Transcripts For BLOOMBERG Market Makers 20240622

On a plane, in a train. Stephanie green eggs and ham. Matt i have been watching it for a good decade now. It is a fantastic show. The presenters have had some issues. But now basically, it has turned an Internet Retailer into the maker of the most watched show on tv overnight. So it is pretty insane what amazon has got here. Stephanie there you go. Okeydokey. Did you just give the punchline away . Matt people are starting to know that. Stephanie let me give you the top stories. Im about to deliver. Investigators have gotten their first big rake in the search for that missing malaysian boeing 777. Debris that washed up on a French Island in the indian open ocean appears to be from a 777. It is not clear if the wreckage is actually from that malaysian plane, but the Australian Government is encouraged. It is the first real evidence that there is a possibility that part of the aircraft might have been found. It is too early to make that judgment, but clearly, we are treating this as a major lead. Seeking to get assurance about what has been found and whether it is indeed going to the disappearance. Stephanie the plane vanished in march of 2014 on a flight from malaysia to china. In cincinnati, a White University Police Officer has been charged with murdering a black man during a traffic stop. A body camera video shows the officer talking to the man just moments before the shooting. Prosecutors say the Police Officer lied about being dragged by the mans car. Matt Time Warner Cable posted secondquarter earnings that missed analyst estimates. The company was hurt by Higher Program sales and marketing costs. Time warner cable is waiting for regulatory clearance so it can merge with charter communication. That would create the countrys secondlargest cable and broadband provider. Shares of whole foods are down as much as 14 in premarket trading. Posted disappointing quarterly results. It cut sales forecast. Track a more organic fires. Hold foods whole foods had a scandal right here in new york city. You can now own a piece of one of the most famous moments in u. S. Olympic history. The goaltender who led the u. S. Hockey team to victory in the 1980s, the miracle on ice, is selling his memorabilia. Jim craig has put his uniforms and a lot more up on auction. The price is 507 million. He wants his children and grandchildren to be financially secure. Those are some of your top headlines this morning. Stephanie these are the top five things you need to know if youre going to invest in these markets. I have got number one. U. S. Dollar. It is on track for its biggest monthly gain since march of this year. It is strengthened against all except three of its 16 major peers. After the Federal Reserve officials turned more bullish on employment compared with their meeting in june. I would like to point out, matt miller, that you said the minutes would be same the same. Matt basically true except one or two sentences they changed but they had to do that in order to be able to raise rates in september. There is no meeting in august. They had to show at least some added optimism in order to make that move. Stephanie had they not, it would be a signal they were not looking to raise in september. It is giving the market more confidence they are going to. Matt it is giving them the ability to do that. They do not necessarily have to. I listen to mike mckee a lot on bloomberg surveillance. In about a half hour, we are going to get another read on the u. S. Economy. Secondquarter gdp numbers will be out. A survey of economists forecast gdp to be growing at 2. 5 . We will cover that live for you. The numbers come out at 8 30 a. M. I was talking to peter scheer about this. Secondquarter gdp, it will be interesting and definitely something we will break live. But we are already in the Third Quarter and i think Market Participants are waiting for thirdquarter data. We will start getting a lot of that out next week. 31 days in july. Tomorrow, we will not get july numbers for jobs. We will have to wait for a week to we will get factory orders manufacturing. Stephanie did you say tomorrow is the 31st of july . Do you know what that means . It is the last day of the july edition of the bloomberg fit challenge. Excited to see who is going to win. Matt i heard august is going to be more serious. Stephanie august will be very serious. Gear up. Gear head i am familiar with. Matt i brought my gym bag today. Julie hyman stephanie julie, you have got a good shot at winning in july. Matt no i dont think so. Shelby siegal works out three times a day. What have you got for number three . Julie it will be cutting 6500 jobs this year, shell. Billions of dollars of investments over the next two years. It is prepared for what the company sees as a long downturn in oil prices. What is interesting is back in april, shell said it saw prices returning to nine dollars per barrel in the next three years. Now it says this downturn will last for several years. It joins a lot of its peers in batman down the hatches, if you will, and preparing for this big slowdown. Matt all right. We hope they do not cut too many, dont we . Stephanie i will take you to number four. I can never resist talking about my former employer. Deutsche bank shares are up about 2 this morning. The company says secondquarter profit more than tripled. Hans nichols is in berlin with details. It kind of makes me feel bad he was at the helm of the company when we were raking in those big dollars and now he is on the beach. Hans we are waiting to hear from john here, the new ceo, in about 55 minutes on just what he says about additional costcutting. Yes, the numbers are good. We should not discount that carry 2. 1 billion from debt and currencies. That was up from 16 . Up 39 on a threes trading. These are on equities trading. These are positive. We still expect significant costcutting both structurally and he hinted he will not really tease this all out until september. I think we will get a sense of just where he wants to take the bank and the Conference Call that starts here in just a little bit. We will have met while in on the german line to practice his german. Stephanie it is nice to take a victory lap. If you are the new ceo and you get to show up and say, hey, i just got here and we had a great quarter. Matt thanks to the guy who just got fired. Number five is facebook third shares are down about two percent in the premarket. The court reported earnings after the bell yesterday. Sales topped estimates spending was also up quite a bit. 82 in the Second Quarter to pay for new talent and at least some of that revenue as well. Lets be honest, it is not as serious as twitter yesterday but social media has been volatile lately. Stephanie but many people are saying thank you, thank you for finally giving us a little bit of honesty. It is exhausting for everyone to be so bold up on innovation. Matt Mark Zuckerberg today. I was thinking, thank you, they have more than 2 billion people on this site. They need to spend a little bit more. They need to expand and grow third i think investors may have seen it slightly differently. Stephanie take me to Market Makers favorite female singers. Atlantis more set. Matt we have paul sweeney to talk about zuckerbergs plea for patients. He is asking investors to be patient for some of the lamer apps whatsapp and messenger. He spent a lot of money on these acquisitions most mode most notably 22 billion for whatsapp and 1 billion for instagram and so on. Investors are saying, we need to see some revenue coming out of these acquisitions. We need to