>> i'm mark crumpton with the first word news. he says the lines is considering strengthening european air and missile defenses and ramping up for games plans if russia fails to respect a cold war era nuclear treaty by august. he said russia showed no signs of returning to compliance before the u.s. deadline. februarygave notice in intention to withdraw from the 1987 pact unless russia

destroyed its new missile. missiles are capable of carrying nuclear warheads. and are hard to detect .educe the warning time >> he declined to give details, but underlined that nato had no intention to deploy nuclear-based missiles in europe. tonight, democratic candidates holder first debate -- hold their first debate. elizabeth warren will be the only top: democrat to take the stage tonight. the house oversight committee has voted to subpoena kellyanne

conway for testimony. she is of violating the hatch act. week, the special counsel's office recommended that conway be removed from federal service democraticging candidates. [no audio] tracks and off the it has raised concerns about the impact on various forms of wildlife including dangerous species.- endangered global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries.

♪ >> from bloomberg world headquarters, this is bloomberg markets the close. >> just 30 minutes away from the end of the trading day. 500 on track for a very minor loss. chipmakers up 3%. have betterg is we than expected. rallytty amazing considering how beaten-down they were. --year yield hovering abound above the 2% mark. off,e yen is getting sold

the numbers continue to amaze the markets in the u.s.. >> some seeing the dow industrial jones higher, less than 2/10 of 4%. also seeing big tech companies higher. >> half of it has come under some fire. saying they -- president trump saying they should be sued, though he did not say for what. care.com was one of the bigger decliners, down about 20% .

one analyst on so far as to call it a red flag. analysts saying the machine company up, continuing to gain, shares up 1.5%. anise -- analyst is bullish and it generates half of its [no audio]ue through seeing annalysts approved outlook and memory chip reducing.turning to the democratic

>> residential party candidates, they will take the stage tonight in the 2020 election cycle, but the trump campaign not letting .hem deal with the spotlight >> i think it's important the american people hear the truth because they will not get that on stage. they will be lying about tax cut and the economy. we are here to make sure american people outside the venue get the truth. the cameraspect will not president trump for each other? see ahink we will free-for-all, everything is free for all. we are confident people are going to vote to keep president trump in office. aboutryone is talking

elizabeth warren. joe biden tomorrow with bernie sanders. were you going to look for from her? -- what are you going to look from her? >> i think the last i saw, she had over $123 trillion in new american people see how radical left the democrats campaign thesemp these as a four hour infomercial for why donald trump will be reelected. >> how is the revolt and party going to respond during the debate? >> the president will be on air force one. --may or may not sleep tweet.

we will make sure people get the ands that are out there debunking the lies coming out of the candidate's mouth. look at them as one big liberal organism and they get to face president trump. was our very own kevin serenity. coming up, big tex under fire. present from floods the possibility of suing facebook and google. is reacting.try tech under, big

fire. the president floats the idea of .uing facebook and google how the industry is reacting. ♪

president trump eric his

grievances about social media companies today. he took aim at facebook and google and discussed the pop of the-- the possibility that federal government might sue them. bloomberg's ben brody covers tech lobbying. what, if any grounds could the u.s. sue google and facebook? i think trump may be referring to the first formal steps and the justice department probing's -- two probing's for alleged misbehavior.

thing i thinkrst he's referring to where there may be court cases will stop the other thing is basically increasing the scrutiny. >> the president also mention the idea of a summit coming up in july with social media networks and executives. do we know who is coming and the purpose of it? >> we don't know or at least the white house hasn't responded. on the other hand, only a handful and i think it is reasonable to think that at least most of them will be participating before or during. what i'm looking to is when trump met with jack dorsey, in theere three topics

other two,- and the online opioid sales. [no audio] it is also major issues being dealt with on a policy level. i expect those will probably be on the agenda. noticeable that he's threatening to sue facebook and google. the eu has the audacity -- fining google and looking into amazon. how much will the u.s. put pains to regulate and what of the areas you are interested in? >> we have been looking at privacy and antitrust trying to

