lira hit a record low again. more pain to come and of the central bank goes missing. u.k. inflation disappoints and turkey jitters spread, the trade is risk off. and the battle over barclays, barclays directors considering hypothetical combinations pitting the chairman against the ceo. david: welcome to "bloomberg daybreak" i am david westin with alix steel. president trump trying to roll back the dodd frank, but i think it is time to go to turkey. alix: apparently really cheap. record low again. but with that finally seeing contagion and the risk off field we are seeing. take a look, futures down by about 17 points, triple digits for the dow, 200 down in the future markets. dollar-yen, 1.0972.

has seen then that biggest move, nine-month low. 10 year moving lower by 5%, five basis points, as a lot of buying comes in. strong all over the u.k. in europe, with the exception of portuguese debt. and yields up as much as 13 basis points. /10de rolling over, down 6 of a percent. and crude is holding up well. david: maybe if they could get a government in italy, that might help. alix: apparently a 5:30 p.m. we are getting a press announcement from the president. david: time for the morning brief. at 10:00 a.m., new homes sales for april. $36 billion in five-year notes. at 2:00 p.m., the fed will release minutes from meetings

held earlier this month. unchanged, but we will look for clues of what is coming. alix: first take, we are joined by peggy collins and michael mcdonnell. the first thing we have to look at is what happens with the lira. another record low. take a look at standard deviation moves, a very unbelievable move, the biggest monthly loss since the financial crisis. michael qamar we looking at capital control? is this -- michael, are we looking at capital control? michael: turkey has not been very pro-capital control. the problem is if you are the central bank, do you try to step in and to do something? what do you do? if you do a one-off significant rate hike it might not be enough, the market could be expecting more into could exacerbate the decline. like you sell with argentina,

200 basis point rate increase, they had to move a couple times. they are stuck between a rock and a hard place. not to mention the political side of things. hi to see what the outcome is going to be. i am glad i am not the turkish bank governor. alix: the fact that we could see in argentina style rate hike is pretty much off the cards. would it stabilize the market to begin with? y: it is high inflati and politics in turkey. earlier this month, the president of turkey basically signal to the markets that after the election in june his plan was to kind of step into monetary policy even more, so less independence for the central bank. that is exactly what wall street is not looking for. wall street is looking for the central bank to raise rates, while he felt his people we are facing higher prices and i will cut them. alix: the bulls are going to say, it was speculators.

of a symbol came out with a statement saying, an indication of our confidence in the turkish lira, the assets, excluding short-term needs, having converted to lira today, do you think that the turkish president said, do me a solid? david: and single central bank cannot support currency on their own, they will just use of preserves. michael: there are no fundamentals in turkey that would justify this sort of move. it is the idea you will have inflation in turkey and not have the central bank responding in kind. it is not like there is deterioration in the fundamentals, it is the expectation that they will get done as things get worse. alix: we are talking about governments, italy now for a second. the president has a summoned -- who supposedly has been up for prime minister by the party. the president has summoned him

today, according to a statement. he is also asking the two leaders of the five-star about this. david: there are questions about conti, also now they have a finance minister proposing, who is a eurosceptic. so when theys -- need is somebody question in europe. out, in pmi's that came will pull up the chart, showing pmi's overall. the eurozone is the white number, yellow germany, blue france. but all basically the same. all way up there near 60 if you months ago, but they still have expansion, but this is a drop off. positive.t is still it is important to note that they were overestimated growth in the first quarter, so now there is a chance they are more accurately reflecting the growth rate across europe. and it also makes sense, because

the more europe is growing, the closer they are getting the full capacity. you would expect it would slow down, but the question is how much does it slow down. is it a systematic problem that could cause the ecb to take pause on plans to taper asset purchases, or is it more healthy. david: if it is a larger issue, we heard this again and again, but now not quite so much. peggy: the question on if global growth is disintegrating. i think as michael was saying, people were thinking there was a temporarily soft spot in the first court of because of whether and at the flu, now we have the latest numbers which could be a result of public holidays, you have to live hurry up -- love europe on that front. in general it seems like the ecb has confidence in the numbers that they are seeing, but whether or not these numbers

will push off any more moves by the ecb into july remains to be seen. alix: become a currency strategist for a second, mike. what has more downside versus the euro, as the euro goes down? - lira.: church - [laughter] alix: emerging markets could be more exposed to the dollar, now you have a rollover of growth for the euro, so which one will have the biggest read rating? -- re-rating? michael: if it looks like the fed will continue increasing rates, or gradual, slightly more than gradual, you will see countries with large current account deficits be a little more susceptible, like india, turkey, south africa, the usual suspects. that is where you have some of the most risk in the emerging markets. david: third story of the morning, reports from the financial times that barclays might be thinking about getting together with a standard chartered.

you see what happened to the stock, barclays went down, central charter went up. but then standard chartered came out with a quote. "we are entely focused on executing our strategy and do not comment on this typef specation." pouring some cold water on it. does this deal makes sense? peggy: people were dubious about this, but you the way people are saying if it is real it is probably not the best idea for the bank. essentially, people saying if you are going to try to bolster barclays, what they need to do is focus on the investment bank that has been underperforming, as opposed to doing a deal with an asset manager like standard chartered that has expertise in em, africa, the middle east, the e.m. markets. david: one of the questions for me was his plan is simple, he has a strong deposit base in the u.k. come up together with an international investment bank.

he wants to grow that with the deposit base camilla jpmorgan, so this is coming out of left field. they do not have much of an investment, so it is it really the chairman raising this? also be thatld barclays is under pressure from an activist investor. is it the bank trying to say, we hear you and we are in talks. so iis a broad phrase, think that it may be that the banks are trying to show that they understand scale is important, mergers in this space have been happening more frequently, but barclays may be trying to show that they are thinking about things and try to get or the activist and it shareholders wanted to be. alix: thank you both. coming up, with the lira plunging to a record, we will discuss the risk of emerging markets contagion. geraldine sundstrom of pimco says, rate up -- re-up those assets into cash.

