Transcripts For BLOOMBERG Market Makers 20240622

Al qaeda leaders as they plotted the 9 11 attacks. An afghan official says omar died two to three years ago across the border in pakistan. The taliban says the group will release a statement shortly. Congress will question pentagon officials today about that iran nuclear deal. A Senate Committee want to know how the agreement could affect the military balance in the middle east. Yesterday, secretary of state john kerry test of ride before a house committee. All makers from both parties sounded skeptical about irans promise not to build atomic weapons. Matt microsofts new operating system windows 10 was released at midnight. It sparked a surge of computer buying but that is unlikely this time. Still, microsoft Vice President told bloomberg that this launch is very important. This is a pretty significant launch for anybody who uses pcs and wants to get things done with technology. We have had big window launches that have brought in things like enabling the internet to happen. I think with windows 10, we are going to reignite peoples excitement around pcs, take that devise people use to get work done and creativity done and we are going to rejuvenate it. Stephanie do you foresee any scenario where you are going to get excited about a pc . Matt no, but i got to tell you something. I am excited about this release. Apparently, the operating system is more like android, ios and it is a Free Download over the internet so it is not oldfashioned microsoft. It is new. It is for the kids. It is very, very exciting. Yelp with shares down as much as 90 . The Customer Review website has cut the revenue forecast. Yelp said they will stop selling National Brand advertising. The company says local advertising will have to drive the growth. I admit that is less exciting but a big drop. Stephanie a very exciting one next. Matt in pro football, looks like a court battle before tom brady plays a game this season. Roger goodell has upheld the fourgame suspension for the new england quarterback for the deflategate scandal. Roger goodell says brady tried to conceal essentially relevant evidence by destroying his mobile phone. The league has asked to confirm Roger Goodell was in his right to a pulled the suspension and the Players Union says they will appeal. Brady responded i have never written, texting, email anybody at any time anything related to put air pressure before the issue was raised at the afc championship game in january. Go to suggest i would distort the phone is completely wrong. Died as a patent denial, that is what i would say. Stephanie maybe he and Hillary Clinton can talk about this matt and richard nixon. Stephanie no, lets take a minute, you are tom brady the worlds best wellknown athlete and barry to the west the best wellknown supermodel forget deflategate. Lets talk about what is in his phone. Lets talk about what is in all of our phones. Can you say every text, email history and photo in here you would be comfortable, ok with getting searched and possibly getting released into the public . I could understand my tom brady separate from the flight i think a, would not want this information out there. I dont want my phone. Matt thats true. He denied destroying his phone right . He says that that is patently not true. Stephanie he is not saying he denies destroying his phone, he says he does not have any information on there that would matt so he did destroy his phone but he is saying, like killer clinton, trust me, i went through the emails. Stephanie just because he does start destroyed his phone does not mean it has to do with deflategate scenario. What im saying is, would you be completely comfortable with everything that could possibly be inside your mobile phone, would you be comfortable having that out there for people to go through . Matt i would show it to Roger Goodell. Stephanie you know what . Im not saying i would want the whole world inside of this and im not the worlds most famous athlete married to the worlds most famous supermodel. Matt i would share my phone with my boss, though. Stephanie could you trust of a good just to your boss . The tabloids could not care about anyone more than tom and gisele. Matt im start to wonder what is on your phone, to be honest. Lets get to the five things you need to know this morning. Stephanie number one we are watching twitter. Maybe you want to see whats in my twitter account. Secondquarter revenue exceeded expectations after the bell yesterday. Julie hyman has the details. Julie, we want to see what is in your phone and what you are saying with twitter. Julie maybe we should all release our direct messages in the exercise of folk cooperation with the authorities. Twitter with an interesting story because the shares initially rose after results and then jack dorsey started talking on the Conference Call and decided to be candid in his first Earnings Call as the interim ceo of the company and said it was facing challenges. He said he was frustrated with the pace of improvement said the company and the pace of user growth based on the product improvements that the company has made. He said they have a long way to go. He and the cfo said that it will be a while before they see more of a meaningful pickup in user growth after they sought anemic growth of just 2 million users on the core bases last quarter. The shares are down about 10 in the premarket. You see the year to date chart where they plunged after the last earnings report. The irony here is that dorsey is actually getting good grades from analysts who are happy about his candor. What im happy about is that he termed the beard. Matt he still looks like a pirate. Number two is facebook, earnings after the bell today and analysts will be watching, obviously, how the investment in advertising are paying off. That will be key for them as it was for twitter. We will be watching as well. Stephanie you get to go from scotus some social and i get to go to d. C. The Federal Reserve releases the statement at 2 00 p. M. Today. Economists and Bloomberg Surveys see virtually no chance of an interestrate an Interest Rate hike. They will scrutinize the hint for any hint that policymakers are inclined to move in september. Said officials will not be meeting in august. They will gather again september 2016. September 16. Matt plus of the people i discussed said they should just change the month but if they do think now that they will raise this september, they will have to intimate that. Number four, chinese stocks rose for the first time in four days. Interest from Retail Investors and margin traders has totally waned. Turnover was the weakest in almost two months but you had a little bit of a dead cat bounce. Stephanie womp, womp. I will get you straight to number 5 barclays is up in the premarket after reporting earnings this morning. Investment banking and credit card operations drove the Second Quarter profit. Barclays chairman John Macfarlane says he will step up the pace of his overhaul of the bank. Macfarlane byard ceo Antony Jenkins earlier this month after growing frustrations over the pace of restructuring. Investors and the markets seem to like that. Matt he apparently fired a couple of abs traders as well, so it will be interesting to watch. He wants to speed up his restructuring and it will be interesting at details rollout. Back to twitter, on the Conference Call made by the twitter owned periscope cap, if you do not know it, it is just like you found something and broadcast it. Interim Ceo Jack Dorsey says twitter should have a bigger appeal. Jack dorsey as i have spent the last few weeks really considering what is in front of us and what the present status and the future, it is really around aligning our execution and service and making sure that we are communicating the service more. We are communicating that to a very broad base. We do think twitter and everything found within twitter has mainstream appeal. And not targeting particular demographics. Matt i wonder if some employee had to sit there with her phone the whole time just going like this periscope this atbat. Stephanie probably. Matt for more on twitter, lets bring in executive Vice President and chief research officer, crawford, the twitter numbers were better than wall street estimates. Stephanie why do you assume it was a female employee that had to sit there . Matt i said that to be like gender i was going to say he and the quickly changed to she because i remember with whom my mom said theres with whom i am on set. I was trying to be fair with use of pronouns. Crawford, im sorry about that. Crawford im just trying to smack my phone to get all the information out of it. Matt you got to hide that before your processes. What do you think about the numbers . I think was fascinating to watch yesterday afternoon, the stock up 12 in late trading and right back down after we all watched paris go. Crawford a total whipsaw. People do not know what to expect going into the called there was a set of expectations by copy before you unraveled the sms users. Obviously, revenue was there as well. Then you get into what the actual user growth, without the sms users, was and anthony basically said, we have not fixed anything. We have a tremendous amount of fixed, so do not change expectations Going Forward from a you just saw over the last three months and that is where the whipsaw came in. I think what this translates into his dad today into is that today not everyone has something to date that is worth listening to or reacting to on twitter. Twitter needs to fix that. They need to make them selves more of a consumer platform as opposed to agree that form. I am super passionate about technology but i think the expectations on what can be based on the current state are pretty accurate based on what he said. Stephanie shouldnt we applaud them for keeping it real . Crawford sure, i mean dick costolo in some respects was writing expectation checks that he could not cash because he kept saying everything is ok but it really wasnt. Stephanie why keep dick costolo on the board . If im jack dorsey, weeks after i tell dick sayonara, and i have a call like this, it really giving investors and analysts to score, why would i keep him . Why would i want him anywhere near me . Crawford i think dick has a lot of equity not only on the board book but with a lot of partners who they work with and who they brought in. I think that is probably powerful. He was also a face to the organization. Again, i think it is about innovating faster and bringing new solutions to market faster. I think once you move dick away from that, he can be useful in another role. Matt revenue was half 1 billion and i wonder we probably asked the same questions every quarter, but the users they have are extremely engaged, is that not right . More engaged in other social network. Forms. Crawford twitter users are super engaged because twitter is a place we can get a platform and if you have an ability to Say Something people want to hear, it is an awesome platform to have a onetoone connection. This was made for celebrities to have that one for one that onetoone connection. If he was into what dorsey said, they want to turn it into something that is more of the news and entertainment site. Good thing you go to to get information. In has to be a heck of a lot easier to use. The Associated Press releases press releases but that does not mean you go there to read press releases. You have a news outlet to interpret. Twitter wants to be that news outlet that is a lot simpler than what they are today. Theyre too complex to be that today. Matt crawford, thank you so much for spending time. Stephanie coming up, september signals. According to a Bloomberg Survey of economists, there is a 5050 chance we will see a rate hike in september. We will find out what kind of things investors will be watching for in todays fed statement. If it is 5050 matt and i are going to coin toss for the next hour and a half. I say heads. Matt i want heads actually ill take tales. I prefer that. Matt and 2 00 p. M. Today, Federal Reserve officials were released a policy statement following the twoday meeting. Although there is a near zero chance of a rate hike this week, investors will examine the statement for clues. The feds next meeting will not be until september which some have said could be the earliest policymakers would make a move. In fact, 50 expect that. Brazil hancock, Global Fixed Income strategist of j. P. Morgan asset manager joins us and also bloombergs mike mckee. We are always going to go through carefully every fed statement but this statement is likely to be different from the one we got last month. Brazil i would expected to be similar, may be a small clue and comment. Last time they said energy had stabilized and weaker now, maybe you will see something about that. Basically growth and employment around the same track in june and they made the big move in the june statements so i would expected to be similar. Matt what are we seeing change as far as Economic Data . We have had housing data, Consumer Confidence data that may have changed. Mike there is not a whole lot of change over the last months where the economy is. It is a little stronger in the then the First Quarter but they had said all along that the economy develops as we forecast and it is that we will raise rates this year. The only question is when. Everybody on wall street is really going to look at these statements and yes they may not change a whole lot but they only have to change a word or two and people will get excited about the possibility of a september move because they are already thinking that is where they will be. The fed once the market to continue leaning in that direction without locking it in. Matt if the fed is leaning in that direction and wants the markets leaning in that direction, doesnt have to give us some kind of clue this is coming in september . Priscilla i think they will stress dated dependency. There is one word. They talk about the risk being nearly balanced. I think they removed the word nearly and that would be a strong sign. I dont expect to see that but it would be a strong sign. Like they will obviously have to change what they say about growth. It will probably suggest growth is reasonably strong and change the word moderate from the last statement, drop that. Aber market, they will acknowledge things are going well there and do they see inflation coming back and if so, where and what are commodities in oil doing . Matt walk us through these lines. We are looking at screens mike matt a fed survey that says most people will not tell us now that they will raise rates in september, but what are these lines that are most likely going to be tweaked . Priscilla, surely go through these line by line. Mike they gave us three indicators they are watching growth in the first line because they want to make sure the economy is Strong Enough and that improvement continues. The labor market has always been the key for them and certainly 5. 3 percent unemployment is very close to their target. Then they want to talk about inflation. Thats the wild card. It has not been going up and they blamed it largely on oil prices. Dude they continue to do that . Did they take of the commodity problems . Did they say anything about the dollar or china . And of course, we were just talking about the idea that they drop the word nearly from the whole question of whether or not the risks are balanced. If they do that will probably be seen as a strong signal. Priscilla i think one comment on inflation, if you look at Janet Yellens testimony in congress, she talked about quarter on quarter cbiz. Year on year cpi or court cbiz only at 1. 8, quarter on quarter is over to and she did mention that, so i think they are thinking even inflation is on the right track given her testimony. Matt they are data dependent but willing to take the data. Or look for the right data on which to be dependent. Mike they want us to walk away going, what is the august report going to say person september . Matt we are obviously going to watch those numbers regardless of what the fed stays says today. Priscilla hancock on Global Fixed Income at j. P. Morgan and Asset Management. And mike mckee who is headed to d. C. And 40 minutes to get ready. We will have coverage from there. Quick break on Market Makers. We are back in two minutes. 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. Stephanie julie welcome back. It is time for futures. We are looking once again at gold. Volatility is taking a breather at least for now. After a 10 days a lot that sense prices to the lowest in five years, the pressure is starting to ease. Old features gold futures are little changed today. What now . Joining me is scott bauer, Senior Market strategist at trading advantage and he is joining me from the cme. Scott, i was reading this morning that the average forecast of the folks resurveyed is for gold to be 9. 84 in january, what do you think . Is it straight down from here . Scott as a trader and kind of looking at the market overall, i took the contrary in angle to that. If you look at a market move what a fix is low and the market has rallied, sentiment is high in the marketplace, that is usually a place to buy protection and opposite holds true. Now you have some analysts, like you said, just piling on piling on and calling for another 100 120 drop in gold. You are saying volumes increased quite a bit. I am not saying we hit the bottom but it really looks like especially when you take the contrary view, it looks at gold may be forming a bother. I am not calling it at 1100 but it may be forming a bottom and a kind of like to see the opposite side of that going out three, six months. Julie would you be buying gold . Is there another way youd play it . Scott for the short run here, i think you stay away. You are seeing so many speculators come in and shorting gold right here. We are not at that point yet, but i think we are almost there. I think maybe you have got another 2 2 to the downside but especially once we get to september and there is more insight from the fed, we are going to get an announcement later today but with more insight and win rates will rise, i think that is when you really start dipping your toes back in. I would say in another 2020 five dollars and we get down to that 10 point 75 area 1075 area, that is a great place. I am a contraraian my entire trading career and as soon as everybody starts piling on, that is when i want to take the opposite side. Julie i know you are trading in the market but one of the interesting things i read is that with the prices going down, the u. S. Mint is seen a pickup in sales with gold coins as prices go down. Is there any case to be made for holding a little bit of physical gold . Scott third definitely is. I think for longerterm investors that is always a prudent situation to hold gold. Again, i would not go into it find that as my investment for my longterm portfolio but there is nothing wrong with it. Look at this we are down 50 off of the highs, right . There is no Technical Area coming up in the next 20, 50, one hundred dollar points. Everything is all kind of a mental point, 1100, 1000. I think owning gold is a great strategy but i do think with everybody piling on, with sentiment coming in really to the short side with speculators coming to the short side, now is the time to consider dipping your toes in the water and buying something longerterm. Julie scott bauer of trading advantage from chicago, thank you so much. Matt . Matt thank you, julie. Time for your top stories on bloomberg. More bad news for the as 35, the pentagons most expensive Weapon System of all time. The marine corps version of the demonstrated fighter showed poor reliability according to a memo a obtained by bloomberg. They said that at 35s are available for flights only half the time they were actually needed. A former navy analyst who spent 30 years in prison for spying for israel will be freed in november. The u. S. Parole Commission Voted to approve the release of jonathan pollard. He was given a life sentence for selling israel classified documents. The Obama Administration denied the parole decision for smooth relations with israel in the wake of the iran nuclear deal. The largest seller of tobacco posted secondquarter profits that the estimates. All three has raised the forecast for the a because higher cigarette prices are boosting revenue. They make small borough and virginia slams. It is also developing product for the ecigarette market. A new ceo at procter and gamble. Ag lastly is stepping down. He served two terms as ceo and interrupted his retirement in 2013 to do a turnaround of png. He will stay on as executive chairman. David kaler is the new ceo. He is currently head of global beauty, grooming and health care products. Those are just some of the top headlines we are following a bloomberg. Coming up, we will find out why one 400 billion asset manager is staying away from chinese investments and turning to other emerging markets like india. Matt coming up, Goldman Sachs chairman and ceo and Mike Bloomberg my boss, joining forces for the 10,000 Small Businesses program. They will be here at 9 40 five eastern with Stephanie Ruhle. You will notice she has left my side because she is prepping for probably the biggest interview of her career. Chinese stocks ended a threegame losing streak today but are investors breathing a sigh of relief or have they been scared off to other markets like india . Lets ask tom, he leads the team at Asset Management which has 480 billion under management. Let me start by saying, i was looking through your notes and i realized it is not just now before Long Time Coming have been visiting china and have not releasing any need to invest heavily. Tom we have been investing in china since 1985. For long time, we have maintained a limited exposure. I think that really reflects not so much the view on the macro story, even despite the market turmoils recently but we are believers in the longtime china story. But from a bottomup perspective. We find china difficult place to invest so that is why we have little invested. Matt one of the interesting facts i found we always questioned the data that comes out of china. They had claimed the growth rate of 7 or more for years and years but you note the stock market has not shown the kind of growth until the last couple of years. How do you explain that . James your rights. The correlation between gdp growth and stock market returns is very low. In part, that is due to the large data involvement in the stock market. A large proportion of the Companies Listed as stateowned and i think what that does is introduce different motivating factors that these companies are not necessarily been run purely for profits. There are other competing agendas, national service. Not surprisingly, the Earnings Growth does not correspond necessarily with the gdp data. Matt what about you look for individual companies, surely you must find some kind of companies there that have different recent Corporate Governance and real growth rates and real profit . James there are some. I think even within the states own sector we found two names that we think fit our criteria so yes, it is possible. I think matt will you share the names . James china mobile which continues to do pretty well, nice was late stock. Tetra china having a harder time with oil price but the subject for quite a bit of reform, so one of the longterm prospects look good. The majority of our exposure to china is actually in direct. We prefer the Hong Kong Market as a proxy for the mainland. Matt obviously been in the Asian Equities Team youve got to invest that is the biggest area but you got to invest somewhere in asia. You think india is the best alternative . James we have been positive on india for a long time. In fact, when you look at the gdp growth there, it has been going in the wrong direction for some years. Despite that we have invested heavily in india which tells you would like the companies irrespective of the matter in environment. We think india is still home to excellent quality companies. It is still a stock pickers market, so there are issues with Corporate Governance, failings and elsewhere that you find in the region but earnings at 30 annually despite the slowing economy. Matt i have to assume with Higher Companies well, let me ask is Corporate Governance in india exponentially better than in china . James it is very stock pacific stock specific. Matt really . James yes, so i think you find as many problems as you do in mainland china. Perhaps you are corporate scandals then in china but there is a history. You do find plenty of companies that are adhering to Good Government standards. Quite a few familyrun companies that we like that have treated minority shareholders fairly for long time. Actually quite a few subsidiaries of Multinational Companies in there as well in the indian stock market. While it is not perfect, those companies at least 10 to bring in at least tend to bring in practice from governance. Matt i had dinner with the cards and davidson ceo and they do much Better Business in india than in china because regulation is easier to deal with, rule of law, etc. You like china mobile and that Petrol Company in china, what do you like in india . Give us a couple names you think are strong there. James we like quite a few of the private sector banks so within that we would include hts see which is the Mortgage Financing Company htsc, which is but good Mortgage Financing Company. We like some consuming names also the subsidiary of sunni leader, listed as multinational some of the cement companies as a proxy for them for structured development which is a big thing for Prime Minister modi. Some of the i. T. Service companies as well which is must less about the indian story and most of the revenue is from the u. S. , in fact, but again, it has been a very very cash generative business. Matt thank you so much. Appreciate your time this morning. Coming up, microsoft goes straight to attend with the latest windows 10 operating system. Will the new Software Help ring life back to the pc market . Stay with us for the details. Matt you know time now for a look at what is ahead. Nine 45, Lloyd Blankfein and Mike Bloomberg definitely something i will watch and you should. Stephanie robel interview both of those guys. Stephanie ruhle will interview both of those guys. Shares of twitter have been down as much as 14 in premarket trading. The stock went up yesterday when they posted secondquarter revenue that Beat Estimates but shares fell once dorsey, the interim ceo and cofounder of the company, started talking. Dorsey i have not yet had impact on growing our audience or participation. This is an acceptable and we are not happy about it. Over the past few weeks, i have had a chance to get a deeper of understanding of where to focus our team. Matt user numbers rose 2 million in the past months and fewer than half check twitter every day. I cannot imagine not checking twitter for one day. The house and senate have found a temporary way to keep highway and transit aid flowing to this day. Congress is close to passing at three month extension of transportation funding. Lawmakers could not agree on a longterm plan. The Highway Trust Fund runs out midnight on friday. Amazon is proposing rules of the road for the air. Company with the government to declare a drone zone so it can go ahead with the plans for air ball package delivery. And Amazon Official quoted the idea yesterday in a conference sponsored by nasa. Those are some of the top headlines we are following. Also microsoft has officially launched the latest operating system windows 10. The first major update since windows eight with mixed reviews in 2012. Emily chang sat down with the Vice President joel on what makes this version different. This is a pretty significant launch for anybody who uses pcs and wants that kind of get things done with technology. We have had the windows launches that have brought in things like enabling the internet to happen and i think with windows 10, we are going to reignite peoples excitement around pcs, we are going to take that device people use to get work done and creativity done, and we are going to rejuvenate it. Lots of exciting stuff coming. Emily in a lot of ways, your correcting mistakes with windows 8. What is better, what has to radically changed . And the team built windows 8, they were trying to allowed to work on touch devices, so they focused on the touch experience. Like you said, a lot of people have older mouse and keyboard type pcs which there are a lot of that did not like that new user experience. What we have done is tried to learn from that experience and create an operating system that can flex. If you have a mouse and keyboard, we have the familiar start menu but it is better. Now you also get a digital and personal assistant to help you with work and find things. If youve got one of the most modern pcs like a circus pro three or convertible from hd or lenovo now, then you can transform from a laptop to a tablet in an elegant way. Windows 10 gives you the best of all those experiences. Matt emily chang with microsoft Vice President. For more on microsoft we are joined now and it looks like this release is going to be more exciting. I have to say im the most excited since the 1990s for Microsoft Windows release. Historically, when microsoft releases operating systems, it is them with secrecy and not many people involved. A have an Insider Program of about 5 Million People for this thing. Matt a beta version so to speak. If you have that amount of feedback, you are highly probable that it is not point to be as much bugs as there were in previous releases and you will get feedback from the users. Matt theyve still got the same layout, it looks like, at least as far as sharp squares grouted then rounded corners. It is a mix between windows 7 and eight, so if you are used to windows 7, as most people are at work, thisll be familiar to you. If you have a touch of us it will go back to square tiles if you want it to be. Matt it will be free for the first year question mark year for people to download over the internet . For microsoft users. It is critical for them for the strategy because that is where it they have Little Market share and there are far behind i was an android. Matt so if they launch this for free, they will hopefully grow the ecosystem and then what . They charge for later on . Ai developers, applications. Right now for mobile applications, they have about the hundred 50,000 apps compared to 1. 5 million for android and ios. They had try to convince to write that application for the windows device but it has not happened as much. Matt google play with 1. 5 million and the apple store of their with 1. 4 million, but windows is behind amazons app store. Ouch. That is the whole thing. They have a thing called universal apps so if you write an app for the pc, and they have a massive install based on that and with good standings, they want lets say the get to one billion devices, that cap can be transferred to the mobile device. Theyre hoping that gets them help to increase their mobile market shares. Matt will this boost windows . What is ring them back to the floor again with this brings them back to the floor again . I think middleclass consumers prefer the apple ecosystem. People who are into computers are using london expert no one likes to use windows on purpose other than worker bees right . If you are a pc user, you would be using some kind of windows operating system. It is the Home Consumers that they did not do well with windows 8 release and theyre hoping with so many pcs up for upgrade that this can clear the buzz and get people to buy this again. Matt have you downloaded it yet . No. Matt are you going to . I am more of an apple user at this point. Matt thank you. Health care stocks have been on fire but are they getting ahead of themselves . Next, and expose a conversation and we will find out why they give you the details in the numbers. Stay with us on bloomberg. Matt this morning, henry schein reported profit and revenue below the estimates. As it can see on the screen, not a big mess but nothing to write home about. Stanley bergman ceo of henry schein joins us from paris. Stanley, just a little bit below on both lines there. In fact, i would say pretty close in line. What happened . Stanley well, i think we are in line with our consensus from analysts that cover us. We had a pretty solid quarter. The markets we are in are quite healthy. The patient traffic is good and our topline grew to just four next to buy about 7. 5 . Actually, our upper margin grew about 45 basis points if you take into account certain onetime expenses and net result was about an 8 eps growth. Having said that, that number will be about 5 higher, mainly about 13 if Foreign Exchange were viewed as constant. Matt where is exchange turning your most and what are you doing to hedge that . Stanley well, our business is quite solid across the board. Our internal growth is about 7. 5 , so the challenge we are having is Foreign Exchange. Overall, from the sales point of view from an operating margin point of view, from a bottomline point of view, adjusting to a Foreign Exchange the business is in doubledigit eps growth. Matt what products are you coming out with that you think can help you with these problems . A what markets are you operating in that you think can help you out there . Stanley generally, if you take a look at our dental business the dental business is quite solid in the United States. The consumable sales, which is really the indicator of how business is doing in that segment, was about 5 up. And equipment we had a Strong Quarter last year in this period and we expect to have good the claimant sales Going Forward. Our dental business is quite valid and we have to continue what we are doing which is to help our customers tom at the dentist operate a more efficient practice so they can provide that a Clinical Care. I think we are doing a good job in that area. On the medical side, we are doing quite well with the id and with the idn. Large enterprises emerging to provide care and office scenting and we will continue to execute quite well there in combination with our partners cardinal health. On the Animal Health side, there is a lot of good things happening in that business, too. It is about executing. The markets are strong in the u. S. And it is a National Business doing quite well. The whole thing is about driving sales by helping our million and a half dental customers operate a Better Business so they can provide better Clinical Care and at the same time driving efficiencies through the business. Matt got it. Stanley, thank you so much peo ceo of henry schein. We will take a quick break on Market Makers. Stay with us. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Live from bloomberg headquarters in new york. This is Market Makers, with Erik Schatzker and Stephanie Ruhle. Matt good morning. You are watching Market Makers at our new time slot. Its not really ours. Im filling in for Erik Schatzker and Stephanie Ruhle is prepping for her interview with Lloyd Blankfein and michael bloomberg. That is something that do not want to miss, coming up in 45 minutes. Two wellknown Tech Companies are getting battered in premarket trading. Twitter has been down 11 . It also plunged as much as 23 . Investors are concerned that twitter is not adding users as fast as it used to. For yelp, the website reduced its revenue forecast and will stop selling National Brand advertising. Expenses climbed in mastercard the secondlargest payment network. Secondquarter earnings still matched estimates. A stronger dollar has heard from overseas there is no sign that u. S. Consumers are spending the money they saved because of cheaper gas but what are the heck the heck are they doing with it . Home prices look bubbly. Robert shiller admitted that the Housing Market can be irrational. Robert if you think home prices are too high and heading for a fall, the best thing you can do is not best. You cannot profit from the knowledge that theyre going to fall. That means that kind of knowledge does not get into market price. Matt the newest case schiller index shows that the increase in housing prices slowed down to a little below 5 in the last year. In pro football, the battle over tom brady is headed to court. Commissioner Roger Goodell has upheld before game suspension of the new england quarterback for the deflate gate scandal. He said that brady tried to conceal potential evidence by destroying his mobile phone. The legal leak has asked the court to the legal right to up hold the suspension. On facebook, brady responded ive never written, texture, email, anybody at any time, anything related to football air pressure. Before this issue was raised that the afc championship game in january. To suggest i destroyed a phone to give not give the nfl information is completely wrong. He is not denying that he destroyed a phone, but he did not pitch the destroying to avoid giving information to the nfl. Said officials will begin releasing their statement at 2 00 p. M. Following their two day meeting. After today, the next meeting will not be until september and they will all destroy their phones. No im just kidding. Carl a Bloomberg Intelligence is here with me now. I guess a fed official would destroy a phone. When ben bernanke is done this is a transparent system. We get the transcript in five years time. That is the case of the june meeting. Matt i hear they do not want to be as transparent as they have been. Carl they do not want to be too explicit. They do not want to commit to september in this meeting because we had big developments tomorrow. We get a first look at q2 gdp. They will not have information at that meeting could in addition to revisions to gdp they will have extension on revisions going to 2012. That could change the economic landscape between today at 2 00 in tomorrow morning at 8 31 a. M. Fed policymakers do not want to pretty commit to september, but they want to lean in that direction. There are two ways they can do this. One, they can tinker with the economic assessment, but the assessment as it was written about the june meeting really has not become outdated given the recent economic news. We had a somewhat soft employment report. Retail sales disappointing. Consumer confidence falling back. The assessment engine works today. They could effectively change the dates on the statement. The second path is to matt basically not a lot has changed. We will parse the fed statement with a comb as we always will but you do not expect really much different. Carl what could be news here because we have ever gone into a titan cycle in recent memory going back to last tightening cycles. The fed did not single something at the meeting before the tightening began. September really is the start date they need to give us some sign today. The Second Channel is the balance of records. Right now they are saying the balance of risks is nearly symmetric. They went on to say that the balance of risk is fully neutral that would be an indication that they are really leaning toward rate increases. Not explicitly in september, but the second half of the year. That could be the moving part today. Matt do you have a boozy lunch scheduled for 3 00 . [laughter] carl no boozy lunch. I will be in front of my bloomberg terminal. Matt you cap your templates ready. Carl it certainly looks like a nonevent. It would be the last nonevent fed meeting for some time. Policymakers do not want a big surprise when industry move comes. In five weeks, there will be plenty of opportunities to signal their inclination. Matt why do only 50 of participants in the survey think there is going to be a increase in september . It seems to be the consensus of everyone who comes on live television. Carl the fed wants to hold up the option to go or not go. They Economic Data is a fed rate hike in such an economy and we are not quite there yet. The economy is good, but not great. Were going growing 2. 5 . Consumer spending is not great. Theyre really questioning if we have enough momentum to initiate left off. Matt thanks, carl. Well be speaking with you all day long. Were going to have live coverage of the feds decision at 2 00 p. M. Regardless of the changes, even if there are none. Even if as carl says they take the june statement and just change the day. Watch Bloomberg Television at 2 00 p. M. To find out. Coming up, the American Energy revolution. We will find out how Southern Company is investing in nuclear power. And 21st century coal what is that . Stay with us to find out. Matt do not miss it. Stephanie ruhles interview with Goldman Sachs chairman Lloyd Blankfein and our very own boss and former mayor of this great city, Mike Bloomberg. Both of them together with stephanie. They are joining forces to promote goldmans 10,000 Small Businesses program here at world headquarters. What are the Largest Electric Utility Companies in the u. S. Reported earnings this morning to Southern Company beat on eps, but revenue trailed due to cheaper Natural Gas Prices. Shares are slightly up in early trading. Here now to talk about it is the Southern Company ceo. Thanks for the time this morning. Obviously, youre a busy man. Let us talk about the revenue myth. White Natural Gas Prices is that ball behind it all behind it . For our business, it is a force. Yearoveryear, gas prices were cheaper. If you look at the accounts youll revenue was down and that is a reflection of that. Nonfuel revenue is up and that is what reflects our earnings. Matt how important is it for you to switch . I know you operate in the southeast. Up here in the north, we have a lot of fuel oil. The trend is to switch over to natural gas. It is clear and easier to deal with an better or the home. Art we have a well diversified portfolio, matt. We always dispatch our system based on economics. And natural gas is cheap, we are going to burn more natural gas versus other sources. Were going to provide the most economical benefit to our customers. That is what we do here at southern. Matt we showed on the map that you operate mostly in alabama, georgia, mississippi. What are the trends that you are seeing their . What are the trends that you are having to keep up with there . Art art we have had tremendous growth in our residential and commercial sectors. If you look at the past 10 years, this is the Second Quarter and in a row where we have had consecutive growth in our classes. We think that is it some of the story. We have seen a lot of growth on the industrial side in the last few years. But we are now beginning to see the connecting of the dots to the other parts of our economy, that being our Residential Markets in our commercial markets. Matt i was thinking the beige book that is the feds breakdown of regional markets. You had a great view of a region down there. How does the economy look to you . I know you were concerned in the past about lowpaying jobs. Art lowpaying jobs are an issue for us. It is an issue that we had with our residential customer use growth. We think Household Incomes have been a little flat. They are beginning to move up a little bit. If we look at the region, we think the region is still fairly strong. If we look at national gdp, we still think it will grow at 2. 5 this year. Our initial estimates are about 3 , but the region is strong. We believe that national gdp is being influenced by other regional factors. Matt are you going to be able to raise prices . I know you had issues going with the regulators. What is the plan now . Art as we look forward, we have got mechanisms and most of our jurisdictions that are forwardlooking. Some operate on a threeyear basis. Some off the rate operate on an annual basis. We work constructively with our regulators to put those at a minimum to make sure that we serve our customers and we allow them the opportunity to grow their economies. Matt im thinking about kemper there. You got the state Supreme Court throwing out previous request for new rates. How will he go forward but that . Art we have got some pending requests and from the regulators in mississippi. The facts are that we have got a portion of that asset that has already been in service for 11 months now. It has been operating very well. It has provided about 15 million worth of savings to our customers. That is the particular immediate rate that we have in front of our regulators in mississippi. We think that we will be treated fairly fairly in that regard. Matt when you talk about my First Century coal, a lot of 21st century coal, a lot of people have not heard that term. What does that mean . Art it is a coal Gasification System that takes lignite coal and gas of pfizer. It puts it in the form of a gas. We burn that through one of our combined cycles. At the end of the day, the most important thing is that it has a Carbon Footprint at the end of the day equal to or lower than a natural gas lifecycle plan. Matt you take the carbon and shove it right back down into the ground and you can mine it again. Art we actually sell the carbon to folks you use it for oil enhanced recovery in south mississippi. Matt very cool. Thank you, art baby the Southern Energy ceo. Coming up, investors are happy about twitter earnings. Or they were before jack dorsey started talking. Stay with us. Matt in just a few moments from now, Stephanie Ruhle will sit down with the ceo of Goldman Sachs woodland fine, and the ceo of bloomberg, our boss and former mayor Mike Bloomberg. Those two are teaming up to help boost small as this is. This is his. Im sure stephanie will ask other things as well. That is an interview you do not want to miss. For social media companies, it is all about learning how to monetize your business. And that means ads. Twitter Second Quarter earnings Beat Estimates with the help of ad revenue and facebook is expected to seek growth as well and the report. For twitter, does revenue matter one user growth is slowing . It does not look like as far as investors are concerned because shares rose 13 . Scott galloway is with me now. So scott, you can look at this as a bad thing. Most of the reports that i have seen have lauded jack dorsey for coming clean and for giving us the straight dope on what is going on at twitter. Scott i think the authenticity and candor matt they still the shares. Scott you and i said in the breakdown that twitter shows negative user growth, which we have not seen across any social media platform still around. You could have a chill that could set off an incredible decrease in valuations, not only across social media, but across the market. I think twitter is about to pay him more important play a more Important Role in the market than people think. Matt do you think that twitter could essentially deflate the tech bubble to some extent . Scott if you look at its trajectory of the growth, it looks that they would be the first of the big 3 Youtube Facebook twitter to so negative user growth. If that happens, back to be a serious chill on the market place. Matt if they turn it around jack dorsey will be crowned the new king of twitter. Right now coming they say hes an interim chief. Friends say he wants to keep that job. What do you think is going to happen . Scott i think he is already crowned. Did you notice that an Earnings Call, they said they were not going to comment on it. If he was truly interim ceo they would find someone great. He would say im just here for a few months. My sense is that jack dorsey decided he is the next ceo. Matt he said we are going to do what is best for both Companies Twitter and square, which is taking public right now. Will he remain if he is twitter ceo for the longterm . Scott i dont pick investors will let you be the ceo of two companies, even as talented as jack might be. This is all speculation, but ultimately he stays on the board. Everyone wants the biggest toy, right. Twitter is about five times bigger in terms of market cap than squares most recent valuation. Guys have a tendency to want to have the biggest card, biggest motorcycle big swatch, whatever it is, and run the biggest company. I would be shocked if he is not the ceo. Matt users of twitter love i mean, and industry users are serious addicts. Engaged users are serious addicts. How are they having this problem of growing the base . Have they saturated . Scott its not a question is a great product and company. The question is does it have the massmarket appeal and size potential that other guys do and does it warned valuation . When you talk about copies trading 20 times revenue, its not media though. You have to hit on all cylinders. You have to hit on monetization and user growth. They had the former. That was impressive. Theyre getting more revenue per user, but its scary with no user growth. Like you said, if you see a decline, you can see a user can crash and desk contraction in the next quarter. Matt you like linkedin. Do they fire on all the cylinders . Scott they have a larger advertising market. You may trade out instagram for messenger or whatsapp or pictures but there is really one dog in town when comes to that and that is linkedin. Linkedins revenue base is more robust than other guys because they get revenue from three distinct resources the user, recruiters, and advertisers. I think linkedin is the most under hyped development platform. Matt Scott Galloway, thank you. Were going to take a quick break. Stay with us. Matt check out the view from our roof here. As we enter in other heat wave in new york, you can see the buildings shimmering and about to give up so much heat that he can barely walk to the city and greet at the same time. It is probably the worst place in the country to be in a day. We are few minutes away from the opening bell. Tracy alloway is here with the three things moving market affected also joining us is the ceo of morgan creek capital he is just off the boat back from greece. Tracy, kick us off. Tracy i have an esoteric one for you. It is chinese port prices. Port prices. K prices. They have shown prices increasing. You can see it on the chart either. Why do we care . They are a major component of Consumer Price inflation. Heres an interesting fact. The Chinese Central Bank has never raised or lowered Interest Rates and inflation was trending up in china. Matt specifically poklrk for all inflation . Tracy all inflation. When it is china and down, what levers does china hackve to pull . Matt in a developing economy like china, food prices are a large portion of the budget. I also note the europeans need to chinese to either pork as much as possible because russia was the biggest importer of european port. Russia said a year and a half ago, no more port from europe because theyre worried about mad cow disease from takes. Takes. The problem is that chinese do not like pork shoulders or lard. Tracy you know far too much about pork. Matt that is why you have seen a 60 drop in lean hog prices. Maybe they will get a bit of relief from the chinese demand. Let us move on to number to give. Tweet me if you want to know anything more about pigs. Tracy another emerging market one for you. But us take a look at brazil. We had Standard Poors saying they were considering cutting brazils reading one notch to take it back into junk territory. That would put it on par with places like turkey, russia, indonesia. The interesting thing here is that the was not much of a market reaction. Take a look at the resilient currency brazilian currency and it ended flat on the day. Stocks ended up here. Thise supposed thinking behind the muted reaction is investors taking advantage of that low currency. You get that major reaction going away whether the prospect of a junk rated for brazil really starts to hurt them market. We have some saying it could go to four against the dollar. Matt when you look at what is going on in emerging markets or in china, does that shake your confidence in Global Equities . Is always a big component of your return. Ive have a good manager friend in london who has been predicting that it will go to for for a while. That number there seems like it can actually happen. Im actually doing a presentation tomorrow called build your house with bricks. We are actually the list on russia and china Going Forward here. Matt really . Very interesting. Let us move on to number three. Tracy number three is closer to home. Let us take a look at the u. S. Bond markets, which is getting pretty dark. Im talking about Companies Issuing private deals into the bond market. For the first time ever, a majority of junk bonds sold this year were private deals, not public deals. They were 144a what does that actually mean . Issuers get away with less financial disclosure. They get away with potentially new vote regimes. Matt and junkier. Tracy people are losing out on lender protections and it all deals with price per yield. We have to said meeting later today. That will be an Interesting Data point for the junkbond market for them. Matt and yet people are still buying them. Tracy, thank you very much. I want to get to Senior Markets correspondent julie hyman right now with a look at which stocks are on the move at the open. Julie we are little changed out of the gate. Not unusual on the day when we are going to get a fed statement. Let us start with twitter. There we are definitely seeing movements. A drop of 10. 5 . Remember that matt was just talking with Scott Galloway about this. The numbers last quarter actually look decent. It is the forwardlooking numbers from twitter that were not so strong. And other words, the company saying that substantial and meaningful increases in user growth are not going to be forthcoming for a significant period of time. This is not as big a drop that we saw last time twitter reported earnings, the drop closer to 20 . On a relative basis, not as bad i guess. Shares are down about 30 from that time going into this earnings report. Matt look, they were up 12 in the aftermarket yesterday. So they had moved down a collective 22 since then. Julie so i guess on that basis its a big move. Im not saying its a big move but its interesting on a relative basis. The last time they reported earnings, there was a big disappointment. Let us talk about mastercard. We are seeing a disappointment as well, but not as sharp. Shares down 2 . Mastercard earnings were down 1 . Its revenue was less than 1 . Revenue missed estimates in this has to do with currencies. Mastercard gets more than half of its revenue from outside of the United States. It was indeed hit by the dollar we have also seen u. S. Gas prices crippling payments here at the pump. Interesting outcomes of what is going on with oil. Speaking of oil, lets move to the Company Coming in with a loss in the quarter. If you exclude items, it missed estimates. Interesting here that the shares are trading higher. The company said that output was trading higher and total production was higher than estimated. 391,000 barrels per day. That is what is supporting the price today. Let us get to the defense contract issue. General dynamics both trading higher. But beating in terms of profits versus estimate. Both raising forecasts as well. In General Dynamics case, the Business Jets were a source of strength you. It has also been benefiting from a rebound in its defense business. Northrop grumman sells drones. That is one area is doing well. Matt im excited there. Amazon has leased a plan for their. Julie is it called a jonesdrone zone . Matt i dont know. Julie for those who do not know, matt has been advocating for quite some time for radioshack to be called drone zone. Matt while not now. Im hearing from my producer that there are still radioshack stores. Still with us is the chief Investment Officer and you just got back from greece. He spent some real time over there. You met with bank heads. What is your assessment of the situation a couple days after you get back . I thought that all the hyperbole about the big ones at atms never saw a big lines. The banks did open while we were there and people were commonly functioning. I met with the ceo of alva bank. All they were both sober about the outlook, they were actually optimistic longterm. They sought recovery coming down the pipe. Met a couple of large families that were looking opportunistically at buying into some of the weakness. In the week that we were there so it was a vacation for a week, but i spent a day doing some meetings before vacation. Everything function great. There was no shortage of food. I gained 10 pounds why was there. Everything is functioning well. Streets were crowded. Tourism huge. I talked to a number of vendors who said that they were having record years, particularly chinese tourists. The line at the store was out the door. It was unbelievable how many people with her trying to live where theyre trying to buy goods. Matt youre talking about the birth economy, but let me talk about the u. S. Yesterday, we were talking with milton berg who said he thinks you have to get out of stocks and go to cash right now. He is concerned about the size in this market. Are you concerned about the u. S. Market the longest bull market in recent memory continuing here . Mark i am not concerned so much that you need to rush to crash. I agree with jerami grant who tweeted this out. I tweeted this out that the last time jerami grant predicted a negative return for the next seven years was 1999. So now you have that prince song stuck in your head. Matt i have the album on vinyl. Mark need to. Me, too. I think he is predicting a longterm care. You want to go along here. You want to go short on overvalued company. I think hedge funds are going to outperform over the next three years. They really underperformed the last four or five years. I think it is just like 20002002. If you go back to april 2000 to april 2002, you have the slowdown. You have the burst of the tech bubble. You have the recession of one. I think 15, 16, 17 are going to look at that. Matt he set us he set a recession . Mark a slight recession. The average growth is under 2 , but they didnt get a recession because things did slow down at it. I think we will see that again not a big, bad recession. Matt you want to go along Good Companies and short by companies. How do you take pick them . Mark we allocate capital to manager. We do 80 of the capital that we put with outside managers that we think are strong up and down the street here in new york. We take 20 of the capital and manage it internally and a best ideas portfolio. We Like Technology here. We Like Health Care here. Matt what do you want to go long and short . Mark this is idea of how you would replicate a solid had fun today Going Forward you go along. You do not have to go to cash if you go long. If you go short the russell 2000 is pretty overvalued. Matt you want to go long on ishares and u. S. Technology. Mark that is the large cap growth. Bwi might be technology. Hopefully we have the ticket for the russell 2000 growth. Im sorry, top 200 growth. Matt you are soft on winter wheat. Mark it is long on the top 200 growth. And then short for the russell 2000. Iw one, i y w. As what you want to go top 200. Matt i just want to get that straight for viewers. I know that there are people paying attention and what to know what you want to do. Let us get back to the emerging markets and what is going on. You see the recovery in europe is not being quite so robust. Yes see what is going on in greece. As great as is is as it is for tourist, not so great for the local economy. Mark listen to tsipras. Matt apparently he signed off on that. Mark the thing i love about tsipras is that he did what it took to get elected. He went far left and now shifted center. Im talking to the ceo and he said, think about this for what person can go up against the 18 leaders of the european nations and do well . He said nobody could this guy did what you needed to do. He went to the metal. There is now a chance that these far right came to recent. We could see some interesting political solidarity. If that happens and he gets a term you could see what kind of happened in japan where for years it was two years and out for Prime Ministers good. I do not think they will have as big a recovery as japan. But if he wins the elections in october, that would be a great day. Matt they cool to get your take on that. We will have to bring you back. Mark just back from greece and the founder and ceo of morgan creek capital. Coming up, as ive been telling you, Lloyd Blankfein, the ceo of Goldman Sachs, and might bloomberg are going to sit down with Stephanie Ruhle to talk about Small Business investing. Theyre going to bring that to you live at 9 45 a. M. Something not see anywhere else. Stay on Bloomberg Television for that. Matt these two gentlemen have just finished speaking of stairs at a conference here at bloombergs world headquarters. They are now coming down to get mike that incident in front of a camera with Stephanie Ruhle. You will see lloyd. 5 and might bloomberg Lloyd Blankfein and Mike Bloomberg in a live exclusive interview with Stephanie Ruhle. Something you do not want to miss. Stay with us. We are setting up right now. In the meantime, i want to go to a story that might interest you as well. Your data may have been stolen. In fact tens of millions of u. S. Insurance holders and Government Employees and the recent months are said to have lost data to a big Chinese Group that had those organizations. And the same group is now set to have hacked United Airlines. Jordan robertson covers Cyber Security here and he joins us from washington, d. C. Did jordan, we are now finding out that the same people who packed insurance who hacked the federal government have hacked United Airlines. Jordan thats right. We reported this morning that the same group of chinese believed to be statesponsored hackers that attacked the office of Personnel Management and got security grants data on employees and also attacked at him and got Health Insurance data also attacked United Airlines and got really Sensitive Information like flight manifests, which lists peoples names and see numbers and data birth and where theyre going and their arrivals and departures, as well as sensitive corporate data from united. Where all this data is going if this is indeed the Chinese Intelligence Services hacking the u. S. , which is what the u. S. Government believes is the case all this data is going to cloudbased services that the Chinese Intelligence Services use to access and wary where Jordan Robertson is going. They would get travel records pop up on the screen. The data is very much being used as a service for intelligence operations in china. Matt so youre saying that it is the chinese intelligence apparatus . It is not just a random group of hackers, maybe some criminals. Something connected to the government but literally the chinese intelligence apparatus taking the data . Jordan that is the belief of many u. S. Investigators in the government. It is almost hard to tell who is exactly behind the keyboard, but these are very sophisticated actors and very specific intentions when they hack into these organizations. The belief is that all this data is being combined to profile individuals avengers to the chinese government. That could include chinese citizens living abroad or eta could include it could include u. S. Government employees, americans with security clearance as well. A broad range of interests and you can get a detailed profile of these individuals with this combination of data. These are the only incidents we know about. There could be more to come. Matt any response at all from the u. S. Government . In china is hacking all of our systems to get this data come you would think that the state would be unhappy about it. Jordan the office of Personnel Management breach is considered one of the worst breaches of Sensitive Data on time. That is security clearance data. Aluminas documents that people a security clearances have to fill out about their information, their health. The u. S. Government is really concerned about this because what you have now are these really rich detailed databases of sensitive u. S. Individuals that are in the hands allegedly a Foreign Government of Foreign Governments at this point. The u. S. Government is scribbling on how we protect government n networks and commercial networks that we do not have any control over. Its a real problem. Matt when i see united, i think about when the New York Stock Exchange had its issues and the wall street journal site can down and all these united flights were grounded. Is that a separate incident or do you think that had something to do with the hacking as well . Jordan its really interesting. There were two major outages that united experience recently. One was in july with its reservation system. All our information is plenty to the fact that they may not have been related to the hack. However, there was an earlier incident in june weather was in an outage in our observation might be a connection to the hack and that outage. What it shows is that regardless of what sequence of events is in these hacks, they can be connected to serious outages affecting critical transportation infrastructure for the United States. That is a really serious concern. Matt jordan, thank you so much. A very fascinating story. Jordan robertson doing investing in investigative reporting. The leader of the taliban in afghanistan is dead. A Government Official there