struck dozens of iranian targets overnight in response to a rocket barrage on israeli positions. >> the united nations will continue to advance and support all efforts aimed at de-escalation in the region. reiteratesry-general that the conflict in syria should be brought to an end with a political solution. he said they have been engaged and in contact with people at various levels about the attacks. the military action was the biggest israeli strike in syria since the 1973 war. the u.s. led coalition says iraqi forces in coordination with syrian forces have captured five senior islamic state leaders. a spokesman called the arrests a significant blow to the extremist group. on twitter, president trump said those captured with the five

most wanted islamic state leaders. more than 40 people including at least 20 children were killed when a dam burst in kenya. the water swept away hundreds of homes, authorities say many people remain missing. kenyan authorities say nearly 170 people have died since march from floods caused by heavy rains. rudy giuliani is leaving his law firm to focus solely on his new role on president trump's legal team. giuliani ascites saying the resignation is in everyone's best interest and will allow him to focus on special counsel robert mueller. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg.

>> live from bloomberg's live headquarters in new york, i am julia chatterley. scarlet: i am scarlet fu. joe: i am joe weisenthal. julia: we are minutes from the closing of trading in the u.s.. joe: the question is, "what'd you miss?" president trump will meet with kim jong-un june 12. goldman sachs head of commodities research joins us live from the leverage finance conference in california. nothing to compelling, according to our next guest. investors were awarded with a strong earnings season but it has not repulsed down to equity markets. the earnings ratio down 7% from january highs. equities u.s.

strategist at citigroup has not been moved. he joins us now. valuations just not compelling. great to have you with us. >> thanks for having me. this seems more emotional. i could cry about they don't market but i won't. earnings are down, one of the biggest questions we get from investors, the have been a couple different factors driving that. the first one relates to the notion that people expected earnings to be strong says a function of them coming through, they were strong, they got to what i wanted but they were not blowing out the kind of numbers -- everyone still had their socks on. they wanted some guidance to estimates have gone up but primarily as a result of what happened in the first quarter. they did not take second, third, fourth quarter numbers.

everybody is worried about end of cycle, where are we, late stage cycle? give me some confidence that the next quarters will be ok. ceos and cfos do not know that in april so you're asking them to much to deliver. they did not get that and investors are complacent on the market because earnings are strong, i think buybacks will be good, the fed will come in if there is a problem. we do not have a fear in the market and that would be necessary to get a rally going. let's tackle the upward earnings revisions. that was included in your notes. it peaked in january after the tax change. white line, the orange line is the s&p 500. it is hard for ceos to give good guidance into the second half in april. is that a seasonal thing? our people accustomed to that or is that different because the first quarter was a blockbuster? yes, but at the same time, i

will bring up a spice girls reference. the notion of, i will tell you what you want, what you really really want, what investors really really wanted was comfort. their confidence was hit badly and they wanted reassurances. it is timewise not the best time to get it, april is not july. that does not change the fact that they wanted it. it is not that things are bad out there, the market got earlier -- got overly excited early in the year. if you hit a bump and you fall, the question is how badly you fall and get hurt. joe: it is obviously dangerous to read too much into one day of trading but it is interesting that we are getting this rally on the back of yet another

benign inflation trend. more data out there suggests prices are not going to spike, there will not be particular urgency to accelerate wage hikes. how much weight do we put on earnings and the visibility of the second half of the year versus evidence of a benign back draft? >> you hit the nail on the head. what caused the market its big connections to go back to february second was jobs numbers and wage numbers being up. as things eased back and we saw things come in at about 2.6% which was reinforced a couple weeks ago, people said inflation is not as bad and the cpi never came in today to me more assurance. willroblem is that we probably be looking in the next six months at higher wages. that we lookork

at, lead indicators suggest that we will get inflationary numbers on the wage side. i would not be too excited about it today even if the market is trading on it. julia: are we talking about peak earnings? we have this debate back and compare torture on quarter earnings versus the one-year trailing comparison, you get peak earnings right now based on what we are looking at in the fourth quarter. part of the debate going on and can't markets rally even giving everything you have said? it is more peak cycle or peak growth, pmi's or things like that. andgrowth rate might slow earnings can continue to grow. you will not get another 18% year next year because you do not have the tax cuts so if we only grow six or 7% next year as opposed to the high teens this

