steepen. mark: if you --romaine: if you

take a look at the put, ratio, nine straight trading sessions. this is significant because we have not had this length of time above that level probably since december when we went about 16 straight days. i want to point this out because the nobel winning economist had a column on bloomberg today where he essentially was time to make the case here that u.s. equities are essentially falling out of favor. he tried to meet the case that chinese equities are more in favor than the u.s. and he did that by looking at the upside to downside changes, basically calls versus puts, specifically the prices on such. when you look at those ratios, he saw a decline of 5.5% for china. for the s&p, a decline of about 13%.

based on his analysis and his opinion, saying chinese equities right now are more >> interesting take. still with us is alex of jp morgan asset management and bloomberg's sarah ponczek. you had said that now is not the time for bets. if one was trying to get in, waiting for an entry point, are we going to get any kind of catalyst that will get us back to the level. >> when you look at the landscape with the kind of u.s.-china trade war. tensions rising in the middle east. emerging markets as well. there is heightened geopolitical risk at the moment. as those clear, i believe that

would be the catalyst for the equity rallies. but you need those clouds to clear and you need them to go, in the minds of an investor, the right sort of way. alex wasking to what saying there, obviously you could make that argument in the short direction and long direction. how much is hedging the activity because people don't want to take real directional bets sort of masking anxiety we might not be seeing if we looked at overall index levels? seen a big pickup in hedging lately. right now, investors are worried that they are going to miss out. we get a tweet saying negotiations are going better. all of a sudden, you get a pickup in the equity market. in the meantime, you have to worry that things could deteriorate even further and that we could see some downside risk. it is the push and pull from

investors wanting to participate still but at the same time being a little bit hesitant. caroline: i was interested by the pointing out that scarlet did of the forecast. interesting from etf flows. what is your take on small caps? alex: i get into small caps when i need to take a strong conviction bet. it is flashing green across the board. i go growth and small-cap. strong flows into a sector without clear catalysts remain geopolitical point of view. is there a clear read on china? it looks like it was recovering then another set of data, those green shoots, not so green.

alex: it is still filtering through the system. there is this idea that the chinese would ride to the rescue. second half of the year, everything does better. you do have the anniversary coming up. one aspect i would point out is the nature of this chinese growth stimulus. it has been focused on the , veryer in new china limited on infrastructure and kind of the old china stimulus. it may help chinese growth, you may see limited ripple effects across the global economy, you may not see the same sort of pickups that you would under an infrastructure led chinese stimulus bill. times there are

these periods where we get anxious. we are in one now. the long-term investor, tune it out. is there any reason to think it ?s that different this time alex: things like brexit, european parliamentary elections , itis u.s.-china trade spat has the potential to damage economic growth and does have some sort of bearing. my personal view is that i do down in thel calm shorter run. when we look at the shorter run, investors who will be in the markets for the next 15-20 years, they have to pick their mind around the fact that tension will be part and parcel of the market going forward. an established superpower like america working out their

differences with an emerging superpower such as china. this will not be sorted in the next month or so. this will be a common investment theme for the next two decades if not longer. scarlet: a longer-term irritant. alex dryden, thank you for your time along with sarah ponczek, our assets reporter. that does it for me with the closing bell. romaine bostick steps in next with "what'd you miss?" sprinte's takeover of and where the government stands. this is bloomberg. ♪

from bloomberg's world headquarters in new york, i'm caroline hyde. romaine: i'm romaine bostick. joe: i'm joe weisenthal. 1.5%, the nasdaq tech laggard. the ripple effect, president reverberatesi ban across markets and the supply chain. ford cuts jobs while one analyst says tesla is facing a code red situation. the doj is said to lean against recommendation to approve t-mobile's takeover of sprint. headlines. with ford planning to eliminate about 7000 salaried jobs, about 10% of its global white-collar workforce.

the automaker is under pressure. signs point to a peak in demand. joining us is a u.s. auto reporter. how surprising was this? we know the big restructuring was happening but did this amount seem like a lot? >> it was actually a little bit on the low side compared to what morgan stanley was expecting. they put out a note last fall where they were saying about 20,000 might be the number. little lower than that prediction but it is obviously still a big number and absolutely raises eyebrows. i think you have a situation where ford is talking about wanting to be quicker with its decision-making. perhaps the handling of this announcement is a perfect encapsulation of how much faster they have to move given that they said they would do a significant job reduction on the salary side way back in october and we are just finding out in

