♪ >> welcome to bloomberg markets, i'm vonnie quinn. solid economic data on housing and jobs helping to keep stocks in the green. let's get a quick check of the markets. again, this rally continuing into today, albeit with a little less billions. about half of the components higher, have lower. as you can see, the nasdaq 100 also extending its gains into today by about 2/10 of 1%.

we are still in correction territory, down more than 2% since february. the two year yield, we are well below that 4%. gold just off the highs, telling us a lot about yesterday's fed and today's economic data and where the economy is headed. the tiling a couple of individual equity movers. for that, we go to isabel. >> schussler tears going lower, tesla recalling all the cybertruck's are produced and sold in its first 15 months and on the u.s. market, so that is over a safety issue that tesla is having trouble resolving. the ev maker estimates that 1% of the 46,000 pickup trucks have a defect with tesla saying it will foot the bill for replacing the panels. we are also looking at accenture with shares edging slightly lower. the company post and beat margin for the second quarter, though analysts say it was better than feared. bloomberg intelligence also saying the company is performing better in the downturn left by

its peers. and darden. this is quite the opposite picture because shares are popping around 6%. the company said implied fourth quarter guidance includes comparable sales growth above 3% ahead of the 2.3 consensus. the annual forecast also implying fourth-quarter total sales are higher than estimates. darden also discussed manageable inflation levels in the ways they can mitigate its relatively limited tariff exposure. back to you. >> fed chair jay powell bringing back the term transitory when discussing the potential inflationary pump from the trump tariff policies. earlier today, former commander city fed president said he thinks inflation could actually have more staying power. >> we have huge debts coming forward. we are going to spend a lot more money again as a nation. the fed is going to have a lot of pressure from this administration and from the economy more broadly to monetize

of that, and the banking history will monetize some of that debt. that should put inflationary pressures higher. number two, remember they keep saying that policy is restrictive, but real interest rates are in the 1.5% range. that's not particularly restrictive in a historical context. i don't think we should be thinking that if we get through these tariffs, we are home free. vonnie: let's digest all that we've learned from the chief u.s. interest-rate strategist with bloomberg intelligence. the administration would have us believe that the inflationary impact, if there even is one, would be temporary. the fed seems to be saying the same thing. what are the academic study saying, what is the market typically say? >> certainly the market when you look at what is implied for inflation, it basically says we are going to have a bump up in

inflation, and then inflation will trend lower and be closer to 2% kind of in the medium term. so the market does seem to think of transitory. i think the risk however is that if we do get increases in prices and things that are observable easily by the household sector, you could wind up having inflation expectations for the vast majority of americans move higher, and that could change spending patterns and that could actually slow down the real economy pretty significantly, and that is kind of my fear in all of the tariff talk. vonnie: did you detect anything with the fed chair said yesterday about inflation expectations that perhaps these may -- he is maybe more concerned that he is letting on? he typically swallowed away all those concerns about university of michigan i-10 year expectations going higher and so on. >> something about the survey data is the survey data has been much weaker than the real data,

thing that has occurred over the last 15-18 months, and we've noted that many times. the market is relying more on the hard data then the survey data. and when you dig into the survey data, and a lot of that does have to do with political party. if you look at even the 5-10 year inflation data and sort by political party, democrats all think there's going to be runaway inflation. publicans think inflation is going to be fine. it is those independents thinking maybe there will be some inflationary impulse that are a little bit more troubling. so i do think that the survey data is really tied to the more political angst, and we've had poor consumer sentiment numbers before and people are still spending money. so i do think that the hard data has to be more important and i suspect the markets will continue to focus more on the hard data than the surveys for now. vonnie: it's interesting, only

two dots made up the difference, yet the market is pricing in perhaps even three at this point, some type of the market at least. ones that come into synchronicity? >> that was an interesting move yesterday. if you go back and look at the last two years of the fed dots vs. what the market is pricing, the fed had generally followed but the market is pricing and yesterday it did diverge from that just a little bit, not having a somewhat more dovish dot plot. i do think maybe there is an acknowledgment from some members of the fed and we will obviously have a lot of fed speak over the next two weeks that will confirm this, but there's a lot of fed members thinking maybe we aren't really very restrictive right now, which we agree with. we think that neutral is only get about 4%. one more rate cut to get to neutral, but i think a lot of