year, is that bad? not necessarily. it's just means your expectations have to be lowered. with some a quibble people on a different network and said you were not entitled to double-digit returns. we're not millennials. we are not entitled to anything. my kids will hate me for that one. joe: if we can't expect strong earnings momentum in the u.s. overall, are there pockets of the market that are going to continue to be robust? i ask because it is remarkable how much those tech stocks that privacy or trump tweets have come storming back. apple, facebook, amazon, are those areas where people expect earnings to be blockbuster for the foreseeable future? to me. generally speaking, investors believe they are going to

continue earnings growth even if you lose on multiple because of inflation and interest rates, you will still make money. if you're growing 30% on earnings, and lose 10%, i'm .till growing tent -- 20% there are more issues than that. using the bloomberg number's, consensus estimates, up 25% the first half for earnings year-over-year in tech. cap 17% in the second half. that is the wrong trend for growth momentum. these are good companies with good fundamentals and strong tailwinds of demand that a lot is in the stake -- the stock. doesn't know this at this point? you said clients needed reassurance after that stumble in february. when you talk to them, are they still in need of reassurance after seeing that we had strong earnings and fundamentals are shifting under our feet? >> there are a number of things

to focus on. why haven't we gotten earnings caring to the market, what is going to happen with inflation and interest rates? the other one is straight. the uncertainty around trade and protectionism and how that plays in unpredictable fashion. we get tweets that make us nervous. equitieschief u.s. strategist at citigroup. we have 20 more to dig into including whether there are elements of investor complacency. from new york, this is bloomberg. ♪ is bloomberg. ♪

scarlet: "what'd you miss?"

elements of complacency and investors. we are back with the chief equities strategist from citigroup. let's pull of this model, we have it juxtaposed against the s&p 500. your model is in white, and the s&p is an orange. talk us through what it shows about complacency. >> it is neutral. in january we were in euphoria and even the words, this is more marketing gimmickry. it is statistical analysis. scarlet: their inputs. >> right, if you see the inputs take us into euphoria, there is a 70% chance you will lose money. that is what we got to about a week through chris -- before christmas and stayed until about mid-february. what happened as the market came off, aside fall off and we were neutral. we areson i say

complacent is people are comforted by the fact that earnings are good and should stay good. they are comforted by the idea of buyback activity know that the tax law has changed. they think somewhere out there, whatever price it is at, the fed will come in and say markets apple back to far and there could be secondary effects. suree might say we are not if it is good, let's hold off and defer investment in the fed does not want that. price somewhere for the fed but it is not down 5% to 10%. the will say at some point they will come in in those three things together provide that level of complacency. i do not think people are excited. they are also not fearful and we would need a little more fear. it is easy to rally off fear and neutral. joe: i want to press you further it is question because

interesting that with the volatility we have seen in some of the potential softness in inflation data, we have not seen expectations come down for the pace of hikes nor have we seen the change in the language. is this something reflecting a new regime at the fed or a continuation of the old policy and people realizing there was always an overstated concept? two things i would respond, i think the fed, the excessive interest from every tweet and nuance or and every body movement on members of the fed is way overdone. it is fun to talk about it i'm not sure it will change their policy because one data point 40fered from the 30 or they're looking at. put,this notion of a fed it was there during crisis and i don't think anyone will find it

different if you talk to janet yellen, stanley fischer or jay powell. they would like to get rates at a level high enough to address the next problem down the road, the next time we have a recession, they have something that allows them to cut rate and not have to dip into unusual whichlike to be -- qe, are therefore crisis. they're going to be following the data. if he did is strong enough they will keep it up. i spend no time trying to believe they out there to deceive me. believeslike everybody , let's hang on every single word, it is too much. julia: it is have it. >> -- it is have it. -- it is habit. scarlet: it is recency bias. body all care about

language. we read people's emotional responses to things we do but we have gone too far down to focus on every little thing. julia: what you need to see to make it more comfortable but thought you are seeing? we have midterms coming up, and a lot of policy from the u.s., moves whoon of the seen the shares down to tax reform? what do you want to see? >> 2:00 on tuesday afternoon, but happened -- what happened? president trump came out on iran. there was another piece of information that nobody focused on, the senior officer from the federal reserve board to shut out continual loan easing on loans. we are talking about interest rates going up and doesn't

matter if it is 2.9 over 3.01 anyway? the fact that business can still get money cheaply and have easy access is more important than if we are at 2.9943.01. 2.99 or 3.01. lendingpasses standards, how much you need to put up to secure a loan. the seven giving the business community the opportunity to lend cheaply. julia: they're already cash rich. the 10 year look at yield, everyone is and with rising yields people keep questioning at what point does that turn into investors looking at equities, saying i cannot be in equities. what does your work on rising treasury yields mean? 3.5% are ok until about

