miles from houston. you see governor abbott holding a live presser. two people believe to be students have then detained. a 17-year-old may have been the shooter. one police officer was also hurt. the extent is unknown. nine people were killed when indian and pakistani soldiers traded gunfire along the kashmiri border. police fired gunshots to disperse anti-israel and anti-u.s. leaders. the ongoing ibo outbreak is not a global health emergency. her health crisis to constitute --lobal emergency it must be

meet specific criteria including a threat to spread to other countries. strongl said there is a chance the situation can be brought under control. there are 14 confirmed cases that vaccines will be given out beginning this weekend. hiside prince harry and brother prince william gathered those who came to town for the royal wedding. the 33 year old princes marrying meghan markle tomorrow in saint george's chapel. millions of people around the world are expected to watch the wedding on television. 24 hours a new -- news to wait for hours a day -- news 24 hours a day.

i'm mark crumpton. this is bloomberg. julia: live from bloomberg world headquarters, i'm julie chesley. scarlet: i'm scarlet fu. julie: i'm julie hyman. julia: stocks mixed in light trading. scarlet: the question is what you miss? stormy clouds over trade. china cast doubt on things saying it had the chance to lower trade. staring down the dollar. hedge fund managers go head-to-head with top strategists over the direction of the u.s. currency. and venezuela votes. the trip administration -- the trump administration. julia: robert lighthizer says

the u.s., canada and mexico is nowhere near a deal to renegotiate nafta. china is pushing back on reports of an offer to reduce its annual trade with the united states by $200 billion. we're joined now by mike mckee. great to have you with us. i was talking about the hot mess of the trade negotiations. talk about nafta. that was supposed to be the easy part of this. >> yes and no. it is a three party negotiation. advisorident's economic says nafta is not dead. that is true. you have to put in context. it has become a political negotiation. the u.s. wanted to move it quickly. they wanted to get something done this year before the democrats take over the house and vote against it.

a lot of political considerations go into this besides on the economics. the u.s. put forth five really strict conditions. they have been focused on auto. they have not gotten there. justin trudeau went before an audience and said we are close. canada and new york are really close. their auto workers make the same amount of money. mexico doesn't have that. they immediately pushed back. it is not dead because they don't have to do it now. they can gond time, to 2009 in 2022 negotiate this of they want. threads, the common the progress of the negotiation depends on who within the administration is doing negotiating. you have multiple parties on age side. how is that playing out?

you hear one thing from robert lighthizer. the same thing appears to be happening on the chinese negotiations. >> put donald trump aside. you never know what he is going to say. the professionals have made a lot of progress. they have half of the treating done -- treaty done. china is a different matter. they have not negotiated yet. it comes out of the plans to impose sanctions on the chinese. they put forth this list of things including the 200 million dollars producing deficit when the u.s. allegation what to china but no one really knows what trump will be satisfied with. it is hard to know where that is. >> things keep coming in.

to stick on that $200 billion reduction. the trade deficit, i should say. it was 100 billion. where are these numbers coming from? how do you even get to 200 billion? >> the numbers have been pulled out of the air. i have a chart that shows you how many -- what we export to china, if you look at this you see the white lines, that is how much we export to china every year. the red line is where you would have to go. you would have to more than double lit which is almost impossible. we have an economy at full speed. >> what product could you send to china that would make up the gap? >> i'm glad you asked.

you could do a lot of different things. the chinese would buy more of be thing, the world would better off. maybe the u.s. would be in some cases. this is a different way of looking at the same thing. the red line is where you would have to go to cut the 200 billion. we sell 10 a year. ramp up, you have to expand soybean sales. how much land is there in the united states for that? think youalistic to could actually make it up by cutting or raising chinese imports. they are not going to cut imports. americans like the chinese products too much. julia: let's talk about what the prospect of a nafta collapse would mean. talking but the mexican economy and the deficit the united states has with the mexican

economy, and what and economic pressure or currency fallback is, which is unlikely, with the election results, and the populist leader of mexico, surely that would have a detrimental impact on the current situation. candidate in mexico who is a populist and has said wild aboutis not donald trump, he likes the treaty. he wants to negotiate the treaty. his election is not the end of it. if youtrump would decided to pull out. did.se he it would not hurt the united states over the long run because the economy is so big and our trade is not that big a deal. we would probably do something with canada reasonably quickly. their pride has been wounded and they are willing to put up with it. they have many more free trade

agreements with the rest of the world. they are trying to expand so they have a fallback. there is a lot to play out in this but it would hurt the mexican currency, the canadian dollar as well. ,f it hit the u.s. stock market we have a problem as well. mckee.ael hodder or messier. thank you. we have our eye on the yield curve. the fed continues to raise rates further. this is bloomberg.

