of a new pedestrian bridge at the florida international university campus. you are looking at live pictures from miami. authorities are searching for people trapped in the brave. muellercounsel robert has subpoenaed the trump organization to turn over documents, including some related to russia. it is the first time the special counsel has demanded documents directly related to president trump's businesses, bringing the investigation closer to the president. the former fbi deputy director has asked the department of justice not to fire him, 72 hours ahead of his scheduled retirement. he is accused of authorizing the exposure of sensitive information, and then lying about it. the white house press secretary says the case shows troubling as aior and refer to him

bad actor. the crowd prince of saudi arabia -- thee middle east prince said the kingdom will ir from trying to seize control of the region, and harsh rhetoric was used to describe the country's leader. many countries around the world and in europe did not realize how dangerous hitler was until what happened, happened. i don't want to cbc events happening in the middle east. saudi arabia does not want to acquire any nuclear weapons. if iran developed them, we will follow suit. and iran haveabia been on opposite sides of ongoing conflicts that have killed hundreds of thousands of people and displaced millions. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. i am mark crumpton.

this is bloomberg. ♪ bloomberg's world headquarters in new york, i am julie hyman. >> i am scarlet fu. >> i am joe weisenthal. >> 30 minutes from the close of trading. s&p has been bouncing between small gains and losses. rep. ryan: -- joe: the question is what'd you miss? scarl broadcome will formally face investors for the first timet: after bowing out of its bid to buy qualcomm.

a whistleblower claims that walmart is playing fast and loose with the law while trying to catch up with amazon. onres of walmart's tumbling the heels of claims that the retailer misled e-commerce results. what'd you miss? we will discuss was markets will be looking for, with the chair of investment and global cios at guggenheim partners. glad you can join us. when you look at the regional inflation data that we have gotten, what you think we are to appear from jay powell? -- going to hear from jay powell? >> maybe there will be more than three rate increases.

the real question is how dogmatic he will be about it. sensitivity,t of a ratebarely priced for increase. the fed is going to be sensitive to a market turmoil if the market is priced for four. slowly, the fed will try to move market expectations. macro am confident the backdrop is more interesting than it was for all of those quarters of no volatility. part of what makes it interesting is this unusual situation, and expansionary fiscal policy, a stimulus that people weren't expecting. when you look back at the long periods of markets, is there an era this strikes you as

similar to? >> it is different this time. the last time we had a policy late in the cycle was probably in the vietnam war era. the difference between then and now was the federal reserve allowed inflation to grab a hol d, starting this spiral, which everyone in modern times recalls. the fed is on guard against that. they are trying to not only reign in inflation, but also inflationary expectations. to my recollection in modern never had anave experience where late in the cycle, we are getting all this stimulus on the fiscal side. policymakers should be leaning against the economy. the fed is going to have to pick we are baton and say,

responsible for leaning against the economy so we don't have to get inflation spiraling. that is going to create complications, especially as the market starts repricing. julie: not to mention potential tension with white house officials. to be fedmes mandates, inflation is one part of it. the other part of it is macro-unemployment. talk us through the ramifications of fact. -- of that. scott: i was in washington yesterday. my republican friends are telling me about how we are bringing all these marginal workers back into the workforce. they are right. if you see the participation rate, it has risen. at the same time, go to your local store and ask someone to make change.

a lot of the marginal workers being brought in don't really have the skills to work. okay. near term, that is employerses along, are having to invest more in training, they are having to step up the pace of which they are increasing their wages. eventually, this is going to push into wage inflation. a year or so from now, we will be seeing something like 4% wage growth, as opposed to wherever we are today. the issue will be the turn into price pressure. certainly, the fed is going to lean against it. joe: we get a question from the terminal. i was about to ask you the same thing. what do you think about where neutral interest rates are going?

the one way i could imagine the threaded of fiscal and monetary policy doing different things is that the fiscal boost actually expands productive capabilities with the economy. this mutual rate actually rises tral rate actually rises to the point where it is not as dramatic as it seems. scott: i think the neutral rate is going to rise. it is estimated to be at zero currently. if you look at the way the fed measures inflation, but the fed funds rate today around 1.5%, their estimates of inflation are around 1.5%, the neutral rate is basically where it should be, either expansionary nor contractionary. we raise rates four times in the next year, is the neutral rate going to go from zero to

year, and there is no practical explanation for that. if the rate does go up a quarter of a percent or a half of a is, the-- the truth fed is going to be moving into restricted territory, which will create the headwinds they are looking to create, and which falls slowdown down job growth and wage inflation. ju when youl look at the treasury and equity marketsie:, julie: when you look at the treasury and equity markets, what are the verifications going to be? sco the federal reserve is trying to reducett: its balance sheet. -- scott: the federal reserve is

trying to reduce its balance sheet. if you look at the financing. if you look up with the treasury is doing and the fed balance allt, the vast majority of of this is coming in the short end of the yield curve, so what i think we're going to see is a meaningful and dramatic rise in shorter-term rates. that is between the overnight and 10 years. at the longer end of the curve, the supply congestion isn't nearly as bad. if people come around to my way of thinking, that policy is not actually moving toward restrictiveness, the long end of the curve is going to say, the fed is going to contain inflation and if there is no reason for us to have a dramatic increase. the yield curve will flatten. in 2019, when the curve will be

flatter, that would send a recession signal, which is where i am expecting to go. scott is sticking with us, coming for recession in 2019 or 2020. this is bloomberg. ♪

