as sarah and carolyn have what is the case for being optimistic things won't be as bad as headlines forget there are two puts at play. the fed put and now the trump put. he could step in to fix the problem he has created. the possibility off the table. they said they would hold rates even if the economy improved. caroline: we close down by eight points, s&p 500 off by 3/10 of a percent. aw jones off by 4/10 of percent. i'm interested in the approach on the bond market side compared to the equity market side. a big rally today. why are we seeing bank of america worrying about the misery that no deal between

china and the u.s. is causing in bond, but not when it comes to stocks? >> it looks like the bond and stock markets are telling us different stories. bond yields keep dropping. equity markets, as we mentioned a few minutes ago, has been remarkably resilient. i think what is happening in the bond market has a lot more to do with events outside the u.s.. don't forget international interest rates are extremely low. we have seen rates close to zero, rates in negative territory. it is that drag from very low international rates that is pulling the u.s. market down. significantgnaling upcoming weakness in the u.s. economy itself. i think it might reconcile the different behaviors. of u.s. equity

performance overall, we were just talking about the federal reserve consistent with its message. is that the key thing that sort of underscores the case for risk assets, and that ultimately everything else is just not big -- not as big of a deal? >> i would push this back into the minority category. yes, low interest rates are helping us and inflation is miraculously inconspicuous at this point. those are all good things. the big driver is that the u.s. economy is almost firing on all cylinders. had -- we had 2000 new jobs in april. we are averaging almost 2000 new jobs for month -- per month in 2019. consumer confidence is high, consumer spending is healthy. there are strong fundamentals to

this u.s. economy. driver that is the big of the strength of the equity market and resilience. scarlett: oil prices down below $62 per barrel and energy stocks getting hit by 1.6% on the day. for the year, energy is one of the laggards come up only 1.9%. sarah: i was looking at how far the energy index is off the highs last year. still 20% off the highs. , broader index benchmarks did hit new highs. were taken by surprise today. u.s. stockpiles rising to the highest levels since 2017. you are dealing with some demand concerns over u.s.-china trade.

now when you throw this in as well and see supplies rising, that could weigh on oil prices and we could see greater divergent -- greater divergence. thatine: it seems to me political tensions abound. -- a goodective point, saying that to a certain extent, health care is your show when it comes to the domestic internal politics and tech is the proxy for international concerns and the trade war. energy,getting out of getting into a more safe haven? >> we have maintained a procyclical bias in terms of pro sector allocation over 2019. we are particularly interested by the technology sector. isyou just described, tech in the eye of the storm. it is the target.

perhaps most vulnerable to this ongoing u.s. china trade. however, it is a sector where prices have come down, they still have really healthy growth dynamics. if you will allow me this kind of interesting fund fact, 20 stocksgo, the nasdaq 100 made up more than 40% of the s&p 500 index market cap but contributed only 10% of their earnings. today, they make up less than 40% of the s&p 500 market cap but contributed more than 30% of earnings. so that growth to valuation trade-off is intriguing. case onust put our base the table. there are three possibilities. yes, we stay at this height and level of escalation, two, it gets worse. most likely outcome is some intermediate resolution of the

global trade war. it won't be permanent, it won't be comprehensive. it will be a cease-fire and a reconciliation. but this should end sooner rather than later. nothat case, technology is so vulnerable from that point on. my favorite headline of the day is from chuck schumer, saying what happened in the white house would make your jaw drop. he's referring to discussions the president was supposed to have with the democrats over infrastructure. he thought this was an area where the two sides could work together. joe: i never thought that. scarlet: fair enough. some hopeful people felt there might be some room for cooperation. it is not as if people are investing in infrastructure because of that? are they? at it asvestors looked the first leg of the administration. infrastructure was seen as a second leg, as something that

can help the u.n. economy rise, stocks,k assets, help if this is an issue that does potentially take that away. i will say that a lot of the investors i spoke with, especially when talking about what to look for in the 2020 election, a lot of people said, if you want anything that will be bipartisan, it is going to be infrastructure. joe: we are probably not going to get any infrastructure stimulus boost in the u.s.. i want to go back to the relative strength of the u.s. .ersus stock markets after several years in which the u.s. was lapping everyone, europe has had a good year. how do you look at this sort of relative comparison of domestic versus international equities? cheapergn stocks are and therefore they are

