enforcement of the system. , thank you soia much for giving us an update. we have the closing bell. you can put a stamp on it. a fourth day decline for the s&p and dow. seventh a drop in a today's for the s&p. caroline: where breaking news we have been talking about other tarts, but tesla is said to release -- reach a china plants.t for its albert looks like they will get cash to do that. scarlet: this is according to people familiar with the metal. joe: the stock is up about 2% after hours. thatt a huge reaction, but

is a critical component to tesla's growth given concerns about demand in here and europe. the fact that they have financing continuing to move forward, is important. scarlet: we are waiting to get final confirmation from elon musk himself. let's take a deeper dive into our markets action. abigail: i'm taking a look at a chart we have been looking at frequently, the s&p 500 over the last year. the reason we look at this chart time overtime is you want to see how it performs. it can be a map for market action. aer the last year, we have sideways range between 2600 and 2800. the buyers have stepped up around of the 2600 level eight times, so a real battle between the bulls and bears. theave the s&p 500 below 200 day moving average, the ,irst time in a couple of weeks

suggesting the declines we had in the fourth quarter of last year, we are likely to see symmetry back down to the bottom of the range supporting that. the rsi momentum indicator is rounding down. this chart is growing more bearish for the medium-term day by day, emma. look atm taking a costco, one of the final s&p 500 companies to report earnings this season and the last of the big retailers. their fiscal second-quarter earnings are due out in the next few minutes and the stock has been sliding into the close, down over 1%. brought down by the order market earnings missed over at kroger. still, a solid report from cosco is expected. comparative sales and margins will be in the picture. the company has been investing in its workforce, technology, so margins may continue to be pressured. arel, the grocery stocks

going to be likely top of mind. i want to highlight a survey. satisfactionerican index, cosco topped it, passing amazon. amazon had been at the talk since 2010 -- top since 2010. romaine: we closed below the 200 and moving average, but when we approached the bull market, it's important to remember why the market has been resilient. past 30ook over the years, the s&p has trended at a price at about 15 -- 16.9 times forward earnings. the first four years of the bull and hugged the line for the next couple of years. then, it reverted back to that mean.

the average forward pe over this tenure period is 15.8 times earnings. that's of a percentage point below the long-term historical average. when you compared to the.com -- had in the boom we 90's, the difference is night and day. strategists hold their hope on this fact, the fact that maybe this market is not as extended as we were in the previous bull market, and that make you that going for longer. scarlet: great context there. is out likeor more young. young.lec the ecb was a driver today. we saw it with the euro move. i show the euro's weakness versus the yen and dollar and yuan, losing at least 1%. as resulted in the s&p 500, having its biggest loss since

november 7. how does the ecb affect stocks? >> the headline is that we came into today with anxiety about global growth. weaker chinese data and european data of the last few months. whilened with trade that, markets are comfortable, we. will not get new iteris. the markets want to see a rollback -- we will not get new tariffs. the market wants to see a rollback. if we get rid of all the existing tariffs on china, what sticks do peter navarro have to force compliance. -- does. navarro have to force compliance. they made a major cut to the european growth forecast three months after saying they were forecasting 1.7. only three month after talking about the wind down timeline for the stimulus, a are talking about new stimulus.

-- they are talking about new stimulus. panic is a strong word, but i think the market is reading this as desperation. the euro is very weak, and that tells you the market was surprised for the -- from the move from the ecb. hurt u.s.he ecb news equities? we are already looking at a dollar index up 5% or 10% year-over-year. the euro makes up the biggest weight in the dollar index, so that is no small factor. investors will be looking at first-quarter earnings is to -- first-quarter earnings season for signs. joe: this idea that the u.s. economy is fairly strong, but there are significant headwinds from abroad, it could be said s.e many period where the u.s. is looking the best but in the rest of the

world, there is some problem. is there something different where this could take it down further, or is it just a tail risk? alec: i think you are right, there has been a long-term theme of the u.s. being the best house on a bad block. what's different this time is that the comparisons for earnings are so tough because 18 was so great. right now, the consensus numbers and that isr or 5% with a lot of hopes about a rollback on tariffs baked into the cake, the news out of the ecb is maybe telling people things are weaker than we thought. i argue, when earnings are only growing for 5%. 20%, maybegs are up that is attractive. one of the reasons the market is hesitating in 2800, it is not just the magic of the number, it is the fact that we have full valuations given earnings growth