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>> this is bloomberg daybreak. i'm kailey leinz. target online sales paying off. missed estimates, the sales growth was better than expected thanks to a 20% surge in revenue. midterm forecast better-than-expected. tiffany posted first-quarter earnings that beat estimates. the chain also reported comparable sales higher than expected.

and tiffany boosted its four-year forecast. finally, lowe's reported first-quarter earnings that missed estimates. it also posted comparable sales growth that was less than expected. namedday, the company allison to be its next leader -- ellison to be its next leader. alix: the big mover in the markets is the turkish lira, dropping to record lows. take a look, the daily percentage of lira dollar, s you can see the down and up moves. down 20% this year. the lines are the standard deviation and we have seen two standard deviation plus on the down move in the lira, so does that -- >> no question about it, it is a general movement of how the market is down. then you have a selling process going on. do not forget, the exchange rate of funds is big now and was the

machines start selling coming you get a knock on effect, a snowball so to speak. alix: joining us is geraldine sundstrom, pimco before the manager. you are diversified with emerging markets. is turkey in there for you? nowldine: emerging markets are really amazing work -- really a mosaic of different countries. we are late cycle and probably everybody is trying to -- at the moment. alix: so where were the opportunity come, if we see the contagion spread, in addition to the dollar holding up of the fed winds of doing a hike? geraldine: it looks like asia is typically a safer area the uncertain high-yield countries, but the recent move has created some value and we are seeing some exchange rates, which are starting to deviate from their fair exchange rate. but ultimately, you know,

emerging markets are high -- to global growth end of global growth is really slowing down as the fed is hiking, this would be a less a favorable environment for emerging markets. so a bit of a wait and see with a certain aspects. but generally speaking, we do not think the recession is around the corner. it we think that central banks are relatively dovish, no big signs of inflation. so it is a bit early to cry wolf. david: as we look at the lira moving, before that the argentinian peso, how much are the fundamentals as they were, the balance of trade and strong dollar was this, or a lack of confidence in the central banks? we had on the argentinian central bank, not pressure coming from the turkish president -- now pressure coming from the turkish president.

geraldine: a lack of an anchor is critical, and very important. the particular aspect somewhat -- i mean, this is not new in turkey. in terms ofening geopolitics with the situation in iran, the situation with oil prices. turkey is amp big int of oil, and in this is not helping. so this is a number of factors coming together from the fed, to the strength of the dollar, to the strong oil prices, independence of the central bank, and also the elections coming with a president that does not want to adopt policies. david: i want to come from developing markets into developed markets. we had the pmi numbers out this morning and we've a chart showing the composite and german and french. 54.1 for the composite, but less than -- it has come down from

where it was five months ago. should we be concerned about growth in europe? geraldine: it is too early to be concerned. there were factors at the beginning of the year, but certainly something we will watch, especially with the situation in italy that could dampen confidence even further. certainly, this would point to the ecb being even more dovish. even extending quantitative easing a little bit into the end of this year, so in oft sense more continuity monetary policy. -- youou are moderate to are moderately bullish on equities, are you hedging more? you could end up with a $1 billion outflow of the european market? geraldine: terms of local performance, depending on theurrency base, euro-dollar, you would have to hedge this.

the weaker euro is good for exporters. we saw in the first quarter a number of companies struggled with the results, because of the strength of the euro. now this is going back the other way. the weakness of the euro is helping a number of sectors in europe, so is the strength of certain commodity prices, so it is not all values for the european stock market. -- bad news for the european stock market. david: standard chartered and barclays pouring cold water on a possible merger. we will talk about that next. this is bloomberg. ♪

david: the financial times reported barclays may be thinking about a possible merger with standard chartered, but standard chartered issued a statement saying, "we are focused on executing our strategy and do not comment on this type of speculation." barclays stock moved it down and

standard charter move up. jonathan, welcome. why would be dealing this every make sense? investors immediately said, we do not get it. jonathan: i agree. it doesn't. was you are looking at m&a a you want is synergies. there is limited overlap. put $50 billion to work. standard chartered has been in recovery mode. so different parts of the world, completely different businesses and both of them trading below standard. it makes very little sense. david: where does this -- how much of this is a dispute between the chairman on the one hand and jes staley on the other, maybe this is where this is coming from. jonathan: i think that is exactly where this is coming from. the chairman worked for standard

chartered. he is said to be unhappy about the area of africa. and the u.k. is the focus for the ceo. this is not the time to be barking on the return to growth of balance sheet lending. david: i want to pull up a chart which compares the performance of standard chartered and barclays, both are doing better than over all the stocks for 600 banks, although barclays is doing substantially better than standard chartered. what about the reserves? you have two banks with financial reserve requirements. -- if you put are them together and look at the pra in the u k, that buffer is going to go up. this is the opposite of what banks want at the moment. the other thing to bear my does is, this is ad

complicated unknown, standard chartered into barclays, we do not know what that means for capital. this is not the time to be, getting the issue. david: we appreciate it. jonathan tice. alix: with us still is geraldine sundstrom. taking a look at how to abide weight which banks -- how to evaluate which banks you like and which ones you do not. is it does with exposure to africa, private wealth management, what is the right strategy? geraldine: i think that each bank is not borne equally in europe and in the u.s. commodity a lot of repair has been done -- u.s., although a lot of repair has been done with the u.k. balance sheet -- european balance sheet. what kind of drive do you have a rates, are negative this is drug that european banks have at

the moment, and with the weight of regulation really adding pressure on profitability. david: i want to pull up a chart that compares european banks and u.s. banks. blue line at the top, the u.s. banks, far and a way better off. the british banks are in the middle with the european banks at the bottom. is it a viable strategy at this point for european banks to go global, or do they need to rein it in and go more domestic, which apparently deutsche bank is doing? geraldine: i think that the lack of lendingrowth and negative interest rates in europe has made those banks to be a lot more conservative. i think that u.s. banks are in a much better position in terms of profitability. rates are no longer negative. also, they are benefiting from a little bit of deregulation, as opposed to the regulation pressure in europe. at the same time, this thing in

terms of price-to-book, this is how banks have been cleaning their balance sheet in the u.s. it was swift after the financial crisis. but in europe it is taking longer. alix: fair point in that part of the equation, but look at yield curves. points,king at 45 basis what is the thesis for liking u.s. banks when the yield curve is flat? geraldine: i'm not saying i am liking u.s. banks, by appointing to a different environment that those banks are facing. i would say that european banks with very large deposit base and a negative interest rates have really something of a burden, rather than the u.s. banks that have enjoyed positive interest rates, despite the fact as you rightly pointed out, that the flatness of the yield curve is not really helping them. alix: geraldine sundstrom thank

you.ank the question will be who will benefit most from the dodd-frank pullback. david: particularly the regional banks, some of the custodial banks. alix: the only good sign they got, the big guys, that they can sell in a time of crisis. david: which they have fought hard for bearded alix: talking -- for. alix: talking about that and we will look at rolling back dodd-frank. we will learn more from jeb hensarling. this is bloomberg. ♪

alix: this is "bloomberg daybreak." happy wednesday. take a look at where futures are

heading. dow futures off by 180 points. s&p futures off 6/10 of a percent. italy is getting hit harder. do we are doing not have a new prime minister? the president is summoning conti, as well as other two heads to his office. david: i thought of the presidency was a figurehead, it does not look like a figurehead now. he is working. not sure he likes this deal. alix: you also have the italy situation causing yields to spike. risk offlso have a big move in the currency market. euro-yen down 2%, the lowest level in nine months. the lira having its fourth month, triggering safe haven buying anywhere you look, whether it is france, germany or u.k., even the u.s.

