this month that firing fbi there -- director james comey had relieved great pressure on him. he reportedly told the russians comey was crazy and a real net job. the president went on to say he faced great pressure because of russia. he went on to say that's taken off. sean spicer, the white house press secretary, did not dispute the account to the new york times. the president has issued what he calls an accelerated campaign to aggressively combat islamic state. >> he directed a tactical shift from shoving isis into an attrition fight to surrounding the enemy and their strongholds to annihilate isis. the intent is to prevent the return home of escaped foreign fighters. mark: the trump administration plans to announce $110 billion in military equipment sales and

for saudi arabia, according to officials familiar with the deal. they say it will include tanks, combat ships, radar, cybersecurity technology. the announcement is expected tomorrow in riyadh. local news 24 hours a day powered by more than 2600 -- global news 24 hours a day powered by more than 2600 120nalists and analysts in countries. i am mark upton. this is bloomberg. julia: live from bloomberg headquarters in new york, i am julia chatterley. scarlet: i am scarlet fu. julia: u.s. stocks closing higher after a volatile week. question is,the

what you miss? a washington post report says a possible -- an investigation into possible ties between the and russiaistration has identified a person of interest currently in the administration. plus, volatility in the markets. we explore that in the week in review. and political drama is not contained to the u.s. brazil's president is under the spotlight. we examine anxiety around the globe. isia: abigail doolittle standing by. abigail: we are looking at nice gains for the major averages heading into the close. s&p 500 and nasdaq solidly higher. the dow and s&p 500 are on pace -- their best games for gains for the month of may. let's dig into the s&p 500 on the week because all of the averages are down on the week. the dow and s&p 500 for the

second week in a row. first time that has happened since the beginning of april. we see that most of the sectors .re lower on the week at the bottom, we have tech and financials among the big laggards. that's important because those are two of the top sectors in the trump trade. let's take a look at some of the movers helping to contribute to the fact that those sectors are so weak. they have less to do with trump trade uncertainty and more to do with the fact that the company offered fourth-quarter sales that are disappointed. we have apple down 2% on the week. this has to do with the fear president trump will not be able to push through tax reform and the company will not have a huge cash cow. jpmorgan also down sharply on the week as the 10 year yield has split about eight basis points. banks trading down with that

rally in rates. the question about the trump trade, is it them play question mark from the election, we still have a nice rally from the s&p 500. 500, still s&p higher, trump trade alive since january 23, up about 3.5%. tech nicely higher. down 1.7at yellow, percent. the financial sector had been the top sector out of the election, but we are now seeing a reversal. since the inauguration, the banks are now negative, weighing on the s&p 500. what you miss? a current white house official is now part of a law enforcement investigation into coordinating between russia and the trump campaign. according to the washington post. the unnamed senior white house adviser under scrutiny by

investigators is reportedly someone close to the president. here with the latest is our white house reporter, and bilberry, who heads up our national security team. channing, let me start with you. latest washington post report, let's be clear, this is separate from the firing of james comey and the revelation of classified information to russian officials and the memo that james comey wrote. is that right? >> yes, that's right. i know it's a lot to keep track of, but this is now's aaa -- now saying that the fbi has identified a person of interest to is a senior advisor close to the president. they did not say who. they did not go further than that. of course, there are only so many senior advisers close to the president, so we are talking about maybe a dozen people it could possibly be, not 20. people could start narrowing that list down rather easily. how surprising is this in

terms of those that are very close to the president, this ist at which, if this report true, this investigation is progressing? >> it is a surprise in the sense that we believe and had reported that there were former associates of trump who were thought to be at least looked at in terms of the russia probe. we are talking about people with possible business interests in ukraine or russia like paul manafort and carter page. some of these people the white house had really distance itself from. that, ifw development true, that there is still someone close to the president who has become a person of interest in the federal probe, as the fbi would say. now, the fbi does not confirm or deny the existence of ongoing investigations typically, so we will not be able to get much from them on this, but this all develops a couple hours after president trump leaves on his eight or nine day trip to the

middle east and europe. goinghad any idea he was to be able to leave some of these troubles behind him, i think that has been answered. i want to come back to you because the press has been busy this afternoon. the new york times reports that president trump suggested to the russians that james comey was crazy, a net job. , sounds likeonest something president trump might say. the sean spicer, the white house press secretary put out a statement not denying it, noted, but he did say the real story is that our national security has been undermined by the leaking of highly private and classified information. he has a point. where are these leaks coming from? the new york times said it came from an official transcript that was being circulated after the meeting,

and that an official in the meeting corroborated what the transcript said. if it is being leaked, it's coming from this own administration. know, i canu understand why they would find that troubling, but the leaks are coming from inside the house. that's where they should be looking. your thoughts? >> the white house is obviously going to be going through with a fine toothed comb to see who actually has looked at that transcript so far. procedures, a white house might share that kind of document with people in the intelligence community, senior people, people at the state department, perhaps the fbi, all people who would really need to know what happened in the room between trump and the russian officials. we are trying to find out are we talking about a few dozen people or a couple hundred people?

