explosive decompression about 30,008. early reports that cfm international recommended that carriers inspect a limited population of older families that didn't prove the one that the best way but a draft recommendation circulated this for the input and would have expanded the list enough to include the engine. iran's representative to the united nations told the yuan nuclear nonproliferation conference in vienna that iran's landmark nuclear deal will not be negotiated or altered. were told that the u.s. will be responsible for any consequences of what he calls its reckless policies against the joint company and to plan of action. sense andlicy unambiguous message to others at partys. is not a reliable agreement andal

that it cannot be trusted. iranianssaid that its start a nuclear program, they will have bigger programs than it ever had before. this is in the 2017 killing of internationally recognized generalist javier valadez. they said the suspect identified was arrested on monday night in the border city of tijuana. the motor was presented to be limited to his investigator works on drug trafficking. tusk says the road to membership in albania and macedonia will be tough. he made his remarks as he started a weeklong tour. all 28 eu member states must

agree unanimously for any nation to become a member. enough progress had been made for albania and macedonia ascension talks to begin. day,, itws, 24 hours a is over 120 countries. i am mark crumpton, this is bloomberg. >> let's pick up the error with readiness, we have the dow down. i looked his major markets of the session loads, they were 3% early on. this was following caterpillars conference call. he said is as good as it gets. quickly have a look at what is going on as far as the tech sectors concerned.

again, the epicenter is not just a tech stock. we did see a 3% rate for the u.s. tenure. let's get some context here, bloomberg intelligence chief, the us equity strategist joins us. afternoon, focused her, right now, the earnings seem to be coming to and investors are saying we don't. >> this has been a concern of investors for the last several months. going into next year you will face a pretty big earnings clip. be 10% growth after

20% growth this year. beyond that it looks like the first quarter maybe the high mark. we have that decelerating earnings growth landscape to contend with. frankly, i think all this is the lack of upward momentum and underlined for earnings. a lot of this is tax related, it is not topline revenue related. we are not seeing the underlying data. we are getting impatient. >> did we learn something new in the earnings? what you described could have been intuitive. you wrote about it before. some of these issues we are seeing with earnings, the headwinds, the lack of core strength. today? learn anything >> they directly highlighted the fact that the first quarter earnings were the high water mark. it brought to the forefront when most investors are concerned about, it is the high watermark.

there is some weakness across the earnings trend that was unexpected. he talked about the semiconductor index being somewhat weak. that has been going on for a web. it was exacerbated over the last two days. last week, the financial sector was much stronger than expected. didn't confront if the outlook was going to get better. they need to get better in the future. not that they were great in the first quarter. >> we were all watching the 3% yield. the stoxx sort of shrugged at wherend yet the earnings the expectations were so high that are not proven to be at least the markets downfall. >> when you look at earnings, it is hard to say that earnings have been disappointing. that investor reaction seems to be the really big letdown. , the 10% real young

which has been a very big bellwether for stocks, that has nearly closed at its highs of the year. that is a clear negative and japan to connect the dots here, we're seeing a lot of tech companies ramp up investment. that is part of how they can write at all for appreciation this year. and you have this high watermark for growth. is -- not >>stment this is the kind of spending anticipated. >> i would say no, this is another source of frustration for the equity investor coming into this year. the argument was are we going to see cap ask? not just none of these things

are really fun. >> it is a little want to plan for this. big andxtraordinary comprehensive and companies are still planning a theory out where they're going to go. not to mention, in the first letter, there was uncertainty with respect to trade policy. terms of corporate planning, i think there is a lucrative hesitancy on the part of companies to really part of this new cash. it has been really difficult to plan considering how much has changed with the tax reform. it was relatively rapid and somewhat on expected this out. >> we have a chart here that you brought us showing the last few months of the rocks -- relationship between the s&p 500 and the implied probability of the hikes. they track each other going to the reasons. there is deftly a bit of separation of late. quiteice continue to be

high. what is about the environment that is not present able to reassess this? is how it clashes and we are we doing the equity market. we have a high watermark for growth. the same time, your fiscal stimulus coming through the pipeline that is expected to pick up the responsiveness of the implied hiking to sell off equities. it has become virtually no. only the upside matters. it seems like investors are in this place where we go from peak growth to know growth and a thesebut that is not what are present at all. >> the tax overhaul is going to and thent beneficiary we talk about the tech sector in particular. incorporates what we had in particular from asia and the

supply chain that feeds into. he was saying we are in full panic mode at this stage. you made this point as far as rates are concerned. we are not seeing this translate into nervousness just by was underperforming versus performing. >> i would use this as an exploratory factor. thefed wants to know what bond market thanks. the stock market is a schizophrenic animal. we tend to overestimate and then way underestimate. i'll think we are necessarily extremely bearish in every market. we see no momentum. we haven't even seen a 2% day for quite some time. this is really nothing in the grass game of volatility. i wouldn't adjust we are overly bearish but we are certainly coming down from our high, high, high levels of optimism that

were reached back in january. >> the chief u.s. equity -- that he's a much for that. , it is rallytcoin this month. regulators may be gearing up to construct the craze. joe is going to talk about it. this is bloomberg. ♪

