Forecast for the year. The company is spending more on employee raises here in the u. S. We will have more on this in just a few minutes. Matt wildfires are threatening a resort town in washington state. Several large fires burning near chelan, washington have already destroyed about 75 homes and businesses. 200 activeduty military troops have been called in to help. Cory i was up in Northern California weeks ago. It is unbelievable what is going on there. Matt a suspect in the deadly explosion in bangkok was seen on security footage. A man in a yellow shirt was seen taking off a backpack and walking away. The bomb exploded in a bangkok Shopping Center popular with foreigners. Searching through Hillary Clintons emails. 305 emails were flagged. Clinton said she did nothing wrong by using a private server while in office. She joked about the messages yesterday while campaigning in iowa. You may have seen that i recently launched a snapchat account. [applause] i love it. I love it. Those messages disappear all by themselves. Week, she turned over her email server to the f ei. Fbi. Cory a scary moment last night for the new york yankees. Pitcher Brian Mitchell struck in his face. He collapsed on the ground and was helped off the field. He had a small nasal fracture and will be evaluated for a concussion. Matt is that not a concussion . Cory i think nasal fracture sounds worse. Matt that will happen. We will bring you as many as we can throughout the day. Right now i want to give you the top five things you need to know about this morning. Number one is oil trading near its six year low. It has slumped more than 30 from this years closing peak in june. Algerias Energy Manager says opec cannot halt the price slide on its own and to be as producers outside the group to help produce supplies. Opec doesnt want to halt the price slide on its own even if it could. Indeed the desire is probably too hurt the u. S. Market by keeping prices low. I think iran coming into the market is a bigger factor. Matt and the chinese economy is probably the biggest factor of all. As far as the sliding oil prices. Chinese stocks tumbled. The most in three weeks. Traders reducing the shanghai composite index sank over 6 . The biggest loss in late july. Matt massive rout. You wonder what the Chinese Government is doing here. They started to sell. Julie hyman has number three for us. Julie we are looking at housing. We have some Economic Data in half an hour. Building permits come out at 8 30 this morning for the month of july. We have seen blockbuster housing data. A streak of relatively strong housing data. That could continue. We got home depot. Releasing secondquarter earnings of 9 with a gain in profits. Sales growth of up to 4. 9 . Really strong given what we are seeing elsewhere in retail. It is good to be in housing retail right now. Matt thats bigger than the overall growth rate of the company. Cory you wonder if that is a good or bad sign for the economy. People are investing in their homes when they cant go out and full the trigger on a new home yet. So what does that say about the housing story . Historically it has been a positive. Matt number four is pat filing petco filing for an ipo. It is backed by ppg and the Abu Dhabi Investment authority. This would be the companys third ipo since 1994. 2002. Pod in cory it has been a rough business. They have blown it twice. Musclzzles for steve there twice. Is that a dangerous dog . Matt he loves humans, but if you are another dog, especially a lapdog cory does he wear it all the time . Matt when its possible that a around. A would be he thinks they are squirrels and he tries to eat them. Cory understandably. He is no dope. Matt lets bring in Olivia Sterns for walmart earnings. Olivia i thought we could talk about your rottweiler. Matt we can continue talking about that. Olivia i am shocked and appalled that you put a muzzle on him. He is a peaceful animal, i have met him. Matt lets hear about walmart earnings. Olivia the bottom line is disappointing. They cut their guidance for the year. Huge hit in investments. My take away is the beat on the u. S. Cop store sales. They are up by one and a half percent. Say their bigts concern, 70 of walmarts profitability comes from u. S. Stores. And want to see improvement arguably that is what you have seen in the numbers already. Traffic is up by 1. 3 . Wagesso is increasing going to increase growth . Olivia that is the 1 billion bet they are taking. To a you dont want to go store where employees are unhappy or unhelpful. You would assume an increase in wages would help. Olivia and the Company Agrees with you. They are investing into boosting employee pay. By february of next year, the minimum wage for walmart workers will be at least 10. Somebody from the company is saying they feel they are already seeing some of the investments pay off. Friendlier, cleaner stores. Disappointing the numbers is investment and training. Matt you could see the ford effect. Henry ford started paying his employees a living wage, and they turned around and started buying modelts. Walmart employees are also walmart customers. If you raise their wages, a lot of the money is going to go right back into the till. Olivia that is one of the arguments for raising the minimum wage. There are also arguments against it. A lot of big tailwinds for the u. S. Consumer right now. Consumer confidence is coming back up and cheaper gas. The company is seeing people spending some of their gas savings. I believe the average price for a gallon was 25 lower than it was in 2014. Matt i have seen them talk about the cost of that. How much does the International Picture hurt . Olivia 70 of their profitability comes from the u. S. 59 of their revenue comes from the u. S. Their International Business is still north of 140 billion. That is more than amazons total sales. Matt speaking of happy employees. Olivia i am not weighing in on that debate. The story in the New York Times over the weekend talking about how unhappy amazon employees whitecollar workers are. Olivia walmart employs about 2. 