then it starts to get iffy. if you get to 3.5%, people will say we are going to 4%. they will do that leap mentally even if we do not get there and that can have negative applications. julia: some people are already talking about the prospect of 4%. >> that would be three times below. julia: good point. point -- threee times the cost of what you are financing at before. us and i will give you a silly example, my wife texted me that she extended her car lease six months because it was due in three days and she thenot realize that, and difference was getting a new car lease on a new car was a few hundred dollars more expensive. that has already changed versus when she did that three years ago. scarlet: chief u.s. equities strategist at citigroup. think is a much for taking the

time. good luck with human oils -- good luck with the millennial slater. [laughter] release numbers. >> nvidia which has been a monster performer this year and over the past year is a member of the extended index that we watch which could make new highs. the second largest component of that is some a conductors. a lot of attention is being paid to how this company will do. shares have rallied over the past six sessions in a added almost $20 billion in market cap. obviously there is a lot of enthusiasm and optimism, you can see movement there that is being built into the shares. now the question becomes, will it measure up? does it deliver? scarlet: how does nvidia look

compared to its peers? o fangs?two >> it is the best performer in the philadelphia semiconductor index to date. it has been up performing other companies. it is just below record high where was in march, it could retake it if nvidia takes another rise on its earnings. if you look at it versus other semi conductor companies, gaming is the biggest source of its revenue. if you take a look at the bloomberg, we have growth in various sectors. data center is the fastest-growing segment, the orange line. this does not show the estimates, automotive is the one that has the least growth. -- gaming is still the largest source of its

revenue. julia: what about cryptocurrency mining? i were in joe's seat, i would be asking this question. has been seen as a proxy for cryptocurrency mining and its fate seemed a very intertwined with that of cryptocurrency. according to estimates, it only gets about 6% or 7% of its revenue from cryptocurrency. that is within the gaming chunk, by the way. helpful for the company but not necessarily. we'll see what they say in their commentary on the conference call but it is less than 10%. scarlet: interesting. at the end of last year, it was all anyone could talk about. >> there are a finite number of publicly traded companies that are legitimate that are tied cryptocurrency. julia: it must be beneficial to them with recent weakness we seen in cricket currency. it did not hold back the rally.

scarlet: the automotive side, too. coming up malaysia stock market may be closed after the election victory but that has not stopped investors. we have a chart you cannot miss next. this is bloomberg. ♪ omberg. ♪

scarlet: "what'd you miss?" malaysia's stock market is closed so there is no local reaction to the stunning turn event -- turn of events in politics. what you see here, the white line it shows price action. the blue line tracks volume. volume has spiked. wednesday spiked at the five-year average as the etf fell as much as 9.5%, it closed down 6%. investors have been betting on the incumbent winning, instead you had a name from the past our-partyh his f

opposition bloc winning. you see it rebound a hair after he was sworn in. he made some investor friendly comments saying he would grow the economy, reduce debt. the market is closed this week and it does not reopen until may 14. this etf is a good price discovery vehicle in the meantime. julia: i am following up on a theme i was talking about yesterday. small-cap stocks, i sure do the comparison of earnings. small-cap stocks have caught up. take a look, not just on the u.s., on a global basis. they are continuing to beat larger counterpoints which is a positive sign for bullish investors. you're looking at the world small-cap index reaching a worker time over its -- a record high over its equivalent large-cap. the bulls should be pleased.

scarlet: he had a bullish call on u.s. equities. market closes next and if you're able you are pretty happy. the dow up 179 points. this is bloomberg. ♪

julia: "what'd you miss?"

stocks rally for a second straight session. i am julia chatterley. scarlet: i am scarlet fu. joe: i'm joe weisenthal. if you are tuning in live on twitter, we want to welcome you to our closing bell coverage. we begin with our market minute. the second straight day of gains. that is what we got here, rallying to a seven-year high. julia has a great chart on her bloomberg that shows how we are at certain key technical levels that have encouraged people to believe we were breaking out of a trap. julia: after the rally, we have pushed above the 50 day moving average. the yellow line of their. question is, i do not want to get too excited but a lot of people looking at this and

saying after a. of sideways action volatility, are we starting to see the beginnings of greater sustained rallying? scarlet: we are also seeing the dollar weaker, weaker than expected inflation, cpi numbers coming in touch below what analysts were looking for. perhaps that signals the fed does not need to do anything different. it does not need to step up the pace. julia: just one data point but who cares, we want to rally. scarlet: the ten-year retreating, the longer at 3%, yesterday it got above 3%, now at .96%. the 30 year, we had a key auction today, the fed had the biggest auction ever of bonds. the highest since march of 2017. it follows yesterday's tenure auction. julia: solid performances. scarlet: individual equities, we are keeping an eye on a couple the lowest level

since 2012, this company owns victoria's secret and bath and body works. sales were now negative for a second straight quarter. revlon reported a first-quarter loss, they fell it is 7%. that's resulted in a 9% drop in stock. an eye on that because result or do any moment. when it does come out, we will let you know. moving up 17%. let me take a look at that. the ticker is run. change, regulators ordering solar panels on most new homes starting 2020 made sunrun a big winner. the biggest residential solar surged as much as

