-- you and deputy secretary of state john sullivan was among leaders from those nations he said today there considering political and economic sanctioning measures against that regime. is cruel new relation of the democratic process. to further enrich handful of supporters at the expense of the venezuelan people. we call on the regime to restore democracy for a true and free electoral process. mark: venezuela's official election results gave president maduro a larger percentage of the vote than any other candidate running for head of state in that country since 1958. an inquiry is underway into last year's deadly tower fire in london. friends and relatives of the victims will give statements over the next two weeks. the inquiry began with 72 seconds of silence to honor those who were killed in the tower last june. 70 others were injured.

a government watchdog is taking issue with pentagon assertions that momentum in the fight against the taliban has shifted to afghan government forces. the report released today by the pentagon's inspector general's office says that while afghan security forces are improving, have made minimal progress toward securing the population. it also said the number of afghan fighting forces has continued to decline, raising concerns about their effectiveness. the russian billionaire ball club owner is unable to travel to the u.k. because of these the delays. the samez, who owns soccer club chelsea has not been denied entry, although britain's home office has not given a reason for the delay. britain is under pressure to look into the russian influence in its economy following the poisoning of the double russian agent on british soil and has been reviewing the visas of 700

wealthy russians on investor visas. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. ♪ >> live from new york, i'm judy chatterley. >> were 30 minutes from the close of trading here in the u.s.. narrow ranges and low-volume. joe: the question is, "what'd you miss?" steve mnuchin said the u.s. is putting the tray were on hold, that how long will it last? to saytalker wants sorry, and is starting with the

brainiac campaign. our exclusive interview in the next hour of "what'd you miss?" julia: he could become the next prime minister italy and will take on his first real job in politics. the trump administration is calling for a trade truce. secretary mnuchin declared a hold as negotiations continue. withy prove only temporary risk remaining between the united states and beijing. a former official negotiated trade deals across the asia-pacific region for president obama. cutler,me wendy currently i president of the asia society policy institute. great to have you with us. august the investors confidence to some degree on these trade negotiations. how comforted are you?

wendy: i'm not that comforted. i find the outcome of the negotiations announced yesterday more of a missed opportunity. i think it is important that we will be able to sell more to china and china will work to reduce our trade deficit, but i think that is really shortsighted. i think we should go to the negotiating table with china and work through some of those long-standing, structural, fundamental issues that are going to continue to create conflict in our bilateral trade relationship is not addressed. i want to bring up something you wrote about in the washington post in your opinion piece. the recent proposal underscores the scope and seriousness of the trade investment and technology issues on his people. unfortunate, does not signal to china for u.s. priorities lie, as in lean more to wish list than a serious negotiating proposal. there lies the problem, the last time the u.s. went to china, there were five principles

attending the meeting and was not clear who was the best spokesperson for the country. we do know the president is very fixated on the trade deficit with china. ?hy is that the wrong approach >> because it's shortsighted. the victories going to be temporary. china will agree to buy more from us, maybe this year or next your, but in the meantime, the long-standing fundamental differences in views on technology trade will continue to fester and lead to conflict in the future between both of us. i think we have a real opportunity to address some of those looming trade issues now war andhe trade technology trade takes off. joe: the critique you present of the white house seems to be the more sophisticated critique, that this is the bigger issue instead of just the bilateral trade deficit. is there a way to cut a deal with china that will not setback china's ambitions? goals, china 25 -- 2025

to begin the lead across a range of industries, it seems very unlikely the country would do anything to slow down its endeavors on that front. they willon't think do anything to dismantle the program, but i do think you have a good case to sit down at the table with them and talk about how the program should be shaped in a way that doesn't distort international trade, does it lead to overcapacity, and doesn't harm u.s. companies and workers. we have that opportunity now to have those discussions before this program is finalized and the effects of the program or felt globally. joe: what do you mean, we have this opportunity right now? ast is it about this moment opposed to, say, several years during the obama administration that this can be addressed? wendy: i point is that we are not dealing with the effects of 2025 now. the subsidies are starting, the

chinese companies now are becoming more competitive, but the rules have not been set yet, so my point is that we should deal with those issues now before the effects are felt globally and distortions are about in the international trading system. julia: you can deal with perhaps the prospect of china buying more u.s. goods and taking out some of the asymmetry, they can open up access in the short term to some of the markets that america would like greater access to, and then tackle what you are saying about broader, longer-term reforms. there's a sequencing here, surely. look ates, but when you the leverage of the framework agreement that was released yesterday, it is specific with respect to what china is willing to do with respect to increase purchases in reducing the deficit. where it gets very vague is what