members of the fed are saying we are uncertain and if we are uncertain we are better off sitting on her hands, fighting inflation first and then worry about growth. and they can especially do that because you still have the ok labor market. labor markets aren't great by any stretch, but it's also not deteriorating, you don't have sub-100,000 payrolls, you don't have unemployment rising significantly, so all of those things .2 let's just stay the course for now until we get data that is significantly worse one way or the other, either higher inflation or slower growth slowdown. >> the fed chair really did paint a picture of a kind of stagflationary environment yesterday, downgrading both expectations and definitely looking for a small take up in unemployment. it's not a great scenario, can we avoid that with monetary policy? >> i don't think so. they have to figure out in a stagflationary environment which

way they want to go. that being said, yes they downgraded the growth expectations. they still see positive growth, just much slower than the last few years. but they do see the uptick in inflation. if you add inflation to real growth, you wind up with around a four-person handle based on what the fed said. 4% nominal growth is fine. i think that is one reason why the fed is thinking that it can stay there. and keep in mind, how many times did he say uncertain, that the outlook is uncertain. he hounded on that again and again and again and i think that is why if things are uncertain, why change policy? i know risk assets, credit spreads and equities might not want to hear that because they are poor uncertainty, -- abhor uncertainty, the state of course has to be the best case scenario for now unless we see changes in the real economy, and they are so data-dependent right now that

unless you see any major shifts, the base case is we do nothing. vonnie: and he also made sure that it wasn't just trade we were focused on, along with him of the trade policies is what we need to be focused on. thank you so much, we will continue to observe the markets and what they say. coming up, the european union possibly avoiding a tariff hangover by -- this is bloomberg.

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♪ vonnie: this is bloomberg markets. european union is delaying the

proposed 50% tariff on american whiskey until mid april, aligning it with broader countermeasures against u.s. steel and aluminum duties. this comes after president trump threatened to impose a 200% tariff on european union's wine and liquor last week. we are now joined by fiona rutherford to cover these american whiskey makers. how are they taking the news, is there anyway that we can make this temporary delay a permanent delay for the american whiskey makers? >> the e.u. is the industry's biggest export market so as you can imagine, if 50% tariff is going to be devastating the industry, and that is the hope that a deal will be reached before the deadline. but until then, companies have been really preparing for this scary reality. vonnie: why has liquor been single out so much? >> american whiskey is iconic and the people i've spoken to have said they feel like they are the target unfairly of this

tariff war. and we have to remember that this trade war started back in 2018 when trump was first in office. the e.u. put a 25% tariff on american whiskey, so they really felt at least in those initial years, they really felt the burn at that time. so a 50% tariff would be devastating. they are doing everything they can to try to stop that from happening. vonnie: have you been able to speak to representatives from some of the makers, who are they speaking with and how are they lobbying for themselves? >> talks are ongoing as you can imagine, but they are really doing their best to try to protect their businesses. so we've seen companies shipping more products to the e.u. to try to get ahead of the deadline in the hope that if a deal isn't reached by the deadline, they will have a stockpile they give them a bit of a buffer for at least a few months. vonnie: that's the thing, i have this image of all these vessels

pirate high with whiskey casks. we have a story today about copper from asia and there are all these ships and warehouses being rented. either literally warehouses full of american whiskey in europe right now? >> it's not public, people actually talking about it as you can imagine but yes, i have heard that warehouses are getting flooded with calls and distilleries, warehouses are doing everything they can to try to get ahead of this. vonnie: what about other liquor makers, makers of other liquors, so not just whiskey. either threats against gin-make rs? >> it's interesting, it is just whiskey. i did speak to one small u.s. distiller who is really considering expanding their exports to rom, gin, and vodka for example just because with

these tariffs being at the center of this trade war, it's really hard to keep afloat. vonnie:0 it's not easy to do that. having these liquors in casks for so long. >> and one thing they can't do is move that production to another country because there are these things called protective designations, you can only make certain spirits in certain countries or regions. and that is the same with whiskey. so it is a very difficult situation. vonnie: thank you so much. we started with rings, now would talk about food. darden restaurants are porting third-quarter results, stock is higher now, one of the best performers in the s&p 500. the owner of olive garden still expects more than $12 billion in sales this year, but darden restaurants which also owns the capital grille and guardhouse is also saying the same thing. michael joins us to break it all down. what were the takeaways from the