is in a make. enimic. make -- those things are mia. i'm not surprised to see the defensive leadership we are seeing in the dark its recently. caroline: you are coming from ftse russell and we have been citing the russell 2000, only of about about the same as the big benchmark, how much are small caps a leading indicator or are they going to be isolated if you are worried about overseas problems? alec: it's easy to think because a lot of these headwinds are overseas, small caps wolter form, we saw bouts of that last year. gets caught up in this risk on risk off dynamic. russell --or the

small caps to outperform in the down take. whether you have a domestic or advantage or not, when volatility goes up, small caps are a higher beta play on large caps. you make more in up markets, so over time, you tend to have a premium return because markets rise longer. during corrections, it is hide to half -- hard to hide in small caps. i think we are seeing some of that right now. people are looking for havens and small caps because it is domestic, that might be a tough sell. has the how much stronger dollar been factored into earnings estimates, do you think? or is that something -- >> i think there is more there. of people were expecting with the dovish policy pivot that the dollar would weekend. weaken. it makes sense that the fed's

dovish pivot has stalled the dollar rally, but hasn't reversed it. a lot of people were too cautious on the dollar, may be surprised by this, so it may take a bigger bite out of forward earnings expectations than is currently discounted. scarlet: especially if it keeps going up. muchyoung, thank you so for your time. it for the closing bell and for me. romaine bostick is stepping in for "what'd you miss?" we will be looking at the ecb's effort to sure up the weakening economy. from new york, this is bloomberg. ♪ s bloomberg. ♪

caroline: live from bloomberg's

world headquarters in new york. i'm caroline hyde. romaine: i'm romaine bostick. lisa: and i'm joe weisenthal -- joe: and i joe weisenthal. caroline: the worst day in the month. president's surprising investors with a support package for the euro area. euro is falling on the fears that the economy will fall short. costs are staying competitive way on their -- and why the fed's economic policy could be partly responsible for the declining labor force participation rate. injects a fresh round of stimulus to a sure -- shore up the economy. mario draghi announced growth and inflation. >> the outlook for real gdp growth has been revised down

substantially in 2019, and likely in 2020. on account of the persistence of uncertainties related to there areal factors, vulnerabilities in the market. [indiscernible] this is adding accommodations. haveinancing conditions been accommodative but they have eased since our last meeting. .ou do what you think is right darkroom, you move with tiny steps, you don't run, but you do move. caroline: let's bring in bloomberg's senior executive editor. in a darkroom, they move slowly.

did the market feel they were a came crashing into the darkroom and move quick enough? >> we will miss his turn of phrase. 's actions,lways there is an action itself and the reason for the market. you had a combination of these, but primarily people felt they had gone further than expected, and that was sending a worrying signal about where the economy was going which was backed up by they areoed revisions giving up on the idea of meeting their inflation forecast or target. overall, investors were right to see this as sending a negative message about the european economy. joe: the ecb has a negative view of the european economy. judging by what we saw with thanks and risky assets in europe, investors don't seem optimistic that the ecb can turn it around. does that mean answer must be

some sort of aggressive fiscal policy in europe? stephanie: mario draghi would tell you, he's been for structural reform for a long time. the ecb gets fed up with telling people they are not the only person boasting up the euro economy. there's a structural issue in we eurozone at the time when have been getting a bit more cautiously optimistic about the , we have optimism around u.s. china potential trade deal, and as the world is looking brighter, the eurozone refuses to brighten. the structural reforms you're talking about, even though dragi mentioned --raghi draghi mentioned it. romaine: so we're not quite at the precipice, but a lot of people focus on the extension of