julie: according to the new york

times would blame fund will step down as goldman sachs ceo in december. david selman will take the top spot. joining us now on the phone is the wells fargo banking analyst, there has been talk and -- about when blank fight -- about when lloyd blankfein might be stepping down. is this making sense? >> i met with lloyd blankfein last week and he was about as engaged as ever. he is certainly still running goldman sachs. we thought this transaction might take place the next year. that we would have a month attached to this. it is new news. it is something to be monitoring. goldman sachs is a wall street powerhouse. changes like this can make a difference.

>> investors seem to have noticed as well, goldman shares which were already lower on the day took a leg lower after that. why would there be a negative interpretation of this announcement? scarlet: there should be no negative interpretation. is -- investment banking, 1/5 is crushing it and doing great. they are creating assets. that is 40%. investing in lending is doing fine. trading is volatile. they had a strong first quarter. it remains to be seen how the rest of the year goes. , transitioning from lloyd blankfein to a banker. which seems extremely likely. if anything, having a banker at

the top and the strong corporate relationships will reinforce the annuity like revenues at the firm. >> we have seen goldman lose a couple of people. some have said there will be departures of people maligned with lloyd blankfein. does the new timetable accelerate departures of key folks. >> that is something to be watched. you have two of the three heads departing. a banker at the top of the firm, goldman makes decisions on what is the best economic value for the firm. one position to watch would be the president. who takes over his old role? that is something to be watched.

talk about best in class. goldman sachs is best in class and investment banking. john walter is a very strong contender. that is the new consumer effort. you have heard it with markets, lending or deposits they plan to create a consumer banking platform. articles breezily talked about how they might expand into europe. there remains to be seen. and eric lane, head of the investment management business. who replaces david solomon will be telling about how much they might want to tweak their strategy. julia: who is optimal for you? >> david, coming from the investment banking side, investment banking is best in class at goldman. the more annuity like revenues

come all three of these players, are the revenue type businesses as opposed to the trading side. it seems to make sense that someone from one of those areas. started, you said he was engaged as ever. would you expect them to disengage at any point for the final day on the job? >> absolutely not. people say someone like lloyd blankfein or other successful as this people him a they go they made a lot of money when they achieved a lot of successful what else do they need? they need what they do day to day. that is what they thrive on. aat goldman sachs has done great job at is keeping the alumni engaged. the alumni at goldman sachs is as strong as anywhere. we would expect lloyd blankfein

to not be engaged day-to-day but still be available at a minimum to help out his old firm. lloyd blank find is still running it. there has been no press release. lloyd blankfein is still ceo. when he does step down, continuity will be the theme. this has been well telegraphed. he will want to put his stamp on the firm as well. dot will you expect him to when he decides to make that move? we would say there are three challenges. trading, trading, trading. sachs has goldman said trading should come back. lloyd blankfein said to me and don't extrapolate the bad trading that we have.

lloyd blankfein still thinks the low level of trading is abnormal. of questionst about how sustainable that is going to be bad he is still expecting things to return. the tradingto challenges the other area to watch would be consumer bank. lloyd blankfein is 110% behind .oldman's strategy that is consumer lending, consumer deposits, branching out into more consumer areas. -- 111%,o be seen maybe 150% behind the strategy. goldman sachs has in a company that served corporations and dealt with their securities. now they are speaking about mass-market -- morris -- mass-market consumers.

that is really an area that is fascinating. it is a supersmart firm. they are making loans that investors aren't always comfortable with later in the cycle. how do they balance fell ability to grow organically to a business they started with managing the operation, executing and credit risk? assuming he is the next ceo, that is in the assumptions here. in the off-chance that he is not , what happens to the share price? >> at this point, make it crystal clear the announcement today of lloyd blankfein stepping down in december which , it should have

zero impact on the stock price. i have been doing this 30 years. if he does not become the ceo than the stock price would suffer. that would be so unexpected. how much he is going to expand the consumer lending effort and otherwise how good the 60% of the firm is that relates to strong investment banking and management. >> there is an awful lot of smooth sailing eight into your scenario. they can fix the trading issue. a longtime ceo.

