the measure also would have eliminated -- republicans have delayed until tomorrow a vote on another republican bill that was put together by leadership as a compromise measure. for some lawmakers the immigration debate is personal. came to theemocrat u.s. as a child from guatemala. >> i was welcomed here. in a loving home. i was not put in a freezing cell . house speaker paul ryan said we are advancing the cause even if something doesn't pass. think this is the seed that is going to be planted for an ultimate solution. the supreme court has ruled that

state and local governments can collect sales taxes from internet realty -- retailers who don't charge tax to their comforters -- customers. this overturned a 92 ruling. retailers from collecting taxes if they didn't have a visible presence in a state. medical tests have confirmed that one additional u.s. embassy worker has affected by mysterious help is in cuba. two brings the total number 25. the worker is one of two who were recently -- recently evacuated from cuba after reporting symptoms. powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton, this is bloomberg. i'm julia chatterly.

i'm scarlet fu. i'm joe weisenthal. for an eighthg straight session. energy and in just rails. what'd you miss. that theme court rules government can collect income taxes. the federal reserve publishes a first set of results for the annual stress tests in the next hour. a revolt at google. build aineers refuse to security tool. >> supreme court ruled today that states can force online retailers to collect sales taxes. the supreme court overturned its

standing 1992 decision. described it as obsolete in the e-commerce area. latest out for us. to what extent are online retailers already collecting these taxes? >> we are talking about upwards of $13 billion. that are not being collected. it isis already a lot of being collected. amazon is already collecting taxes. the third-party merchants where they have other vendors selling on amazon's site, that currently is not taxed. we saw various retailers fall today. amazon fell little bit. talk about some of the different models of these companies. is the issue is more these

others. >> wayfarer is down 9% but it is fully recovered toward the end of the closing day after they came out with a statement saying they would be minimally impacted. there are lots of different approaches here. they were benefiting from price differential. some of their prices were not taxed. you have a pure market place like ebay or other sites like overstock. their shares are down six or 7%. there are a lot of different models. how is is going to be talked to a small vendor of health and beauty products today. he wasn't very happy about it. he asked how he was going to deal with thousands of different jurisdictions. one question is about digitally native rands. will they have a tougher time

getting seen or growing a business. it is not just about amazon. different rules for different states, it is mind-boggling. twice -- >> for me it is undershirts. endless undershirts. what do you get on your facebook feed? >> i don't. may be a comprehensive tax structure here or a lot of it states a federal standard for which companies have to collect the tax, will this make congress do something? >> that is a big question. there is talk about could they retroactively go after the taxes that they had not collected. we don't see that happening. the supreme court punted on that today. there is still a lot that has to be determined.

>> is there an argument here that a federal level decision needs to be made here in order to make this whole such relation -- whole situation easy? >> good length getting congress to address this. the original ruling was from 1992 when jeff bezos was a student at winston. have beenhile they saying that the tax differential between them and the online retailer's on reason why they are not getting sales. >> you said it well. it removes an excuse. the s&p was down. walmart is down. of the order,wake this is great for brick and mortar. of five.

they are exposed to these direct to customer brands. is the issue from them more the may not havethey the scale and logistics to do that? >> another thing that is advanced is who is winning the price war online? shopping online is not just about price anymore. it is about convenience. walmart talks about reducing friction. even if the price is low but you cannot navigate through the site you are going to give up area you're going to lose on the conversion rate. what percentage of people on your site are actually buying something. >> final question. talk about the scenario in which amazon may end up benefiting from the imposition of sales tax. >> if the third-party merchants are going to get hurt, they will

say let's just sell it ourselves. ared-party syrup -- sales if they sellle but it themselves they can collect all the revenue. >> thank you. we will continue to check in with you. coming up, it's not just for women. men are getting a lift with botox. this is bloomberg. ♪ allergan in the race to promote

its best-selling drug to men. more men are getting botox.

