>> it is time now for the bloomberg business flash. navistar could be right for a volkswagen style takeover. automaker could consider boosting its a 17% stake. volkswagen has outlined a price tag between three and $4 billion , but did not say if it was in

euro. electric fell the most on the dow earlier today after sachs noticed a cut to its output is almost a certainty. there was an email sent to shareholders on friday it did itsexpect any impact to 2018 forecast. general electric has lost billions of dollars in market value since the beginning of last year. ck could be pushed ahead in the race to dominate the market. datacompanies released after testing their products on newly diagnosed patients. there

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>> the s&p now it the highest in almost a month. investors are not looking past it as well. let's talk about what is going on within the equity markets. america has reported results. . we also have health-care names. it was on is reportedly shopping its plan to pursue drug distribution, at least for now. general electric, coming down,

falling almost 1.2%. says there is a profit forecast. there is a first-quarter report coming out later this week. joe: let's take a look at the bond market. not a whole lot of action there. constitutes more flattening, which is on everyone's mind these days. the curve gets flatter and flatter. there is a bit of breaking news. china is holding -- we don't know what impact trade would have. we don't do anything about the dumping of treasuries or anything like that.

china is in focus. no one was named a currency manipulator by the treasury on friday. but the president tweeted over -- the u.s. keeps raising interest rates. here is the one-year chart. their,e one-year chart back-and-forth. receipt additional sanctions coming. that has been a contributing factor. interesting tweets from the president on that point curated it has been surging by over $1000. it is the biggest one-day volume of ever. saying itof people

image mored and the constructive than a has been in oil taking ad >> little bit of a breather. this might be one source of evidence down 1.5%. and iot really moving want to take a look at aluminum. including its highest level in about five years. those are today's market point as we went them, let's bring in the board dashboard intelligence director. netflix had a blockbuster fourth

quarter that gave investors a sense it is not strong down. over 8 million subscribers and that drove a huge surge to the stocks. this continues to be a momentum stock. >> is this one of the deals where they put up subscriber numbers? >> just, potentially. management has tried to get people to look at the profitability of this company and the gross markets are improving, but again that story

is what funds revenue growth and is all the expenditure programs that are making. how concern do we need to be about the sheer quantity of money they are spending? we have quite an interesting chart in the bloomberg curated -- the mercury -- in the bloomberg curated >> -- the bloomberg. they're going to the debt market toated it is very perceptive netflix. that is what i think the market is trading off.

>> it is an international expansion. where they gaining traction and where they looking to improve? >> they are in every country in the planet with the notable exception of china. when you take a look at the u.k. , the growth started about two or three years ago. found that they are still getting great growth in those markets as well, even though they are players in the market. it was basically just netflix. there are local competitors there. they are putting up subscriber growth numbers. of excitementot

about indian and brilliant -- brazilian opportunities as well. >> it is driven by wireless internet access. >> there is something on bloomberg saying netflix released its first-quarter results, but when you click on the links, there is a page that is -- that says there is nothing here, so we will continue to wait. is the release out yet? >> here ago. >> it says it is released and you click on the link. we have numbers.

>> for the first quarter, netflix streaming at 4.1 million, so much better than anticipated. really continuing on that blockbuster fourth quarter. it really raise expectations for this time around. isn't the first quarter supposed to be slower for a company like netflix? >> it is heard they added seven point 4 million. 4ur beer, they added about million over the first quarter. >> the optimism we can see there

as well. >> i think the skeptics got another slap in the face. thesee the reaction curated short story has been terrible for years. netflix -- among >> there is a lot of variability to its members. they showed some outperformance and i think that is a function of the international markets. they feel less comfortable for directing international growth, so they tend to the conservative there. again, a strong subscriber had a solidrs which bead as well. >> if you want to be skeptics, workers you poke holes? might be competition.

we've not really seen that many -- hulu has never been a viable competitor. disney's new product going direct to consumers. could disney be a viable competitor #we haven't seen anybody really challenge netflix . what about promoting their content? outdoor advertising. ryan murphy the executive reduce it. to that, they are pulling some key figures. >> they are spending a

tremendous amount in content and it is not just throwing money at hollywood, they are hiring proven show runners to create and run the shows. they have hired the town away. that will drive original programming going forward. -- yvonne -- termst are they doing in -- we are seeing that if you're , this isood these days the golden era. everybody is employed. showss to 500 scripted across television, so everybody is upping their game to compete against netflix and amazon prime.