earnings reports? >> it was a tough quarter, everybody expected it to be. the quarter ended at february month end, so we had the coldest january in 14 years, a february with a lot of snow, a very bad flu season. sales rose only 60 basis point. none of that was really a surprise. stock was up really on its outlook for the next quarter, and they told us on the call that sales were up over 3% quarter to date. and they are expecting a 3% sales in the next quarter. so that has eased a lot of minds. restaurant sales of sold off with this decline in consumer sentiment and a decline in market, and there's been a lot of panic about where sales are going. we've been kind of bullish coming into this year, we remain bullish. we think most of the quarter,

most of the tough results in february were really based on the weather. vonnie: fascinating and obviously if we were to look at existing home sales today and see that they are 70% higher thanks to the weather, that bodes well for the likes of darden. but we are also here in walmart saying that people who make more than $100,000 are trading down. are we seeing any of that in these results? >> darden didn't necessarily talk about that consumer. what they did mention was that the only consumer that had a negative sale were those making under $50,000. we expect that to continue because of patient is qe. even though the rate of inflation is lessening, it's cumulative. low income consumers will continue to struggle throughout the year. but chains like darden and some of the other casual dining chains we cover, especially chilis but also texas roadhouse have been doing a better job of

bringing in younger, wealthier consumers, and that is driving sales at some of the chains that we cover. tanya: how are the valuations? we are looking at darden trading , texas roadhouse, and then you have the likes of cheesecake factory which is at 13. are any of these cheap? >> it's tough. we are not one that really looks at historical valuations. what we like to do is really look at valuations against the peer group, and darden has a premium valuation for good reason. they have the highest restaurant level margin in the industry. they do a great job of running restaurants, operations are always top-notch and we were bullish on this name coming into this year because they had been underpricing their peers, they had been underpricing inflation and they are finally going to start spending some money on marketing to let their consumers know about it. vonnie: what did they say about inflation on foodstuffs? >> they caught a break in this

past quarter because their procurement team did a great job getting ahead of the chicken price increase and there were some disinflation in seafood. but they expect that to increase here in the next quarter and they expect some low single-digit inflation. their labor inflation has been steady at about 3.5% for some time now. >> michael, thank you so much for joining us. darden restaurants certainly one of the best performers in the s&p 500 today, though it is off its highs. it is the second best performer right now. coming up, claims of widespread fraud for social security benefits may not hold much merit. we will tell you the so called truth about receiving benefits when we return. this is bloomberg. ♪

♪ vonnie: this is "bloomberg markets." this week it was announced that the social security administration will add new procedures requiring beneficiaries to prove their identity before claiming benefits or changing their direct deposit instructions. it's part of an effort to crack down on alleged fraud. that brings us to our weekly segment on retirement. joining us for more now is justin foxx, a luger -- bloomberg opinion: have been writing on this topic. you gave yourself the pleasurable task of reading about 38 inspectors general reports. what did you find? >> elon musk a few weeks ago suddenly announced to the world that he had found $20.8 million -- 20.8 million people 100 years older or over in the main social security database and he implied that they were getting benefits and president trump and mosque have been blah blah-ing about that. the inspector general left a few months ago but was appointed by trump did that same

investigation a couple years ago and found 18.9 million people 100 years or older in the database, and 44,000 membered in benefits. there are more than 80,000 people older than 100 years old in the country including my dad, so that is not unusual at all. so the they think of there being millions and millions of dead people getting social security, no, they are not. but the inspector general has been doing these audits for the last decade where they do try to find dead people. basically by comparing social security database with other ones they can get like state data records, things like that. vonnie: and in fact, the trump appointed acting commissioner said that there is a database of people who had social security numbers who may be missing date of death, but that doesn't mean. >> he was put into that job by doge and trump but he is a reality-based person and has seen that there is not this big issue. but there is this smaller issue

of i've had the recent experience of managing the financial affairs of a couple people who died, and i found that social security was incredibly efficient at reaching , not just stopping the checks but grabbing the last check. it's kind of amazing. the whole system is automated, they get notified from the funeral homes and the states, but there are people who are missed in that poor there are things where information gets sent by the states and somehow it gets messed up in the computer system. vonnie: so is there some reason to think that individuals with a private equity background who have consented to fix this, that they had any better expertise than anybody else is already in the system? >> always great to get a different pair of eyes on it, but the one thing that is very strange about all of this and social security is that president trump nominated a really capable high-profile guy to run the social security