you have a five-year option later on today for $36 billion. and it was ok yesterday for the two-year, coming in a little bit light. they were there. david: at the right price. alix: and the right yield. copper, we always talk about oil, but copper is up 2%. oil is where the risk is, global growth currency emerging markets story. david: you follow copper closely. alix: feel like oil has a lot moving with it that is keeping is supported in the risk off mode, that is why copper could be getting hit the most. david: you have a program as well tomorrow. now a look at what is making headlines. kailey leinz has first word news. >> british foreign secretary boris johnson has warned theresa may to get on with it and take the u.k. at of

european union trade rules. he has a list of demands for theresa may. he insists it is up to her to enter that the u.k. -- ensure that the u.k. take back control. moving ahead with a summit next month. thatresident is expecting the meeting will take place in singapore and it says there is a substantial chance it will work out. the sticking point is the issue of whether north korea look of of the nuclear weapons. president trump with a chance to make good on his campaign promise "to do a big number on the dodd frank act." the house has passed a sweeping overhaul of banking regulations against smaller banks released from rules. although they did not get as much as they wanted. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. david, more on dodd-frank?

david: think you so much. kevin -- thank you so much. kevin is live with jeb hensarling. kevin: the man of the hour. big reform bill yesterday, fixed it, whatever you want to call it. what does it mean for community banks as they plan for the regulatory structure in the year ahead? >> it means revelatory meetings will stop. we have been losing a community bank for a credit union every day since dodd-frank was passed. ironically, since it was passed, the big banks got bigger and the taxpayer got poorer. now, finally under president trump's leadership, this is going to change. i wish in the bill was bigger and bolder, but it is to do with the president said, it is doing a number on dodd-frank.

to some extent, the big debate has not been regulation and deregulation, it is smart regulation and dumb regulation. kevin: how many democrats supported it? >> we had a good number in the house. they had almost two thirds of the senate to support the senate package bills. and i am happy to say, modestly, that over half of the bills started in the senate and two thirds of the regulatory bills that pushed back on the bureaucracy came from the house. it is a progrowth bill. number one, fortunately we now have a 3% growth tax policy. policy,a 3% regulatory especially with banking and capital markets. this is the banking portion. you did pass with a strong bipartisan vote. we expect to have a on the president's desk. this means that people throughout america will have better options to buy homes, buy

cars and put food on the table. kevin: could there be another package before the midterms, or is that not realistic? >> it is very realistic. i am not ready to sign a blood oath it will happen, but we have a guarantee from the senate that they will vote on a package of bills that we have worked on, that is about capital formation. s-2155 is mainly a regulatory relief bill for banks. what we do not have, as you know in america 80% of corporate debt comes from capital markets, not from banks, so we have a different system from much of the other industrialized world. we have had in the past something called a jobs series of bills to jumpstart the business startups. the first series of bills were signed into law by president obama. so this is all geared toward venture capital, to startups, brokers., strong m&a

we have a package like this in the house and many have passed by over two thirds margin. i am trying to work with my counterparts to say, we have been thinking piece done, but we do not the capital markets piece. that is coming next. -- kevin: there was a bipartisan amendment from chris van hollen, from maryland, that would make a more difficult for the president to lift trade restrictions. i did notice in the house yesterday -- do you have concerns about the president's proposal to lift a trade restrictions? >> one, i reserve the right to see the details of what the president is going to end up proposing. i want to see what the president ng.pro when sanctions are announced, we want them to be imposed. but the president is our chief

negotiator, and understand this in the context of our greater trading relationship with china, and obviously it is in the context of the security and peace on the korean peninsula, but if we are going to have stations, they should be imposed. so i am looking for that explanation of exactly what the administration has in mind and many of us are concerned. but i want to have the administration unveiled the entirety of the package and hear their side of the story. i do not want to jump the gun. kevin: in terms of what we're seeing in the market with regards to the back and forth with china, obviously the development of whether or not the june 12 summit is going to happen with north korea leader kim jong-un, what do you make of that, as all of this continues to be so quickly evolving? >> i am concerned. trade is important to america

and i give the president credit for his tax policy. they percent growth tax policy -- a they percent growth tax policy. he is on track to give us the best regular tour policy since ronald reagan, but we will lose it all if we end up in a global trade war. i hope the president's negotiation strategy proves brilliant on a bilateral basis and we end up with better trade deals. at the inner the day, trade is -- but at the end of the day come a trade is important. i was a preface with larry kudlow with a bunch of members of congress, and every single one of them, including myself, talked to larry about our aluminum producers are users, users in our district that take the imports, in my case turn them into shelving or buildings, and they would be hurt by the steel tariffs. we said, share this story with the president. it is about american jobs.

frankly, it is about american consumers as well. kevin: do you think he will ultimately lifted the restrictions against china, are you advocating he lifted the restrictions on thie imports? >> i want to make sure we are focused on those who have not lived by the rules of the tw wto. those who are taking our intellectual property and technology. so if there was a nationstate that was deserving of some kind both new arrangement, it is certainly china, but i want to make sure that america is not hurt, that we do not cut off our nose despite her face. we have to ensure that this involuntary transfer of intellectual property and technology stops, that is wrong and the president is leading on that. kevin: in the minute we have

left, talk about the farm bill and republican pockets and whether it should be tied to immigration. where is the status of that this morning? [laughter] it is moving fast. >> as one who grew up working on a farm, i do not believe in the farm program. i do not like it and i never have liked it. others agree with it. i think that we lose our moral authority to deal with other forms of welfare with people making six-figure incomes getting it. i do not want the farm bill tied to the welfare reform the help of people off of poverty into work, much less do i see any time necessarily to immigration, which is another big issue that we have to tangle with. i think the quote from mark twain is, "i am grateful i can say, i do not know the answer to the question." twain theting mark

day after the dodd frank bill. we appreciate the time. david: you sometimes remind me of mark twain, actually. kevin: huge complement. david: thank you so much. the man of the hour. tune in later this money for our interview with marc short, white house director of regulatory affairs. alix: the news from pimco, you want to go longer in your cash allocation, up that part of your portfolio 10%-50%. and the recession is not coming 3-5 years, and expect single-digit returns for the coming years. he calls it depressing. still with us from pimco, geraldine sundstrom. come inside the bloomberg, a really interesting thing happening. the white line is the 10 year yield, the blue line is the

three-month treasury build, almost -- bill, almost at 2%. do you want to be in cash because this is yielding more? h is becoming more attractive if you are a u.s. investor. that is not the case around the globe. i suppose it is a new year and is something that pimco has been talking about, the volatility on the rise. maneuver is room for and a decrease in freedom from the policymakers. we have used a lot of ammunition already. so keeping that powder dry involuntary markets is important -- in volatile markets is important. it is not a question of complete risk aversion, but keeping powder dry for a good entry point into those markets. alix: that brings us into the central bank divergence, which is increasingly divergent.

fed minutes coming out from become a more important, especially what they say about asymmetry. i want to show you what is happening with treasury positions. jpmorgan showing more clients are going long as the yield winds up moving higher. are we priced for perfection when it comes to the fed scenario? geraldine: i think we are coming closer to what we have been thinking. we still believe in the new neutral, that the rates will be lower than they were in the previous cycles. with the tenure around -- ten comingound 3%, that is much closer to fair value. alix: ok, geraldine sundstrom, good to see you. david: the ceo of morgan stanley seeing big changes for the bank, $1 trillion. and turn on your radio and listen to lisa abramovitz.