see some return on investment. His response yesterday was be patient. We are all about growing the user base before we really start trying to monetize the user base. Are we any closer to understanding why he thought whatsapp was worth 19 billion when he is really switching everyone over to messenger . I used to use whatsapp before stephanie everyone is using bloomberg messenger. No one is using Facebook Messenger in lieu of whatsapp. Matt i used whatsapp all the time before zuckerberg bought it and then he made messenger a second app on the phone and now i use messenger with all my european friends and so does everyone house and we do not use whatsapp anymore. Over eight hudgins million users and what they are saying is listen, we need to build these environments that are one billion plus users, not the 300 million that twitter has, but one billion plus. That is when advertisers really start to Pay Attention. That is where perhaps you could try some ecommerce. There is a whole host of Revenue Opportunities they see. It seems to Mark Zuckerberg the billion users number is a big number. If you look just at the core facebook business, 39 revenue growth, he is probably onto something. Stephanie isnt volume in terms of users sort of his secret sauce question mark whatever facebook or twitter does, even if i do not like it, i stay with it. Our member when i was forced into using messenger, i denied it until i would see i had all of those friends who wanted to say some it to me and i was like, yes, i accept third we all end up excepting in the end. Mark zuckerberg tells us what to do and we do it. Matt it has really become haves and havenots. Google and facebook have the overall Global Mobile apps penny. A third and fourth players are much smaller. Mark zuckerberg is onto something to he recognizes it is all about scale in the early stage. It looks like a grab for market share but it seems like google and facebook have clearly cornered the market in terms of those billion user platforms which drive revenue. Stephanie do we all keep saying yes simply because everything is free . As long as the advertisers continue to support it absolutely. Over the last few quarters, for the first time, the Television Networks are losing advertising share to the internet. Including the big social media sites like facebook. That is where the ad dollars are going. I think you will see more multibillion dollar app acquisitions. Stephanie if you are an advertiser, the amount of data you can get back, you can really understand the impact of the ads you are putting on the likes of facebook much more than a billboard on the highway. You start to migrate. Particularly when you go mobile. You are targeting people on the move. You learn a lot of information. Geotargeting. Are people walking by my store . I will hit them with an ad. It starts to get interesting quickly. Advertisers are starting to get a sense of the value of not only internet advertising. That is well defined and established. Now it is about mobile. Every Internet Company use the this quarter and over the last several quarters, they lead every Conference Call with, this is our mobile strategy, this is how our growth is growing on mobile because everyone knows that is where the future is. Matt speaking of dominating globally, jerry at his toptier team may not be terribly familiar to Many Americans but 350 Million People tune in to watch the show every week to he was fired by the bbc for a tells a with the producer but also he had done a number of jerky things before on air. Now amazon has picked him up. What an incredible crew coup. Stephanie i just want to tie this back to facebook. Matt on bbc america on verizon files. Stephanie you are watching it realtime or fast 40 through the commercials . Watching family guys ties, i watched the commercials. I cannot remember the last time i watched a tv commercial, except those on bloomberg. Matt yes, stay in school. But stefan really but stephanie, amazon prime can draw in another 350 million users. They do not even need to show commercials at least for a while. This is a huge coup for amazon third over the top new tv networks, this did not go to abc, cbs or fox. It did not go to hbo or the traditional Media Outlets in the united states. Everyone thought it would go to netflix. Many of them were probably bidding on this. Very high profile property. Stephanie traditionally, if you had a show and you wanted to put it out there, you needed that they platform to be your amplifier. Why on earth would he do a deal with the devil and say, please, traditional network, can you help me get an audience . He has an audience and he gets to keep the dough and i am with him. I think this is one of the rare global franchises. He now has the ability to walk across the street and get a huge bucket of cash that will stay with him and his production company. Matt formula one, world cup soccer, and top gear. Stephanie shows i watched 10 or 15 years ago, i could remember what day, what network, what time they were on kerry tell me what is on tv wednesday night . Time shifted viewing started 20 years ago with the vcr and then tivo. Even cbs, even nickelodeon, they are putting their content direct to consumers over the internet. Breaking down that core bundle of pay tv that we all grew up with and that everyone in hollywood made money with. Stephanie even five years ago, i could say wednesday nights law and order coco i am pretty sure it is on 17 channels all day long. Matt i have not watched cable. Stephanie we have advertisers. Sweeney not Mark Zuckerberg but jess is much better. We have heard from the fed dresses much better. We have heard from the fed. We will find out. Stephanie coming up later this morning on Bloomberg Television cigna ceo David Cordani will join at 10 30 a. M. Third we look get his reaction on cigna earnings. Matt definitely tune in for that third now time for your top stories. Selfies are helping drive profits at sony. Profits tripled in the First Quarter thanks imparts in part to sales of smartphones. They also sold more video games and gaming consoles. Sony has lost money six of the last seven years. British actress jane birkin wants to take her name off the crocodile version of the iconic birkin handbag. They cost anywhere from 10,000 to 100,000 apiece. The Animal Rights group peta has accused them of using crocodile skin and cruel slaughter practices. We all know it is probably true. Stephanie i am pretty sure they know how they produce matt it is probably not nice. Mixed results in crash tests performed on the ford f150 pickup. The smaller pickup did poorly in a front crash test. Thank goodness i have the big steel, fourdoor. Stephanie those are your top headlines. The impressive that he wants to take us back just before we came back. I wiped out. It was tremendous. We need to take a break because i need to lick my wounds. We will be back. Matt it is time now for our morning brief want to give you some of the agenda items you need to know about this thursday but i will kick it off with Vice President joe biden. He is hosting a working breakfast with members of the House Democratic caucus to discuss the nuclear deal with iran. At 9 30 a. M. , the senate will be holding a hearing on the impact of the tax code on corporations and jobs. Witnesses include the former allegan ceo, and as a Senate Lawmakers will be voting on their version of the 3, 6year highway pope. Bill. Stephanie the take away from the twoday policy meeting we saw this week. Signs are plenty to september for a rate hike. Is the u. S. Economy really ready . Lets ask Bloomberg Intelligence senior in