2 Million People worldwide. Amazon employs about 150,000. Matt this is a company not rooting to raise rates. A stronger u. S. Economy will help. Matt a stronger dollar doesnt help much, does it . Olivia mexico and canada, positive. And u. K. Is in the midst of very aggressive grocery wars. Stiff competition. China is also interesting. They just got out the rest of their partnership in a Company Called i called the beijing bureau to get the pronunciation. Matt sorry . [laughter] a lot of analysts think this might be a precursor for walmart preparing to make a bigger investment in ecommerce. The company is less than 1 of the chinese ecommerce market that some people say they think this is walmart wanting to get serious about competing with j. D. Com and alibaba. Flat. Revenue is basically olivia if used about the currency hit, it is up about 3. 6 . Out the currency hit, it is of about 3. 6 . Matt we both refuse. But thank you very much. Olivia sterns, thank you so much. Coming up, fixed income are on pace for a record year. To blackrocks ishares, the largest family of etfs. Matt time for some top stories. An indonesian search team says no one survived the crash of a small airline. Trigana plane crashed into the mountains 10 minutes before scheduled to land. A Chinese Company has agreed to make smartphones in india. This time it is lenovo. It plans to make 6 million phones. Xiaomi already makes phones there. The government has offered some tax breaks for manufacturers. Cory the force will be with you on japans Largest Airline this fall. The pond airways will start flowing Nippon Airways will start flying a plane with r2d2 on it. It is part of the hype around the new star wars movie. Matt i would say getting too obsessed with star wars is unacceptably nerdish. Cory its not good for your social life. Trust me. 787 painted like r2d2 is pretty cool. Cory have you been on one yet . Matt i dont believe i have. Cory its really fantastic. The carbon fiber frame of the plane is even better than writing luggage class on no legroom regardless if you are in economy. As the fed gears up for a potential rate hike , investors may be looking for safe havens. Our next guest says etfs may be the way to go. The head ofis americas ishares fixed income strategy at blackrock. I know Institutional Investors have been using etf in a big way. I hear the kids are into them. Millennials. I dont want to say it is a trend, but the something they are doing a lot more of. Thats right. Think about what an etf is. It is a way to access the bond market and control your own investing. There are over 200 etfs in the u. S. Out there and build your own fixed income portfolio. You really have control over your investment in a way you cant in fixed income any other way. There is no other way to treat the bond market the way you can with an etf. If you are very technologically savvy and you want to control your investment, it is a great way to go. Cory is it only etf . Think of it as trade or customize. Say you want to build a portfolio that just matches what you want. You can customize your portfolio down to whatever degree of specificity you want. You can do that with trade, too. Matt interesting in the bond market. I feeling the bigger funds we are talking about, when they use it they use it for exposure to markets they dont want to do the actual work to pick winners and losers. I wonder if there are better for etfs than say commodities. It is hard to take commodities. Im not a commodities guy. Matt they create distortions and commodity markets. You dont see any bond market distortions from etfs. What you see as investors using them as a way to invest in markets they couldnt get access to. I want toinvestor and invest in an emerging market and i dont have any analysts or the ability to pick bonds, i can buy an etf and get exposure to that market. Cory where are you seeing the most success . A couple different places. We are seeing a lot more investing in the shortterm part of the market. Back to the fed potentially raising Interest Rates we have a floating rate. Invest in securities that have a coupon that floats off three months libor. So will increase as the fed increases Interest Rates. Lets get some other picks from you. We are also seeing fund and near. Matt clever. It gives you a half year of Interest Rate risk and 8 of yield. A percent of yield. Years a one to three credit fund. Cory its fine, it works. It basically allows you to get shortterm credit exposure. It is more risky than the other two but a little more yield as well. Matt very cool. Thanks for joining us. Matt tucker from blackrock. Oning up next, a major read the economy Housing Starts are due in just a few minutes. Will the results confirm or deny growing optimism . Get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swifts music videos, interviews, and more. Xfinity is the destination for all things taylor swift. Tand thats what were doings to chat xfinity. Rself, we are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Matt taking a look at futures. Starting the day down pointing open. Negative i two important razor out today. Home depot Earnings Release this morning and Housing Starts in just about four minutes. Lets check in with nela richardson. To see what she makes of the latest numbers. We havent got the Housing Starts numbers out yet. What are you looking for . What do you think of the industry right now . I would love to see a Housing Starts number of 1. 