bill.orward a privacy in the last days and weeks, i noticed that members of congress are very interested in getting more information about the algorithm that drives these particular companies and you have the republican senate to see theerday .ontent on the platforms it is unclear, but a new level to regulate algorithms. >> that is bloomberg's ben brody from washington. a quick check of the latest business flash headlines. has added someone to

its roster for possible restructuring. shares of blackberry falling the most in the year. -- athing acquisition less of auisition boost than anticipated. smash., avocado expected toocado continue to rise until mexican farmers continued to harvest the summer. he also tweeted out a great chart that shows the euphoria of bitcoin and of a condo prices.

prices.do it is interesting. >> this is bloomberg. ♪

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thousands of mattresses to those in need. live healthier, live happier by resting deeper. right now, you can get 10% off, plus two free pillows. go to leesa.com today. this is count down to the close. >> joining us everyday at this time is joe weisenthal. avocados, what can you keep an eye on today? really is a crazy move, giving a 2017 five to the market ibe to theh

market. [no audio] the underperformers. it is not a very to meditate, but it is straightforward. there are so many headlines out and the president made some and probably will be some tonight with the debate. [no audio]eason fed,ump talking about the talking about monetary policy, regulating the tech companies. it makes you wonder why we are seeing some much risk.

available, stanley fischer, -- >> the boe is always hiring. let's look at how are doing in terms of the market. of -- upuctors of -- 3.5%. proxy.downside, a bond >> i'm not too crazy about this rally. you are not seeing the names you want. that sex has been the key performer, the s&p 500 basically

flat. minutes away from the close. it has been a rough few days for shares of companies involved ,n for-profit prison industry the latest hit came tonight after bloomberg reported that bank of america will stop lending to the industry. that is a key group. 18% andstocks are down afterspectively, mainly elizabeth warren said she would make ending private persons -- prisons part of the campaign. follows similar decisions by jpmorgan and wells fargo to end their relationships with industry. days may be a couple rough

for the private prisons, but not 39%.ch for bitcoin, up joe was making the 2017 comparisons and then there was the crash. for facebookation and that is% lifting some of the crypto stock. -- we could see a reversal coming, but right now, bitcoin on fire. >> energy sector also having a , they good day best-performing sector on the s&p 500. most at thesing the

beginning of the year, putting really good days, all rising between four and 5%. also, crude and refined product exports has had a record high as well as gasoline around a record high. we heard that the largest refinery on the east coast is close following a fire. now.t's get more analysis eye on the back of earnings.

>> we have seen the names coming out to you have micron and fedex. i was a before actual earnings come up we also have to pay attention to the g20 of course. when they said they found a loophole resuming shipments to , for semi conductors really caught in the middle of everything going on between the u.s. and china, micron derives 13% of its sales from what way -- huawei, so this is a huge deal and that is why you see every single stock higher. >> as we head to the market

you very much for .oining us what you make of the current expectations? do you think given all the a companyadwinds that in the s&p 500 can be dumped? >> it's uncomfortable for many investors. do i think it is problematic for the market? no. >> we're seeing a lot of analysts as a whole for the year, but at the same time seemed in standby their price sense of oneaking

that is going down. >> i think investors are trying to understand and i headed to a recession? not, so youe are don't necessarily need to be concerned about the price is much. trade willdata from result in a minor change. it does not necessarily want a change because we don't view it as recessionary. health care has been under pressure, but also tech. oft do your sources make trump's call to sue them? >> this adds to all the talk we

have heard about antitrust and yet, we did see facebook and google take a bit of a hit today, so it is pretty minimal and the fact of the matter is investors are saying until we actually see some for movement on this, it'll probably take five years for the investigations to wrap up, it is not too much of a worry. important from a market standpoint seeing the direction it is headed in? >> we are concerned of the direction it is headed in. there's still an open field for the democratic candidate. it is a debate over a couple days. we can see what the

candidate looks like, we will make a difference. >> we are unable to break that lower.the s&p tracks >> we saw the number of companies making new highs decrease. had these losses. they have been mild. the market repricing how much the fed will cut. let's dive deeper into the action. what are you watching? chart.s check in on a