comments economist rich. I heard during the break that rich may be the cause of the miranda lambert, Blake Shelton breakup. Rich there is a rumor out of there. I may have started it myself. Matt maybe janet yellen. Stephanie Blake Shelton matt he has got it going on. Tell us about yesterdays release . Rich the fed said, lets not say too much and lets not say too little. I was talking with carl. Right before yesterday. It is kind of like, you ever see a bird at a bird feeder sitting there eating . All of a sudden, what happens when a hawk flies in . They freeze. They are motionless. They do not want to bring any attention to themselves. Stephanie like a statue. How did you know that . Rich i was just looking out the window once. They do not want to bring attention to themselves. They said, listen, lets wait another month here until we figure out what we have as far as employment number, inflation points find out what happens in greece, what happens in china or not and lets just buy some time. I think that is what they are doing. They are just waiting and buying time. Stephanie we will not disagree with you but our next guest might that i want to bring in citigroup head of north american economics, bill joins us. Matt i do not know if you heard the analogy rich just made that he thinks the fed is like a bird frozen in time to try to avoid an attack from an incoming hawk. Stephanie there is no hidden meeting meaning with the hawk. Bill within the culture, what they told you yesterday was a lean toward september. They did it to say, we told you we are data dependent they chose to ignore all the weak elements like retail sales, the fact that the labor force did not grow much. They focused on, things have improved and job markets have improved job growth was solid. Those are the element that tell you, the audience, that we are ready and we are ready for the next couple of data points to confirm the fact that we are ready. Stephanie is it saying we are ready or is it just giving them the option so we cannot possibly. 2 september and say, you surprised us and we were not ready . Bill we heard this would be june or six months down the road. It is always six months down the road. I have done an analysis you see every six months. It will not be a surprise. This is the longest awaited matt is it time for them to rates raise from zero . A lot of people said the taper was already an Interest Rate hike. Fiat chrysler rolling across the screen. Second quarter basically operating profit, 1. 5 billion euros. We were looking for less than one billion. People are buying a ton of cars in america. Isnt it ok to raise rates right now . Rich i think yes, sure. Bill get them higher, get them where you could have some and human nation some ammunition. Rich sorry to disagree, but the good reason is that activities have gotten stronger. What we will find out from todaygdp release in a few minutes, that will combine the income side growing at 3. 5 . We think we will get a better picture of where the levels are and that would give the fed even more ammo. Stephanie to get a better picture, look at Economic Data that we have got some breaking right now that i will send you to the newsroom where vonnie quinn has more. Vonnie 2. 3 growth in the Second Quarter. That is a little bit weaker than economists had averaged. It is the First Quarter were particularly interested in. It has been a negative quarter,. 2 . That is now positive by. 6 . That is definitely a. 8 swing there. I just want to tell you about initial jobless claims as well. They come in at 200 67,000 last week. The week is better than forecast 33,000 better than forecast in fact. Stephanie thank you, vonnie. Rich if you are looking at 2. 3 , you are basically around 1. 5 for the first half, nothing to write home about. Granted, we picked up the pace and were entering Third Quarter. Some confidence is weaker. I do not think consumers are out there spending a whole heck of a lot of money. You see the driving around going to wherever they are going. Stephanie a slip and slide in their backyard. Matt bill, what do you think . Savings on gas they are definitely spending money on working down Credit Card Debt although that does not count as far as Consumer Spending. But it is going somewhere. Bill the consumer is cautious, also showing consumers have got to be more cautious Going Forward. We are getting extra job growth. I think all we need is 2. 523 range. That is 1 above attentional. Potential. Stephanie it is highly important to the two of you, but yesterday i sat down with the chairman and ceo of Goldman Sachs would blank stein Goldman Sachs and he said we are way to data dependent. You are not looking at the overall economy and not taking the longterm views. Rich we have to look at the entire mosaic third of the mosaic not be mentioned is the income side or the new gdp numbers coming out are combining a hybrid measure to add the income side. We do have a lot of growth out there. Bill it is the reason why we spend or do not spend. If you have higher costs or inflation, then you are not going to be able to spend that much. No sign of inflation at all. Rich they are creeping higher. Bill they are below where they were last year. Rich this is the biggest thousand and economics. The gasoline savings. You only fill up your tank youre 25 gallon tank once a week arguably, and you save the increments over that week. Stephanie do you actually, on that friday you drive your family over to the all of garden and get extract the kaisers . And get appetizers . Matt doesnt it look like consumers have been paying down debt . We hear from mastercard that consumers are spending money on their cards but they are paying their debt down at a faster rate . Bill my research has shown instead of send spending 70 on the dollar, we are still spending more but less than before. That is where the savings are going. Matt i wish i could do the same. I am still spending more than before that i have a 36 gallon tank. Gas prices go down, i do a lot more offering. Stephanie you are offloading their you are not fine dining. Matt true that i am not going to olive garden. Bill lee, thank you for joining us. Senior economist, rich yamarone. We will take a break. Stephanie rich is rumored to have broken up Blake Shelton. This is no accident. We appreciate it. Rich oh, behave. Stephanie there we go. We have our own austin powers in the house. You are our own dr. Evil. Stephanie dark gray. It doesnt look good. Matt it looks ominous. Stephanie it looks like batman is rolling into town. That is new york city. It is bright and exciting inside bloomberg World Headquarters right here. Guess who we are talking about . The donald. Senior trump likes to say he is the own the one of the 17 republican president ial candidates who can beat Democratic Front runner hillary clinton. He gets support from just 36 of registered voters nationwide in a hypothetical matchup against clinton. Our Bloomberg Politics team held a focus group of trumps supporters. With all due respect to host john, we asked them what they liked about the donald. He speaks the truth. When he talks about especially immigration control and the border, he does not care what people think. On choreographed. I like his roughness. He is not a politician. Its like he said, i wont be bought off. He does not fit into the same box. Besides the money issue, he is still into and with what everybody is wanting. When he referred to some Illegal Immigrants as rapists that bothered people or did not bother what was your reaction . As it did not bother me. It did not bother me. It is the common sense thing to do. I