you can be sure the white house is doing the same kind of review at this point. is aet: so, perhaps it huge relief for the white house that the president left this afternoon for his nine-day trip where he will be visiting a number of cities. this is something we have enough the past with the next and administration, a u.s. president leaving for an overseas trip while there is trouble at home, hoping to score points and diplomatic victories. what would success for the trump administration looked like during this trip abroad? >> i think he has different goals in different countries. he starts the trip in saudi arabia. already reported that an arms deal is going to be signed. somegood for them to get modernized weaponry. he once a commitment from nato that they are going to boost defense spending.

from our allies, i think they are going to be looking for trump to make some sort of commitment directly about his willingness to stand with them against russia in places like ukraine, eastern europe, and the baltics. foreign policy is one area where the president still has a lot of leeway regardless of what is happening on the domestic front. we will see the white house trying to emphasize deal in this deals in places like saudi arabia and alliances with our european partners. reality ind the saudi arabia has changed a lot. this shows what saudi arabia is challenged with. saudi arabia is spending a lot more of its reserves. energy dependence in the united states, of course, --

independence, in the united states, of course, means the saudi's have less leverage. could pullt trump off infrastructure spending in the united states, an announcement of that over the weekend, that would surely go some way toward diversifying the news, the negative news flow around this administration. sure, this was a guy who got elected saying he would put america first. he wanted to talk about jobs and infrastructure. he's going to be looking for deals on this trip. that's ultimately what his base is looking for and what got him elected resident. >> last question. do we expect the president to between thing throughout the overseas trip? >> i would not be surprised if he does. i guess that's a good question. if he can get an internet signal. he has an iphone and an android,

so i am sure he will be tweeting. the official potus account has already been tweeting the weekly address. i continue to get tweets from them, even with him in the air. is one: all it takes negative headline for him to come out as well. we will see how that all progresses. thank you very much. julia: coming up, we will tell you how -- why i lilly ceo dave rich is such an advocate for corporate tax reform. this is bloomberg. ♪

julia: what did you miss question mark it would be hard to miss the tech stocks are performing -- would you miss?

-- what did you miss? it would be hard to miss that tech stocks are performing well. >> this starts with the stock market and ends with video games. let's start by looking at what's actually happening in the s&p 500. line, s&p 500. white line, technology sector. we have seen a big contribution from the tech stocks in the past month. they hit record highs and then bounced around before losing on wednesday. down here, you can see the ratio of infotech to the s&p 500. that is the biggest lead stocks of had against the benchmark index since august. there has been quite a rally in technology companies. if you look at what has been sector, thistor by is pretty interesting. what i have done is basically just taken all the numbers for each of these sector groups and

discovered how many have rallied over the course of this year. it's pretty interesting. if you look at what is happening in tech, 84 percent are higher on the year. that's the highest of any sector apart from500, utilities, which have seen a good rebound in the past couple of days. , the bond trade has been winning in the market. this goes to show you the degree of threat happening within the market. to look at what has been going on -- actually, going to dismiss this real quick, one set, going to change the terminal, and them. and boom.- if you look right here, you have apple, amazon, alphabet. apart from that, the big major bank stocks are pretty much missing. instead, you have nvidia,

johnson & johnson, citigroup. have interesting companies here, including activision blizzard, which has contributed quite a bit to the infotech sector this year, especially in the last couple of months. people are getting excited about call of duty and a lot of video games. bottom line, given the spin in the market on wednesday, it is the only sector holding up. glad to have you here to talk to us. scarlet: i knew you would find a way to bring in video games. somehow, someway. julia: it's friday. >> i think this is interesting for investors because it tells you that at the end of the day, there are a lot of trump trade's happening at a lot of speculation about what things mean for the market. are expecting a lot of growth. we have an earnings backdrop that is very positive.