>> blue apron plans to start selling kits in stores. we have a good chart showing why

they have to do something. this tells the story over the last nine months or so. look at this in stock, down 80%. their number of customers are on the decline. revenue is declining. the stock is declining. this is the financial analysis function on blue apron. >> in the wrong direction. >> they are trying to do something to fix the situation. >> what are analysts saying? >> i am technologically behind. i get my dvds from netflix, still. >> [laughter] >> i would never do delivery meals. if they were in stores, i could just pick it up. but i'm not sure if that will make up.

also, they are thinking of offering single meal kits for diversification. they are trying to do something to stem the bearish tide. was all about that consistent revenue stream, but that may be a one-off. competitors? every time i listen, there is a new mail cap. -- meal kit. weight watchers is a very formidable competitor. walmart bought one of weight watchers' biggest competitors. and amazon. >> you can pretty much count on it. >> what'd you miss? we're talking about scott reinar d's recession call for 2019 and

2020.you say 2018 will feature an investment worth between stocks and bonds. scott: high temperature i agree i h jeff in terms of the -- am not sure i agree with jeff in terms of immediately bearish stocks. if we got to areas approaching 4%, we would have difficulty, but stocks are going to power ahead based on earnings. historically, if we are within this.ars of a recession, is typically a very good. for stocks. typicallyriod is very good for stocks. joe: in the risk of scenario you n, what is smart

diversification? right it is a tough game now. buying into my view of the world, look at stocks and have a barbell strategy of fixed income. you don't want to get stuck in credit if we are approaching a recession. i am always a believer that people should have some exposure to commodities in emerging markets. joe: what is the best way to get exposure? etf's, a musty want to take 0-- untless you want to

take iron ore onto your front lawn. >> would you think of what larry kudlow said, buy dollar, sell gold? scott: the dollar will strengthen. in a lot of turbulence in the near-term is coming from the rhetoric of the white house. julie: do you think that is subject to debate? scott: no, but the rhetoric changes. i am not sure we will be hearing the thing rhetoric around the dollar. tariff issue -- one thing i think that washington is having a hard time understanding is the trade deficit is the other side of the capital account surplus. we are expecting to sell a

trillion dollars relative of u.s. government debt and we have an economy that generate $600 theion in savings, continued reliance upon foreign capital to buy our debt is going to put pressure on increasing the trade deficit. mathematical reality. that should put pressure on the dollar. i think the short-term rates rising will carry the day and the dollar will rise. >> government debt and household debt or a concern -- were concerns in the last recession. willu think corporate debt be the trigger in the future recession? t: people should be dramatically upgrading the quality of their portfolio. get out of high-yield.

investment-grade corporate debt, be --t of the place to get out of. the place to be is at the long end of the yield curve. by treasury bills were floating rate securities. get out of investment-grade, as well as high-yield? scott: you are not being compensated. we are 600 basis points tighter than where we were in the financial crisis. julie: scott is sticking with us. from new york, this is bloomberg.

♪

>> what'd you miss? at the guggenheim partners global cio is still with us. talk about what is happening at guggenheim. i am looking at total return outperforming benchmarks over the past several years. at the same time, there has been some internal turmoil that has been reported upon at the firm. of -- talk to me about what you are talking to clients about. scott: the characterization of a power struggle is completely inappropriate. ourselves in being able to speak openly and have an open, healthy debate as part of

the organization, the team around extremely strong people. they are really motivated because returns have been so great. we had a record year last year in terms of inflows. it is a pretty exciting time. ie: you had inflows last year. it seems as though you were able to reassure clients. new client inflows iddid you increase? scott: it was both, from existing and new inflows. us, when you look at everything that has happened in the last year, our performance remained exceptionally strong. our team stayed very focused. in some ways, they are geeky,

nerds, that really get into doing this. the excitement for the job and the fact that we have had such a call in terms of understanding the economy has been exciting. >> you announced last september you were selling your etf business. higher fees to this base that has been trained by vanguard to prioritize low costs bove every -- above everything else? equities,the world of management is a difficult business. it isrms of fixed income, eve moreanacea theryone thought. ryone more than half

of thet bonds thath trade are not in an indexought. then everyone thought. more than half the bonds that trade are not in an index. i tell investors, judge me on how your portfolio is doing .fter you pay is the fee good things are not a cheap things aren't good. -- good things aren't cheap and cheap things aren't going. there are people out there that are cheaper, but you won't get the same performance. >> thank you. the market close is next. take a look at how the stock

market is doing right now. the ascent peak little change right now. losing 2/10 of 1%. from new york, this is bloomberg. ♪

scarlet: "what'd you miss?"

