ritika: let's get the first word. more american troops are headed to the middle east. president has ordered the deployment of 1500 additional troops amid rising tensions with iran. the president spoke with reporters as he left the white house for japan. trump: we want to have protection in the middle east. we will be sending a small number of troops, mostly protective. some very talented people are going to the middle east right now, and we will seep what happens -- we will see what happens. ritika: the president's decisions follow the administration's claims that there was evidence iran is

threatening possible attacks on american interest or allies in the region. european negotiations with the u.s. will never renew unless and drops demands for complete north armament said north korea. for bright talks collapsed with impossible demands. while in japan, president trump will meet with prime minister shinzo abe. north korea will likely be high on the agenda. mike parsons has signed a bill that bans abortion on or beyond the eighth week with no exceptions. that makes it among the most restrictive abortion policies in the nation. supporters hope to provoke a legal challenge that will eventually force the u.s. supreme court to revisit its landmark 1973 ruling that legalized abortion nationally. those who violate the law can face five to 15 years in prison. meanwhile, abortion providers

are asking if federal judge to block an alabama law that would ban most abortions in the state. the only exception would be when a woman's health is at serious risk. the lawsuit says the ban is unconstitutional and would harm women by forcing them to continue pregnancies against their will. the law is set to take effect in november on blocked by a judge. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪ scarlet: from bloomberg world headquarters in new york, this is "bloomberg markets: the close." i'm scarlet fu. romaine: high romaine bostick. we are just 30 minutes from the end of the trading day. if you take a look at what is going on, we are up marginally

here. i guess it is better than nothing. you see the nasdaq 100 up about four points. utilities down a little bit but they were up 2% on the week, so we saw some defensive action on the day. scarlet: bitcoin back about $8,000. interesting. romaine: the big move in the s&p 500 is total system services. reports that they may be striking a deal with a payment processing company. we have had two big deals so far this year. action in that space. scarlet: even with volatility in the overall markets. small caps outperforming the big caps today. the russell 2000 is up 0.8%. 0.9%, almost double again in the dow. crude open higher and had been bouncing around. $50 per barrel. it started the week at $63. it has been all over the place. romaine: so many dynamics on the

supply-side and demand-side. time to figure out where to put it. epic 14 day losing streak versus the euro. -- the euro for the pound. romaine: let's get to u.k. prime minister theresa may because she has announced she will be stepping down. markets are already reacting to one of her possible successors. boris johnson said the nation must prepare for a no deal brexit extending the pound's record one of losses against the euro. for more, we will bring in been. -- ben. he joins us from los angeles. the pound seemed to hold up a little bit today. when you look at what happened today with theresa may stepping down and the prospects for the u.k. exit from the eu, do you think the downside risk to the pound has already been priced in, or should we expect something in little further in decline? ben: thank you very much for

having us again. there is probably similar service for the pound relative to the euro because we are going through p aeriod now -- through a period now through the next 11 weeks. there is some other uncertainty of who the executor according to the bank of england will have a certain teambuilding bound. -- a certainty building around. there is a discussion between may and the labour party, which really priced out in a sense that people saw it as not the solution to go from here. we will go through a new phase of uncertainty in that sense, ultimately leading to the deadline in october with what looks like perhaps a no deal. scarlet: uncertainty is something we have been living with for years now, but this will be a new phase of uncertainty.

theresa may's recognition, you write, makes u.k. assets in some ways look more attractive. explain how that works out. ben: i think you have to look at the bid from a relative point of view because if we are getting a hard exit, it would have a flipside where it would be just as bad for the euro zone economy. because the trade within the u.k. and europe is so large. billion of goods traded. i think if you get this so called hard brexit that will materialize, whatever is in the price in u.k. is not in european assets. that is part of that is part of the analysis. the other part is there is also some effect here today of the relief of we went through this phase over two years with may and could not get this deal done. so a new deal will perhaps prevail, and that can be a boost

to u.k. assets. hoping for a good outcome. romaine: do you think there is any sort of sense there could be some systemic risk withs ing to transpire? even if we get a deal, it could take sometime for a new leader to get something in place. ben: that is a good point. what is the systemic risk here? one, it will not be a financial systemic risk because the ecb and the bank of england have a close cooperation in the case of any kind of hard brexit or no deal exit, they have the clearing of derivatives markets in check. in other words, not a disruption like we saw with lehman or what could have happened with greece. relationship between the u.k. and euros zone is so substantial that that will be a real economic impact that could basically ripple across the euro zone economy for that matter. i think that is what markets will embrace for if we end up in this heart exit scenario.

scarlet: as you put it, a new phase in the uncertainty we have been working with for the past three years. ben joining us from l.a. thank you. coming up, a bullish bet. an analyst explains why he says amazon stocks could reach $3000 in two to three years. from new york, this is bloomberg. ♪

scarlet: it is time now for our top calls. first up, we have jp morgan upgrading to neutral. they stop getting a bump by 1%. analysts citing a better risk reward ratio. list.a added to a select the recent seller -- retail seller has a chance to be an e-commerce giant. $3000 in tworeach to three years.