♪ joe: what did you miss? eric schneiderman has sent letters to 13 cryptocurrency exchanges including coinbase and gemini about how they protect the customer assets. i want to bring in michael. thank you for joining us. that youall, i know

guys are trying to differential yourselves by being decentralized. the new york what attorney general is focusing on, it was to think they were inquired about, it was custody and transparency. these are the changes are essentially holding your funds and transparency because you don't really know what is happening behind the scenes of any of the other exchanges. essentially operating as unregulated bank accounts. joe: you obviously don't have to do with the issue of unregulated bank accounts. you're not holding anything that is money in the traditional sense. some of the things that people are concerned about with the currency exchanges are trades, other things where people try to just drop the price. do you have mechanisms in place to what those things? that we hado think

those in place. i think regulators will look at their swap and be very happy with it. and be very happy with it. this is where a lot of people come in and buy something and they sell it. that happens on an order book. that is not possible on airswap. power ofveraging the blockchain and we are not sitting in between trade and not deciding how trades are matched by the network itself. joe: explain why peer-to-peer-based trading set up would prevent a group of people manipulating to drive up the price, go to chat rooms and do a lot of nefarious stuff, why is it harder on your system? >> there is no general question if you like. business people can decide amongst themselves how they want to trade.

the users themselves get to decide what price is fair to them. >> let's talk about the macro crypto landscape of all. the first few months of the are pretty dismal, we have seen a little bit of a pickup and one of the questions i like to ask people is from your and -- when you to the price pickup, what you see on the business side? d.c. people who are taking phone calls? we have gotten a lot of inquiries over the past three weeks. for me, this technology is revolutionary. a lot of institutional money is sitting on the side is ready to get in. if you're in the financial services street, if you're not getting involved in the technology, you'll get left behind. joe: let's talk about the network. you can't trade bitcoin on airswap, correct? >> you cannot but you can do

swaps. called thestandard erc 20 standard. these tokens are so popular because anyone in the world can sell them to anyone us in the world. in the first time in history of humanity we have a global, scalable asset class. the we had the head of agency said that some of the bigger digital currencies should be considered securities due to the nature of how they were originally sold. does that pose a risk to you if regulators look at a. ium. -- etherium. >> i think it would be pretty hard for regulators to comment in and say that this is extra security.

if that were especially happen it would have negative impacts. joe: there is a range of approaches with erc 20 tokens. you said, anyone can just spin them up. who can trade via air swept? -- airswap? >> we will implement a blacklist scenario. likell blacklist anything the venezuelan token. we are implementing a blacklist scenario so that anything that seems to be not kosher by the regulators, we will not allow them to trade on the platform. >> the default setting will be that it can trade on their swap -- airswap and you will wait until something is not kosher to lackluster. >> we are more than listing service. anyone who wants to list of their assets on platforms, as

long as they are following the regulation of their jurisdiction and who -- two, that would be ok with us. >> you are about to go live? >> we go live tomorrow morning. joe: it will be an interesting experiment to watch. thank you for coming. >> it is time now for our stock of the hour. she is on pace for the worst cases january 2016. this is the worst performer in the s&p 500 today. abigail doolittle joins us with why this is having trouble. >> the numbers were pretty ugly. they actually missed. this company actually missed earnings by double digits. they missed sales by 1%. looking forward for 2018, the author raised cash cost. they also took down the 29th production outlook.

that mine.this is now i am questioning myself. it is indonesia. this could mean a collapse of some sort but a potential role change on tailing, they use of a river stream. let's take a look at it. this is a one-year chart in the bloomberg. look at this through the 50 day, all the 200 and moving average. tells you that investors are really surprised by this. people were really caught off guard. plus it is a huge strengthen -- strike in volume. >> the company gets its copper and gold. he gets more of is ready from copper. sometimes it tells us things about what will happen with the pricing. do you have any comments?