stocks end mixed going into the close. julie: i'm julie hyman. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. on twitter, we want to welcome you. scarlet: we begin with our market minutes, closing mixed on the day, the s&p and nasdaq are lower. and the dow moving higher by 115 points, a lot of economic data. nothing that really told a new story though. joe: it is interesting. i like the empire and philadelphia fed and numbers, but not what you would would expect. scarlet: below average before the fed a meeting next week where jay powell will make his debut in front of the new, in front of the world really.

he explains the policy going forward. julie: even though the decline in the s&p 500 is a small, it is the fourth straight and it is the longest losing streak so far in 2018. so it is because we have had choppiness in the market that we have not seen that consecutive with declines. scarlet: in terms of equities, what specific stocks are you looking at? julie: walmart: because on the day there was not much change, we had the headlines coming out this afternoon that sense of the stock lower end of that is the whistleblower lawsuit claiming that the company issued misleading e-commerce results and then fired the executive that filed the suit. we dug into it with matt boyle earlier, this had to do with the marketplace portion of walmart's website, where the third-party vendors sell their goods through the wal-mart.com site. elsewhere today, looking at

monsanto and the attempt to acquire the company from bayer. u.s. officials are concerned that the merger could hurt competition, even though buyer has already planned to invest quite a number of assets. we are watching hasbro as was mattel on the liquidation, the planned liquidation of toys are us stores. we are also looking at pipeline stocks come after figure of -- of federal regulators ruled that -- can no longer receive a credit for income taxes that they do not pay, so one of the main reasons to purchase mmlp has been tax related, that diminished. snap, fun pop culture one. rihanna criticized snap which ran a controversial ad that asked users to decide whether they wanted to slap her or punch chris brown. she criticized the company, saying it made a joke of her history as victim of domestic

violence. so a valid criticism. snap, which has gotten in hot water before, after being criticized by superstars, down 3.5% on the day. joe: let's take a look at the government bond market. isaac and say, not a ton of action today, higher yields across the board as a scarlet mentioned, the data not particularly conclusive one way or another. 2.8.ear yield up tenure at 2.82. a little more flattening if we look at the chart of the two ten spread. that has been the theme of the last month. beginning of the year, steepening, but now we're back to the story from last year. scarlet: take a look at currencies, because we have headlines. larry kudlow endorsing a stronger dollar. he said he would sell gold and biking dollar. you can see the dollar index

moving higher through the session. where does that leave some of the biggest trading partners, such as canada and mexico? prime minister justin trudeau told us that he is willing to pick up the pace of the nafta discussions to get ahead of the mexican presidential election on july 1. their dollar is stronger. and of course in mexico, the deputy finance minister said volatility with the peso may persist with nafta discussions and election concerns swirling around. joe? joe: on commodities, take a look at oil and gold, very quiet day. bit, golda little down a little bit. scarlet: breaking news across the bloomberg, broadcom reporting quarterly results and of course the ticker -- they reporting $5.12. it had given guidance earlier on pretty announcing that it would be $5.10, so this is higher than indicated.

net revenue of $5.3 billion, pretty much in line with what it expected. and it had anticipated $5.3 billion to $5.35 billion. and net revenue anywhere from $5 billion plus or -$75 million, and analysts looking for $5 billion, looking to sell the stock. and the company announcing a quarterly interim dividend. that is something that the company is saying, i am looking to see what the exact size of that dividend is going to be. julie: i did a word search through the release for the word qualcomm and no finding of that. presumably, they will get questions about where they go from here after the government's rejection of the bid and after the abandonment of it from broadcom, so that will be the key point for the conference call, one would imagine. numbers aside, what is the

future of broadcom. scarlet: i found the dividend, one dollars and five cents a share. -- $1.75 a share. broadcom. from the dividend. for more the market action, we want to bring in binky chadha from deutsche bank. i want to get your reaction to the fact that as julie pointed out, this is the fourth straight day of declines for the s&p 500. have we fallen into a slump? binky: i would not make much out of it. we have kind of a forgotten what normal was, we were spoiled by 15 months of the market going up every day, never hold back. one of our calls for this year was the resumption of what i would call normal pullbacks, about 3%-5% basically every 2-3 months. we began such a pullback and we got amplified temporarily into them back to 10, one of the

sharpest 10% moves. then we came back. rangeare in that 3%-5% going sideways again. so when we start one of these pullbacks, positioning is long and it would argue after 15 months and on our measures, as well as pretty close to seven-year highs, it is going to take a little while, especially when you see the increase in vol and trending vol it is into everybody's risk management it takes a while. it is normal. joe: we were talking earlier with scott minard of guggenheim about the crosswinds in the economy, the stimulus, tax cuts, potentially tightening monetary policy. when you look at the fiscal side and half of it is spending and the other half tax cuts, what will be the ramifications from the tax cuts for the market? because the markets seem to like the news.

binky: sure. i would argue that there are several things that are very unusual about this cycle. we are now in the 10th year of the recovery. labor market by anybody's measure, we are at or past full employment and we are getting, i would argue, most people say stimulus, i would argue four. i think they are well-known. cut in taxes, especially the corporate tax parts, increase in government expenditure, the acceleration of capital spending, and to the list i would actually add the increase in interest rates, the increase in short rates. everybody is well aware that the household sector has 14 chile dollars in debt -- has $14 trillion in debt, and $11 trillion in cash. you talk about the basis points, that is an injection of $110 billion into people's, into

their bank account. and that is counted as income. what we know about u.s. households is they tend to spend about 95% or 97% of that income. there is a lot of stimulus. so you talked about, you brought up the issue of crosswinds, so many people say inflation is going to go up, but i would argue, as i am hawkish, i think you have to keep it sort of in perspective so -- julie: how does that balance work between the benefit that folks will get from a short-term interest rates and higher cost that they presumably will pay? binky: the point i would make is, we are starting to worry about inflation after a long time when we were worrying about the reverse, so inflation began to slow with the march last year in april. i would argue that sort of a manic reaction to a very modest

move down in inflation, now we are having a sort of manic narrative on the other side. if you look at core pce inflation for example, i think it is important to keep in mind inflation 1995, 1996, has been a tight range of 130 basis points, between 1%-one 1.23%. we were in that range last summer. we were talking about inflation. and it is also important to keep in mind that the last 23 years encompasses three business cycles, so unemployment at 10%, 3.8%, it covers increases in the dollar, declines for the dollar, oil prices going from $20 to $160, back down to $30. it is a range. you can ask why, but it is

because inflation expeditions are a low into stable and it is the only driver in the long run. so where are they today? expectations have been in a near were range -- narrower range, they have fallen below the range they have been in for the last 23 years. so yes, i am hawkish on inflation. every indicator points to it moving up. we should not get carried away. in terms of cost and a trade-off, growth is good already, stimulus has not kicked in, the risk is growth will be even better in inflation will normalize as opposed to explode. i would argue in many ways the best part of the cycle has been saved for last. [laughter] julie: thank you. scarlet: thank you so much. binky chadha from deutsche bank. julie: clinic, the senate passed the biggest loosening of financial regulations since a

decade ago, we talk about the impact of the deregulation wave. from new york, this is bloomberg. ♪

mark: i'm mark come to with first word news. several people killed in an undetermined number injured after the collapse of a newly pedestrian bridge at florida international university in miami. you are looking at pictures from the scene. authorities say part of the structure fell onto a highway, crushing at least five of pedestrian bridge at florida international university in miami. vehicles and attracting -- trapping occupants. during an oval office meeting today with the irish prime minister, president trump weighed in on last week's nerve

gas attack on a foreign russian spy and his daughter in the u.k. the president said "it certainly looks like the russians were behind the attack." his comments came after the treasury secretary steven mnuchin announced a sanctions on 19 russians for a legend interference -- alleged interference in the 2016 election. officials today have said that russian hackers are conducting an assault on american infrastructure. the fbi warns that the electric processing plants and air transportation facilities are among the targets of cyberattacks. the announcement was the first of the official confirmations that hackers have taken aim at facilities in which hundreds of hundreds of millions of americans attended basic services. pledges today of $100 million in new funding for the yuan relief agency for palestinians. the action comes after the u.s. slashed eight earlier this year. a nearlyy still faces

$315 million shortfall in 2018. conferenceency donor in rome, the u.s. secretary general called this an important first step for the relief and work institute. >> it would not exist if the services could not be provided, the security would be undermined for the region. it is it is very clear, absolutely essential that the extraordinary anonymity and political support for activities translate itself into cash. into the financial support fully bridge the gap. mark: the u.s. supplied 30% of the budget and was its largest donor. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. the senate passed a

bill trimming back portions of dodd-frank the first time since the financial crisis and our next guest says the consequences could be severe. joining us from washington, mike konczal. what is interesting about the bill is it was bipartisan, so the talking points among republicans and democrats, is that it removes regulatory burden on the community banks and a smaller lenders. how are they misleading the public by stressing that? mike: the biggest beneficiary, probably in net terms, are the medium-sized banks, between $50 billion-200 $50 billion in assets. together they control about a sixth of the u.s. assets. they are huge beneficiaries and they lose regulations that are important for stability, such as enhanced capital of requirements and a stress tests. there's also a lot of consumer deregulation, things that make it harder to enforce laws on subprime lending and so forth.

a couple of loopholes in here as well, that we think will benefit the largest players in terms of how easy it is to write rules going forward. also domestic subsidiaries of a foreign banks. there is a lot across the board that goes way beyond trying to provide relief for community bankers. joe: do you think there could have been a good bill that would provided relief to community bankers, but that did not do the other stuff you think is dangerous? mike: absolutely. dodd-frank works starting at $50 billion of assets with regulations that get bigger the bigger the bank is. and a lot of people think that $50 billion is too low and there has been talk the past couple of years to change and it may be $75 billion, and it still moves to $250 billion, which is impressive. committee banks have gone a lot of relief in alaska years and they are more profitable than people understand. the presence is declining

because of consolidation in the lower and medium-size range, but absolutely you could have given them help without all this other stuff. joe: there has been dismay on the left about the degree to which democrats, whose votes have been needed to pass the bill, have supplied the votes. what is your theory for why they have been willing to do this, vote for this, which in your view is quite a gift to the industry? mike: it is about a third of the democrats, about 17 at a 48, so we are talking about a third. none of the contenders who are rumored for 2020 in the senate voted for it, which is very telling. it is not just the lefties, it is people thinking ahead, they are vocally against the bill. that is important. the senators that voted for this are primarily in states that voted for donald trump, so they are facing reelection and that is a big question mark for them. when you think of powerful banks you think of jpmorgan, with the trillions of dollars, but these

regional banks are powerful and they are often very popular in their local communities. for statewide office, it actually does matter if you can fund raise. so i assume that is part of the incentive package. julie: as you say, the 2020 potential did not support this. that means we could get further changes of the regulation some years down the road. what kind of effective that have on industry when you have this back and forth between regulation and deregulation in short spans of time? scarlet: good question. mike: dodd-frank involved a lot of rule writing and it was revisited several times since 2010, but those were technical fixes and clarifications, pulling back on one or two things where they agreed they went too far. it has been a slow process. some people think it has been to gradual. i would not expect a massive

reregulation passage in 2023. we know that secretary hillary clinton put forth proposals that were much more on the of forstmann side, moving past -- enforcement side, moving past agreements linking to wrongdoing in the corporate sector, maybe enhancement for regulations like shadow banking, and other highly leveraged short-term lending product. so the next agenda will likely be a gradual increase or expansion of what is already happening in the regulatory community. but because this is such a serious bill, you may actually some resurgence of breaking up the banks. scarlet: thank you. mike konczal joining us from washington. bank stocks little changed today. commit, larry kubo wasting no time showing that he is ready to serve president trump. details next. this is bloomberg. ♪

joe: "what'd you miss?" within minutes of being named tough economic adviser, larry kubo was calling for more tax cuts. for more, we want to bring in neil dutta. i have seen a lot of criticism of larry kubo, he is a tv economist, he made a bunch of bad calls, he is not qualified, he even looks like an economist. emails toed him in client, why do think he is a fine pick? neil: i think first it is not as important as people make it out to be. the national economic council was a something created in the early 1990's. i do not think most people can name the last three or four directors of the nec.

but the other thing is it is a process job, it is a project management role, it is not like he will go to the president every other day defending a phd dissertation. it is not like he is a strategic advisor. i think if you're going to criticize donald trump, the weakest argument is to say that he does not have a phd. thato think the fact everyone has made bad calls. it is hysterical that the people criticizing larry kudlow first calls and who thousand seven were also calling for -- for global recession such a donald trump make it the white house. so let he who is not send through the first -- sinned throw the first stone. i think he has a remarkable story, overcoming substance abuse. the guy was a partner at bear stearns in his 30's. a personalis is not

thing, but i would trade the career that he has had for the career that most of us critics will have. joe: you think it is unfair that people say that he is a tv economist, donald trump only knows him for tv and given his pre-cnbc career, he had more chops. neil: i think that he can effectively articulate the message of the administration to the public on matters of the economy. in terms of, is he the best economist in the world, no. is he a phd? no. but as i said, i do not think -- this rule is different, it requires project management. there have been attorneys there, people with a sort of the jd degrees the have done that job. look, i think wall street economists it is a different sort of thing. it is not economic academics, but it counts for something. you are making calls on stocks and interest rates, and people

will not listen to you if you are wrong all the time, so he must of been doing something right when he was running the economic department in bear stearns. joe: you pointed out that everybody makes mistakes. some of his mistakes seem to be of the ideological overriding where when a republican is the president, such as george w. bush, things are awesome and under president obama, the policies will create hyperinflation. does that disturb you that not only did he make mistakes, but they seem to have been motivated by -- neil: i do think -- again, he wouldn't be my first choice, but people need to get a grip on this. look, i think there is partisanship that seeps into his analysis, but at the same time now that he is working in the administration you want somebody who can defend the presidency. joe: bottom line, his experience is a stronger than people say into the job is not what people think it is, it is not like he is the fed chair. neil: i would point out that the

fed chair right now is an attorney with a jd degree, i believe. he does not have a phd. joe: i appreciate the defense. neil: if you're going to criticize someone, it is much harder to get into the seat. joe: ok. thank you. neil: thank you. scarlet: ok. mark crumpton for first word news. mark: then your times citing two people briefed on the matter reports that special counsel robert mueller has subpoenaed the trump organization to turn over documents, including some related to russia. the order is the first known time that the special counsel has demanded documents directly related to president trump's businesses, bringing the investigation closer to the president. and former deputy director of the fbi andrew mccabe has asked the department of justice not to fire him only 72 hours ahead of his scheduled retirement.

he is accused of authorizing the disclosure of sensitive information to a reporter and then lying about it. white house press secretary sarah huckabee sanders says that mccabe showed what she calls troubling behavior and referred to him as an "bad actor." and the russian foreign minister today accused great britain of having motives "that were not honest" for accusing russia of being behind intervu agent attack on a former russian spy and his daughter. he told those in moscow that the u.k. had not answered questions or had conducted an investigation via the proper procedure. he added that moscow expects london to abide by procedures of the international chemical weapons watchdog to investigate. north korea's top diplomat visiting sweden for talks about a possible summit between kim jong-un and president trump. according to a person for mother with the matter, the talks will focus on whether to hold at the summit and a possible trust building measures.