thattional cable networks would be content running reruns, they cannot do that. they have to create original programming. we're --o of fx say were at pt the year ago. quest the subscription models are really driving the, even though the advertising business is tough. original programming. >> is netflix ever going to add a new product will do something different because it is very straightforward? new it ever evolve into category? netflixig question for is a one of the going to get into sports? gethat are they going to into sports?

point -- that might be a challenge to their business model. >> they do plenty of sports dramas. >> now that we have gone through , -- presidents trump's decision to launch airstrikes in syria is being .riticized by some 100 missiles shot at and they did not sure one down. ,ou heard they shot 40 down then i called, every single one

hit its target. >> congress could take his first big step in years for authorizing military action in the middle east. democratic senator tim kaine called the presence decision illegal. he and bob corker could introduce a draft of a that would aim to define military goals and impose limits on actions. we don't need a process for the

sake of a process. of because of goodwill, but the reality that without a political negotiation, this cycle destruction will continue. meetingwant to use the next week following the western airstrikes. political transition will begin a day earlier than expected. thegovernment has moved up national assembly to wednesday that a thursday. raul castro took over from his

mother -- brother in 2008. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. >> earnings season underway. the managingw, director. great to have you. courts have been talking about the optimism going into earnings season. your equally hopeful we have seen the underpinning of the market. >> i think earnings will drop the market overall, partially because the tax cut and a strong underlying and earnings.

earnings toill the get to where we were. deeply that is not true? about 18 last year and now we are about 16.5. -- i think the numbers will turn out better than expected. we do need to look at the backdrop as well. the president says he will be nominating richard claro, a very he istional pick, in fact a known quantity. from an investment point of view, what does that nomination

signal to you? from an easyoing monetary policy, but we don't know what it involves. , -- it is going to be tricky. there is no playbook. fors there a playbook dealing with trade between the u.s. and china? not a book, so there will be need for creativity, but i have a lot of confidence in the picks by the president. lot besides the

fundamentals in the trade software china. what is noise in what is -- what is noise and what is important? >> i think the china story has legs and think part of that is premium.here is a risk i also think there is a growing consensus among china experts that is important for the west to take a tougher stance. is a big thing here having to do with the technology transfer and unfair rules they impose? >> that is correct or it i think , thenext and want to china

consensus was china would become more like the west, a bit more open and emphatic. clearly aside to set along her own path. things that have to recognize china will continue down the path. >> this is a long-term issue. >> this is an issue that is not going to go away and it will be not just aeal with month from now. also, one of these things that will come in and out. weeks ithe last couple

makes it seem. is to allow the country to open up. >> it can ultimately being a better relationship. >> i think that is the hope. see that china be china and have it be like the red sox versus the yankees. >> and kiang, thank you to my rector.

republicans have sold the benefits of the tax law. >> if we cannot sell this to the american people, then we are to go to another line of work. >> you looked into it and joins us now. how big a deal by the tax cuts for voters? sincengs have improved december when the public approval of the legislation was underwater, but the big one signs for republicans is voters are not motivated by these much lower than other

issues like health care and guns and integration. that not having the effect republicans want. >> what are republican incumbents running on? >> they're running on the middle class tax relief of the bill. have tried not to appear as the -- that is what republicans are highlighted. of course, democrats are saying operations got a much larger break. neither of those things are particularly popular. >> there is a paragraph where you say when the resident was calledthe speech, he

them born remarks. , stop thee to do that boring tax talk? >> he is a more traditional candidate. he understood that immigration and trade in issues like that were more salient to republican voters. it and itlly opposes doesn't motivate them. out, it is more than just a base. taxalking about the overhaul, isn't it -- a majority rather than the base?

andhave the border wall immigration. 35% totalking about the 40% of people who identify as republicans and leaning -- republican leaning. again, this is an issue where there are very few republicans against it, but it is not something that really motivates them. party leaders saw this as an issue of persuasion. that is one warning sign i think

republicans are leaning on. >> the democrats message is this is another piece and repeal of mandate.idual that is an issue that many voters are paying attention to, will win it on the insurers. that is a big issue for democrats. >> thank you for that. up, how the economics professor proved they will be

discussing from new york.