both countries are going to do on investment. what are countries going to do on intellectual property protection? what will both countries do with technology trade? i did not see any concrete language and what was announced on those issues. scarlet: julia mentioned sequencing. if the u.s. were to strike a new deal on nafta with canada and mexico, that would give american negotiators a tale with heading into the discussions with china. that as an important precedent in order to get a better deal with china? wendy: not necessarily. i see them as two separate exercises. issues we arend addressing with canada and mexico are very different than issues with china. don't see one as a prerequisite or one giving a tell when to the others initiatives. having created global tensions and concerns about what the prospect of the relationship is going forward, the united states custody. 90 states cuts

and inferior deal in order to do something. the agreement for china to buy more product and goods, i think i ability to go back to the well and threaten china again with tariffs is going to be diminished, looking ahead. scarlet: you cannot really say were going to do that once again after we've already pulled back. cutler, thank you. out, gunning for the top job in italy. the country's next prime minister may be more at home in the university faculty lounge than it government, and that may depart of his appeal. we had to rome for the latest. this is bloomberg. ♪

julia: "what'd you miss?" an academic with no political experience will lead the government. a law professor at florence university has been proposed as italy's next prime minister. what we saw the session today anda weaker stock market, further pressure on italian debt. let's get some context here with our opinion columnist who joins us. great to have you with us. what do we know about this professor and the prospect of him leading the next government? what powers will he ultimately have? >> we know rather little about him, actually. we know he was picked as the government minister and the five-star movement administration. it's one of the two populist parties coming together in the and establishment coalition which could put italy on a collision course with the rest of the eurozone.

the big question about him is, if indeed he is given a mandate to form a government in italy, how independent will he be from the leaders of the two parties on the five-star movement side? well.is an irony here as the populist parties have complained for years and years at italy had a succession of technocrats as prime minister's. and economics professor was bought in to leave italy at the height of the eurozone crisis. now they have a great shot at power and who did they pick as a prime minister? a technocratic law professor who has not been elected and in fact has no experience whatsoever in government. irony, a kind of technocratic populist here. scarlet: sometimes you cannot make these things up. talk a little bit about how a premiership would be perceived

by the italian political parties, and also in brussels, investors are feeling pretty edgy given the reaction that julia was telling us about. >> indeed, there are still a number of things that have to be decided. -- remember, these are just the two parties agreeing on a name, but becoming president has quite a lot of powers at this stage. they need to give him a mandate and then they need to agree on a team of ministers. one name will be looking closely at is who will be the next finance minister? withoing to have someone strong eurocentric views, or someone more reassuring who can moderate the pressure that will come from the two parties. ago,'ve seen just a week the initial draft of their , with somerogram

, andre and strange pledges the final draft that we saw recently includes spending and tax cut pledges for more than 100 billion euros a year. aat's a lot of money for country with one of the largest public debts in the world. that's something the watching very carefully. joe: speaking of the italian budgets, the phrase of the day mini-be the year is bot. >> it can mean different things to different people. assist keep context, at the moment all we have is a line in the program that says there should be a study of this instrument as a way to pay arrears. we have a big problem with

arrears, it means supplies to the government are not pay promptly, so the government is thinking of issuing a small size itsrnment debt payback for arrears. however, for many market participants, this is ringing alarm bells because it's something they'd been considering at the height is it greek debt crisis. it would mean essentially the government been able to issue these small size government debt bringments as a way to money which would be legal under and reallyn treaties get the european central bank not just nervous but infuriated and ultimately could lead italy to leave the euro.

marketmething participants are looking at with great interest. it's something to look at. joe: people might remember california issuing ious in 2009. sometimes these things happen. quickly, what about for the business community here? the 65thhat will be government since the end of the second world war, ultimately. the business community is used to political dysfunction ever have stability would be more irregular. what are they saying about this? today speakingan to a number of business representatives, and they are worried. i spoke to some people working for banks and they are nervous. remember italian banks still have a lot of italian government

debt on the balance sheet and bond yields are coming up. it's a big thing in italy because it's hard to get your guarantees that if you're trying to repossess collateral and its performance for nonperforming loans, which are a big problem for italian banks. julia: we have to leave it there, thank you so much, the bloomberg opinion columnist who resides in rome. thank you for the context. scarlet: that's get to our stock of the hour, we're focusing on wwe. julie hyman is here with that story. live. smack down reporting the new home for smack down live will be fox.

this had been talked about in recent days, the hollywood reporter reporting last week contention.s in nbc universal has had the rights to this for a number of years and both wwe raw program as well as smack down live right now are on usa network. the fact that it could be moving would be a big deal, and the numbers are a huge deal also.ially for wwe according to the hollywood reporter, the five-year deal could be valued at more than a billion dollars, a more than threefold increase over what was originally paid. joe: the stock is up 300% in a year. itt does wwe have going for that suddenly it is like a hot thing? gains havet of the come very recently as the talks have ramped up. it seems is getting priced into the stock what the new negotiation is going to yield for the company.