attempting for that reason alone. but we suspect they are cheaper for a reason. we have seen u.s. stocks over non-us stocks because the u.s., placeconomy, is the only where you have a confluence of -- what do we have? we have fiscal stimulus, deregulation, a very strong job market which we don't see elsewhere. these three things combined, in addition to the common themes of low inflation and low interest rates, i think makes the u.s. a very special place to invest right now. thank you so much. that does it for the closing bell and for me. romaine bostick stepping in for will'd you miss?" where we have a conversation with tom barrack, who is investing billions in latin america. this is bloomberg. ♪

caroline: live from berlin's worldly -- from bloomberg's world news headquarters in new york, i'm caroline hyde. here's a snapshot of how we briefly erased a lot of today's losses. we ended in the red but not really showing the trade tensions down. those trade tensions keep on simmering. blacklisttrump may china's video surveillance firm. china brace itself for a new long march. fixing the framework. a former fed economist explains why jerome powell and co-should focus more on paychecks, not

prices. theresa may just won't give up. one of her key ministers resigned but another one says she may continue to fight on, saying it is her duty for a brexit deal to get a fourth vote. -- coexit call-up -brexit cabinet minister has resigned from the government and pushingre increasingly theresa may to give up her role as the u.k. leader. what a day. we thought deals had closed but this resignation letter seem to have come out of from andrea leadsom. >> has been a day of high drama, a lot of subterfuge, plotting by

ministers. they are trying to find a way to get theresa may out and stop her putting this slightly tweaked brexit deal to parliament again. is theresa may going to go tomorrow, today, monday, or early june? the big picture here is that theresa may is leaving, her deal is almost certainly dead, and therefore, i'm afraid, we are no further forward to seeing what breaks it actually mean. the other sort of key thing to bear in mind is that the next leader of the conservative party is going to be chosen by the grassroots conservative members, that is 120,000 members who are going to choose the next prime minister. they overwhelmingly are pro brexit and, i'm afraid, pro a no deal brexit. that is why the market is down, why the pound is dropping, is bracing market

for the chance that they might try to lead the u.k. out of the eu without a deal. is easy to crash out when you don't have to bear the responsibility of managing that. it is a nice responsibility to be in politics where you could just throw things out and not have to deal with any consequences. once in power, and we don't know who it is, we don't know who the next prime minister is, are they going to face the same pressure to soft and, to try to come up with something that makes the transition a little bit more smooth and have to tone down the crash out rhetoric? ma: i think that is a very good point. one could imagine that once someone comes into office and looks at the detail for what it actually means for factories,

manufacturing, trade, that their tone would soft and. parliament as opposed to a no deal brexit. a probe exit hardliner did win the leadership race and did a non a pledge to pursue deal brexit, we spent the summer seeing whether these candidates are committing to a no deal brexit or not, that is going to be the thing we are watching for over the summer. perhaps it will soften and they -- perhaps they will get a strong mandate or even a second referendum. romaine: let's say they do go to a spec -- to a second referendum. do they have the time for that and how receptive do you think brussels would be to that?

brussels has basically been quite in favor of the idea of a second referendum. that is probably because the view generally has been that remain would win in a second referendum. one of the interesting things we will see over the coming days as we have these eu elections, the u.k. is voting tomorrow, and if there is a very strong showing for the brexit party, the party of nigel faraj, he is advocating a hard brexit, a no deal brexit. i do wonder whether the view in brussels will change as to whether a second referendum is something they should wish for. alline: all right -- joe: right, bloomberg's emme ross thomas, thank you very much. powell signaling a slow and steady approach to rate moves. our next guest has some advice for the central bank. this is bloomberg. ♪

in the latest fed minutes, the central bank signaling its patient approach to interest rate change. our next guest has some advice for how to fix the fed's framework in a recent article, writing, "instead of trying to constrain the rate at which the unemployment rate falls or rises, the fed should use its policy toolkit to use a floor gli."f growth -- joining us is a guest who was --viously in economist at and a research analyst at -- research analyst at the fed. what are some of the conceptual problems you see with targeting