administration. the ceo of pfizer. i mean, his confirmation hearing is next week. why is doge doing other stuff when there is somebody who has huge amounts of expertise about payments and security of payment systems who will be coming into that job presumably in a few weeks? vonnie: at the end of the day, do you see any meaningful savings being made here? >> meaningful, probably not. the systems are really old. the way people do things can always be revised and done better, but i think the issue with social security especially with identifying dead people but also a disability is that if you get super strict about trying to avoid fraud, you end up denying benefits to a bunch of people who are supposed to be getting them. vonnie: can this idea of people needing to re-up their identity in person, that's going to be difficult for a lot of older folks. >> the issue is you can do a lot

of things on the phone now for social security administration in this new moment, but they are saying that is too fraud sensitive, we can do that. that means more and more people having to come in to already totally overwhelmed social security offices while social security is being pushed to lay people off. it just feels like president trump has always said hands-off social security. this is going to feel to a lot of recipients like the hands are on. vonnie: exactly. and those 38 reports, anything else we should know? >> there's a fair number of

people listed as dead somewhere that aren't really dead. there was actually a pretty alarming column in the seattle times this week that has been making the rounds about this guy who is perfectly alive and suddenly social security reached in, took his most recent payments out of his bank account, and declared that he was dead and he tried to get fixed on the phone, they would let him. he had to sit in line for hours and hours to prove that he was not dead. vonnie: so they can go both ways. we are going to be looking at private credit funds with the ceo of monroe capital. this is "bloomberg." carin's heading into retirement. [screams] with a lifetime of savings. but that's not the only thing she's taking into retirement. hi! ♪♪ hi. every advisor knows retirement isn't a lump sum, it's the sum of their clients' life's work. ♪♪ now what? you protect their life's work with protected growth and income strategies from prudential. who's your rock? ♪♪

♪ vonnie: welcome to "bloomberg markets," let's get a check on those markets as we turned negative on the s&p 500. not by much, but down by about 1/10 of 1%. the nasdaq 100 as well seeing just a little risk off move, down about one third of 1%. bear in mind, we were up with both of those indices yesterday. in the buying and treasuries to send that 2-year note even lower. president trump rehashed some of

his bitcoin and crypto statements and that has bitcoin down about 1.6% in the last 24 hours. it had rallied slightly ahead of those comments. with thailand a couple of individual equity movers now. >> it's lunch time so i'm thinking about the mediterranean food chain cava. it is down 24% year-to-date but it got an upgrade over jp morgan today to overweight from neutral, as analysts saying investors should take advantage of the downturn in the stock and that it has significant u.s. white space and generating free cash flow unusually early. that stock went public in 2023 and is up over 100% since then. i'm also looking at shares of five below, we will do southwest first. that stock is up just a little bit delayed. they are eliminating 120 one more jobs at four airports due to over staffing for ground

workers and people who stock planes with food and beverages. these job cuts coming after southwest airlines already disclosed it was cutting 1750 jobs in his leadership ranks. again, that stock in the green but almost unchanged here. and finally five below did have pretty good earnings. that stock is up about 6% right now. above estimates, sales in line with estimates. analysts were cautious about the long-term impact of, you guessed it, tariffs for the discount retailer. both morgan stanley and barclays cutter targets on that stock. again, that tariff uncertainty. vonnie: you so much. now to a breaking news story across the terminal the sour, apple undergoing a rare shakeup of its executive ranks, aiming to get artificial intelligence efforts back on track after months of delays and stumbles. this is all appoint people familiar with the matter. during us now, the reporter who broke the story.