-- has oftenf played a special rule in north korea for the u.s., since it has an embassy there. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. ♪ let's get a recap of the market action. a fourth day of declines the s&p 500 and we had a lot of data today, but none of it really told a story that investors could cling on to. one story told, one of those comments made today, was from larry kudlow the top economic advisor in the white house and he was bullish on the dollar. so that finished higher, but stocks were mixed. julie: he did not saying it about stocks. scarlet: he didn't. breaking news, saudi arabia cutting back on dealings with german companies. this is a mid a diplomatic spat with their top trading partner, this according to people familiar with the matter. this comes after the foreign

minister -- in november. so germany is their top european trading partner and a source of imports worldwide as well. julie: back to business for broadcom after the drama surrounding the takeover of qualcomm dominated the headlines. the soon-to-be u.s. chipmaker reported curtly awnings -- itsey earnings. i-- quarterly earnings. it had pre-announcements, but how did it compare with those and what we get for outlook? >> better than preannouncement, because they were in the middle of the battle for takeover with qualcomm and they took the step of not only guiding to q1, but also for q2. and they both came in better than preannouncement. here we are, we are done with the first quarter of the fiscal year and they are already ahead by $.19 for the full year, so

business is good and one of the diversitythi is where the really comes in handy. q1 was powered by the iphone expanding out, but the wider business comes in stronger, offsetting the wireless business, said have a better outlook for q2, but for a totally different reason. non-hands-on the approach really help to them. joe: qualcomm, that is never going to happen, but people wonder whether it is possible that they will make bids for smaller chip companies in the u.s. is there an area in their product line that they need to fill, and are there other acquisitions that will make sense? >> the interesting part of broadcom is that this is in the long run a gps topline growth company. earnings can grow faster than

sales, but we are still talking the single digits. strategy in the m&a order to make the long growth model work. that said, the biggest holes in their portfolio is the underexposure to industrials and autos. they are in and communication, but industrials and autos are areas where they could look to fill. if you look at that, we have talked about the companies like microchip, analog devices, those have been speculated as potential takeover targets for broadcom, but it is unclear whether they will come into play their, given that they have been earmarked. earmarked as a problem child, if you may. but those are the logical acquisition candidates. scarlet: i like the way that you put that. julie mentioned it will soon be listed in the u.s., any reason that they would say we do not want to be listed in the u.s.,

we will stay in singapore? >> technically they are listed in the u.s., the precursor to broadcom, as well as the company that it bought, they have been all listed in the u.s. singapore,. versus look, they moved out of the u.s. and they went to singapore for tax reasons, now that those reasons have gone away they are coming back in it makes sense, but with the acquisition strategy you have to take a look at the bigger picture. the interesting part is u.s. companies from an acquisition standpoint are still big game. you look at japan, europe, those are less likely acquisition targets and they are more protectionist, and the margins are not as a solid in those areas as they would be in the u.s. those are easier, the u.s. companies might be easier, and maybe quicker fits above the japanese or the european targets. julie: qualcomm is part of the earnings announcements,

announcing a dividend of a dollar $.75 per share -- $1.25 per share, so that is a consolation for investors? >> it is. this is a well oiled machine, a company that can acquire assets quickly and quickly divest businesses that are not core to operations, and harness cash flows for the company. so not surprised they are doing this. joe: big picture, the chip stocks doing incredibly well, very close if not right at all-time highs right now. it has blown people away, the length of the cycle. and it does not seem to be coming down. when you look past the quarterly earnings, are there any other threats to the story? >> you have to look at it like it is a bipolar approach. the one hand,on the semi conductors are the building blocks of american economy, the global economy version 2.0, option a.

in that case you could argue that earnings power remains, albeit expansion is low. the other way you could look at it is the boom bust cycle, and by that token you have to be nervous, particularly in areas of memory, which are commoditized terribly. but thus far, it seems strangely rational. it is scaring people how rational it has been for as long as it has been. scarlet: good stuff. thank you for joining us. coming up, and walmart whistleblower claims the company cheated in its race with amazon, issuing misleading e-commerce results. we will dig into the details, next. this is bloomberg. ♪

scarlet: you are looking at a live shot out of miami-dade county. new pedestrian bridge collapsed onto a highway at a miami area college, crushing five of vehicles, killing several people according to authorities. and people are being loaded onto ambulances, they are conducting search and rescue missions and according to a highway patrol lieutenant there were several fatalities. this is a new bridge that crossed over a seven lane highway that divided the campus from the city of sweetwater and it was just installed on saturday. julie: a lot of fanfare down there in florida. scarlet: we will keep you posted. "what'd you miss?" walmart shares taking a dip today after lawsuit alleged the company issued misleading e-commerce results and fired an executive who complained that they were breaking the law. matthew boyle has been reading the complaint, talk us through the details. >> this was an executive hired