we should mention that this is 30% of the revenue. most of it is copper. if there is something with this ruling in indonesia, if they're not using for the negotiating tactic, it could create a bottleneck of some sort for copper which could turn those prices higher. if it breaks out, who knows, that could be positive for dr. copper which we can see on the. this is a snapshot of the daily trading volume. it is 509%, the 30 day average. >> investors are really stepping aside from this one. something worth pointing out, bloomberg,n the shares are trading at a discount and also training close to the low end of the historical valuation.

for the great investor who can see past this issue, that is a huge overhang. the revenue could be at risk. many are saying that it could just be a negotiating tactic on the half of -- the half of indonesia. you, coming up, let's take a look at the picture for the major averages as we head toward the close. we will discuss in more detail what is going on, what happened today, whether it tells us about how the rest of the earnings season is going to look for stock. ,e will have more with peter chief market strategist, he will join us next. this is bloomberg. ♪

♪ >> usf continued to salt. the u.s. 10 year yield rose briefly since the first time

this day were 2014. joining us now is peter. we had stock selloff today, it looks all about a caterpillar. peter: it has been our view that expectations coming into the earnings season are quite high. it started with the banks. the banks sold off stronger. caterpillar essentially reported strong numbers but said this is as good as it gets. that is a pattern we have been seeing. investors are expecting an awful lot. multiples coming into the earnings season. we have grown into that just a touch but not a lot. we expect more volatility as rates have risen, stocks have got more sensitive to that. investors are expecting more from earnings given the rising cost of capital.

>> didn't they just say what everyone has been thinking and afraid to say? that this could be as good as it gets? heard in terms of valuation that we have been borrowing growth. the rally was on 2017 is now coming undone. peter: that is what monetary and fiscal policy does. they borrowed growth from the future. the monetary policy close lower demand and fiscal policy does that through the application of debt. as we look forward to how much more stimulus we can get with tighter financial conditions through monetary policy, it is tough to see where the new tailwinds are going to come from unless they are organic. >> what are the currently could is between equity rates? i came into the year fairly bowlers, the market rallied a percent.

at we noticed was that shortfall was starting to take a. we also saw libor starting to rise. more recently, as a function of the debt spending. as investors got to realize the financial conditions really are they become more discerning about what is happening with earnings. even if earnings are very good, up,he cost of capital goes equities tend to find headwinds rather than tailwinds. >> we are just a thought -- few moments away from this. as you can see, right now, the dow is down 1.8%. we'll talk far more about what

we are seeing with the rate markets, the equities markets, plenty more from us, the marketplace is next. here are some major averages, this is bloomberg. ♪

♪ >> what did you miss?

yield dropsar again. >> i am joe weisenthal. live onre turning in twitter, we want to welcome you to our closing bell coverage. >> we begin with our market meant, where else can we begin? but talking about the effect on the markets from caterpillar had been day. we saw little changed out of the gate this morning as investors weighed earnings. caterpillar came out and talked about how the first quarter was going to be the watermark. saw stocks turn lower as that symbolized the concerned that investors seem to have about the earnings season more broadly. let's look at the padded -- caterpillar specifically with

more stock on the move. calculations are finishing lower by 6%. they are still up by 50% over the past year. they have had quite a run here and caterpillar seems to be blaming this weakness throughout the rest of the year unless favorable margins and pricing for some of its input cost interestingly enough. that is a bit of keep an eye on. at-bat shares finishing lower on concern over the company's cost. intel shares are higher after city said this could be the macron of 2018, low expectations and overdeliver so to speak. and speaking of overdeliver a harley davidson show some progress in terms of it turnaround plan. the shares are pinching our by 2.4%. intel finishing up despite the fact that semiconductors fell, a lot of weight being placed on texas instruments. they had just reported its numbers if i can break an

admission is really quickly. the cupping says its first-quarter revenue came in above estimates of $3.97 billion. it is coming out with predictions for the second quarter. they say that revenue will be 4.10 billion. the estimate is 3.9 billion. we are seeing at least initially, a more positive reaction and what is going -- imported a texas instrument is that unlike any of the chubbuck equipment makers, it's inside implications for the smartphone market. ti makes a broader range of ships. this one was being very closely watched to see if indeed things are as bad in chip lend as some of the other indications seem to be. the company is also talking about his tax rate. this is its annual operating tax rate will be about 16% starting in 29. -- 2019.