perspective, last year's revenue was about $800 million for 2017. if you talking about a billion dollar deal over five years, that's a substantial increase. analysts are starting to say it is potentially getting priced in here, although just last week, morgan stanley came out with a full case for the company of $70 a share. so you still have definitely some enthusiasm. the viewership on the stuff is amazing. according to hollywood reporter, smack down averages 2.5 9 point 59ears -- two million viewers a year. scarlet: julie hyman, thanks so much. why emerging-market currencies

are feeling the burn payment we will explore, next. this is bloomberg. ♪

scarlet: "what'd you miss?" it has been a challenging run for emerging-market currencies. diverting fundamentals played a role. now by phone.us great to speak with you, thank you for taking the time. cannoted and of course we see this on the bloomberg that every emerging market currency down so far in the second quarter. is there unifying theme across the board or are these isolated stories that have combined to scare off investors at a time when they see the dollars prospects better than any of the individual emerging-market currencies can offer? >> there's a two-part answer to that. rates,me is higher u.s. the dollar is up across the

board for the year. with that said, there's deftly some idiosyncrasies end of urgencies, argentina, turkey, have some clear underperformers both in equities and fx and we have some stronger currencies holding up better that are outperforming, mostly in asia. i think we see these diversions is continue but overall, even though stronger spreads to -- will hold on in a broad-based rally. joe: of course there's sort of , theorst one lately turkish lira has been getting slammed lately, people wondering if the central bank is going to intervene more. there was a brokerage it came out with a note today calling on turkey to stem the lira decline. lately we've been seeing, for instance, south africa. is this contagion as in people looking for the next one, or is

there a specific south africa story causing people to get jittery? lin: there is an underlying theme for the underperformers. the rising u.s. interest rate environment, those countries have more external financing and they will underperform. countries that are dependent on hot money flows are going to suffer and turkey is right up there, south africa, and to a lesser extent, brazil. i think the overarching theme is that liquidity is tiny across , and what's in the big picture story, you have these idiosyncratic stories of huge step urgencies. i would throw argentina in there as well, obviously. julia: you talk about the expectation that interest rates in the u.s. will continue to rise throughout the second quarter.

the dollar stories being driven by the cross currencies, japanese yen as well. these things together, how long do expect to see investors being cautious more broadly in the em space, particularly given what we're seen as far as u.s. rates are concerned and the u.s. dollar for reasons other than dollar strength? we talk about contagion, but again, every em country suffers from the same sort of problem. say in 1997-98, we have managed floating -- in the past we had strict pegs. break, all hell breaks loose. what's working is that the currencies are doing their job as the shock absorber. they help the economy adjust.

it may not seem like a slow pace, but a slow work pace of adjustment. i think that is a good sign. scarlet: thank you so much for joining us. the market closes next. ♪ retail.

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julia: the monday session ends higher, led by industrials but volumes are low and ranges are hot. if you tuning in live, we want to welcome you to our closing go coverage every weekday. scarlet: we begin with the market minute. the s&p 500 ending a two day retreat and closing up by .75%. the dow did even better, the nasdaq up by .5%. 2000 continues to power ahead. the small-cap at yet another record high for a believe the fourth day running here. the small caps powering ahead since last week. scarlet: let's look at some individual names. abroad backdrop is the trade tensions which i have your be easing because the u.s. is hitting a possible on a trade

button.itting the pause or,we start with a decline fifth third bancorp falling, with the purchase of in the financial, the transaction is the most company is ever paid for acquisition and is 24% higher than the last closing price. entertainment, julie hyman was just telling us about this, up 12.5%, now trading at a record high. network willx become the new home for smack down like pivot and general electric a homeless 2%, the biggest event -- biggest advance in almost a month. the ceo plans to revitalize the industrial giant, merging the locomotive business in a deal that that -- thousand and 11 what $1 billion.

that will yield $1 billion. joe: the long-term rates not doing a lot, despite the risk on moves. make of that what you will. 10 year yield down to 3.06. thateal interesting action happy new year, we were talking about this earlier, five-year yields in italy shooting up to 1.2%. other peripherals spread selling off on the political anxiety in europe, which reminds people there are still issues there that need to be worked out. at this incredibly dramatic move, this is the two-year yield over the last year, down to the negative territory a few days ago and now positive.ing

maybe just need a little political anxiety. some earlier pressure on the euro resulting in what were seeing in italy and the consequences more broadly. initially under rusher off the french find in -- prime minister wade in and set there's on sequences for the entire euro zone. we continue to keep an eye on the dollarg on as mexican peso and the dollar canadian exchange rate. both currencies higher versus the u.s. dollar but a lot of thaton over the weekend the nafta partners remain far apart on reaching the deal and the headline risk around the prospect of some kind of skinny deal is mentioned by u.s. treasury secretary steve mnuchin earlier today which is ultimately what they the currencies a little bit of a reprieve. the emergingatch