5 million. I dont think we are anywhere near that point. What we did see earlier is that confidence is the highest it has been in about a decade. That is good news. Lets hope it is good news for the right reasons. That some of the supply issues are starting to become less and. Cory what are the wrong reasons . Buyer demand. We have had really low supplies for about two years now. The buyer demand is there. It is supply concerns holding back housing. Matt why is that . Buyers are still trying to get credit. New gold construction is more expensive. New Home Construction is more expensive. They are wary about pulling the trigger. No one wants to be the person who bought at the top of the market. Matt i can see that where i live in san francisco. We see another market such as south florida. How much of this is a regional story and how much of it is national . Housing is all about location. There are some macro side effects. We have very low Interest Rates and very tight credit. If we had looser credit, we would see a totally different Housing Market. Matt s credit a problem for credit a well is problem for supply as well . It has been a big problem for builders and developers. They couldnt get the credit to buy the lots they needed to construct now. Matt so builders cant get it and buyers cant get it. It was so tight for so long that they are kind of kind. Matt is it a hangover from 2008 . We are still seeing the aftershocks. Cory lending standards are just not there. We talked about Student Loan Debt. Etfs areho like the paying so much in Student Loan Debt so they are delaying housing purchases and that generation is pushing off their home purchases more than anyone else. Millennials are a mixed breed. Those that have highpaying jobs are fine. 50 of our buyers are firsttime millennials. But by and large a lot of them are held back i a lackluster labor market and stagnant wage growth. Matt i wonder what you think about home depot. They look good, but what does that mean for housing . Does them and people are staying in their homes and renovating mean people that are staying in their homes and them . Ating people would rather at 400 uy a neweet than b y house. If we see the singlefamily construction pick up that is good news. Matt construction in general is great for home depot. These Housing Starts will be built by small independent contractors in local markets. That has been a big shift. There are no longer leveling a lot for 200 singlefamily homes. They are going into cities and being more targeted. They are feeding the demand for walkable communities. Really interesting change in the kinds of housing being built. That is across the board. Matt we are just about 20 seconds away from new home starts. I want to go out to vonnie quinn. 1. 5said you wanted to see million but i think the consensus is more for 1. 3 million. 1. 18 million is the consensus in the bloomberg survey. We had a good month last month. The game last month was 9. 8 so we are just looking for half a percent. We have the numbers in. Rise and the previous month was revised upward. Picture still a good for housing. In july, 1. 206 million houses. Building permits down 16. 3 , almost double the consensus for the drop of 8. 2 that economists were looking for. So Building Permits had been running up. Looking like we are giving back a lot of that now. 16. 3 down in july. I wanted to look at single and multifamily. Month over month, singlefamily were actually up 12. 8 . Multifamily down 17 . It is interesting. The first number i grasp onto is the approvals for Housing Starts. It is down 16. 3 . That is double what we were looking for. Where we getting the approvals . Supplyooks like the concerns are still relevant and meaningful. Until they start to slip away, we will still have a hard time getting things off the ground. Cory the Credit Impact it is a pretty good number. The impact is still there. I think so. It is a pretty good number, but you have to look at it in context. It is not keeping up with the pace of demand. It is not keeping up with new household formation. We are seeing steady improvement, but it is not enough for current needs. Matt what does that do to the pricing situation . Slowdown ineing a the existing home market somewhat. We are projecting that for august. That is based on buyers getting a little weary about paying such high prices. I think prices will still be contained. But builders are tending to build for a higher in market than where the demand is. There are not typically building for the firsttime buyer and that is were the demand is. Lowerlevel Housing Demand is going to have to go to existing. Because the new stock just isnt there. Builders are really concerned about margin. They are really riskaverse. A little bit more risky to build for a firsttime clientele. Matt that goes right back to the credit thing. Builders not wanting to be part of a market where there isnt a certain thing. Thats how the Housing Market has been operating. Traditional sellers or builders and developers are really riskaverse. Theyre going with the cash buyer. Theyre are afraid to put risk into their transaction. Cory thanks so much for joining us, nila richardson. Time for our top stories. Sprint has given up the to your mobile phone contract. It will offer cheaper monthly balance plans. With sprints ceo earlier on bluebird surveillance. Bloomberg surveillance. So confusing,y is bringing transparency to consumers is a must. The big winner in this movement is American Consumers. Cory tmobile ended contract about two years ago. Verizon dropped them this month. Only at t still subsidizes new phones. The irs says a cyber attack was more than twice as bad as that thought. The agency said cyber thieves stole Tax Information from 334,000 people. Authorities are notifying potential victims and offering Free Credit Monitoring Services to those affected. More Research Backing the benefits of coffee. A study of Cancer Patients says those who drink coffee had better survival rates. Soda and other caffeinated drink do not have the same effect. Other studies have shown it can lower the risk of diabetes what causes bad breath. Bad breath. S its good for you. You dont treat profit . You dont drink coffee . Matt no. Cory we have analyst action, next. Matt Media Companies are moving this morning. On an analyst downgrade of content. I thought content was king. Cory that doesnt mean people pay for it. Matt julie hyman is here with that note. Julie wells fargo is out with the note this morning. Ago, we hadweeks disney setting off a cascade of negative earnings news. Really putting a fine point on the question of whether people are cutting the cord. Are we going to see renegotiations with some of these content providers . Are we going to see the socalled unbundling of their networks . Wells said they wanted to take some time post that selloff to try to reassess. We are seeing bouncing around. 