we also have an idea that if we are not going to be the trump focused u.s. trade, we have multinational companies as well. there are a lot of companies that are growth oriented. despite the move toward the bond proxies this week, tech has really sort in the past month. julia: and then really resilient, the given the gains we have seen in the nervousness. >> the bottom line is, i think investors want to get good returns, obviously. even though bonds have been selling in the past couple of months, the yield is not there for them. so, if they do that, they look for growth. one of the areas they can get it in his the technology sector. some of these companies within their -- is the technology sector and some of the companies there. i wonder how tired they are to the need for tax reform. yes, they would like to bring

back some of their overseas cash, but it's not as if apple is paying high taxes because of its different arrangements with different units. >> absolutely. and with the repatriation trade, i think when you assume it's going to have a large impact on these companies you are making a few logical leaps that are probably not the most realistic way to interpret things. realistically, a lot of money is going to go to shareholder activity. we have seen some of that in the market for sure since the ultimately, with the specific companies, it's hard to teach an old dog new tricks. this is the way they are probably going to continue to use it. julia: and you made the point that these different companies perhaps have shifting profits and are getting a lower tax base. some of the smaller stocks are involved. perhaps the benefit of overall corporate tax rates will be

better and they are still pricing that in. >> that's true. when you take the s&p 500 and break it down by effective tax rate, it's not a clear-cut story. theher side point is, effective tax for a lot of these companies is already below 15%. at the end of the day, there is no guarantee they will get a better rate than they already are. scarlet: this is something julian i were talking about -- julie and i were talking about earlier. she could not get her head around that there is an official tax rate but almost nobody pays it. >> welcome to america. scarlet: thank you very much. great charts. this is bloomberg. ♪

julia: we look at market

volatility and the wild week in equities markets. we bring in an equity strategist. happy friday. great to have you on. i am showing you chart here and i want to get straight into it, deep dive. the last three or four years, and making the point that we are passed a relative peak. >> it's interesting because really since march 1 the markets have been in a sideways trajectory. tech of all sectors has done best. tech has had a great spring. leadership is driving the market. earlier this week, before the comey news broke, we were at 24 hundred, right? well above 2400. we thought we had broken through the major peak level on the s&p.

not so fast. do you think this will give the market some relative resilience? saw important headlines, but we held pretty well. >> good point, well-made. what this has done for the part --s allow any over overbought condition to really that self and the market has generally traded sideways. the earnings environment is not going to break down here. if we can establish a little bit of confidence in the outlook, the long-term trend is still intact. scarlet: we have seen a lot of money move out of u.s. stocks and overseas, europe being one of the big destinations. the european stock measure has surpassed the s&p 500 for the first time since brexit. is a ratio the

s&p 500 to the stoxx 600. >> it's really interesting to go back in time and look at the s&p's relative peak to the stock. it's right around brexit time. it has been a good climate for risk-taking broadly. stocks outside of the united states in the last year or so have generally done better than stocks inside the united states. some of this is absolutely the relative valuation trade. cycle, s&p has seen a very defensive, hesitant investor. over the last year, we have seen a little more resilience take shape. scarlet: i wonder if europe has had a -- has become a political safe haven. the few elections we have seen, things have turned out ok for the establishment. >> i think we were a little fatigued on european election

news, european crisis. we have kind of been through the ringer on europe for a long time, starting with greece. i think there was a little bit of fatigue, and valuations reflected that. the european and me as heart warmed by the possibility that europe might be a political safe haven. can the european markets remain independent of the mood we are seeing in the u.s. market? we are showing you a correlation , and that is at the lowest level of has been for the last 20 years. >> it is really, really low. this is a really in treating because lowball recovery has become a big part of the equity markets story. in that recovery, you're seeing couple oneets

another. that is a reflection of the fact that the s&p is very defensive. julia: chief equity strategist for bloomberg intelligence. next.t: the market closes indexes giving up some gain in the final hour of trading. this is bloomberg. ♪

♪ scarlet: "what'd you miss?"

u.s. stocks closing higher this friday after a volatile week. and if you are tuning in live on welcome you toed our closing bell coverage every weekday from 4:00 until five eastern time. we begin with our market minutes. u.s. stocks giving up some of their gain. headlines,some headlines from the white house saying there is a white house official under investigation under ties with russia and the trump campaign. that generated some anxiety in market. you are seeing give back over the weekend where many more headlines could arrest as well. every time the markets close, some big shoe drops. joe: retracing that point, the

shift in equities to more defensive stocks, you have to question is that provided markets with a level of resilience. we will get more headlines over the weekend and next week. will we get some policy headlines that offset those? >> the sector returns for the week, what we have? trusts,ate investment consumer staples, utilities, the best performers of the week, gaining at least half of 1%. thelaggards, you have financials off by 1.1% during the period. some concern about what happens to tax reform and the rollback of financial regulations. big regional names continuing to be under pressure following disappointing first-quarter results. as for today's individual at a record debt