so what are these shakeups, what can you tell us about the names? >> thank you so much for having me. this is a long anticipated major shakeup to the executive ranks in response to what really has become a flaw that is with siri and apple intelligence. apple has been behind for years and that has become abundantly clear in recent months. the chief of ai, the senior vice president of ai at apple since 2018, he's losing responsibility over siri. obviously siri has been emblematic of the ai issues at apple. it is now going to be taken over by mike rockwell, known as the creator of the vision pro and the vice president of the engineering group that develops vision product line. so he's taking over, and he as well as siri will now report to the senior vice president of all software at apple. as part of this, rockwell is leaving the vision pro group and that is going to be taken over by another executive named paul

who has run hardware engineering for the iphone and the vision pro in prior years. vonnie: so we are seeing a little bit of a shifting around, but is it that apple is concerned about siri in the future or that these executives are just more attuned the various parts of apple and it is getting an online? >> no, apple is nearly concerned about ai future see how well they had open -- openai, all these companies are generations ahead of what apple is offering. and siri has faced a number of significant engineering delays. they believed that apple's topic executives including tim cook, that mike rockwell will be able to write the ship. internally is known as an evangelist for future technologies. he's a longtime siri critic, pitching tim cook and other executives on how to revamp siri for years.

to see if he can make those changes and improvements, he has told executives for years he is close to implementing. vonnie: apple advertiser the iphone 16 with the idea that all of these intelligence assets would be coming to it. i got it and i'm not really using any of them, they don't seem to be appearing. is that a problem that apple cannot get its ducks in a row, what happened? >> if a massive problem. it is a revamped version that uses artificial intelligence to contextualize your queries based on what you see on the screen, based on the data on your iphone, based on how your tablet -- tapped into applications. and they advertise it for five months on tv. never launch. it was supposed to come out in april, then it was reportedly delayed to may and earlier this month it was delayed indefinitely. they officially said it's going to be released in the coming year, but i'm told they don't actually know exactly what it's going to be released at this point. there are many competing

development pipelines going now for other future services and products that they have to align this with as well. vonnie: mark, that is a wonderful scoop and thank you to you. that is mark gurman. coming up, the gdc conference continues today with major announcements on ai making headlines so far. we are going to ed ludlow who bring us more next from san jose. this is bloomberg. this is bloomberg. so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management

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♪ ♪ vonnie: this is "bloomberg markets." and that he aims to spend several hundred billion dollars to procure u.s.-made chips and electronics of the next four

years according to the financial times. that story coming as nvidia is hosting its gdc ai developer conference. bloomberg technology coanchor ed ludlow joins us now from the event live in san jose, california and bear in mind there will be a special with him at 4:30 eastern. but what can you tell us more about this story that has been really lighting up the rounds today? ed: it has caused a lot of confusion, frankly. what jensen huang was talking about was not a metric for capital expenditures. he is simply explaining that as nvidia onshore is in the united states more of chain, in particular using tsmc to make the gpu critical to ai infrastructure and data centers, inevitably the proportion of money that passes through the ecosystem is going to be greater in the united states. think about it this way. the data center revenue segment is more than $100 billion for

this year, maybe $120 billion. it will grow 20% each year. it is a segment of which they have 70% market share. it's just the cost of doing business and more of that business is going to be happening in the u.s., in particular when you think about all the hands that touch a server that goes into a data center. the memory makers like micron, for example. more of that money will flow through this country, but it is not a capital expenditure number that comes off the balance sheet. vonnie: there was some discussion about whether this was just an announcement to please the white house in some way in the sense that we haven't seen jensen huang in the white house as much as some of the other tech gurus. >> right. they've been pretty consistent that they have this line they always say. we obey american laws. we are an american company, we obey the laws of the land. and they talked about the idea that they need to diversify the supply chain.

yes, in the united states but also in countries like vietnam. they've already moved to do that similar to apple. he did make an interesting point yesterday that i think a lot of people missed where he said 50% of the world ai researchers are in china or come from china, and he actually said he hopes that continues because they are brilliant minds in the field of ai is to move forward, he hoped that level of research out of that country will happen, but he dodged the original question in the room what was what is the future of your business in china, applauding them on the research is different to saying this is what my sales channel will be in that market for years to come. vonnie: today is quantum day and you're going to be hosting a special later on, but i'm curious, jensen has been roiling the quantum stocks over the recent weeks anytime he says something about it, and he did so this week again. ed: nvidia does not make quantum computers. it sells its existing supercomputer technology to want an industry so they can use the

benefits of a supercomputer to improve their own technology. basically you take an ai computer and it helps you to calibrate and reduce the error account that a quantum computer, which is a completely different set of technology, relies on. in january he was asked what did you think of quantum computing? he said it was a decade or more away from useful and many of those the went into freefall. what he did then was say i'm going to invite all of them to san jose, speak to them publicly for two hours and that is what happens in about 15 minutes time. it is a really interesting dynamic but for nvidia, it is potentially because it is a nascent industry, a big market for them if they are right on the thesis that you can sell than the ai computer that engineers simply used to make their own technology better, and that is what i will be listening for the next couple of hours and talking about this evening. vonnie: we can't wait for you to break lots of news in that special.