by walmart from amazon in 2014, at a time when walmart was looking to grow the e-commerce business quite aggressively into this executive claims that they got a little bit overaggressive, ignoring internal controls and basically that this guy, he says when he brought the concerns to light he was terminated in early 2017. joe: he says the company misled on e-commerce results, how specifically does he claim, or what specifically does he claim the company did the massage -- to mislead? >> is that it was a disconnect between what they were telling the investors about the market side, where third-party vendors sell their own goods and walmart gets a commission, amazon does that as well. that is why they hired the sky. among the allegations, he says walmart mischaracterized or mislabeled the product category of some items, meaning that they

would say it is a laptop, but it was a different kind of product category and it resulted in a different level of commission being paid. whether it was a design flaw or system snafu, he says walmart ignored it. another issue was product returns totaling $7 million. i know you say $7 million, this is a $500 billion company, but this guy says that was another thing ignored, they did not properly process the returns and he says that he brought the issues to light. he says he was ignored and terminated in 2017, even after he brought it to the attention of the ethics department. scarlet: when we spoke with you earlier, you said we had not heard from walmart in response to this, is that still the case? >> they have not replied with any kind of statement. i believe this could have taken them by surprise in bentonville, certainly, the corporate headquarters. all of the allegations happening in the .com business in

california, so we do not know what they are saying about this. joe: when the news hit, we saw the stock take a slide and it ended flat, so not a huge impact on the end, but what is the investor anxiety over this tell us, if anything, about how people feel about walmart? >> a lot of jitters after the fourth quarter. they had reported in the holiday quarter, a slowdown in the e-commerce growth and also a pretty bad margin as well, so people are wondering if the growth is coming out to much of a cost to walmart and it has people on edge. scarlet: matthew boyle, bringing us the walmart story. "what'd you miss?" speaking of amazon, it claims another retail victim. toys r us trying to turn things around after it filed "what'd you miss?" bankruptcy, but now it will close all of its stores in the u.s. julie: announcing debt payments adding to the competition was,

causing it to fold. now,ing us -- with us sarah. i want to talk to you about the retail side of the equation, then we look at two tara on the debt side. when you look at toys r us, we saw them emphasizing the expense about going to the store. you could argue that other chains, bass pro shops, they have found success in doing that, it is almost an amusement park atmosphere in some of the stores, why wasn't that enough for thoys r us? >> i don't think they went far enough with it. they were doing diapering classes in their stores, having craft making classes, so that brings an element of experience, but they did not redesign the stores to be more inviting or exciting. when charles lazarus started the brand in 1957, his idea was it

to be a toy supermarket, which was really novel at the time, but 60 years later it is not so novel anymore in the shopping landscape has changed and they could not do enough to keep up with it. scarlet: they recognized e-commerce was going to be something they needed help with and they teamed up with amazon, as you wrote about, but the agreement that i stuck with amazon was not to their benefit and it ended up being shortsighted. itk us through whaere fell apart. >> it was a fateful day in 2000 where they decided to launch an e-commerce store with amazon and the idea it was that they would select the merchandise and amazon would provide the film it and customer service -- fulfillment and customer service. it ended with lawsuits. us didult was toys r not need to invest in the networks for so long that they were just so behind the curve it was hard to play catch up later. joe: obviously, part of the

story is death by amazon or death by changing trends. the other thing people talk about is when they filed for bankruptcy, they were just saddled with an extraordinary amount of debt going private. is that the cause, or did that accelerate what was inevitable? sarah: i think both. obviously, online shopping and amazon and the fact kids are playing more with ipad, that didn't hurt them, but when you look at the financial statements it is a different picture then maybe we have been seeing. tara: that toys "r" us could have lasted for more years, they had $11 billion in annual sales, so they are generating money, but the problem is so much of the prophet was going toward debt payment tied to what happened in 2005. you saw the balance sheet immediately take the hit and is held operating costs, something like 97% of the operating profit was going toward expense.

so when we talk about this, we cannot lose the point that this was hastened by debt and it ties back to a private equity led deal and it definitely brought about the downfall a lot quicker than maybe we would've seen, because $11 billion in sales, tens of thousands of employees, it is important to think about what was the root cause of this. julie: when you talk about it in those terms, it seems inevitable. of course this would happen. was there a scenario in which the lbo could've happened and this would not have been the result? was it the fact that it happened at all? tara: i would assume in 2005 when private equity firms were looking at this they thought things would be great, and for many years they could grow the brand or keep it running the way that it was. sales did grow and they did not fall off much after the recession, which is fascinating. sales as of october where back to where they were when the lbo

happened, so i think what happened was the combination of the competition from amazon, and even back then when the deal was announced people were worried about walmart driving the prices down, so they saw this coming and they baked in optimistic projections, which tends to be the case with m&a, especially those deals where you are relying on some much debt. joe:, so substantial revenue generator are you surprised, are you surprised it ended the way that they did, that they could not find a way to restructure the debt and keep the business going? sarah: i thought once they made the announcement in january that they would close 182 stores, i thought that would be enough, but apparently it wasn't and now it becomes a game of who can take the share. target, theyon, will be very hard to pick up this $11 billion in sales that is left up for grabs. scarlet: any benefit that going