20%, the biggest advance since august 2016. those are today's market minute. for more on market action, let's bring in a senior editor and lead blogger for markets live, mike reagan. your cap your eye on a lot of moving parts this week. can't believe the nuclear deal was announced just earlier. happened. in terms of drivers, there was -- >> there was a little something from everyone. the bond market has swallowed a huge amount of treasury supply. that much indigestion, on all the metrics, both auctions were strong. you see that yield drop out. the cpi data being lower than

expected this morning. ppi data yesterday, both helping ease concerns in the bond market. the dollar rally cracking a little bit. acrossas fundamental asset reasons, you have all that. the chart watchers have so much to talk about. this descending triangle pattern that everyone has been fixated on. ,e have been fixated on that today closing above mid april highs in the s&p 500 is a big deal. a follow through on breaking out of that triangle pattern that a lot of people are talking about. a little something for everyone. i would add in, it is that time where we are over the hump, most companies reported and companies are allowed to start buying back shares. a lot of reasons to be bullish right now. julia: can we sustain this? the other thing is volatility. volatility came down and a number of people cited the break around4, we are now just 13. >> that is just adding to the confidence, a big exhale from a

lot of investors that we have gotten past these risk events. being but drawn from, it was well telegraphed. something president trump has campaigned on, has been talking about. we got past it, the facts that a lot of sanctions will be delayed for a few months allowed people to breathe easier. , or with north korea are helping a lot. julia: the second half of this year, trade issues, potential sanctions, whatever for today. joe: looking at the cross asset picture, obviously equities rallying but it is striking the degree to which everything was agreeing today. he pointed out 10 year yields backing off that 3% level. a good day having overall, both industrial and precious metals. vibeit got that 2017 by

where all aspects are working and tech is working the best? for the day.t vibe i want to mention emerging markets, they have been a center for concern and some strength bond today both in the em market and the stock market. it is a good question if we will at that 2017 feeling again. so much has changed this early in the year. we are barely up for the year in the s&p 500. the more days we have like this, the more comfortable people will feel that the good times are here to stay and the risk on the sentiment can continue. julia: thanks -- scarlet: thanks for stopping by. "what'd you miss?" a big day for debt. the treasury sold 30 year bonds in a record auction and the private debt market has been growing. adherent is standing by with more.

hammond is a standing by with more. california, the finance conference. i'm joined by the cohead's of the americas financing group. i want to start on leverage loans. that is one of the main reasons we are here today. about 6.4verages times, it has gone up a lot to get to that level. how is it different today? all, the 6.4 times of today is we have fewer companies that are that levered. the universe of highly levered companies in 2007 was much bigger. when the music stopped in 2007, $207ks had -- bank had

plus on leverage loans. even if we ran into the next phase of the credit cycle, which ultimately we will. the absolute level of leverage combined with loans on banks balance sheets will make it a safer environment. >> one area affecting leverage his government regulation. the last administration was vocal in what they thought was except a bull. this administration has yet to show its hand. they think it will be a slightly looser in the leverages. is that something your factoring in our waiting to be dictated? >> it is a little bit of a wait and see approach. the market is speaking. there are opportunities given the growth that we are seeing dad incremental leverage but we all live within a regulatory regime that we have to abide by

and it is reduce leverage in the system. you could argue it has worked. we will continue to stay within the guardrails. >> i want to pick up on sponsors. two children dollars a dry llion of dry tri powder. the last thing they want to do is give that money back. everything is fully priced, there is a lot of strategic activity, it is all competitive. how do they get into the market? it is an extraordinary environments now so that does make it more competitive as it relates to pricing. that said, the ability to finance deals is readily available today so that provides the ability of sponsors to get deals done. they are being more creative with their capital. it is not necessarily control deals, there are a lot of capital trades out there that will help them deploy this