here with more is a drew armstrong. this?ergan pushing >> the answer is both. you see a lot of plastic surgery they have been giving botox to women, men are 50% of the population. there is a clinic in los angeles called man land. isir advertising campaign men on catches with cigars drinking scotch. allergan is pushing this as well. they have ads running during sports games. it is a little big town in cheek. >> you should soften your lines not your edge. a slight social media and

instagram? >> i cannot tell you the answer to that. i'm sure other people do. allergan says we have a product, it is our biggest thing, why are we going after 50% of the population. we would be fools not to make you feel bad and maybe it is time. >> this is a huge part of the market. i think this is an add-on. why shouldn't men want to take care of themselves in this way? there are other challenges out there in the field. advantagegan have an because they know botox so well. >> this is an iconic brand. with otherthere

lifestyle drugs. you guys have been selling it for a long time. even though they had competitors, there is a good brand recognition. it's as big as kleenex or xerox. a the ceo of allergan is customer himself. company, thishe -- they said surprise we are going to give you a treatment here on stage and actually had someone come out and give him some boko's and -- botox injections. he has kept it up he told us. >> what age range are they targeting here? there are other uses for this. they are talking about men in

their 20's. >> their prime target is men in their 40's area. old.37 years >> would you consider having botox? >> many people get botox before they actually needed. need being a flexible phrase. allergan would certainly like to convince us that that is the case. >> is their embarrassment? >> this is something i have never thought about. >> i have a baby face. i look like i am 12 years old. keep it coming. >> it is interesting getting over that apparent stigma. botox is an incredible drug,

we talk about it the ending, but aren't there many uses for it? >> cosmetic use is primary yes but it has other clinical uses. you are always looking for, what else could this be used fo it is mostly known and mostly use for these cosmetic uses. >> thank you. don't forgeto eck out our prognosis page. we report on the future of health care and the financial force that is driving at all. >> it is time for the bloomberg business flash. is said to be in talks with a potential deal. they are looking to capitalize on the boom in frozen food sales. they are at an early stage of a

deal with radical. -- pinnacle. panera is close to collecting $5.8 billion in its latest fund-raising round. hsbc are also buying in. they are concerned about recent acquisitions. reversal of canada's biggest lenders. td bank returns more than doubled its canadian competitor in the past year. roleiminating the premium they had for the best part of a decade.

rbc has gained about 7%. cash would be king in singapore by 2025. they are accelerating their shift toward digital -- digital pay. to promote electronic transfers, the government endorsed payment platforms called pay now. that is your bloomberg business flash. >> some white house officials are trying to head off a trade war with china before tariffs go into effect on july 6. this move is setting up a battle internally. randy was joins us from washington with a story. this sounds like another round , larryfree traders kudlow versus the hardliners. >> that is correct. it sounds like the globalist are really trying to stave off a

trade war by july 6 when these massive tariffs are supposed to go into effect. we will see what happens. >> what is their approach? nothing has worked so far. do you have any angles that will be new? anything with a breakthrough? >> what is new is we have these massive tariffs on the deck now. these 34 billion dollars of goods that will be slapped with tariffs on july 6. that is a major incentive for china to come to the table and strike a deal with the u.s.. be moreat there will goods that are slotted for tariffs. china does have a reason to sit down to the table. >> i am looking at the piece you have written here.

we refer to the u.s. trade representative, reaching trade deals is his job. hardliner anda wants to take out some of the asymmetry in the relationship ultimately there has to be a plan to bring all players to the table. do you think we are seeing some sort of recognition? caret need to introduce a and start debating this properly. think we are seeing that from some numbers of the administrative -- administration. we have heays, from the commerce secretary who had struck a pretty hard line on this saying talk is cheap and now is the time for action. there seems to be a split that still exists and it will be up to trump to decide which side he takes. >> where do we think the president is at this moment? he has expressed his desire for

tariffs. he likes the tariff approach. perhaps he can be influenced have something other than fierceness. >> steven mnuchin has the president's year. larry kudlow as well. globalist who have the president's year who are telling him that a global trade war is not in the u.s. interest right now. peter other side we have navarro and others who are taking the other side and they have the president's ear. it will be interesting to see what happens with this. >> president trump has been mocked for saying that trade wars are going to be easy to win. who would argue

that we are actually winning. stock market has been getting slammed harder than the u.s. market. waraps if there is a trade china would be hurt more than the u.s.. here that be a factor china looks at what is going on and says we need to concede more than we have? booming.s. economy is and the chinese economy is slowing down. that gives the u.s. a leg up in his argument. there are some very strong voices warning the president about the negative effects of a trade war. the chair of the federal reserve said this week that it is a concern to economic growth. i'm sure the president is listening to that. >> randy woods, thank you so

much. >> you have until july 6. that is a. of time before things can get done. chinese made it clear that it was going to take that off the table. urgency. will have the details, this is bloomberg. ♪ it's showtime.