high. more than a dozen analysts raise the price market after surprising first-quarter earnings. gaddis -- gap is trading at the lowest for this year. gap almost down 4% on the day. disappointing forecast for the first half of the year. not good news for the second quarter and foot locker down by 17%. the company blaming unprecedented challenges last quarter, especially in february when sales plummeted by a percentage. let's look att: the bond markets as well. yields coming down i'm showing you the change here on the week. basis point loss for the 10 year. the low on the 18th of may when we got those headlines on donald

trump the concerns about this russia probe, to 17 below -- 217 the low there. questions being raised about whether or not the fed is going to have their plans adjusted by what breaks over the next few weeks in terms of news from this administration. who knows? levels, down two basis points for the 2 year too. scarlet: the dollar set for its worst week since july. this is a reflection of how markets have become much more sensitive to those negative headlines. what has not been a beneficiary is the brazilian rate out -- rael. the president is refusing to brazil the double be

credit rating is still don't, but with a negative outlook. and a quick mention of the brent,ty currencies, hope seven opec agreement next week. -- the cad the strongest in three weeks. will trading -- we are heading into the opec meeting and the believe in that it is this fight is that opec and not opec should extend those cuts. soybeans, the stock heavily impacted from what we heard from brazil. we had farmers running to take

advantage of that currency plunge as a result of the political concerns. another benefit of currency weakness. scarlet: and those are today's market minutes. julia: now back to the top story of the week. president trump is on his way to for his first trip abroad. the washington post reporting that a current white house official is part of the law intocement investigation possible ties between russia and the trump campaign. the unnamed senior white house adviser under investigation is someone closer to the president. bloomberg senior washington correspondent has literally just landed in saudi arabia. how do you believe this latest news is going to impact the president struck -- president's trip? the traveling press corps

landing here where president trump will meet with saudi arabian government officials tomorrow as part of a summit here in ryad. sean spicer issuing a statement above air force one in route here to saudi arabia, he says that the president has always emphasized the importance of these deals with russia as it relates to syria, ukraine and for the benefit they give the american people. grandstanding, james comey created unnecessary pressure. he goes on from there. president trump's first international visit will be clouded by a controversy waiting for him at the lens here in saudi arabia -- as he lands here in saudi arabia.

scarlet: what kind of mood away to the president's arrival? >> on the way to the city, president trump and king solomon are photographed on billboards around the city and it says together we are stronger. this is a city that is waiting have president trump visit. here he goes to israel, brussels as well as to italy for the g-7 .ummit as a chanceng this to start their 2020 vision as --global companies like lockheed martin, ge, all going to be here this weekend.

washington correspondent on the ground. thank you. let's find out what s first visitmp' will mean for the middle east. before we get to president trump agenda in the middle east, let's talk about this report from the washington post that a senior white house official is part of this investigation of ties between the trump campaign and russia. it is reportedly someone close to the president. who might that the? -- that be? >> never a don't moment. the biggest concern is if it is jerod. all ofbeen in charge of

the foreign-policy strategy and engagement with leaders for trump. every head of state meeting he is had, he has organized the china summit, israel, palestine, saudi arabia. he is critical in all these things. it would be surprising to me if jerod was not aware of -- of the question is did he have direct conversations with? that is not mean that he was involved directly including but he knows about some of this stuff. if he is going to be caught up in the investigation, that does not mean he is guilty but it would not surprise me at all if people are going to be chatting with him. if that comes out, it is a pretty big bombshell for trump. one thing that trump did in the press conference with the president from columbia yesterday was he said there was absolutely no collusion, myself, my campaign and he said i know for certain about myself.

you see the gears in his head literally turning while they are happening and you can hear him say no, i was not colluding and so everyone out there, part of the reason why this story has so many legs is precisely because so far it does not add up. everyone expects, whether it are people who cannot stand trump or people paying attention to the issue, there's something big we don't actually know here. we all know that at some point we're going to find out. trump inbombshell for what way? is it because it is someone so close to him? is it difficult to separate president trump whether there is intent there are not? >> this is a president who has no foreign-policy experience and he is relied so much on a small inner circle and the family plays a such a significant role,