what are you going to be watching closely, where could they potentially trip up in this process? clear, as far as our when i joined wells fargo, 10 months ago, if goldman were to have a mishap it is not likely related to the specific transition. so, the best transition is for decent results the next few

quarters. lloyd blankfein departing for a position of strength. if goldman has a mishap, lloyd blankfein departs from a position of weakness that would certainly be unexpected per not something we would think is bad for the stock. the stock price is significantly higher. scarlet: what do you expect would like fun to do next? >> the wife of a ceo is -- the life of a ceo is varied. some retired only to come back later. i have to say from my experience , you need to stay busy doing something, having a purpose waking up every day.

scarlet: no walks along the beach. julie: doing god's work, i am sure. world's biggest maker -- being hit by freight prices. that will be hit by a headwind. is dear going to be but to raise prices? are they in good enough shape to absorb the higher costs? >> they will have no problem. is a recovery right now. their auto book was now going into fiscal 2019.

i think they will be able to put it through. scarlet: what about international? >> if you look at any region now , every market is now growing. the important thing, people think of them as agriculture because they are 70% agriculture but earnings are going to come out of construction. andalk about aluminum volatility we have seen. there is a number of elements here. rising energy and hesitation costs as we have heard from a number of players but also the metal space and the uncertainty there. >> the two big items everyone is talking about is steel and freight. wereht is what people caught by surprise by. a lot of that stuff you can pass by. when you have an end market,

everyone has grown 20% now. you can put price through. the quarter actually was not that great. they started doing buybacks again. happy days are here again. >> contrast dear with caterpillar. -- deere with caterpillar. the message was taken different by the market. caterpillar raise their forecast by 22%. the earnings beat by a lot to scare people. don't annualized it. they were trying to temper this and they scare the heck out of people. three ando win

lowered estimates. it has changed a lot in four weeks. scarlet: do they see a benefit to the bottom line, will be profit margins fatten? >> i think it is keeping up. it will give them good incremental leverage. they can't catch up on that. in construction they can catch up now. >> they have another 500 million they can get out of structural cause. that will help in agriculture. they execute pretty well. going to be fascinating. is a net? out of all of these

guys. thank you so much. bloomberg intelligence senior analyst. the market closes next. a mixed day for u.s. stocks. the dow little changed and the s&p up 4%. this is bloomberg. ♪

>> welcome back to what'd you

miss. the s&p 500 is having its worst week in a while. i'm julia chatterley permit scarlet: i'm scarlet fu. want to welcome you to the closing bell coverage from 4:00 to 5:00 eastern time. we begin with our markets minutes and start with the stoxx. higher.is closing the s&p 500 and nasdaq is selling off on the day. isappointing earnings that will get to in a moment. financials are doing the worst on the session. after we see a rally in bond prices coming down a little bit today. long --ld off with a along with oil prices. but get to the disappointing earnings reports and related news. campbell soup is dragging down

consumer staples after the ceo --exit of longtime the longtime ceo. a strategicouncing review even before a new leader is in place. quite a lot of news for people to digest permit you can see the shares down 12%. nordstrom is also selling off. the company's sales beat estimates, however, comparable sales missed the rise analysts expecting. applied materials is also selling off a percent -- 8%. we have seen this rally of semi conductor equipment which is what they make. now we are seeing -- perhaps now we are seeing them run out of steam.

we were just speaking about the deer with bloomberg intelligence karen. dear is more optimistic about the outlook and plans to raise -- deere is more optimistic about the outlook and plans to raise income. yieldhave the 30 year hitting 3.26%. we are back down from four basis points. we are seeing 3% in the tenure as well. there are a whole bunch of reasons that could have happened. in the session today, pulling back the gain in the 545 basis points. -- 5 for 5 basis points. we have a coalition agreement with higher spending and lower taxes. the higher risk bringing -- risk premium is being attributed to that.