spinning off of the rapidly growing cloud business can help other units such as the retail business. those are some of your top calls. romaine: joining us now on the phone is one of those analysts behind that call on amazon. mike, you put out a pretty compelling analysis out today with regards to amazon. a lot of it seemed to be based on the idea that people are undervaluing amazon web services. is that right? >> yes, good afternoon. what we are really doing here is making a valuation argument that if you split amazon into three major segments, retail, aws, and then advertising, and then apply something close to a comp group average multiple to each of those segments, you basically arrived at a share price of around $3000 in two years or 2021. 20 -- or in mid

scarlet: you say amazon can which that level with no major acquisitions or significant changes to the business. does that mean that at a minimum, amazon would reach $3000 if it makes any kind of significant changes or purchases that it could therefore surpass $3000? mike: yes, that could definitely help. could drive the share price higher depending on the parameters of growth and possibility of such acquisition. that can certainly have a potential impact. really, but we are trying to say is that the analysis did not require anything inorganic so no acquisitions. but it would be hopeful to understanding the valuation of a segment if aws were to be spun out. we have no indication if an aws been out is a real possibility or not, but it would be a catalyst for the value of each part if that were

to happen. romaine: annual your report, you broke down segment by segment amazon and how it compares to various companies that would align with that particular segment. i'm wondering when you look at amazon as a whole, who is its main competitor? what do you face a relative valuation on if you are looking at the company as a whole? mike: well, that is a tougher thing to do just because you have three very distinct businesses, and that is why we encourage people to focus on the sum of the parts. most investors when they do look compareda whole basis to primarily other internet companies versus other software and service or cloud companies or advertiser companies just because the core we tell business is the largest portion of the business. we do encourage the some of the parts given how different those three businesses are from one another. scarlet: looking at some of their different businesses, the ad business is worth $120 billion by the year 2022.

what is the likelihood that could be a spinoff target amazon considers? mike: i think it is less likely than aws's spinoff, and the primary reason for that is because the advertising business is pretty closely or very closely i guess i would say aligned with the core retail business whereas aws is more of a business that really does not need to be aligned with either the advertising or core retail portions of the business. spinning off aws could have positive benefits of creating less competition which can drive more business for aws and amazon core retail for each of those segments. potential benefit as well. romaine: when you look at the retail side of the business, the e-commerce side of the business, do you see the growth rate slowing at all? or are they going to maintain that over the next two or three years? know, it is worth

pointing out that the estimates for amazon's advertising business and aws business, we do assume growth rates that are decelerating each year but are still well above the averages. for the core business, we assume the same thing. it is slowing but still growing at more than four times the pace of brick-and-mortar comps. on the other hand, from an e-commerce perspective, it is going slightly less. when we factor that into the analysis, we applied the e-commerce comp group to reflect the slightly lower growth rate. scarlet: we have about 20 or 30 seconds left. amazon at $3000 would mean a market capital just under $1.5 trillion. what kind of political risks does that make? wouldn't that encourage senator warren and her likes to push for a breakup of the company? mike: it could, and i think generally speaking we will continue to see large caps being

targeted by a lot of different commentary from politicians and others. at the same time, aws spinning out can answer that question. scarlet: mike, thank you so much. his call that amazon can reach $3000 a share. 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.

♪ scarlet: this is "countdown to the close." i'm scarlet fu. romaine: joining us at this time as always is joe weisenthal. heading into the memorial day weekend here. joe: it feels like it in the market. i was looking down the row and not seeing anyone. it is memorial day weekend. it feels like it in the market. we are up a little bit but there is not a lot of action, not a lot of mark attack i -- not a lot of market talk i have heard

today. scarlet: we did have some data that showed durable goods not so great. perhaps it reinforces somewhat weak tmi numbers we got. romaine: i was looking -- joe: i was looking at the city surprise index. that has fallen back to -40. this morning's durable goods numbers confirming that. nothing too exciting happening on the eco-friend confirms that a little bit of a soft patch. today, a little bit of buying. romaine: anything on next week to look forward to? joe: i think it is going to be quiet. scarlet: if you look at how the sectors are performing today, we have some notable gainers. the indexes are higher on the day. banks, health care quitman, telecom are also will be higher. on the downside, chip companies. they are the ones that faced the brunt of the trade headwinds. romaine: you are seeing some of

the chip companies try to fight back but when you look at them as a basket, nobody wants to be in this right now. scarlet: interesting that we, beverage, and tobacco are down, too. they were havens. today, no real reason to be in them. if you look at the indexes, we opened higher kind of. we lifted lower. in the afternoon, did not do much. the bond market closed early. romaine: not a very impressive chart either. scarlet: let's get would have the chart. joe: underperforming. nasdaq underperforming yet again. even on the update today -- up day today. scarlet: the russell 2000 the upper former today as well. we are moments away from the close. let's dive deeper into the action with premarket reporters. emma: i'm taking look at the biggest waiting on the dow today. that is of course boeing. the best performer on the doubt when you look at it on a point basis. you cannot keep going down today despite a flurry of seemingly

negative news. a bloomberg scoop found the fcc isn't a best getting the company's disclosures with relation to the 737 max jet groundings. united airlines today have scrubbed the 737 max jet through the beginning of august pushing out the timeline of when we might expect that model to return to the skies. we are heaving southwest, the biggest operator of the 737 max jet, is paying some $2000 a month to store each of its 34 grounded max jets. all of this adds to the cost for boeing. bloomberg intelligence estimating they could face a bill up to $1 billion in terms of airlines lost operating profit and canceled flights if that jet stays grounded through september. nevertheless, shares rising today. abigail: let's take a look at one of the biggest weightings in the dow and s&p 500 and nasdaq as well. that is apple, now down a third week in a row, down more than 15% over that time period.