that was a much bigger hit than if you had a strong secretary of state who is clearly a component on the active day-to-day basis of the administration. you don't actually have that. he lost his national security adviser one month in and even though he was advised, don't reach up to flynn, he sends a message to him saying said a strong -- stay strong. there seems to be some level of connection here on the russian issue that goes beyond the question that we have that are securely about incompetence or lack of experience -- are surely about incompetence or lack of experience. this is not misspelling a tweet. the russia story is much more structural, much more strategic and clearly affects the actual administration. julia: i love that you used to

the word strategic. for all of these reasons, they have chosen these countries president trump is visiting first for specific reasons. israel and saudi arabia, you can make a comparison between the cool relations between obama and these countries and donald trump. he goes to a warm welcome on an offset. >> it is not a strategic reason, it is a tactical reason. saudi arabia is not a country that in 10 years time is going to be more relevant to the u.s. than it is now. it is becoming less relevant. they have checks that can be written to support trump favorable headlines from the saudis right now. the saudi king and the deputy crown prince and the israeli americanister are two allies who are happiest at to see the back of president obama

and happy to see trump come in. goicates of, where can i that will move the needle for me today, saudi arabia and israel makes sense. when you say the key relationships, it is europe, canada, mexico, asia. but he did not go there for reasons. you mentioned israel, he was supposed to go there to a warm welcome but it was a revelation this week that he passed on classified information to the russians and the source of that information was from israel. how does that compromises ability to achieve anything while he is there? anif you needed to screw ally on intelligence, israel was the one to do. this is not going to shake up the personal relationship that netanyahu has with trump and his family. we saw the israeli ambassador in

washington come out very strongly and say yay. let's be clear, our most important ally in the world is the united states. the americans right the big checks. that is going to continue. the bigericans write checks. the problem with these first two visits have nothing to do with relationshipl between the government's it has to do with trump's problems that call. julia: the new york times article, again, the national security concern. where is the information coming from? mentioned that some of these leaders should be put in jail. that is not the way it works at the end of the day but it is very frustrating for trump that

he does not have control over his own administration. hannity came out last night and said the deep state needs to be stopped. there is no deep state and the united states but there is a deeper offers the. -- deep bureaucracy. america is not ruled by man, it is ruled by law. the boj is working out of principle, they are working out of values. .hey support the rule of law so when they see things from the elected president that they believe goes against that, this deep bureaucracy is going to act is and restrain what trump able to do. this is extremely frustrating for a man is not used to people having oversight of him. there's a fight between those two forces. this is not an immovable object. trump is going to lose.

people should not get overly concerned about president trump "to break american institutions. there are a lot of things problematic with american institutions, but a would be authoritarian leader is not one of them. scarlet: great to have you. julia: coming up, from one political hotspot to another, brazil,, markets dramatically shaken in that country. how does it look the day after? this is bloomberg ♪

scarlet: "what'd you miss?" a chaotic couple of days for brazil.

as calls for his impeachment group, the chance that he could enact his reform agenda that came and less likely. plummeted.the real it is not just brazilian assets that have felt the effects, latin american bond markets across the board seized up. and we're seeing government still angle on self. had markets open up without a bid. by the time the afternoon came around, markets rebounded. scarlet: is that because he said he refused to resign? >> you did not see real selling and other emerging markets. they were not fund selling. been a lot of inflows into emerging markets. there was not that much

contagion. by the afternoon, it looks like brazil was starting to decouple. scarlet: given faces of positioning. julia: i was looking at this, ,or positioning in fx swaps local bonds and foreign bonds, 12% as opposed to 20% a year ago. does that make this market less vulnerable as an asset collapse because foreigners are not so bold? >> there may be less comprehensive involvement in people backed up but people forget. beginning, there was a sense that we were going to have -- we had come off the bad news in venezuela and there was tremendous performance in the last half of the year. people were still underinvested in emerging markets.

you are seeing reallocation, a lot of inflows. a couple of headlines in brazil that spooked people, for some of us have been in the market for a long time, it is nice to see markets the volatile again because of there has been an inability to understand what the real risks are. brazil,ramework of these headlines to do not mean that much. uncertainty is rising, stating the obvious, does any of that matter to investors? short-term, you have a more potential for political uncertainty and it may setback agenda in political and market reforms. but that you have a person involved in brazilian politics for some time involved in some sort of corruption, well, surprise.