inflation? >> things for having me on. inflation itself, i think obviously it is codified in textbooks as the all important variable. if you think about how it is measured, it is actually a little bit more janky than i think people appreciate. a start with, it is actually lagging indicator. this was mentioned several times in an interview back in 2007. as inflation was rising into thousand eight, we were seeing real and nominal measures of activity were dietary -- work deteriorating into a financial crisis. there's the fact that is not very cyclical. there's things like health care and finance services. methodology isn't actually very stable. given a lotlen was of grief for the fact that unlimited data plans were made

available by verizon and because of an adjustment change, the quality adjusted price for data fell quite a bit. is movingology around, we are discussing methodology whether it is transitory or not, so it is not actually very stable. you talk about should central banks be focused on this, i think that is more of an open question. romaine: inflation itself does have a fairly large impact on economic growth rates. is the issue with inflation itself or how the fed is measuring inflation? skanda: i think in terms of how you measure it, it is more challenging than is generally admitted. i understand why the bls is making changes it makes. inflation might be a good signal of some of -- of some of the upside risks especially when you think about the framework review and how they are trying to understand how they can have

effective policy especially near the zero lower bound. it doesn't mean they have gli,oned their target but gross labor income, is probably a better benchmark. this is like looking at the accumulated amount of consumption each person earns. caroline: let's talk about gli. eachumulative sum of employed person's play -- employed person's paycheck. tracker of a better when we are running too hot? at what point do you not want a bigger paycheck? skanda: that is totally fair. from lower to higher, you want higher paychecks, you don't want higher prices. in a hot economy, is growth late debt is gross labor income growth going to be a better number? probably not. the 1999-2000 example is a good

one. gross labor income growth was strong in that period. i don't want to say that inflation should never be looked at it when we think about the costs of different states of the economy, different nominal anchors make sense. joe: we want fast wage growth, right? that is a good thing. when with the signal come in your framework for the fed to tighten? skanda: the way we have specified it, if you get growth labor income -- gross labor income growth beyond a certain threshold, if you think there are reasons why inflation is going to get out of control after you have received a threshold level of income growth -- if you look at aggregate outcomes, right now probably about 4.1 percent, 4.2% would be our rough estimate. you could probably make a more expansive case for 5% if you wanted to. if you take population growth,

about 5%. if you take the inflation target and tack onto that, you get to 4.1%, 4.2%. if you switch to that gross labor income metric, how do you -- how does the productivity factor into your model? skanda: productivity is actually quite countercyclical. it is really a function of when do we sort of shed or rapidly higher labor. the jobless parts of the recovery are when we see the productivity at their best. one, are we getting more periodive around that period? i don't think so. this is where the labor share discussion is pretty helpful because it hasn't come back to

labor. launching this new organization, employee america, basically this idea that we can have full employment all the time, at least in theory, and persistently run an economy where people can find work. from your position, when you look at how the fed has been operating, a lot of people would we are doing fine on the labor front. what is the argument that we are not fulfilling the job aspect of what we have to do? the discussion has moved toward price stability. but the natural rate of unemployment, those have persistently moved in one direction in almost a cyclical manner. as we go further and, we know more examples than the fed realized. in 2015liams said back that we have achieved maximum

employment and we have seen 8 million jobs created since then. from that perspective, i do think there is more of a failure than people realize. the fed itself has changed the goal posts on what qualifies as maximum employment. secondly, i would say we want to make sure we lock in the gains. the unemployment rate is better than it was five or 10 years ago. if these games just last for two months or two quarters, how is ?hat useful caroline: a quick check on the latest shares of qualcomm plunged today. a federal judge in california cited with the sec, ruling that qualcomm's licensing practices violate antitrust law. the company has the most advanced 5g in the market. a buyback by a cryptocurrency

startup will result in a payday for investors. the earliest ones will see more than a 6500% return on the investment. about $4ny raised billion. investors include billionaires peter thiel. in canada, horizons etf management is launching the world's first leveraged and inverse marijuana exchange traded fund. they allowed an investor to short a marijuana stock by going long on the etf. that is your business flash update. coming up, well prepared. a ceo says he is not worried about the upcoming tariffs or the huawei ban on 5g tech. ♪