21st century fox, disney, and cbs are the three big downgrades coming from wells. They sort of ripped up the script. Among those criteria, they were looking for companies with low Foreign Exchange and regulatory risk. Companies with relatively stable growth. They also said things that are must haves by the average consumer various services and products. The potential for some sort of positive catalyst. That is where disney and cbs did not measure up. The companies that did measure of were more the distribution. Not aarner or comcast, lot of movement. Matt there is a problem with the feed. It is unlikely that every single stock is unchanged. Julie yes. There is a problem with the feed. Youre not seeing a lot of movement. Julie so lets look at the bloomberg terminal. What you see here is an index of content versus distribution. We put together these indices. This is the entertainment index with Companies Like disney and cbs in it. You see the big drop we had a couple of weeks ago. This index is down around 13 . Companies of paytv is up about 13 . Its not like wells is unique in coming to this conclusion that we are seeing this shift in the media landscape. It is just interesting to see this deep dive into the two sets of companies. It is reflected in the stocks. The question is what happens from here in terms of how much we actually see it come to fruition that people are cutting the cord. Matt im kind of fixated on apple tv. We all want apple to build a television set. Cory which they will not do. Matt they built the box, which is genius. They are negotiating with and be providers to try their own orange line. As long as the white line continues to drop like that, we are getting closer to apple being an orange line. Julie except apple keeps pushing it back. Year . Whats a they have been after the white line people and they cant agree on price. The lower down this white line gets, the more power at least in theory, apple has. Cory very clever, matt miller. You, julie. Time for some agenda items you need to know this tuesday. Tjx, owner of t. J. Maxx and marshalls, reports Second Quarter corner wee earnings. Julian castro will hold a meeting to discuss the 10 Year Anniversary of hurricane katrina. It has been a decade. The American Petroleum institute releases its weekly inventories report. It is a key indicator, today especially as we see oil come down below 42 a barrel. Opec saying, we cant cut production. Cory it is a weird time for refineries. Matt it is a weird time at the gas pump. We are seeing the crude price takedown and prices at the pump are rising. K down and prices at the pump are rising. 4. 89. Saw gas at matt maybe you should get a tesla. Cory i will not. But thanks for that suggestion, matt miller. Technology. Ng that story next on market makers. Youre watching market makers. Im vonnie quinn. It is boosting its forecast. Trading higher by more than 3 . Salessaying that comp were up 6 . That is double the estimates. The ceo said in the press release that the Third Quarter is off to a solid start. Home goods is one of the areas where they are seeing the best improvements. 5 increase as opposed to in 2015. That is in line with some of the housing data we are getting. Cory the future of the american highway. Traditional automakers face competition from tech companies. Right inside the of their car. Theyre all trying to acquire the most detailed maps on the road. There is a car race underway pitting traditional automakers against upstarts in silicon valley. Getting self driving cars on the road first. And maps are the fuel in this race. It was really about getting from a to b. There transitioning from becoming visual. It not only helps you get there but helps the car drive. It is also knowing everything in realtime. It is extremely cultural. Bmw and audid eat o team up to acquire nokias map division . They are afraid of ceding control to apple and google. And what makes them even more valuable . There arent that many map data sets in the world. Theres apple, google, tomtom, and nokia. So the automakers may have landed a sweet deal. To map the future of the auto industry. You are the car guy. But its interesting to me that the carmakers are having this debate where they want users i want to put my iphone in my dont want waze, i to wait for my car to update their map system. But they dont want to turn over control of the unit to apple or google. Its carmaker versus consumer. You want to be able to use whatever you are using in your office or home in your car. Cory right. Matt you probably want to use waze because it is the best. It a safetyave made issue, but i think it is a business issue. The maps are a place where transactions happen. Mercedes,fully audi, and bmw just got together to buy from nokia. First time i can recall those automakers working together on anything. The interesting solution would be if they can figure out an interface that would allow me to have waze on my phone, get in my car, put my iphone in the consul and have it automatically translate to the maps in my head unit. Cory they have. Doesew apple car platy just that. The automakers are not in love with it. They look at what happened in the Music Industry when apple partnered with them and the pain that caused. There is also an open Source Development model to create an open source, Free Software mapping thing that would allow everyone to have something that no one would control. So the automakers would maybe use that instead. Matt was michael what is that called . Cory i dont know. Matt we will take a deeper dive into the earnings of walmart. Matt walmart posted secondquarter earnings that came in below analyst estimates. The company is down after cut its forecast. Olivia sterns has been listening in on the Conference Call and she joins us now. Is there anything more that you can glean from this Conference Call . Olivia theyre are just going through the pressure points. Reiterating the fact that store sales were up. Particular are in this big fx hit from foreign currency exchange. The other reasons all caps from walmart u. S. Shrink, unaccounted for items. Some of that is theft. Also pharmacy, just the nature of the way walmart is getting reimbursed for its medicines. And finally, investment. Walmart sounds quite confident that they are seeing the Big Investments they have been making in cleaner, faster, friendlier stores already pay off. 1. 