1.97, we were above 2% so we lost 11 basis points. that is what we are seeing broadly across some of these bond markets. you can see a push wider here to the portuguese bond as well. the opposite director, on tenure bond as well, and let's take a quick look at my bloomberg as well. the surgeon the italian yield spread, you can see five, 165 basis points. not that to be given deal. , ton make the chart longer show we have clearly seen worse. moving on to currencies, let's take a quick look at the dollar index is concerned. year to date hikes, over the debate of where we will see -- to see wheredebate

it will go. saveve seen a flight to haven in the japanese yen and swiss bank as well. who knows what is going on as far as trade negotiations. i will show you dollar as well. we have seen weaker retail sales that wait on the index. you can see, dollar mexico is higher by one percentage point. this ongoing pressure we have seen in emerging markets currencies -- market currencies, continues. it has been a turbulent week for emerging markets. if you care about lines and indicators, that's a good one for you. >> important lines. let's move on to oil prices. this is wti over the last five days. we have seen oil lose momentum. it fell on the day, but it is holding above $71 a barrel.

over the past five days, we have seen the third straight week of gains. the way, is the longest stretch since 2011. the market is increasingly balanced after opec cuts. you can to the production sort all is venezuela, which we will discuss later. and rising shell output. let's conclude with a quick five-day glance with nicole nickle posting positive. positioning matters here. are trend strategies that are positioned for higher prices. keep that in mind. those are today's market minutes. let's get more on today's market's action with john.

jonathan golub from credit suisse securities llc. into this.iled with caterpillar, the numbers are good but we had to backtrack a little and manage people's expectation. what happened? wise there different reception to what these companies are saying -- why is there different reception to what these companies have thing? jonathan: the results have been really strong. in well over 11% which is double the normal. stocks are not responding. it is almost the shadow of doubt people have on where it is going. the surprise will be that the next three quarters, it won't look this good but will look strong as well. >> will investors be in a position to react positively? we have seen a correction earlier this quarter. >> i think so.

the underlying fundamentals, the economic data is good. if you look at what happened this week, this was a week of backdrop -- in terms of backdrop,. success people were more optimistic of a stronger economy. if you look at the sectors, it materials,t of energy, industrials. it was those sectors basically playing on a stronger, healthier of economy that led the market. what was sold off? bond proxies in the areas that play on weaknesses. >> i want to ask you about consumer staples. campbell after the departure of ce -- the ceo. many of these companies are saying we are not passing on these costs. there is price competition and what does that mean for inflation, consumers if they are not having to pay those higher prices? jonathan: this is the number one question that we are getting

from investors. there are two big ones. the first one is, how long does the cycle go on and the other is what goes on with consumer staples? we are seeing that every other sector is able to pass on higher input costs, except for consumer staples. >> why not? jonathan: the issue is these and some may be an amazon effect or increased competition, we are shopping differently. we are able to -- it used to be in order to get shelf space at the supermarket, you needed to have a certain kind of brand permit today -- brand. today, you can buy a razor on the internet and the cost of entering those market is lower. it makes it much more difficult for those brands that we grew up with to be able to get pricing. >> so disruption? jonathan: massive disruption.

the probably biggest disruption -- we thought the amazon disruption was on brick and mortar retail. it looks like it is equally as big -- >> the waves have sort of pass. there was this whole area where people were not able to pay for clothing for example. now, it seems to be migrating to the grocery aisle. jonathan: exactly. interesting, while you are ready had brick and mortar being beaten up, you are seeing this now in staples. we downgraded the group specifically on these concerns. they are still trading at the market mobile -- market level. a sign ofto be bullish sentiment. you do not want to file into these stocks when there is reason to not. gekko --ignal gone now now a? if youn: the question is

have energy going into industrials and materials, you are taking it away from other areas. however, if the story is secular , weakness, long-term lack of traditionaless of brand, that could be a substantial longer area. we are talking about buying the cyclicals, yada yada --a, >> you piled your money in tech and then you make decisions on it. tech, it is not that they are expensive, their underlying businesses are unbelievable. flowu look it the cash generation, they are triple the success of the bond market. it is unbelievable. scarlet: later this year, they are going to switch up the categories. telecom will be made up of those communication names in the tech sector will be broken up even

further. what does that mean for how investors are positioned in some of these areas? inevitably, they have to come out of some to pile more money into telecom. expression,e old arose of any other name, if you like company acts and you categorize a tech versus media, amazon is categorized as consumer discretionary. if we category it someplace else, it's for amazon. but they invest in sectors and etf's. jonathan: eltel you what you do on seeing a, this new category which is taking telephone companies, and new areas, it will be a little troubling for will get clever about how they treat them. julia: when do interest rates

become a problem? interest rate the hot rising for good reason. -- interest rates rising for good reason. can the economy withstand it? i what point does it become a problem -- at what point does it become a problem? jonathan: we found there is a tipping point. here is the key. it is not a precedent, it is a tipping point. interest rates go from being a positive to being negative. they become a small problem at 3.5 and that grows. as you move through that to 4%, then you have a nightmare. the next 10, 20, 30 basis points are positive and not relevant. creditjonathan golub

chief securities llc's u.s. equity strategist, thank you. we will be right back. this is bloomberg. ♪