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: a federal judge in new york has refused to block subpoenas seeking financial records from president trump. the judge found that while his family and business would suffer irreparable harm from the disclosure, they were unlikely to succeed in a lawsuit, arguing that the subpoenas were illegal. trump sued deutsche bank at capital one last month to block them from complying with congressional demands for broad information. a congressional lawmaker blames president trump's border

policies for the deaths of migrant children. security on a homeland security. of customs and border protection was named to lead the department temporarily following the resignation of secretary kirstjen nielsen. democrat lauren underwood said what is happening regarding migrants at the southern border is more than a question of resources. >> congress has been more than willing to provide the resources to address the security and humanitarian concerns. at this point, five kids have died, 5000 separated from their families, i feel like, and the evidence is clear, that this is intentional. a policy choice being made on purpose by this administration and it is cruel and inhumane. >> that is an appalling accusation. men and women fight hard to protect people in our custody every day.

a breeze -- after a brief recess, republicans were able to push for a vote to admonish congresswoman underwood, whose statement was stricken from the record and she was barred from speaking the rest of the election. virginia governor ralph northam is reiterating he was not in a racist photo that appeared on his facebook page. aftere the comments today an investigation from the school failed to determine if he was in the photo of a man in blackface next to someone in a ku klux klan hood and robe. democrat initially acknowledged he was in the picture when it surfaced in february and then he reversed course the next day, saying he was convinced he was not in the photo. 4's most patriotic positions is the boston pops fireworks spectacular on the banks of the charles river. for the third year in a row, bloomberg will host the event is

a major sponsor and media partner. superstar queen latifah is the headliner this year. it will also feature arlo guthrie, and the 50th anniversary of woodstock. be sure to mark your calendars. alix steel, matt miller, janet wu will cohost. bloomberg tv, bloomberg radio, bloomberg.com, and boston globe.com. 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. romaine: a bit of breaking news here. a brazilian cosmetics company best known for owning the body shop in the u.s. has agreed to by avon products.

they say they have secured about 1.6 billion dollars in financing to pull off this deal. products, based out of london and primarily operates in latin america. this is separate from avon in north america. a big movearoline: after hours for elle brands, beating expectations when it comes to net sales. basically in line with where it was at this time last year. first-quarter earnings-per-share, down from the previous year but again ahead of expectations. victoria's secret not doing so well, like for like sales down. bath and body works increased like for like sales some 14%. since the u.s. ban on huawei, many are wondering the impact on 5g technology. we discussed whether the band

could derail or slow the technology. >> i actually don't worry about that. i think there are multiple suppliers around the world who provide macro radio technology. once you get off the macro radio, we provide most of the technology in the core networks for our customers. i think there are plenty of good alternatives out there. i think the bigger issue, when you think about 5g and the deployments, are the cost of capital. our customers are having -- the cost our customers are having to face to buy spectrum, the regulatory environment, and what is the reality of the business model they can build to get the roi on the investments. i think those of the bigger things we have to be talking about and working on. >> there has been a lot written that, because of the cost of the band, it creates an incredible opportunity for the likes of you

and others. i have seen a number at about $5 billion in terms of a global market. do you see that as an opportunity in terms of cisco? >> it is hard to say. we focus on our innovation in working with our customers. to haveomers all tend multi-vendor strategies to begin with. it is difficult to ascertain use strategy with one versus another. it typically wouldn't tell us anyway because they wouldn't want to give us any negotiating power. >> 5g, if huawei is locked out of that market, once you start to create these networks and you are locked out, it is hard to kind of change. longer this the goes on, it doesn't create more of an opportunity for you guys?

>> whatever the reasons are that makes a franchise decision, because they have always done this, they make architectural franchise decisions. if you don't get into those, and this happens to us as well, then you are basically waiting for the next transition to have an entry point. i've talked publicly about the fact that we missed a couple of early waves in the web scale providers and now we are having to work our way back in. whether it is a security issue or a technology issue, if you miss a wave, you will have to wait for the next one. usually they are somewhere five to 10 years. we feel that when it happens to us. 5g, in you think about feel it when we talk to folks talking about a

massive leap forward in terms of the types of services, the types of things that we as consumers and businesses will be able to do. >> think about where you are today and when you can do with your mobile device versus what you could do 15 years ago. we take it all for granted today but the capabilities we have in our pockets on these devices are just monumentally different. this is no different. you will see a step change. this one is probably exponentially even better than what we felt over the last decade or so. cisco ceo chuck robbins as part of the bloomberg businessweek talk series. you can hear from bloomberg reporters and editors every saturday and sunday on bloomberg television and radio. long silicon valley, hello columbus, ohio. this is bloomberg. ♪

watch out, silicon valley. secondary tech hubs are showing momentum this year. a tech analyst joins us from atlanta to explain. every region wants to be the next silicon valley. it is almost like a cliche. eventually, they always fizzle out. through columbus and pittsburgh. your view is that it is happening this time. what did you see on the ground that convinced you that maybe tech clusters are emerging outside of the valley? >> i think you are seeing smaller scale versions of silicon valley where companies like industrious and wework are

going into the cities to capture the trends. have kind ofals been growing for a while. i think what really change people's mindsets was amazon, hq2, we are looking to expand somewhere else. these are the 20 cities we are looking to check out. that makes others for eat -- that makes it easy for others to make the pitch as well. romaine: one reason people gravitate to silicon valley or new york is that people have this large pool of talent. pittsburgh, phoenix, you don't necessarily have that critical mass of talent. is that an impediment or do they think they can sort of attract people into those sort of areas? conor: columbus has ohio state and pittsburgh has carnegie .ellon

the scale won't be there, so it is not clear that they can build the next facebook or uber, but may be a start up is something they have the skill to build. caroline: i felt this when covering technology in europe, that everyone wanted to be in london but you saw manchester do well, paris, berlin. we have seen tech hotbeds build up but what many have often said , it is not just talent, but also that there is no down hill road. are the vcs going out? said theye of the vcs might not be involved in pittsburgh as other places because there are a certain number of places they want to see. pages,only give them 4-6 --is sort of like a

joe: one of the problems with silicon valley or new york has been the high cost of living. if we are actually seeing momentum in places like pittsburgh, does that actually a realat this becomes issue for places like silicon valley, assuming there are people who opt to go elsewhere because there are things like housing costs. if you do start something somewhere else and it gains momentum, there is not this immediate, let's move to silicon valley. money, butensity and you are looking to expand elsewhere to 200 employees, 500 employees, rather than 2000. romaine: how involved are some

of the local governments here in trying to attract some of these new types of companies and investment? conor: they definitely know it is interesting and they are looking to pursue it. just because you haven't seen those big winners come out of the cities, it is hard to get the buy in when you think, we could do this. until you actually do it, it is hard to get everyone on board. there is enthusiasm but i would say everyone is subdued relative to everyone else. caroline: thank you. a quick check on the latest fitness flash headlines. keeping it all in the family. spending about $2 billion in cash to buy international speedway. it is already controlled by the france family. they own stock car tracks including daytona international. the tesla bears keep piling on. the latest is citigroup. thatnalysts highlighted

negatively scaled risks. consumer reports say autopilot's are a safety issue. ford has a solution for driverless delivery. package carrying robots. and is texting dig it, android with legs and arms, capable of carrying a 40 pounds ind, made by a startup bill oregon. ford is hoping to deploy delivery robots as early as 2021. there are estimates that removing the human driver from vehicles could/delivery costs by -- could slash delivery costs by 60% or more. why is ford doing it? joe: i want to see videos like things are very messy. to crash --one .rone to crashing

let's go to smart charts. abigail: mark newton and i of newton and visors, we are have a about -- you chart about the trade-weighted dollar. looking at the dollar index, it has looked bullish. mark: this one is more bullish. a lot of people make the mistake of the dxy, 60% against the euro. when you look at the trade-weighted index compared to the euro index, you can see the strength. this three year longer-term cup and handle pattern. this has just broken out along these highs from last fall and also 2016. pound sterling.