capital. they can be more patient as well. i would not bet against them. there is a lot of capital but i bet of opportunity as well. we move into an environment where sponsors -- the idea of being financial engineers is out because they left outside, to have to become operators? >> the best sponsors are always operators. whether that is working with existing teams were bringing in picking up on, what pete said, sponsors are not just equity plus leverage. they are investing in credit, they have special opportunity fund's they are running cap , there is ans environment where sponsors need to be more noble but they have become more noble. them think this idea of playing different places in the investment stack is something

that only the biggest shops are equipped to do or do we see that happening lower in the market? >> it happens first with the biggest guys and then as it trickles down to the entire sponsor environment. we have a big middle-market sponsor business, coverage and execution business that we did not have during the financial crisis. that is presenting great opportunity for us and our clients. the sponsor clients and investment clients. >> let's talk about covenants. last year one of the trends was covenant light and how much that was in the market. -- haveoved beyond that we moved beyond that? >> it is all situation specific. there has been a trend that way and the markets are very aggressive. it is sector by sector. you have to be smart about what you are underwriting and what

you are buying. i do not think there is a trend, it is more of the same but more situation specific. ask, we are just up the coast from san diego, qualcomm offended off a hostile from broadcom, now they're saying potentially they could lbo the company. maybe some people in the market are skeptical. how big an lbo could be seen in this environment? >> you could see a big lbo. there are not a lot out there. whether it is qualcomm or some other company, banks have plenty of capacity on their balance sheet. rates are still low and attractive. the size is a function of where they can make the math work. you can see something big out there. >> the appetite is there to do something of that size? >> there is appetite within

constraints of balance sheet availability and the regulatory environment. want cap on something you were talking about on middle-market, last year there was news that came out that oldman was going to push and more. is that having an impact on your business or was it already a big part of the leverage for this? >> it has always been a big piece of our business. the majority of the private equity business is middle-market. we have made a conscious effort to bring folks in to focus on that sector but it is also part of our growth initiative that we have talked about, touching more clients and doing more products. very consistent with historical strategies. >> let's finished on the nonbank lenders. private equity getting much more into lending space. threat, or is that

an everyday function of the market expanding? >> we do not change our business in reaction to what is happening. we have got this footprint expansion. we hired a team to cover middle-market sponsors so we would like to think we are driving change in the market and the market is changing with us. >> thank you so much for joining us. julia, back to you. julia: thank you so much. joining us from the goldman sachs leverage finance conference. from new york, this is bloomberg.. ♪

mark: i am mark crumpton with

first word news. ofcy pelosi led a group house democrats in criticizing president trump's decision to withdraw from the iran nuclear agreement. >> president's dangerous action leaves america isolated. it erodes our international credibility during a vertical moment with north korea. it recklessly puts the catastrophic threat of a nuclear iran back on the table. mark: russia and germany reiterated that efforts must be taken to preserve the nuclear deal following the u.s. exit. congo's health minister says the first death from an outbreak of ebola has been confirmed. 11 others are said to have the virus. officials say they have been a 17 deaths that drew the attention of health officials. they have not yet been confirmed. there is no specific treatment for the virus and without preventive measures, it can spread pick me. 90%s fatal in up to 290% --

of cases. this is the first outbreak in congo since 1976. russia's ambassador to the u.k. says he is responded to the uk's response to his country's attempts to gain access to a former spy and his daughter. they were victims of a poisoning attack in england in march. the ambassador called relations between russian and the u.k. very low and said the denial of access to them gives the impression that these people were abducted. the three americans released from north korea are being evaluated at walter reed army medical center. president trump was on hand to greet the former detainees when their plane landed outside washington just after 2:30 this morning. translator, a south korean born u.s. citizen discuss his time in captivity. >> we were treated in many

different ways. i had to do a lot of labor but when i got sick i was treated. mark: the detainees were ineased when mike pompeo was the country to discuss president trump's upcoming summit with kim jong-un. that meeting will take place in singapore june 12. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. thank you so much. for more on that summit, let's bring in the chief washington -- .hief white house correspondent we have a date, june 12 in a singapore. just over a month from now. mark pompeo has gone to pyongyang twice, what else might he be looking for -- we be

looking for? >> mark your calendar. president trump meeting with kim jong-un and what we do not know is what is going to be on that agenda. thatdent trump has said denuclearization, no nukes as he says, they have got to get rid of nukes. how do they plan on doing that and what type of negotiation are they looking for? there is no question that the focus has been on u.s. and north korea talks but let's note the importance that china plays in this role with trying to pressure from an economic standpoint. more than 90% of north korea's exports and imports come from china. julia: i went to move on and ask about nafta. we have had negotiations this week and the noises i hear coming out of mexico seem alarmed. they have the most pressing deadline.