>> i'm mark crumpton with first word news. the texas governor says the guns used in a deadly school shooting near houston today belonged to the suspect's father. the governor says 10 people were killed and 10 others injured this morning at santa fe high school. one police officer was hit, the extent of the officer's injuries are unknown. >> we come together today as we deal with one of the most heinous attacks that we have

ever seen in the history of texas schools. that is impossible to describe the magnitude of the evil of someone who would attack innocent children in a school. authorities identified the suspect as a 17-year-old, a student at the school. he is being held without bond on a capital murder charge. saycuban military officers only three people survived of the passengers get shortly after afterk after -- took off -- took off. it went down in a field in a rule area a short distance from the end of the runway. met withn chancellor russian president vladimir putin. toer the talks, putin urged rebuild syria to encourage the return of refugees to their homes. chancellor merkel asked putin to

shot -- bout with the ashad to help. global news on tick tock and twitter. i'm mark crumpton. this is bloomberg. >> what did you miss? dueling over the dollar. the fate of the greenback. it is the best run in three years, is far from over. joining us now is catherine, who wrote this story. or these hedge fund players and why do they think the dollar is -- who areep going these hedge fund players and why do they think the dollar is going to keep going? >> singapore, london, and a sydney. they are saying -- and sydney. trade,s down to a timing

there is room for this dollar rally to continue. scarlet: we are looking at a chart on the bloomberg showing the dollar index is one day percent changing. it certainly has momentum as of late here. is thetrast, of course, southside strategists who are bearish. they are focused on long-term. that is ironic if you think about it. [laughter] especially on things like the widening budget deficit and the amount of deficit we are issuing. >> there is that sounded up well, the markets almost seem to clever -- someday it up well, the markets almost seem too clever. there are 20 deficits in the u.s. and that will weigh on the dollar's long-term prospect. a problem, five or 10 years down the road. just looking at the months ahead, it is set up for more green backing. julia: because they are looking at the federal reserve and

saying if they talk about rising rates in you look across the pond, japan was a great example. tackle european growth. it is a fight here. >> there is a lot of focus on treasury yield. this interest rate differential, primarily between german and u.s., the gap between those yields has been why all year, but it has reached a tipping point dramatically in favor of the dollar. sx is really starting to responders yield. julia: where do we expect to see the outperformance of the u.s. dollar? is there a specific currency with a look at and say, this is where it will play out? >> both of the games could come against the euro. -- gains could come against the euro.

there has been some skepticism about when the ecb can step back from qe. it, thererce phrased is terrible forward guidance for economic growth out of europe. a bulk of those gains could come against the euro. julia: i think the bank of england is a classic example. they indicate they will raise rates, and then we get a full reversal. >> the fund managers you spoke to are not necessarily long-term goals on the dollar. be, don'tage seems to be cute about it, we might as well write it up for the shorter term. >> it is tactical. >> it is a tactical view. they are stepping back from the big, long-term picture saying looking ahead, looking towards the end of the summer, the dollar rally could really continue. scarlet: it's interesting when

you see the southside not focused on the next. market in liquid bond the world. >> catherine, thank you so much. hedgesup, as venezuelan on sunday, they face a likely outcome and less incentive as voter handouts rise to a halt. how this could impact the worst economic crisis in their history. -- how this could cause the worst economic crisis in their history. this is bloomberg. ♪ his is bloomberg. ♪

isthe venezuelan president up for reelection this sunday. despite inflation and shortages, there is no doubt he will capture a second term.