says that mullah omar died nearly three years ago. The cleric founded a grueling a Guerrilla Movement and founded rival movements after the soviet union left afghanistan. Foxs leaving everyone into the act of the first republican president ial candidates. Now, there will not be one, but two debates in august 6 in cleveland. One of the top 10 candidates in the second one with the other six. That helps Lindsey Graham George Pataki and others. They would not qualify under the old rules because they do not have 1 in the polls. It will definitely be entertaining to watch. Fox will show that as well and get more viewers. An eightyearold boy is believed to be the youngest ever to receive transplants of both hands. Harvey appeared at a News Conference in philadelphia. He lost his hands because of an infection, but he got a pair of great new ones and he is training on those now. Those are some of your top headlines today. I want to toss it over just up new rule, who is sitting down with wavelength fine Lloyd Blankfein and Mike Bloomberg. Stephanie it is a busy day at bloomberg headquarters. Goldman sachs and bloomberg talking Small Business promoting Goldman Sachs 10,000 Small Business program. Gentlemen, welcome. As we talk to these Small Business owners, they have got to be worried about the economy. You are looking from ceo chairman sees, but what if the u. S. That the u. S. Economy expect right now . There is clearly a lot of job creation. There is a lot of angst among people that we are not addressing big issues immigration and tax policy and guns industry. There are worrisome things happening all around the world. Mike the average person is not doing all that badly. In all fairness to obama, during his administration in the last for years, jobs have created and the jobless rate is down. There are still plenty of people who do not have the jobs they want and fulltime jobs and that sort of thing, but theres always going to be problems. It is not perfect and ive certainly very worried about the future with iran and all these things. But the average Small Businessman or business person seems to be coming back starting another business, and being able to create jobs. Lloyd i agree. I think the sentiment is pretty negative. We are in the election cycle and are a lot of things wrong in the economy and a lot of things could go wrong. My core job requires me to worry and think about all the things that could go wrong. If you just kept it simple, you would say that the United States is growing at a trend growth whether it is 2. 5 or under 3 growth, or a little above it. It is with very good reason that levels as if we were in a recession. Financial conditions are easy. Most of the economies in europe have roped into the high side. If you just look at it very simply, things are going to go very well. There are number of things to worry about, but thats an added complexity people are putting in. I would say to keep it simple and things are moving forward. Stephanie do you think the tremendous bull run that we are seeing in the market is right . Lloyd we will see. When i got out of school, we had doubledigit inflation doubledigit unemployment. We also had bad things happening in the world. We had jimmy carter passing the reins to ronald reagan. It was a very bad time. And guess what . It turned out to be the start of a 20 year bull market. While all that bad stuff was going on, people were deleveraging and dealing with the problems. They did not feel good, but they would not have forecast it. But guess what . We went through those problems. Its the financial crisis especially in this country, we chewed through them. Consumers have deep leverage. The leverage. We have the blessing of low energy prices. Housing prices started to stabilize and move higher. I think we are in for a longish positive market. But again, if you look back its like looking down at a big ugly city from 30,000 feet. It all look so clean. When you get on the ground, you see all the problems. In the 20 year cycle, there were a lot of bad moments. If you look at the 20 years afterward, it was definitely a bull market cycle. Stephanie mike, do you agree . It seems like there are some of the problems around the world and even here, but the market continues to take higher. Mike i always my life assuming the worst is going to happen because that is what you have to prepare for good dealing with success is easy. You have to learn how to do with family. I worry that we are not teaching our kids how to deal with failure. Was and i just did an event to help small lloyd and i just didnt event to help smallcompanys and lloyd said that no career goes in a straight line. The always will have rehearsals. I think we will have reversals. In my own investment policy, i have a lot of cash in terms of the company. I worry about what could go wrong. We have people working to make sure things go right. Having said all that, it is not doom and gloom. We still have the same problems. We keep kicking the can down the road. We seem to be able to live up after we have with that. We have not changed our tax policy, but we still go on. We have a fractured congress that cannot get together and do anything, but we are still going on. The big things you have to worry about are things like the iran treaty, which is very worrisome to me. Like our relationships with some of the other countries around the world. Like our immigration policy. Those are the things that can have longlasting consequences. Lastly, we are selling our birthrights in terms of not having good schools for our kids. And not having the same fiscal policies in government were we are not spending money to the day that our children will have to come up with tomorrow. Stephanie mike says that the worst is yet to come. You have a longterm goal on china in the last few weeks. We are suddenly sank, should we wake up and realize things are much worse there then we should realize . Have you changed your view in anyway . Lloyd china has an incredible execution problem to get through. It took one generation what took my 50 years to evolve and other places. It is very hard to bootstrap and do everything at once. To have businesses you would like to have businesses over padded with people. Guess what . In china, if you fired those people, there is no Unemployment Insurance to cushion the blow. Or if you want to go out and create insurance companies, but guess what . The pool of capital to invest or not there. China does not have capital markets. How do you write off your mistakes . If you build 80 airports at once, 40 of them may turn out to be in the wrong place. Build an airport in the wrong place the United States, planes do not land there. They do not pay fees. Debt service does not get paid. It defaults and gets taken over. And they put up a shopping mall. In china, it stays there as an unused airport. That is the system. It has to be corrected. They know it. It is going to take time and i just discovered after i know that for a long time, its going to be an incredible execution problem. But it does not stop me from thinking that in the longterm it will sort out. I said this before. I think it will be a Great Century for china like the 20th was a Great Century for the United States. But in our Great Century, we had a lot of bad years and china will have a lot of bad years in its century. Stephanie is there such a thing as longterm in terms of investing anymore . When you talk to stand drug in miller, he could be negative on the overall economy. Mike you got to differentiate between investigators and people like one play find who run companies. They have to have a much longer term. I can tell you how to raise her kids. Mine are little more complex. Stephanie minor preconference. Mine are preconference. Pretty,. Mike it always seems like your problems are worse in the other persons. You cannot have that. You have that confidence to invest in the future. If you look at how our china has come in a very short time, you can talk about how far they have to go, but so does america. Every problem china has come a we have a comparable one. It may not be the same when here, but they approach it with a very different mentality and a very different system. They have brought 150 Million People into the middle class. They still have 400 billion people who live on intel year. Live on a dollar a year and still need their help. But america has made difference for the people. The poor in our country need a lot of help, but they are better off than poor in many places. That does not mean we should stop. We should be thankful for how far we come, but we should always realize that there is more to do. I Goldman Sachs, a bloomberg, at america, and that china could at Goldman Sachs, at bloomberg, at america, and at china. Lloyd if i sent you you have to invest in 20 years, but you cannot touch in 20 years because its for your children, would you invest in china . Stephanie the answer is probably yes, but you run into the problem that ceos face politicians. They cannot make decisions for the long term because they could have an activist investor banging down the door and saying what are you doing tomorrow . Politicians cannot make this is a longterm because they need to make decisions now for elections. Mike business week had a story looking at the record of some of these people and it has been very good. You also have to stand up