pimm fox joining from 9:00 until 10:00 a.m. it can be heard all across the united states on sirius xm radio. this is bloomberg. ♪

>> this is "bloomberg daybreak" ceong up, the union pacific lance fritz. ♪ david: we turn to wall street beat, where we cover three things wall street will be buzzing about. ubs skills up -- scales up. he tells bloomberg they are scaling up investment banking, but not raising the share of

capital allocated to the division. of morgann, the ceo stanley -- alix: i like that picture. david: and finally, carlisle's easy money. david rubenstein sees more money going into private equity now than at any other point in his career. alix: joining us is the executive editor from global television, who spoke to bloomberg about how operations are going. >> the asset management in the auto banking industry, scale has become an important factor. as for scaling up operations, we are scaling up investment banking operations, but we are type ofg to change the business we do or the amount of capital we dedicate to the investment bank, relative to water management operations. alix: how do you do that without resources? >> do more --

alix: with less. >> or the same amount. david: very friendly. [laughter] or speaks to the notion of they are looking at growth. i feel like a cross, especially with some european banks of late, late deutsche bank, we have heard more about cutting it jermaine and getting out of businesses. this is test cutting and trimming and getting out of businesses. i was interested in the what management side, which obviously ubs has invested in over the years. david: exactly, they have been a leader on the financial side. now some the us want to take them on, morgan stanley. yesterday, the head of morgan stanley was in washington and he said that asset managing is one of the most important vehicles we have and i am very excited. he said he wanted to reach $1 trillion in management. >> i love that number, as you

know. it is a nice round number. alix: i would like to get to that. [laughter] >> it is interesting how far morgan stanley have to go together. -- to get there. look at where they are now. blackrock is the clear leader. morgan stanley, this is literally a fraction. david: there is a lot of banks in between. >> the bank of new york mellon and morgan stanley, dot, dot, dot. they need to first get back to where they were. not too long ago, they were at $600 billion, now under $500 billion. david: he knows the busins and he was brought in to do that. you look at their earnings, they are dog well. alix: do they have to buy to get it? what kind of acquisition with a have to do? >> it is a theme we have been

hearing from the banks and the private equity firms that have invested in that business, that this is an area of activity, this is the place where people may be are investing organically, but you may need to buy to bolster that. david: carlisle is not having trouble raising money. head said it is easier to raise money than any other time i have been in the business. is it good news or bad news? >> great news if you are david rubenstein. money,if he can raise why can't other people raise money? >> one way to look at it is -- david: i am a glass half empty guy. >> from the private equity business, they are having a lot of people come to them and this sort of market clearly is favoring the incumbents in a lot of ways. that is large is because it grew carlisle,p like

they have built these machines that can ingest, as it were, huge chunks of money. and the big sovereigns, the public pensions, the endowments, they want to put money to work with fewer managers. you said a striking because i do not consider them private equity firms. they are wealth managers that happened have a p.e. side. so when we saw him trying to get into direct lending, we were thinking do have to go to businesses more risky and how do you manage that? >> a lot of what the big firms have been doing is bringing in big chunks of capital. david blitzer has a group that is able to deploy lots of capital, depending on where the opportunities are, not just private equity, it could be hedge funds, there is a lot of flex ability. david: now we know what alix's

goal is. alix: $1 trillion. that seems manageable. >> get right behind morgan stanley. david: great to have you. coming up, will he or won't he? president trump lifting penalties on zde. alix: and check out tv , watch us online and interact with us directly. scroll through on the right-hand side. check it out. this is bloomberg. ♪

david: ok, this is what i am watching. there is something developing between donald trump and republicans on the hill over the

zte. in 2016pped trading because of the sentence imposed, but not president trump thinks we should step back. president asked me to look into it. i said, they pay a big price without damaging the american companies and by setting them that we are hurting a lot of american companies." ande are a lot of senators congressmen the hill that a upset ou this, includi cornyn, who is a republican, who said, are you sure what you are doing? doing favors for the chinese. sections laws should not be negotiable, because the rule of law is a key part of what distances the u.s. from a country like china that is ruled by a communist dictatorship. alix: that is a harsh word. we talk a lot about donald trump 's strategy when it comes to all the issues he has worked on, whether it is dodd-frank him

s dodd-frank, -- i iran, or china. we have learned he says outrageous things, gets everybody totally panicked, then uses it as a bargaining chip to dial it back. david: the only thing i find a little bit interesting is he gets a free shot, he has managed to go over the line, even with his own party. they have a decision now that could kori taylor it. -- could curtail it. alix: consider utilities. withll take a look at that perkin. this is bloomberg. ♪ our phones are more than just phones.

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it's the internet in your hand. that's why xfinity mobile can be included with xfinity internet. which can save you $400 or more a year. it's a new kind of network designed to save you money. click, call or visit a store today. alix: markets melt.

equity futures dive. says ramp up cash allocations. fed minutes could become a tipping point. is there any more room to price in a rate hike? david: we come in on a beautiful shot of the white house. you know what is in the white house right now, the dodd-frank bill sent to the president. we welcome you to bloomberg. i am david westin here with alex -- with alix steel. dodd-frank, they are going to change the rule. alix: president trump tweeting a big rollback coming. david: just a few minutes ago. he says big legislation will be signed, after many years. this is bipartisan. things out seen many

of washington that are bipartisan and in fairness, largely banking has not been bipartisan until dodd-frank. alix: the question becomes is it going to stay that way because in order to get the house bill in the senate, didn't they have to make votes and changes on other things? david: they're going to fight it out over immigration but this one will go through. in the meantime, we also have trade. out, our trade deal with china is moving along nicely, but in the end, we will have to use a different structure and that this will be too hard to get done and to verify results. i'm not sure i know what this means. he is certainly backtracking. i don't know what he is trying to get us ready for. alix: is it in response to the

senate coming down on him for the zte thing? that was unclear. david: getting his fingers singed there. he is getting us ready for a different approach. alix: in the meantime, the approach of the market is risk off, risk off, risk off. about 1% but to me, it is euro-yen at a nine-month low, continuing to move lower as the yen becomes the safe haven of choice. buy bonds. out onnote's coming auction at 1:00. it is going to be a hard place to find any kind of safety today. david: time for the morning

brief. at 10:00, we will get new home sales and a 1:00, the u.s. is going to auction $36 billion in five-year notes. the federal reserve will release the minutes from its fomc meetings earlier this month. they left rates unchanged but we are looking at the minutes to see if there are any clues about what may be coming next. alix: as we were saying, it is risk off. u.s. futures pointing to a lower open. also in the fx market, that is where you are seeing a lot of movement. investors really flee to safety. also seeing a read through to the bond market. buy, unless it is the italian bond market or maybe the portuguese bond market. joining us now is eddie perkin, eaton vance chief equity investment officer. what do you do at the open? eddie: we are long-term

investors, so we are not actively trading day today, but i would say it has been surprising to me that the market has shrugged off some of the geopolitical events and the events in the currency markets you have referenced. but only turkey, but what is happening in argentina and elsewhere. the geopolitics in the currency markets are sending some warning signs and yet the u.s. equity markets have been shrugging it off. it is important to remember that we are in a volatile time. things seem to be strong in the economy, but the view that rates can only go up is something we have to balance with some of these risk factors. alix: on the flipside, we saw the smart money came in. the dumb money did not. tech, consumer discretionary. you don't want to buy utilities,

you want to buy more risk on trades. >> in the very short term, you can make a case that utilities are washed out, but structurally, these things have only underperformed for about a year. what do you say to that? eddie: i know him well. we have good debates on this topic. coming up on two years now for some of these areas and they were expensive a couple years ago and with rates backing up, the 10-year bottomed to 1.38. we are more than double off of the bottom. the 10-year has breached 3%. people are afraid to own these so-called bond proxies. they're worried about what rates mean for those companies. rates are an area that should have -- it is a real asset, real estate.

it should have a good inflation hedge element to it. with the underperformance of other areas, i think it is more of it -- more than a dead counsel -- a dead cat bounce. good fundamentals in many of those businesses. we are happy to own many of those areas. breaking news right now. this is about comcast and fox. it is now reporting comcast confirms it is considering and is in the advanced stages of preparing and all-cash offer. disney offered to buy a lot of the assets of 21st century fox. comcast came in and said we will buy the sky part. now they are in the advanced stages of preparing an all-cash offer that will be at least as favorable as what disney has offered. disney's offer is stock, not cash.

they are going forward aggressively, comcast. heard from foxo that they might be more interested in the stock. alix: interesting. is in the comcast deal better regulatory approval? david: exactly right. bob said two things about the comparison. number one, i think they want the stock and number two, there is a regulatory difference there. alix: eddie? you like a disney fox or a comcast fox? think investors generally prefer that disney be the buyer and that they do not get in a bidding war.

from a comcast shareholder perspective, they do not have that cash on hand, so they would have to issue significant debt. becomes a high price and with a lot of financial leverage. come care shareholders will not like it. -- comcast shareholders will not like it. i still think that is the more likely scenario, that disney is the winner. david: such a powerful point. we tend not to look at the balance sheets of the companies. disney versus comcast. bob can afford to do this and he is not using cash. what do you think about the long-term prospects of disney? eddie: it remains to be seen. the assets are good, so a lot of it comes down to the price paid. disney has a lot of great properties. this would be additive for them. of eatondie perkin vance will be staying with us.

coming up, the turkish lira points to a record. we will discuss that next. ♪

david: the turkish lira is hitting new lows today. the green lines are two standard deviations. there is an election coming up next month, months from now. pressure is growing on the central banko support the lira even as the president said he should have a say. we will come our bloomberg colleague based in istanbul.

this is quite the drama you have going on over there. the president says he should have a say in monetary policy. i feel sorry for the poor central banker. >> the lira suffered its worst loss -- worst loss against the dollar in almost a decade. as you said, investors are expecting the central bank to raise rates significantly. it is just not happening. we're experiencing virtual radio silence from the central bank despite this huge selloff in the lira. what investors are looking for is a significant rate hike. they are saying between 300 and 400 basis points, minimum. last week, it was 200 basis points. erdogan has made no secret that he dislikes high

rates and now investors are concerned that the central bank is being influenced by president erdogan and is not acting independently. this is unnerving investors and because of this, we are seeing a big selloff in the market. david: we appreciate the reporting. alix: still with us is eddie perkin of eaton vance. market bulls are going to tell you that risks are weighing on turkey but that overall you will have good value. they are in much better shape than 2013. what do you say to that? eddie: it is ultimately very true. the timing is tricky because once you get a run on the currency, people tend to sell first and ask questions later. increasingre is value that is becoming apparent. the flow of funds and the common element of this is u.s. dollars. talking about the lira and the

pressure that many emerging markets are feeling is the dollar strength that has a negative impact on their economy. alix: i found it to be better this time. they were in a better spot. if the dollar tops out and the base rate hike expectations for the fed are already baked in, is there value and where there -- and where will it be? brought investment in emerging markets, whether it is equity or debt or even the currencies is sensible, but that is an unknown. the dollar shows no signs of letting up. the timing is tricky but i think the premise is correct that there is value in some of these emerging markets, both on the debt and equity side. david: are there clouds on the horizon? i read report about the extent to which markets have taken on dollar-denominated debt and they had to refinance a lot of it in the next year or 18 months.

turkey was right at the top of the list and we got ourselves back into the situation from the 80's with emerging markets with dollar-denominated debt. it gets pretty expensive as the dollar goes up. eddie: that's right. it is the risk and not only the fundamental risk, but the fear of that, the psychology of the market and the flow of funds into and out of some of these smaller countries can create technical factors and can become a self the filling prophecy. that is the concert -- self-fulfilling prophecy. that is the concern here. alix: let's round out these conversations. if you come inside the bloomberg, you can see the yield hitting around 2% versus the 10 year which is at 3%. that is an argument to be more heavily invested in cash. what are your top stock picks? how does cash fit into that equation? eddie: we stay fully invested

and we recognize that equity markets tend to go up over time. equityare running an portfolio and are carrying a lot of cash, that is a losing strategy over time. at the individual level, investors can make their own judgment of whether having some cash make sense. theone thing about cash is return you get is not just the yield, but also the optionality embedded in cash that if there is a market selloff in the coming days, weeks or months, you have an activity to take advantage of that and you can only do that if you have some cash in reserve. some of the dividend oriented sectors are attractive, particularly utilities and telecom and increasingly, pharmaceuticals. you still dissipate in the upside and you get a good yield that is competitive with the bond market. david: eddie perkin of eaton vance will be sticking with us.

coming up, a read on the rails. we will speak with lance fritz, chairman of one of the largest railroad companies in the world. this is bloomberg. ♪

david: one of the largest railroads in the country, i think it is the largest. 22% since thep current ceo took over in 2015. we welcome now that ceo and chairman, mr. lance fritz. lance: good to be here. david: i want to take it global look at your business. how much of your shipments are domestic, how much are with mexico or canada. we see much -- we see so much radertainty abt. how might that affect your business? lance: 40% of our business originates or terminates outside the u.s., so trade is a very important part of our business.

mexico is maybe 11% or 12%. asian trade off the west coast is a very healthy portion. we've got trade with canada and other parts of the world. when you dial that back, toward nafta, nafta is very important to us. we enjoyed about 70% of the rail-based freight with mexico. and extreme herbal links between our economy and the mexican economy in supply chains and the growth of a healthy middle-class of consumerism. that is very important and we support that. david: are you seeing any diminishment because of the uncertainty over nafta? nothing has been done yet, but there is a lot of uncertainty. do you see people dialing back? lance: i don't see people dialing back yet, but i hear a lot of concerns. u.s. based businesses as well as mexican-based businesses, and

the concern is whether investments made now will be able to generate a return in the future and be secure into the future. we look at nafta and think it is an agreement that can be modernized and in modernizing it, the dispute resolution could use some tweaking but overall, it has been a tremendous success in growing u.s. jobs and exports and imports from both canada and mexico. alix: has it prevented you from making any particular business decision? lance: that is the current dispute. they have not prevented us from making business decisions. they have made us pause and think about it. we just announced our biggest single capital investment in the united states. $550 million to create a terminal. that is all about texas and the carload market in and around texas from industrial chemicals to the housing market. part of that does support

mexico, and we have paused that investment for a couple years because of some of the uncertainty we were feeling. alix: let's dig into the different areas of your business and look at the volume growth. you can see where you are heavy in the business, like industrials and premiums. from where you sit, is the economy overheating? is inflation a risk? lance: the economy is not overheating and i do not yet see inflation as a huge risk. we see commodity prices increasing. we are experiencing a little bit of inflationary pressure. what we see is a pretty healthy economy. we see an economy that used to ,e at 1.5% and 2% gdp growth now approaching 3% growth. alix: sustainable? lance: i hope it is sustainable. address the workforce, making sure that united states citizens are capable of the jobs in the future. it is also about immigration.

we have to augment our citizens to build a strong workforce. you finding the workers you need, with the training you need? are you having to pay more for them? lance: we are having to use signing bonuses to attract people to the right jobs. we can find the workforce we need, but there are certain areas where unemployment is very low and there are not enough people in the pools we are traditionally hiring from. we have to find ways to increase the polls -- the pools. david: let's talk about your business. how much of it is dependent on energy and how do you see that developing overtime as we talk about cutting back on fossil fuel's, cutting back on -- fossil fuels, cutting back on coal? producing economy is

active and vibrant and when trade is going on -- part of that is energy but if you look at our energy specific business, that is already reduced by about half since the heydays, eight, 10 years ago. l.ergy for us is coa it is also the activity in the permian basin. we care about is making sure that the consuming economy is healthy, our producing economy is healthy and that we've got good, open, free and fair trade with other countries. alix: you mentioned the permian. trucksyou compete versus and how does your business benefit when the midland-houston spread sort of blows up? lance: in the permian, the way we help that basin compete is we --d frack sand shift ins

shipments inbound. we do some brown sand and other basins and we also can help outbound when pipeline capacity is restricted. we are getting a lot of demand for crude oil outbound. we have to be careful because that will be a short-lived business cycle and we have to be careful not to make investments that ultimately don't have an ability to generate a return because they were only used for a short time. david: to what extent is trucking a constraint on your pricing power? lance: trucking is a wonderful market for us right now. carload, ourifest business is truckload competitive -- is truck mpetitive. volume opportunity and pricing opportunity. alix: take a look at your operating ratio, the goal is to get to 80%. talk to me about how you do it. lance: we were doing ok.

we made progress on improving our operating ratio. we've got a very trek -- very attractive operating ratio based on a competitive environment. i think as we look forward, there is all of the opportunity in the world to continue to be more productive. it is not just about labor productivity. it is asset productivity, fuel efficiency. a number of projects we've got going on. a gives us a lot of confidence that we are able to continue to improve our operating ratio and hit 60 percent and ultimately move below. david: are you investing more capital because of texas? lance: -- because of tax laws? alix: -- lance: we are investing more. we are going to have a more vibrant economy, which is great for us. that will prompt us to make investment and we have great paying jobs and would generate

an attractive return of investments. alix: your unit labor costs? lance: they are going up. we collectively bargain for our you -- for our labor and those contracts are increasing wages. alix: lance fritz, such a great chance to catch up with you. david, you were looking at comcast and the drama that continues to unfold. david: comcast is coming up with its new offer for most of the assets of 21st century fox. disney originally offered to buy them with stock. comcast saying they are in the late stages of an offer with cash. they say the structure will be at least as favorable for some -- for fox shareholders. fox has indicated they like disney better. bob eisner's think -- bob eisner thinks they are better off because they are offering stock.

comcast stock is down on the news although disney is down as well. alix: you have the interpretation that bob iger, that rupert murdoch would prefer to have shares in disney but other shareholders may not agree. david: this is dual class shareholders. say countsh has to for more than all the other shareholders put together. alix: david is now ditching me for the next half hour. he is heading upstairs to the bloomberg law leadership forum. david: i will talk to jay clayton, the ec's -- the sec chairman about what he wants to do wt sec. really wants to encourage ipo's. some cbs asere is well. david: overnight, cvs has filed with the fcc -- fec thing they

could not change the bylaws to increase the voting power. cvs is ending up on his doorstep. alix: this is basically like your homeland. but we will take some of your interview as well and you can watch the full interview if you go to live go -- live on your terminal. dow jones futures off by about 178 points. european stocks are lower. energy stocks are rolling over. potentially the next prime minister as well as the head of the five star and the league as well. in other asset classes, it is a strong war risk off story in the currency and treasury and bond market. euro-yen the big performer, down to a nine-month low, off by almost a full 1.5%.

also seeing strong buying in ds.ds and bun we do have that five-year 1:00, 36 billion dollars, watching how the market winds up absorbing that. the vix also higher but not as much as you would think. jpmorgan paring back expectations for an ecb rate hike. divergence ahead of the fomc meeting -- minutes. after copper, not oil because oil seems to be moving with idiosyncratic -- copper feels to me like there is where the risk off is being expressed in the commodity market. on what isn update making headlines outside the business world. kailey leinz is here with "first word news." kaliey: north korea is getting ready to blow up its main nuclear weapons test site. a group of journalists are traveling to a mountainous

region of the country to witness the event. south korean and u.s. officials view it as a goodwill gesture. they said it would keep north korea from developing more weapons. has warned prior minister theresa may it is time to get on with it and take the u.k. out of the eu trading rules as fast as possible. bloomberg had an exclusive interview with johnson. he has a list of demands for may. he says it is up to her to make sure the u.k. take back control over its own tariff regime. philip ross has died. a look at post world war ii america -- he looked at post world war ii a -- post-world war ii america. he was 85. global news --global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. i'm kailey leinz, this is bloomberg. alix: a slew of retailers

reported earnings this morning. falling belowe's targets. targeted get some squeeze on its earnings. lowe's cited cold-weather as weighing on sales. tiffany announcing a $1 million -- $1 billion buyback plan, beating analyst estimates. joining us now is our bloomberg opinion columnist. she joins us from washington. what did we learn today? >> we learned the consumer is in pretty good shape and when we did see that the stock was going down as in the case of target, it was not because topline sales were bad, they had a 3.7% increase in traffic. out, theirted e-commerce growth was strong. what investors were reacting to epsthat gross margin and

were not quite what they would like to see, but that reflects their e-commerce for the future. alix: when you take a look at department stores and same-store sales, we've got bar charts that show how uneven that is. can you help us draw a through-line in what worked and what didn't? >> what you are seeing is more a timing shift than anything else. both of those retailers had a major friends and family sale move from the second quarter to the first quarter, and that shaped their comparable sales growth. it would have only been 1.7% without that lift. i think what you are seeing is that department stores are learning how to survive retail apocalypse, but they have not figured out how to thrive. they are hanging on, but they have not figured out how to move

forward and start regaining some of the market share they lost. alix: great point. i had that written down because i read your article yesterday. i have not yet figured out how to thrive. thank you very much. joining us for more is matt midget --udget -- eddievice president and perkin of eaton vance is with us as well. you do a lot of work with what consumers want, what they are looking for. oft did you find and kind brand value and convenience. what do they care about more and who was winning that race? matt: it is very different depending on the retailers. need to do islers understand how customers are different. stores and large retailers are figuring out what those differences are.

we are seeing retailers shift from being transactional entities to relationship and that these. what the required -- relationship entities. chart that from that if you look at specific retailers like macy's and compare them to target, it is a very different profile. understanding what their profile is and how to wrap the customer experience into that profile and deliver is a learning process, done through testing and understanding those customers. that is what our research is doing, finding the emotional profiles of those customers and how to best adapt their profiles and marginalizing to the -- to fit each one of the customer sets. alix: the customer -- that is -- the conversation with retail stocks, they are not good. now we are in a more idiosyncratic environment. do you like any of the stocks?

eddie: i agree with what is just -- with what was just said, in that you have to pick your spots. if you have a value proposition that goes beyond general merchandise where you are competing directly with amazon, vertically integrated model where you have your own apparel, if you have an experience or differentiated merchandising strategy, that you can potentially win but if you are a generalist retailer, you may have a good quarter here or there, but the long-term trend is here -- is clear. alix: which brings us to kohl's and how they did a great job yesterday. kohl's is teaming up with amazon, not trying to fight with it. the difference that it is making when you compare it with t.j. maxx or target or nordstrom. matt: the good comparison is looking at jcpenney and kohl's. they are both similar retailers

in terms of demographic. will we have seen with kohl's, -- what we have seen with kohl's, they try new things out and how they can bring players like amazon into the place. kohl's has done two things that is noteworthy for department stores. the first is they partnered with amazon to allow customers to bring returns into the store. they are merging their customer experience with the new experience of how millennials are shopping. this is allowing customers to experience cold in a new way -- kohl's and new way. -- in a new way. they are using pop sugar which , understandingd convenience in a new way is really helping kohl's. alix: jcpenney cannot seem to

keep up. you see the see the in-store customers also shopping on amazon, jcpenney is pretty high on that list. the ceo has left and gone to lowe's and we have not seen that do well either. what can jcpenney do? matt: they are in a tough spot, where they have an older demographic which is used to a traditional way of buying. the struggle is, do you change and shakeup that standard or do you try to figure out what you can do differently? they can look at kohl's and what kohl's has done from a testing perspective, understanding where they can push the boundaries and get uncomfortable. they have to figure out what it customers they can link to the amazon culture, to the millennials we are seeing in figure out where those crossroads are. it is not going to be easy and like we have seen, there have been ups and downs. the end result we are seeing is

kohl's is able to come out the other side and as jcpenney looks at its customer base, they can figure out what that equation is that gets them to a better place. alix: 40% down in the last year. the economic backdrop here, rising gasoline prices, especially heading into memorial day weekend. at what point do we need to pay attention to the consumer, paring back its consumer discretionary spending? been clear to me in the last couple of years is the strongest part of the economy is the industrial sector, not so much the consumer. the consumer has already been somewhat weak. gasoline prices tend to get too much attention. the bigger question is whether consumer products companies and retailers can pass through some inflation seems to be on the industrial side of the economy. consumer may not

tolerate higher prices, so that is where there is some friction in the system. and: matt sargent of magid eddie perkin of eaton vance, thank you very much. oil baron -- joining me now is the man who will be ringing the bell with him this afternoon, toby loftin, bp capital fund advisors managing principal. great to see you. i want to track what that etf has done. you have the white line actually energy stocks. the yellow line is oil and then the red line is boone etf. why the underperformance? this is the reason we designed it. we saw a gap in the marketplace and most energy products or

etf's and mutual funds are married to the upstream. etfs andtion -- mutual funds are married to the upstream. this index, the new york stock exchange pickens oil response index is designed to do just that, a balanced response to energy they don't have to pick the bottoms and tops. alix: but do you dilute yourself? toby: great question. the way we look at it is we are taking advantage of other parts of the economy. cheap natural gas, the petrochemical industry is going to enjoy that relative cost advantage, globally. another example would be cf industries, enjoying cheap natural gas as it produces fertilizer, obviously competing on a global basis which is

priced off of brent crude. you don't necessarily dilute yourself. you are mitigating the downside capture and trying to maintain or improve the upside capture. is i ame reason i ask curious, are we seeing new investors come in to oil products as oil prices have risen or are these old investors coming back? toby: for our etf specifically, we started with $2.5 million. we are seeing inflows in our other products, but overall what we are seeing is taking a breather now that we have reached high 70's in wti and brent. also the backend of the curve lifting and strength in that area which is encouraging to us for a longer-term outperformance. alix: thank you very much, toby

loftin of bp capital fund advisors. tell boone to come on over. the bloomberg law leadership forum is underway in new york. my coanchor is now moderating a keynote interview with jay clayton, sec chairman. let's listen in. our public capital markets are where every chill investors participate in the growth of our growthare where capital investors participate in the growth of america. i don't want that because if we continue to have a drinking suite of public companies, retail investors have a shrinking opportunity to invest. i would like to see our public capital markets be a more attractive place for companies. i am also challenging our staff to come up with ways for retail investors to better participate in our private capital markets. david: how do you know when

you've got the right balance? we have seen the federal government in the past with really good in -- really good intentions, get involved and it did not end up so good in the end. it was noble intentions. how do you know when you have given too much access to retail investors and you run into troubles? no problem is exactly like the last. let's take mortgages. there was a great mismatch between expectations and reality. everybody thought that these inducts they were investing were very safe. david: because real estate always goes up. jay: real estate always goes up and it trades just a bit different from treasuries or just a bit different -- so it must be the same.

turns out, it wasn't. expectations and reality were way out of whack. as we look at our rule set for public companies, i asked a couple questions. what can we do to make it easier without diminishing investor protection? what are the steps we can take as a result of technology or developments in the marketplace. is investor protection at least where it was? the question i continually ask is, are the markets expectations out of whack with reality? that may not be something that is relevant to the equity markets, but going back to mortgages, i constantly ask that question in the product markets. are the expectations for what their product does out of whack with reality -- for what that product does out of whack with

reality? david: give us a sense of the answer to your question which is how can you facilitate offerings without reducing protections for the investor, because you could start cutting out disclosures, really make it easier that that might interfere with protections. --: one of the things we did i am reticent to become a public company because the process is so long ride have exposed my company to my competitors. they get to see all the goodies and in the market may move, i have taken all that risk and don't want to go public anymore. we have greatly reduced the time were you have to show all your wares to the world, you still have to show it for long enough for investors to be able to read your disclosure and make a reasonable investment decision. instead of three or four months, it is more like 30 days plus a

marketing period. plenty of time to assess a company. that was one small thing that i believe has made a difference. david: what can you do as the when it comes to rulemaking? when do you think you would be able to accomplish what you want to accomplish in facilitating ipo's? jay: that question is very insightful. you must've been a lawyer at some point. there are different things you can do at the sec. for something that requires rulemaking, there is the administrative procedure act. you have to get at least three out of five votes. there is a comment period. i call it the pipes. you can only push through -- push so much through the pipes.

david: let's talk about cryptocurrency. things like bitcoin. said in testimony that you have never seen an initial coin offering that you did not think was a security. aren't you obliged to regulate securities? jay: we are. we regulate securities offerings and securities transactions. that is the job of the sec. it springs out of what happened in the 20's, when you had what we would call today unrated -- unregulated public offerings , whichregulated trading is what you see in a lot of these ipo's. you see people going for a broad spectrum investor, promising trading in the secondary market.

each of those transactions is unregulated. was aided in 1933, that bad idea and if you look at what is actually happening in that market, it is a bad idea. proving of the people who wrote the securities laws back in the 30's knew what they were doing. we adjusted the loss for technology and i want to do that. part of what i was saying about drinking the time is technology is now available for people can assess an offering in a much shorter time. and ifdamental principle you are going to go out to a broad audience and provide secondary liquidity, you have to provide some basic investor protections like financial statements. it works. i say we build a $19 trillion economy following these rules. the rest of the world would like

to have our economy. i am not going to throw this out because someone says it does not fit my model. david: when we going to see the regulation of icos? jay: we have it. if you break the law, you are in trouble. david: that's not the way we regulate securities under the 33 or 34 act. jay: that is an amazing thing that has happened. if you went to your lawyer or banker and said i want to conduct an opera -- an offering, they could say you could do a private offering in here is how you would have to do it. you can go to a certain set of people, you cannot trade these securities in the secondary market without registering with the sec. if you want to do a public offering, you have to file a registration statement with the sec, go through our process, list your securities on an exchange. market, they have

elected to do none of those things. do you have enforcement actions? jay: i cannot comment on it -- on anything specific. david: i mean in general. jay: we have brought cases in this space already, including people who were completely fraudulent. they had no business. they collected millions of dollars and were heading for the border. , as you look you at regulation of cryptocurrency, how do you strike the right balance between making sure you protect retail investors and creativity and innovation because one of the themes of our president has been we are going to our with regulation and that we are curt schilling growth and innovation -- curtailing growth and innovation. at least try to the right balance in this area of making sure we are protecting people but making sure we are not throwing too much cold water on it?

jay: let me ask you a question. we came out of the financial crisis. if you talk to bankers around the world and central bankers, why did the u.s. come out quickly? it was because of the nimble nature of our capital markets and the ability to fund new projects and growth. what has changed that we cannot continue to do that just as we are, that you need to allow people to violate our securities laws to raise capital? i don't buy it. my answer to the question that innovation is, blockchain, distributor technology, icy huge opportunities. we spend a great deal of money, not just in the securities area but on verification of transactions and ensuring that if i transfer something to you, you know you have it. to the extent this technology facilitates that and

record-keeping, the opportunity for efficiency is tremendous. to the extent it facilitates fraud, i've got no interest. david: let's talk about fraud and the enforcement part of your responsibilities. we have heard a fair amount about ipo's and ico's. you come in with an administration that has a broad mandate of deregulation. we have instances before. chairman cox before the 20 -- 2008 crisis was in charge and afterwards, he said we missed it. how do you come in with an agenda such as you have, not communicate to the bad actors out there that the sheriff has backed off. jay: deregulation does not mean lax enforcement. we were just talking about what

do you do to facilitate access to our public capital markets or facilitate investor access? you can do those things which are very important and at the same time, get bad guys out of the market. i think they go hand in hand. i think operating in our securities market is a privilege. i think if you are a bad actor, you should be out. it is pretty simple. david: do you have enough of a budget for enforcement at this point? up. our budget is headcount is down a bit. have an effective enforcement program. as the heads of our enforcement program, we have a former southern district prosecutor who ran the securities unit there. they have a reputation.

ahead of our new york office had the same job -- the head of our new york office had the same job. knows -- our cohead knows the securities markets. i say bring the cases that have the most impact for american investors. that is your job. , the people who invest for their future who want us to be bringing them. they want us to get the fraudsters out of the market. to ceos, whattalk are the top items on every one of their agendas is cybersecurity. it affects every company differently. what about for you and the sec? how do cybersecurity and concerns about cybersecurity affect what you are doing? jay: first is our own house. it is important to me and it is

ongoing, for us to do the type of cybersecurity assessment that i think the american people would want us to do. what kind of information do we collect, how sensitive is it, how do we protect it? where do we need to enhance protections? that is an ongoing process. in terms of our role as view and itt was my remains my view that i don't think disclosure of the risks is across our public companies. i think it has improved. , the are substantial risks nile of service risks, risks to the franchise -- denial of service risk, risks to the franchise. that type of disclosure as well. i don't want public companies to feel they have to give away

secrets to bad guys or provide a roadmap for access. definitely not. i think investor should know that this is a reality and it is something. investor should know what the board of directors and senior management are focused on. maybe we are getting there, but a year ago, investors did not know how much of the focus this was. david: do you find financial companies to be responsive to that or resistant to it? jay: i think becoming more responsive. david: can you effectuate what you need to in cybersecurity just by having more strict requirements in terms of filings? jay: disclosure -- we are a disclosure organization. i cannot go in and say i want you to run your company this way. what i can say is tell us how you are running your company and when you are telling us, cover

these items, please cover cybersecurity. david: is it fair to say making progress, not there yet? jay: that is what we are going to be doing for a while. david: you are also interested in standards. tell us what your thoughts there are. we saw things like the judiciary role go away with the department of labor. what standards of conduct should apply and i will say to registered investment professionals, investment provider -- advisors. we take a pause. when i have learned is if you are not dealing with a ,egistered investment advisor you're are dealing with somebody else, that is a huge risk. i want investors to understand that. as far as the standard of conduct -- david: i think a lot of investors don't understand that. jay: we just learned a database

to make that clear -- just started a database to make that clear. if someone calls you on the phone, the first question you should ask is are you an investment advisor? if they are, you can look them up. if they are not, you might want to hang up the phone. alix: you have been listening to david westin's keynote interview with jay clayton, chairman of the sec. you can keep watching it if you go to live . that wraps it up for bloomberg daybreak: americas. the market open starts as we see this risk off day. sell equities. this is bloomberg. ♪ 30 minutes until the start of

trading. this is the countdown to the open. >> investors and smashing into a world of worry. republicans delivering one more campaign promise. heading towardy the currency crisis. the lira hitting a record low as hopes for intervention fade. 30 minutes away from the open. risk aversion dominates the session. futures, -16. that feels a bit into tragedy -- treasury. 2% on a u.s. tenure. things to worry about continues to rise after a trade truce fails to spark a sustained relief rally. fresh concern of a north korea adding to a growing list of headwinds.