investors worried about the trade war with china. the company receives almost any percent of the revenue from china. that can mean jeopardy. the supply chain worries on the chart. support on the closed coming into the close is starting to break down. this is the weekly chart. it has been very reliable the last number of years. a beautiful uptrend. it tends to go down to the 200 week moving average and you lower. that happened back in 2013 when there were margin issues and revenue issues and last year in the volatility. right now, apple is below that average. if we see it close below that level, it may set the stock up for a drop in the coming weeks, perhaps back down to the 200 week moving average below $150 a share. scarlet: certainly will be keeping an eye on that one. thank you so much. for more market analysis, let's bring in sarah ponczek. we tend to write off these days before holidays, right?

essentially like the day before memorial day but i think back to christmas eve, december 24, and it was a totally different kind of day. sarah: that was because we saw a huge lunch. you cannot -- plunge. you cannot make nothing of that. on the summer 24, you look at the volume and we sell a lot on pretty light volumes. you look at the volume trading right now, dow volume 30% lower than the average at this time of day over the past 30 days or so. so yes you can look at these days and somewhat write them off because trading is just so thin. you look at the price action today, up, down from a floating around, not much to take away from it either. joe: looking at the one-week chart, 1% is not that big of a deal. sarah: it is really not that big of a deal. if you only paid attention to the headlines and you only listened, you would think we are so much further off than where we actually are right now. s&p, how far we

are off the highs, only 4% off the highs. really not that bad. scarlet: i see what you mean about how that is not that big of a deal over the week, but by next week, it would have gone down by the week for 1%. it will be 4 straight weeks of losses. it adds to the narrative. joe: it builds up. sarah: when i was speaking with investors on may 6 right after we got the words from president trump asking how bad we get higher tariffs in place and we did, china did came out and we tallied. it does not seem like negotiations are going further. we had people saying we can see a 10%, maybe 15%. romaine: let's build on this conversation because we will be joined right now by scott, the senior global equity strategist at wells fargo investment institute. three weeks down on the s&p, nasdaq. five weeks down on the dow jones industrial average.

what is being priced out? just: i tell you, sarah said the hayward asset is not fall off the all-time record high. we are not. the market is still pricing in that we are going to get some kind of a trade deal. it might not happen next week. it might not happen by the next g20 meeting at the end of next month. but the market is still pricing in some sort of a deal. we think eventually there will be some kind of a deal. certainly the things that have happened over the last couple of weeks, whether it is seemingly the talks breaking down between the u.s. and china or the huawei situation there, that has pushed the timetable out and really probably lowered the probability of an all-encompassing type of deal, but the market has not given up hope i don't think. that is probably the right way to look at it. joe: for the first few months of the year, the themes were under

discretionary miniatures and feeling like they were missing the blazing fast start to the year. i do not know if it is still that way but for those who may invested, isunder now the time to jump in or should they wait? is this the moment? scott: i think you are really in the early stages. i would argue in some cases over the last year, you have seen people starting to jump in, starting to chase a little bit. but then the decline in december made people sit on their hands, certainly retail investors. and some of the things that happened recently here. i think there are at least from , ourail client exposure clients are underexposed as a group to stocks at least in our opinion. you have seen some hedge fund stats out lately that show hedge or even underexposed to equities at this point. for us, really, we have taken a more neutral position here recently in terms of stock allocations relative to where we

think they ought to be strategically after the big jump from the christmas eve panic low. what we are doing is waiting for an opportunity. 4% pullback is not much of an opportunity. even the 200 day that is a little lower than where we are now is only a 6% pullback. after a big 26% run higher from christmas eve, you know, you could easily cop up a third of that on no news at all. the market is hanging in here pretty well but we are sharpening our pencils. we would like to have some opportunities to buy some stocks. we got a little bit of cash to use. and certainly our clients do. scarlet: how much of a pullback can there really be a people are convinced in the market? scott: i'm not so sure they are completely convinced ofcomplete. at's face it, this week was perfect week. one day of a headline a mother market runs up, next time you

have a headline and it drops like a rock. it we are in that kind of environment and i think if you get a few bad hints on the trade news, you get a little bit of less than stellar news out of some of the global economy, you might be down to some attractive levels to pick up stocks. closet: stocks did higher. very thin volume, in many cases 20% below the 30 day moving average, certainly for the dow industrial that was the case. with small cats -- small caps leading the way. the nasdaq closing below 7300, folks think we need to go back and test those lows that we had back in march and april. it would be interesting to see what the reaction is next week. scarlet: let's take a deeper dive into the action with our reporters.