it is not explicitly incriminating what he said on the tape. is,consensus at this point he is not going to be impeached and it will probably just go to elections next year. the market reforms might get pulled back but the good news is this is the first big corruption scandal i have seen in an emerging market where it was not a political tool to get rid of the opposition. this actually might cleanup brazil. if you look at brazil, it has an internationally competitive industry and an educated population, short-term negative, medium to long-term positive. scarlet: it could be quite noisy in the short-term? >> i have so. we need volatility. isia: if the reform agenda stalled, i know pension reform was one of the critical issues people were talking about, what

is the reason to buy? because on a relative basis it looks cheap? why would you look at this market relative to other emerging markets, would you avoid just because it is noisy? >> two levels of analysis, payment capacity and possibility of prices going up, appreciation in what you buy. if you want the biggest bang for the buck, you do not get to brazil but if you look at them on a sovereign level, you are not worried about the false -- not worried about th defaults. the ability to pay is there and it is a matter of market to market. scarlet: you said medium to long-term positive, defined that. -- define that. >> what is impressive abrupt brazil is the institutional framework the united states is

holding seems to be holding in brazil. it comes from an independent judiciary continuing investigations into the scandal and rooting out the corruption. the institutions are holding and that is an impressive thing for emerging markets. scarlet: stick with us because we're going to talk next about iran, it's election and the opportunities for investment. this is bloomberg. ♪

now let's take a deep dive into the bloomberg. you can see our chart function at the bottom of this screen. volatility across asset classes, stocks versus bonds. volatility in the stock market

is at the white line and it finally shut up with all the u.s. political turmoil. the bond market has come up as well that nowhere near the magnitude we saw in the vix. high, about 20% below that level right now. i would argue that political turmoil means there is going to be less volatility in treasury before because people do not see treasury yields ending the year by 3%, it will be cut that quite a bit. julia: it is all about ability to pay that if you're talking about the content here, nothing really changed in the economy. we have? over the tax plan, health care, what that means financially for the company. what investors do at this stage? scarlet: maybe the fed may not raise rates but it is pretty much -- julia: nothing really to shout home about.

coming up, tehran is counting votes in today's presidential election. stay with us.

mark: it is time for first word news. the white house is responding to a "new york times" reports of that president told officials in the oval office that former fbi director james comey was a net job and firing comey -- a statementreleased that reads in part, by grandstanding and politicizing the investigating into russia's created james comey unnecessary pressure on our ability to negotiate with russia. reportshington post" investigation into possible between russia and

the trump campaign has identified a current white house official as a significant person of interest. people familiar with the matter says of the senior white house adviser under scrutiny by investigators is someone close to the president. mr. trump is accelerating the campaign to defeat islamic state , that is according to defense secretary james mattis, taking at a conference about anti-terror method, he says of the president's goal is to quote annihilate islamic state and not simply contained the dream is group. -- the extremist group. voting has been extended for several hours in today's presidential election. iranians will decide if rouhani will get another chance to engage with the rest of the world.

most opinion polls show rouhani in the lead. global news 24 hours a day powered more than 2600 journalists and analysts around the world in more than 120 countries. i am mark crumpton. this is bloomberg. julia: "what'd you miss?" s are heading to the polls today to vote in the presidential election. for analysis, let's bring in our correspondent. populist, hardline and racy or reformer rouhani, who wins? too close to call. some of them were pointing to that is whereow the music stops in terms of the actual voting. the counting begins and we expect to get the results and the early morning hours.

it is trickling in from the various counties around the country. we were at one of the polling stations and saw president and we, the incumbent, spoke to people on the ground and some analysts suggested the higher turnout could favor the incumbent president but this is a metropolitan story. it is a different story when you get outside of the cities and that is where ebrahim raisi is going to be jumping on the opportunity to win some boats and say this government -- to win some votes and say i can make is a strong iran and bring this country back together. some: he has made seemingly populist promises, what will the people do if he loses? if he loses, ultimately it is still very close, so if ebrahim e, youloses this vot

will see iran going on a path that is active with his diplomacy in the outside world, trying to make relations work and secure for investment. sanctions --g the you see this conversation is not really hashed out. president donald trump and saudi arabia on the same day, you have not have tied -- timing any better if you wanted to send a message. een tryings have b to push of the u.s. administration to put a tougher line on syria and the rod -- and iran. scarlet: we will get an investor's perspective, the capital chairman and ceo rejoins us. i'm going to pick up where julia left out -- left off --

scarlet: what will happen if rouhani loses? >> i don't think they will all be closed up, the chinese and the russians and the indians are there and europeans are there. they have been restrained from investing because there has not been real clarification of our treasuries rules about what the sanctions mean for money going forward. just to take a breather and see what happens in tehran and what happens with trump and his crew, to see if there will be comply nflagration.o it is a better outcome geopolitically with rouhani winning. rouhani wins,if

there is some tension. that this is is it going on at the same time when president trump is about to land in saudi arabia? also tensions there with israel? critical timing here for so many reasons? israeli first and then second, if you're going to take two countries to visit while the ns are out to vote, he could not send a stronger signal. in the countryside of iran, you're going to get a stronger reaction. most of my contacts are in the urban centers and you have the sense that they are going to vote for rouhani. at of 66 million voters, they of already counted 40 million ballots.