500 over thee s&p last 1.5 years. that is an important level. it is a range. each time the s&p 500 has gotten above that range, it has gone back in. we are looking at a newer version that suggest a move. this chart probably supports that. you need to stay above that top trendline, suggesting near-term bumps. rsi comingk at that off the top. there was one close below 2%

before it jumped above that level today. worststate is the performing group in the s&p 500, down 2%. real estate tends to underperform when bond yields rise. it is also increasing borrowing costs. real estate is down 5% over four days. the worst performance for 2018 that time period, suggesting equity investors betting this rally in the treasury's market is running out of steam. now it is time to take some profit in real estate. that was the best performing group in the s&p 500. have gold retreating

from its high. we are seeing a taking of breath from that rally. analysts saying that may be the reason. were also looking at gold above $1400 amounts. speakheless, fed dampening down expectations of the scale of the rate cut. also some profit taking given that big run-up. rsi still the signaling in overbought territory. it has come down. we could see gold fall further. analysts saying the trend for the foreseeable future should be upwards. our guests have

still with us. had a little selloff today, something we have not seen for a while. did treasuries get overextended? >> they are just reflecting the economic data incoming. the biggest concern we have is the pace deflation in the ism. that is what the treasury market is reacting to, what the hard data is telling you. joe: that piece that came out yesterday evening tracking some of the things making people nervous about the market, some real economic data, some sentiment. resonate?at did a lot of people say they were nervous? did it feel like there are a lot of people willing to predict a bear market? >> this is the top for those who

are predicting it. those who are growing more nervous, absolutely. one indicator was the consumer confidence data we got yesterday. in the stockidence market are intertwined. they are highly correlated. the case can be made we saw the top and october 2018. sinceday, the lowest 2017. nothat is true, that bodes so well. there are warnings for the overall investment cycle. there are other indicators you can watch as well, but there is a growing sense of nervousness at this point of time. are you telling people to do? >> we see it limited upside from here. when we look at the data, is it decelerating? yes.

what does the pace of deceleration look alike to the next several months? will we careen 30. inflation data is soft. consumer data is healthy. the labor market remains healthy. i think the reading in july will give us a better indication. you have two pillars of the economy still doing well. in julythe fed does cut as the market expects, what does that do? does that give a boost to the real economy, or is that largely something that works to the financial channel? is not looking to materially boost the economy. they're looking to adjust policy around the long end of the curve , reset liquidity conditions around the 10 year or 30 year, as opposed to cutting in the sense that we have a recession and need to do a stimulus of the economy.

it is something to move the needle, but not necessarily stimulate the economy. when we are looking at the economic data, in addition to consumer confidence, we head home sales data in terms of sales and pricing suggesting some weakness. we are awaiting kb home's earnings today. >> lennar said they are having problems. have a similar issue? we are seeing more buyers because we have lower mortgage but the this time, economic data has been slowly softening. it has not completely fallen apart. this is why people are saying the fed should come out with a preemptive cut, but now i'm seeing? isaround the fact whether it

going to be an insurance cut. -- but now i'm seeing talk around the fact whether it is going to be an insurance cut. caroline: what are you making of the moves in oil? our downgrade of earnings was reflecting the fact that oil has fallen over the past several months. the geopolitical backdrop thinks oil will move higher, energy will do better. it is really a beta play on oil. if we get an indication demand is increasing or geopolitical tensions are rising, it is likely that to bode well for the energy sector. romaine: i'd like to go back to this fed cut on this idea that we get the cut as the market

expects it to be that that would add fuel to the fire. is the cost of capital really holding this market back right now? >> we agree. we don't believe it is the cost of capital. clients are programmed to say yield curve converts, i need to understand what the problem is. it's not that you occurred reflects a problem, but signals telling investors you should be concerned. signal, iting that removes that discussion from the table and brings confidence back. or 50 in july? >> it is out of my league to say. i don't know. caroline: great to have you with us. that is it for the closing bell. "what'd you miss?" is up next, where we will look at president trump's comments and much more. this is bloomberg. ♪

