Transcripts For BLOOMBERG Market Makers 20240622

Data and they have a different much smaller number. Stephanie say it aint so, mr. Trump. Time to give you the top stories 32 big drugmakers reported earnings. Pfizer posted secondquarter revenue and profit that beat analyst estimates. Sales of its new cancer drug rose. Meanwhile, mercks secondquarter profit fell. Merck also raised its profit forecast for the year. The profits surge in the second quarter. At ford. Earning has rose 44 beating estimates. The reason, the demands for the numa aluminum bodied f150 pickup. Discounts on the truck after sales fell last month. The sales account for 90 of 40s profit. Ford said it will be september before the fully stocked. Matt i like the idea and i will get you one third you deserve one. President obama is wrapping up his five day trip to africa. Today in ethiopia, he warned African Leaders that the continents economic progress rests on a fragile foundation. He said something must be done to provide opportunities for young africans. President obama we will not be able to meet the challenges of our time, from ensuring a strong Global Economy to facing down violent extremism, to combating climate change, ending hummer hunger, without the voices and contributions of one billion africans. Matt president obama returned to a theme he hit on in kenya that africa must fight a culture of corruption. Resumed a selling jump on the iran nuclear deal. John kerry goes to capitol hill to testify. Congress has 60 days to review the agreement. Lawmakers can approve or reject it but president obama says he will veto a rejection. We have done the math on donald trump. He is worth 2. 9 billion. The candidate has said he is worth more than 10 billion. The bloomberg billionaires index to their own calculations based on Financial Disclosure debt trump made last week. The majority comes from real estate holdings. The index does not value the trump land brand. We will have more coming up it we will break it down. Those are your headlines for now. Stephanie is that how you would describe him, the celebrity candidate . Matt the reality tv star candidate. Stephanie people like reality tv. Matt if you are a billionaire that is the first way to describe a billionaire. Stephanie put that in your notes section. Now what do we need to do . The five things you need to know this morning. I will give you numero uno. Oil. Extending declines this morning. The market is already suffering. The middle east is Still Producing oil at a record pace. At the same time, the u. S. Has emerged as a key player in the oil market. A supply and demand problem. Bp reported its lowest score early profit in at least 10 years after a conflict in libya and a crash and trading forced almost 600 million worth of write downs. Matt chinese stocks fell again today after another another 1 after an 8 drop. A little bit of a drop that not a huge one. The trading pattern mirrors the market classic 1929 crash of 1929. China security regulators also investigating mondays selloff. They set off an Enforcement Task force. It was actually a much bigger drop earlier yesterday in their trading day. It kind of recovered and then went back down. Stephanie when you see Something Like that, it is a big wow but once you dig in what did they come up with . How about julie hyman, our senior markets correspondent, in the newsroom. Julie we have got economic data. The fed today. First up, 9 00 a. M. Eastern, we will get the latest read on the 20 said it come 20 city composite home index. That is one of the ones we focus on. Economists are looking for. 3 increase in may. Being the increase to 5. 6 . We also, by the way, get the pmi report. Consumer confidence at 10 00 pair the fed meeting today is of course important. There is not likely to be any significant developments. The markets view is a relative nonevent. The next meeting happens in september. That remains a potential date for the start of policy normalization although a lot of Market Participants are even discounting that and pushing that out to next year. David we will get more hints in the statement today. Matt the consensus is for september, right . Julie it keeps shifting. Matt i will be waiting. Stephanie you know what he is not waiting for . Ford, ford, ford. Matt estimates, one point 9 billion globally versus estimates of 1. 93 1. 9 3 billion dollars. Earnings were held by demands of the new f150. We will be talking about that more in this program. Stephanie you have a raptor, correct . Matt it is an f150 raptor. Stephanie it looks like a monster coming to bite me. That is what it felt like. Coming at me. You went with black. Matt it is quite cool but i could get you one in red, or a bright orange multilava color. Stephanie number five. Twitter, earnings after the bell today, all eyes. Investors will be looking to see whether the companies advertisement and Marketing Efforts have paid off. The key deal requiring a company that helps advertisers find potential customers across devices while also forging an alliance with the one and only google. Jack dorsey is also back at the helm as ceo. He does not look quite like that now. A nice tattoo on his arm and a nice beard. We will find out if he could provide any strategy of days to get investors excited about the stocks again. Shares are down around 34 since the first quarter. People are on the twitter all day long. The question is can they monetize it . Before we get to twitter, out already, pfizer and merck, the two Big Pharma Companies reported earnings earlier this morning that beat analyst estimates. For more on that, bloombergs own cynthia joins us now. Pharma, pharma, pharma. This is the industry that the go on forever. Talk to us about these two companies. The earnings tell a different story. Cynthia both of these companies have updates investors are paying a lot of attention to. In merckss case it is an oncology drug. In pfizers case, it is another drug. Results for the key products, which are future for these companies in terms of what they own right now, were positive. In that sense, it was a good quarter for both. Matt a lot of the Big Pharma Companies have faced the problem that the drugs were coming to the end of the patent times and they would be heard by a loss of the earnings and the intrusion of generics. Do they not face that . Cynthia that is definitely an issue. Especially for pfizer. Really, the story about whether or not m a will be a part of it, that will be a big question today. Everyone will listen for even a shift of body language. Everyone expects them to do a big deal soon. Stephanie a big deal in terms of acquisitions. Cynthia what investors are looking for is, they could still do a tax inversion to lower their tax rate. Stephanie just what politicians love. Cynthia highly controversial but still an opportunity for them to potentially cut down their tax rate. Perhaps Companies Like shire could be attractive. Some say allergan now that it is split up. But i do not quite see as much of the logic in that. These are some of the names that thin conversation about companies they could target to get their tax rate down and buy some more innovation. Matt what areas will they look at the sides regional areas . It is great to get a tax boost. What areas would they be looking for cynthia as far as their Product Pipeline . Cynthia it is hard to say with pfizer. They entered into a partnership with german mark that answers some of the questions there. Oncology is always attractive. That is a scenario they could be looking at. There