mark: sean hannity of fox news said on his radio show today that michael cohen, president trump's personal attorney, " never represented me in any matter." cohen, "i may have handed $10 for attorney privilege." this after cohen secretly did legal work for delayy, after trying to prosecutors from examining records and electronic devices seized on the grounds that many of them are protected by a attorney-client privilege. the speaker of russian state

says next month, the russians will review a bill on counter sanctions against the united states. he told reporters the proposed bill had been sent to president vladimir putin and other russian officials. this comes after ambassador nikki haley indicated new economic sanctions that will be announced against russia were enabling the government of the syrian leader in its use of chemical weapons. british prime minister theresa may said about her decision to join the u.s. and france on syrian target. some lawmakers expressed concern that may did not talk to parliament. the decision was made on thursday after the cabinet decided on the advice given. >> we are griped it was not just morally right, but legally right to take military action with our closest allies to alleviate

further humanitarian suffering. it is not about intervening in a civil war and it was not about regime change. mark: prime minister may set consulting lawmakers would have been impractical both because parliament was on a spring break until today and because some of the intelligence behind the decision was classified. house majority whip steve scalise is undergoing a planned follow-up surgery 10 months after he was badly wounded by a gunman who fired at a republican baseball practice. scalise told colleagues he will return to the capital as soon as his doctors give him the green light. doctors who treated him after the june 2017 shooting say he nearly died. onbal news 24 hours a day air and on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.

scarlet: let's get a recap of today's market action. earnings season pushing stocks higher. s&p 500 closing at almost -- the nasdaq closingscarlet: 7/10. lots of different pieces of news. among them was the fact amazon shelf a plan aboutug selling prescription drugs. netflix beat analyst estimates. joe: a libertarian professor actually made the case that maybe regulations are not that bad? alex tabarrok began studying the correlation between that are regulations and business growth, he was sure the data would prove studytions -- his actually concluded something different. he joins us now from washington. thank you very much, professor. tell us about how you went down this research in the first place. what did you set out to show? alex: i did not set out to show

anything, but what i set out to study was there was a long-term decline in dynamism in the united states, the number of new startups has been going down. the job creation rate has been going down. fewer people are moving about from job to job. what we want to do was ask is regulation a cause of this? it seems a plausible theory. after dicing and chopping up the data in a whole bunch of different ways, we concluded regulation is not a cause of this decline in dynamism. joe: let's check about -- talk about methodology because attempting to quantify regulation in the economy strikes me as a difficult thing. i guess you could do it by number of lines, but there is also qualitative elements. eveno you go about measuring the amounts of regulations in the economy in any given moment?

alex: you are right. what people have done in the past is look at the regulation. what we did was using a database, we looked at the code of federal regulations and we broke it intowhat we did was us. in each chunk, we looked at the number of restrictive words. words like prohibited, must, shall. then, we counted up the number words and using a machine learning words and usina machine learning technique, associated each conch of the code of federal regulations with an industry. what that gives you is a measure of every year, how much a regulation in terms of these words and the amount of text per industry there is. joe: so, you said you did not set out to show anything, but what were you expecting to have

found? alex: that is fair. it is a very plausible theory -- this is a theory that was put forward in the rise and decline of nations. there is no single regulation that is necessarily bad, but if you throw one double -- pebble into the stream, no problem. but you keep throwing pebbles into the stream and eventually you will dam it up. the idea was it was the accumulation of regulation. this denny sclerosis that is picking up in plaque of the arteries that overtime that is what slowed things down. what we found is that, unfortunately in a way, both dynamism is down and highly regulated industries and it is also down in lightly regulated industries. i say unfortunate because that means we don't have an easy solution. joe: is there a new area -- i

dynamism is blog, an important topic. an important topic at george mason. given new areas you want to explode now that you have shown the volume of regulation is not particular fruitful? alex: i do think we have to look more broadly. one possible area to think about is another word for dynamism -- it's churn. churn you actually want less of. version is this decline in dynamism is information-technology has enabled firms, perhaps, to be more nimble, more quick. instead of firms going out of business, you have these firms which are now older, but they are not quite so aged. they are able to respond using information, technology more quickly. therefore, in terms of creative

destruction, we get just as much creative for less destruction. that is the optimistic take. in other words, it is in other words, it is possible that the economy is dynamic, but that the old statistics that we used to measure that are not really capturing what is going on? it is possible. it used to be perhaps that you required unemployment, more unemployment, more people to switch jobs enable to get these dynamism. now we maybe require less. that is just the optimistic view. it is true that during the same it is possible. period of time, we know productivity growth has slowed, gdp growth has slowed. it could be that these two things are unrelated, but it might also be that it is different in different industries as well. joe: go back to the question of regulation. your study shows it is hard to show any connection between the amount of regulation and the decline in dynamism.