may just how many people they are going to cut. this is a company that needs to move faster given the amount of change that is sweeping this industry. romaine: speaking of moving faster, we got some news out this morning on tesla. a warning that tesla face day kilimanjaro-like uphill climb to make a profit. listen to what he said today. >> of profitability does not come in the second half, they will have to raise one billion to $2 billion more in capital. romaine: you heard what he said. you've seen the report. we know that tesla has cash issues, but we have already gone back to the market. is there some sense here that the landscape has changed so much that the growth trajectory might have been wrong? >> i think the first quarter result was really jarring for

people. putting ahis company forive forecast out there 2019 that they have stuck to. there is a general sense that there hasn't been a pickup to sort of justify them continuing to keep the forecast where it is. you are seeing the street sort of call tesla's bluff and i think you see a bit of concern in the wake of elon musk's memo to employees last week where he anded about the cfo, new the job, scrutinizing literally every expense. he's talking about looking at every page of expenses at the company. you would maybe think that that sort of discipline would actually be a positive, but it may be sort of raised alarm bells among investors that this company still doesn't have its

costs in line and may have to do this out of sort of desperation because the demand is in there. joe: thank you very much. now joining us, senior analyst at needham and company, to reiterate the underperform rating on tesla. thank you for joining us. where is the floor here? how bad is it getting? obviously we have seen the extraordinary pace of declines on the stock this year. is that over? >> it is not over at all. we were on this show i think a year ago saying that the stock price was going to fall. now we are thinking it could fall to $150 and below. demand for the the model s and -- the unit sales

were down 45% year-over-year. even assuming a pretty good snapback in the second half, they will still be down 40%. the model three, they basically had depleted their high-end version of the model three in the second half of last year. that backlog of orders has now gone and now they have to kind of go into the mass market. at the same time, when the the otherve expired issues on the gross margins, the gross margins in q1 were 12.5%. that was a decline of 750 basis points sequentially. the gross margins are being hit by lower volume, lower pricing on the model three, model s and x, as well as a -39% gross margin on the services line where they put a lot of extra costs associated with the business.

the margins are very bad and will continue to get worse. you have aation when stock that has already been completely overvalued, it is a recipe for disaster. caroline: a lot of the valuation is because of the future of what tesla might become. you were sort of pulling away some of the carpet underneath that viewpoint about autonomous vehicles. what about these uber taxis that will be coming in next year? their valuation has been on their auto pilot we cover the semiconductor industry so we are intimately aware of what is going on with self-driving. their vehicle, their autopilot, is going to be basically replicated by every mass-market oem. toyota is going to be releasing level to advance, very similar

to autopilot in terms of its capability, from lexus down to corolla. same thing with volvo, same thing with daimlerchrysler. all of these capabilities will be driven by semiconductors. there is technological differentiation. the second key component, when they talk about one million robo taxis by next year, that is an absurd statement. therein reason is because is no guidelines at the federal level in terms of what is going to be allowed for self-driving vehicles. the federal, government -- the federal government and the state are divided. there are no set rules. the states have different rules and there is no standard for federal level. to make an assessment that you will have one million self-driving robo taxis by next year when there are no standards at the federal level is an absurd statement. it is just a distraction, in my

view, to conceal the issues going on in the company itself. romaine: we want to keep this conversation going and specifically hit on some of the ideas that were just being talked about with regard to semiconductors. we saw the stock down about 4%, ban on huawei rippled through the global supply chain. we want to bring in a bloomberg news reporter who covers the global supply industry. how important it is not just to the computer market itself but to autos and other factors. >> investors are expressing concern, and they should. the u.s. is the largest maker of chips. 50-odd percent of the market in terms of production. anything that disrupts the flow between these two countries,

anything that indicates that things might be getting worse, that people are going to get cut .ff weapon if you are the trump ministration and want to put pressure on china. for some of these big chip giants, huawei is not like a huge customer. effects, morer tariffs, this tech cold war that will fragment the infrastructure. >> it is a compounding effect. when trump come on may 10, onreased the tariff rates $200 billion worth of goods, that caused a fear across the semiconductor industry. most companies get 40% to 60% of the revenue integrator china. adding to the anxiety is huawei.

u.s. supply chain is big and deep. huawei is the number one handset vendor in china. it is the top three handset vendor in the world next to samsung and apple. it is one of the largest communication equipment vendors to china. 60% of china mobile, china unicom, china telecom, that whole operator uses huawei's networking gear. any potential disruption in that supply chain will have a massive impact on the handset supply chain as well as the infrastructure. there are a lot of u.s. infrastructure companies, chip companies, that are exposed to that industry both directly and indirectly. caroline: we know that actually huawei has been preparing for this to a certain extent, bringing in plenty of chips ahead of time.