are other big areas where there is a lot of potential. Where some of the new alzheimers trucks could be coming. These areas have a of potential in coming years. Anything could be on the table. Matt it is an exciting time to be alive. Stephanie luckily, with great pharmaceuticals, we can be. Matt Bloomberg News cynthia koons. Stephanie during the break, we will say 444 we will say ford as many times as possible. Matt what todays figures mean for the second half. Bob shanks says will be a rocket. Stay with us. Stephanie hazy morning here in nyc. What you cant see are the people on the streets sweating it out. It is much nicer to look at that hazy smoggy skyline to the right of our humble little village. Matt and i are here, cool as cucumbers inside bloomberg world headquarters, delivering you our top story for the morning. Starting with one of matteos favorites, general motors. Making a bet it can sell more chevys. It has agreed with chinas partner. It will replace many of the smaller chevy models that are sold in china, brazil, india and mexico. Gm forecast that emerging markets sales growth over the next 15 years. And ebay is raising the white flag surrender. The company is killing its same Day Delivery Service in the united dates. That is an acknowledgment that ebay will not try to match amazons Speedy Delivery project. Ebays same day service has been available in san francisco, dallas, and chicago. The newest book from dr. Seuss hits bookstores today. What pet should i get is the first book from the beloved childrens author in 25 years. Dr. Seuss died in 1991. The book is based on a manuscript his widow put in shortly after his death. She rediscovered it in 2013. I cannot wait to share this book with my children. Are you a dr. Seuss fan . Matt i am. Stephanie matt apparently dr. Seuss makes a ton of money still because he and his state make good investments. Get his estate make good investments. Stephanie i am glad he is successful. Matt it is like dr. Suite so german kids can love it. Lets turn to for an now. They exceeded analyst at locations thanks to demand for the new f150. A 44 surge in profit in the second quarter. Some say todays results eased pressure on the second half of the year. Jeff joins us now from detroit. Thanks for your time. Let me first ask, you have to get your head around the fact the earnings are driven by the f1 50 on the one hand and ford sold 21,000 fewer than they did last year. Jeff good news and bad news with the f150 story. A slow ramp up. It has been expected, but it continues. That really will not resolve itself until well after well into the Third Quarter and the fourth quarter. When you look at the surprise in earnings right now, it does ease pressure on ford and some of the critics out there. Obviously, there is still a highly competitive segment and a highly competitive market. The jury is still out on the overall picture and we have to wait until the fall. Matt they say they get 44,000 each for these are but they only offer 3600 in incentives. We did a story that showed they offered 10,000 in incentives on some trucks. How do you see for doing in general as far as Pricing Power . Jeff no question, the pricing with the new trucks and the emergence on the new trucks will be very strong. You can see that in the results of the earnings so far. There are some vehicles that have those high incentives. I think when you look at that segment, that is arguably one of the most if not the most competitive segments in the industry gas prices at the stage they have been at certainly help. If you look at the segments position, 40s position while in it, it should pick up some steam. Stephanie offering these aggressive incentives, do you run the risk that it is a race to the bottom if you are the automaker . Jeff there is oh is a loyal segment. The fact that the trucks have not really fully gotten to the dealerships, that is a concern and a risk to ford. They are trying to certainly show it up and make sure they are keeping their customers happy and keeping buyers in the ford truck. Right now, while they are managing through this rampup, they are doing everything to keep the share as stable as possible. Even though volume is down. Matt share was up about. 1 in china, which is a hugely important market. Obviously, gm has a stronger foothold there. Ford has seen historically, in the last couple of years, huge growth. Will that all come to a halt now . Jeff china is an interesting market. We are seeing the market as a whole start to slow down. It is expected and it is finally starting to happen. You just read about gms recent investment in china. So i think they are making a big push overall for the chevy brand. That will put additional pressure. Looking at these markets around the world, whether it is europe north america, china, highly competitive. I think that really just shows you cannot take your eye off the ball and you have got to keep moving forward and protect your share. Do not do it at a stage that hurts your profitability. I think right now, with its earnings, ford is positioned well to finish the year strong. Matt thank you so much for joining us, jeff schuster. We will have more from ford when i speak with the cfo, bob shanks. Stephanie coming up, it has been the third longest period without a correction in stocks. Ill should jones hedge fund will tell us how to position your portfolio. Stick around. A big day here. This is a great place to work. Not because they have yoga meetings and a juice bar. Because theyre getting comcast business internet. Comcast business offers convenient installation appointments that work around your schedule. And it takes done. About an hour. Get reliable internet thats up to five times faster than dsl from the phone company. Call 8005016000 to switch today. Perks are nice. But the best thing you can give your business is comcast business. Comcast business. Built for business. Stephanie welcome back. Im stephanie ruhle. This is next segment is dedicated to matt miller. Bigger [laughter] is not always better. [laughter] [laughter] that was a gift. By london city university, in times of market terminal, smaller hedge funds outperformed their larger peers. Pure to tell us why is the chief strategist of quadruple quad group. The director of research at Paul Tudor Jones fund. Bigger is not always better. Is that simply because if you are a massive fund, it is harder to move the needle . No doubt about it. It is a market of stocks. When you have tremendous positions are, a lot of assets under management, it is hard to move that. In the firms we are trying to accelerate, you want to be that speedboat that can maneuver around the wakes that the big funds create. Stephanie how come investors do not seem to be paying attention to that these days . Smaller funds have struggled to raise assets been we have seen funds get bigger and bigger because investments look at them and say, no one gets fired for giving them money . Peter millennium is a great fund. I will not pick on one individual. Stephanie well, you will not get fired if you give de shaw money. Peter the notion is the market has gone up and it has very low mop volatility. These funds are essentially index huggers or what i would call leveraged beta. We are trying to develop for people who can generate output take an opportunity where things will change. A tanker will not move quickly. Remember, we are at the third longest time without a 10 correction. We are at a very narrow range. He will get complacent. Complacency leads to people putting money with larger