3 inease of on traffic. And 1. 5 in sales. Matt but analysts dont seem to like it nonetheless investors i should say. Obviously you are not buying the shares in the premarket. We will see what happens in 35 minutes. Our walmart executives trying to assuage investors in any way . They have said that they have a mediumterm strategy in place. Nobody is making any pretense that there is a big 2015 Earnings Growth story for walmart. This is an investment story. It is going to take a long time to turn around. Theyre pointing the figure at disappointing results from the International Business. Out only had positive comps of two of their markets. Disappointment coming out of china. Matt thanks very much. We will take a quick break. When we come back, we will talk this is market makers. Matt good tuesday morning. Im matt miller. Cory im cory johnson. Schatzker and ruhle are off. But we are here. Matt lets give you a look at our top stories. Shall we . Cory we shall. Matt new Home Construction rose last month to the highest level in almost eight years. Buyers are being attracted by low mortgage rates. The lack of home on the markets is persuading builders to start new developments. The largest auto retailer in the country is getting bigger. 16onation has agreed to buy Car Dealerships located in georgia, alabama, tennessee, and maryland. Nbc universal looking for younger audiences. They have invested 200 million in buzz feed. The two companies will invest in another Digital Media site, vox media. A suspect and the deadly explosion was seen on a security bangkok, thailand. 20 people were killed, 100 others were wounded. The greek government is relaxing on moneyictions transfers. Greek respected greece restricted banking transactions to prevent a run on the banks. Those are your top headlines. Cory just some of them matt just some of them. Cory just some. Im used to seeing you on the radio. You cant see on the radio. Matt are you persuaded by the housing numbers . The housing sector is picking up steam. Areits for new construction plunging, but this was due to expectations of a tax credit expiring in new york city for builders. They were rushing to get permits filed before the deadlines past. The big rush to file permits led to big increases in may and june. T is all about new york if you look at the northeast, you see a big plunge in permits driven by the new york data. Aboutwhy dont you talk influencing behavior with tax policy. If you want less of something, raise the price of it and you do that by putting a tax on it. Matt although it creates ripples in the data going or word forward. More people to be homeowners, give them a tax credit, making it cheaper to be a homeowner. You may have a libertarian slant toward government policies, but you can influence consumers. Matt i was a renter for years and years and it made me angry that i was subsidizing homeownership. Economic benefits to having a high rate of homeownership. People are more involved in the community. , we speaking of credit were talking earlier about the lack of credit available for firsttime homebuyers and pushing construction to the higher end of the market. What are we seeing . We are seeing some falling of credit over the last couple of months and the last several quarters. You see this reallocation of credit further on down the spectrum. More Credit Availability in the median sector of the market, rather than the higher end. The senior loan survey, for instance. That is quarterly data. That shows that mortgage credit has been fine. That even ifean the fed starts raising interest time ther quite some rate can be moving higher cory the bet is that when rates go up, housing will slow down. That is the key point. Matt if we continue to offer tax loopholes to the builders, they will continue to build and we can even increase tax discounts to the buyers. The bigger incentive for builders is the shortage of supply. Cory especially of singlefamily housing. Even if you look at rental vacancy rate, it is a very tight supply in the market for r enters and buyers. There is improving demand and limited supply. That is why you saw Homebuilder Sentiment continued to increase. Matt because builders were having difficulty getting the credit to purchase the lots two years ago, now that they are, you are seeing them doing that and what was the a lot more housing. They are working to alleviate the shortage. Cory yet, we are still nowhere near. We have a long way to go. Builders have a long road ahead. It is good news for them and good news for the broader economy because residential investment will be an important engine of Economic Growth for several quarters, if not a couple more years. The problem is it is too small to carry the load alone. Domestic demand for consumers. Matt we should not worry about the drop in consumers. Onetime anomaly due to expectations for the credit to expire. Matt the average age of a car on the road. Day. Ve him on tv every i beat him up on the radio cory i beat him up on the radio every day. Bruising. Deal foring up, a big retail earnings. Between walmart and tj maxx come a we will look at the winners and losers next. Stay with us. Cory welcome back to market makers. There are tremendous changes going on. Francisco,d from san , iearly every