knew he was a wealthy and successful man and i remember asking my mother if i could write him a letter asking how he made his money so i could do it as well. I think he is a successful person. I want to be a billionaire. He worked hard. John tell me what you think a trump president would look like. He. Classy. It would be a president of hope presidency of hope. Stephanie that is how some supporters describe them. It is funny when they say he is a guy who cannot be bought off. One of the reasons he has been so wealthy, maybe he cannot be bought off but he certainly can be bought third if you think about how that trump name is licensed, from water to vodka to golf courses to discount ties, that trump name is for sale. Matt he is selling himself. I think probably the one play that rings closest to the truth for most people is that he speaks his mind. People respect the fact he says whatever he likes regardless of the fact that it is not politically correct and social media does not agree with everything he says. I will say also the art of the deal was the first Nonfiction Book i read in the seventh or eighth grade that i understand there is a base in america that thinks of him, as i did when i was a kid, this big successful man a real estate man from new york. Stephanie whether people like what he has to say or not, there is an appreciation for the fact he actually speaks his mind. His bait and switch many politicians who have to pander to the extremes and are to their constituency just to get into that seat. Many people voted for obama the first time thinking he would be centrist and be the voice of hope. Eight years later many are disappointed because they feel that things are more partisan than ever and it is not what they expected. Listen, you know what youre getting with the donald. His haircut if nothing else to share this. A new police just out poll is just out. Matt 20 20 of republicans nationally. Stephanie there are 17 hold on third there are 17 names in here 30 if you ask your average american youre educated american walk me through each of these 17 candidates, what do they think and what do they stand for, it is very hard to break that down third donald trump, his message, whether you like it or not, is a lot clearer. People like knowing the rules of engagement. They like to know what they are getting. Matt the outliers always come up ahead early on in the polls. But when it comes time to actually pick a candidate, and there are only a few, 20 percent eight going to cut it. Stephanie what is donald trump going to do . He is selling himself and his name. That water, trump ice, it is putting trump all over the place. We will talk about that and a whole lot more today at 5 00 p. M. It is cocktail hour. What else will you do but watch with all due respect . Matt coming up, digital growth. How our connected world can simple fight your next doctors visit. Simplify your next doctors visit. Stephanie welcome back that im Stephanie Ruhle with my partner, matt miller pentagon is Going Digital with their health records. A team led by letos holdings won a deal that could be worth up to nine billion dollars to create an Electronic Health record system for the pentagon. As the government takes a step in moving medicine to digital, what will the impact be on the future of the Digital Health market . Wellness cofounder jim kane joins us now. Wellness fx allows users to access their health data online. Is this the case of the pentagon leading by example . All of my doctors are at the nyu hospital. I love the fact that i scanned my hand and they know more about me than i can remember in the last 10 years. I feel like i get Better Health services because of it. Jim the government has driving this has been driving this Movement Toward Digital Health. If you look as far as records they are fragmented. The Biggest Company that has the dominant market share has about 12 . Taking the records from one provider to the other is always very difficult. The government is playing a leading role in this. The v. A. Made all of the records available. They had not done that before. That catalyze to the whole movement. This is just a natural progression for the government to do this and i think this will radiate into the main market. Matt there are two does sides to the client. Stephanie two sides to every coin. Matt if you have a one sided coin please send it to me. You have got your medical records available. Health care will be faster and people will benefit from that, surely. On the other hand, it is only a matter of weeks until chinese the chinese hack the database. It will be a problem having everyones matted medical records on one database per it will surely be hacked. Jim it is potentially a huge problem. Do you want great medical care or do you want china looking at your medical records . Matt that is a dilemma i could live with. Stephanie there is a bull run in the Digital Health sector. Fitbit crushed it. The stock has only been going up third many argue, these wearables until i see the bloomberg tv fitness challenge wearables sat in the graveyard or on my nightstand. Many people are now embracing the digital space, using these wearables. I do not see you wearing one. Jim my iphone. Three years ago, a lot of things of the wearables can do now, they can do because they were having to do everything contained on or iphone in the device. Now they are pushing all of that stuff out. That has completely catalyzed it. It is a movement and the blue Tooth Movement and it made it simpler and smaller, waterproof things like that. You see a proliferation. Wearable being funded by digital right now as far as venture capital. What you are seeing is, fire last year, it is the same place this year. Stephanie is there something specific that you are most excited about . Jim this sounds strange, but one third of your life is spent in bed, ideally. They used to have these weird devices that started out and kind of destroyed your love life. Youve been on your forehead and wear it every night and my wife told me after two weeks to take it off. Matt what device is that . Jim a sleep device. Matt not a cpap. Stephanie when i see the cpap, that is like a sexual repellent. Matt not many have sex with the cpap on. Jim it is a really Great Technology device. The one we got you plant in your bed third it is incredibly accurate. That is the success aspect for wearable. Stephanie that is for people truly tuned in. You have got more open these people in this country than ever. They are driving themselves from the taco bell to the mcdonalds to a burger king. Jim you have things like they measure your respiration. Things that measure your movement around the house but you can have telemonitoring. It will not be one device that if you try to do too much stuff in one device, it will not measure it. It has to be super specific. Matt i am more excited about Digital Health care outside of Consumer Wealth wearable spirit you will not have to go to the doctor as often because you can already do it online. Your records being shared makes everything more efficient. The cost of health care will drop. Stephanie even the simple fact that you can email your doctor has made a huge impact. Jim there is a company that allows you to quickly safely text. You are showing health care all the way out to the periphery so you do not have to go to the office. You can pull your diagnostic stuff and combine your 20 minute consulate with your doctor on the fly just saying come i want someone to look at this bearded will be safe. It was great. I never had to go to an office. Matt cheaper for the doctor to do that you do not have to drive there that you do not spend money on gas pit and you never have to get off your couch or down the quesadillas. Stephanie jim, thank you so much for joining us. The wellness fx cofounder. Matt julie will show us where futures are pointing and give us a look ahead at the market day. Julie i want to talk about earnings. Lets hit facebook again and talk about what the shares are doing now. We climbed just about 2. 7 after the company had an increase in spending that was larger than what some analysts had predicted. We are seeing an interesting disconnect this morning between what we are seeing the shares do and the analyst commentary following the report. I was going through a number of different analyst notes on earnings. What stands out is the Deutsche Bank note that says facebook continues to execute near flawlessly with Second Quarter metrics that were right down the fairway. It was interesting we were seeing people sell off a little bit. The shares are up about 24 year to date and they are trading near a record. You have to take that into account when youre looking at what the shares are doing. Whole foods. It is tumbling this morning by 11 there to whole foods reporting the slowest comparable sales growth since the Fourth Quarter of 2009. Basically everybody is ripping off whole foods formula essentially. It in vented the paradigm for organic grocery but everybody is selling organic grocery now, from walmart to do much all of its competitors. With the increased competition whole foods is feeling the pinch. It brought down its prices to some extent a earnings per share missing the average analyst estimates by a penny. Finally, fiat chrysler, which would just heard from, i know matt follows this closely, raising its fullyear earnings forecast. Demand for jeeps helping to fuel those earnings. Stephanie thank you so much. Jim keane, we did not let you leave. One of my favorite moments of the show and what have you got . Jim these are some kicks i could probably rock myself. Adidas teamed up with star wars in honor of the newest film that comes out in december. Consumers can add exclusive star wars laces. And 3d darth vader molded backs. That is sick. Stephanie these puppies will start at 110 30 my kids have darth vader and Storm Trooper vans. It is what they want more than anything. Slap a little star wears off star wars on their and boy does it sell. Are you a star wars guy . Jim secretly, i am. I will not go stand in line for tonight. But i will go see it. I have the entire digital set at home. Stephanie i will say when it comes out, we may recreate the whole set. Jim my son has a 31 inch darth vader that i gave to him. Stephanie i could be job or if you are willing to be possessed leah. Matt i think you would look ok in the gold bikini. Stephanie i think you would. This massive creature, this is discussion disgusting. The second largest snake at 18 feet three inches longer the pythons four inches shorter than the largest. Officials say snakes of this size can eat animals like alligators or dear. Deer they can also eat human beings. They have no natural predators. Jim kane, thank you. We will be back. Live from bloomberg headquarters in new york, this is Market Makers. Matt good morning. This is Market Makers. I matt miller come in for Erik Schatzker. Stephanie he is in for Erik Schatzker appeared i may be in for Olivia Sterns. She is logged into her twitter account right now in front of me. What else is going to happen this hour . China, the ugly trading commodities and the business of tom brady. Here is a look at our top story this morning. We are talking about the u. S. Economy. Of the Second Quarter, the gdp rose at an annual rate of 2. 3 . Slightly less than expected. The Commerce Department revised the first order figure upward instead of contracting the economy, the economy grew. 6 . Before the numbers came out, economists sounded pessimistic about u. S. Growth this year. He appeared on bloomberg surveillance. Below 2 below 2 . Even the fed is estimating 1. 8 . We will end up below 2 . The Second Quarter moved slightly above stephanie he also said the fed may not raise Interest Rates in september because inflation is not growing fast enough. Matt the Worlds Largest Consumer Products market maker report profit that beat estimates. Cutting costs and streamlining operations since returning to p g two years ago, the Company Announced they will be stepping down in november. The former host of top gear is shifting gears to a new not even a network. They will do a news show on cars for amazon starting next year. He was dumped as the host of the bbc show in march after he got into a scuffle with the producer. Top gear is im waiting for this to come to the u. S. It will draw a lot of viewers to prime. Stephanie could one of the reasons he did not want to be part of an established network is because of that kerfuffle . He doesnt want to answer to anyone. He has his specific voice and brand. Matt i dont know that much about his feelings towards the bbc other than the jokes he would make. He seemed to have a pretty good life there. I think he apologized and wanted to stick around. Im sure he is getting paid a lot more now that he is at amazon. Stephanie or maybe its all part of the conversation. I would not know what the show was. Suddenly, who is this guy . Chelsea handler was on the network all the time dogging on the network i found that more interesting than the content. Matt i love it when anchors dog the network. I would not do that. Stephanie not here. Nothing to talk about. Matt a great place to work. We have a lot of news for you, starting with the u. S. Economy jumping at a faster pace. The gain is consistent with the Federal Reserve possibly you best Federal Reserve Federal Reserves view. Weve been doing our patriotic duty. Gdp comes in a bit lower than people thought. The Consumer Spending numbers very strong for the month. The first gdp numbers revised higher. We did not stop spending as much as we thought we did during the quarter. The economy is Getting Better the fed has to be happy with most of what they see and hear. Matt what do you think this means for thirdquarter growth . A lot of people are looking at julys numbers waiting for next week when we start to get those readouts. We are hearing people doing some backtoschool shopping. I dont know if youve gotten your pencil cases yet. It looks good. Matt it is expected to be strong this year. Stronger this year. People have more money, they will be more willing to spend. If they are more willing to spend, that is good for companies, they hire more people. Matt what about jobs . When you look at the jobless claims we saw lower today, the adp reports this month, how does july stack up . There doesnt seem to be any indication will come in surprisingly low. Right now, the forecast is for 200 and 1000. 231,000. In march, nobody saw 119,000 coming. We could be surprised. The fed is really on track for september. Nothing has knocked them off. Matt we were looking at the 5050 survey. Is it higher now . A bit higher. 