ofgail: i am thinking volatility. while we have the s&p 500 down three weeks in a row, volatility is suppressed. in blue we have the s&p 500, in white the vix, coming out of 2017 the rally. we had the vix at historic lows. the s&p 500 climbing into january and then on the big drop we have the two reconvert as it summer,und 2650, last full-time highs, volatility suppressed again and it reconnects below 2650 in the fourth quarter selloff. look at the huge divergence, top. is congestion on while volatility is still relatively low at 16%, the two could reconnect once again at 2650. despite recovering losses, wti is still heading toward its biggest weekly loss this year, down more than 6% so

far this week. since december. the real pain came thursday when wti fell below its 100 day moving average, the first time since march. brent hit $10 a barrel. today energy stocks, the worst performers on the s&p 500. traders concerned about rising inventory levels in the u.s. the numbers came as a big surprise for them but also weakening demand outlook tensions between the u.s. and china remain unresolved. joe: still with us, scott wren of wells fargo institute and sarah from bloomberg. sometill think maybe at point there is likely to be a deal but what if this is the start of a major rupture that lasts for years and altered the u.s.-china trading relationship? would you still like to be long stocks here?

scott: it would be tough. our urine target is 2900 to 3000. it would be tough to close ifide that target range these trade talks fell apart and we knew there was not going to be any kind of a deal. now the fed really is off the table, at least worries about the fed this year, next year as well, the focus has to be on global growth. it has to be on these trade negotiations. they are clearly tied together. this doesn't is have to be a great trade deal. it just has to remove the last layer of tariffs we have seen, looked promising to not advance and do this next round of tariffs. you don't need a lot for the market to feel positive. that would spill over into business confidence. what you need to see ultimately

is more spending on a global happen we would believe if we had fewer uncertainties over this trade situation. romaine: earlier we talked about consumer confidence, and if it starts to wane, really watch out. what are you hearing? >> the same. datae looking at sentiment at 15 year highs but it was backwards looking. we saw the pmi yesterday not far from contractionary territory, durable goods also backwards, and it was a strong. you would say it is weak, now many are saying the pmi's could be forewarning that we could see capex slow down, we could see these orders slowdown more. that is the issue when it comes to sentiment.

if consumers don't feel well, they will not spend. that is going to hit earnings. doesn't matter if you have high exposure to china sales f -- if u.s. consumers are not feeling great. that will affect your company. scarlet: it is also chinese consumers. i want to bring this quote from dan ives who talks about apple, getting hit on a lot of these concerns over it being hit hard by chinese tariffs. he says we believe calls of etf's getting hit by 20%, 30% plus with china being close off as a region is doomsday calls that are not realistic. what is your take? what is the risk of staying in the stocks with china exposure like apple? butt: i am no apple expert we have a gdp number in china, 6.2%. if you look at earnings for companies that are based in taiwan and south korea that ship

a lot of high-tech goods into china, industrial goods, those earnings have gotten crushed in the fourth quarter and first quarter. spending in china has deteriorated mostly due to these trade negotiations. as the confidence, consumer confidence takes a hit over there, that will have an effect as well. right now what you want to look at is what are these chinese and are theyng, going to be importing some of these high-tech goods? we will watch earnings release of the situation for the not looking for a few day scenario. we have five point 5% of s&p 500 revenues reliance on china. the spillover effect as sarah mentioned is confidence. consumer confidence in u.s. is

high. we are going to see further spending ahead. business confidence is the one that by now typically in a cycle the baton would have been handed to businesses. that hasn't been the case. it is on a long delay but we this global expansion to keep going. joe: we haven't talked about the fed, fresh inflation data. we saw flattening of the yield curve which could be the signal to the fed it needs to cut or policy is too tight. we know from everything we hear whether it is the minutes, inclined to are not cut rates. is this something that is coming to a head? do you think the fed may have to capitulate to what the market is saying? look at fed funds futures, last time i looked it was earlier in the week, there was 42% chance we would see cuts

of next year. that seems dramatic to me. in our opinion we are not expecting any cuts. we think is in a good place. could they have maybe not done anything, sure. but one cannot, hikes will not make the difference. fed is on hold this year, next year, it is unlikely. you would have to see some deterioration in the labor market and in the economy in general in the u.s. for the fed to cut rates. fed funds futures is very thinly traded. it is a good thing to look at but i don't think you want to hang your hat and that the farm on it. -- and bedt the farm on it. joe: thank you very much. that does it for the closing bell. coming up next, we will look at the end of the theresa may era.

this is bloomberg. ♪ ♪

♪ scarlet: live from bloomberg world headquarters, i am caroline -- i am scarlet fu. romaine: i am romaine bostick. joe: i am joe weisenthal. joe:scarlet: here is how stocks closed today, they edged higher than volume. joe: what did you miss? scarlet: theresa may heading for the exit. her party could have a new leader by the end of july and all options are back on the

table. result five months on the job and already talk of resignation or impeachment for giant bolsonaro. nashville the home of country music and bourbon is booming, but this is causing a costly fuel crunch for airlines and truckers trying to keep up. after three years of failing to bridge the divide in her conservative party over how to leave, theresa may said she will announced -- she will step down june 7. >> her majesty the queen has asked me to form a new government and i accept it. do we have a plan for brexit? we do. the united kingdom's permanent representative to the e.u. handed a letter on my behalf to the president of the european council to invoke article 50 on the treaty. brexit means brexit. brexit.oes mean

there should be no general election until 2020. we need a general election. every vote for me is a vote for strong and stable leadership. strong and stable leadership. strong and stable leadership. i am working to get a deal parliament will support. otherd a deal with the member states, it is clear the house doesn't support this. voting against leaving without a deal and for an extension doesn't solve the problem. we are now at the moment of decision. we are reaching the limit. we will now not leave on time with the deal on the 29th of march. it is slipping away from us. we risk losing a great opportunity. i will shortly leave the job. it has been the owner of my life to hold it. i do so with no ill will but with enormous and enduring