what a prehearing? the biggest thing is how it relates to the auto industry. there is some reporting including from bloomberg that would suggest that the mexicans are willing to compromise on that key threshold of what percentage of auto parts must be built in all three countries. the u.s. would like to see that threshold at 75%. mexico is willing to increase the threshold to 70%. whether that is enough for the trump administration, i am not sure. the front runner in the mexican election is not necessarily someone this administration wants to be negotiating with so that might put pressure to get this thing wrapped up. talk about rudy giuliani. i am switching gears but when i look at the news, i cannot keep sayingf what giuliani is

and whether he is speaking on behalf of the president or not. >> that is a very fair question. , with severaln folks connected to the administration, the present the appearance that they are but there are many people inside the white house who are trying to distance themselves. the reports that rudy giuliani is cutting ties with his law firm as a resort of his relationship with the administration has reverberated in the beltway. i do speak with sources close to the mayor who suggest that he knows what he is doing and this is part of a larger effort to continue communicating effectively and getting a message out that the president has been frustrated, has not been able to break through. mayor giuliani's someone who has

the power of the megaphone and can cut through, the question is whether he is communicating effectively. how is d.c. reacting since the revelations about the michael cohen fund and the other companies? i guess you can't call it a fund but all the companies that have given money to him. what is the thinking about that? >> this is following the money. robert mueller is looking to do that. with the developments regarding at&t and michael cohen, it puts him back on the spotlight. in terms of whether this investigation will reach its natural conclusion, we are waiting to see that. robert mueller holds the cards in terms of timetable, whether they will be a report issued with regards to the russia investigation.

we saw house democrats release to confirms, trying what the intelligence community said gordon a year ago, that these ads existed. whether the administration or tech companies, that is going to continue. robert mueller is operating on his own timetable. scarlet: chief washington correspondent. thank you. from new york, this is bloomberg. ♪ erg. ♪

scarlet: breaking news, we have nvidia reporting first-quarter results. reporting revenue that beat the highest analyst estimate. $3.21 billion, analysts were looking for $2.9 billion. the range goes anywhere from billion.lion to $3.03

for ats were looking dollar 66 growth margin, expanded 54.7%. -- 64.7%. three point $10 million in revenue. a drop off from the first quarter. analysts were looking for below $3 billion. julia: our data center business achieved record gains. the heart of the opportunity is the demands for artificial intelligence, just at the time traditional computing has slowed. scarlet: the stock has bounced around. head: up next, the global at goldman sachs joining life leveragebanks conference in california. we'll get his thoughts on what

is next for oil after the u.s. exits the run deal. this is bloomberg. ♪ is is bloomberg. ♪ mr. elliot, what's your wifi password?

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and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. giuliani is living his manhattan offer to focus on his new role as president trump's lawyer. the resignation is in everyone's best interest and will allow him to focus on special counsel robert or's investigation. regimenprime minister that yahoo! is accusing iran of line.ssing a red it attacks the neighboring syria in response and called the international community to stop iran from gaining a foothold in

syria and promised not to allow to run the place troops close to israeli positions. and for no gutierrez has called for a halt to the attacks between israel and iranian forces based in syria. the secretary general comments came after israel said it struck dozens of iranian targets in syria overnight in response to a rocket barrage on israeli positions. continue nations will to advance efforts to further de-escalation in the region. the secretary-general reiterates the competition be brought to an end with a political solution to the geneva talks. mark: gutierrez is engaged and is in contact with various people at various levels about the attacks. the military action was the biggest israeli strike in syria since the 1973 war.

officials said they are stockpiling radios, food, water, and generators in puerto rico to prepare the territory for dealing with any catastrophic storm as the atlantic hurricane season approaches. the island is recovering from the devastation of hurricane maria that struck last september. global news, 24 hours a day, on the air, and at tictoc on twitter. powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. scarlet: let's recap today's market action with u.s. stocks rising and the second day of gains with the dow up almost 200 points. 9/10 of 1%.gaining leading the way

and the inflation report indicated everything is fine and the fed does it need to push faster with rate hikes. we are live from the goldman sachs conference and los angeles. is standing by with a tivo voice in the energy markets -- with a key voice in the currency and energy markets. pollst as we see trump werica out of the iran deal, see political changes coming in syria and is a lot of geopolitical stuff going on. what should clients be worried about? emphasize theo bullish views is predicated by demand and where we are on the business cycle and not geopolitical risk. that said, the way to think