morning, pat feel like covering software and television is a pain because the video is never any good. Felix there was a massive transition going away i feel like there is a massive transition going away from. Is the world more confusing . It is a little more confusing. Those are still the big players in the space. There were three big themes that i see going on in software. You have everyone trying to move to the crowd and you have the trying to get to the cloud as fast as they can. Number two, we are seeing a lot more consolidation. Number three, you have cool, new vendors bringing mobile and Cloud Technologies to industries that did not have it before. Cory like what . Im glad you asked. Most people who go to a yoga class or pilates class these days, you can do it on your mobile phone and you can do it with an app can pick the class you want to go to and it is automatically scheduled and paid for and you show up. Who is doing that . It is a Company Called mindbody, a recent ipo. Theyre bringing Cloud Technology to health and wellness. Cory it is the kind of development, that mobilefirst notion investors will look at those things and jump on those things. It will also look for the kind of things that those big Software Companies or the more modern software Companies Like might wantor workday to create that stuff custom or acquire those companies. Where are we in the acquisition . We have seen a 10 of these acquisitions already. Of these acquisitions already. You will see that continue. If you look at oracle, on their earnings calls, almost the entire dialogue is about the cloud and it is only 5 of revenue. In order to get that percentage higher, they have to keep buying things. Matt is there any trend, i think of sap is the giant in , it was sap and oracle salesforce is the newcomer compared to those two guys these are the three giants. Is there any trend that can knock them down . Do any startups have a chance of growing that big or will they all be acquired eventually . O, i mean, it is hard to ,emember that 510 years ago workday and salesforce were effectively in startup land area startup land. Salesforce has grown at 30 . Workday grew over 60 last year. Matt salesforce growing at 30 last year with billions and acquisitions. It has not impacted the stock yet. That the imagine salesforce is expected to grow at a much slower space. A report this week, so we will see. Interesting stuff. It will be an interesting earnings call, as always, will mark you. Phone are nearing an end. Matt welcome back to market makers. Trump is backed by 24 . Jeb bush is the only one in double figures at 13 . Sachs, Robert Kaplan is now with the Harvard Business school after two decades of goldman. He will be the dallas fed president. Sprint will offer cheaper monthly plans so customers will no longer get a mobile phone for a heavily discounted price. Earlier, we spoke with sprints ceo. The American Consumer will know what they are paying for their phone and for their service. That has been so confusing, transparency is a must. Contractsbile ended more than two years ago. Verizon dropped them this month. Subsidizes new phone purchases. Cory the days of phone subsidies are nearing an end, shift is actually boosting the top line for these companies. This is an interesting accounting thing. It is. Cory it is a bit of an oxymoron. It is all about accounting. Cory good thing i have this job. I have an easy explanation for you. Matt break it down for us. How do you buy a phone now . Of years ago,ple you would walk into a verizon or at ts door and plunked down and the a 650 iphone carrier would report that 300 as revenue that you paid them and they would take a matt 300 over time . It would be taken as a the 350. Pense, 300 recognized. The 350 subsidy that they are paying for you, would be a cost of goods sold. In todays world, where you are buying the phone on time, you walk in, the carrier does not recognizeuy it, they as revenue the entire 650 even though zero cash is coming in the door and they have no subsidy expense. Matt this is assuming you sign on for a contract. There is no contract. It is monthtomonth he essentially. You are on the hook for paying for the device, not on the hook for staying with the carrier over the course of two years. Matt if you leave, you have to pay the rest of the deposit. The contract business goes away. Is great deal for consumers they give you discounted service. Is great deal for consumers that. At tmobilek did this first. Their big shtick was they brought the Service Price down just like everyone else, but they advertised it as, what you see is what you get. You buy your phone on time at a low price. Cory the growth in sprints sales growth it is an oxymoron. Sprints sales are shrinking. Matt you are full of them today. [laughter] cory that might change because of the accounting change . For a short while. It right now. D but you end up repricing the base. Sprint is a much more complicated story and a longterm story, really, when you look at what has to play out for them over the next two years. This is not the kind of benefit they need. Thanks a much for joining us, john. Cory i love my accounting stories. But that is just me. Matt we are going to take a quick break. Cory and i will be back in three minutes. 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. Matt we are minutes away from the opening bell of the Bloomberg Stock exchange. Frostegan is here and tom is here. Next him, bring your twin brother with you. Mike regan, kick us off. Lets start with emerging markets. Dropping tominal the lowest since 2011. , it istio to the s p 500 about a decade low. The focus is back on china. The shanghai composite dropping 2. 6 . China down 6. 2 , im sorry. Down 2. 