♪ caroline: live from new york, i am caroline hyde. joe: i am joe weisenthal. the question is "what'd you miss?" caroline: the president threatens tariffs and says mario draghi should head the fed. senator john kennedy tells us why he is concerned about facebook's crypto coin. and the state run oil giant is looking to restore

its finances and move beyond the scandal that rocked the company and country years ago. romaine: breaking news. kb home's earnings are out. fall, butd eps did less than expected. $.51, quarter eps at estimate $.38. $1.02 billion. no guidance, but shares up 6%. caroline: it all comes down to the g20. president trump warning he made have to resort to plan b if there is no progress on the trade deal. a,t plan b sounds like plan more tariffs. the president threatens 10% tariffs on all remaining goods from china. we have the story. there isn't some

kind of handshake and resolution. the mood music is so mixed. on one side we have steven mnuchin and seeming so optimistic. >> we are getting conflicting signals. a seeming bearish. steven mnuchin and things were 90% of the trade deal that will be completed by the end of the year. robert lighthizer speaking with the chinese vice minister in charge of trade, speaking positively, hoping the meeting scheduled for saturday between president xi jinping and president trump would be positive. we have three positive things in one negative thing. i will say it is a positive thing. is the realistic expectation for this weekend? joe: sunday night to come are going to open. what will set the tone for this?

>> the market would be happy if it saw something like a noncombatant coming out of both sides, something along the lines of trump saying we will hold off on that plan b or plan a. we are going to hold off on new tariffs and we will give negotiations another chance. that would be very positive for markets. romaine: the thing that most intrigued me today about trump's interview was his seemingly positive comments about mario draghi. you have his pining for having a draghi-led fed. would mario draghi really delivery anything that trump really wants? i know we think of mario draghi as a dove, but the situation in europe that drove those policies are a lot different than the united states. >> that is true. europe has far lower interest

rates, but a slower economy. findingway of trump another way to needle jay powell of the fed. caroline: calling him our fed person. >> he said he is acting childishly. it is very personal with trump. he tends to turn things into a personal conflict, where powell is doing what he can to drain the emotion out of the situation, unsuccessfully. romaine: have you seen any evidence in anything powell says -- and of course powell will say they are independent, then people suspect is this somehow undermine or make life difficult . i'm curious if you see any difference in the effect on fed policy at all? >> it is hard to know. what is the counterfactual. joe: that is the challenge. caroline: they have done what

you want. >> they have. trump is getting his way. the fed is talking about coming in july. that is what the president is looking for. it has to be affected deliberations, but if you -- to be affecting deliberations, but if you had a hands-off president they would probably be right where they are now. could search his influence, but those vacancies are not field. >> that would have a more lasting effect. they would be voting. if he put in some super dubs, they would probably -- doves, they would probably be outvoted. joe: you don't think mario draghi would be happy with the fed?m with bond years of multiyear talksone manning manager

about where -- money manager talks about where he is putting his money. this is bloomberg. ♪ s bloomberg. ♪

caroline: time to look at the stories trending. the biggest refinery on the u.s. east coast shut down. the complex will close after a massive explosion and fire crippled operations at the site that has fueled the region for 153 years. the refinery will close within the next month after emerging from bankruptcy. bloomberg on and google employees urging the organizer of the san francisco pride parade to kick the company out of the celebration. overe has been under fire