this program or the next iteration with it. since a lot of lending costs are going up in june, and this program doesn't kick in until september. is the idea that things are getting bad, but we will let banks tread water for three months? >> i've had conversations privately with some of the senior members of the board about this. they want to help in some sense, and they want to make sure the monetary easing that they have had does not go overnight into the summer and cause problems for the banks. they are aware the italian banks are the ones that are particularly cautious if they have to do this refinancing. they don't want to be in the business of propping up the debility, and that's why you have this conversation -- propped up profitability, and that is why you have this conversation. they want to support the growth and preventing a crunch, but not sending money at the banks -- throwing money at the banks. caroline: you mentioned earlier,

within the board, some are even more pacific date -- more pessimistic. mario draghi is on the way out vidman is usually far more hawkish than the italian in the room. stephanie: this is going to be part of a horse training, fantastic european activity around, was we have the european elections. it will be between germany and france on which way they prefer. for investors, it is the ecb that is the key job. we don't think it will be the german and leading candidates are all people who are up to the draghi approach, but they won't inherit the same lack of tools -- they will inherit the same lack of tools. romaine: thank you, stephanie.

we want to turn to breaking news right now. cosco earnings have hit the wire. second quarter adjusted eps coming in above estimates. the shares of her to be rising after hours. $2.01 was the estimate and they were looking for dollar $.69 -- $1.69. this is bloomberg. ♪

caroline: more details on the deal for lows coming -- loans coming to tesla from china. by hundred $21 million of secured loans coming from a mixture of chinese banks. we see the china construction

bank, and others, are involved in the deal. notably, this is for their agreement for a giga factory in china. this is what the bank loans are for. we see it will be a restated permits paying up to $209 of added commitment. this is coming thick -- $209 million of added commitment. romaine: we will come back to the u.s., because cosco earnings are out. they appear to be beating most of the metrics analysts were looking for. turning us now to talk about this is brendan fletcher. we just got these numbers, and i know you haven't had a chance to go through all of him, but costco seems to be doing everything right brandon: -- write. brandon: we think cosco -- right.

caroline: we think cosco is invulnerable to all disruptors. the lowest have price on a narrow assortment. amazon wins by having a very incredible -- price on an incredible assortment. cosco will remain successful for a long time. joe: let's talk about someone not doing as good, kroger got slammed today. with a caught in the tito models you described? brandon: is difficult -- too models you described? brandon: it's difficult -- two models you described? caroline: it's difficult. brandon: workers have embraced what other european users are doing to get more efficient on grocery delivery or collect. they've decided to do partnership with oconto, a u.k.-based retailer, that allows them to be far more efficient

than today. that now, the costs is they are spending so much money chasing walmart to do click and collect like we would. what you are really looking for is that to be done in a semiautomatic way. but doesat in french this. if the dominant online retailer for grocery. we think rogue or can make a move like that, but it will take time and money. that is what investors are aggravated about. you have to wait longer make it harder for investors to believe and where it is today. getting: gross margins crushed. i'm interested in one area of growth that a few american retailers have latched onto. they're looking to copy amazon with digital advertising. how big a sources that likely to be? brandon: it can be very large. i was a walmart executive for a

number of years, and we went down that path. we didn't commit has there's a notion if you start taking from true advertisers, are you representing your customers? if you are under pressure and amazon does it anyway, that conversation becomes real. walmart brought the process in-house. kroger understands there could be a lot of money there. romaine: is there too much competition? there are some of the grocery stores opening up in my neighborhood along with four open in the last year. when you look at the problems kroger faces, and all of the other places face, when do you get to critical mass? brandon: that 20,000 mom-and-pop groceries in the united states. and when i say mom-and-pop, i don't mean -- i mean 10 stores, 20 stores. of thoseto get rid

guys before you get terrified about groceries. you can crush 15 to 20% of shares a mom-and-pop's and you still have enough for kroger's to survive. disruptiont did its with the supercenter, kroger had massive share pressure. they did a similar move and went to the u.k., found a partnership with a company and figured out how to harvest customer data. they made the same play to survive again, runaway to the u.k., i do technology to apply --the u.s. and bring it in find a technology to apply to the u.s., and bring it in. caroline: it's interesting they look at the u.k. where there is so much control. great analysis. brendan foster. tim cook is in on the joke it seems. after president trump flooded the apple ceos name, cook has changed his name on twitter to