markets currency index. or broadly for all the currencies and the pressure were seen right now, we've got the index trading significantly below the 200 day moving average. the question is overly, do we see some kind about back? you can see when we initially broke through back in december 2016 but we are nowhere near that since then. so the broader optimism we've seen for several quarters on emerging markets. joe: and on commodities, let's look at auto and gold and soybeans. gold notnues to rally, really doing anything there. soybeans having a nice day, up 2.1%. if there is a deal with china, it could entail more chinese buying of western agricultural commodities like soybeans. tariffs on china

that slammed them pretty hard. so nice bounce there. want to go back to oil to give you little more perspective on the complexion of this rally. what we see on the chart come the blue line, that's the five-year forward price for brent. the white line is the out front brent oil, what people are paying right here. you can see we have seen a premium getting built up at the long end, even more than the anxietyrm price of oil, that declining investment perhaps leading to shortages in sustained and just demand picture, not just oil rallying but people see the oil rally sustain itself and paying a premium for delivery out in the future. and that's today's market minute. scarlet: let's bring in cameron crise, no trade war for now, everything is good, right?

except for italy and emerging markets. know, it canou only focus on one thing at a time, and for better or worse, there it is in the u.s., certainly the trade tensions on china, and that has been diffused for a while. you can kind of go back to focusing on a pretty solid earnings environment and economic environment. joe: i love this chart you have brought us. trade tensions abated, stocks rallying. that we were ever really worried that trade. cameron: they met have been worried but they did not implement that in for olio's. the white line is in etf geared toward exporting stock, companies that have a high export intensity of revenues. line is theender

s&p 500. this is inclusive of dividends. see the white line has generally been a little bit above the lavender line all year. if the market were efficient and worried about trade tensions, you would have expected the export in terms of companies that dramatic they underperform the rest of the index. that hasn't happened, so whether throwingre selling -- the baby out with the bathwater market was just a talking point and portfolioe us managers have just gone managing risk, probably a little bit of both. there is little evidence that this was an investable thing for equity managers. julia: what are we seeing right now? we talked endlessly about the lack of follow-through from earnings and the lack of acknowledgment given to strong earnings. pretty anemic volumes, stuck in

trading,a number that all the excitement that figure been volatility and we have slumped back down. what is going on? cameron: let's not forget there's a holiday weekend coming up, and it thirds of tier one economic data this week. there may have been upward pressure on the short end of the curve, but it's a sort of a in terms of earnings. there's no real macro data. we've had a bit of good news from the trade stock but as we've just established, the market wasn't really acting on that anyway in a discernible fashion. the weather is finally nice here in new york so maybe people are hitting the golf course rather than the trading floor. cameron, when you look at what's ahead of us this week, we mentioned the fed, the ecb,

what has the potential to rock us out of this lull? the always answers what's going on elsewhere in the world. get aflares up you could little bit of contagion effect risky asset prices which will obviously affect the u.s.. joe: you've probably seen a lot of episodes like turkey in your career. how do these in? -- how do these end? cameron: normally with an overshoot. what makes it interesting, indicated he wants to take more a strongman approach in terms of directing monetary policy. situation, badly is normally how it ends. the turkish central bank has already been constrained on the interest rate report, he can

give the lira, given the country's external bounds and given its indebtedness, it needs to reward investors for taking the currency risk and essentially it has been punishing investors for taking the risk. erdogan wants to punish them further and eventually investors punch back, and that's what we're seeing in the case of turkey. at some point the blow is going to land in the turks will have to do something to encourage people to take the currency. isia: and the french bank waiting for signals from the present, as we heard last week. thank you for that. coming up, and exclusive interview with the wells fargo ceo. he will tell us about the company's apology to her. from your, this is bloomberg. -- from new york. ♪

mark: i'm mark crumpton with first word news. you have to has been sworn in as the cia's first female director. she said she stands on the shoulders of heroines who never saw public acclaim but served as inspiration to the generations that came after them. she was confirmed by the senate last week after overcoming concerns about her role in the cia's harsh interrogation of terror suspects after the 9/11 attacks. an upcoming report by the internal watchdog at the department of justice will reportedly criticize the fbi for not moving quickly know to review a fresh batch of hillary according to the associated press. the fbi's timing has been a source of contention for clinton supporters claim former director james comey's announcement of the review contributed to her loss to donald trump. today in jerusalem, israel from

minister benjamin netanyahu pray secretary of state mike pompeo for taking what was called a firm position against iran. >> no enrichment, tough sanctions, and iran should get out of syria. we believe this is the right policy. we believe it is the only policy that can ultimately guarantee the security of the middle east and peace in our region. our: prime minister netanyahu called on all countries to follow america's lead because "iran is an aggressive force." global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. crumpton. this is bloomberg. let's get a quick recap of where markets close today. u.s. equities did rise but volume was lower than average. it was down double digits compared with a 20 day moving average. moving on to the other asset