checking in on one of our perennial favorites. moving past shares are climbing today thanks to a new pricing plan. no more a one price fits

all. >> it depends on what you are going to see. the company is going to start search pricing. it could be movies that are popular. you can see on opening weekend that the prices are going to be higher. this stock has been all over the place. because of various different stories. place,u say all over the you are basically saying it has gone one dection and is almost worth zero. >> i guess the moves are on a percentage based. this a penny stock at point. you saw the spike right? matheson whichd

it said data analytics -- wei't ev he time to update the description of the company. pass is what it is known for. what investors have been fearing happened. anc came out and said it is going to launch its own subscription service. people could see three movies for that price. that's a pretty good deal. >> to me this feels like a good idea. i can start to see some prospect of monetization. thprlem is t theaters. the theaters didn't really get their ducks in a row. out, shortnt interest is quite high. here you have helio's and matheson.

games also has high short interest. right now it is at 44% for this company. >> thank you so much julie. this is the market as we approach the close. this is bloomberg. ♪ . . retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

julia: "what'd you miss?" the dow falling nearly 200 points, declining for the eighth straight session. energy and industrial spirit i am julia chatterley. scarlet: i'm scarlet fu. joe: and i am joe weisenthal. if you are tuning in live on twitter, we want to welcome you to our closing bell coverage, every weekday from 4:00 to 5:00 p.m. eastern. inrlet: losses overseas asia and europe. the dow, s&p, and nasdaq all down. julia mentioned the 8th str dow, then for the longest since march. joe: it is long. scarlet: i feel like the reasons why stocks fell today may contend some concerns. you have the daimler warning, and as we get closer to earnings

season, maybe we will hear more from companies, the impact from all the noise of the trade discussions. joe: or it may be that companies that are struggling cite trade. scarlet: that is a possibility as well. let's look at individual names here, because intel was a loser, off by 2.4%. the ceo ousted because of an inappropriate workplace relationship. as a result, what you have is a leadership crisis at intel, the first and its 15-year history, or at least the worst. intel promotes ceo's from within the ranks. it changes the succession plan, push out federal internal leaders. there is still a vacancy in the president's spot, who usually succeeds the ceo. now you're looking at a vacant bench. conagra,o mention

approaching pinnacle about adding brands to its roster, right in a time when frozen food cells are making it may come back here because millennials have discovered the convenience of frozen food. just a mission wayfarer as well, the online e-commerce retailer. the supreme court ruled states can collect online sales tax from the retailers. muchrer enjoyed and pretty touted its price does ritual -- price differential. it could stand to lose. joe: let's look at the government bond market today. today, i think that the really interesting thing and the key thing that people are to remember is for a while now, we have really seen that reemergence of the inverse correlation between stocks and trading. it broke down some intense periods of volatility,

particularly when spurred by legislation. lately we have not seen that. we have had a diversified portfolio. a good deal that bonds and treasuries are up, a good indication that the version patient -- that diversifications are working. julia: trading above the $1.16 level. we just saw it earlier in the session, concerns over in italy euroscepticns, the alberto back nine, who has been named chairman of the senate finance committee. sterling higher by .5%. we did have the bank of england today. supporting it. that is giving sterling a bit of

a lift here, optimism from the chief economist in particular. broadersee some of the sentiment. a quick look just as a market check, as they seem to do on a daily basis, a mixed bag interesting in itself, on the downside. i think energy plays into that in particular. too, becauseeso, we did have central banks raising rates for the second time this year, obviously tackling a weaker peso. joe? joe: let's end on the compliance -- the commodities, kind of in a holding pattern. oil just marginally. we have the opec decision coming up, a little more optimism that

iran may not veto its plan to increase expansion. saudi arabia talking about wanting to increase apply so as to not hurt the world oil consumer to mustard oil in a bit of a holding pattern. gold essentially flat was still under the $1270 amount. scarlet: for more, let's bring in george pearkes, from bespoke investment management group. julie and i were just talking about how daimler's profit worries and the concern over global trade, global growth, signal that investors will be listening. maybe it is just an excuse the way that companies blame weather for not being up to par. what is the read on to how much daimler's profit warning is at the corporate level on trade? i cannot speak to

daimler specifically. i do not follow the stock is enough to have a comment on their warning. i think when analysts get skeptical about specific headline-driven excuses with what is going on with a company's performance. i think it is reasonable to be skeptical. wille other hand, tariffs disrupt around the world if tensions continue. i do not think that is something that would be controversial. it does seem early for daimler to be saying that affects us dramatically, maybe in terms of cost increases for raw input, but in terms of declines for consumers, i find it hard to believe that that is really moving the needle for them. but again, i cannot speak specifically to it beyond that, because i do not follow the stock personally. joe: george, let's talk about what we can see already in the data.