tim apple. this made me laugh a lot. joe: very lighthearted moment. romaine: i feel like we don't get that from him a lot. he always seems a little stiff. it's nice to see him have a sense of humor. joe: and it's not one of charms nastiest nicknames. he has called people nicknames much worse than that. caroline: he is also done this before to lockheed martin. joe: i guess it's a badge of honor -- romaine: i guess it's a badge of honor. maybe every company needs to be named after their own name, like bloomberg. day gets bit at is extreme, but michael carr shifting deals. this is bloomberg. ♪

mark: i'm mark crumpton with bloomberg's first word news. attorney said he batchterested in a a davis release a statement that says "michael was open to the ongoing dangling of a possible parted by trump representatives, privately and in the media that was at odds with -- media." michael'st odds with quote where he says i will not accept a part of from president trump. >> maybe his lawyers didn't tell him they were inquiring about the pardon.

i don't know. all i can say is mr. cohen has a story to tell. >> an issue of prospective pardon as a lure for a --ential or ward for forgery for perjury is troubling. everyone involved in any of the reports ought to be brought before congress. cohen has pleaded guilty to nine felonies, including lying to congress and previous testimony. he is due to report to prison in may. sued the trump organization saying the president's company stiffed him on millions in legal fees and costs. nancy pelosi the house will vote on a resolution condemning anti-semitism, islamophobia, white supremacy, and other forms of hate after elon omar's

comments about israel sparked with democrats. -- concerns with democrats. >> we're working on a resolution. we will see when we bring it to the floor. that's will speak out against anti-islamophobia , anti-white supremacy, and all of the forms it takes. our country has no place for this. mark: the resolution will not mention elon omar. more fallout from the sex abuse candle from the catholic church. a french cardinal who failed to purport this report a pedophile

priest has given his resignation. he spoke today of his compassion for the victims and said they were in his prayers. >the florida sheriff suspended y the governor after the portland school scene is suing to get his job back. israel says he was fired for political reasons and denies he neglected his duties. ron desantis said he displayed a poor leadership and failed to keep families and children safe before and during the shooting and marjorie stoneman ,ouglas i that left his -- high that left 27 people dead. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. caroline: the m&a landscape has in 2019, buts activity in the mid-cap is

falling. let's get the expertise of ed hammond, standing by with a key player in the space. carr, michael, you run one of the best m&a franchises in the world. we have seen a slight trend where we have seen six deals and $5llions of dollars, million deals are done about a third from year ago. is,hat's interesting to me with the numbers you talked about, the larger companies are trying to take a move right now. that's happening because they have the fortitude and resources to get transactions done. what is happening at the lower end of the stage, one to $5 billion, i think december was a very scary moment for the smaller part of the spectrum.

these larger companies have the opportunity to put what they have to work. ed: let's talk about december. it was grams in terms of the credit market. where there any deals that didn't happen as a consequence of the slowdown? >> you will never know, but nothing we saw. most of the people pulled in their horns and decided this was a good year and would put it into the bank. that is what happened. i'm not an equity markets person, but at the time, you could see everyone had taken their gains and moved on. ed: one of the biggest deals we are focused on is bristol-myers and their merger. what does this tell us about the way companies are failing to understand the big shareholders? that activists really started this trend 10 years ago. mind,ility to speak your

be able to move markets, that became powerful over time. so you had the activist group doing their thing, and then we move on to what is happening now, which is long only's are starting to come in to companies directly. what we've seen over the years is that is much of a one-on-one discussion. ed: [indiscernible] >> yes. the segue between those two was an intimate sort of dialogue between ceos and boards and investors. what's happening now is that is crumbling a little bit. only is would like as well as the hedge funds is much stronger ability to talk and communicate and advocate -- from where they would

like to go from as a strategy point of view. ed: you sit with these board members before they go out and execute on deals. surely the message for them is that you have to talk to shareholders and know what they are going to do in response. if you do the deal and then they come against you, that's not going to work out right. >> the advice we give is that you have to know your shareholders. we see there are a lot of people around the dialogue between the company and the markets. there are bankers, lawyers, all sorts of people, and you have to have directit and channel from either the chairman or theceo -- chairman ceo to really test drive your strategy, to make it sure -- to make sure that if and when you do a transaction, that is something you have worked with your investors about. ed: another deal i know you're familiar with, which counter this whole trend, which is interesting to see, didn't end

up happening. was that the case of a ceo proving if you do go stick to your guns, you can win? michael: i'm not going to comment on individual transactions. what i would say, as a bit of a tangent to that discussion, is who tendeing activists to pick up ownership pieces from anywhere from five to 10, to sometimes 15%. we now have private equity who have these large funds and researcher see them come together. we are starting to see them come together in actual transactions. i think you saw, probably in the press, that went on in the case and that is a time where you have two different capitals coming together to create a transaction. in this case, there were other reasons that it didn't happen, but it was fascinating to see them come together. they have the same ito's when they look at value.

and what are the return patterns you can generate and leveraged contacts? number two, the way each of those organizations put together is very different -- is put together is very different. private equity takes significant time, and activists are much more nimble. ed: to wrap on this, one of the characteristics is that we have seen some sectors consolidate to what looks like their end game like big media companies, and even the telco's where does the next wave of megamergers come from? michael: if you look at the conversation -- composition of the markets you have think and health care, both up about 35% year on year. we haven't seen that behavior from either of those sectors for the last couple of years. you are starting to see change in the composition of what is happening. verticals, itse

is happening for a very specific reason. ed: michael carr, thank you for joining me. caroline: thank you. tune in tomorrow at 2:00 p.m. in new york to hear from bristol-myers squibb. so much of a day to come. this is bloomberg -- so much m&a to come. this is bloomberg. ♪

was hit withowell questions last week about how to get more americans working. our next guest says the central bank is more responsible for low labor force participation many cares to admit. we welcome carl smith. carl, great to have you. what is the fed's role in persistently low levels of labor force participation in the post crisis, and even the precrisis

post dot, area. -- area period. carl: the fed has been raising rates sooner than it needed to, and has created an environment where we have had unemployment -- more employment than we needed, an environment where workers have not seen as many that, and over time, changes what workers expect and what employers expect. a year or two ago, there has been in excess of employees of people looking for jobs to the number of jobs available. have a lot employers of choice, they become spoiled and don't take people who beat accommodations, people who might have been out of the labor force for a long time, i cap had criminal records. people in those situations learn that and stop looking. some of the drop in labor force participation is because the market has been so bad for labor for so long that people have just dropped out.

havee who would otherwise a difficult time anyway have dropped out completely. i think that is what we have seen over the last 20 years. most of that was because of the fed. romaine: you talk about the last 20 years. the labor force participation rate is still healthy. if you go back past 20 years, we're still above long-term averages, and some would say the distortions seen here have to do with trends that have nothing to do with economic policy ver -- economic policy. had we reconcile the fact that times just change and it may be out of the control of the fed? karl: i will see any reason to expect that here. there are a couple reasons why labor force participation might decline. participation, it has been declining because the population is getting older. i think that's prime age participation, people 25 to 54. there's a massive drop off.

-- authoring that recession. recovery, a mass trump off from the great recession, and it picked back up recently. as late as a few years ago, was moreought there rooms to add jobs, we were done, and we had to pull back on accommodation and raising rates. whyink that is the reason we are far below where we were in the 90's. joe: d.c. evidence the powell fed is going to break this pattern -- do you see evidence of health that is going to break this pattern and create a structural break in these trends? karl: powell has been hinting at this since early 2017. he with a we will see what happens on labor force participation. there are some people who think, and people like me, who think there is a political to will come into the labor force if we give them a chance. they did that, it happened.