6 after a bombing. Cory many stocks are not trading on the shanghai composite. No, we are going to play today. [laughter] cory the selloff would have been worse. Presumably. Cory they did not take off the ones that were going to go up. Right. Currency is getting hit today. The turkish lira at the lowest on record versus the dollar area matt the way this normally works is we wait for your commentary. When corey is here, he takes it all. We love corey commentary. Even after this pullback, the Chinese Markets are down. U. S. Markets are up 200 since 2009. It was Baron Rothschild that said the time to buy is one there is blood in the streets. We think there is blood in the streets in the emerging market area, but we think there are really good buys in that area. Matt where do you go . We actually like china right now. We like mexico and other latin american countries. Cory are you calling a bottom on china . , we aree not traders investors. We are thinking long term. We think there will be much greater growth on the emerging markets than there well in the u. S. Markets in the next 20 years. We are not calling a peek in the u. S. Markets peak in the u. S. Markets by any means. Matt i think the majority of people would agree with you over the longterm. Absolutely. You want to get on the roller coaster at the bottom with the top . Things are cheaper right now. Cory does not look anything like a bottom or any. Matt you dont think this is going to look like a cheap point over 30 years . Cory youve got some real systemic problems with what is going on. Absolutely. The Chinese Government is learning they should not manipulate the market. We learned that a long time ago. Until they become a democracy, we are going to see that over there. As we see, when it slips, it slips like a clutch. Matt lets move on to number two. A little bit of blood in the aisles at walmart today. They are down from a range as high as 5. 05 per share. Strong dollar is hurting overseas sales and their increase in wages having an effect. It willm, they believe be a good thing come but pretty painful in the shortterm and it makes you wonder about companies that have followed suit. These companies certainly dont print their own money. Giving workers a race is going to hit their bottom line. If you are an owner of walmart or one of these other kind companies, the strengthening dollar has been hitting your profits. Consumer, do you want a strong dollar or a weak dollar . Cory it is ridiculous of walmart to blame the strong dollar. They are the beneficiary of the strong dollar. But is not just in america. Matt they get 41 of their revenue overseas. In some places it is clearly hurting them. Cory in most places, it is helping. I think you are right, it is ridiculous for them to blame it. On the one, soul event, it is eating into their profit. How does it help the consumer . We want a strong dollar. We want to buy more goods and services. If it was 50 50, it would be a wash. The benefit accrues to walmart, it does not detract from walmart. Matt the workers are not spending all of their increase of walmart. Precisely. Housing reaching the highest level in almost a years. Eight years. Homebuilders have been a strength in the market. Builder confidence was at a decade high. It looks like a strong segment of the economy. Many wrote off this sector since 2009 . Think like an investor, not a trader. This points toward a good buying opportunity. This industry is healthy enough to withstand rate increases . We think so. We like that sector a lot. I think the average american is still dealing with posttraumatic stress disorder after what they went through in 2007 through 2009. Everyone is looking for this black swan event that is going to signal the destruction of the u. S. Economy. We look at the economic expansion to being in the fourth inning or fifth inning of a nine inning game. Think are an investor, we that the different signs we looking at right now present great opportunity. Matt bullish. I like it. It makes me feel good on this tuesday morning. Cory not me. Matt you are a glass halfempty guy. You love software stories. Cory and accounting. Matt let me get over to julie hyman for a look at some of the biggest movers four minutes into the market day. The formal trading day, i guess you would call it. Lets start with walmart. To be fair, a little clarification. I did not say it was ridiculous. Im a little bit misquoted by cory johnson. Cory said it is ridiculous to blame the backorder on the strong dollar. Trying to figure out what they gained from the strong dollar versus how it hurts walmart. Cop sales in the u. S. Rose, beating estimates. Currency is hurting, higher pay is hurting, so the stock is falling. Duda sending us an interesting chart. Take a look at my bloomberg terminal. It is walmart over target. It is the difference between walmart and target. His assertion is that this is a Financial Stress test of the u. S. Economy. When this index is higher relative to some of its peers, that that means the economy is doing a little bit worse. You kind of see that. You are looking at 20082009, this index is higher. We have seen it model along. Now that it is going lower, could that mean the economy is improving . Moving on to some other movers, home depot. The company raising its forecast as well. We have seen the streak of rising home prices. Cory and matt were debating earlier whether the fact that people are spending money to fix up their homes is a good or a bad sign. They could be fixing them up to put them on the market in some cases. Sticking with retail, tjx. It is evidence of a really interesting trend in off rice retailer. People want bargains. Matt they do. Cory i know. Matt and they are getting them there, jules. What is the store that has the rack . Julie Nordstrom Rack. Cory this gets back to my thing. It is nordstrom, not kohls. It is coach, not the cheaper stuff. Julie maybe this stuff is perceived as better quality, but it is a marked down. Matt i was thinking of terry lundgren. They want to have some kind of macys backstage or bloomingdales behind the scenes. Retail did not look that great last week. It is looking at little better today. What do you think about the state of the u. S. Consumer . We think they are improving. We have some great tailwinds. Low oil