on my a chart here terminal, global manufacturing, global industrial production, and global trade volume. going back about 10 years, when you look at the total global macroeconomy, is it rolling over a little bit? and how concerned are you? george: yes, we have definitely seen an inflection down in terms of activity, whether you are looking at the manufacturing side of things where the eurozone is really what is driving the downtick. what we saw a earlier in the here and in 2017 was an explosion in activity in the eurozone, a lot of pent up inventory pent up activities are that seems to have burned off. the euro economy looks fine. indicators are not like they were six months ago. the rest of the global economy, it really depends on where you look. a large markets come under their own relatively extreme stress from the market, but there has not been anything like that sort of stress on their actual

economic activity. china is a really good example of that. if you look outside of china, a place like brazil would be another example. they do not have to deal with disruptions, and 80 o idiosyncratic issue like truckers. it is not the beginning of a global recession or anything like that but just a cooling off from a strong period of economic activity around the world to a period where things are growing at a solid click but much less impressive than they were before. is a eurozone downtick from record levels to nearly strong lik levels. scarlet: what are you looking at given that pmi is rolling over and not just cooling off after a period of outside performance? george: so pmi is going to be about as good as we can get from a global perspective as to what is happening in the manufacturing sector at a given time.

nonmanufacturing some of those tend to be more cyclical, more confusing to get a hard read on what is going on around the world. pmi as far as actual data will be better in terms of time. when we look at the global economy, we look at what has driven the recent activity. we have seen commodity prices rise. we've seen a large to climb the u.s. dollar in 2017, early 2018. of developed economies, we have seen a lot of good stuff happening, when you look at a place like switzerland, which has seen real inflation for the first time in the entire cycle. like you look at a place sweden, which has incredibly robust indicators across the board right now and has for some time. the pmi is one example. it is a good indicator. we do not see an obvious risk other than trade, which could escalate, but that should not be a base case for the global economy in terms of really having growth shutdown. julia: when you say you have

seen a bit of a rationalization in terms of asset classes, what happens if we continue to see it to continue to retrace policy in terms of assets on the balance sheet or whether it is financial conditions in terms of raising rates? right now, market prices are 2/3 of what the fed anticipated will do over the next 12 months. what does that mean for financial conditioning tightening, for the u.s. dollar, and therefore the spillover effect we have seen from everywhere else at this moment? george: i think that is a very complicated question with a lot of moving parts. as far as the fed goes, what we have seen in the beginning of 2017, the fed has kicked in at a higher geargas -- and the market has prepared for. basicallyne year, so what the market rate is going to be at. the actual fed fund effective rate has been above that for the

past year and a half now, whereas before that period, before 2017, it was below. in other words, the fed is ahead of the market as opposed to the market being ahead of the fed. in that context, it makes sense to trust with the fed is saying a little bit more than you would trust the market right now, i think, purely because that is the pattern, and it is relatively common in most heightening cycles. the market lags behind as the fed begins tightening. for the u.s. economy, we do not think that is a huge problem. we have not seen that rate hikes will have a direct massive negative impact on economic activity. with the u.s. dollar against developing market currencies -- developed market currencies like of 4017 wase end completely divorced from anything approaching the reasonable analysis of rate differentials, and it is starting to catch back down to big differences between the united states and is eurozone.

the dollar also is affected by other instances in the global economy, like activity, trade volumes, commodity prices that are not driven by the fed. i wish i could give you a neat little answer there, but it is a complicated question tying all of those pieces together. julia: it is a perfect answer for what investors deal with on a daily basis. george, thank you, george pearkes at bespoke investment group. we will take the conversation global now. how do you decide where to invest? stick around. this is bloomberg. ♪ s bloomberg. ♪

mark: i am mark crumpton with first word news. president trump has ordered u.s. agencies to realign families

that were separated through the head of the cabinet meeting, the president expressed willingness to discuss legislation with democrats as soon as possible. pres. trump: we should be able to do a bill. i would invite them to come over to the white house anytime they want. this afternoon would be good. after the cabinet meeting would be good. they are invited, efficiently. i will let you do the inviting. mark: on wednesday, the president reversed course on this policy that separated immigrant children from their parents, ordering homeland security secretary kirstjen to keep families together when they are detained. meantime, first lady melania trump made an unannounced visit today to child detention centers in texas. mrs. trump plans the trip on her own over concerns over how her husband's immigration policies were affecting the detained families crossing the u.s.-mexico border illegally. leaders of major facilities gathered today. they say president trump has