and his comments, he was increasingly frustrated with the models that say it can't happen and to say once we are unemployed -- caroline: i'm afraid we will have to wrap it there. great perspective as ever. this is bloomberg. ♪

caroline: there's an new whiskey in town and it is japanese. the is a brand-new bourbon. let's go to carol massar and jason kelly. >> this is bloomberg businessweek on bloomberg radio. a first edition of businessweek talks, and we are happy to have with us the centauri holdings president and ceo, a brand company that has been around for more than 100 years. you have spirits, beers, beverages, health foods, but before we talk about the outlook, we want to talk about trade. i feel like that is so much

front and center when it comes to any global company. -- how how you see closely you are watching the u.s. china talks and what you are worried about for your company. you have already seen an impact. >> that's right. momenty be affecting the -- momentum of japanese consumption eventually. it has not gotten a negative sign from the tensions between china and the u.s.. carol: not yet. but eventually. today a newnnounced product in collaboration between somethingny and closer to home here in kentucky. do you worry maybe these collaborations won't be as easy to pull off in this new trade world we're living in? >> i don't think about the collaboration between suntory. its integration started five years before and is almost complete. , by thehing a new brand

-- chief lenders lenders. i don't feel any concern, but my ,oncern is that u.s. and europe that part of a bottom line, quite a lot because of the tariffs between u.s. and europe. the bourbon is the target. i hope that will be lifted sooner or later, but i'm sure that will be effective of the bottom line. carol: we think that somebody brands that you folks own and so associated, with united states, and i wonder if you try to sell in the chinese market whether or not there is pushback because they don't want to buy u.s. products or u.s. associated products? otherhave to think about

sources to expose the product. we have many factories in the world, so we may have change the portfolio, change the process of those products exported to china. jason: talk to us about the consumer right now. we think so much about health and wellness and maybe that's leads to lower alcohol consumption. you have other products that you are selling. how does that makes change as the consumer changes? beer too low confident -- calorie -- withh alcohol content soda, carbonated soda, that is substitution for beer, for example. pillh consciousness is a

we enforce. we can propose another way to like a trend.ust in the u.s., it has been prevailing by suntory. plus, -- carol: we definitely do see folks around the globe and certainly in the united states showing we're drinking less inohol or it is stagnating terms of seeing growth. do you think more about nonalcoholic beverages or more of the wellness category of the company's future? >> you are right. plus, more shift into the luxury of brands. people don't want to drink a lot, but people want to drink premium. that's the way to go. tea, non-sugar soft drinks, we can offer and the tea

is technology. we have huge technology to offer in the tea category for example. jason: when you think about your strategy, what you think about emma day -- m&a? is it in your future? the future, yes, but we already have a good portfolio products. we have thousands of brands, so we have to focus more on key teads, and we have the brands and nutrition products. we have to invest it to core brands we choose. already by now. we're not interested in everyday so much -- m&a, but a small m&a like we did in thailand to apply for pepsi.

from time to time, small-scale, yes. carol: where are your growth markets? most of your revenues are in japan, but there's a focus on india and russia going forward. rather than -- could you see the growth in that consumer market? where does chuck -- what is china playing? >> we are with alibaba, for example. we have a strategic discussion with alibaba. is a big playground for us. we can offer a lot of brands. if you love japanese products, they love thai products for example, we can go to india. setsve lots of the skill to play in india, but we are not in a hurry. little by little, we had to take a look at local consumers.

-- united states and china, consumers and local cities are very different in terms of their needs and regrets. same as in india. we want to know more local consumers. jason: i want to ask you -- because i think this is something you commented on before, carlos ghosn being released on bail. this has brought to the attention of the world the japanese system and the culture of companies. at what is your take on what is going on now and where it goes from here? the detention period is too long. the government or judiciary system should explain to global market as well, but another point is the corporate governance. what he did is generally just renault wrongdoing -- general

wrongdoing. when you go to the legal action, that should be done something by the corporate governors. carol: it's a fascinating thing for us to watch and get a better understanding of how things are working and what it might mean for global companies going forward in terms of their operations in japan. thank you so much. joining usry in the bloomberg ceo. we send it back to tv. caroline: jason kelly and carol massar with suntory. tomorrow, international wellings day. joe: and i will be walking the jobs report at 8:30 a.m. eastern. forine: also, the numberins housing comes out. caroline: that's all for "what'd you miss?" romaine: bloomberg technology is up next in the u.s.. joe: have a great evening.

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emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next hour, facebook's new mission, social network -- the social network says it is pivoting to more communication. plus, amazon is flexing its muscle in washington, stepping up lobbying efforts and spending a record amount of cash to get its d.c. agenda on track.