private gave toys "r" us? back, ithink looking is a different story. maybe they thought it would make sense to get out of the public work on fighting walmart behind the scenes and it did not play out. i think you could not see it coming. the numbers did not work and it was a reason that they cannot reinvest in their stores and e-commerce at the end of the day. scarlet: we no longer see leveraged buyout's the size of this, but that has become a very important way for deals to get done, usually as a way for payment. what does that tell us about how the next cycle will shake out? tara: absolutely, we do not see these likely used to. but we are looking at micro mergers, time warner going to court on monday with a deal, including debt. and there are many more deals where we see debt with companies

that may be were more cautious when it came to borrowing, and it shows the environment, these companies have a lot of pressure to grow and they are running out of options and they are turning to the debt market to do deals and they are very pricey. it will be interesting time to cover these stories. thank you. whipg up, has majority steve scalise discusses making the tax cuts permanent. this is bloomberg. ♪

scarlet: "what'd you miss?" congressional republicans have bet that tax cuts will pay off with voters in november, does the gop lost in the pennsylvania special action cast doubt on

that thinking? steve scalise of louisiana spoke with shery ahn and david westin about the earlier on bloomberg markets, balance of power. rep. scalise: in the case of that race, it was an open seat and for a lot of our incumbents in swing districts they did vote to cut taxes for families, so families are seeing the benefit. but they are familiar with the work being done by those incumbent members of congress, representing their districts well and getting around and getting to know people, so there is an important factor that those members in the swing states have done a great job to represent their districts and all politics are local, so this is a blueprint, it is a wake-up call if you are not out there connecting with voters, not raising money, you will have a tough race. most of our members in the swing states are ahead of the curve and are taking care of that. and having a message that they are running on in terms of what we have done, to put more money in the pockets of the families and democrats have said, they

said if they get the house back, if nancy pelosi is the speaker can, they will raise individual taxes and corporate taxes will be raised. that is not what we want to do with turning back the clock. >> the president has been talking about phase 2 of the tax cuts that would make the individual tax cuts permanent. if that was to happen, is that something the republicans would try to do with democratic support, or with the re-conciliation process again? rep. scalise: i would like to see us bring that forward to make those tax cuts permanent. in some cases, the senate rules prevented us from doing that, but let's have a vote on it. every single democrat voted against cutting taxes, so i'm not sure they would be on this, it would be interesting because they railed against us cutting the taxes. families love the fact they have more money in their pockets, that is one of the old battles between big government liberals who want to take your money and tell you what to do and you have to beg to get crumbs, as nancy

pelosi would say, where the families do a better job with money in their pocket and growing the economy. businesses are giving bonuses and pay raises to their workers and that is what economic growth is about and we are finally seeing it, why would we want to turn the clock back? scalise that was steve on bloomberg earlier today. time for the bloomberg business flash from a look at the stories right now. michael spencer's group has confirmed -- see ante about a potential acquisition. according to people familiar with the matter, the london-based company could also attract interest from other exchange operators. next run's markets is known for selling and trading assets and in is attractive to the board which owns the chicago mercantile exchange. blackberry endorsing the ceo turnaround plan, it has awarded a new contract with $128 million for five years. the pay package includes 10

million stock grants, through november of 2023. library has exited the phone business since chen took over. he transformed the company into more of a software company. steve wynn and his wife are ending their fight over when resort shares. the couple, which control 21% of the company, say that they no longer consider an agreement filed in 2010 to be valid. that frees them to sell their shares in the casino chain after a war for control the stocks. aine's accusation led to his downfall and recognition. that is your bloomberg business flash update. julie: we wanted to bring you an update on the pedestrian bridge collapse in florida. a press conference with the details is ongoing. the bridge was a new bridge

built across a highway, just unveiled on saturday and it collapsed at a miami area college, florida international university. they crushed 8 vehicles underneath the massive slabs, killing multiple people, but we do not yet have the details on exactly how many fatalities related to this. we know that 8 people were taken to local hospitals. this is bloomberg. ♪

>> coming up, don't miss this, e university of michigan sentiment index comes out omorrow at 10:00 a.m. eastern. >> then more knick u.s. housing out.s be >> then angela america ell holds talks with french president. that does it for us. up next.g technology " >> have a great evening. this is bloomberg.

>> you're watching "bloomberg technology ." here's a check of first word news. people have been killed and an undetermined number following the collapse

a newspaper installed pedestrian bridge in miami. onto a he bridge fell highway, crushing vehicles and occupants.ir mummer subpoenaed the trump organization to turn over including some related to russia. it's the first known time that demanded counsel documents directly related to businesses. former f.b.i. director andrew asked the department of justice not to ahead of ust 72 hours his scheduled retirement. giving sense active information to a reporter it.then lying about the white was at house. the president says he homes to meet with him next year.