how it responded to jokes made on his youtube video service. tictoc reported france's bracing for a heat wave. more than half the country has been placed on alert with temperatures expected to reach 104 degrees fahrenheit. temporary fountains have been put in place. you can follow these stories on your terminal, bloomberg.com, and tictoc on twitter. joe: even though we are seeing a slight selloff in government bonds today, 10 year yields in the u.s. and germany remain near multi-near lows -- multiyear lows. where'd you go to find yield? our guest joins us with his investing ideas. thank you for joining us. i'm curious about the premise of the question. do you have to chase yields? must one play the game? >> you don't, but there are opportunity costs for sitting in

cash. with rates falling, cash is yielding less and less. that impetus is growing. romaine: what is the mindset of money managers? when you think about the gains in equities at the start of the year, a lot of people said you can sit on your hands for the rest of the year and you have locked in your returns, but is there this idea you have to be constantly active with the portfolio or move to cash and wait it out? >> in reality, investors are driven by primal and stakes. in december, how much can i lose? now it is how much more can i gain? there is typically not that level in the market. caroline: you see that movement in europe. what are you seeing? what are you looking for in terms of yield? >> i think that preferred stocks

are a decent place to go right now. they are further down the capital structure and can selloff like equities, but they have fairly good tax treatment. the spread over long-term government bonds is attractive right now. that is a place where you can get decent value. joe: i totally forgot. it has been so long since we talked about preferred stocks. remind me how they fit in on the capital structure. >> they are senior to equity, but junior, subordinated to corporate bonds. joe: got it. romaine: another area you brought up earlier today was this idea that municipal bonds, particular these closed-end funds, which blew my mind. >> they are unlike an open ended fund.

they are a fixed amount of shares issued and they trade like stocks. that asset value may be $10, but dollars,e at $11, nine so they move up and down and traded premiums or discounts. they utilize leverage. as short-term interest rates went up, discounts widen because the profitability decreased because their cost of funds increased as they were buying municipal bonds yielding roughly ae same amount, but there is tail wind behind them right now in that their cost of leverage is declining at the same time their assets are going up. some of these funds are still at 10% plus discounts. the underlying bonds have gotten more expensive, but there is room for the leverage to go down in price and cost. caroline: that is not for the fainthearted.

i'm more interested in the plain-vanilla calls you have. regional banks remain deeply unloved. may be right now? where is the opportunity? >> everybody knows the banks are sensitive to interest rates, but in reality, the move down in prices has gone far in excess of the impact to earnings. joe: we see the eps line generally going up in the banks deteriorating. >> what has been priced in probably would amount to a 5% decline in earnings. that is far less than what is being priced in. yieldne way to avoid the chases to buy a fast-growing tech stock that doesn't pay a dividend. one company you own is google. come? it feels like everyone knows about that company. what is the story?

>> you would probably say this year everything that could go wrong has gone wrong. there is the new doj probe. they missed earnings in the first quarter. there have been tweets from the president against google. just a lot of overhang for the stock. when you actually look at the stock, they are still growing over 20% per year topline. the cloud segment, they compete microsoft, and growing close to 100% year-over-year. they haven't even broken that out yet. on an earnings basis, three quarters of the year ahead, they will grow tremendously from here. dhey haven't even pulle the buyback lever yet like a company like apple. howine: i didn't realize much alphabet had been trailing the s&p. what has accounted for that? fromthink it is overhang

big tex scrutiny, the doj, but to buy a company growing 20% plus for the same forward multiple as the market, that is fairly compelling right now. romaine: ok. we will leave it there. hackers in the hotels? the hospitality industry has been struggling on how to deal with data breaches. sometimes the exploits find their way into something as simple as an internet connected remote-controlled curtain. i thought it was interesting because they said there are all these little things in hotel rooms that can easily be exploited. joe: it's one of the things i never thought of, but i am not surprised. caroline: i like the one where a

connected place where you can put your fish was a key area of weakness. this is bloomberg. ♪ this is bloomberg. ♪

>> i am mark crumpton with first word news. ron johnson, chairman of the senate homeland security hearing onbegan a human trafficking and smuggling on the u.s. southern border by saying he hoped an associated press photo showing a salvadoran father and daughter drowned in the rio grande river would prompt congressional action. that photo appeared on the cover of today's new york times. >> live realize tragedies occur all over this country, the world . i don't want to see another picture like that on the u.s.