of the candidates are banned from running from the united states to the european union and the regional lima group called on venezuela to spend the election. -- to suspend the election. andrew, great to have you with us. set the scene. what the mood is like right now. we talked about the humanitarian challenges, in particular the country is facing. how willing are people to go and vote this weekend? >> for many venezuelans, it is in the back of their mind thinking about the challenges of search for basics and getting past the daily grind here. in caracas, you are seeing water and electricity blackouts and they are more frequent. the candidates there, they are able to drop big crowds as expected in the opposition is

calling for a boycott. we are not seeing the energy we have had in the past elections just a few years ago. out --ection has not run rung out given everything we have seen today. >> is maduro offering anything to voters to offer incentivized improvement? has promised an economic revolution at the start of his next term. it is not clear what he means by that. [indiscernible] his political pull is businessmen who is the cause of some of these food shortage and inflation. he says he will crackdown. have of venezuelans stopped believing. there has been a lot of venezuelans, if they do believe it, they are wondering if he is

capable of doing it. we have not done a full plan on what he expects to do, and the u.s. is threatening more sanctions, perhaps even sanctioning the all-important oil industry here. if that does happen, it's going to get a lot worse, much faster. scarlet: describe to us the mood of what it is like in caracas. it is hard to imagine with the sky rocket in food shortages, etc., what it is like to live there. what the people feel like at this point. can you talk about that? who think, for venezuelans make the currency, it is very bleak. the minimum wage is two dollars a month year. by, many venezuelans q long lines overnight where they can get help. if you aren't able to get those,

it evaporates. there is a national transportation crunch going on busesnow as many of the and metro cars are bracing down after years of little maintenance. now, there are problems with water as well. problems been a big with this in the past, and a lot of shortages, but there is a sense of the ground it is coming to a head. >> it does seem that way indeed. thank you, andrew results he - ati.rew roset >> bloomberg has an index, we --l it the cafe cohn leche con leche. this is 8000% inflation. >> we will have more on venezuela, and we talked to the

greylock capital management llc chairman and ceo hans humes. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

mark: i'm are clinton with the first word news. the texas governor describes today's deadly school shooting near houston as "pure evil." authorities say a 17 girl student at santa fe high was armed with two weapons that belonged to his father when he opened fire inside the school this morning. 10 people, most of them students, where killed. another 10 others were wounded. victims who for the lost their lives at santa fe high school. for the families suffering and will continue to suffer in the days to come. parent for prepare a

the loss of a child. mark: the police officer was also hurt. there is no word on the extent of the injuries. the united nations human rights council voted to set up a cancel -- counsel to look into deadly crackdown on protesters. they met in geneva and they voted 29-2 with 14 extensions to back a resolution. the commissioner for human rights says israel as an obligation under international law to protect the population of gaza and to ensure the people's welfare. caged inre in essence a kocsis -- toxic slum from birth to death. of dignity, dehumanized by the israeli authorities to such a point it appeared officials do not even consider these men and women have a right , as well as every reason to

protest. representative says this was deplorable and says the human rights council " pretends to be interested in the truth." it is the biggest shakeup ever in the sat -- catholic troop -- church. all 31 bishops in she lay off her resign after an emergency summit at the vatican with pope francis. bishops were accused of destroying evidence of sex crimes and in pope francis's words, great negligence on protecting children from pedophile priests. some ofilliam greeted the thousands well-wishers coming to town for the royal lecture -- royal wedding. meghan markle is marrying the prince in st. george's chapel in front of 600 guests and millions around the world will be watching the wedding on television. global news, 24 hours a day, on air and at tick-tock on twitter,

powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. >> the dow finished unchanged but we saw a decline in u.s. stocks. the dollar rose and treasury yields backed up. there was a bid to treasuries as well. investors continue to weigh on the detail on trade discussions between china and the u.s.. and others. we'll wait. >> what'd you miss? venezuela could be the best country out there, according to our new guest. hans humes of greylock capital management llc. this election is expected to have another election win and six more years in power for the currently there. talk about how that fits with a great emerging-market sori as we

talk about this guy remaining in control perhaps for the next six years. hans: the thesis around venezuela is where it has been historically. was the wealthiest country in latin america in the 19 century with gdp. julia: more reserves and saudi arabia. hans: exactly. arabia.saudi the infrastructure needs to be re-billed. how long can a maduro regime stay outside of the fold? the sanctions make it extremely difficult to finance any kind of rebuilding. i think the pressure is on venezuela to figure out a way, in the aftermath of the elections, how to reintegrate. >> it is basically a pariah state, right? hans: it is. the countries it is grouped within north korea, russia, and i ron, you have three --iran and

you have three countries in the fold in the u.s. trying to block them. you might see an opportunity for these countries to work together to avoid sanctions, especially with europe stepping out to and saying they are not going to be -- it is going to be illegal to comply with the sentence on iran. the more likely the scenario is going to work, and whatever regime comes after the election tries to go back to the center. >> maduro has shown no evidence in doing that in the past. the pressure is already reaching dire proportions on the ground in venezuela. if that has not convinced him, what makes you think that it will? will it just be a length of time of these conditions lasting? hans: he is not a one-man show. have a lot of interested parties on the ground in venezuela. the military, the chinese does havistas, and the