tune in later for that special bloomberg technology coverage of the event. again, 4:30 eastern. time now for stock of the hour. fedex shares are higher before earnings results today after the bell. with uncertainty and weaker consumer demand, the fedex toy 25 outlook is in focus with challenges ahead. joining us now to tell us what he thinks is the senior analyst at citi, a price target about $300 trading right now at to hunt and 8.68. when do we get there? >> thank you for having me on. the investors we've been talking to at least really have been reluctant to step in here because of the tariff risks, because of the broader risks to the economy, to the consumer. we tend to think when evaluation stands now, the stock has really been beaten up. we think it is a good time to buy. on the back end some of these

challenges, that actually looks like an attractive value stock. vonnie: it is one of the more cheap stocks in the transports. what is discounted that maybe shouldn't be? >> fedex is one of the cheapest stocks in our coverage. historically fedex has had a bit of a challenge on the execution front. right now they have a $2 billion cost savings program which is very meaningful in terms of offsetting some of the volume pressure the company could be facing that similar to ups, fedex is currently in a trend where there's been focusing more on pricing and efficiency, cost-cutting initiatives. that really provides a lot of support to the earnings. obviously if we go into recession, all bets are off in terms of what that earnings number could look like. vonnie: what are we going to hear in terms of whether suppliers and vendors and contractors and so on our frontloading shipments in order to avoid tariffs? >> we have seen a little bit of that. it is more evident if you look at some of the ports data coming out, especially on the west

coast. you can see there's really been some volume that has moved and have tariffs. shippers trying to gain, get at least some of their inventory on shore to avoid some of those tariffs. if you look at the hong kong international air cargo day that you can see some of that. some about affect going on. that could actually provide some nice support to the corded within the outlook look like for the rest of the year and as we go into fiscal year 2026? vonnie: how does fedex plan for that? her jake elliott yesterday, it is difficult for the federal reserve and they have all the data at their fingertips. how do they plan for such an uncertain year? >> if a real challenge, not unique to fedex. fedex has had this efficiency initiative underway for some time now, so we think the fact that they kind of preempted some of these challenges is actually going to bode well for their resiliency in the stock and the resiliency of earnings.

vonnie: the state of the freight business is obviously going to go ahead. >> i think it's part of the reason some investors are somewhat uneasy to step in, because they don't really know. historically fedex has had in the challenge on the service front, and yet they have run one of the largest businesses in the country, really the largest from a revenue standpoint. so as they go forward it could be a nice opportunity to unlock some value. they've announced the ceo of that business is going to be stepping down and retiring. we don't yet know who is going to be running a business, another thing adding to investor anxiety. vonnie: the stock is pretty beaten up, we are down 11%+ year-to-date, worse than the market itself. it does seem like it would be a good opportunity to buy but if you look at the broader market, is there more of a fallout and should investors wait? >> it's one of the things we can

pointing out to investors which is transports are underperformed not only this year but for the last two or three years, and because of the durable nature of a lot of these businesses, we don't worry too much if alex is going to be around in five years, 10 years, the railroads were trucking companies. from our perspective we actually think it is a good time to be looking at a lot of these names. i had an investor, the other day it kind of feels like a value investors paradise. when we get past some of these challenges and certainly if the prospect of tax cut system on the table, with a packet actually be a nice support for some of the stocks in the second half of the year. vonnie: beyond fedex to cover a bunch of transports. what are your top picks right now, you are covering not just ground transports but shipping and rail and all sorts. >> we actually like fedex quite a lot. we like ups as well. part of the reason for that is if you look at the airfreight parcel names ups and fedex, they trade at their largest discount