gratitude to have had the opportunity to serve the country i love. scarlet: that was quite the long journey. negotiator had more words for theresa may. here is what he said in brussels. comment, justt to want to express my full respect for theresa may and determination in working towards the united kingdom and on our exactly in that direction the next two weeks. maria.: let's bring in we heard from michel barnier, his response to the plans recognition of theresa may. what are you hearing about how other leaders are dealing with it? barnier,e to michel and he did have some nice words

for prime minister may. ultimately many europeans and european leaders -- they could they sayell, and brexit cannot be a success. the brexit that was promised cannot be delivered. this is something to europeans will tell you time after time. another thing he told me and he speaks on behalf of the e.u. 27 is the deal is not going to change. of primeuded to think minister can come in and change a deal with in this. want to make it clear today. fundamentally there will be no -- the new prime minister has basically the same offer on the table. it is up to him or her to make it work. joe: that is where i was going to go. we don't know who the next pm will be, and if it is boris johnson he could renegotiate. there is no better deal, he is ready for a hard crash out.

from your reporting there will not be a negotiation regardless. maria: no. [speaking simultaneously] maria: somehow the irish -- i think we lost maria there. she was talking to us by phone from brussels but as we look at pictures of boris johnson, the question is how he proceeds from here. he has done a lot of things that didn't turn out to be true. joe: joining us for more on the resignation is hendler -- heather connolly, center for strategic and international studies. thank you very much for joining us. is there any prospect in your view for a new p.m. to deliver something better? >> the next prime ministers going to use the deal theresa may negotiated as their starting

point. as the reporter correctly noted, the e.u. is not going to budge. that is an agreement they negotiated. the challenge the new prime minister will have to do which theresa may could not do, sell as borisliament or johnson suggested, walk away without a deal. romaine: what do you think the best way is to break the deadlock in parliament? what is the solution? the mostthat is challenging thing. this is where we were hopeful these cross party talks as theresa may was sitting down with jeremy corbyn, leader of the opposition party team, but they cannot maintain their own to a's unity and every deal. quite frankly the conservative party has put party over country for the last three years. their priority is keeping the party together, and the results from the european election which

will be announced sunday will be devastating for the conservative party. their leadership contest will be about who is leader that can -- the leader that can keep the party together, and they will waste more time trying to get a bill through parliament. scarlet: the conservative party members have to rise to the challenge in finding some unity in how they approach things. what about the role of labor and the other members of parliament? do they have a role to play? heather: this has been the great anticipation was labor was always supposed to play a part before the referendum in 2016, they were supposed to stop this, but labor is as deeply divided on brexit as the conservative party is. jeremy corbyn has walked this labor has no sure clear position -- fine line to bour has no clear

position. the parties that will do well have great clarity re: the brexit party -- scarlet: we have got to leave it there as regarding the elections. talk about how this shakes out with financial markets. how does this affect how people see the u.k.? heather: the uncertainty will leadershipe as this contest unfolds and the new leader has to come from the brexiteer part of the party, they are clear and comfortable with very much going to the e.u. and saying no deal or we walk. selling in ont the market to say this could be a crash out on october 31 and the united kingdom is not prepared. the e.u. isn't either. british companies are really starting to panic.

not only is there not a plan, the clock is ticking and it looks like they are interested in a no deal exit. joe: it is easy to say we are totally willing to crash out of the e.u. when you are not the one running the country and the one responsible for any chaos or difficulties afterwards, and we see this in politics all the time where opposition politics say one thing strongly until the moment they get out. alexis tsipras wasn't going to negotiate or make major demand and in the end he caved, or obama's on -- republicans on obamacare. is it possible a hard court brexiteer likely takes over the u.k., itip in the would be the same situation? once you are responsible, suddenly not so easy to say we are ready. heather: that is true. when a politician is in charge they have to face facts and

reality. will goprime minister to brussels and think because he or she will play greater hardball, the e.u. will cave. they will not. then the new leader has to come back and give the same tune theresa may has given or make a toision to say i am going walk, this is how we get ourselves untangled from the e.u. we don't know. the other variable is you could see where a no deal scenario brings about half of the party that will seek a no-confidence vote in the new prime minister and we could be going toward a general election which sends more chaos into the work. this will be interesting to watch. romaine: we will be watching you. that is heather connolly. coming up we will hear from the chinese ambassador to the u.s., his thoughts on the while a band

and why he believes trade talks with china are not going well. that is next. this is bloomberg. ♪ ♪

romaine: president trump says a resolution with huawei could be part of a deal with china. there was a ban on keeping u.s. companies from buying their components. we talked about this earlier. i think what is happening to highway -- huawei is unusual. you see the mobilization of the state power against a private company. what are people really up to under the pretext of national security? we don't know.