>> let's look at the government bond market. there is a lot of action, starting with the u.s. two-year and 10 year. short-term rate expectations are not moving very much despite the market volatility or it the 10 year yield is 2.99% earlier in the day. that 3% levelsed and you can see, here's the into are, we are about 3%. then we got slammed back down. getting drawn down on some of the selloff and not like a big move at all. rate ended higher on the day. this causes briefly about 3% but not the closing bell. >> you can match what was signed terms of the price action and in particular we saw at the peak for the dollar-yen, that if everything all started to sell off, we saw the yen strengthened. the euro versus the

dollar hitting session highs around 122.44. it is now higher by 2/10 of 1%. justin might of some of the more choppy action and the risk sentiment we were talking about and have been talking about. look at what is going on as far as the emerging market. , because heapshot mesko stronger versus the dollar, 6/10 of 1%. it is weaker over the last three sessions overall. you can see them holding prelaw, even for the likes of what my turkey which is one is very exposed and it has weaknesses. economics also higher in the session. commodities let's look at some of the different moves. .oe: oil is down

there are a few different crosswinds going on there. a big selloff across commodities and equities, probably the main story. there continues to be ambiguity about what will happen with the iran deal with could have an impact on supply depending on what happens. oil is down below $60 per barrel. gold is getting a little bit but not too much. then some of those industrial metals that have gotten so much attention over the last few forth,ave been back and sanctions continuing to selloff. they got hammered pretty good on signs that the u.s. would soften those. gianty russian dry and -- sold off. those are today's market minutes. >> let's look at texas instrument. >> we mentioned them a little

bit. i think we should mention them in light of what we have been talking about. with the demand for chips in particular, second-quarter revenues, there are expectations coming in. eight/$4.1 billion. this is right in the middle as far as estimates are concerned. is $3.65ate there billion. in terms of the first-quarter earnings, the shares are one dollar 35. the consensus that one dollar 11. you have tax related benefits to incorporate in this as well but we have been saying that the reaction as far as the earnings are concerned are bit disappointing on this one. for now, as far as the headline numbers are concerned, better. you have to see what the price peter, let's get

that's what we were saying. peter: -- we were just talking about this take on of earnings. the reception that investors are giving them, they are not satisfied with the numbers. a lot of people are pointing this out. at the risk of sounding like a broken record, i think the big of a here is something secular change in the rate environment. i think investors are slowly waking up to this. financial conditions are simply tightening. a year and a half to two years ago, we had 40 basis points. now we have libor at 235. we had the two-year treasury at over 235. we have the tenure flirting with 3%. in the absence of the equity market volatility, i think the

tenure would have put well about 3%. that is the governing mechanism and the feedback mechanism we see for rates, especially on the long and. the capital flows back. >> doing it to the federal reserve acknowledgment to a greater extent? we has to talking about three or four basis points. there was a significant tightening in the curve. >> there is an offset. monetary policy shifted from being a domestic conversation to a much more global conversation. while the fed is tightening and the balance sheet is going to shrink to the end of this year, monetary policy conditions are still fairly was. they have come out very clearly the second medication standpoint. fearing it they

would stop buying assets in september has essentially signaled they will continue to buy assets at a slower pace through the end of the year. because there is a tighter condition here in the u.s. and central-bank policy makers need to take that into account. there on that in other places in the world. >> we talked about 10 year yields at 3% but also two-year yields getting close to 2.5%. we hear a lot people access it -- expressing bullishness or trying to buy short-term rates. does that make sense? , should people stay playing at the short and? peter: that is where we have seen this. we saw this on the short end and in fact, if the fed continues to move, i think we will continue to see that on the short end. i don't think is necessarily a great place to play and in fact,

our view has been since the beginning of the year for a flatter curve. into the end of the year i think it is quite possible will be close to perfectly flat. of tenure, of course that will depend on what would happen to equity markets. >> what you do in equity markets right now? >> i think there largely brain found. -- is too late in the cycle to be overly bullish. we are trading at a range between 2500 and 2700 on the s&p 500. >> that was peter. thank you. we have some breaking news now regarding generic drug companies. u.s. prosecutors are being said to nearing their first criminal charges. this is all that we have been anticipating, they have been working on this.

give us the details. >> this investigation has been in the process for almost 40 years now. it has been on a federal level except for two small charges against a small drugmaker. we saw a parallel state investigation which had juicier disclosures about elected price-fixing, a lot of back rooms of restaurants, gains a better and cover markets. now we are hearing that the feds are close to bringing charges. a major new development in this started in the obama administration and continues and trumpet nation. it has been is overhang for a lot of the companies. two quick questions, these are criminal charges were talking about. generics are you make one and that i commented undercut yuan price and you don't have any intellectual property exclusive 70. , what is the mechanism with which the incumbent -- the expired to manipulate