is there another argument -- how should you then rethink about the cost and benefits of regulations goingregulations gof this sort of standard story does not really work? alex: this certainly does not mean we necessarily want more regulation. this means that this particular problem, this dynamism problem, we should look elsewhere. there could be other costs to regulation. if you have a tax, for example, that is going to make the industry smaller but it does not is not necessarily aod of tax good is going to be less dynamic. the thing even if it does not have a big effect on dynamism. the same thing could be true here as well. joe: i know it is not part of your study, but since it is such in the news these days, immigration, i'm curious what you think about the relationship and measuresration of dynamism in the economy. alex: more immigration is

actually one of the few things which we are pretty sure will increase dynamism for two reasons. first, entrepreneurs, immigrants tend to be much more entrepreneurial than do citizens. the reason for that is many immigrants are coming from societies in which just to get by, you have to start your own business. in the united states, we have the luxury of working for big, solid firms which are going to be around year after year. in many other parts of the world, if you don't start your own firm, you are in trouble. when these immigrants come to the united states, starting a firm for them is not something new. it has been something they are familiar with. the other benefit of immigration is that it just increases demand. it means we have more workers, we have more -- you need more firms to serve those workers. just having more entrepreneurial people and having more demand,

that itself could be a big cause of increasing dynamism. joe: great stuff, really interesting research. alex tabarrok, professor at george mason university. scarlet: comingalex up, shares netflix surge, especially when it comes to i dish and of subscribers -- the addition of subscribers. we have more. this is bloomberg. ♪

scarlet: shares of netflix are surging on better than expected som subscriber growth. here is lucas shaw. we have gone through these subscriber addition numbers and how they beat analyst estimates

following on the heels of a very successful fourth-quarter. as you look through the release, what else have you picked up that is worthy of mention? lucas: one of the big things is the pricing power that netflix now has. if you remember seven years ago, netflix got in a lot of trouble when it split its dvd business and streaming business which amounted to a price increase for its customers. it was the last time netflix faced real problems, the stock price plummeted, some subscribers canceled. it has been growth since then. there was some concern of a price increase a while ago. the past year, they rolled out price increases all over the world in the most important territories. it not only slow their growth but they just posted their best second quarter ever. julia: how are they doing this? they arhave the average of scrubber growth growing by 14%. surely, you have to assume at

some point that will narrow, the ability to raise prices or raise the average selling price is curtailed. lucas: i don't think we will see netflix raise the price to $20 a month anytime soon, but they will institute these gradual price increases. if you think as netflix as a substitute for cable -- they are making more shows than you would get from 10 cable channels, it is still a great deal. that is not true in some of the international territories where a lot of the u.s. is tv. in the u.s., the u.k. -- in brazil, it is much cheaper than pay tv. scarlet: that is a really good point. i want to talk about the free cash flow because netflix forecast negative cash flow in 2018 to $4 billion and says it will be negative for several more years. they are not going to pull back on spending on original content because that is how they get the subscriber growth.

are we looking at a company that will be permanently cash flow negative? lucas: for the foreseeable future. i don't think you could say permanently because at some point the company would like to be generating cash. for now, they are still in investment mode because they have 125 million subscribers globally. their goal is at least 400 million which means they have a lot of money to spend on programming. the streaming content obligations, that total only went up a couple hundred million dollars this year. maybe we are seeing the pace of growth slowing but i don't think we will see positive cash flow from netflix for at least three years, probably five. julia: thank you, lucas shaw. great to have you on the show. coming up, a new cop in town. robert mercer has found another way to keep the conceal and carry perk that came with his volunteer police badge. all the details on this next. this is bloomberg.

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julia: robert mercer traded in his late police badge for a new one. the hedge fund tycoon is a volunteer member of the yuma county, colorado police force after he spent nearly six years as a volunteer policeman in the small town with a population of seemingly reap the benefits of a conceal and carry perk that comes along with the title. is bloomberg's zack minus. . the story continues. robert mercer give up his badge in new mexico.

what is going on in yuma county, colorado? >> we reported a while ago that merce had this volunteer police badge in this tiny town in new mexico. now, it turns out he is not without a badge now that he gave up his new mexico that. it turns out he found his county in colorado, a rural county bordering nebraska and kansas with 10,000 people, and the sheriff has made merer and some of his associates members of the sheriff's office. julia: what is involved in being a volunteer police officer? talk to me about influences, the ties to the county --what is go, you have to qualify for the badge. zach: we have not found much what qualifications or training the sheriff requires, but we do know that robert mercer through a foundation bought at $65,000. dodge ram pickup truck for

the sheriff's use and tasers. julia: the foundation could be willing to help the small police community and support them with these tools of the job, but it does seemingly look like he has effectively bought a badge in yuma county. is that the case? zach: the transactions happen at a similar time frame. he made the contributions around the same time he joined the department. the sheriff insist this is not a trade, but he will not talk about the specifics on why he felt it was important to let mr. mercer become a volunteer. julia: talk to me what happened in like arthur, new mexico since your story broke. zach: a very small town. after our original story, they actually shut down the whole of police department. it was essentially all volunteers. it is a very small town. they essentially decided it was not worth the trouble.

they were shutting the whole thing down. julia: talk to me about some of the other volunteers operating, as you emphasizing, a very tiny town of 433 people. very high profile individuals. zach: they are all from around the country. the king of instagram was among the volunteer officers. a whole bunch of guys that were bodyguards for the koch brothers all caps these badges. you can imagine being a professional bodyguard, it would be handy to be able to carry your weapon in all 50 states of matter where you have to travel. julia: how many badges can one own? you can volunteer as many police departments as you choose if you have the time? zach: right, but you only need one. if you are law enforcement officer, you have rights that no one else has. if you have one badge, that can be very valuable if you want to carry a gun anywhere. julia: are you continuing to dig around to see what other potential counties you can find

now that have high profile names? how did you find this information out? there was an email chain. zach: originally, we found out about mercer and wrote a story about him. since then, this whole department in new mexico turns out to be a clearinghouse for all of these people around the country who want to these perks, from san diego to virginia beach. since then, we have gone there emails and phone numbers. we have been able to identify dozens and dozens of people. we think there were ultimately hundreds and hundreds who got a badge at some point during the 11 years this department was in operation. julia: what is yuma county saying about this police department? any potential of swiping back some of the badges? zach: i spoke with the sheriff in yuma county and he was very clear he did not want to talk about any individual officers. he was afraid. he said there were safety

reasons because some of the officers -- he would not say if robert mercer were among them -- working undercover toreasons bee officers infiltrate and mexican drug cartels. if -- if mr. mercer was undercover, he did not want to blow his cover. he when not talk about any individual officers. julia: sorry, i cannot help but find that slightly amusing. thank you very much. amazing work. i'm laughing but it is fantastic work. scarlet: it is time for the bloomberg business flash. bank of america posted better-than-expected first-quarter results. the number two biggest bank cut expenses for 60% of revenue for the first quarter. the ceo expects further growth the rest of the year. >> as we look out, we expect a constructive economy and our experts have it continuing to for 2018 2.9% gdp which would be a nice pickup. blocked washington has

chinese telecom manufacturer from exporting sensitive technology from the u.s. the commerce department said they made false statements last year when it failed to disclose it paid full bonuses for employees which engaged in illegal conduct. the firm agreed to plead guilty and pay a fine for violating u.s. laws against sales of american technology. says it plans to award a single contract for multiyear services which makes no sense. bloomberg reported that she criticized the bidding process at a private dinner with president trump. she says the process seems designed to benefit amazon. a final request for proposals which outlines a tenure contract is a scheduled to be awarded by the end of september. that is your business flash

update. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪ this is bloomberg. ♪ joe:

scarlet: u.s. stocks rising as we get into the heart of earnings season and netflix delivered. coming up, china gdp out tonight at 10 p.m. eastern. joe: i will be looking at economic data of u.s. building.

bank: don't miss the earnings continues. bank of america today. we have goldman sachs earnings out tomorrow before the bell. scarlet: that does it for what you miss. julia: bloomberg technology is next. joe:bank of america have a good. this is bloomberg. ♪

mark: i'm mark crumpton. you are watching bloomberg technology. president trump reportedly stopped a plan to impose additional sanctions on russia for its role in this syria attack. it walks back in announcement

this weekend by u.s. ambassador nikki haley which was heavily criticized by the kremlin. the washington post reports sanctions were under consideration but the president did not give final authorization. the speaker of russia's state says next month, lawmakers will review a bill on conversations against the u.s. he told reporters the proposed bill was already sent to president vladimir putin and other russian officials. sean hannity says michael cohen, president trump's personal attorney never represented me in any manner. his comments to his radio wasence came after cohen forced to reveal he secretly had done legal work for the fox news anchor. updatingcould soon be authorization for u.s. military action in the middle east after president trump ordered those airstrikes against syria without congressional approval. a draft to define military goals in the