stop thereally technological progress? can they really deprive people of the right to benefit from new technologies? i don't think so. do they really have the interest of the american people in mind? i don't think so either. for the trade talks between china and the united states, these talks have to be they asked -- they have to be based on mutual respect. it has to be a balanced approach. david: you said shut -- huawei is a private company. there is an issue of contention. there are thoughts that the huawei has people from the chinese military in it. is ungrounded suspicion. people never come up with any evidence. the fact is so clear. huawei his by its own owned

stock. it is privately held. it has been there for so many years. one thing i am struck by is there is uncertainty how the trade talks may resolve, but the businesses in china have reduced investments in the u.s. dramatically. i am wondering how much their attitude toward the united states has changed, that is perhaps irreversible. cui: the uncertainty of our trade talks and countries is very much a result of frequent change of position by the u.s. side. we have been consistent all along but they have changed their mind overnight so often. the chinese investment in the united states, there is enthusiasm in chinese business to make investment here, but they are facing increasing

restriction. a lot of barriers have been raised against them. i don't know why. david: you talk about the u.s. government changing its position. the reports out of the u.s. side was what broke down the talks was the chinese delegation marked up a draft and took out language and changed language and changed its position. what you think led to the breakdown in talks? the talks have been going on for quite a few months. of course there is naturally discussion of all of the issues. the exchange of views. everything in the process, there was no agreement yet. but if we look back what happened last year, for instance in may last year, we didn't have some agreement. -- did have some agreement. there was even a joint statement. there was a change on the u.s. side overnight. scarlet: that was the chinese

ambassador to the u.s. tune in monday for more. ♪

when you rest on a leesa hybrid mattress. bedtime is no longer simply the time you go to sleep. it's time to switch off and catch up. enjoy me time, and we time. 40 winks or 8 hours solid. the leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket springs provide edge to edge support, responsiveness and comfort while premium foams relieve pressure. keep you comfortably cool and limit motion transfer. leesa's hybrid mattress is not only recommended by experts. experts choose to sleep on it too. try it yourself in any west elm store. or order online and we'll ship it to your door so you can try it risk free. the leesa hybrid is american made. built to last. and because everyone needs a place to rest we donate tens of thousands of mattresses to those

in need. live healthier, live happier, by resting deeper. get 15% off and two free pillows. go to leesa.com today! ritika: let's get the first word. more american troops are headed to the middle east. president trump has ordered about 1500 additional troops amid rising tensions with iran. the president's decision follows the administration's claim that there is evidence that iran is threatening a possible attack on american interests or allies in the region. president trump is weighing in on british prime minister theresa may's announcement that she will resign next month after being unable to secure a brexit deal. the president said to reporters as he left the white house in japan. president trump: i feel badly

for theresa. i like her very much. she was a good woman and worked very hard. she is very strong. she decided to do something that some people were surprised at, some people weren't. it is for the good of her country. ritika: president trump will meet with may in the u.k. early next month. he is headed to europe for a state dinner in england as well as d-day anniversary ceremonies. former south african president jacob zuma has to wait three months to find out whether corruption or recordkeeping and money laundering charges against him might be dropped. he is accused of receiving bribes related to a 1999 arms deal. the charges were first raised more than a decade ago. attorney say the case has been prejudiced by long delays and worry he will not receive a fair trial. residents affected by a powerful tornado may have to withstand some hot weather without electricity to their homes. twister brought

down hundreds of power poles and it could take a couple of days to repair them. meanwhile, severe weather continues for a fourth day. storms this week in the central u.s. have left at least seven people dead. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. -- with take a group that i'm ritika gupta. this is uber. scarlet: not only president trump faces calls for impeachment because talks resignation or even removal swarming around the brazilian president. his administration has been hampered by infighting and setbacks. julia joins us now with this story. is this just his opponents, his enemies, weather in congress or voters that are talking about possible impeachment, or are his supporters turning against him? julia: bolsonaro has had a bit

of a complicated early term. he does have people who voted for him that are already kind of backtracking on some businessmen that were vocal supporters no longer still clearly on his side. it is important to say that talk of impeachment is not openly discussed at this point, but it is five months into his term. less than four or five years after the last impeachment. as you remember, it was a very located two years in office. -- very complicated two years in office. joe: wasn't it last week the bolsonaro was elected? it feels so. what are the conditions that have gone south so fast? julia: he has been in office since january. he was elected in october. not quite last week but very recent. bolsonaro comes from a very small party. this was always a concern, that he would not be able to build a

majority in congress. it is complicated. he has focused on some ideological and some controversial topics that have kind of taken away from the economic agenda, which is why he was elected in the first place. so that has been causing a lot of the friction. politics,ism of all which is a big reason why he was elected, is not going along well with congressman still representing all politics and they are feeling attacked. romaine: i saw a poll that said % a brazilians think the government is bad or terrible. wides elected by a fairly margin or the government was. has it been that much of a change in terms of the people who dislike him? or is that percentage still about the same? julia: it is important to remember a lot of the votes that

bolsonaro got. he was not elected by a wide majority but a lot of it was, i refused to vote for the other option. a lot of the support he got was people just could not stand voting for the other side. some of those people are rethinking what they did five months in because of the focus on so much of these ideological matters, all the infighting with his sons. it has been a busy five months. also, the economy is not doing well yet again. gdp numbers the first quarter will be out next weekend and likely another contraction for brazil. scarlet: i'm glad you brought up his sons because i want to find out more about that as well. he has three sons. well,re in government as so it is not as if the complaints against them could be easily dismissed because they are part of the process. julia: he has three sons that are in politics. two of them in congress.