prices. -- conspired to manipulate prices. >> we don't know that yet. the mechanism is that the generics are commodities. the cheapest producers tend to win when the buyers are out. peoplef times you have driving down the prices. if you are making this stuff for pennies on the dollar, if you can get together with your buddy over at generic company and say what if you took a little bit of this market over here and you guys were the only one making destroy for a little while. you could charge a little more. those are the types of things that are already been done. carving upmuch as the market as it is price-fixing. >> in theory, generic drugs are supposed to save you money. they are supposed to send this is the money. do have an idea of how much this costs people? what we do know is we're talking about a lot of companies

and the whole lot of drugs. oftentimes the are relatively small products we're talking about here. the generics industry is done unburied extreme margins. these guys are looking for the dollars whatever they can find them. i think what we will eventually start to see here as we get a fuller picture is the answer to that question. this is definitely a consumer protection issue, we just don't know by how much yet. we don't know the full details of what these investigations have uncovered. >> i am looking forward to getting those numbers. drew armstrong. now have some more earnings news , speaking of health care we giant, the one reporting the window company crossing here. 321, thatit rained at is what analysts have been anticipating, is raising the low end of its 2018 forecast. we are not seen amateur vid was in the shares as a result of

this. we will keep digging into the numbers here. the company says it's will be about 700 $50 million. we are also getting numbers on wynn resorts. turmoil quite a bit of over the past several months. the steve wynn exiting company after allegations of sexual misconduct. this estimate ramy up 20%, that is just shy of projections, it would is very dependent on the cow. look at this.ill >> the estimate was $.75. at least estimating -- meeting estimates on that front. from new york, this is bloomberg. ♪

♪ >> i am mark crumpton with first word news. considers a u.s. withdrawal from that multinational nuclear agreement with iran, president trump called the 2015 accord ridiculous and insane. the president made his displeasure known during meetings and at a press conference with a manual macron. decayedis a deal with foundations. it is a bad deal. it is a bad structure, it is falling down, it should have never been made. >> the president added that the us -- if the iranians restart there program then they will have bigger problems than ever before. chuck schumer will oppose my

pump has confirmation for secretary of state. he is among senate democrats who backed pompeo as cia director but he said pompeo is not satisfactorily answering questions of the top diplomat. the canadian has of commons observed a moment of silence to honor the victims of monday's attack in toronto that left 10 people dead. another 13 people were injured and a van jumped a curb busy intersection and slammed into pedestrians. the 25 euros suspect appeared in court today. he faces 10 counts of first-degree murder and 13 counts of attempted murder. police say he posted what they're calling a cryptic facebook message minutes before the incident. the man who snatched in ar-15 rifle away from a gunman at a tennessee restaurant told state lawmakers he faced the true test of a man has the state has

hailed him as a euro with a resolution. actedshaw junior said he sunday nashville waffle house to save his own life and save others in the process. a judge revoked the $2 million bond for the suspect who has been charged with four counts of criminal homicide. global news, 24 hours a day, on air and on tech talk. powered by more than 2700 journalists and analysts. i am mark crumpton, this is bloomberg. >> texas instruments trading earnings just a moment ago. you can see that just shy of 5% gains. these stocks were the best performing industry group last year. they are trading at their lowest levels in more than two months. this is where half of that index >> texasreport

instruments is a very steady company. it is a good representative of the market. i think that there is a lot of pent-up fear in the sector because the sector is an of things to come and is very violent and fast-moving. as a result, people look to semi conductors for broader indications of demand. by that token, texas was better than fear. theoes that tell us that problems are more centered on smart phones and less on the broader array of semiconductor usage? >> i think it is not surprising that smartphones are going to remain a headline risk. i think it is a big talk of the semi conductor market as a whole. if you look at computing pieces in general, these two pockets

have the potential for causing a lot of blips. it is not that well exposed to have sex in general. you see a lot of volatility if samsung were apple move around their supply chains quite a bit. some ship forces rolling over. based on the suite of earnings we got, what can we say about memory haser? >> been an industry that has benefited disproportionately from pricing over the last six quarters. some of those have rolled over since november of last year. you have to look at pocket by pocket. they're not that particularly bad. if you look at it overall, relative to expectations, i think by the time we get through one cute, we will have a sense that this is not as bad as feared.