they've got about three months, we understand, to supply themselves. but they are also making their own chips. what really are they left exposed with? what cannot they do on their own that would potentially grind this company to a halt? >> you ask a good question. obviously we have seen micron's stock get hit. likeit comes to something the microprocessor for the server business, intel is really the only game in town. when it comes to the switch chip , only game in town when you want to be the best. some of the networking stuff, they really need what is called and asked pda. if you block from these suppliers, you are really in trouble if you are huawei. their in-house chip unit is very good, got some really good

capabilities, but not quite to that intel, not quite to that broadcom or qualcomm level yet. romaine: we talk about what is going on with the rollout, with 5g in the u.s., even in europe. there's a big rollout in china and now there is concern that a lot of the u.s. companies will sort of be locked out in retaliation. >> that is a big issue. china has been one of the biggest drivers of the fight. the u.s. has been behind for all sorts of reasons. the fact that huawei is at the heart of the network with china, this has a big impact in terms of rolling out the 5g. the other thing i would say, huawei has its own internal chip, but it is mainly for the application process of the phone. outside of that, whether it is memory, ian mentioned they had to buy from samsung.

the infrastructure, a lot of the optical transceiver companies. lament him just lowered its outlook by about seven or 8% citing lower orders from huawei. you can see more chip companies lower their outlook, more optical companies lower their outlook. as i was saying earlier, the huawei issue compounds the anxiety between china and the u.s.. huawei is a very significant event because of its breadth across the entire technology industry. caroline: what an excellent guest today, to take us all the way from tesla to chips. of course we want to thank bloomberg's ian king. coming up billionaire investor robert smith giving the morehouse college class of 2019 graduates a $40 million gift of a lifetime. we discussed this ahead.

this is bloomberg. ♪

caroline: morehouse college graduates may have received the best gift possible. billionaire robert smith announced that he would pay off the student loans of every member of the class of 2019. the jubilation must have been ecstatic. poorew is, poor 2020, 2021. joe: how many billionaires are now being invited to give commencement speeches? romaine: this is great. puts them on sort of i guess a good path if you don't have that debt. caroline: he's a good man.

this is bloomberg. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond.

mark: president trump is telling former white house counsel don began to defy a subpoena. says heice department can't be forced to testify before congress about the findings of special counsel robert mueller's report. the white house says he would have been -- have immunity as an advisor. he was scheduled to appear before the house committee tomorrow. question himo about whether president trump obstructed the investigations.

a 16-year-old from guatemala died today in texas. u.s. customs and border protection says border patrol in southed the teen texas's rio grande valley. they say he was found unresponsive this morning during a welfare check. teendid not say why the had been detained for a week. british prime minister theresa may says she will spell out a timetable for departure from the european union in early june. u.k. international trade secretary neil fox spoke with bloomberg television in london today. >> a key thing is that we face the legislative challenge while getting a second reading of the withdrawal agreement to go through. it is up to them as a parliament to try and reconcile the duty we

have to deliver on the referendum results. if we come to a leadership contest, i'm sure mp's will have a wide field to choose from. busy field of candidates is already vying to succeed theresa may with boris johnson the current favorite. chicago's new mayor has been sworn in. lori lightfoot took the oath of , becoming chicago's first black female and openly gay mayor. she made a pledge on the heels reform plan.police to a cityking ahead of strong school -- of safe streets and strong schools for every child regardless of neighborhood. a city where people want to grow

and not flee. feary of sanctuary against where no one must hide in the shadows. lightfoot also announced creation of a mayor's office of public safety as part of her strategy. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. closer too inching legal recreational marijuana use. legalization and mexico coupled with already legal sales in canada could increase pressure on the u.s. to do the same at the federal level. joining us, a senior research analyst who covers pot stock. thank you for joining us. always new developments in this space. and theking to mexico

roadmap that it's president laid out, that recreational uses possible down the road there. how difficult would that be for established players in canada and the u.s.? would they likely have access to this new market or is it the kind of thing where homegrown players would have different -- >> it is a very exciting development, the second country in america legalizing adult use cannabis. canadians have been focused on the latin american market area -- market. several canadian lps are establishing access. we envision some of the supply would certainly be directed toward mexico. mark: we just really weren't getting the kind of retail exposure.