failed to address the humanitarian crisis of his own making. the mayor call for immediate unification of immigrant children with their families. >> this is more than just politics. this is more than just the dysfunction we have grown accustomed to in washington, d.c. this is moral. mark: the mayors asked for towards of holding facilities to witness everything firsthand. they were denied immediate access by the department of health and human services. florida's busiest airport is becoming the first in the nation to require a face can for -- face scanned for all passengers arriving for departing flights, including american citizens. alarmed privacy advocates, who say there is no rule in place for handling data obtained from screenings. they say they will use the face scans for some flights but not

all for international travelers. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. back with george pearkes, global macro strategist at bespoke investment group. break, wefore the were talking about perspective tightening. we were talking about the yield for the 15 largest economies, the policy, the tpp. i mean, that shows financial tightening, conditions back to where we were in 2015. talk us through the significance of this at this moment. george: yeah, so i do think sometimes economists can overstate the impact of interest rates on economic activity for a variety of reasons, but at the day, capital costs

day, capital costs more, it will be more challenging to get stuff done that you need to borrow to invest. you need to borrow to consume. you need to borrow at the macro level to finance your current account deficit or whatever it is you need to do. i do think it has been underappreciated how much it has risen in aggregate around the world, not just th because of tightening by the federal reserve, which is a sign of strength in the u.s. economy, but it is also true for inflation and emergency emerging -- in emerging markets. a perfect example would be the decision today to raise interest rates as they look forward to the impact of higher oil prices and a o on domestic to be i in in mexico.pi this does not get enough attention. long-term rates look similar if you do the same calculation. they have risen quite dramatically and have not gotten the same attention. julia: the sexually points me back to the united states

julia: this actually points me back to the united states. surely the u.s. companies, as we look around the globe. george: maybe. i am not sure. i certainly think it is a good point to raise the u.s. cashnies are awash in that makes debt sectors look a lot more reasonable. i think that is important to consider, and the fact that interest rates are growin goingp can be a tailwind to the global economy. of therent structure global economy is not such that u.s. companies are the only one with cash balances. i think i would be cautious saying that the higher short-term interest rates around the world are somehow beneficial to u.s. companies at the expense of others. others, because u.s. interest

rates are rising as a result of strong economic activity. finally, on the domestic situation, i want to bring up a chart you have come of various moving a lotures, of stories lately, a lot of companies, if you read those earnings reports, talking about the difficulties they are having. what is the take away here, though? is it a margin story, and inflation story? what is it overall? i think thereso, are two sides to the coin. the chart that i showed is the volume transported, you've got motor rail, the ata, the national estimate for the aggregate trucking industry, and you have the freight index, which measures a couple different modes of transportation. the key take away from that chart is the economy is doing really well. the freight volume indices tend

to be correlated with higher manufacturing production, higher gdp, so that is a really good sign. truckers and railroads are very busy. it is a good sign in terms of what is going on with economic activity. in terms of the cost, when you see a sudden spike, costs should rise. that is a normal they. part of that is going to benefit legacy players in terms of higher margin, but it is also going to pass down to labor well, a huge indication for wage indices for truckers. if you talk to a trucker, the they reported their hours recently has had a big impact. and they are still sorting that out. combine that with a labor market where there are not as many people as there worth a few years ago sort of waiting for any work they can get. the result is prices for goods have gone up quite dramatically. reports aroundo

the country, supply delivery backlog, which tend to be a good indicator of freight cost, have dropped a little bit, so that is a good sign. we have also seen the coloration of the price indices from folks who pass information where price indices on a short-term basis pretty much have come back a little bit. increasesure that the in transportation cost is the end of the world, but right now, looking at the transportation industry, it is a sign that the u.s. economy is doing quite well. julia: george, thank you so much for joining us, george pearkes, macro strategist at bespoke investment group. from new york, this is bloomberg. ♪ bloomberg. ♪

julia: "what'd you miss?"

wells fargo ceo tim sloan facing negative headlines. he spoke with bloomberg's carol massar in new york. they started the conversation talking about the strength of the u.s. economy. economyrall, the continues to improve for a variety of reasons, that we probably do not have time to detail, but it is pretty consistent with the consensus in the u.s., and that is that we will probably have gdp growth in the seventh quarter of 4%, and we will have growth for the full year at about 3%. that is a big improvement from what we have seen over the last four years. there are certainly some clouds on the horizon. we are in the banking business, so we talk about recession all the time. we are in the business of taking risks. when you are in the business of

taking risks, you need to make sure you are all-inclusive in terms of the potential. in 2005, 2006, this environment, people were talking about how we would never have another recession again, technology has done this, and people thought about taking risks in a different way. from my perspective, if you have been in this business, you want a cyclical world, you want a cyclical business. financial service industry is certainly cyclical. we need to be thoughtful about the fact that while recovery has been relatively slow in the u.s. -- and in most parts of the world since the great recession -- it is long. we are now going to set a new record. we are setting new records. i think it is something to be mindful of. at least we are relatively optimistic for the next couple of years, not because we are worried about your three, it is just that it is hard to see. carol: one thing you did say to

me, you said you see a lot of non-us customers have operations in the u.s., committed to making more investments in the united states. you are still seeing that? tim: i think so. the change in the corporate tax policy in the u.s. has allowed us to be more competitive, and it has created an environment where non-us companies, who has been moving, particularly manufacturing operations, here to reduce the risk in the supply change, are now saying hey, you know what? it probably makes more sense to have more of our operations here, because this is such a vibrant market for them. julia: that would be wells fargo ceo tim sloan with bloomberg's carol massar earlier today. up next, banks feeling stress or not? the federal reserve publishes results from its annual stress test in just a few moments' time.we will bring you that as soon as it breaks . this is bloomberg.

♪ aks . this is bloomberg. ♪

julia: breaking news. the federal reserve is just publishing the results of its first annual stress test. clearing the first hurdle of the stress test and all banks are found to have sufficient capital in their exams. goldman sachs is the closest to the minimum level on the supplementary leverage ratio. state street is the closest to the equity tier one capital. -- the stress test results this is the first stage. i believe there is another level as well. let us get some context. let us break it down and use

some of the names that we are seeing. goldman sachs in particular, the closest to the minimum on the supplementary ratio level. what does that mean? that does not sound good. close to theame leverage numbers in the first stage which tells us that when they are asking for their capital planning for the next lessal quarters, they have wiggle room to ask for huge increases. and according to the estimates that i included in my outlook this week, goldman is probably going to decrease the amount of capital distributed in the next two years. when you are that close, you cannot ask her to much of an increase. goldman will probably decrease. morgan stanley may not ask for too much. julia: we will hear that information on june 28. joe: just to be clear. increase the distribution to shareholders. guest: exactly.

joe: who is on the other end of the spectrum. which bank has the most flexibility? guest: i was using analysts' estimates, six or so opinions i was using as a consensus -- bank of america, citigroup, they are leading the charge. even wells. scarlet: wells fargo even with all of their problems? it mightme thought fail on the qualitative portion based on risk controls and whether they are doing a good thedamaging their risk and fed has not been happy and they have punished them as well. they managed to pass that portion. they have a lot of extra capital. their leverage and risk based capitals. scarlet: this was part one of 's stress test.

a hypothetical bad scenario on what happens with banks. you we know the circumstances around the hypothetical situation that they painted for the banks? how does it look? julia: it was tougher than expected. guest: it was really tough. they started to do this seven or eight years ago. tough because they kept the unemployment ratio at 10%. it was 10% when they first started doing this seven or eight years ago but unemployment then was about 8%. going up to 10% was not such a big deal but when it was 4% or below, and then going to 10% is a huge stress. when the fed -- and they tried to explain this in a background briefing and they were asked about this and they said -- look, when times are good, we

want to keep the stress harsher the cousin of times go bad, they could go bad really badly to the worst that we have seen all of a sudden because that is what happened in 2008. things were wonderful and that we had a bad summer. that is why they are trying to keep it really tough when times are good. and the economy is really chugging along. this is their way of saying that we want to keep the tests stronger because if things go bad we are not caught off guard. julia: what about the foreign banks operating in the u.s.? what is the risk around these guys? banks we have several big that are being tested for the first time like barclays and credit suisse and deutsche bank. had one unit tested but not the whole u.s. operation. these are all new. them look really good. because they have huge capital ratios in their u.s. operations.

around 20% for some of them. these are big numbers. they have been building capital levels in the u.s. getting ready for this stress test that the risk is the qualitative portion. joe: that is what i was about to ask. it is important to make this distinction. you mentioned it with wealth and how they have a town of capital but people are worried about how it is run. who else could fall into that category? for example, deutsche bank. in thateutsche's is category definitely. and just a few weeks ago, we -- that thehe fed fdic had downgraded it for these reasons that make a bank fail in qualitative tests. that is not good risk controls. concept ofa good what is in their system. and deutsche is in there definitely. but with the other big european , wes that are successes

could see that in their system the as they are all new to this. maybe the fed will say -- you are not doing this correctly yet. julia: and it is a learning curve. guest: and try to fix it next year. president trump, they are trying to roll bank a lot of banking regulations including dodd-frank. what does that mean for the stress test? guest: they have done certain things that show some of the rollbacks but, for example, congress passed a law with bipartisan support. not just republican. they increased the threshold for banks to be considered systemically important. took three banks from the stress test including colors and zions.merzbank

and zions. they are clearly not going away from the stress test. but, some things are being changed a little. things a little easier. especially midsized banks are not under as much scrutiny. julia: deregulation is vital for those banks. right to have you with us. thank you for breaking that down. let us go to mark crumpton. trump says he is considering meeting with the russian president next month. bloomberg has learned possible dates include july 11, below the nato summit in brussels, or after july 13 when president trump visits britain. the secretary-general says there is no guarantee the transatlantic alliance will surprise. nato has been shaken by president trump's american first stance.

effortberg called for an to strengthen the military alliance saying "we have overcome these differences every time you are cold u.s. to is urging the reconsider pulling out of the top human rights body. gutierrez spoke of the merits. >> i do believe that the human tohts architecture is a key come at the present moment, in order to promote and protect human rights around the world. mark: russian foreign minister viewssed his similar saying he hopes washington's decision is not final. the u.s. withdrew from the council earlier this week accusing the body of being biased against israel and of allowing countries with for human rights records to become members. dueu.s. tariffs on metals to un security council has -- have strained ties with our

allies. well -- wilbur ross says the game is over. thee are going to fix problem of protectionism around the world and we are going to fix it by making it more faint -- more painful for those countries to do bad practices than to do the right things which is to lower the trade barriers and their tariffs. also saidetary ross the trading partners take advantage of the free american markets and he called them ." oiled the new zealand prime minister has given birth to her first child, a daughter. the mother and baby according to her office are doing well. she becomes just the second withinto have a child power after the former pakistani prime minister benazir bhutto in 1990. incidentally, the baby was born on benazir bhutto's birthday. global news 24 hours a day on air and on tictoc on twitter

powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton and this is bloomberg. scarlet: coming up, six months ago, he graced the cover of forbes for his ethical leadership but now, the intel ceo is out. what does it mean for the future of intel? the company is looking to raise its standards. get involved in the conversation. send me a tweet. i post charts and videos and jokes. and the funniest thing is that scarlet said on air -- if i can check it out and let me know what we should talk about on the show. this is bloomberg. ♪

scarlet: let us get a recap of today's market action. another down day for the u.s. markets. the largest losing streak since march 2017. there current concerns about trade. "what'd you miss?" upheaval at intel. earlier today, brian krzanich was removed after learning of a previous consensual relationship he had with an employee, a violation of the these policies. he took become a to record performance levels. but it is reeling from one of the largest me to moments in corporate america. my own personal views are about this -- take us through the details. guest: intel said that this

morning that the board was notified presumably recently that ryan krzanich, the ceo 2013, had had at some point in the past a consensual relationship. intel employee. and this violated the policy that intel had of non-fraternization. people cannot have relationships with those who are under or below them in the employee ranks. and so, they asked for the ceos resignation. scarlet: and as ceo, presumably he was familiar with the policies. i checked it out in terms of our policies. any employees involved in a personal relationship with each other are prohibited from being in a direct reporting oformation or in the chain command of one another or otherwise participating in the employee decisions involving one another. in other words, if you are

reporting to someone and have a relationship with them, that is problematic. brian krzanich was ceo so you could argue that everyone is reporting to him. guest: without question. and we are in an era where the spotlight is on companies and on executives for what they do in the work place. and i feel that intel really had no choice once they were notified. scarlet: he was very active in making sure that intel increased the reputation of women and increased the representation of minorities in the working ranks. he put himself out there as a model. guest: i agree. he put himself out as a champion for women and minorities. and to intel's credit. if you make yourself this high infile figure for diversity the workplace, you have to hold yourself to a higher standard. joe: there is no allegation that it was not consensual that if you are someone's boss, what does that even mean because that

person has power. guest: that is right. the issue with consensual relationships is that you often find out later that maybe they were not consensual. ceo fore has only been just under five years and that gives you a timeframe. it goes back to questions we have been asking about this whole me to movement. and the questions about people's behavior. 10,have to look back over 20, 30, 40 years in some cases of someone's behavior. and in some cases, that can come back and haunt you. guest: absolutely. atssume people are looking his whole work history and we will see what happens. scarlet: what is interesting for intel is that the company usually promotes people from within. they use homegrown talent to fill their supply change of case, brianin this krzanich had pushed out a lot of internal candidates who presumably would have been the