about the imposing sanctions on iran is that it reduces the capacity to produce and doesn't do much to the board balances. likely to be replaced by saudi production and other u.s. allies. secretary mnuchin made that very clear that that allies will replace it. nothing to the forward balance but it takes away capacity, which makes the market exposed and gold is, another area we see reduced output. situation in venezuela israel and you have an election on may 20 10 lead to further disruption in the market and it is far more exposed. the upside risk is substantial to geopolitical risk. onat the u.s. is dependent venezuela for heavy crude. the u.s. is the biggest export

of crude, should it have a policy that we see other large exporting nations have? aboutwhen we think compliance and the reduction of iranian exports due to the willition of sanctions, players like india and china comply to this? 2012ifference today than is exports because the u.s. is as large of an exporter as iran, 2.5 million barrels a day right now. that gives him a learning chip -- a bargaining chip. it is a way to enforce compliance on refiners around the world. >> america has its own cap you can switch off. if we move into this interest-rate environment, and we see some fall with

wemodities, where would invest in commodities in that scenario? jeff: when you going into the late stages of a business cycle, commodities outperform every asset class. the average returns during this phase are 29% because commodities are spot acids that perform very well in the rapid growth environment but we are in right now. in contrast equities are anticipatory assets and anticipate the future. they did very well because they strongated, and the underlying transcripts inflation that forces the hand of the central bank and you get the higher rates which puts downward pressure on financial instruments. that is what creates the negative correlation between commodities and financial assets. >> but the market doesn't get it.

all this m&a speculation , and you get short interest that is sky high. what is the disconnect? jeff: i had a client say i am going to write this one out. it is going to be short-lived, and as wrong for several reasons and one is we're not here for geopolitical reasons and where they are for real demand reasons. returns the is commodity the last decade have been terrible people have been burned on interest coming back. i have says any early cycle clinic but say commodities have been poor over the last decade and where in a late cycle where commodities perform the best. the third reason investors are shying away is because there is no china. the china story is very different this time around. it is going to be consuming more than capex.

>> that was the structural catalysts thatet is short cycle. what is the new china demand of this generation? jeff: the lack of investment in long cycle projects. uncertainty and policy uncertainty and trait uncertainty, the horizon is short. what a short cycle? tech, shale. we did deepwater offshore platforms and gold buying, and copper mines. that will lead to a bottleneck in supplies. permian basin the due to a lack of type investment that is constraining the output that short cycle out the. >> is there a scenario where it doesn't come?

we told inis a story the late 90's and it is the revenge of the old economy and the new economy took too much capital away and we're going towards a similar dynamic and the only solution is higher commodity prices improving the financial metrics so capital flows back into the old economy, particularly oil and minds. es. >> let's talk about shale. havegrowth, and now they to become cash flows. they do itns, can successfully and can the market make that transition? jeff: they have already been squeezed out of the growth indices and figured out how the revenge of the old economy works. up andckholders wake have been squeezed out of the growth indices by the market cap

getting large on the tech side. have to find a new sponsor and as a result they pay dividends and through share buybacks and create demand. the key is the financial metrics have to improve. when we think about the industry, a needs to restructure. the u.s.at happened to oil patch to the european banks. ecb never restructured, similarly when we think about the oil patch, they are not restructuring and the joke is how many ceos does it take to drill a well? the answer now is 600. so we do need to see restructuring. >> and is the result m&a? the likelyis outcome, they have adjustments and scale and low cost of capital and that is one way to take shelter to the next direction. >> i have to and on this question, we had a story prices isof wink g

down. if you are a sports event, that is great, but what is the goldman view on chicken wings? jeff: sports fans didn't like the prices they were paying a year ago and there priced out of market and that created a 30% drop. can they create more demand going forward? wednesday are dropped off of the menu it is hard to get back on the menu, so we think it is going to be a wild before they occur and the key point there is when we think about chicken it is sold on a per pound basis and not per unit in the poultry meats genetically modified chicken to grow eight wings. then you solve the problem. >> is that bullish? you can wing it if you want. [laughter] jeff: we will see what happens with the football season.

oddly that creates a demand. -- hopefully that creates a demand. >> jeff currie, thank you very much. scarlet: great final question on chicken wings. coming up, cracking the code. i talked to christina lewis about how her nonprofit is trying to get minorities into the tech sector. and a reminder to as to our weekly podcast and find our best content. it comes out every friday and enjoy your favorite interviews from the week over the weekend and never have a day go by without some "what'd you miss?" content in your life. this is bloomberg. ♪

scarlet: a bleak outlook for black and latino men in the tech industry based on current numbers. "light of those men who are still in high school christina lewis is founder and ceo of the nonprofit and a featured guest at the practices of diversity summit and i sat down with christina and began asking her about specific challenges facing men of color in the tech sector. only 20% of test takers were black and latino, they're extremely underrepresented. a month the black and latino committees in particular, both boys and girls are underserved.