fundamentally, the problem with the canadian rollout was that it was managed at the provincial level. you can see meaningful contrast in the revenue trajectory in , compared to ontario where they didn't have their .irst store caroline: by 2025, you are still standing by this canadian dollar market. a great report out talking about just how many adults are actually using cannabis in some shape or form in canada. can you talk us through the numbers? >> today, we published a report with the findings, a proprietary survey that we conducted in alberta and ontario. it was 1700 consumers. one of the big takeaways was

that incidents were much higher than the percentage of adults willing to admit in the survey that they had used cannabis in the past month was significantly higher than what we see in the government reported data, which suggests to us that there are still cannabis users hiding in the woodwork. joe: is it possible the numbers are higher than that because possibly there were some users who didn't want to tell the truth in your survey? >> the sponsor rate we got was almost 2x. our health -- our age cohort did skew a little bit younger. i saw a story recently from the new york times that kind of talked about the illicit market. even with legalization, you had a lot of people still sort of selling in the shadows. part of the issue with that, some of these growers and sellers didn't want to deal with the regulatory aspects of having

to sign up. i wonder, where do you see we get to sort of a balance or maybe some of the folks who have been operating on the legal side are willing to come into the fold with whatever state or them totion is allowing sell legally. >> we think that would happen over time if, in particular, better enforcement was a factor. for the time being, one of the remedies being discussed was lower taxes temporarily. that should lower the price gap since the price gaps are very wide. which companies at the moment are really managing to get where they need to be in terms of the market? which companies are managing to build the boats that are build thean -- moats necessary. >> our topic, aurora, and also

canopy. both of those companies are on track. they are still building out their cultivation capacity but they are both on track to produce half a million kilograms. any data yetseen showing a market change in alcohol consumption where people have the option now to consume legal, recreational cannabis it -- cannabis? >> in the first quarter, beer volumes in canada fell. in the month of march, they are down 7% in canada. romaine: right now, we are looking at pictures of somebody sort of cutting leaves, growing and cultivating these plants. i'm wondering, when do we move to a stage where we are seeing a lot more stuff done in the labs and we are seeing more per dietary things like oils and -- proprietary things like oils and

compounds? >> kronos does have an agreement with ginkgo bio works. starting with thc, cbd, then moving into some of the more rare cannabinoids. that is a three year agreement that they have. we are just finishing kind of year one. we haven't heard anything there. tot is certainly one way create novel extracts, through biosynthesis. there are other ways to of course use the plant matter itself, use one of the different extraction methodologies, the co2 or ethanol. 's arew the canadian lp working aggressively at scaling up. thosethey are using processes to develop oils and capsules, the demand will be far greater when you meet that --

when you need that thc distillate when you go into the edibles and namely vapes. caroline: we thank you, always great to get your expertise. coming up, t-mobile and sprint signal.earing a busy of this is state bloomberg. ♪ the megamerger, ahead.

the department of justice leaning against approving the merger between

t-mobile and sprint. after the remedy proposed didn't do enough to quell antitrust concerns, according to a bloomberg story. we spoke to the fcc commissioner rented car. >> part of our years long review has been looking at competition issues. atn you look right now combined sprint-t-mobile, it would have the same size and scale as verizon and at&t in terms of customers. when you have a third competitor on that scale, what our record shows is that there are benefits for consumers in terms of the new competition you will see. caroline: let's welcome a former fcc commissioner, partner now at cooley. it is an interesting story from bloomberg saying that, at the moment, the doj could be at odds with ajit pai's signoff for the

deal. that would be quite remarkable, wouldn't it? >> the department of justice and the fcc communicate often, sometimes multiple times a day, on a variety of deals and other matters. there's a lot of coordination. i can't think of times in my career when they converged. i would be very surprised, not to question your colleague's sources at the doj, but you have wonderful engineers, attorneys at the fcc and the doj, all looking at these deals, and they can have their own opinion. romaine: one thing that did seem clear from various reporting is that t-mobile and sprint will have to give up a little bit of something to get this done. talking about to make sure they satisfy whatever it is they are looking for? pot, the chairman, and

-- ajit pai,arr --metro pcsoner, has a robust prepaid business that is owned by t-mobile. that is number one, a structural remedy that someone from the doj would like. he talked about his preference for structural remedies over behavioral remedies. there are also pricing commitments. three years of the best deal and it won't cost you more for 5g as it rolls out. that will allay concerns not only of the department of justice but also the states. public service commission has already approved this. they are looking at this as well. ajit has done a masterful job i think of finding

a number of conditions agreeable to the parties as well as the states and department of justice. i think we have the perfect -- argue that even without these conditions, that the merger would be good for competition? >> absolutely. 5g will have up to 100 times more capacity and speed. we are at the dawn of that era. we need to frontload our capex in the global race to 5g. this merger cleans up a week balance sheet by combining assets like cell towers and things of that nature, then $40wing it to borrow about billion, give or take, to spend more quickly. we will get to a 5g future faster. joe: why is it a race? if other countries have faster wireless than we do, just

explain to me why that is a big deal? >> first of all, there was a race to 3g which the u.s. kind of lost. to 4g.the race that helped us set technical standards and patents. it created an environment like in silicon valley, austin, texas, northern virginia, where there were the app economy blossomed as a result of higher-speed connectivity. uber, netflix on your phone, et cetera, all came out because of 4g. we have some great ideas but i guarantee it will be a great surprise. caroline: if it doesn't get through, what then for 5g particular in the u.s., particular as we are seeing huawei blacklisted?