one a senator, when a congressman, and one a councilmember in rio. they are very active. they tweet a lot as you see in the u.s. with president trump as well. bolsonaro tweets a lot as well. viewhave interfered -- the is that interfered in some government decisions, which some investors and bolsonaro supporters do not like. joe: thank you very much for becoming up, why the golden state of california is a proxy for the u.s. economy and why that may be bad news. this is bloomberg. ♪

u.s. joblessk, claims unexpectedly dipping to a five-year low, offering a sign

that the labor market remains historically tight amid other mixing's on the u.s. economy. i would guess as to focus on what is going on in california where the situation is not as great. . and generalder manager joins us from san francisco. good to have you back. you give us a fresh perspective on data or new data no one else has. you have been sounding the alarm about california's specific jobless claims, and it is not looking good as the rest of the country. you say california is so big and a bellwether for where we are going overall. this can spell trouble. andrew: one is to talk about jobless claims and why they are a leading indicator for where the economy is going. historically, we are reaching that point where every time we reach this point, we tip over into a recession. we are at that shaky inflection point. to understand a little bit more, if we look at california, it really is a proxy for the u.s. economy.

you talk about real estate, oil, manufacturing, high-tech, every single industry california dominates. when you look at the gdp, almost 15% of gdp is california. california, california, california. what is interesting is big picture, jobless claims on a year-over-year basis are not falling anymore and that is a historical danger zone where employers are no longer hiring and no longer firing. that is where we are. they start to fire more. we are at that parody place. the difference is california. california entered that space earlier this year than the rest of the u.s. i think some of that is because we are more exposed to china. when you think about exports, again, california the biggest exporting state. what is going on? we are very exposed to china. when you start looking at everything, it is bad news for california and that can spell bad news for the country.

romaine: i sort of understand that things are negative factors having negative pressure on the state, but at the same time, seeing potentially positive factors should these issues reverse, should a trade situation be sorted out. theou see any upside to struggle of the economic structure of the state right now? andrew: no doubt because california is much more exposed to the trade war than any resumption of trade. a big boost to california, will get a bounce. i would take a step back and say even before this was going on, we were seeing a slowdown. the bigger picture is the u.s. economy coming into the fourth quarter was already starting to reach that parody point. and then we get to the first quarter and are bumping into it. most states not even going big picture, this is the more concerning thing, have already reached a point where they are having jobless claims now higher than they had last year. that is recession right there.

that is the concern with california going to dictate the speed with which we go down and the speed with which we come back up. we are talking about stuff happening at the margins. this trend was going on before the march timeframe. scarlet: you made clear california is a leading indicator for the rest of the country. what has been the relationship between california whether it is jobless claims or any other economic data and the broader u.s.? clearly, you make the case that represents thely u.s. economy but it has not always been that way. andrew: it kind of a has been for the last 20 years. when you talk about the u.s. has moved a little bit away from a manufacturing economy, more to a service economy. right there, that is california. from disneyland to the internet, the internet is a huge service economy. it is all california, california, california. even when talking about

manufacturing, california is one of the top five manufacturers. when we talk about oil, california is in the top five of states. the reason i throughout california is we are not a one note wonder so it is not oil is down so of course texas is going to be slowing down or finance is slow so there goes new york. every single sector is going to be in california as the lead for all intents and purposes so it is a very diversified economy. joe: andrew, what is the significance of any of the elimination of the change of the tax law which had a lot of blue states? is that in your view acting as a drag on california and also presumably new york, new jersey, and some other states? andrew: basically, less tax refund this year because of the issue where you cannot detect more of your mortgage and the state income tax type of thing. i do not think it showed up yet but i also know talking to my

colleagues out here that most people are unaware that coming into this year's tax year they did not plan for any reduction in the rebate and are going to be seeing some pain. i think we will see that showing up in the jobless claims because the jobless claims are sensitive things like restaurants and bars. let's face it. if you are getting $1000 or $2000 less of your refund, you are going to belt-tightening little bit in may, june, and july. we may see some of that popping up in the jobless claims. all of it is at the margins. for me, we are in spitting distance in terms of the claim from where we were last year. that means employers are firing at the same pace they were firing last year, which means the economy is expanding pretty much at 0%. that is really what it means, we have stopped growing some of that is certainly the trade issue. it is certainly there, but it is a trend that was going on before we got to this point.

just exacerbates it. andrew with some interesting research on california jobless claims. thank you so much. this holiday weekend, an estimated 37 million people will be hitting the road as the summer travel season kicks off and one of the fastest growing destinations for tourists has been music city, nashville, where the number of jobs rise by 13.5% over the last year. joe: i was just there at that record shop. scarlet: joe is there somewhere. it has contributed, and increasing number of festivals, and as a guest writes, a pipeline problem as well. jeff joins us now from houston with this story. this pipeline problem has resulted in a fuel crunch for airlines and truckers time to get into nashville. talk about where nashville is situated when it comes to oil pipelines that deliver fuel. jeff: great question. fromille draws its fuel

the houston area, louisiana binaries up to atlanta. a smaller pipeline sprints off gasolinenta and brings to nashville at the northern end of the line. that puts nashville in a weird spot because it is served from one supply source and everyone else gets the first crack at that fuel. joe: what is the solution? when were these built? what was nashville's size or expected size at the time the infrastructure was built out? talking about the boom, how stretched is it relative to where it should be? jeffrey: you are talking about pipelines built in the 1960's and 1970's when nashville was much smaller. it was still known for country music back then but not industry. really, the demand now is not anticipated at that time. -- pipeline expansion is a fairly costly proposition and one not in hard for right

