Transcripts For BLOOMBERG Whatd You Miss 20170509

Corps helicopter cost more than expected according to the pentagons cost assessment office. Be 144g stallion will million, 4 higher than projections. It also wont be ready to deploy until a year later than planned. They are committed to reducing the cost of the life of the program. Today hehusetts judge erased the murder conviction of aaron hernandez. The former nfl star killed himself in prison last month. The judge said she had no choice, citing state law that calls for vacating conditions when a defendant dies before an appeal can be heard. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Julia live from World Headquarters in new york, i am julia chatterley. Scarlet im scarlet fu. Joe im joe weisenthal. We are 30 mins away from the close of trading the u. S. U. S. The s p 500 approaching fresh records. Dataet should record low be explained for volatility . Where to go in the French Election now that the minimum account has inherited a slowgoing economy, what will the new leader need to do to deliver on promises . Himachal quarter for walt disney they report fiscal secondquarter earnings after the bell. We will bring in those numbers when they cross. Joe now lets take a look at what the major where the major averages stand. Abigail doolittle is standing by. Saying veryare not big moves for the major averages heading into the close. The dow the s p 500 fractionally lower, and the nasdaq higher by more than one quarter of 1 . Small moves, but nonetheless we are saying records. We saw a record earlier for the s p 500, and if the s p 500 can turn fractionally higher, it will once again put turn in a record close. Some mixed, basically unchanged trading, but nonetheless records once again. Hes us on the steps, names that could dominate trading tomorrow. The companies do report after the bell. Disney up about. 5 . Investors are looking for 1. 41 in adjusted earnings. Bloomberg intelligence analysts paul sweeney a sayings the keys to the quarter and the Stock Performance is espn2 scrubbers. If they are up, the stock will like performance is espn subscribers. A fair up, the stock will likely go up. Like tos would really see Gross Margins grow for the fiscal year 2018, perhaps by a full percent. Itll be extinct to see that debt interest and to see if that comes true. It will be interesting to see if that comes true. Ia nonsmall numbers either. We will know more soon. Lets look at one of the sectors dragging on the s p 500 and the dow member in explaining why those averages are slightly lower. The energy sector, chevron, conical, anadarko, all down. Now down more than 14 on the year. Much of this coming from the end of february on on supply concerns. Investors are waiting for the opec meeting on whether or not they will expend the cuts. Lets hop into the bloomberg and 8033. T g btv this is out of the election, the trump trade still in tact. Finances are still higher. Tech is also helping. Financials are starting to lag. On the bottom, look at energy in yellow. Down more than 3 . It will be extended see whether or not the tech strength can offset the Energy Business and the effect of the financials are well off their highs, joe. Now thatks, Abigail Emmanuel macron will be frances next president , what will his economic agenda look like . Frederik ducrozet, who joins us on the phone from geneva. Great to have you back up it we have been talking about the political ramifications. Lets talk about economics what you think will be the First Priority in terms of jumpstarting the French Economy . Frederik well, for a start, i think he has been very lucky, and that is pretty clear like him or not that is part of the, i would say the starting point in terms of the cyclical condition in france. At the very least, whatever he does in the next few months he will continue to enjoy a fairly supportive economic situation, a bit like a honeymoon in the next two months. I am not saying he will have no impact on the economy obviously not in terms of business conference in particular. It might be the first impact in terms of the Confidence Survey the next two months. There will be this positive and supportive context for him, and lets hope he benefits and takes advantage of it. In terms of priority, we know already what he will try and do in the first few months during the summer, including in the recess for the parliament. He will have two prayer is, i believe the first and only in terms of the political priorities, i believe. The first of be in the political life. The second will come fairly soon, and that will be much more challenging. Itll be related to the label market reform, and that has been, as you know, a sensitive topic in france. There have been many reforms in the past few years. Further innds to go terms of deregulation, flexing go, well,and try and some former president s failed, and that would be the First Political test for him. Scarlet it will be a political test, but would order to see kit the easy item first, or the hardwon first . Frederik he intends to go through the hardwon first, with french specific hard one first, with french specifically decree law that could bypass the parliament. There will be another election in june a legislative election. There is no guarantee that he will get government majority. Of thesaid even ahead election that he could go with radical tool and the choice of bypassing the parliament. Again, with the union in particular inference, that could backfire quickly. Will enjoysaying he a fairly supportive situation from an economic perspective, howalso go quickly to see both the union and the population react to the strategy. Julia yet, because he is already promised he promised on sunday he would make changes in the labor market by decree if necessary, but i think were missing something really important here, and that is angela merkel. He has to keep her happy, first, disney . Theres already talk he will head over to berlin next week to talk to her, and she has ruled out any kind of easing on spending limits for the french because she has her own election to win here. What is yesterday to comply with germans here to keep them on board first and foremost what does he have to do to comply with the germans here to keep them on board first and foremost . Frederik there is a lot of posturing, if you ask me. Angela merkel has welcomed his victory as well. She knows he was the only true proeuropean candidate in the campaign, and in berlin there has been a release release after the results. Then, again, she has to sell any change in terms of european policy to her own public. As you said, she faces local election first, and general election later this year. You have to rebuild, i think that is the key, the trust between france and germany that has been lost over the past decades, and that is something emmanuel macron, as i understand it is fully aware of it, and it will do his best. I am not saying he will sell those reforms just to please berlin, but it is part of his strategy. If he can do this, and managed germanthe french relationship back on track, and sell Something Else in terms of the european policies and institutions as well, he might actually succeed. Julia ducrozet. Rederik a long road ahead for emmanuel macron. Joe breaking news on walmart april familiar with the matter say the company is close to resolving a longrunning probe regarding to bribery investigations in mexico and china. It appears they will be close to resolving the probe for 300 million, a lot more a lot less than had previously been sought. Perhaps the government have been gone going for at least double that. This has been a longrunning thing. The proposed resolution would require a guilty plea by at least one walmart subsidiary according to people familiar with the matter. Appears to million be what the price tag will be for resolving this probe. From new york, this is bloomberg. Pay walmart is preparing to 300 million to resolve a long my u. S. Investigation into allegations of bribery from its employees according to people familiar with the matter. The penalty would be far lower than what the u. S. Had sought last year. I want to bring in Tom Schonberg who joins us from washington. Thanks for joining us. Why does it appear the final penalty will be significantly lower than what the government had earlier been pursuing . Tom it has been a longrunning case for the government more than five years they have been investigating allegations of , india,aid in mexico china, and other places by walmart, and as they got into this conduct, you know, a number of sources have told me throughout that they just really werent finding, sort of, major payments, or the type of cover up by the company as initially alleged, and it want of being a more difficult case. Last year there were some talks to resolve the case that one person told me they reached as high as the most 1 billion. Obviously, at this point, if walmart is able to get this deal for about 300 million dollars, it is obviously a large concession by the government that the evidence wasnt really there for such a high penalty. And of course, this by thegation, it began Obama Administration did the change prompt a quick resolution in walmarts favor . Tom that is hard to say at the moment. Number of career people have been working on a case people that were on the case during the Obama Administration, and they are still in their positions, and the Trump Administration has yet they still have many unfilled posts at the justice department, including the head of the Criminal Division that would normally play a lead role. I do think it is something that a lot of people will be looking into to see whether or not that moves the needle a little bit. At this point, it is difficult to say for certain. Julia many of those posts remain unfilled. Surely, there will be a problem in gathering the information, but we should also make the point here as well that walmart itself, since investigation began, i believe they have change the ceo, cfo, the heads of the u. S. And international businesses, and overhauled what they are doing as far as ethics and compliance is concerned. His that right, tom . Tom that is correct. The company has spent more than 800 million on the formsigation, wrapping in across the board. So, a very, sort of, significant amount of money spent by the company, you know, up until today. Also worth noting that what im hearing is one of their subsidiaries would be pleading guilty as a part of this agreement, which is still being negotiated, but the company itself may end up with a nonprosecution agreement and a corporate monitor. Tom schonberg,s reports and financial crimes. Thank you for joining us. Julia time for a look at the business the Bloomberg Business flash cell phone video has captured more troubles for airlines, this time clashes in for larry vale Fort Lauderdale, florida. Angry protesters fighting with employees and police. Spirit is blaming the cancellations on a dispute with the pilots union, at the budget carrier is routinely ranked as the worse u. S. Airline in the skies. Find more thanll 1 trillion worth of mortgage or no will us to improve its Balance Sheet and restore investor confidence. The canadian mother has been under investigation by regulators for possible mortgage fraud. They report firstquarter results on thursday. Amazon is escalating its online battle with walmart, reducing the minimum order to qualify for free shipping. You now have to buy 25 worth of merchandise instead of the 35 walmart requires to get the lowcost shipping. Amazon shipping will take longer, though up to eight days as opposed to walmarts to days. That is a whopping difference. Set visiting is disney is that the reporter ins after the closing bell. The Company Making headlines when they cut about 100 espn staffers, including onair talent. Costs andth rising any rodent subscriber base. Lets look at disney as a whole. Companys residence Revenue Growth has been negative in backtoback quarters, the first time that has happened since 2000 and. You can see total revenue in white, and media revenue in orange. Networks are critical because disney gets more than 40 of its revenue from that unit, which includes espn. You can see how the sports giant has lost subscribers for three straight years. Lower revenue is stressed, but so, too, are higher costs. Espn is the highestprice part of your typical cable tv bundle and it is vulnerable to cord cutting because the network generates much of its revenue from since christians. People, as we know subscriptions. People have been pretty quick to cut the cord. 600 30,000 Traditional Service subscribers in the first quarter. Disney might be able to fight off some losses by being part of new streaming Services Like hulu live. Is booming. Siness beauty and the beast is the Worldwide Box Office leader, and disneys expected to lead at the box office this summer with his lineup including offerings like cars 3of the caribbean, all of these proven franchises. The world of avatar opens in orlando, and Piper Jaffray forecast revenue from the parks will climb by 64 . Looking at the big picture, Analysts Expect a return to positive Revenue Growth and bob iger says modest eps growth this anomaly. Be an clueless you with the numbers look like after the closing bell. Reminder, bob iger will join Bloomberg Technology post Earnings Reports. Dont miss that. Joe Small Business prices have not, and in fact i have been going up. We have a chart that shows good news, dipped, and in fact they have been going up. This is bloomberg. Scarlet scarlet i am scarlet fu what did you miss we know apple has caching galore, but over 90 of the cash is stuck overseas and cannot come home without a humongous tax bill. If the government can agree on a tax holiday on the ba110 10 tax on bp treated earnings, tax onould have repatriated earnings, apple would have 230 billion to play with. Option thens of an disney and netflix. What we have improved his enterprise value and the estimated premium that has been 29 here to date. Of these are areas where apple but wepend 230 billion, know apple has been reluctant to shell out for big companies. Beets, 3 billion for but that is the most it has paid for a deal. Julia the big question for me is where do Companies Like apple actually keep the money . Is the cash on some random Balance Sheet outside of the country . Where does it go. . To answer the question i refer you to . Stay with me. This law allows this company to repatriate and, as long as they are buying u. S. Assets Corporate Bonds or u. S. Treasuries. Perhaps we can use this to explain a strange anomaly that happens in the u. S. Treasury markets. Im showing you the biggest holders of u. S. Treasuries per capita. If you look at the yellow bars, island is the Third Largest holder of u. S. Treasuries behind japan and i went. There is only 5 Million People in ireland. Real taxpple has had a battle with the irish concerns about how much money and what is going on with tax practices that are. Surely they are not the only ones. Perhaps this explains the anomaly. The cache is not even yet another countries. It is back in it is back invested in the united states. One final point, if i had put the Cayman Islands here, we would need a chart that which is to the top of bloomberg hq. Joe and i like how the Irish Government likes to avoid collecting taxes when they have this. Julia i like the chart. Joe we have some Interesting Data from the optimism survey. They always ask interesting questions about the nature of Small Business. One of them is are you raising prices right now what inflation is more or less. The white line is the percentage of companies out raising prices. That is the highest level since 2014. You can see at the end, the blue lines core pce. It lives up pretty closely with this measure with nfib. If more companies are raising prices per the survey, it is a good sign that more official measures of inflation will probably rise upward as well. Scarlet i feel like we have been waiting for a long time. Joe we keep waiting. The beginning of 2016 how much hired as any to go to register . Scarlet we are not going higher right now when it comes to equities. We just came off session lows. The s p 500 earlier touching a record high. It is currently down by about four points. The nasdaq still at a record high, up by 12, 6115 for the nasdaq. From new york, this is bloomberg. Julia whatd you miss . U. S. Stocks in the lower today. The nasdaq closing at another record high. Strong boosts from financial and tech shares earlier in the day. Scarlet im scarlet fu. Joe i am joe weisenthal. Welcome you to our closing bell coverage every weekday. Scarlet we begin with the market minutes. The nasdaq closing at a record high, gaining 3 10 of a percent. 500 could not hold on. Industrials dragging down by 37 points. No round numbers today. Joe i hate it. Scarlet industry groups, for out of the 11 sectors are higher. Discretionary stocks, homebuilders, auto companies, travel and leisure, they are higher. Utility and energy are the lacquers laggers. And looking at apple, a record high again. We pointed it out earlier how they have a huge cash board and if they wanted to make an acquisition the world is its oyster. United airlines, part of the discretionary grouping if you want to look out at how people spend their money, higher by 4. 8 . Receiving support from a shareholder. This is afterd Brad Gerstner said it would be going higher. Marriott trading at a record high. Firstquarter results coming out, fairly decent and encouraging, the dollar was strong and demand overseas to driver. A driver. And delta, passengers screaming at each other, getting ugly with Law Enforcement of the Fort Lauderdale international airport, after a series of cap of cancellations. People not happy. And looking at south korea, the index climbing to a record high. We wanted to mention it in the context of the new president. He was elected yesterday. Political uncertainty is now over and he can embark on reforms. It will be interesting to see how he tackles the familyrun conglomerates. Joe in government bonds, we will take a look. 10year higher on the day. Up to 2. 39 . And it had been higher earlier in the day. And broaden it out. Year,nth chart of the 10 it is interesting. For so long between the middle of december and through the middle of march, we were in range. We broke through in april. Look back in the range we have been in forever, bouncing from about 2. 3 two. 6 . Here we are 2. 6 . Hey we are, back in that tunnel. Julia i would think the trends we saw from the commodities prices when you look at yields, they are higher by 20 basis points. And that filters into the dollar. Let me give you a look of what is going on in currency land. Euro and sterling under pressure. It is a dollar story. This is tracking against the u. S. Yield. We are offlaryen, the highs today. And about 12 billion spent this week on the dollar rally versus the yen, the expectations higher ashigh higher as much 1. 33. Take a quick look. Lots of talk in the emerging markets of a relative outperformance expected for emergingmarket equities relative to the s p 500, thanks to jeffrey goodlatte. Outflows from latin america and asia intensifying what we saw last week. Korea mentioned. Goldman sachs saying that the ruble hit the most. And they are continuing the selloff in commodities and it could impact em. Rand short. A joe finally come on the commodities fronts, oil is down again, back below 46 a barrel, that is west texas intermediate. Modestly,ng off fitting in with the modest treasury selloff we saw today. Iron or with a bounce up. Of course, it has been clobbered on the overall routes for industrial commodities. Those are the market minutes. Julia we will take a dive into the bloomberg and you can find the following charts using the function of the bottom of the screen. Calm weptical of the have seen for vix. Lets take a look at the divergence. You have pulled of the chart. Joe i have it here on the s p volatility. Julia bear with me. I am struggling. Joe, my savior. Looking at the decline we have seen in the vix, as far as economic information is concerned and the uncertainty about economic data. Look at the divergence we have going on, particularly in the last three months, another indicator about the questions of what is going on. Bank settlements last year saying stuff the vix. You need to look at the dollar, that is the benchmark of the risk sentiment. Joe i love how this is driving everybody crazy. They were sure there was something wrong. It is not going anywhere. [laughter] scarlet to back up your point, credit always leads. Andif you look at the vix you are puzzled why it is so low, it closed at the lowest since 1993 yesterday, this is confirmation why it should be low, high yield credit spread. Between debt and the 10 year treasury. As you can see, it has been going down reflecting little risk aversion. It is confirmed by the spread in highyield. Julia we have breaking news with a disney. I will have a look at what the earnings say. The Second Quarter adjusted the estimate was 1. 41, so they are coming out better. Arewe see that the revenues actually below estimates, were waiting for those numbers. We have the estimates for the Second Quarter coming in at 30. 3 billion. Soft on thebit revenue numbers. But joe we have a Cable Network with profit up, just shy of the estimates of 1. 8 billion. That is well known to be a weak spot for the company. Hada few weeks ago, we layoffs at espn. They know they have trouble there. We are looking for more numbers. It explains part of the revenue miss, stop down 2 . Earnings was not the problem. Revenuess to be at the in the. End. Scarlet and they are talking about the Strong Performance of the studio in parks and resorts, notable it is not mentioned the Media Network of high. But it matters, it makes up 40 of the operating income. When we focus and fixate on espn, it is for good reason. Of course, the movie studio business has been doing well julia . We understand with the revenue as well to what extent it was advertising revenue that hurt them here, this is what we heard from competitors as well. Julia time warner in the force carter first quarter. And advertising revenue was a concern. The hope was it would pick up in the next quarter. We will have to see what the ceo says about it. Very critical. Joe the interesting thing is it appears to be multiple categories where there was revenue misses. We talk about Media Networks and the Cable Networks, parks and resorts, 3. 3 billion. Studio entertainment, they had the massive film heads carried a lot of the load, revenue at 2. 03 billion. Billion for the revenue. Julia disney coming in better than expected on the Second Quarter. The estimate was 1. 41. On the revenue line, that is the problem, it is down 3 . A touch shy of expectations bid also have revenues for the expectations. We also have revenues for the Media Network. The expectation was a concern. We know that the concern is about espn and the cost to which they have had to pay in order to get it contracted. To what extent is it digging into what they are managing to generate in that network. Scarlet and a followup, we have a revenue mix in the Second Quarter among the different business segments, not just through the Media Networks, but as well with the parks and resorts and the studio and entertainment. When you look at the operating income, these are beats. 2. 2edia networks, billion. But for parks and resorts, 750 money and dollars operating million ands 730 much better than what analysts were looking for. Joe i want to bring in paul sweeney, director of research. It is interesting, as it scarlet was saying, mediocre to week across the border epsnue, but solid on the side and operating income with the divisions. If nothing else, they are doing well to handle the margins. Paul it is a mixed bag. I think investors tend to look on the top line for this story, because there was concern about some of the businesses like espn and the Media Network segment in particular, are the core cutting issues, are they continuing to have an impact on the top line growth . A miss on the revenue is what the investors are focusing on pay but on the earnings, it will be all about how they will position espn and the world of increasing cuts and challenges and is there a direct consumer kind of application for espn. Scarlet does that mean that disney has further to go when it comes to costcutting . Paul i think a company that size is always taking cost out of the business, given what the revenue outlook is. They took away 100 jobs from espn. But the real issue is programming rights and those are longterm contracts, not much you can do. Joe sarah, what do you want to hear on the call from disney . What are the Big Questions . Sarah what they want to do with espn. We have known they have had these issues and they are looking at the direct to consumer option, but i think investors more and more with the mna speculation and investors out there not afraid of going out, disney has fallen off of their pedestal lately, so i think people want to know if it is not fixable is there a way to monetize it. Is it easier to break of the company . I think these are things that might have been unheard of a couple years ago but now it comes into the regular story because of the issues they are having. Julia i wonder about the theme parks. It is interesting. We have the chinese theme park as well. This was weaker than expected. Paul investors feel good about the theme park business, because it is not best not just the data coming out. We have seen good numbers. That theme across the industry is the domestic and even the International Thing part businesses remain strong for the big operators and disney has the most leverage. Julia how long do investors give them to come out with a concrete strategy for the Strategic Direction . Ultimately what is going on with espn. Paul it is a 2017 issue, they suggested they will have a strategic answer for espn. Other competitors are kind of beating them to the punch, so espn is bringing up the rear and that is because they have the most a lose. Scarlet everyone applauds bob iger for how well he has steered disney. Now is the challenging part where they have to figure out what to do with espn. By extending his contract to 2019, does he put himself any position where maybe he will not go out on top . Tara he has done so much for disney and he is responsible for the amazing gains they have had. It is coming to the point where it is challenging to have the conglomerate structure and you have most of disney doing well, but the networks is where it is struggling and they are not the only ones having the issue. It becomes a question of if he is looking at the succession plan, is there somebody that can run all these businesses . It is hard when one side fires on all cylinders and another side has issues and you have to split duties between both of these and keep this one up and the other one from getting worse. It is challenging, but i think the investors are relieved he is staying. Scarlet that has been the case for the last three years. Paul and tara, thank you. Iger reminder that bob will june join Bloomberg Technology, so keep it here. We have more earnings from priceline, beating the consensus by almost, more than a dollar. 9. 88 was the reported number. And the outlook for this quarter, the Second Quarter, mrs. The consensus and that is probably why you see those shares down by 3 . Joe we have earnings from the Videogame Company electronic arts. We say it rising 3. 8 after hours. Eps . 85. This is versus estimates of . 75. 21 million players, it is an important financial metric. From new york, this is bloomberg. Scarlet whatd you miss . Julia equity volatility remaining at a 24 year low. We of the chief excitement investment strategist of bank. Jeff joins us now. Great to have you. Thank you. Julia volatility. We have made an argument this afternoon. If you think back to 1993, we had complacency likely due do today, but not in equities it was the bond market equities. It was the bond market. And at fifth third, we believe if there is going to be a break and we will be disturbed by the low volatility, do not worry about equities. Julia what will break the bond market . Rising inflation. And those are companies, we have the industrial heartland, and we hear these kinds of inflationary manufacturers that want arise prices and feel the need to because they are paying higher wages. We think that cycle will be more important. Scarlet we have also heard that for some time, inflation was around the corner and it never shows up. Especially with Commodity Prices rolling over. This is a reason we have complacency in the bond market come because so many people bond market, because some people were saying wolf. We were a little early with it. But three things are different this cycle that do not exist in the past. We have a structurally flawed labor market. Scarlet what does that mean . Impasse cycles when you get Wage Inflation you get workers coming off the sidelines. Sidelines . E the longterm unemployed, those with criminal backgrounds, and a big problem today is the opioid addiction. The Surgeon General estimates 10 Million People are taking opioids for nonmedical reasons. This is what we hear about from the companies that we work with in the midwest and they cannot find people that can pass a drug test. Joe interesting. It seems like you have a perspective we do not hear very often. People are looking at the wage growth and say it is growing, but not as fast as we think. Do you think we will have a kick up in that number . Right, we are getting to the point where we are getting the underemployed, those back down to the precrisis levels. We have run out. We have natural wage growth through population growth, that supplies half are of our needs. We need people, and they have to come from somewhere. Joe speaking about the underemployed, here is the chart on my terminal, this coming down showing how much of the shadow is up there starting to diminish. If that is true and we get this sort of like up in wages leg up in wages, what does it mean for domestic equities . If you look at equities and how they perform in the final two years of an economic before, you do pretty well. We think perhaps that is where we are right now. You take margin pressures. And the inflation changes what kind of stocks you want to own. It means you have to be wary of margins diminishing. Scarlet you think we are at the end of the equity market cycle not yet. Scarlet arent we supposed to get another kick from all the policy out of washington . Policy is important. Policy is by and large good, in terms of encouraging capex, which will extend the life of the expansion. But at the cost of markets. You have to depreciate that investment. Julia top trade . Given our views on rising inflation and higher rates you have to like financials, maybe more than the banks, because bonds could go up. Joe quickly, there is a lot of excitement about fiscal stimulus, but if what you say is true and we are really just at the end of the labor market slack and we do more spending on infrastructure, does that turn into more accelerated inflation . Apart from encouraging capex , everythingtion else in the agenda is inflationary. Infrastructure spending at full employment, that is inflationary. Cutting immigration, even illegal immigration, 8 Million People unauthorized in the workforce today, discouraging that inflow is inflationary. Julia i read that it has two times the bang for the buck on growth, that tax cuts would have. Who is managing that . Do you believe that . Absolutely. You get two facets. It was reduces the cost of business. It boosts Business Owner confidence was will drive longterm productivity. Julia jeff, great to chat with you. The chief investment strategist at fifth third private bank. Scarlet despite record closes for the s p 500 and nasdaq, not everybody is enamored with the u. S. Stock market. We will show you why. From new york, this is bloomberg. Scarlet im scarlet fu. Whatd you miss . Stocks outside the u. S. Have room to rally after trailing for seven years. You can find our charts using the function of the bottom of this grain. Weask our guests, where are to the rest of the world whether it is europe or emerging markets . One says, we are in the early stages. Here is a chart looking at the vanguard, basically all the equities outside of the u. S. Versus the spy. It is a ratio and the line has been going down for the last seven years, clearly showing the underperformance of the global stocks to the s p 500. The lowest level in december and since then, it is hard to see, but it has been moving higher. Early days in the turnaround when you look at it on a longerterm scale. Joe and when was the last time we had somebody say they are long against the rest of the world. You never hear that anymore. It is interesting. Scarlet hard to make the case when ever thing is so valued. Julia we need you. Joe and we have a measure of one thing i like to look at is the blue line, and that is holding steady. A chart that compares the quick jobs,people leaving their versus market optimism. That has held tightly since 2001. A divergence between the white line and blue line, the official measures. We will see if perhaps the stated optimism goes down a little bit in might of the study rate. Steady rate data commodity producers the hardest hit in china. Is there more room to run on this front . This is bloomberg. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. I am mark crumpton. It is time now for first word news. Arming kurds, which they say are needed to take the. Ity of rafa the u. S. Classifies the group as terrorists. There was a letter sent by democrats to the republican leadership, asking for a bipartisan effort on healthcare reform, and the gop has been Holding Meetings to satisfy all of its members. Obviously, as you have heard all of us discuss, the status quo is indefensible. The American People expect us to act, and we are working to get at least 50 republicans, because no democrats are interested in participating, to change the status quo, which is completely unacceptable. Mark republicans can lose only two republican votes, with vice pence castinge a tiebreaking vote. And an election followed months of political turmoil in south corruptioned by a scandal. The victory ends a decade of conservative rule in south korea. Russian president Vladimir Putin urged the country to join in the fight against terrorism, as he marked the anniversary of the allies winning world war ii. The annual victory day parade in red square featured 10,000 marching soldiers, as well as onnty of military hardware display. Global news 24 hours a day powered by more than 2600. I am mark crumpton. This is bloomberg. Scarlet lets get a recap of todays market action. Any game would have been another record high, the dow closing off. Would have been another record high. Entertainment giant disney, the shares have a little pressure in afterhours trade. They were beating estimates of 1. 41. Of 13. 4,xpectations showed an increase, but the real focus is the network division, and there is the loss of table scribers of cable subscribers. They spend billions per year on contracts, and there is the situation at espn. Priceline is down in afterhours trading, and a boost did not happen because it just did not hand out. There was the timing of the Easter Holiday weekend, but a bit of a disappointment, also trailing estimates. Sincehat stock is up 2001. Scarlet good context. Joe even with the holiday. Electronic arts, they are rising, beating estimates of g, and fornue beatin 0l. 25 off 0. 25. It are the company has reaffirmed its forecast, pulling back from a feature, and maybe that is part of it, as well, and i am looking at these results to see what it is that has investors so excited. This is after reaffirming their forecast, and saying they will invest more money in brand advertising. I do not think that would do it. They miss the consensus estimate. And, of course, we are also waiting for the news score results the news corp. Results. And a prague. Plug. Iger will be joining us. Yesterday, a ceo weighed in on how much we should be reading into a selloff. We have seen is a lot of financial liquidation. We have seen this in china, where they have tightened by the pboc, and i think that has forced some to liquidate. So how much more is there to go on this . Lets bring in thomas fang, head of equities at ubs. Are they engineering a deleveraging . I do not think the intention is really against the stock market. ,he shadow banking, if you will to really get a handle on it. It has really picked up steam over the last couple of with, xi jinping meeting officials, and the intention might not be to have an effect on the stock market, but we are nonetheless,fects, and we are seeing this on the bloomberg, and you can see this has gone down in the last couple of weeks, following the crackdown by regulators, as have estimate,hina, by one billions erased from stocks and bonds since midapril. Would a continued selloff in stocks and bonds dropped china to change its strategy in any way . What a continued selloff in tocks and bonds get china change its strategy in any way . Q1, thedont forget, stock market has done relatively well in china, asia. Robert ticking, as well. Profit taking, as well. Fell if the market believe, then regulators might step in, or the government itself might get nervous. Would you agree with that . No, buti would say looking at the market quite closely, the key levels, i think the regulator wanted it to be stable. Julia i think it is interesting it was in such a tight range. Trumpresident xi was with in maralago what point, what are the milestones that they are looking to see to say, ok, we have made progress . Thomas they are advising the ,anks to do self investigation so they are expecting this somewhere around june and hopefully recover from there. Julia the value year to date of week aes, last number of people coming out, saying we could seize, rotation saying we could see some shares into hf a shares. Thomas we have a lot coming into hong kong. Of a sort of asset diversification and also reflecting the domestic investor, as well. Scarlet generally speaking, this is not the first time china has crackdown on this. It has happened every couple of years. This,he government does how long does it last, and where are we in this cycle versus the last . Thomas i would give it a couple of quarters. Pboc wanted to see the economy have a stable performance, and around q4 and q1 this year, the economy was a little bit overheat. Seenone thing we have not much of all in china is outflows. The reserves have been very stable. That seems to be a reason why be domestic issues have not affected International Markets at all. Could that come back . More concerns about liquidation domestically, people finding ways to get their money back out again . Thomas the foreign reserve has been steadily declining, with the exception of last month, april, so i think the regulators are watching the reserve quite growth, and the overall of the economy, hopefully, will help. Scarlet all right, thomas fang, head of ubs equities, thank you. Thomas sometimes there is a u. S. Dollars story. Right, thanks again, thomas. The first Earnings Reports of the economy, hopefully, will help. Scarlet tomorrow. From new york, this is bloomberg. Ofrlet the Parent Company snapchat will be releasing its first public Earnings Report after the closing battle. The company, as you know, went public in march and is currently trading above its offer price. Lets look at snap in another round of the numbers dont li e. Snapchatlook at users, has their number doubled since 2014. When you look at growth, a little bit different. In daily been a dip users since last year, that number only growing 3. 3 in the last quarter, and that could be i treated to instagram. Attributed tobe instagram. Facebook, which owns instagram, is currently a threat to snapchats growth. If users are unique, not thatsible through apps could be true. 35 of the snapchat users are on anotherle platform. Us from percentage are not watching youtube. A certain percentage are not watching youtube on a given day. The white lines there. They estimate that snap will have revenue of 150 million. 158 million. We will keep an eye on them after the u. S. Closing bell. Joe thank you. We want to bring in our Bloomberg Technology reporter and shira ovide, a columnist at bloomberg gadfly. I totally forgot this existed as a stock until today, but it is about to deliver its firstever report. What does wall street want to see to sort of rekindle that enthusiasm . Ra we saw that slow down, coincidentally maybe around the time that instagram launch their own feature, which is kind of a copycat of snapchat, but the funny thing of snapchat is it is the first Earnings Report of a very Young Company that went public, and it will be widely unpredictable, i predict. Julia this is something we can glean, other than the user number. I know it is negative for 2016. Yes, lets put profits off of the table fork snapchat. This is a company that is not going to have positive cash flow until 2020, 2021, so nobody is looking at the bottom line, and hardly anybody will be looking at Gross Margins. It is all about revenue. From san francisco, i want to bring you in. What do these products look like . Doing anything novel recently to crank that up . What do we know about how those products are working . The one thing that snap will have to prove is that it is starting to be a more stable part of their budget. That is really the only way that they can grow into that massive down way should that you talked about before, so in order to do that, they are trying to improve their targeting for as, their demographic targeting on the app. Trying to improve the way they measure them and are bringing in outside firms, and they are trying to be more creative from what we have seen at other sites in terms of how they let people advertise. The way that people can advertise using snapchat, they can have somebody put a brand on one of their own selfies. Basically, people are turning themselves into ads, and that is. Ovel that is something people will want to use to reach the millennial and that demographic. Scarlet one thing you wrote about, i am looking at a page on bloomberg, and they have a 34 rating,ng, a 49 hold analysts rated it a sell. Shira the issue for snapchat is, again, they are very young. Monetization has been very aggressive, but it is also a highly valued Company Without much of a track record, and so it all depends on what color glasses you are wearing. Rosecolored glasses, it looks like an Amazing Company that could be the next multibillion dollar company, or it could be a giant failure, and that is reflected in the wild divergence. Scarlet thank you guys so much. Julia we have been waiting for news corp. , those numbers coming billion so it is a the estimate of five cents for the eps, and both from the top and bottom line coming in for news corp. Is blasting stock off after hours, and that stock has been on a tear already, and , this was less than a 41 stock, now close to 120, so a huge move for nvidia. From new york, this is bloomberg. Julia what did you miss . Transformed by technology. Bloomberg spoke with three Public Companies in cambridge, massachusetts, that are racing to use a technique in people to prove it can work to treat disease. Geneediting tool, tweaking the genetics of mosquitoes and creating lyme and now,roof mice, they are racing to use the technology in humans. The most exciting invention i have seen. They are the only public ,ompanies like this in the u. S. All in a threemile stretch in cambridge, massachusetts. This is a technology to accomplish what is called gene and with a mistake in the dna, to be able to go there and repair it. The biotech companies, which all went public last year, aim to first test the technology with a simple diseases, where a small genetic tweak can cause damage. Of a gps localization signal or a zip code. Put a zip code onto a pair of scissors, and the scissors do not work until the zip code delivers the molecular scissors into the part of the general genome we are targeting. A rapid pace. G at if you asked me two or three years ago how long it would take to get to the clinic, we would have predicted a much longer time frame than what we are staring at right now. They want to start by genetically engineering the blood with Rare Disorders outside of the body before putting them back in, and they aim to inject them into the eyes of people with a genetically caused form of blindness. Another company has not given a timeline for when it will put products in people. Given the fact that we are modifying your dna, which we have not been doing with other therapeutic approaches, there are some considerations we have to be very thoughtful about. Scientists in china are moving faster. They started the first human trial last year, using it to modify the genomes of human embryos. Where do you draw the line . In anase versus individual . For now, the three leading companies are focusing on and therehis comment is a complex series of battles in the u. S. And europe. Basically, the issue is about who actually invented this. And there is a complex series of battles in the u. S. And europe. Academics on one side and others on the other. In february, one surged after the m. I. T. And harvardbacked institute has a challenge from uc berkeley in the u. S. , keeping them alive for now. They fell on the news and are appealing the decision. It is hard to say which will bethey fell on the news and doig medicines. Ultimately, human trials in the next new years will tell us more about how this technology will change our genes and our health. Ultimately, human trials in we are beginning to understand that there are 6000 genetically defined diseases, and it is a very long list of patients who could potentially be helped with this kind of approach. That was our bloomberg reporter, reporting on crisp from cambridge, massachusetts, and all this week, we are in boston, and Caroline Hyde is taking a look at fortune 500 burgeoning biotech and startups and government officials. Technologyberg from 5 00 p. M. Until 6 00 p. M. Eastern and on bloomberg radio. Disney shares continuing to trade lower, and we talked about the Earnings Report. Obviously, investors focused on what the company will say when it has a Conference Call again. From new york, this is bloomberg. Scarlet we mentioned disney shares falling in afterhours trading, and they said sales jumped in the Second Quarter, but television subscriber losses will be slower. Julia alisa im Alisa Parenti from washington. You are watching Bloomberg Technology. Lets start with a checkup first word is going to white house decision on g link draw from the paris kind and you has been delayed for a second time. I sit in front President Trump pledged to renegotiate but has wavered since taking office. Spokesmans sean spicer says the president will make an announcement after the g senate g7 summit in name. More american troops could be on the way to afghanistan. Advisers are urging President Trump to send up to 5000 new troops. There are already 8400 troops backing afghan forces. Are demanding 40 consecutive life sentences for the man who attacked a nightclub during a new year celebration, according to turkey state run news organization. 13 people were killed and 79 others were injured. The british artist banks the banksy and