traditional elites. >>? they will break with them >> -- >> and they will break with them? hans: a lot of reports say they need to go another way in venezuela, and they know this. and he regime that concludes maduro -- includes maduro will not get out of the u.s. sanctions. one of the room as we have heard is maduro my name a vice president in the aftermath, and you get traditional economists like francisco rodriguez coming into the fold. they could reach out to d.c. and start negotiating a form of transition. >> what are the chances you don't have some peaceful postelection transition? what are the risks of that and, -- that, and how long does that turmoil last? hans: that is a risk, and the worst case scenario is you get some kind of civil war.

the reality is, you are seeing much less violence on the street now than you were months ago. there is a sense that there is a room for peaceful transition. that is a risk, and if you have bond trading at $.25 to the dollar, there is risk pricing in the secondary market. the question is, what is the likelihood. the likelihood of a civil war is low. the likelihood of a peaceful and gradual transition is much higher. julia: maduro proved willing to sacrifice his people for whatever cost, elevating power, his existence and remaining in power. is that what you want ultimately -- is that who you want ultimately remaining in power on this country? bringing in someone for the opposition and using that to facilitate a way forward, ultimately, the only way forward if you want to survive. hans: on the oil sanctions, you

almost don't need them now. production has fallen quickly and they have sanctions on oil. will they be seizing assets and others follow suit? hans: no question about it. i think maduro is much more concerned with some kind of immunity and less concerned with power. >> you talk about venezuela being an opportunity, and in five years time, this could be a great investments, but how ethical is it to invest in a government doing it to their people? this is a humanitarian crisis. it feels like we are endorsing and what he is doing. hans: we're not talking about putting money in. there is nothing we are doing or creditors doing that is putting new funding into this regime. ande are old bonds issued, they were voted on by the national assembly. debt.legitimate one of the things the creditors realize, we need to be part of the solution in looking for the

ill-gotten gains. being stolenoney from venezuela, if you bring them back into the economy, their payment capacity could be better. an organized creditor group, we are aware we need to be part of that solution, and if it comes down to it, give them the breathing room to a subsequent regime to rebuild the economy before demanding payment. giving a grace. , in effect, i think that is on period, in- grace effect, i think that is on the table. >> something has to be reestablished to be back to the capital markets. you facilitate that by being there? >> absolutely. creditors are not going to go after humanitarian companies. we want to be part of the solution. scarlet: hans humes from greylock capital management llc is sticking with us. markets get world by the prospect of a coalition.

we will get the take on what is going on in italy. a reminder to subscribe to our podcast and you will find our best content each friday to enjoy over the weekend. i cannot make promises, that i will guess that hans will be on they podcast -- the podcast. this is bloomberg. ♪ ♪

scarlet: italian markets were boiled and strategists announced they reached a final government contract. we're back now with hans humes, the chairman and ceo of greylock capital management llc. whether there is populous coalition, or not, or what is going to happen with changes

along the way, does this change the outlook for italy overall? with something like this make you invest in italian bonds? think11 basis points, i that reports stress. i guess, what i would say to people investing in it, do not panic. governmentto a new coming in, especially outsiders to make broad proclamations. the things they said have demonstrated their naivety. if you're going to make a bet, i would make a bet on the guys who had to negotiate with ireland and portugal, and is spain, and greece [laughter] against a new government coming in. at a certain point, the population in italy will support the eu and euro. say rights coming in

off our debts, it is nice, but you have the guy on the board and you read through his stuff and no that's these guys know what they are doing. they're well-positioned for a dialogue and the framework of italy, i'm sorry, the framework of europe will ultimately be stronger. you are working toward a fiscal union. they're good for headlines, but i do not think it affects the trajectory we are looking at. >> for every election over the last three and a half years, what we have always found, whoever the populist is, they end up getting dragged to the center mark. hans: why is that unfortunately? julia: unfortunately for them. not for the world. hans: all these new italian guys, i would recommend they take a look at greece.