fonts. Stephanie this is why guys put money back, because of they do not have enough money, they cannot invest wisely . Peter exactly. When you have that much assets under management, it becomes a trade. What is the marginal gain i can get from receiving an Incentive Fee versus the additional Management Fee i get from the assets. If i cannot maneuver i will not get a large enough Incentive Fee. Matt how do you manage to keep your fund small if you do well and if you are successful . Stephanie why would you want to while sitting back and smoking a cigar . Matt honestly, if you do well your fund will grow. And people will want to invest more money. Peter our business strategy, we believe the sweet spot is probably 300 million to 500 million. As an individual fund, you want to grow bigger. As a platform, if we could put seven or 10 of those together we could have 3 billion plus under management and that is how we deal with the growth. Our objective is constantly finding new talent there it we known or matter how good we are some people will not perform and that is the nature of the business. But we want to grow and we want to make the people that are there, and we incentivize them by, they can get a higher pay. Matt i noticed on your resume here that you are the trading quote coach. Trading is not an easy thing to teach. I think of the Paul Tudor Jones video where he is up at 4 00 in the morning trading from the ski lift. This is not the kind of thing you can teach. Can you coach this kind of ability or are you born with it . Stephanie even if you are born with something, you can be coached. Peter it is a combination of both. If you do not have talent you cannot succeed. But talent alone is not sufficient to succeed. If you look at any profession those who work the hardest are the best. I am a trading coach. I always kid around. I take credit for all the successes and then blame traders for the failures. Matt we have a lot of traders watching bloomberg television. You were the first macro technician. What would you tell them . What kinds of tips would you give traders active in todays market . It is not moving. It is just going sideways p what do they do . Peter when you trade, the name of the day the name of the game is to and the trade with more money than you started with. It is all about making money and not being right. People come on here and other shows and they want to be right. It is the only channel on television, except i am a mets fan. Too often, people get stubborn. The point is not to be stubborn to be flexible, to have a change in opinion. The market is always right. If you look in that video with paul and a young me. We work all weekends. By 9 40 90 morning, the whole piece is thrown in the garbage can because the market is right and we were wrong. That is one of those things i learned more than anything from paul. You have got to be around to play another day. What we look for in traders are those that are agnostic. I do not care if you are bullish or bearish in the long hole. Haul. When it comes to market, it is a disciplined, methodical process. Whether you have a model or whether you are a discretionary trader, if you deviate from that, you are doomed. Stephanie in order to be a good investor, do you have to be willing to do this 24 7 . Peter no doubt about it. This is a business where you have to live, breathe, eat, and think. Stephanie how will you recruit millenials . Millenials say the quality of their life is as important to work life. We see banks like goldman cut the hours of bankers because it does not seem to be a priority for young people. How will we recruit the next generation who say, i do not believe in working 110 hours per week . Peter not at all. Again, go back to the sports analogy. The best players show up early for practice and then they play the game. Then they stay on the court afterwards to get better. It is a very small, narrow set of the population. It is a decision one has to make in terms of life balance. We support that. If you are coming in at 9 30 to start trading china, and they are very civilized over there, we have a room where you can take a nap. Matt that is excellent. Great advice. Stephanie awesome having you here. Matt peter borish. Stephanie founding board member of the one and only robin hood very great hair. Matt i am glad your career in business is doing better than the mets. Stephanie but i am glad you stayed loyal to your team. Matt thanks. Time now for your top stories. United Parcel Service crashed cached in from a new Pricing System. The world passes Largest Service the new Pricing System covered deliveries outside the u. S. The fullyear profit would be at the highend of the of what was forecast in april. President obama wrapped up his visit to africa today by speaking to African Leaders in ethiopia. The president sounded a familiar theme. Africa needs to end the culture of bride taking. President obama we have been a leading advocate working with the g7 to assist businesses investing here in africa and making sure that capital flows are property properly accounted for. That is the kind of partnership america offers. Nothing will unlock africas economic potential more than ending the cancer of corruption. Matt president obama also warned that afghanis to provide opportunities for a Younger Generation that needs to find work. Stephanie there is likely to be a changing of the guard pretty soon. Bloomberg news reports the p g ceo may announce his retirement. That will set the stage for david taylor to take over. He served at two terms as ceo. He interested his retirement in 2013 to lead a third around at p g. A massive security flaw in googless android mobile operating system. It allows hackers to disable an Android Device simply by sending a text message. Google has notified its hardware and Software Partners and provided those are your top headlines. Matt these hackers are wreaking havoc. Stephanie they are. A lot of work in her moms basement clicking away. Matt i would not say that on tv. They would hack into your account. Stephanie training for american ninja warrior. It is my alltime favorite tv show. Matt the athleticism is amazing. Are the Chinese Markets mirroring the crash of 1989 . We had to hong kong for an update from our own market watchers coming up next. Matt hong kong, there. A party there in hong kong. Except for the fact that chinese stocks fell for the second day. The shanghai composite the eighth. 5 side we saw yesterday. Tim, Bloomberg Intelligence Asian Research director in hong kong joins us now. We are hearing more and more comparisons to the chinese stock market drop and the 1929 crash. Is that a fair comparison . Tim i would say no. There are drastically different underlying economic fundamentals between the two. If you just look of it the market dynamic, call it a 30 drop. You could say there are some similarities from that perspective. We have looked back at 2007 and 2009 in china and we have chatted about china having a history then retreat. 2007 saw that and failed. 2009 saw that and then recovered with a lot of stimulus and recurring growth retention here in terms of which one are we looking at today in 2015. Matt we still see big gains in the Chinese Market even with a couple drops, still up about 14 year to date on the shanghai composite. What are forecasts in the region for the index . Tim it is interesting because i think you start to break down what is actually the Chinese Market when you think about those. The hong kong traded china stocks traded at a significant discount. We as well as others feel there are ok fundamentals and the value is cheap relative to anything you would look at globally. By the same token, you look at the chinese Growth Market in mainland stocks, and they are trading at 43 times earnings. It depends on which china you want to think about. Most feel there are clearly government policymakers putting their foot underthings. Hopefully, they do not block. As we have looked at the issue, value starting to emerge if you look at larger cap stock 100 largest in the shanghai composite, those the trade in hong kong. We are looking at well below the world sector benchmarks, if we are look looking forward at earnings multiples. There is value starting to show relative to global benchmarks. Stephanie in terms of market response and what is dominating Business Media right now, this drop were seeing in china. If you actually look at the performance of the shanghai composite it has done well over the last year. How much further could we drop . If we are panicking now and the market is up when we get legitimately bad news, how bad could this thing go . Tim it is a really good question and i will parlay back to what i was discussing. Todays market move was different from yesterdays. Yesterday, everything sold off and it was a bit of panic. Today, you had financials and Consumer Sectors in the shanghai composite that are actually up. It was technology, energy, tell gone that was down significantly. In some of those areas, the higher multiple parts of the market. To answer your question directly, if you look back at the sectors and stocks trading at very significant multiples, that would seem to be where there where there is the most risk from the moment of speculation. It has been a frenzied individual investor action in china. Whereas if you look at there are 92 stocks in the shanghai composite, there would seem to be less fundamental risk that would jeopardize an investor position. It really depends on which hes of the market you look at. Matt thank you for joining us tim craighead. Stephanie it seems mcdonalds is not worth the billions he says he is. Bloomberg is the one and only place to get those numbers. I want to ask the question. Does it matter in terms of whether this guy could be president or not . Stephanie guess what we like to do here . Talk about money. This guy sure like to. Donald trump. The big news is that he is worth 10 billion. Our bloomberg billionaires team says no way. He is worth just about one third of that. Kayla joins us now and also here with us, bloomberg week publisher tim obrien, the man who wrote the book, trump nation, which looks at chomp businesses. Welcome. Caleb, lets get your calculator out. How did you come up with your numbers . Caleb mr. Trump says 10 billion to we do not get that high. We do the best we can to get the to get to that number can we look at the revenues and we look at what the Square Footage is going for, cap rates, any tools available to us in the market, and a place like new york city that is really good. We value these as if trump were to try to put them on the market tomorrow. Matt you have come to 2. 9 billion care that is still a lot of money. A billionaire is a billionaire is a billionaire. But you do not value his brand. I feel like a guy currently leading the polls for the republican president ial nominee, has a pretty valuable brand. We get to it in a few ways. Stephanie it does not mean you want to buy his necktie. A great sidebar story on the value of his golf courses. There is a real donald trump premium on those golf courses. People want to play on donald trump golf courses. He collected 32 32 million to 52 million revenue on royalties. And we collect that but we also know from looking at those disclosures that a lot of the Revenue Streams will not be there after the comments he made during the election. Stephanie you talked to us about the value of the donald trump premium. Last i checked, those seem to be on super sale at macys. Food, the food, the airlines. He is comfortably wealthy but he is an inflationary. Inflationaire. This all distress for people looking at his track record as an operator. Stephanie why does it matter in terms of him running for president . Why does his wealth matter . Is it the disparity shows he is a liar . I think it does not matter. Matters to him which is why he keeps saying it. Matt he says, im a winner and i made 10 billion here that is how good i am. Especially when he says he will fix the system and politicians do not know how to operate anything. He has a track record. He inflates a lot of his other achievements. He is essentially becoming human shingle. He gets paid a lot of money to licenses name. Stephanie wouldnt that make him a very good politician . It makes him a good promoter, someone who has become a spectacle. Matt it sounds like a politician. A good Public Servant and a legislature is an entirely different matter. That should be the standard we should judge with. His most valuable asset does not have his name on it. It is a 30 stake into buildings. California and san francisco, the premier Office Building in san francisco. That is a big one. He has 30 in the two of them. He owns wall street, which is big for him. The commercial spaces and the penthouse in trump tower. A lot of trump tower, those are sold. Stephanie how many times has he filed for bankruptcy . Never for personal bankruptcy. Four corporate bankruptcies. Stephanie put it into context for us. Big real estate, wheeler dealer tycoons. How common is that . Is it just the rules of engagement . The Gold Standard donald is not in that. Just that class. He is not a major real estate developer. The other thing that is interesting in valuing where he is at are the gulf versus. Very hard to account for. In a lot of cases, the underlying land is not owned by him. The members essentially owned the club. The valuation varies from property to property. He has clearly inflated the value of those. When he put his worth at 8. 7 billion, he valued the golf course Collection Club at 2 billion. Stephanie if he became president of the United States what he would have to do with his is this as having ownership and management responsible . He would have to put his financial interests into a trust where he would have no direct control over them. He would at 30 or 40 stories to the white house. [laughter] stephanie there you go. Thank you, jim and. Gentleman. When you love to see the white house as a skyscraper with trump on the front . Matt major averages try to snap their longest losing streak since january. Julie hyman joins us now with the individual movers you need to know about ahead of the open. Julie i am getting a little social looking at the analyst calls on some of the social Media Companies that will be announcing earnings. Twitter is one of them. Shares are little changed. Bank of america saying that definitely expectations are low going into this report. Analysts at bank of america saying there is a lot going against twitter pushing those expectations down, including channel checks that have shown softness, including the ongoing search for ceo. Take a look at what the shares have been doing. Remember, this is when it where it cut its for your Sales Forecast after first year were reported. Right around here is when the company said youd be stepping down as ceo and it is still looking for a permanent replacement as jack dorsey is still there on an interest asus basis. Given all of that, bank of america says we think likely expecting monthly athletic athlete users. That is one of the numbers we will be watching after we await the results after the close of trading. We will be looking for yelp numbers. Deutsche bank is out this morning cutting ahead of those results and talking about reduced confidence in its business and Strategic Value saying the local Online Advertising has turned out to be harder to monetize than anticipated. Those shares are down ahead of the bell this morning. Linkedin which reports later this week on thursday, and km partners 285 dollars, obviously well above where it is today. It says talent and marketing alone justify this stock as a best in. That is boosting the shares. Stephanie thank you. Thanks social. It is time for this mornings picture this. Numbers and a tongue twister. The first, 3. 2 million years old. I am talking about jesuss nextdoor neighbor. The age of the most complete gallatin skeleton of an early human ancestor ever. President obama met his girl lucy, the female that illustrates how humans are connected. Even donald trump, the head researcher, jumped to the president look at this. A lot more cute than a bunch of bones. How about the second one, matt . Matt the panda. 37, how old hong kongs panda turned this morning. She rang in her birthday in style. I wonder if she is spread and it. Maybe she would be a story. Give birth. That would be a story. Mom has always been one of those people who needs to keep busy. If shes not working in her garden, shes probably on one of her long walks with bailey. She was recently diagnosed with a heart condition. I know shes okay, but it concerned me shes alone so often. So i encouraged her to get a medical alert button. Philips lifeline offers the best options to keep her doing the things she loves in the home she loves. If she ever falls, or needs help, i know we can get to her quickly and with her condition that can be critical. And even though she doesnt typically go far from home, the button always goes with her. These days, shes still as busy as ever. Just the way she likes it. Innovation and you. Philips lifeline. Lifeline is americas 1 medical alert service. Visit philipslifeline. Com caregiver today or call this number for your free brochure and ask about free activation. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Stephanie good morning. You are watching the second hour of Market Makers. I am stephanie ruhle. Matt i am matt miller in for Erik Schatzker. A lot of talk about earnings. 40 companies are out with earnings. For is out with earnings. Some arma companies. China, a selloff there. Oil and gold down. A lot is going on beyond the panda. Am i and i am excited. Stephanie we are bringing in one of my favorite technical analysts, milton. He says hershey bars can tell us about the price of gold, which he believes is going down. Stick around for that. Matt we have breaking news. Home price numbers are out here and lets get to vonnie quinn for the breakdown. Vonnie the composite index month over month was down almost. 2 . Looking for an increase of. 3 month over month. That brings the yearoveryear gain to 4. 9 , which is midsingle digits. A pretty tepid gain in house prices in the composite index or at it as a threemonth composite index as well. It is lacking a little bit. The final month is made. We are looking backwards a little bit weird we did see better earnings and better housing data recently. It is an indicator, the biggest month over month decline in several months. Stephanie thank you so much. Here now is a look at the other top stories of the hour. Two big drug earners reported earnings today. Profits Beat Estimates in pfizer. The company also raised its forecast because of sales of a new drug that could fight breast cancer. Earnings were better than expected. Merck also raised its profit forecast for the year. John kerry is now back on set on capitol hill. The secretary of state will try to persuade a Ethical Congress to support the iran nuclear agreement. He will appear along with the treasury and energy secretary. Matt president obama wrapped up his fiveday visit to after today. As he did in kenya, the president called on them to and what he calls the cancer of corruption. President obama when someone has to pay a bribe just to start a business or go to school or get an official to do the job they are supposed to do anyway that is not the african way. It undermines the dignity of the people you represent. Matt president obama also said africas democratic process is at risk when leaders refused to give up power at the end of the terms. President ial candidate donald trump says he is worth more than 10 billion and we have come up with a different number. The bloomberg billions billionaires index says 2. 9 billion. The majority of trumps fortune comes from real estate holdings. The Bloomberg Index does not value trumps brand e. On account desha county for licensing deals and business partnerships. Those are just some of the top headlines we have got for you this morning. More red for chinese stocks in the chinese stock market as well. If you have been tuned in at all, you have heard about it. That shanghai composite index dropped another 1 after the climbing a most in 2007 yesterday. One investor said it is not a time for panic but a time to buy. Capital management ceo quits Chris Mcguire joins us. Why would you buy into the market when it is so clearly being manipulated by the Chinese Government and you do not know which way they will go next . Chris the government wants the market to go higher. They have prohibited shareholders and companies 30 higher from here. Were starting to see a lot of capitulation from retail. Retail drove the market up and they are selling because they are getting caught on margin calls and any sign of forced things down. We are seeing the capitulation that is giving us opportunity. Matt is it wrong to characterize the average Chinese Investor as a gambler, someone playing the lottery by investing in the stock market . I was always attracted to trading stocks because so many chinese do flock and they do like to gamble. There is a mentality that, for years, as we have seen in the hong kong markets where investors are speculating rampantly, we see that in the mainland as well. We do classify a lot of Chinese Investors as gamblers. Stephanie do those investors realize the risk they are taking at this point . Many professional investors said, i am a qualified if to show buyer and i know what im doing. When the markets froze, they were truly screwed and unprepared. Compare them to the Chinese Investors and the sentiment around those investments . I think it is short memory. Exactly what you say, what happened when the market ran up and l justice asked him a we are the that again here it markets repeat themselves. Investors that may not have been involved back and have been involved this time. There is euphoria. Investors tend to be lemmings and everybody in china is running or the next way to make a buck. We are seeing it the other way where they are all getting caught and everyone is running for the door at the same time. Matt you are buying here and expect chinese stocks to bounce back as the lemmings go back to the casino, basically. Chris i do believe that. This will be volatile. After the market bottom july 8 and ninth, we saw the market bounced back and it was still not clear whether we would see more foreign buying. The market fell 8. 