border. hope that picture alone will catalyze this congress, this committee to do something. the senate homeland security committee heard from top u.s. officials at customs and border protection about the strain caused by the surge in thousands of migrant families and unaccompanied children. tonight is the first of two nights of democratic presidential debates in miami. the presidents will make their case to voters why they should take the nomination to run against president trump, who is seeking reelection. the event is hosted by nbc. elizabeth warren will be the only toppling democrat to take the stage tonight. in iran, the sick country's supreme leader has rejected the idea of negotiations to ease the standoff with the united states. the ayatollah said the u.s.

wants to make iranians miserable and argued washington is trying to strip iran of its economic and defensive capabilities. those were his first public remarks since being sanctioned by president trump. route to the is in g 20 summit. mr. trump is expected to meet with xi jinping as the two countries prepared to resume trade talks. announceis expected to its decision to hold off imposing tariffs on china. bloomberg has learned the decision may be announced after the two leaders meet this weekend. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. romaine: thank you. it is time for a bloomberg exclusive. petrobras priced a secondary as theffering today

company tries to restore its finances. joining us now is the cfo of now from, joining us the nyse. thank you for joining us. let's start with the offering today. can you give me some sense as to what the purpose of the offering was and how it helps to improve your finances? made withfering was shares in the treasury and ask petrobras to work with them making this offering, but it is being made and petrobras is helping. it could execute the equity deal. talking tou are investors. what has been the reception to the shares in your company right now? >> the reception was very good.

we talked to many investors in this last weeks. we have been talking about the great story the company has put through. goinge been through tremendous deleveraging to get the company to a level where we believe it will have a lower cost of capital and be able to compete in the market better. we have in doing portfolio management, looking at what are the assets we should be devasting from, and the ones we should be concentrating on. without we have a big divestment plan that will help us, not just deleverage the company, but invest in deepwater exploration and production in brazil, where petrobras believes the company is doing the best. it is our core business. you tell us when

we might start to see the selloff asserting key assets? yet?ere a timeline set >> we have a divestment plan. we will be looking at the portfolios. there will be some assets coming to the market. stakee decided to sell a in distribution. we had already that. decided that as part of the portfolio management for petrobras that we should reduce capacity in brazil from 100% to 50% of the capacity. we will be selling three refineries in brazil as well. we have been doing that. this will be part of our strategy moving forward. we are always looking what are the assets we should be devasting to invest in higher

return assets. these are the ones that are coming, but we will be looking all times that the ones we should add on. romaine: with regards to raising additional funds, other latin american companies went into the euro market. are there plans for petrobras to sell a euro-denominated issue anytime soon? >> we look at all possibilities when doing issuance. we have all the doors open. currencies, capital markets in brazil, the banking market. we have been accepting all of them. even right now we will be much more focused on liability management to reduce the cost of justotal debt then increasing, so we are in a

decreasing trend of our debt, but definitely we will be looking at what is the best market we are going to reach and what is the best opportunity so we can really lower the dangerous burden we have right now. joe: thank you very much. we appreciate you joining us. coming up, john kennedy has some words of support for fed chair powell and some concerns over mark zuckerberg. stay tuned for a full interview with the louisiana senator. this is bloomberg. ♪

joe: president trump going after jay powell this morning, saying he would prefer ecb president mario draghi head of the central bank. earlierto john kennedy and asked him whether he thought that trump can remove the fed chair. answer to know the that. i have not researched it. here is my impression. the federal reserve is and it should be an independent agency. america, everybody is entitled to his opinion. i think jay powell is doing a good job. i think he calls it like he sees it. the economy in america is doing extraordinarily well. i don't think he is so worried about that as much as he is about the rest of the world's economy. europe is about to go into a recession.