classes, we do see the euro gaining ground versus the dollar. the 10 year yield unchanged at the moment and oil continues moving north. let's head over to erik schatzker in california. welcome viewers and listeners worldwide here to wells fargo headquarters in san francisco, california. i'm here with the ceo of wells fargo, tim sloan. thank you for having us. tim: good to sit in front of the stagecoach. eric: let's begin with you new ad campaign. for a company as big as yours to say effectively, we screwed up on national television. ,hy draw attention to yourself attention to your mistakes,

let's say, by meeting that you lost your customers trust instead of just moving on? because we are telling the truth. we've been very clear, and it's not the first time we made those statements on national tv. i been interviewed by you when we talked about it. i think it's us -- it's honest, it's saying what made some mistakes, there is no question about that. we have taken responsibility. we are not perfect, but were going to move forward because there's a great history of this company, we done a lot of really terrific things, which we talk about in the ad, and we focus on what we are doing for our customers today, which is a lot about innovation. erik: the reason i ask why is because i think back to recent history, for example, the financial crisis. banks thatlots of made mistakes that contributed to the financial crisis, but i cannot think of a single one, not bank of america, not other companies

like aig, that ran an ad campaign to apologize, to atone for their role. why is this different? tim: again, i don't want to speak for other companies, but i will speak to our decision-making. if we look at the feedback we were getting from our stakeholders, they wanted to ,ear us take responsibility sewer listening to our customers, our team members, all of our stakeholders, and missing is a really good lesson we have learned over the last couple of years. so that is just us. say trust iny financial services's hard-won and easily lost. how do you rebuild trust with these customers while there are still some ongoing issues like the one we found out about last week, for example? tim: the issue that was covered last week related to business banking had nothing to do with customers. those were internal bank

document and there was no customer impact or customer harm. the way we think about rebuilding trust is simple. first, i view it as my number one responsibility. ,ow do we go about doing that other than listening, as we were talking about, is making sure that we make things right for our customers. is not only about making sure that any customer that was harmed is remediated, which we are doing in our retail banking business, in our mortgage business, and are auto insurance business. it's also about providing the right information for our is to manage their financial situation in an appropriate way. i think about the fact that we have the most favorable and most customer friendly overdraft policies today in terms of overdraft rewind and real-time balance alerts for our customers. secondly, it's about fixing anything that was broken. we have fundamentally change the organization of the company.

we changed leadership. tim: i was just listening to what you were saying and thinking to myself, if you are right and you have finally changed the culture of the company and the way it does business, then what we learned about last week, offering some client information without the client's permission, surely has to worry you, because that seems cultural, doesn't it? it's not all that far away from creating phony accounts or signing people up to our insurance that they didn't need and charging them improper mortgage fees. it seems to suggest there is still a cultural problem. that's why i asked the question. tim: i want to reinforce that were changing and improving our culture. ultimately, the culture of the company is fine. satisfyingsion of our customers financial needs and helping them succeed financially. we have five primary values that drive this company. but it's interesting, because if

you google the word culture, in .45 seconds you'll get 90 million references. everybody has a different definition. when i think about the culture of our company, it is absolutely fine. the issue we have in the company is how we are operating the policies, the procedures to accomplish our goals. that's where we need to make improvements. when i mention about fixing things that were broken, those are the things we are fixing, and we are making a lot of progress in terms of addressing these issues because when you think about the situation last week, which is fair to bring up, by the way, the difference is that that was discovered because a team member raised their hand come and we been reinforcing to our team, if you see something that is problematic, raise your hand. that is what happened. it got escalated independently of the business. the business then looked into it with our risk partners. we stopped the inappropriate activity, and we are moving on. if you compare that to where we

were two or three years ago, that would not happen. erik: would you say that if any other bank of your size were to do the same thing, undergo the same cover of self-examination and encourage the same kind of self reporting, we would be hearing similar things out of them to what we are hearing from you? tim: again, i don't want to comment on behalf of a competitors, because they are well run and good firms in the light. i think anytime you have tens of millions of customers, you provide lots of products, you have people everywhere, there is a chance that something could go wrong. could it happen for them? absolutely, but i'm focused on wells fargo. erik: i don't need to remind you, but i'm going to, that an enormous gap has opened up between the performance of your stock since september 2016 when the first of these gambles erupted, until today. if you compare it with other large banks, and i don't mean to

long do youow think, given all the steps you are undertaking, it's going to take to close that gap? tim: hopefully not too much longer. when i look at our financial performance in the midst of one most difficult periods of our history, i'm really proud of what our team has done. one of the few companies in this country that made more than $21 billion in the last five years. when you look at our metrics in turn on assets and return on equity, you are right, our stock has not performed as well as we like. personally think it is undervalued, and we are very focused, as we talked about in our investor day a couple of weeks ago, about moving this company forward, but not just to make sure that we've got good returns. that is result of providing good customer service, having highest team member engagement, making sure we are very innovative, that we manage our risk appropriately, and improve how