5 . It happened with trade. Probably some more testing of the downside for we presume a high. It is a good trade market right now. Matt i wonder what you think about the fact that so many stocks were suspended at so many buyers were not allowed to sell. Wont they open up the floodgates when those restrictions were lifted . Stephanie those are the opposite of the trade market because you cannot trade those . Chris 25 in china have been suspended. We try to stay with what we consider the safest areas. The state owned companies that have listings and hong kong as well as china, and shares we feel are not going to be close. The 100 billion dollar market Cap Companies. A lot of smaller Cap Companies still remain closed and we stay away from that. That is definitely not for a foreign investor. It will take more time for people who have comfort buying those shares rapidly. Matt bounced Capital Management stays in the hong kong shares . Chris we do invest in the mainland but we tried to strip stay with shares that have dualistic. Bank of china. These are state owned enterprises supported by the government, the blue chips of the market. We are staying with the top 25 stocks. Matt thanks very much. Stephanie coming up, prices of gold have hit a five year low. The next guest says hold on tight because prices will go even lower. We are talking gold and a whole lot more with top market technician milton berg. Stephanie welcome back. Look at the beautiful city of san francisco. That is why rents are so high. It is not tech evaluations. Here we are in new york city where it is just sweaty. We are talking gold. Prices have still not hit bottom. That is the call of milton berg, whose Market Research focuses on technical data and historical analysis. Up more than 32 since inception back in 2014. Milton, youre one of my favorites. Welcome back. Talk to us about gold. I feel it was 2011 just before the highs, when he said gold would take a turn. Milton i managed a gold fund. I did Much Research about gold and i found people do not know how to value gold. It is except that gold is an inflation hedge. The inflation rate doubled from 1982 2000. The price of gold was cut in half. Gold is not an inflation hedge. It is a very speculative commodity that moves longterm with the price of inflation. Gold, unlike any other commodity in the world. Every commodity the world is consumed beer and oil is consumed. Wheat is consumed. Any bit of gold ever mind is someplace and someones cufflink or a womans necklace or in a central bank vault. To apply increases each year, you hope the demand increases to match supply. The way to price gold is to see what gold could buy. Hershey bars are a good example. I thought i would compare an ounce of gold, a bar of gold to a hershey bar or a bar of chocolate. That did not work because hershey bars change sizes over the years. Now we do one ounce of gold to one ounce. At the top of 1980, it took one ounce of gold and 2850 hersheys bars. The top of 2011, 1 ounce of gold worth 2800 ounces of hersheys bars. If you measure gold based on historically, you know in 2011, it was at an alltime high. Going back to 1932, gold traded on a hershey bar basis the median level roughly 950 an ounce. I would say 950. If you study markets historically, every market has been way overvalued. It always goes to a level where it is undervalued. The price for a hershey bar in 2000 relative to gold was for budget 66 it means were at a bear market in gold. It started in 2011. Gold was way over priced at the time. There is hyperinflation. You do not have to buy an ounce of gold. I studied zimbabwe and germany. In germany, there are two peri ods during the hyperinflation time. Everything even value is inflation. There is nothing unique about gold except for the fact it is very speculative or you can fall in love with gold. It is a beautiful thing. I imagine gold will bottom somewhere between 700 and 950. It is not just hersheys ours. Going to succession 22, on a Housing Price basis, roughly 950, but at the 2000 lows. Matt i was thinking supply and demand, the availability of cocoa has an effect. You compared it to others than chocolate. Milton if you can buy many things for the price of gold, then gold is overvalued. Gold is still somewhat overvalued. Technical analysts, you go from over to undervalued. Stephanie why are we seeing for the first time the hedge funds actually creating against gold . In 2006, we started to collect the data. We have not seen this trade. Why are we seeing across the hedge fund community, in the hedge fund community, short for the First Time Since the data began being collected. Why . Milton hedge fund finally went short. The reality is people believed in gold and they were not willing to bet against gold. Some of the smartest people on wall street, i will not mention names they all bought gold and held gold and never sold gold. The other hedge just the other hedge fund, you will not go short against these kinds of wall street. Gets overvalued and undervalued. People are finally recognizing the fact they are in a bear market that has not ended despite the fact will probably get a shortterm rally here due to the fact the hedge funds have shorted gold. Matt you do not think gold has any value . A lot of gold bugs say it will have a value as currency. Obviously, most economists do not agree. Ben bernanke famously did not agree when he testified in front of congress. Milton it cannot be a Capital Gains tax on a transaction. I do not think how much i paid. Since gold is taxed as a capital gain, it cannot be a currency. I believe all Capital Gains should be abolished. Your apple stock could be a currency. Stephanie we have to take a break. Before we go, what is the trade to doing gold . Milton a longterm investor should wait until gold guest to 650 before he advised. A trader should go against those hedge funds and by now for a shortterm trade area gold stocks showed record volume on the downside last week. Gold did not. Down 70 in two years. The miners show the technical things you look for at the bottom. Record on the lows. Matt instead of playing the miners which they were doing historically. We will take a quick break. Stephanie dont go anywhere. Market makers is next. Stick around. Matt lets check the top headlines. Less than an hour from now, the Obama Administration resumes its sales pitch for the iran nuke your deal. John kerry will go before a house committee. The secretaries of energy and the treasury, they met last week. Congress is expected to vote on the plan early in september. The president already said he would veto any rejection. Microsoftss latest operating system tonight at midnight. The company said it will be a Free Download for anyone who has the home or pro versions of windows 7 or eight. Tech watchers it will sit say it will be more like google or apples ios system. The f1 50 pickup is driving profits. The automaker surged a 44 rise in earnings beat expectations are 90 of 40s profits are coming from the new f1 50 featuring an aluminum body. Ford offered discounts of 10000 on some of the trucks. The average incentive was 3600. I will talk to the cfo bob shanks in just about an hour and a half. I am excited. Stephanie when we come back, we will speak to the one and only milton berg, turning our attention to stocks. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Stephanie my god, it just gets more and more beautiful in san francisco. You tech geniuses and your beautiful city. Matt and i are in another awesome city nyc, and we are a few minutes away from the opening bell. The google markets executive editor is here. Milton berg is still here dropping some serious knowledge. Im glad you are sticking around. Tracy, hit us up. Tracy chinese stocks, we had a big fall yesterday. They were down about 1. 7 today after they fell and then they were up 1 at one time. Volatility is the name of the game in chinese stocks. I want to give you an example. Take a look at the china industry. This is a largecap stock in the Chinese Market. It is acting like a penny stock. Look at that. It jumped 66 . Then it was down 10 by the limit order yesterday. We have got major stocks in the Chinese Market right now that are acting like any stocks. Imagine if you are a chinese Retail Investor and our trading that thing on margin. That has got to be painful volatility. Milton i think it is a correction in chinese stocks. Many corrections at 30 . It is rude to suggest chinese is headed for congestion. It is still making a profit on the air. Matt you pointed out we cannot draw from this 1929 that 1930 will follow. Milton fighting against the markets. Just after the crash, they started the lowering rate. In china, they are fighting in favor of the market. It is most likely just a correction at this point. Tracy number two, milton was too polite to name any names for hedge fund managers. I am not so polite. Lets take a look at david einhorn. Stephanie it great poker player and financial analyst. Tracy his Insurance Company is being, for that gold. They have about 10 of Greenlight Capital raise portfolio. The shares are down quite a lot. I think theyre back down to 2011 levels. The market is taking a look at that long position in gold. David einhorn has always been animate adamant that they will come back to hunt the market come we will get inflation and you want to invest in gold. It seems like the market does not believe him at this point or they are not on board with that. My view is just the opposite. That is antimoney. The credit has to be unwound. It inflates the economy. Greece, puerto rico and so on. To argue to buy gold as it is just the opposite. It will be deflation because instead of actually reducing inflation. Matt you do not believe you do not believe that gold is an inflation head . The price of gold was cut in half. Stephanie are you paying attention to puerto rico and greece . It is the canary in the cold mine. It will haunt us and hurt us. Stephanie those who say that greece is isolated to not milton where all isolated. We are all involved in the same trouble in isolation, and it will affect us negatively. Tracy should we do the last one . The bloodbath in the market and commodities combine in a package in south africa. Tomorrow we will get south africas unemployment rate. It is forecast to be 26 , the highest of the 65 countries tracked by bloomberg. What is happening in south africa are the Mining Companies are cutting back due to them i get nervous the market nervousness. Stephanie isnt something we would Pay Attention to . Milton it is a free economy. The government involved in mining takes actions away from businesses. If theres an option to shut down a gold mine and open an apple store, people would do it. Stephanie here is what she believes investors care about most. 9 30, when the market opens what are you focused on . Holden milton it majorly oversold. The markets it have rallied. Nasdaq made a slightly higher high but for the rest of 2000, the unweighted s p heading headed oh, and that is something to worry about. Matt what does that tell you . Milton correction is not over. Longterm investors should not be in the stock market. But the money in cash, and one or two or three years after the road, traders, and i was a traitor, they will be out of the market because they did not like the current action. Stephanie if you think the market is overvalued, what do you think about tech investors on the private side . We are seeing putnam type investors pile into the eye that Tech Companies thinking we are looking for the next uber. Is the bubble going to burst . Milton it is a sign the bubble will burst. Investors are doing things they would never done 10 or 20 years ago. Stephanie like what . 10 years ago they were saying let us double down on triple lending . Milton now they are getting involved. They know it is not liquid. Matt let me ask what you would put your money on. If you wanted to sell all of your stocks into cash and not to own gold or buy it until 750 where are you going is there anything you want to invest in rather than just sticking your cash milton cash will be king for the next couple of years. You can buy stocks cheaper with higher yields down the road, two or three years down the road. Institutional investors should be out of the market now for the next corrections and. It is possible a bear market is a getting. Tapering is the equivalent of tightening. The fed is no longer putting money into the economy. The economy is having trouble with the credit they have in the oil business. Matt how yields are real problem . Milton they borrowed money they cant pay back. Government debt student loan, those are big problems. Puerto rico, that is the tip of the iceberg. Youll have many minutes of these defaulting. Matt you are all doom and going here. Is it as a gloomy as 2008 and 2009, or are you expecting a less severe downturn . Milton i do not like to predict how far the market will go. On the typical stock ratio, it is more overvalued today than it ever was in the history of the United States. The median price of these ratios the median, not the average, the median price of these ratios is the highest in the history of the United States. Never since 2000 has it been so overvalued as it is today. Stephanie a you scratching your head as to why more investors are not paying attention . Milton as long as you have money, the money goes into the market, the markets are going up. It takes a while for investors to realize they are overpaying. They think if stock is moving up they mustve bought it cheaply. We dont like to take longterm views based on the longterm view. We like to take advantage. The investors are pushing the market up or down. Matt when could we see a turnaround . We have had five turnaround days. Going back down . Milton the peak may be now. It might be a minor rally going into september. Looking at the background people are saying that it has not tightened it you do not need a fed to create a bear market. You have people that have borrowed so much money they can no longer are a loop. The saturation level the saturation level and the debt of the United States, and its cannot borrow much more. Students cannot borrow money. Corporations are little better off. Some corporations. They are borrowing money to buy back stocks. Theyre making the mistake they made in 2006 and 2005. Stephanie before the break we asked tracy her number one female artist. She didnt want to answer. She said alanis morissette. Matt how shocking is that . Stephanie thank you. Is that your normal ring tone . Matt that is very weird. I dont know what happened. Let me close by saying that it is fascinating to hear from someone with a gloomy outlook but is not a cold bug. Those things a gold bug. Those things usually go hand in hand with my inbox experience. Stephanie always a pleasure and an honor. Milton berg, the founder and ceo of indian visors. We will take you to julie hyman for a look at what is moving at the open. You perked up more when i said ani defranco. Julie not much of a rebound. The major averages are up on the strength of consumer earnings reports. A 44 surge in secondquarter profits. That is thanks in a large part to the f1 50 f150 pickup. Secondquarter profits are boosted are beating analysts