things are not going well in china. it is a tough job. i think it is very important that powell and the fed be allowed to do its job. now, does the president have the right to complain? sure he does. every president that i can remember has always offered his opinion to the fed about the analysis,n the final it is the fed's call. one of the reasons that aliens of dollars every year flow into america -- billions of dollars every year flow into america to be invested here is because people believe the federal reserve is not a political body, and it is not. ask president erdogan in turkey what happens when you appoint your son-in-law head of the federal reserve. there currency tanks. joe: right.

let's turn to a topic over which the president probably has more control right now, the trade talks. are you optimistic heading into the g20 that the current path of negotiations with china is on track to get something done? how worried would you be about the economy if nothing gets done in the full set of tariffs go into place? >> i think eventually we will work out an agreement with china. i am not sure that china will abide by that agreement. that has been part of the problem. we admitted china. china was admitted with our support to the wto, which has a set of rules. on december 12, 2001, china started cheating. they have been cheating every day ever since, and america has

never stood up to him. we have always been told be patient, be patient, china is a developing country. they will come around. they haven't come around. they have gotten worse. that is what this trade fight is all about. i think the president knows no one who fights a trade war will win it. we want to be friendly competitors with china, but they have to play by the same rules the rest of the world does. when will we work it out? i don't know. i am hopeful the summit will get things back on the right track. , painful topainful us, painful to china, but all china has to do is say, we get it. we will abide by the same set of rules the rest of the world abides by. joe: do you think congress should take back some authority over trade or perhaps change the law limiting the president's ability to unilaterally or

easily decide that something is a national security threat, even when that is in dispute? >> i think congress should have more say in trade, not just trade, but a lot of things. our founders were very smart people. they set up three coequal branches of government. ever since then, for whatever reason, members of congress have given away a lot of their power to the president, to the bureaucracy, to the courts. i think having that check and balance is healthy. i think congress should have more to say in terms of trade. that doesn't mean the president should not have anything to say, but their needs are right balance, and the balance right now is off. joe: last question, the banking committee has scheduled hearings for facebook's cryptocurrency. i'm curious whether you are concerned about that.

they are an extraordinarily large and powerful tech company issuing its own supranational currency and what questions you might have about that. >> i have read facebook's proposal. it boils down to this. we will turn over the world's money supply to mark zuckerberg. what could possibly go wrong? i am looking forward to the hearings. i need to hear more about this idea. joe: that was my interview with republican louisiana senator john kennedy. caroline: a little chuckle at the end there. one thing blowing my mind is senators, 11 republican lawmakers fleeing announcer: to prevent a quorum to vote on carbon emissions. the democrats say there may not be enough support to pass the legislation. law, howing maker of can you disappear?

what sort of democratic -- does this happen often? romaine: it does. a few years ago, lawmakers in wisconsin absconded to illinois to avoid that vote. we saw something in texas. joe: when i lived there in 2001, 2002, the democrats did the same thing. if there are not enough people to vote, that's what you do in theory. romaine: if they stay within the state, i guess -- joe: the marshals can round you up. romaine: and force you to vote. caroline: the turn of phrase is amazing. saying they better bring their guns, basically. romaine: i like it that you are amazed by this. you came from a country where someone stole the scepter off

the floor of parliament and that brought everything to a standstill. caroline: we filibuster to try to stop laws going through, where as you guys abscond. smart chartsw for with abigail doolittle. one of the biggest bowls out there this week. out there this week. >> he has been bullish for the last couple of years. he even had the correction in 2015. great to have you here. a little volatility in may, but overall up and away. let's look at your first chart of the s&p 500 comparing high beta to lower beta. >> once again, the s&p is having trouble pushing through to the upside. summertime, you usually don't get the breakout. as we think about the second half of the year, we want to be

position for the breakout. one key piece of information, risk in an 18 month decline in now showing signs of turning higher. one way to look at this to look at the ratio between high beta versus the low volatility indexes. in can see high beta peaked the first quarter of 2018. there is the decline we have been in. it first bottom in december. now we are getting the double bottom in risk, high beta, very similar to the summertime 2016. it wasn't until the back half of the summer that high beta started to get into gear. i think if we see a similar rotation, that will stir that breakout to the upside. targets.talk if we see that breakout above 3000, where could we go by the end of the year, next year? >> we only do targets once a year. i only want to be wrong once.