60 think the fed will go in september. There are no fed speeches between now and september 17 scheduled. That makes jackson a bit more important. They want to know what people are thinking about. Stephanie the fact that janet yellen it was a month ago when Christine Lagarde pleaded for the fed to Pay Attention to the plight of europe and the struggles they are having. The fact that we all seem bullish and talking about Consumer Spending, not geopolitics not the situation in china, does that mean the fed is back to basics saying we are focusing on the u. S. Economy . That is their job. They take into account what will happen overseas because of the feedback loop to the u. S. If things are slowing overseas because the dollar is stronger they have to take that into account. They dont think it will be enough to derail the u. S. Expansion, so they have to think about what they are doing. Christine calls and you say im tired, we cannot hear you. Stephanie i always take her calls. Matt we saw that more fed members are pushing for two racete increases this year than one. Is that a likelihood . You cannot say it is likely. If the economy turns out as we think it is going to, that would enable us to go twice. They are very data dependent, they have left themselves in opening to not move them september. They will raise rates in september if the numbers turnout for august as expected. And then look at the data. If the data continue to be strong, they will move again in december. Matt data dependency takes so long. You know . Stephanie it does. One thing we should mention about the gdp report gdp was revised lower for previous years. Productivity was lower. We saw businesses really cut back on spending in the Second Quarter. If they dont start spending that will be a problem for the economy. Matt danbury tweeting retweeting that postrecession gdp from 2019 now averages only 2. 1 . From 2009 to now averages only 2. 1 . We have a problem in raising living standards. Stephanie it is trapper keeper season. I will do my part back to school shopping. This jacket, hello. Michael mckee. Matt chinas stock market has been on a roller coaster ride this week. Today, shares closed down more than 2 . Will there be a full recovery anytime soon . Or can we expect a lot more of this crazy volatility . Stephanie stick around. You are watching Market Makers. Matt check out this view of hong kong. The lights go out and hong kong. It is nine 12 00 p. M. Over there. 9 12 p. M. Over there. In the last hour of trading today, the shanghai composite index closed down 2. 2 . Leaving investors puzzled over why. There are not real fundamental reasons. We will ask donald, senior managing director of ever core isi joining us from los angeles. We try to find fundamental reasons for all of these moves. Is this just gambling, chinese equities . Donald it is worse than that. There was a mania mid june from 2014 to 2015. People started to get on the market on july 4. Beijing intervened. A lot of nonmarket interventions this market is not a stock market that is driven by fundamentals. It is a government operation. The shanghai market is not suitable for Foreign Investors because beijing is calling the tune day by day. Stephanie if it is not a market, how could anyone possibly invest . How could they possibly accept its medium as a fair platform for trade . Donald i dont think they should. There are some who do. It is not suitable. 19 of all the shares in the shanghai are halted. No transactions. All insiders all officials directors, all those companies are frozen for six months. You cannot sell even if youve got a balloon payment on your house that you are inspecting to sell some stock to pay for. You cant do it. This is beijing saying we want this giant rally to sell 25 by june best buy july 3 25 by july 3. It is volatile ever since. Matt it sounds horrible if we had a situation in this country, the economy would surely contract. How important is the stock market to the chinese economy . How linked are they and how bad will followup hebe . Donald it is much less important to chinas economy than two hours. In china, 10 of Household Wealth is andin equities. Than to ours. It basically says all this program could reform talk that we have heard out of beijings leadership over the last couple of years is marginally empty. You cannot break the stock market. The most visible symbol of markets in any economy in the world, you cannot break that and still be thought of a promarket reformer. Matt is there a central figure we can look to in china . Issues in europe, you might look at mario draghi or in germany, wolfgang choi. Here, janet yellen. Is there someone in china you look to talking about this trying to support these moves . Donald china is run from the top. The president is the president of the country, the head of state and the general secretary of the commonest party of china, he has all the power. It is very pyramid al in that sense. Just today, they put out a statement saying therey were going to step up their targeted controls. That sounds like command and control topdown management to me, not let the Market Forces blossom and lift to the economy. Matt we appreciate your time. Great to get inexpert on this issue. To get an expert on this issue. For more on china, check out bloomberg. Com. Stephanie growing in the u. S. 2 in the First Quarter and all sites are putting to a rate hike incentive. The nyu professor spoke on bloomberg surveillance earlier today on what is driving the feds timing. Global factors affect what Central Banks do in the last couple months. The greek crisis has been reduced. The china slowdown is another risk. The chinese are intervening. Domestic factors as of this point, if you are looking at the real signs of Economic Growth job creation, we are close to the point where a rate hike should occur. Factors suggest im confident about that point in september. Oil prices are falling and Commodity Prices are falling. Given there are large profit margins, even if there was exhilaration you do this better than me and better than dr. It depends on what measure you use. Cpi, inflation is moving up. When you strip out those energy and commodity affects, their argument is we cannot do anything about the price of oil. We have to worry about prices and other areas and there is evidence that prices outside of commodities are starting to rise. Thats why they are looking at wages as a sign that people are beginning to see prices increase and demand for compensation to make up for it. Im curious about something you just said. The reduced risk of a greek exit. I reduced is that risk and how confident can we be that weve moved past this . Have we raced in the risk that remains . Priced in the risk that remains . It has been postponed for the next six months. The question is going to be six or nine months from now politically and socially maybe the government collapses and the question appears as well. This is something we will discuss in six to nine months. Where do you see gdp growth for the u. S. This year . We will probably be below 2 . Even the fed is estimating 1. 8 . We will probably end up below 2 . The Second Quarter looks slightly above 2 . We will not be doing great. Stephanie speaking on bloomberg surveillance earlier this morning. We have more to cover when we come back. U. S. Markets opening up in just a few. Stephanie not so beautiful this morning. It is still very early, only 620 20 6 a. M. At the bay bridge 6 26 a. M. At the bay bridge and 10 go. Gloomy and ominous. It in san francisco. We are just a few minutes away from the open. Tracy has joined us. The three things moving. I know we just had u. S. Gdp figures come out. We will take a look at chinese gdp again. We had that 7 growth figure for Second Quarter chinese gdp that came out a while ago. We had a survey from act of america this morning that says only 20 of the investors surveyed actually think china was around 7 . Survey from bank of america this morning. The vast majority of people seem to think it was more around for 5 . 4 or 5 . What does that mean for markets . We have a love questions over how chinese stocks are moving at the moment. We have seen big leaps in the last five minutes. A lot of questions over how chinese stocks are moving at the moment. Matt this china even know over one billion people in a country the size of the globe it is massive. The big thing now is china needs to that most people thought china was moving its gdp figures. Maybe there is a bit of tweaking. The question is whether it has gone beyond tweaking. Matt how much of that economy is underground . Out in the provinces, out in the rice fields with peasants who have no connection the Chinese Government has embraced that gray market economy, gray market lending. Do they have a handle on it now . Who knows. Matt fascinating. Number two, good story in the wall street journal today about hanks encouraging investors to use derivatives banks encouraging investors to use derivatives instead of buying stocks. Theres a total return swap. Stephanie it is considered a derivative. For stocks. If banks encourage clients to use derivatives they dont have to use up as much of their Balance Sheet buying and selling stocks and facilitating those trades. Its a way for the banks to circumvent the leverage ratio and make it cheaper for them to do business for their clients. Matt theyre not trying to convince Retail Investors to do this. Talking about big institutions. Matt sophisticated investors. Theres a question over whether itsr or not its healthy stephanie maybe its a good idea, but it feels like level one of this is where we were with investors 11 years ago. How about looking at cbo lets double down. Matt it doesnt sound like a good idea. Stephanie we will see. Matt it may turn out to be profitable for one party or the other. I want to pull in julie hyman for a at what stocks are on the move. Julie we start with facebook today. The biggie of the earnings reports moving lower by 2 . The nubbers looked pretty good but then people started focusing on the spending facebook has been doing. The numbers look good. Mark zuckerberg urged patience on the part of investors matt get a glass of water and take a look at the stock. Julie thank you. He urged patience in terms of some of the newer apps including the messenger app the company is trying to promote and develop. In lieu of that patience, we are seeing some selling in the stock this morning. Matt it was up 82 . They are spending a lot of money julie a lot of it on people. Hiring a talent. Im having some sort of issue. I will send it back to you guys. Stephanie we have not even done to number three at. Best yet. Number three yet. Bloomberg intelligence has dug through the numbers and found an even bigger number we can all marvel at this morning the actual volume is now at 18 trillion over the past 12 months. Bigger than u. S. Gdp. Matt we have bloombergs etf analyst with us. A fascinating story. This is not the only fascinating number i saw this morning. Sheer volume alone is massive. It also dwarfs the underlying assets the etf sold. Stephanie especially as we look at credit etfs. You cannot trade 10 million bonds of a single name without moving the market half a point. How is this even happening . When you look at the way etfs trade they have standardized everything. Every asset class trades like a stock. They are trading like stocks. In the case of bonds, you bring up a good point. They are trading at a tip of the spirit type stock trading vehicle. Tip of the spear type stock trading vehicle. Its between two parties only 10 is called creations were they going to the bond market or stock market and create new shares. In a lot of it is just two people exchanging their shares. It doesnt impact the underlying all that often. Of course, when you have lots of people trading you have is Market Makers trading, what does that mean for wall street . It sounds like a big business. Eric if you calculate the 18 trillion they are making 9 billion a year off the c. T. S. Off these etfs. If the phils johns prophecy that etfs desk it fulfills johns prophecy. There is so much trading going on. Thats what they were first designed for. Amex invented in the etf to spur trading and thats what happened. Stephanie give us the worstcase scenario. John said its like handing an arsonist a gun. A match. Im having a hard time. Tom wagner said Pay Attention to this. Who is it going to be an issue for . If the market does turn in fixed income and there is liquidity freeze, who is going to pay . Eric weve seen this before. The big highyield bond etf i would not worry about treasuries all that much. Hyg was around 2008. They traded at an 8 discount. Things got ugly. You cannot trade the underlying bonds either. It is just a bad day. You will eventually find a buyer , the discount will come back up and they are like rubber bands, they snap back to the nab value and keep trucking. They have been around for over 10 years now. It is never pretty on a bad day but no one loses their money. The bonds are custodians. There is a safety and trading them. When Everyone Wants to sell everything it is not easy to sell the etf for the bonds. Stephanie when Everyone Wants to sell everything the street is no longer there to cushion the blow even if they want. That falling knife has gotten sharper in the last five years. Matt thank you very much, eric. Our bloomberg etf editor. Julie is ok. Just so you know. She has recovered. She talks a lot, 12 hours a day. Stephanie like a rotten apple or a bad year of corn, the entire commodities complex has been soft come at best. Just because one commodity is challenged doesnt mean another is not oversold. There is nothing worse then shucking corn and you get a bad ear. Stephanie there you go, looking at the market spread. We are here to break it down. You are watching Market Makers. Heres a look at your top stories of the morning. Malaysias premier said the metal sheet found in a remote idol will Remote Island will be sent for tests. It might be from that missing Malaysian Airline jet. Officials think it looks like a wing flap from a boeing 777. No trace of the plane has been found since. There is more fallout from the Rolling Stones debunked story about a Fraternity Gang Rape at the university of virginia. The editor in charge of the story is officially leaving the magazine. The story was retracted after an investigation. Three members of that fraternity are now suing rolling stone. For republicans, a 17 candidate is now in the president ial race. Jim gilmore no telling whether he will get into next weeks televised debates with only the top 10 candidates in the poll those are your top headlines for the hour. Matt broadly, the entire commodities space has fallen out of favor. The global head of Commodities Research says weakness and oil gold and copper has tracked down the entire complex and created opportunities. He joins us now. I thought your notes were fascinating and it makes a lot of sense. All commodities have been part of the same brush but there are still important buys not losing out because of china. Thats right. Youve got the bloomberg Commodity Index the world focuses on the majors. Oil, copper and gold. The rest dont matter. Those three were so important its tracking down the entire matt copper is because of china. That is the issue. Why would copper be so weak because of china when 10, led and nickel these have been oversold. Tin lead and nickel. Its price is much more significantly higher than his cost of production its cost of production. Matt the price to produce copper or to pull it out is still less than the stock price. Its around 5,300 a ton. The consultants put out number around 4500 a ton to pull it out of the ground. Our estimates are much lower than that. And to buckle economics, when things are imbalanced, prices should equal the marginal cost of production. In this case, prices of copper have been elevated because of financing deals in china. In typical economics, when things are imbalanced. Chilean workers are going on strike, this creates a premium in the copper price. When you have disappointing news coming out of china, copper is very vulnerable because it has that premium relative to its cost. Matt copper as low as it is still has room to fall from here. Unfortunately, it probably does. It probably should not because there are elements of the chinese policymakers who want to support certain policy copper does have issues right now. Theres no reason why should collapse. Stephanie copper is dragging down other commodities. Grain prices drop as a result of copper and oil. Why . They are totally independent. No relationship whatsoever. For the point being, if you talk to the average person and tell them commodities are selling off, oil is going down, gold is going down, copper is going down, no one wants to get long any commodities. In the course of grains this case of grains stephanie it is just momentum and trend creating. We are not seeing fundamentals. It is sentiment. Stephanie that is not unique to commodities. Look at where tech stocks trade. Everything is being dragged down on sentiment and thats what creates the buying opportunities. Matt i always think of trading places when the duke brothers sat eddie murphy down and showed him bacon, orange juice. He thinks of his breakfast are those all in a sweet spot for buying right now . Things like sugar and coffee has been completely beaten up by currency weaknesses. This countries like brazil because demand is down so much its more of a fundamental story because it is driven by demand. Stephanie if there is one thing we should by in the commodity space long nickel. Stephanie thank you so much for joining us this morning. Matt does everybody there learn how to pronounce it in french . They do. Matt so much fun to say. Stephanie from a french accent to the boston one, the business of tom brady. Matt coming up later this morning cignas ceo will join our market they 10 30. He will get his reaction to cignas earnings and his reaction to the anthem deal. It is a big deal. Stephanie another big deal, tom brady is not just a star athlete, but a powerful brand in and out of the sports world. Good that brand worth millions and millions become permanently tarnished with these new deflategate revelations which includes mashing his cell phone which included smashing his cell phone . We need the caveat, she is a giants fan. Before we get it to this means for tom brady ss fans, i want to know what tom brady has done and how out of control this has gotten. Many people thought he got the suspension, this was over and done with lets talk about this phone for just a moment. Tom brady has submitted 10,000 emails. He did what his employer asked him to do. Matt they wanted all of his emails. If you give them the ones that dont say anything they wanted the ones that said something. They wanted the smoking gun. Not the one wiped of prince. Prints. Stephanie could one argue that your cell phone is your personal business . We are entitled to our personal life come even secret life. People would love to know your private business and the things that could be your cell phone. No question. Thank you for having me on. I went through the 20 page report that Roger Goodell put forward and its clear and has been clear for the last several months, they did not ask for the phone they told tom bradys lawyer you can handpick the information on scouts honor. They did not want the phone they allow his agent to pick the information from the phone. The fact that he destroyed it on the day he met with the investigators looks really suspicious. Matt he actually destroyed it . Your private life being your own, that is great. If you are an athlete that gets paid hundreds of millions of dollars, when you do something at home beat your wife or use racial slurs if you use a racial slur in your private home and your girlfriend tapes it that has an effect on your public career. Just ask cogan about that last comment. Holt hogan huklk hogan. Stephanie lets go back to tom brady. What does it mean for the business of tom . He is hurting his case right now. If he had come out from the beginning and admitted to whatever the nfl wanted him to admit to and publicly apologized and not drag this out, we would have gotten over this. Now, there is a real hurt to his brand that he will see and it will be interesting in the deals Going Forward once he retires is anybody going to be wary of picking up him up as a new sponsor . Stephanie he has said i di dnt do this but i will take one for the team. Punish me. He admitted that much. There have been reports that the nfl offered to cut his suspension in half if he had admitted to not cooperating and knowing about the deflated footballs and apologized. If you had taken that deal, this would have been over and done with. This will get dragged through the courts and it will be interesting to see what under armour says about this. Stephanie the fact that he destroyed his phone, you think it is a big brand hurter . The things in his phone between he and his wife could be damaging to his overall reputation. What do you think he wouldve been texting to the guy who watches his jockstrap . His endorsement value is not as large as you might think. Get peyton manning, he earns 15 million a year in endorsements. Tom brady is between 4 million and 7 million. I dont see under armour uggs dropping him at this time. I dont see anybody knew coming into the fray which is interesting because here is a guy that last year won his fourth super bowl, tied with the most ever. It is going to impact whether he is going to get new endorsers. Matt we are looking at live pictures of patriots training camp. Tom brady is not down there. Im sure hell he has to show up once in a while. He only has to show up once in a while. I dont believe his brand will be hurt this much because the patriots seem to have this knack for bouncing back from getting caught cheating. They were videotaping other teamss playbooks. That is down and dirty and Nothing Happened to them. They are allowed to stay in the league i cant believe goodale is going through with this. Tom brady is still great looking. He has such a winning record, a supermodel wife. Look at the sky. This guy. Its because of the resentment of the favorability that robert kraft has received in the past. Stephanie is that fair . Maybe i did not hurt you hard enough in the past so i will punish you now. Going back to tom brady more than destroying the cell phone which will hurt him he has made 7 million a year through endorsements. He is suing the league. Nikes official deal with the league is up in 2017 and under armour is going to make a huge push. If they are looking at making a deal with the nfl, you think they want to have a guy suing the league on their payroll . I dont think so. Stephanie matt and i are disagreeing. We will see. Stick with us. Julie mom has always been one of those people who needs to keep busy. 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Roach motel desk a rundown of the most berman filled cities in the u. S. We are not talking about the human variety. Actual insects. Matt good morning and welcome to the bloomberg market day. I am matt miller. Olivia im Olivia Sterns be lets get to the market check on the heels of this u. S. Gdp report out this morning showing the u. S. Economy grew by 2. 3 . Matt the only 2. 3