prices are great for u. S. Consumers. We have a strengthening dollar and lower unemployment. We liked the Consumer Discretionary space right now. People are spending money that they were not spending before. They are spending it on things they did not need to spend it on before. Clothes, electronics, cars. Matt you consider that discretionary . The changing credit , over 60 of the cars sold in the last year had loans at 72 weeks, which is crazy. Matt why is that crazy . It is just different. Dont worry about it. Cory it is subprime lending. You are extending credit terms to try to reduce sales and maybe that does not reflect the house health of the consumer. They dont have to be driving period. Matt not everyone holds onto a car for the entire length of a loan. Some people buy them and flip them. That is not the only vector we like. We like the i. T. Sector. That sector happens to do very well during the midst of the. Iddle of an economic expansion we certainly Like Health Care with the aging baby boomers. Matt all right. Pleasure having you here. Thank you so much for joining us. Tom frost, frost and frost. I want to take a break from markets to top golf. Practice your swing because winning a golf game means more pga a fat purse on the tour. Zach johnson has gone into business with a good number of companies after winning the british open championship. He has amassed 33 million in the process. Thank you so much for coming on the show. Say, congratulations on the open championship victory. It was incredibly exciting to watch. Your career has been exciting to follow. Have you get back into the game after Something Like that . Winning at such a storied course , it is like a stroke of genius, and then you have to get back to the daily grind of the pga tour. How do you do that . I dont know if there is a perfect formula. I appreciate you saying that. If anything, i thought it was prepared and ready, specifically for last week at the pga championship. Bottom line, the game is not easy and it hit me bit me. It is hard. I dont know if there was overconfidence, but if anything, i was too antsy and too amped up and too ready to go. I was almost playing thursdays round for sundays round. I was confident with what i was doing, but it did not surface. I dont know if there is a perfect formula. Motivation is not difficult. It comes down to getting down to what got you there. That is being in the now. Taking each moment each day, each hole, each shot for what it is. Its kind of sounds simplistic, but that is the way to approach it. Matt your confidence was really amazing. You could see it in the playoff at the open. Are you saying that you could have too much confidence and that is what happened in the pga . Do you think you need to be a little uncomfortable, a little bit scared, a little bit worried . Im not sure if you have to be scared or worried. I dont know if it was necessarily overconfidence, i was almost too excited to play. And it was a shots must like the ball left my clubface and i was like, what happened . Rather than going through the motions been going through my process. Imissed the cut by a shot and hit my driver so bad and that is usually one of my fortes and my strengths. Youve got to get the ball in the fairway on the pga tour, and especially in the majors. Im going to stick to the positives. I know what i need to work on. I feel it my game is in a great state. Cory i want to talk about your business. How big is team johnson . You ony people work for the business of being you . I appreciate that. It is a business. It is my job. If i want to take this to new heights, the communication and trust us to be there. My wife is the selfproclaimed ceo of zach johnson. I have great coaches, great managers, great people that i certainly trust. And guys that trust in me, we are all on the same page, we are all trying to accomplish the same goals. I have individuals that support me and my family and my foundation. They help me on the road staying in great places. It just makes my time on the road that much easier. Great individuals all throughout my team. These individuals help me prioritize my life. Cory what was bigger, winning the masters for the british open . Yes. [laughter] those opportunities dont come very often. Im not going to sit here and say i am going to win a bunch more. That is just not the case. It is hard to do. I relished both. The masters was my first major. I would not change any second of it. There was a lot of shock and all that came along with that. The open championship i have held in the highest regard outside of augustine because i love what it demands and requires. Cory and st. Andrews, too. The shock was there, but the awe was there. Cory it is my favorite course to watch on. Matt you have had a great record in georgia. Your first few pga wins were in georgia and then obviously augusta. That has to be your home golf state, in a way. I actually live there. I live in saint simons island, georgia. That state has been very kind to me. Netjets. K about how helpful is netjets to you . Do you use it on tour . There are a bunch of us that do. It gives me the freedom. It helps keep my priorities in line. In a safe manner. I can be with my family. It is the ease of travel. The road what i am on staying in a country and suites, im able to travel with netjets and get home to my family. I cannot put a number on that. I cannot measure that. Certainly, my wife makes that very apparent. I need to get home and be with my kids. Take them to school. Matt we appreciate your time. Thanks very much. Zach johnson, the winner of this years open championship and the winner of the masters. So he will always be invited back to the greatest spectator sporting event. Cory and on like us, he can make a green jacket look good. Zach johnson. No relation, to be clear. Top stories. No one survived the crash of an indonesian airliner. Weatherators say bad may have caused the crash. Two more senators voicing their opposition to the iran nuclear deal. It will probably pass. