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Speaker 1: Broadcasting live to New York, Bloomberg eleventh Yo to Washington,

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Speaker 1: d C, Bloomberg to Boston, Bloomberg twelve Wonders to San Francisco,

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Speaker 1: Bloomberg to the country. Shoe is Exam General one ninety

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Speaker 1: and around the globe the Bloomberg Radio plus append Bloomberg

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Speaker 1: dot Com. This is Bloomberg Surveillance. Good morning. I might

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Speaker 1: come mc key in the Bloomberg one news room in Washington,

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Speaker 1: d C. An hour from now. We'll be talking with

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Speaker 1: Richmond FED President Jeffrey Lacker. Tom Keene is in the

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Speaker 1: bureau in New York. We're keeping an eye on the

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Speaker 1: market slower after the FED suggested yesterday a rate hike

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Speaker 1: may be coming in June. We've also got though some

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Speaker 1: counterbalancing news. Walmart surging shares up nine percent after the

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Speaker 1: company reported same store sales up one percent and profited.

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Speaker 1: Blue Away estimates ninety eight cents. Analysts had forecast eighty

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Speaker 1: eight cents. Very big surprise for Walmart the morning. Blackstone

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Speaker 1: says it is weighing the sale of its eleven billion

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Speaker 1: dollar logic core warehouses. People want to get out of

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Speaker 1: the commodity warehousing business and bear making an unsolicited takeover

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Speaker 1: offer for mon Sajo. The St. Louis based company has

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Speaker 1: a market value of forty two billion dollars. We'll see

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Speaker 1: what the offer actually is. Says it's reviewing the offer,

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Speaker 1: but did not disclose terms of the proposal. We're also

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Speaker 1: keeping an eye on the latest on the egypt air

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Speaker 1: flight that crashed somewhere in the Mediterranean overnight. Michael Barr

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Speaker 1: is here with the latest. Michael Minke, thank you very much.

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Speaker 1: Prosecutors in Paris say they've opened an investigation into an

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Speaker 1: egypt airplane that disappeared while flying from Paris to Cairo

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Speaker 1: over the Mediterranean Sea early this morning. There were sixty

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Speaker 1: six people aboard flight eight oh four. French President Francois Lan,

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Speaker 1: through interpreter the information that we have managed to guide

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Speaker 1: that the Many States, members of the governments and the

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Speaker 1: Egyptian authorities confirm the alas that displane had crushed and

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Speaker 1: it has disappeared. Search and rescue crews have been sent

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Speaker 1: to the site where flight eight oh four last made contact,

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Speaker 1: about ten miles into Egyptian airspace. Lawmakers in the US

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Speaker 1: House could a vote as soon as next week on

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Speaker 1: legislation to help financially troubled Puerto Rico. Revised Bill was

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Speaker 1: introduced last night that would create a control board to

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Speaker 1: help manage the US territories financial obligations and oversee some

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Speaker 1: debt restructuring. Puerto Rico is seventy billion dollars in debt

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Speaker 1: and faces defaulting on a two billion dollar debt payment.

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Speaker 1: On July one, Boxing great Many bacchia I was closer

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Speaker 1: to a possible crick at the Presidency in the Philippines

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Speaker 1: Today of the thirty seven year old was proclaimed one

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Speaker 1: of the winners of the Philippine Senate seats. Global News

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Speaker 1: twenty four hours a day. Michael bar Mike Tom, Thank you, Michael.

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Speaker 1: Time now for the land Over partipity Bloomberg NBC Sports Update.

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Speaker 1: Here's Rob Bush. Hey, morning, Mike. And they love the

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Speaker 1: shooting guards, as they have now hired Jeff horness Sek,

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Speaker 1: the former sharpshooter for the Utah Jazz and Phoenix Suns,

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Speaker 1: to be their next head coach. He has no experience

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Speaker 1: running to triangle offense, nor a relationship with Phil Jackson.

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Speaker 1: He did have his team though, on the top eleven

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Speaker 1: and three point shooting in the last two seasons. Kurt

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Speaker 1: Rambas role remains unclear with the team. The Warriors last

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Speaker 1: night jumped back into the Conference finals, taking down the

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Speaker 1: thunder one, eighteen to ninety one. Steph Curry had fifteen

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Speaker 1: points in less than two minutes. During one stretch he

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Speaker 1: had eight overall. He did dive into the crowd came

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Speaker 1: away with a pretty bad knot on his elbow. They

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Speaker 1: will examine him there tonight. Game two, it's the Eastern

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Speaker 1: Conference Finals. Cleveland up one nothing. They take on Toronto Yankees,

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Speaker 1: a winner four to two in Arizona. Nathan Vivaldi retired

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Speaker 1: eighteen straight at one point, and the Mets they fell

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Speaker 1: seven to one to the Nationals on the ice Pittsburgh.