estimates for ups. It is not only about weight, but it is about dimension to deliver packages. Also wante to draw attention to comments about the u. S. Economy. Saying the gdp growth will be the ceo is saying that we are cautious about the u. S. Economy. Were watching pfizer. Only about 9 10 of 1 . The Company Raised its earnings forecast. They have a new drug to treat breast cancer. It has been doing quite well. In addition some of its legacy drugs like lipitor, accor, and pregnancy are selling better. Matt well continue to cover that throughout the morning. Speaking of markets, the ecb has approved graces market reopening according to officials. We will talk about that when we come back. Greece and its creditors are in athens to work out the terms of an 86 billion euro loan. If the talks fail there is a secret plan b. Yanis varoufakis told investors that he had a plan to hack into the ministrys database to create a parallel payment system. Hans nichols has more on the story. He would have to hack into the system because the creditors currently watch over it . Hans the idea was the way to get into the system to create a parallel liquidity would be going through the back door so you didnt let anyone know among the creditors that you are planning to do this and you had a contingency plan. He let the cat out of the bag speaking to hedge funders on a conference call. His words are pretty remarkable. We were planning to create a reserve account attached to the tax file number. Just a have a system function under wraps and at the touch of a button would allow us to give the numbers to taxpayers. Hans we know that this is Yanis Varoufakis defending himself. He said he handed this plan to his predecessor, the current finance been finance minister. The plan is still there. If they want a reserve currency, they can still do that. Yanis varoufakis claims that he was authorized to do that before the Prime Minister was Prime Minister. Think of it as a president obama as president elect gave orders to his finance minister to have a secret plan. That is the authority that yanis firefox caucus that yanis map caucus that varoufakis is resting his claim. No one disputes that both cl signs of had plan b. He tapped in old childhood buddy that was a professor at Columbia University to develop the plan to hack into the systems so they would have it. We dont know to what extent that alexis siebers new about the plan as it was being developed. That is something opposition members in parliament will be talking about. This is overlaying talks that have gotten off to the wrong foot. Mission hates will arrive in athens tomorrow to try to make progress. Titian heads will arrive in athens tomorrow to try to make progress. Matt i will go online to sign up for that professors classic Columbia University. I bet a lot of incoming freshmen will be excited about it. Stephanie thank you so much. Columbia university will be amped to have matt miller their auditing a class. Ok. Heres a look at our top stories. The rise of prices in 20 major u. S. Markets cooled slightly. That is the rating in the s p. Property values increase in may by 4. 9 over the same month last year. Ending in april, it was just 5 . Procter gamble could have a change at the top. Ag lashley may retire as ceo this week. The successor is david taylor. He interrupted his retirement two years ago to lead the turnaround at png. And there might not be a new female ceo at procter gamble, but there is a female coach in the nfl. She is joining the arizona staff and will coach the inside linebackers during the cardinals Training Camp during the preseason. She played running back in the football league. She was the first woman other than a kicker to play in a mens pro league. Wow. Look at the guns on this woman. She played in the pro league not the Lingerie League i recently learned about. Matt how did you learn about that . Stephanie accidentally. They say no risk and no reward. The investment that has generated 250 per year for 12 years. Where you find that kind of return . A den in time. Stay with us. Matt coming up, ford motors cfo bob shanks will discuss company earnings. That is definitely something you do not want to miss. Matt because we are bloomberg we want to give you numbers. 40 is how old Alex Rodriguez turned yesterday. The second number is six. The number of times he has hit a home run on his birthday. He did that yesterday. Four is the number of people in an exclusive club that he joined last night. Only four people in Major League Baseball have hit a home run before they turned 20 and after they turned 40. Stephanie happy birthday, alex. Nice job on the homer. Ill be a had is good at the birthday night as i had. Last night, i got to see an extraordinary show in new york city. Broadway is big business. More than 13 Million People attended the theater in new york city. The take was 1. 3 billion. Do you want to know how you can enjoy a great show and get a piece of the action . Theres an insiders guide to producing and investing in theater. I caught up with the author. Stephanie it is matinee day and i am walking in the new york city theater district. Who better to talk with about the hottest ticket in town . It hasnt even open yet and has the largest advance in history 27 million dollars. Is that a guaranteed the producers will make out like bandits . Weiss it is a show that will change her life. Youre walking away with all of that money. If 2 million to put that show on broadway and you have 27 million in the bank and you have not even opened. Stephanie lets talk about what hamilton is to investors. A hiphop show about american history. How do they show like that end up with a producer putting in real dollars . Weiss it is a production from a public theater. They said we want to try something new and we trust the creators. They ended up with hits. Stephanie hamilton captured the imagination of theater goers. That is not the case for most. Youre saying that eight out of 10 shows fail. Are you to know that wicked will be on top, you have to be someone with a deep understanding of the theater business. Weiss this is a slot machine. Instead of making a thousand dollars on the slot machine, you could be making millions. Stephanie the return on a hit can be bigger than the best stock in the market. Take wicked for example. Weiss the original investors on a show it is reported they are making 250 per year on their investment. Where did you find that . Stephanie you have to know what you are doing. Weiss what is a producer has two jobs. To be aware. All of my time and energy is spent on one project. Stephanie what is a typical minimum investment . Weiss 10 million. Stephanie they say the performers have it in their blood. It is the same for the people behind the performance. Weiss theyre passionate about the culture and making money. It is the combination. Stephanie the at her investing is high risk, but i had the pleasure of seeing hamilton last night along with the joe biden who was in the theater. You have to see it. Tuned in to todays options insight sponsored by td ameritrade. It is 11 00 p. M. In tokyo, and midnight in sydney. Welcome to the bloomberg market day. Loving the new aluminum bodied f150 pickup. Matt it beats estimates, and you can thank a strong over these over season. We will talk to their cfo. The first to buy the new dr. Seuss story sense he died 25 years ago. Olivia good morning. Im olivia sterns. Matt we have a measure of consumer confidence. Julie hyman has the results. Julie 90. 9 was the reading for the month