like the colombian peso, brazilian real. , domestic equities are showing a lot of strength. it has been largely emerging markets that have suffered. weeklybuy -- a weekly buy signal, the first one in quite some time. do you think it could be that bullish again? mark: near-term, i can see this continuing for a number of months. i think eventually, the dollar will turn down. it has had a heck of a run. the evidence of divergence. the mental was at a higher level. something to watch. ,ow we are seeing confirmation

the highest level since 2002. >> let's carry this for -- this story forward to stocks. this is positive to u.s. stocks as opposed to em stocks. this is the msci world index versus emerging markets. gradually started to show more and more strength, really the reciprocal of emerging-market weakness. this pattern eventually does get resolved by a move to the upside. this makes sense in my view to avoid emerging markets. ofs accounts for about 25% eem. other countries like taiwan and korea have been under tremendous pressure. >> how long do you think we could see divergence between emerging-market stocks and u.s. stocks? at some point, they tend to come back together.

a risk continuum would suggest that at some point, u.s. stocks or world stocks would come down. do you see that? it is tough to get a real grip on when that will metastasize. a very resilient fasten compared to em, so that is really the theme. you want to avoid the emerging markets theme for now. >> one big bright spot, india. mark: for those who want to play the em space, india does look very track -- very attractive. this has been a real standout among the entire emerging-market space. .ndia, about 9% of the eem recently, an ongoing trend. it has been a six-year bull run. of saw a minor amount consolidation but yet you held the longer term uptrend and

recently you're starting to see evidence of breaking back above that. i would really pick india as being the top pick among the em space for those who have to choose. >> great stuff. mark newton, bullish on the dollar, not so much in em overall but if you have to invest in em, india is the place to be. caroline: that doesn't to me. i'm stepping off to host "bloomberg technology," where we will be looking of course at the qualcomm ruling. the simmering trade tensions. this is bloomberg. ♪

it is time for asia ahead. just a few days after that ban on huawei, the u.s. government looking to crackdown and other companies. margaret is here to talking -- here to talk a little bit more

on that is bloomberg's shery ahn. i guess this sort of fits in with the narrative on why huawei was blacklisted as well. there are five companies including to sources and it is really interesting that last year, already, congress had put forth legislation to rein in companies like these because of their link on having these surveillance cameras that they say is used to monitor these ethnic minority uighurs in china to lock them up in concentration camps. sources tell us they are linking uris issue with minority uigh issues. hikvision, tell us a little bit more about this company, why it has become the face of investing. shery: it is really interesting.

overseas investors owning hikvision, putting 11th highest among change in listed stocks. it took a big hit as we saw those reports. those two companies right there, they are the largest providers of surveillance hardware and deutsche bank says these two companies together control one third of the global video market for surveillance. after xi jinping came into power, this big brother state has become such a thing. with regards to surveillance of the uighurs, there was talk about these being so effective to the point that a lot of other governments and other countries were looking to buy this. shery: facial recognition is one of the things that these surveillance cameras can apparently do. they can identify you and these

are one of the tools claimed to be used to identify uighurs and put them in concentration camps. hikvision, they are not just in china. we are talking about potentially in the u.s.. they have hundreds of employees here in the u.s. and they are sold to over 100 countries. joe: meanwhile, gigi and payne talking about a new long march. what does that tell us about how doug in the government is and their posture? trade tensions, the meaning historically of achieving progress despite hardship, so you can imagine what that means. for more on these stories, don't miss daybreak australia and daybreak asia starting at 6:00 eastern. the european continent holding elections. romaine: best buy reports first-quarter earnings tomorrow. that's all for "what'd you miss?

" "bloomberg technology" is up next. joe: this is bloomberg. ♪

caroline: i'm caroline hyde in new york in for emily chang. this is "bloomberg technology." the trumpet ministration's order on huawei. the u.s. is also considering cutting off american technology to additional chinese tech companies. qualcomm tumbles 10% after a u.s. district judge sides with