>> excellent question. asia in general, and europe, are very eager to try to beat the u.s. to 5g, to set those technical standards, to own the technology. the techpre-much owns economy, so to speak. in terms of market cap, innovation, investment, that stuff is happening here. other parts of the world saw the wealth effect that created and they want to replicate it. they get to 5g faster, than they will be able to have a shot of knocking america off its perch. romaine: there has been a lot of talk about the impact of what consumers pay. some of the other criticism has to do with wholesale risk and also jobs. that frequently happens when you have a large merger of this kind. how do you address those criticisms, seeing these

companies could be viable separately? >> with the added capacity and speed of 5g, 100 times more, that is added supply of a thing in the market. technology enables you to supply exponentially more of the thing it is you are selling. , thatou have more supply causes downward pricing pressure. there is more of the stock for consumers. pricing is going to go down. also you are clearing up the balance sheet so that helps. it is going to create jobs. don't take my word for it. look how t-mobile handled its acquisition of metro pcs. they tripled the number of employees at metro pcs. it all started when i was at the fcc. prices went down. customers were happy. -- the customer

experience and satisfaction ratings went way up. we expect that is a fantastic testbed. neville ray did a great job of integrating those networks. they will do an even better job, i think, with the new t-mobile. romaine: that his former fcc commissioner and t-mobile advisor robert mcdowell. coming up, a surprise electoral win over the weekend in australia. this is bloomberg. ♪

now to asia. shares surged in sydney after australian prime minister scott morrison's center-right party secured a surprise victory over the weekend. they will secure 177 seats in the lower house. this was a bit of a surprise, right?

there was some concern that they would boot morrison out after less than a year in office? shery: i remember we talked so much about bill shorten. over the weekend, there had to be so much studying about morrison and his policies because all of a sudden everything turned around. there was one tv ad during the campaign that pretty much summed up for me what happened in australia. bill shorten is a bill that australia can't afford was a message. concerns potentially a that he would make the country more expensive to do business in. as soon as we saw more conviction that prime minister stockon would win, we saw

prices go up. joe: the best performing stock in the indian rupee, where investors are apparently happy about the results of that election. on that aussie dollar thing, it jumped. there are bets that the rba would be forced to cut based on economic data. it is paring back those earlier gains. indian assets, we saw stocks, bonds, also the rupee gaining grounds. right now, what investors are finding comfort in is the fact that the projections are so strong. it looks like a landslide victory at the moment. even if you would see that it is not a landslide victory, it would still be a victory for the ruling coalition of narendra modi. caroline: people like continuity.

we've got a look at what will also be dominating the conversations in your show, obviously the ongoing trade debacles, talks, tensions. also, rare earth. shery: it was so interesting when i saw that president xi jinping visited this rare earth facility in china. i remember when this was the huge issue in asia back in 2011. i was in japan back then. nhk, the media, was really spooked about what would happen if china started raining in these exports. in 2011, we saw these export quotas being implemented. china dominates the rare earth markets. they produce 95% of these materials. we are talking about these metals that we can't even name. i'm not going to try. --y are very complicated chemical names.

there are concerns that would affect electric vehicle makers, some manufacturers at the u.s. of course has many of. for more on these stories you don't want to miss, daybreak australia and daybreak asia starting at 6:00 p.m. eastern. it seems that the democratic house committee is getting a step closer to reviewing donald trump's tax information. they ruled that lawmakers have the powers to review records. thenderstand of course that trump administration will probably try to hide this. romaine: some breaking news on constellation brands. the ftc in the u.s. asking for a little bit more information about the sales of some of that business. this is the second request that the ftc has made. it is not exactly clear what they are asking for but constellations says they expect a deal to close in the second half of this year. caroline: some moves at the top when it comes to snap. appoints of snapchat

derek anderson. that is all for "what'd you miss?" romaine: "bloomberg technology is up next. this is bloomberg. ♪

chang in sanily francisco and this is "bloomberg technology." mixed messages. the u.s. department of justice is leaning against approving a $26 billion merger between sprint and t-mobile while the chair of the fcc has endorsed the deal. we will tell you what is next. google is cutting off supplies and services to huawei along with a slew