the signaling from the white house is -- may not be constructive. scarlet: we talked about this election being a binary choice, it is a choice between extremes. does a country like iran take its cue i the election that we see in europe or the u.s. -- by the election we see in europe or the u.s., they have returned the establishment figure in france, versus we saw with the u.s. and the u.k. did. >> no doubt the trump election moves the needle in europe and make people take notice. i posted that question to a few people involved in iran what that we do, the feedback i'm getting, that might nudge people more to rouhani, less destabilizing vote. there's a real sense that rouhani represents the

continuity to re-create destitute re-into quite --two reintegrate economically. julia: what power does he have with the supreme leader? >> within the context of people allowed to vote, rouhani-ebrahim raisi is not much of a spectrum. it's not a wide open election. you have to get designated as eligible to vote. julia: one thing about rouhani is he has quoted for next -- he -- courted for the existence foreign investment with success, but what would wrong? >> there was huge political resistance and the united states after the nuclear deal. there was apprehension about

racing to lift the sanctions. a large part of it in that the department of treasury clarifying what the sanctions language meant in terms of money transfers internationally. people were taking slow steps. i cannotuhani victory, imagine the europeans will not join the rest of the world in investing in iran and the united states may have to catch up. iran may be one of the best overall investment opportunities in the world because it has been cut off and the economy still functions and you have a population that wants to be part of the rest of the world, that is very western oriented in terms of how they dress, what they eat, what they watch on tv. we had tore in iran, catch a taxi and the taxi driver spoke the kind of english you would here in queens and they

learned it from watching american movies. it is a huge possibility. julia: fantastic to get your insight. coming up, a look at whether higher income taxes can lead to fewer wins for your favorite pro sports team. this is bloomberg. ♪

scarlet: "what'd you miss?" bloomberg television taking a look at tax reform with actual segments and guess throughout the week -- and guests throughout the week. is higher state income taxes lead to fewer wins fourth pro sports team -- for

pro sports teams. explain to us in the commonest turned -- in economist terms what your study says about how income taxes affect team performance? thate basic idea here is teams have to compete over players and players do not like tax, then teams are going to have to play taxes more -- play more.s -- pay players does paying players more translate into teams winning less? in many sports teams, there is a salary cap and if there is a limit on what teams can pay their players, that money is going to go farther in places with lower state income taxes. scarlet: what does your research

show about the magnitude of that affect? >> i find somewhat modest effect size over the past 20 years in professional sports. if you were to go from a no income taxed state like florida or texas to a high income taxed state like florida or minnesota, on average you're going to lose percent more 1-3 of your games every year is what i find. that is the difference between being the five-speed or the six in -- five seed or six seed the playoffs. abouta high effect size what it would cost of that team to get that kind of talent. a year two more games can cost a team several million dollars. aarlet: the mlb does not have

salary cap but there is a luxury tax, does that have any similar effect? >> you might still expect a relatively small impact from the luxury tax, it certainly disincentivizes teams to play more but because of there is no strict salary cap, the owner can compensate those players for extra taxes as much as they would like to. in major league baseball, it is only a small effect, somewhat closer to zero but in the other three major confessional sports nhl, we nfl, nba and find much larger effect than in baseball. scarlet: you grew up in nebraska, you got your phd in wisconsin, what happens when you apply your theory to college teams? one thing that i did in my

study was i wanted to check whether it was actually income taxes that was the driving teams in low income taxed state to win --i checked to college teams in those areas with low income taxes do better than college teams in an area with high income taxes? they support their teams more, you might see a similar effect in college sports. but i do not find that relation. in college sports, income tax rates do not predict winning in the same way as professional sports. scarlet: have you close the gap? >> the solution is simple. the salary cap is in place to level the playing field across all the teams but it is not level is that salary cap is based on pretax income with the inferential -- with the

differential income tax rate. dollarsusing post-tax instead of pre-tax dollars. scarlet: what kind of responses have you gotten? did any of the lease contact you? -- leagues contact you? >> i've not heard from anybody get. we will see about the future and whether they agree with what i have found but i would be happy to talk to anybody. scarlet: thank you so much. julia: up next, we hear from former democratic senator bill bradley, he was behind the last attempt to rewrite the tax code way back in 1986. when you say about president trump's plan. from new york, this is bloomberg. ♪