now, just an idea out there. you can bring it in by truck at considerable cost and those are probably some ideas being looked at it but as it is now, a surcharge of two cents to eight cents per gallon for your fuel to get it into nashville. you can rest assured that is passed on to the consumers who are flying to and from there. romaine: are you hearing for many people this is having a direct economic impact or they are predicting some sort of significant direct economic impact? jeffrey: i don't think it is that far along yet. i don't nashville had a record airline traffic day earlier this year. the folks in the airport, pretty crowded. the airlines are going to get their jet fuel no matter what the cost will be so they will find a way. it can be in the cost of your ticket flying southwest or american or some of the other airlines. scarlet: bloomberg energy reporter jeff joining us from houston. great story, and i highly

recommend folks to read it on bric.com. let's -- on bloomberg.com. let's head to the east coast because south carolina seeing some migration while the tri-state area is seeing the biggest financial drain. this story in the bloomberg is a font of information. i had not realized connecticut lost 1.6% of its annual income. people are leaving in droves. these are blue states. the loss of the state and local tax deduction a big reason why. joe: in addition to high taxes, it is also people are big cities that they want to be in. it is hard to see what would be the draw to go to connecticut with so many headmans? romaine: a lot of these states getting these inflows, they are starting to become much more economic senators, financial -- the centers for financial companies and businesses that they were not years ago. who wanted to go there for a career prospect?

joe: it is warmer. scarlet: you have to deal with potential hurricanes. joe: that is true. scarlet: i did not realize florida is the third most populous state in america, surpassing new york in 2014. joe: florida does not have any huge city. romaine: that is good. we have so many people in new york. scarlet: more people should be going to florida? romaine: fine by me. scarlet: just that. romaine: on the subway. scarlet: he needs the subway to be cleared. spotlight on a major hollywood talent agency. we are talking endeavor. that is next. this is bloomberg. ♪

scarlet: it is time for a look at the stories that are trending across the bloomberg universe. terminal users are reading about president trump ordering the deployment of about 1500 additional u.s. troops and military hardware to the middle east. that comes amid rising tensions with iran. the president's decision comes

after the white house that it had evidence that iran is threatening possible attacks on u.s. interests or allies in the region. bloomberg.com has a story on an executive who worked out some of wall street's biggest deals. he has a side business that is quite delicious. he is building a luxury chocolate brand. dark chocolate will follow the upward trajectory of craft beer and coffee. tictoc on twitter is reporting that botswana has lifted its hunting band. the government says it promised to take an orderly and ethical approach. you can follow all these stories across the uber universe on your terminal on bloomberg.com and on twitter. romaine: thanks scarlet. endeavor group holdings is filing for an ipo. endeavor is the hollywood talent agency and has a portfolio that images doing

johnson and maria sharapova. is media.y asset lucas shaw has been following this story. this is kind of a big deal. company from a relatively small talent agency a few years ago. now it is kind of branched out into pre-much every facet of media. lucas: it is one of the stranger media companies in existence. as you point out, it started in the mid-1990's as a pretty traditional talent agency. they represented tv show runners and writers and producers and made deals that wait and make money by taking a piece of whatever shows and packages they put together. it stayed that way for 15 years or so. that had bought a larger talent agency but was still more or less a talent agency. over the past five years, you have seen he and his partner swallow a number of much larger

companies starting with img, which was a sports events and marketing firm, a representation firm, where maria sharapova comes in. professional bull riders, the ultimate fighter championship, interests and fashion, a little bit of everything. hard to compare to anything else out there. joe, ari emanuel was the inspiration for army gold on "entourage." joe: that's a good one. lucas, is there anything us like this that is public? lucas: not really. they have pieces of a lot of other companies. they have a very large events business which might draw some comparison to somebody like live nation but they represent half of the artists playing at live nation events. there is no other talent agency that is public right now. me editor of "variety" told the agency that he used to work

at was part of the public company back in the day, but that aside, there has never been a public talent agency because if you are a talent agent, you do not want your client to know how much money you are making off of them. romaine: do we have any sense what the goal is here in terms of once they raise this money, what they are planning to do with it? lucas: i think a big part of it is making sure they can pay off their debt and stay solvent. endeavor has gotten bigger throughout the acquisition. the revenue growth looks quite strong as a result. 30% to 35% a year. that has been fueled by them borrowing money or getting assessments from other companies. they have four or $5 billion in debt already they have to pay off. that is a big part of it. also to invest in some new areas, whether it is podcasting, an audio division, as well as streaming. they bought a streaming company a couple years ago. scarlet: thank you so much for the important context. do not miss this. president trump will travel to japan to meet with shinzo abe this weekend.

joe: markets close in the u.s. and the u.k. on monday. romaine: u.s. gdp numbers over the first quarter come out on thursday. scarlet: that is it for "what'd you miss?" romaine: "bloomberg technology" is next. joe: have a great evening. ♪

yvonne: >> i'm taylor in new york in for emily chang. this is "bloomberg technology ." coming up, has the technology cold war already begun? president trump says while we may be part of the trade deal shifting from previous efforts to campaign against a company is a sprament issue during ongoing trade dispute. plus the electricke