in history. on some level that clearly reflects a lot of concerns from investors that what is the future look like for these businesses as they engage in this strategic shift from a focus on volume growth to a focus on margins and pricing, but historically it's actually many really good transition for other transportation companies. railroads are durable, defensive, have great businesses and actually trade at pretty reasonable valuations. csx is on the top of the list and then we have been recommending canadian pacific where there's a lot of tariff risk exposure but historically the company has been very good at managing around challenges and has really top-tier management in the industry. vonnie: active fedex, what is the one number we should be looking for when we're looking at earnings, what is the key number for investors this quarter? >> what people are going to be honed in on is the eps outlook. they provide the eps outlook for 19-20 dollars. that is down from the prior quarter so if there is a further

cut to that number i think you can probably expect somewhat of a negative reaction from the stock. even if they narrow the guidance and a slightly bearish way, we think a lot of that negativity is priced in. vonnie: and what will you be asking on the call? >> definitely want to know about the freight spin, the tariff impact, and frankly about progress with the efficiency initiatives. that in and of itself really have a lot of opportunity to offset some of these pressures around volume, so if they can show some success, it's enough to support earnings we think such that investors don't seem to be reflecting that concern. vonnie: that is the director of city research at city. apple hitting a session low along with the broader market. mike rockwell taking over syrian

reporting to software chief removing siri from his control and command as apple gets a little more concerned about its artificial intelligence efforts and getting them back on track. coming up, donald trump's latest efforts to reduce the size of the federal government and its workforce is taking aim at dismantling the department of education. details next. this is bloomberg.

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will create a healthier world tomorrow. better questions. better outcomes. ♪ vonnie: this is "bloomberg markets." later today donald trump is expected to sign an executive action formally asking officials to take steps to dismantle the department of education. the department was created by congress so technically it needs

legislative action to be shuttered. let's bring in akayla gardner is covering the story of washington, d.c.. what would an executive action mean in the scenario where technically congress would need to be on the president tsai in order to abolish this department? akayla: that's the key question because the education department has already taken drastic steps to decrease the workforce. just last week they announced that they cut nearly half of their staff, more than 1300 workers, and we've already seen education department secretary linda mcmahon telling her workforce essentially that there's going to be major cuts to operations, changes in the budget, so this is something that trump has already signaled that he wants due to eliminate the education department. this order basically tells mcmahon to take any further steps necessary to get to that goal, but there is certainly anxiety with student loan borrowers, student loan advocates about what this means for their industries. there's more than $1 trillion in

student debt this department oversees. president trump had floated potentially moving that responsibility to the treasury or commerce department. we found out today those programs will stay there, yet they acknowledge that congress needs to be able to actually approve the abolishing of the department, that they've taken major steps at other agencies like the cfpb, the usaid to shutter and pretty much a those agencies as well. vonnie: so his goal really is to return educational authority to the states, one of the think the department of education does is disperse about 120 $1 billion in federal grants, loans and work-study programs and worse, disadvantaged students and so on. what happens in a hypothetical scenario where an educational authority does relate to the states, do they get some of this money to be able to spend? >> antegrade question. the education department is funding about 10% of some of those that you mentioned that have really large populations

with low-income students, communities and rural communities, native american communities, also schools with large numbers of kids with disabilities. so that funding is at stake with this shakeup at the department, and yet they say they want to move response annuities the states. but states already have control over their curriculums, and this is what trump has been expressing dissatisfaction with. improving the u.s. overall standing when it comes to math, reading. again, those responsible is already remain with the states so this has become really a political fight that this agency has been caught up in with pretty much dissatisfaction with the way education is currently run at the local level. vonnie: thank you so much. of course, follow along live on bloomberg television for more. "balance of power" is next.

do stay with us as these markets continue to move forward. the dow up about 1/10 of 1%. we are off session lows, the s&p 500 down to tense of 1%. you can see the two year yield back up to 3.9615. to make them real.

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live from washington d.c. ♪ joe: dismantling the department of education. or just drinking it. welcome to the fastest show in politics. as president trump takes the direction in the shrinking the department that he promised to eliminate, with or without congress. i'm joe mathieu alongside julie fine in washington, thanks for being with us on the thursday edition of "balance of power" on bloomberg. radio. julie is our texas bureau chief, in the nation's capital. the president surrounded himself with republican governors in the east room including your governor of texas. julie: no surprise, he will surround himself with states that are doing things already that he would like to see. for instance, in my home state of texas yesterday, the state

senate