julia: "what'd you miss?" markets are stabilizing after a volatile week and controversy around the white house raised concerns about the timeline of the president's tax reform. the architect of the 1986 tax aboutul was optimistic the trump administration ambitious plans. >> the odds are against it but what you need if you're going to do tax reform is you need some principles to guide you, a committed president, a calendar treasury secretary, the chairman of the finance and ways committee to have their own political interests involved in preceding with tax reform. if you don't have that or any of those, you have major problems. >> if you talk to orrin hatch, chair of the finance committee

and you talk to bradley -- kevin brady, chairman of the house ways and means, they say they are committed to it. they agree on a lot more than they disagree on. >> first thing you need to do if you're going to detect the form is just to put a persistent -- a specific proposal out. it is great to talk principles and ideas but you have to put a specific proposal out and measure it against the principles you have espouse and you have to say if it is tax reform, do equal incomes pay tax, to the wealthy pay their fair share, the one of the market allocating resources as opposed to the ways and means committee? it's a simple, is a clear? >> what they would say is the primary goal is growth, we need to get growth for the economy to benefit everybody. what can be done that would make sense that would be program for the tax code?

>> i think cleaning it up with neck a big difference. over a trillion dollars worth of loopholes in the tax cut. since the 1986, it is gotten worse in year-by-year with tax bills added more and more loopholes. it would make sense to clean up the loopholes and of course of the benefits of doing that is you can lower the rate but beware of the two favorite friends of anybody writing tax , growthion and that is in numbers that are off the wall and cannot be justified and dynamic scoring, which means if you have a rate cut, you have dramatic his -- dramatic increase in revenue, history shows of that is not true. cleanup the tax code of the loopholes and lower the rates. you wound out looking at the markets, they are pricing in lower corporate tax,

repatriation and suddenly it is going to explode and everything is going to be great. >> what is the trickle true down to tax reform to actual been -- spending? >> it is not wise to make economic decisions based on what has not happened. the markets are pricing in the accomplishment of tax reform on the corporate side, for example. it has not happened. it is a little dangerous to do that. >> if it did happen, did you notice in your years of the there was a transmission see taxes herewe and spending does pickup. >> we cut corporate tax rate from 36 to 44. we did see increase in economic

growth but it was driven from the individual side that was making tough decisions -- tough decision on tax loopholes. we close over $100 billion in loopholes and the lower income people got a -- probably one of the bigger tax cuts of their lives and the upper income people ended up paying more of the total tax revenue because they were using the loopholes to reduce their taxes while the rest of us ended up paying a higher tax than we otherwise shift. >> the prescription is simplified, cut the rate. corporate interest reduction, is that something that should be eliminated or cut back? >> it is not productive to go to a yes or no because it is all dynamic. where are the race going to go? are a lot of things you can eliminate. rates going toe

get? -- to go? you cannot answer it in isolation. it is like trying to answer, what are we going to do with taxes when we do not know how to fix the president. we do not know how to fix the president and left he reveals his tax return. they'll be a part of the whole tax return effort as well. that was former senator bill bradley. gear up need to know to for the next trading week. this is bloomberg. ♪

scarlet: "what'd you miss?" u.s. stocks not managing to finish strong. end ofn hour before the trading, reports that a senior

white house official involved in the russian investigation. julia: get used to those headlines. scarlet: we've seen it all week. coming up, president trump will be meeting the saudi royal family and we are also looking releasedc minutes wednesday. opec meets indiana to decide -- in vienna. that is all for "what'd you miss?" scarlet: bloomberg technology continues. this is bloomberg. ♪

mark: i am mark crumpton in new york. you are watching "bloomberg technology." the washington post citing people familiar reports the investigation into potential collusion between russia and the

trump campaign has identified a current senior white house official as a significant person of interest. that official has not been identified. that development comes as president trump heads on his first overseas trip since taking office. the president will make five stops in the middle east and europe, including visits to saudi arabia, israel, and the vatican. he will also attend two summits. the president did not name a new f.b.i. director before leaving. "the new york times" citing a he said firings james comey relieved great pressure on him. mr. trump also reportedly called the former director "a real that job -- nut mjob." rob rosenstein tells congress he stands by a memo that he wrote that preceded the firing of james comey. in remarks to congress, he says firing the f.b.i. director was appropriate and listed concerns over the handling of t