next ceo so they do not have a deep bench to go to. guest: this is a bad time for them to have this leadership vacuum. in 2012s a horse race to replace the longtime ceo and brian krzanich won. there were other people like rene james who were in the running and did not get the job. did not do a good job of keeping them. krzanichid that ryan shoved out people that presented a risk to his leadership or any kind of questioning to his leadership. and now they are in a position where the leadership bench is not that stocked. it is stunning to think that intel might go out of its own ranks. it would be the first time in the history of the company for the ceo. scarlet: that is pretty notable. fall big -- and a quick from grace for brian krzanich.

in the past, people would not have cared. not have been an issue nor would it have come to light. scarlet: two issa much. coming up next, silicon valley taking a stand. some google engineers are boycotting a sensitive project. we will explain. from new york, this is bloomberg. ♪

scarlet: "what'd you miss?" google employees standing their ground. they refuse to work on a project that would have opened the door to google-military partnerships. a worry that it might help the government waged war.

alastair joins us. explain to us how this group of nine made their objections known and how they convinced management to not move forward with this strategic software they were supposed to work on. reporter: it is pretty unprecedented as far as google goes. i described it as basically a work strike. arework of nine engineers very well-respected and talented and crucial to what google is trying to do in cloud computing. they were asked to build a feature. and it is called airgap. it is needed if you are going to do some pretty sensitive work and governments agencies involving sensitive data. obviously, military implications. this group of nine said they were not going to do it. spends a lot of time

making sure that their top talent is happy and sticks around and does not go to another company. the company actually stood down on this one at least for now. joe: you anticipated where i was going to go. the incredible leverage that top talent has in selleck and valley where the betweenion for talent google and facebook and amazon and all of these companies -- it is so fierce. small groups can have some -- can have a lot of influence on what their companies do and this is spreading. we have seen more subsequent to this where employees are putting down their foot and thing we do not want to be involved with a company that engages with red ever that project is. reporter: the late -- with whatever the project was. reporter: the problem of course is that if you look at the big cloud providers, the three major ones, amazon, microsoft, and

google -- if you are a cloud are pursuing three work with the government and with the military. julia: i understand the ethics point particularly in an environment where we are looking at this investment in particular, but this can also be used to protect american lives. is a question of pleasing your employees versus defending the country. where do you draw the line? reporter: it is a very tough line to draw and diane greene, the cloud chief at google, has really been caught up in stepping on both sides of the line and getting a lot of flack both internally and from outside. one great example is the u.s. congress is looking at googles past work with the chinese and you factor which made some android phones. some people in congress were -- you won't work with

the pentagon on ai projects but you will work with a chinese handset manufacturer. that is a difficult position for google and other tech companies to be in and they are working on trying to handle this. scarlet: you mentioned how google wants to please its employees. it's star performers. -- its star performers. did anyone resign over this? reported it has been and we have also confirmed it that at least 10 maybe 12 employees did resign over a contract with the pentagon project called project a maven. where google provided ai software to some -- to help analyze drone footage. diane greene pointed out earlier this year that -- it was about saving lives. the main concern is that once that is in place and other

contracts get going, then the technology could be used for other means. course, there is a lot of money up for grabs for tech companies potentially working with defense and homeland security and all kinds of stuff that will probably be hot buttons. it feels like this will be a really big challenge for more companies and a bigger challenge for the government as it tries to source contracts. reporter: from the point of view of the government, i imagine, looking at stories about selig and valley internet -- silicon valley engineers, will not help a company like google win giant contracts. amazon is interesting. there a icloud chief made a classic silicon valley argument which is -- you do not want to ban technology just because it might be used for something you do not like in the future. julia: smart analysis.

thank you. joe: coming up, "what'd you up, what young need to know for tomorrow's trading day. this is bloomberg. ♪

scarlet: "what'd you miss?" a down day in u.s. stocks.

falling for the eighth straight day. coming up, opec ministers and their partners meet in vienna to determine whether to restore the halt from last year. at globalooking economic data. pmi numbers coming out tomorrow morning. julia: and don't miss this. a former member of the federal reserve board. that is at 7:00. i cannot get over your enthusiasm. bloomberg -- "bloomberg technology" is up next. joe: have a good evening. ♪

the emily chang san francisco, and this is " bloomberg technology." the u.s. supreme court frieze state and local governments to collect taxes on internet commerce. brian kucinich is removed as ceo violatedafter the ceo