we manage risk. clearly it's going to be up to the investors to decide when they let you out of the penalty box. the last month we been the best performing large banks stop. -- large bank stock. to maybe sound heretical, but i don't worry about what our stock does today or tomorrow. what i think about at wells fargo is where we will be two years from now, 5, 10 years from now. that's where you got to be focused. if that means we have to go toough a difficult period make the right investment so that our earnings are a little bit lower than they did it could be, i'm happy to make that investment. that's the right thing to do. erik: one of the things investors have on their mind is the relatively and president step the federal reserve took on

putting a cap on your balance sheet. in retrospect, should you have been more solicitous with regulators, should you have been more aggressive in making changes on the board? mike the fed have redacted less harshly had you done those things? tim: i cannot speak for the fed, but i can say there are a lot of things i wish we had done differently over the last years. but over the last couple of years, the changes we're making in the company to make sure that customers are taking care of and we are axing anything that was broken and building a better company by making these good long-term decisions, we are absolutely going in the right direction. erik: you have taken pains to exchange your investors and others how the asset cap is going to function, the impact is going to have on your business. one thing that doesn't seem as clear perhaps as some others is the degree to which it has forced you to change any of your plans or your strategic initiatives in terms of slowing them down, getting rid of them entirely, or modifying them to

accommodate what the fed has asked of you. tim: the reason we have an asset cap in places because we could have and should have managed some of our risk, not all of our risk, better, particularly as it relates to operational and compliance risk. we are very focused on making sure we are best in class in terms of how we manage risk. that's one of our six goals. having said that, the impact in terms of the asset cap affects a small number of customers in our .inancial institutions group beyond that, there is not impact in terms of how we are going about serving our customers. onk: there's no impact anything that wells fargo is trying to do? of customerterms activity, but in terms of making sure we are making the right investments, hiring the right people and fundamentally changing how we manage some of our risk, those are the things that are different. that is where we are very

focused, so we can meet and exceed any of the expectations of our regulators. gettinge your creditors as cutthroat as you expect them now that they think wells fargo has one hand tied behind its back? think about the impact some of these regulatory challenges have on our business, it's really not impacting most of our team members in terms of how they are interacting with our customers. having said that, we are in a competitive business. we have always been in a competitive business, so my expectation is that that's not really going to change. erik: it's getting pretty late in the credit cycle, most people would agree. wells fargo has already pulled back in some of the higher-yielding loans markets, like autos, for example. conservative would you say your approaches to extended credit right now? tim: conservative would you say

i would say it hasn't changed a whole lot. i've been at this company for 30 plus years. i've been through a number of cycles. i think that's one of the hallmarks of wells fargo success is how we manage credit. we tend to be more conservative than many of our competitors. that is one of the reasons we are here, as you were mentioning him a during the financial crisis, we were not one of the banks that created some of the concerns that occurred in the industry. there are some markets that we are a little concerned about, auto, you mentioned. we have pulled back enough and now we will be growing that business again. erik: where else? tim: we are bit concerned that some of the commercial real estate activity. we are the largest commercial real estate lender in this country. we love that business, but some transactions being done today seem a little bit frothy. isin, i'll think anybody smart enough, and i know i'm not

smart enough to pick the point that credit turns. but you've got to be consistent in terms of how you manage credit and you got to be looking for signals. erik: what are you keeping a close eye on to know when that cycle has turned? tim: first and foremost is what is the fundamental health of our country. most of our businesses here in the u.s. are we creating jobs? environment, there is a lot of dislocation occurring because of technology and for other reasons that can impact our customers. erik: there is a lot of concern out there that the yield curve the fed raises short-term interest rates. concerned because in the past it has presaged a recession. do you share that concern? tim: it certainly could invert. i don't think if it inverted in the short term over the next year or two it would because the

is a concern necessarily about us having a recession next year or the year after that. i think it has more to do with the fact that if you look around the world, long-term rates in europe and japan in particular are much lower than they are here in the u.s. you could argue whether that makes sense from a risk return standpoint. i think that is what is keeping a ceiling on longer-term rates. you are seeing the yield curve flattened out just a little bit. if the ten-year treasury is at 3.1% today, where do you figure it peaks? tim: i'm not smart enough to know. we have great people at this company that are thinking about that all the time. could i imagine us seeing a 10 year at 3.5% or 4%, sometime in the next 6-12 months? absolutely. significantpretty backup of almost 50 basis points just in the last few months. if you believe that economic only in the u.s.