>> here's hoping. thank you so much. coming up, a bad omen for apple. investors hunting for clues ahead of earnings. they looking at the main manufacturing partners. this doesn't look good. we will have those details, this is bloomberg. ♪

♪ >> semiconductors are bruising apple. supply is taking a bite out of the rose most valuable companies. questions about over-on-demand. joining us now from san francisco is bloomberg global apple reporter, great to have you with us. can measure up

some of the nervousness we are seeing right now? >> that is a good question. their guidance already didn't come in as expected. we are looking for guidance of 63 or 65 billion. they are walking into this on bad footing already. if they announced strong iphone is ars, then i think that positive sign for investors. based on the signs we are seeing right now, that is not likely to be the case. >> what are we getting in terms of units as forecast? have they been changing? >> we are not seeing a lot of hard estimates for iphone sales. when we do now is that last year they announced about 50.1 million iphones to over 50

million iphones sold in q2. it is not a problem unless the problems are far less than the iphone numbers from the report. there wanting the numbers to come in way above. what would really be a disappointment is it it was anything below last year's numbers. game ahave it at this long time, trying to read the tea leaves from various suppliers and read through. how solid and consistent is that? does that give us a big sense that that is what is going on? iswhat apple likes to say that the tea leaves be nothing, then normally not strong indicators of anything going on in the supply chain. in reality, that is not the case. what we saw is verizon announced 24,000 subscriber reduction for their recent results earlier today. we saw tsmc announced big issues

with its forecast along with foxconn. these are all in the getting issues with the iphone x. this is the proximity sensor that lets you know the phone is by your face. they reported it, it is an austrian company. really love forecast. at him is altogether, i think it is too much smoke for that cannot be fired here in terms of -- ous problems at i think it is a short-lived problem. >> think so much. apple is down for the fifth straight session. datapoint 8.5% in that time. coming up, something new, something better, donald trump

and emmanuel macron think they can get a better iran deal. the rest of the world leaders get on board? this is bloomberg. ♪

mark: i'm mark crumpton with first word news. the manufacturer of the engine that the loveless week on a southwest airlines plane was recommending inspections that included the one that failed. one person died in the explosive decompression above 30,000 feet. the united nation's syria envoy is warning the rebel held province of idlib could become the ravaged country's new humanitarian crisis area. speaking inside brussels today alongside the european union federal chief. challenge, the new 2.5 million people.

you will not believe all of them are terrorists, of course. there are women, civilian, children. we hope there will be a location for making sure idlib does not become the new, aleppo the new eastern content -- eastern ghouta. mark: the syrian observatory for human rights say 177 people have fled combat in eastern ghouta since february. 12,000 fighters relocated to idlib. justin trudeau says drivers must civilian, children. we hope there will be a location not live in fear after a driver plowed a van into a sidewalk sunday. prime minister trudeau called it "a senseless attack and a horrific tragedy." p.m. trudeau: at this time we have no reason to suspect there is a national security element to this attack, but obviously

the investigations continue. mark: a judge has ordered the 25-year-old suspect detained on 10 counts of first-degree murder and 13 counts of attempted murder. not live in senata senatar markn warning taking back financial rules after in over 120 countries. i'm mark crumpton. this is bloomberg. >> let's get a recap of today's market action. caterpillar took the market down around midday on its conference call. the company said first-quarter would be it's high watermark. caterpillar was not alone in selling off.

weakness across technology, with the biggest drags on the s&p 500, amazon, microsoft, google and facebook. industrials were the worst. consumer tech and discretionary had pretty steep selling. "what'd you miss?" a bigger, better deal. emmanuel macron came to washington with the not so secret goal of selling president trump on the iran deal. trump on the iran deal. he proposed renegotiating "something new" that would address concerns and caution the president against tearing of the deal, which president called insane. no one knows what president trump will decide may 12. we are joined by washington

chief correspondent kevin cirilli from the white house. instead of another very colorful hand-check, what did macron achieve? >> president trump said perhaps macron is the only person in the world who might have some idea what president trump will decide may 12. let's dive deep into the details, specifically with regards to the financial backing. if do look at the iranian exports between 2015 and 2016, since this deal has come to fruition, they have increased by 375% to european nations. that of course is what europeans are concerned about, should the united states pull out of this deal, that the market would close. financial institutions still have a rudimentary system in place when dealing with iran. german chancellor angela merkel scheduled to be here on friday, in addition to germany, france, the united kingdom is also urging president trump to remain in this deal. >> thank you so much kevin

cirilli, chief washington correspondent joining us from the white house. up next, north carolina's treasure dale folwell started as a motorcycle mechanic, then transferred to a career in finance, and as state treasurer, gets to manage the state pension fund. he thrives on a challenge, and is up is up next. this is bloomberg. ♪

>> "what'd you miss?" dale robbins folwell won on a platform including better transparency and accountability from officials, tackling things like burgeoning pension and health-care costs. a move he believes could save the pension $100 million in fees by the end of his four-year term. the keeper of the 26th largest amount of money in the world joins us. talk to me about your progress. you came in, you changed a few things, you specifically look at fees being paid to improving how the pension fund money is managed. you ruffled a lot of feathers, internally and externally. treasurer folwell: your viewers like to see public officials that are aspirational and who also fix things. >> accountable. treasurer folwell: i am probably not the aspirational person, but

i am good at fixing stuff. i told the voters of north carolina we would cut wall street fees, which i've gone from $50 million to the -- the state treasurer left office in the year 2000. fees were 50 million when he lost office, and almost 700 million per year when i entered into thousand 16. we were able to cut fees last year by over $75 million. year savings of over $300 million. that money stays in the pension fund so it can be softened and remain -- can be solvent and remain one of the best pension funds in the united states. >> you have to look at performance fees. yes, the fees may have skyrocketed, but if the performance was there, it does not matter so much. what is your response to that?

treasurer folwell: when you are the keeper of the public purse, there is no gap. your loyalty and duty of care is to the participants in these plans, and the taxpayers of north carolina. when i assumed office i found there were $11 billion worth of blank checks on the pension plan. these are commitments made or investments, but the money was not yet drawn out. that is important, because when there are $11 billion worth of blank checks, people will be asking for that money at some point. secondly, in the year before, the plan did not earn as much as it needed to in order to pay off benefits. our whole job when i was sworn in was to reduce complexity and build value within the pension plan. now we are working on how we sustain this. it has been over 50 years. we want to sustain this for another 50 years.

i don't mind criticism. there is a show you might be familiar with called "the andy griffith show." there is a man by the name of ernest t bass. he breaks rocks and giggles. someone has to solve these problems. these are the problems of unfunded liability. criticism is fine, but some are the critics are the people -- some of the critics are the people who put us into this mess. >> even in the last year with what you have on wound, you have missed out on other opportunities -- are they being too short-term-ist? how do you decide where to put the money going forward? treasurer folwell: the previous treasurer made two years worth of investments for tenure. our job was to ingest that investment she had made before i came on board. treasurer made.

i did not put on a job application i had a crystal ball. when you are faced with $11 billion worth of blank checks people can write for commitments managers, yet those.d not taken those.cal year end of the fiscal year end of 2016, the plan paid out billions more than it actually earned. the fees were almost more than the earnings themselves. those are situations where you have to stop, figure out what is right for thep it future. >> you are having those conversations now with fund managers -- let's separated rige future. out, look at the ones that are performing over the past two decades over ones that have underperformed, decide who to leave with money to invest with, and who not. treasurer folwell: we have two io's i amerim co-c happy with.

our returns barely offset the year previous. going back to the premise of your earlier question -- at the end of the day, the root causes of these problems will have to be addressed. pension plan is one of the best 500 in the united states, has not earned it's assumed rate of return for the last 20 years. it is probably not going to earn it for the next 20 years. that is what we face in reality. >> the liability and financing gap is only going to grow at that rate, and you have to do something. treasurer folwell: that is correct. >> does there need to be a reality check? you can massage the figures to see how big your deficit is, or your unfunded liability. treasurer folwell: that was a great point. as educated as you are viewers

are, it is a perverse thing to hear me say the better fund your pension plan is, the harder it is to lower the assumed rate of return into something more realistic. we are not fooling anyone. the rating agencies which i just finished meeting with over the last three days -- standard & poor's, movies, such as -- they understand we are not going to give these returns when they assign us aaa bond rating. the bottom line is treacherous treasurers, it is hard for them to lower the assumed because the because the fund level of the plan goes down dramatically. i am not going to play those games. we have not earned this rate of return for the last 20 years and will probably not earn it for the next 20 years. we will get it right and keep it right. that is why we will lower the

assumed rate of return. i can make this plan 100% funded just like that by raising the rate of return. that the stunning you are achieving it. -- that does not mean you are achieving it. >> to address your critics who say you are moving too slowly, you say you are positioned to be speaking to the right people to get that rate of return higher, to figure out where the best investment should be placed. treasurer folwell: absolutely. when you say the right people, these are the people that fund this plan. in the governor's budget, the speaker of the house, the president pro tem as well as the county commissioner's association. >> i am talking about the funds that come under criticism. treasurer folwell: yes, we have had fund managers come to us and cut fees voluntarily. almost every week i am signing an amendment to a document where

we are cutting fees. they realize this is important. in order to have a long-term partnership with one of the largest pools of public money in the world, they have to work on behalf of our participants and taxpayers. >> you are sticking with us. if you think tensions are a challenge, we to you hear about health care. the treasurer is also responsible for that. that conversation coming up next. this is bloomberg. ♪

>> "what'd you miss?" n.c. state treasurer dale folwell described his approach to the state's nearly $100 billion pension fund state liabilities.