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Speaker 1: They'd beat the Lightning of four to two. They take

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Speaker 1: a to one series lead. Sharks and Blues Game three

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Speaker 1: in San Jose a to night. That series tied at one.

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Speaker 1: That's your NBC Bloomberg Sports update. Mike, All right, thank you, Rob.

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Speaker 1: We have not mentioned oil prices in the markets today.

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Speaker 1: They are a tad lower. West Texas for twenty five

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Speaker 1: down two percent, Brent crude forty seventy nine off two

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Speaker 1: point three percent so far. This is Bloomberg surveillance simn

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Speaker 1: Michael McKay. I'm live in the Bloomberg News room in Washington,

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Speaker 1: where in about an hour we'll be talking with Richmond

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Speaker 1: FED President Jeffrey Lacker. Tom Keane is in New Yorker

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Speaker 1: keeping an eye on the markets. They are adjusting, shall

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Speaker 1: we say, after yesterday's FED minutes suggested we're going to

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Speaker 1: see a rate increase. S and P futures are down

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Speaker 1: two points, almost three points right now, one tenth of

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Speaker 1: a percent down. Future is off thirteen about a tenth

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Speaker 1: of eight percent. The Bloomberg n j I T STAM

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Speaker 1: Report is brought to you by New Jersey Institute of Technology,

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Speaker 1: investing more than a hundred and ten million dollars a

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Speaker 1: year and applied research to solve problems and improved life.

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Speaker 1: Learn more at Stories of Innovation dot n j I

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Speaker 1: T dot e U. Here's Bob Move Michael, Good morning.

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Speaker 1: Here's what's making news and science, technology, engineering, and math.

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Speaker 1: What if a leading university conducted a landmark study on

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Speaker 1: the health effects of a widely used insecticide, but the

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Speaker 1: federal agency that regulates the chemical and overseas its safety

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Speaker 1: was told by the university. Essentially, this is our study,

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Speaker 1: a top Environmental Protection Agency official says Columbia University administrators

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Speaker 1: told the agency that the relevant parts of the study

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Speaker 1: were funded with private dollars, and therefore the e p

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Speaker 1: A wouldn't be entitled to the researchers unpublished data on

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Speaker 1: core paraphos. That's the act of ingredient in dozens of pesticides,

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Speaker 1: and according to the EPA, it's the most widely used

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Speaker 1: insecticide in the US. The study found it can have

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Speaker 1: serious neurodevelopmental consequences. A spokesman for Columbia told Bloomberg the

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Speaker 1: university is willing to provide access to parts of the

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Speaker 1: research in a way that ensures the confidentiality of the

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Speaker 1: local children and mothers who participated in the study. As

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Speaker 1: the EPA and goitiates with Columbia over the data, it's

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Speaker 1: being sued by a group of environmental activists pressing for

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Speaker 1: a near total ban on the chemical. Google announced an

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Speaker 1: array of new apps, devices, and platforms at its Developer

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Speaker 1: conference aimed at keeping rivals from turning its once dominant

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Speaker 1: search engine into a relic in the age of mobile

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Speaker 1: computing and beyond. Among them Duo, a video calling app

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Speaker 1: to rival Apple's popular FaceTime video conferencing and Google Home

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Speaker 1: is a gadget that competes with Amazon's hot selling Echo device.

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Speaker 1: That's this morning's Bloomberg and j I t Stem Report, Michael,

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Speaker 1: Bob Moon, thank you so much. Coming out of the

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Speaker 1: financial crisis, the FED was forced to FED and banking

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Speaker 1: regulators forced to put some banks together to try to

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Speaker 1: save some failing institutions, which only made the big bigger.

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Speaker 1: Now there's concerned about how big is too big, and

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Speaker 1: there's also concern at p WC and Strategy and their

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Speaker 1: consulting business about big being too big for some of

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Speaker 1: the other banks. Were joined by Argent Sexina, who is

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Speaker 1: looking at the competitive position of smaller banks, those that

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Speaker 1: are outside of the Big three, and suggesting that maybe

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Speaker 1: they need to band together to fight off encroachment by

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Speaker 1: the Big three and and actually make some money. Good morning,

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Speaker 1: are you? Good morning, Mike, Thank you for having me.