but around the world, will continue to increase, you could imagine rates getting in that range. is rates get higher and the yield curve slopes more positively, it's better for the be, as long as the underlying economy is performing well. from our perspective, the positive yield curve and the higher rates is good for the company and the industry, as long as the economic activity is strong. what would happen if we found ourselves in a bond bear market? what would that signal? he pace, if it was quick, would be negative for the underlying economy and you would see a slowdown in economic growth. that is what i would be concerned about.

it is the pace and the absolute yield. >> you have plans to cut costs by 2019 and more the following year. you are about $1 billion through. eliminate so much spending and maintain customer care and manage risk? just toopenses are high for the company. having said that, we are the half billions on of our customers to improve risk-management and cybersecurity and the like. the fact is that our expenses are too high and we will bring them down in a thoughtful way to meet the expectations of our customers and the regulators. >> i am going to ask what sounds like an obnoxious question.

why do banks find a way to cut costs when they need to and under pressure as opposed to when times are good? anlet may push back with obnoxious answer. you look at the performance of wells fargo and our financial performance when we were making acquisitions and our efficiency ratio was the best in the industry. because of some of the sales practices and the pace of the investments in our underlying infrastructure had our expenses are dealingh and we with that. what you have outlined what that means to the branches and some of it has to do with technological advances that you are making and you are going from a branch footprint to

something in the order of 5000. headcount?ns to the is there going to be a reduction in the number of people employed? >> it depends. we have jobs that are open, but there is no question that, as we reduce expenses, there will be an impact on the members who work at wells fargo. in terms of branch reductions, there has not been a big increase. most of them are branches that are near one another and we have retained 99% of the team base. >> you streamline this and take out the expenses from one use -- when you started. that liken't look at

that. that doesn't mean a commensurate reduction in team members. technologyenses with that have more to do with the underlying systems than with people or a lot of professional fees or consultants we used to make those changes. -1 will not be a 1-for reduction. look back at what you have done and asked the question of how far along you are. you have identified all of these things you needed to do. you know what the list is. are you at the end?

have you done everything you need to? it is a constant effort, but, in terms of things you need to look obligee change, how far along are you -- need to accomplish and change, how far along are you? >> we are very far along. we have talked about this in the past and i think it is an important point. no matter how well you are performing, you have to raise the bar and you cannot expect a third party to do that for you. i do not ever want to rest and say, "you know, we have accomplished everything and we are done." it would be like running the patent office in 1909 and saying that everything that is ever going to be invented is invented. we need to make progress because that is what customers tell us.

their expectations are very high, whether it is consumer, weld, or wholesale customers, they expect the best and we have to raise the bar on ourselves to make sure we are the best. to thank you for spending time with us. >> thank you. i appreciate it. >> tim sloan is the chief executive officer of wells fargo. back to you. >> thanks for that interview with tim sloan. the backdrop is the stumbling share price in wells fargo. in fact, it was pointed out by tim sloan. wells fargo has trailed the peers since 2016. bank of america is almost double, 94.5%. >> some people have pointed out

that wells fargo shares have not fallen, but you have to look at the underperformance. above water after the november election, but you have wells fargo as the best performer there in this. -- in this period. number one thing is rebuilding trust and that is why they have launched the ad campaign. they have said that they want to hear the firm apologize and then say that the account details have been tampered with and he said that did not have a customer impact, to erik says it goes back cultures of trust in the firm and listen to what tim sloan had to say. >> i think about the culture of

the company and it is absolutely fine. the issue is how we operate and the policies and procedures to accomplish our goals. that is where we need to make improvements. i mentioned fixing things that were broken and we have made a lot of progress, in terms of addressing those issues. crux of it when they are trying to do an ad campaign. it is a tough one here. we will have plenty more of that interview. >> he is not done. he has more on the to-do list. r slams aman staffe white house staffer. and hasnnon reemerges

more to say about the current truce with china. this is bloomberg.

controversial strategist, steve bannon has reemerged and attacked steven mnuchin for his role in negotiating with china. phonewas an exclusive conversation with steve bannon earlier today. it is no surprise that he is slightly annoyed. >> putting it nicely that he is slightly annoyed. vanden went all out against the -- bannon went all out against brokered byruce steven mnuchin in and he said s -- steven mnuchin anha

c bennett took issue with the lifting -- steve bannon took issues with the lifting of sanctions on zte. he still plays depends on who you ask. ,ext week, he will be in italy meeting with the far-rights ultra-conservative leader. he didn't answer when i asked him about the last time he spoke with trump. >> you once where i want to go, his contact with trump. contact the u.s. trade representative? in contact with the political orbit outside the white house, but he would not

say who read talks to inside of the white house. we should note that steve bannon nunberg,g stone going after the fbi. i can tell you that sanders released a statement that said with ronp met rosenstein and, as a result of that meeting, john kelly will meet with lawmakers on capitol hill and others in the intelligence community to start an investigation into the fbi. jeff sessions called on the inspector general to expand the fromstigation into the fbi usageama administration's

of techniques on the trump campaign. >> kelly is setting up a meeting dni.the fbi, doj, and who is doing the investigating here? a good question. there are many investigations going on right now. if you are outside of washington and trying to make sense of it, jeff sessions has instructed the inspector general to expand his scope of the investigation into the fbi, but that is separate investigation,r which many would argue is the most important one. we have no timetable for when the conclusion of the mueller investigation will be, before or butr the mid-terms, republicans i speak with feel

consistent that the pressure on fbi officials could lead to another investigation within congress that investigates the fbi. i am losing count. begettinggations investigations. interesting to see what bannon is up to. >> the trade representative had a fascinating piece. up a.s. trade rep setting political failure. >> moving the goalposts about what the administration wants to achieve. op-ed worth watching. >> we will keep our eyes on that one. a tightening of sanctions on

venezuela. we will talk about what is next for the country. this is bloomberg.

>> more of the same in venezuela in anaduro reelected election that was boycotted by leaders. a stepping up of economic pressures with an ordering of debts -- [indiscernible] the assetned by manager from miami. great to have you with us. obviously, this was well-anticipated. in light of what happened in the united states to step up the pressure on the regime, what are

we expecting? he sanctions announced were measures to cut off the funding to the regime. if your viewers remember, venezuela sold receivables as deal.f the petro caribe what the sanctions do is prohibit selling receivables going for. from a creditor's point of view, they cannot give away assets at $.50 on the dollar. that they are saying basically provided a form of collateral for future obligations and can no longer do that to preserve the assets within the country. >> right. it cuts off the sources of funding in the short-term and they sold receivables. that for cash.

>> big picture, the results over roe weekend are madu reelected with fewer votes than previous elections. the same, more deterioration and widespread suffering? >> yes. citizenshe apathy in and you look at the opposition numbers. no matter how you slice it, the turnout was poor. day-to-day life is very difficult. meet,tion, making end's it was difficult. the exodus of venezuelans have been large and the ones in the country have almost given up. mentioned investors in

venezuela and what the u.s. did was benefit fixed-income investors. some question the ethics of investing in the regime with a humanitarian crisis. have you been putting your money to work? to what extent are forward investors playing a role in helping the country get on track? what's we will play a -- >> we will play a role and we are willing to be accommodative. we are not providing it will not provide funding to the current government. lawissues under venezuelan with all government bodies providing proper authorization -- nothing that is prohibited by illegal arrangements. accommodating investors

that frankly try to work with governments to get them on their feet. venezuela has 18 years of mismanagement on a scale that makes zimbabwe it look like the s from chicago. >> it was mismanaged, but they had capital markets until maduro decided that was not important. you talk about having a government in place you can negotiate with. do you see a prospect of the government being willing, back to able to come the international community and being reasonable or does there have to be a fundamental government change in order for that to happen? maduro would be willing, but do not think other governments around the world would allow him.

i do not see the regime negotiating a restructuring for new capital. that is really what they need access to. the new and additional funds and i do not see any ability with that government in place for money to come in. >> how long until a collapse? thattough question investors have been thinking about for many years. you look at the investment bank that put out the piece today about venezuela being run by a the 1950's. in i don't think you will see a change in the government in the next couple of months, but sooner is better for all parties. >> great chatting with you. that is the chief investment officer joining us from miami. thank you for that. turn and look at the

deep dive with investors pouring money into the double-down long bets. this is the --- it is different than an etf. it moves twice as much as the vix. you can see the price of this etf analyst says this happens a lot. aree temple, but people trying to call the bottom or it could be a technical play. settled after averaging -- people are looking for a pickup, but we do not know the positions. >> people are still punting on leveraged notes. itaking of volatility, relates to this chart and it is

interesting to watch the changing nature of volatility since it picked up. anthonyery vix and as s&p focus, but then there was amazon and facebook that were the volatility. the chart has normalized and it shows that the relationship in the volatility is right at normal levels for the last year and suggest that, to some s are getting back to normal and the are no areas that are standing out. data, heg about the talked about people selling the shorting volatility again. aboutmind being worried

volatility. >> if you are long anything, it is volatility! coming up, what you need to know for tomorrow's trading day. this is bloomberg.

>> what did you miss? a gain in stock. >> a big thing. moon visits washington and meets with trump in advance of the coming summit with north korea. mark zuckerberg testifies to the european parliament about using personal data. >> that does it for us. bloomberg technology is next. >> have a great evening. this is bloomberg.

♪ >> i am emily chang in san francisco. this is bloomberg technology. gdp are goes into effect this friday. changing forever. how tech companies handle personal data. how it will affect you and what the likelihood it is and lamented in the united states -- an -- implemented in the united states. steve mnuchin