the health plan is the biggest non-purchaser of health care, spending over $300 billion in 2017. right now it has a $34 billion deficit. treasurer, talk to me about breaking down some of the misconceptions at the individual level over whose money is paying for health care in the state. treasurer folwell: whose money-- it is the taxpayer's money and the public service worker's. a lot of public service workers do not realize that the insurer, the name on the front of the card, is not our insurer. this is a self-funded plan. we are coming out with an employee benefits statement that shows the value of these benefits to our employees. you can be in any relationship where you don't get credit -- can't be in any relationship where you don't get credit for what you bring, just get

criticized for what you do to the relationship. we will go to the insurance card, which says paid for by you and taxpayers like you. >> when we talk about health care in this country, we take the costs for granted,card, whin there is a debate about who pays. what do you do about bending the cost curve down, so that the provision of health care becomes less expensive, setting aside who is actually paying for it? treasurer folwell: the first thing you do is turn these 750,000 participants in the n.c. state plan -- the recent announcement by berkshire hathaway, jp morgan, and amazon -- our state health plan is almost as large as the domestic employment-based of all three of those companies combined. that is the buying power we have. we pushed the power away from us in the treasurer's office and down to them as consumers. if we get our state employees to

think about this card, the health plan card as deeply as they think about this card every time they pull it out of their pocket, we can turn them into watchdogs, and they can turn down the cost of health care. this is important when it is combined with the redesign of the explanation of benefit. doesn't explain the benefit of anything. >> you have an enormous amount of negotiating power. when we have been talking from our perspective about this powerhouse that will be this jp morgan-amazon-berkshire combined entity, one of the things we talk about his how they will have a lot of power negotiating costs. what role do you play from that perspective in trying to also, not just rely on your consumers, on the supply side, get those costs down? treasurer folwell: number one, you start up with a culture that

we will sign contracts that benefit the taxpayers of our state, not big pharma contracts and not big wall street contracts. when you are the keeper of the public purse and have almost $50 billion of unfunded liabilities, this is sort of like yoga. your job in yoga is to breathe and pay attention to the air mat. our mat right now is to drive health care costs so that employees and retirees can afford it. >> do you do yoga? treasurer folwell: i do. >> you are encouraging medical tourism to an extent. you are pushing consumers to shop around. what about union power? when you talk about the fixed and on thethey pay, other and on the other side, employers that contribute to these costs as well. their costs are rising too.

you are trying to juggle a lot of things here, and that concerns me. treasurer folwell: state employees association is very much in favor of everything we are trying to do to root out waste, fraud, and abuse. we did in enrollment audit where several hundred people had to leave the state health plan because they could not verify they were on it. someone cashing in their parent's checks. this is like an ant eating a ham sandwich, it is not going to happen in one day. joe: going back to making the consumers the watchdogs, it is great in theory, but people don't often think rationally about health care. they weigh the risks. it is an emotional thing. -- dnon't weigh the risks. you cannot shop around when you get into a car accident, it is more like, who can help me?

what needs to be done on the side of transparency so that a fully armed consumer can make good decisions? treasurer folwell: we are redesigning the explanation of benefits so when people get a summary of a bill, they can reconcile this is what they got. consumers ultimately determine the success and failure of everything that goes on in our society except health care. there is an old term from an old cartoon, popeye, where he used to say i can't stand it because i can't stands it no morse. the people of north carolina are sick and tired. they don't consume it, it consumes them. we are trying to drive information down to them so they can be watchdogs. i look forward to updating you on this progress. >> some could argue where power in health

care power in health care is on the amazon site. in north carolina, you have huge benefits as far as technology in particular. do you think there is opportunity going forward for an amazon-jpthis is like an morgane up, a private sector tie up with a public sector like yours? you have been very pro on what they are doing. treasurer folwell: i have great respect for what they're trying to do. our train left the station a year ago. at the end of the day, it takes discipline. in north carolina and probably across the country, we have a medical arms race going on. think about what that means, where consumers don't know the value of what they are paying for. we are going to work together. mat in north carolina. anytime we can work with the private consortium and trade notes on the things we are doing, i think that would be fantastic. generally speaking, i lived in

winston-salem north carolina. i work in raleigh. that is about 110 miles apart. you would not believe the difference in basic medical procedures for sints -- for stints, for knee replacements under that stretch down i-40. >> we did not talk about the fact that you are a dirt bike champion. warren buffett, if you are listening. >> warren buffett signed my motorcycle. >> [laughter] there you go. dale folwell, north carolina treasurer. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪

"what'd you miss?" we saw a selloff in stocks. also a little bit of recovery. after the bell earnings. texas instruments with the standout, a after-hours

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