they may have more leverage, but i think it is the same outcome. could,nt to turn, if we o about rain -- about rain -- bahrain. it sounds like this is just potential. what goes from potential to actual opportunity? hans: i happen to be speaking in the conference and i stop by at the bloomberg office so i had a chance to speak to people and the one place that looks like it isht be coming to our realms bahrain. 80, whichs are around

is i think the highest yield are in the universe. is onenteresting, but it of these binary things that standalone and does work with somebody backing them. at what happened in dubai in 2009, abu dhabi stepping in, the relative site for the economy, they are much closer in ties them bahrain which is very small and compared to saudi. saudi needs to back bahrain and they probably will. given the fact to the instability of bahrain is driven between the split, it is pretty important that bahrain not get too unstable. investor, they are assessing the probabilities. it is not clear that saudi would step in. >> why might they not? show to force bahrain to responsibility fiscally.

you do not want to step in early, all the time. it is an upside down side. saudi or a brother of some sort does not step in, this could come apart and get down to the stress levels we traditionally lead into. given the overall situation with bahrain it looks like it might not be a bad idea for putting your toe in the water for people like us. >> hans humes, chairman and ceo at greylock capital management llc, thank you for joining us. coming up, the british the states,o discusses the state of the special relationship after the american withdrawal of the ironic nuclear -- iran nuclear deal. this is bloomberg. ♪

>> what'd you miss? this morning we asked about relations between the britain -- the british and the u.k. -- and the u.s.. would much support what the administration does to north korea. objectives,the which is in iran not developing

nuclear weapons, that is not relying on helpful things in the region, that is not developing missiles. the issue we have is we would jcpoa, andain the the president decided to withdraw from it. we are disappointed with that, but we will stick with the deal is the prime minister said when she met angela merkel recently and we will continue to talk to our allies of this administration about ways of moving forward and on iran's activities. >> the eu is looking at a blocking statute that would protect eu business is doing business with iran and protect them from the u.s. sanctions, how are you discussing with u.k. businesses who want to be involved in the u.s. but also want to be building this and iran as well? >> there are stages. we don't know yet exactly what

the u.s. sanctions legislation will look like and what they intend to do in relation to third countries. let's wait and see how that develops. we have been in this position before. we were back there in the relation to i run -- iran and cuba then. there is nothing new. we hope we can find a way forward with the administration that reflects our view of intact one jcpoa iran's activities as well. >> when i shift gears to brexit is, the omnipresence of it there and the eu a president is saying they are getting disorienting messages from the in terms of the future relationship post-brexit with tariffs and customs union. how'd you discuss with businesses from the u.k. and working in the united states,

with u.s. companies and institutions that you liaison with about these messages? is it the difficult one to have to discuss when you're doing business? >> i don't. what i say to businesses here, first of all, this was always going to be a complex negotiation. we are two thirds of the way through. we have agreed on the leaving bill and on ways of protecting british citizens in europe and europeans living in the u.k.. we agreed recently at the last european council arrangements on a transitional. which will give confidence and certainty to all businesses in the u.k. about another period of stability where they go through what they are now until the end of 2020. we are now discussing the final status of the relationship through the u.k. and eu in the future, we will publish a white

paper next month on the options in the government's intentions on that. that will be available for everyone. i think we're going to be transparent and local about potential and options on the case and how we move forward. >> as you can tell from caroline's but a questioning, u.k. is a little resentful of -- europe is a little resentful of u.k.. britain is now moving its them -- not moving its embassy. boris johnson came over and did not seem to have any sway with the u.s. president. how difficult is it to navigate those orders? >> there are always moments at any given time in the relationship whether it is britain and europe or britain and america, there will always be one or two things we disagree on. the point of friendships and is you can discuss

those frankly and openly and constructively. and find a way forward. boris johnson had an ve visitnally productio here. he saw everyone through the vice president to the national security adviser's. it was not just about iran. had very constructive discussions about the whole range of issues. he really enjoys coming here. he will be back again soon, and with the president coming to the u.k. in july. kim darroch on "bloomberg markets." >> what you need to know to gear up for next week. this is bloomberg. ♪

>> what'd you miss? trading, modest losses, and in the dow, no change at all.

coming up, on monday, tune in for our interview for wells fargo's ceo. >> that to be very interesting. the feds are releasing the minutes on 2 p.m. on wednesday. >> the south korean president plans to visit washington in advance of the settled -- scheduled date. >> that does it for what'd you miss? , bloomberg technology is up next. this is bloomberg. ♪ mom you called?

oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around.

♪ this is bloomberg technology. we are showcasing the diversity and power of the tech economy. coming up, we find out how the help over 1000 businesses get off the ground. plus, one of the mt