there is support for girls and women in computer science but we need the same thing for young men of color, and that is why i found this nonprofit to make sure this group can participate in the innovation economy. scarlet: what you need to do to tell your efforts to young men of color as opposed to young people of color? christina: it makes sense to focus and so from the beginning we look at curriculum and marketing equipment. teachingt classroom stopped and tools from the perspective of working with our boys. from the posters that you put on the wall and whose face are on those posters, to the classroom dynamics. and to what teachers are looking sense toakes a lot of be able to recruit directly. scarlet: you are involved in the

nitty-gritty in figuring out certain approaches work better for young men. christina: we just competition in our classroom for sure and it really motivates them. scarlet: talk about your corporate partners. you are looking to eventually placed these young men at some point, how are companies involved in this effort? a full-timehis is summer intensive were students learn computer science pencils and web development, and overall gaining a growth mindset that takes place at companies. return companies into classrooms for the summer and can pop up anywhere and do pop up anywhere with our curriculum. what we do there is for six weeks but these are our partners.

mentorship lunches for students. speakers and the students get towards of the -- students get two ours. scarlet: the goal is to get into college so they can major in computer science and eventually get a job in the sector? christina: we are building a pipeline from high school to four-year colleges with students majoring and minoring in your science. our students are interning at facebook, goldman sachs, google, and other amazing companies as software engineers. the goal is to create a pathway into innovation, and that is not just jobs, is also products.

it is all industries. tech industry is having conversations it needs to and there is clearly more work to be done. talk about a partnership with these companies and those programs of the summer that take place on corporate campuses. what more should the companies be doing as opposed to the founders went there on foundations and can find it through their personal wealth? i encourage founders of technology companies to also foster corporate philanthropy within their corporations. us ins a huge driver for having companies as partners. working with charitable organizations directly with the company is really beneficial because that is where the engine of growth is. nonprofit, students can be housed within a

profit-making enterprise and work with those employees, engineers, it has a huge impact to them and it is really innovative. scarlet: that was my interview with christina lewis. the end of an, era in malaysia and the surprised election results. this is bloomberg. ♪

thea: upset in malaysia, 92-year-old former prime minister has ended the ruling coalition's expected grip on power. sophie kamaruddin filed this report. heart of malaysia

marking a historic day and surprise upset for outgoing will help our, for 61 years, after the country's longest serving prime 92-year-old but the opposition coalition to 222ring at least 112 of parliamentary seats that were in contest. he inherited an economy that is set to go above 5% this year and inflation has subsided after rising the fastest pace in a decade in 2017. it is set to be volatile with investors concerned about quality, continuity, and some

strategist including fidelity capital suggest this is a clean state moment that allows a reform to the place. is time for the bloomberg business flash and a look at the stores in the news right now. goldman sachs is planning a deeper dive into consumer finance and the bank is teaming up with apple and a quote branded credit card and enjoy a cart will reportedly carried that apple pay brand and be available early next year. the deal replaces apple's long-standingthe deal replaces's long-standing boards partnership. how did mr.'s in my candle plans of its type with time warner, and as more than alleged by the fire presented at the actress stormy daniels. lawyer revealed a series of alleged payments including money from novartis and korean aerospace.

l brands is giving investors more reason to be wary after the owner of victoria's secret and beth and body works says quarter results will be at the lower end of its produce the guided range and sales and victoria's secret also picked business. the carrier blames winning travel demand content today in anime out that service between ellie and mexico and on october 4. flights tocanceled which resorts in mexico and delta marks the winner anniversary of a good of alliance with mexico's national carrier. that is your business flash update. you need toup, what know for tomorrow's trading day. this is bloomberg. ♪

♪ u.s. stocks rally for a second day with the s&p at a seven-week high and the dollar tumbling as well. up, numbers from consumer sentiments. julia: and president trump spits

on his plans to combat drug pricing. "bloomberg technology" is next. have a great evening. this is bloomberg. ♪

♪ driverlessng up, cars are the next frontier but there is a controversy brewing within the industry about how to keep them safe. we hear from john chen who expect the driver to monitor them is a rational. in robin hood, we discussed the rapid rise with the cofounder.