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Speaker 1: The big three you say dominate market share, so the

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Speaker 1: regionals are at a severe and widening disadvantage. They should

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Speaker 1: consider merging. That's correct. So if you look at the

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Speaker 1: some of the research that we have done, the big

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Speaker 1: three Bank of America, as Fargo and Jippy Morgan Cheese

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Speaker 1: have only run an eighteen percent share of branches, but

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Speaker 1: if you look at the recent growth, the deposit growth

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Speaker 1: that they've been able to capture is as much as

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Speaker 1: two thirds of that of the total market. And if

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Speaker 1: you look further at the checking account growth, of which

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Speaker 1: the depth card UH statistics are a good proxy, it's

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Speaker 1: as much of the growth over two thousand eleven to

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Speaker 1: two fourteen. So this suggests clearly that you know, the

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Speaker 1: regional banks, those between tenberle and hundred fifty billion, other

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Speaker 1: ones which are probably most impacted are the ones who

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Speaker 1: are losing share to the big three, And therefore, you know,

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Speaker 1: one of the things that they really should be thinking

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Speaker 1: about is consolidation to treat out costs to improve their

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Speaker 1: return and equity. Had to be able to free up

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Speaker 1: some of the funds that they need to be able

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Speaker 1: to compete head to head against digital capabilities and the

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Speaker 1: brands that the big three are being able to deploy. Well,

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Speaker 1: is it clear that bigger is better, that you need

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Speaker 1: to have economies of scale and you need to have

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Speaker 1: size in order to succeed. If that's the case, how

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Speaker 1: come we have so many community banks? Look, that's a

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Speaker 1: good question. I think if you look at the history

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Speaker 1: of the U S banking sector, what we have today is,

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Speaker 1: you know, a presult of the legacy that we've had

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Speaker 1: of regulation and of the legislative environment over literally the

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Speaker 1: past seven or eight years is a great depression, and

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Speaker 1: a lot of it has been driven by the fact

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Speaker 1: that the U S literally banned interstate banking until the

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Speaker 1: mid nineties almost and then it also separated retail and

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Speaker 1: commercial banking was investment banking quite shrictly until ninety eight

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Speaker 1: when Last Eagle was finally repealed. Right, That's not the

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Speaker 1: case in many other geographies. So if you look at

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Speaker 1: the other O e C markets like the UK or

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Speaker 1: Australia or Canada, the top five, top six banks control

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Speaker 1: as much as ninety of the post there. In the

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Speaker 1: US because of these legislatives and regulatory restrictions, it is

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Speaker 1: stilled today. After the wave of consolidation we've had over

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Speaker 1: the last fifteen years, with you know, very more sele

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Speaker 1: banks of America being traded out of Nations Bank or

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Speaker 1: the more recent labor consolidation post crisis, the top twenty

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Speaker 1: banks still controlled baily of deposits. Right, That's the reason

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Speaker 1: for what we have today's market structure, and clearly there

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Speaker 1: are preferences in place for local community banks, which is

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Speaker 1: why you have literally five thousands of them still in

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Speaker 1: existence despite the consolidation in the Lady teas of the nineties,

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Speaker 1: and then there is actually consolidation under b at the

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Speaker 1: Loreen as well right now. Argent Saxina from PwC, thank

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Speaker 1: you very much for joining us this morning. He's was

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Speaker 1: strategy and p wc's consulting arm. The banks one of

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Speaker 1: the groups that benefited yesterday. Shares went up for the

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Speaker 1: banking group after the FED minutes came out on the

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Speaker 1: idea that they will get higher net interest margins out

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Speaker 1: of a FED rate increase. We shall see if the

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Speaker 1: Fed follows through and if that is indeed the case.

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Speaker 1: Bankers went up after the December FED tightening, but the

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Speaker 1: slipped back right now. All futures are pointing to a

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Speaker 1: slip back in markets today. S and P features off

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Speaker 1: by two points a tenth of eight percent. Bloomberg Surveillance

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Speaker 1: is brought to you by National Realty Returns on cash

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Speaker 1: in rented real estate. Find them at n r I,

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Speaker 1: a dot net