you get that breakout to the upside, you start thinking about 3100 and some higher levels. folks are the bearish talking about the dow transports not acting well. you have a chart comparing those indexes to the s&p 500 suggesting that may not matter. >> what about the transports and small-caps underperforming? they need to participate in absolute terms. the jury is still out. i'm less worried about the relative underperformance. let's look back to the 1980's to the 1990's bull market. the s&p 500, that big secular run-up. i overlaid it with russell 2000 relative to the s&p, and transports relative to the s&p. you will notice the falling blue line, small caps underperforming the entire period, and transports underperformed. i will take the view cooperates

our view we are in a secular bull market, led by large-cap growth. russell 2002 the s&p 500 looks may be putting in a small bottom. you have an interesting investment idea for viewers to potentially look at. in etf, aerospace and defense. >> let's stay in the industrial sector. we are overweight industrial. -- industrials. xat, absolute price relative to the s&p 500, breaking out on an absolute basis and relative to the market. that is relative leadership. it is broad-based too. you have some mid-cap names, large-cap names, so broad-based strength. >> that is a great differentiated idea. a pleasure to have you here on smart charts defending your bullish view. you have been right, so kudos to

you. back to you. romaine: thanks. coming up, hong kong protesters want their grievances addressed. the chinese president heads to the g20. that is next. this is bloomberg. ♪

romaine: hong kong protesters hoping to have their grievances heard at the g20 meeting with a series of demonstrations ahead of the summit in japan. in oure, let's bring guest. these protests are in hong kong. people are asking for what? ,> for international help international pressure on the hong kong government to get rid of that extradition bill that has been suspended so far, but not eliminated. that is what they want.

they have been chanting in different languages in all the countries participating in the g20. things they were portraying in placards was president trump, please liberate hong kong. joe: here is the question. i have always wondered this. happens inandoff china promised to maintain the two systems, one country framework. are there any enforcement mechanisms built into that? we don't want to wait the whole 50 years. is there anything stopping, preventing them? >> the law. the constitution of hong kong, where it is granted those 50 years, but there is nothing forcefully restraining beijing from asserting its influence in hong kong.

we have seen more efforts in order to integrate hong kong into the mainland. we are seeing tons of cultural and economic projects as well. we have the greater bay area being redeveloped, connecting hong kong, the macau bridge as well. thatasic law does state that agreement in 1997, the handover from the uk2 china, those 50 years would be respected. speaking they are all different languages of the countries that will gather in japan. do you think hong kong will be a major talking point at g20? >> it is not on the official agenda. assistantard from the minister of china saying that beijing will not allow the hong kong issue to be brought up at the g20, but at the same time, we have heard from secretary

mike pompeo saying president trump and xi jinping will be talking and this issue could be one of those addressed. romaine: is there anything to read into the fact that they are still allowing these protests to go on? situation,tricky especially on xi jinping with pressure on these trade negotiations coming from the u.s. and so forth. we have seen beijing tried to save face by allowing this bill to be suspended, but not completely withdrawn. the protests still continue. caroline: don't miss daybreak australia and daybreak asia. tune into tomorrow, our special coverage of the second night of democratic debates tomorrow in miami. joe: i will be watching numbers for the first quarter, u.s. gdp at 8:30 a.m. eastern. romaine: nike fourth-quarter

earnings after the bell. caroline: that is all for "what'd you miss?" romaine: bloomberg technology is next. joe: have a great evening. this is bloomberg. ♪

♪ emily: i am emily chang in san francisco. this is "bloomberg technology." president trump says the u.s. should sue google and facebook. this, as executives are grilled on capitol hill. plus, a legal loophole. american companies finding a workaround on the u.s. ba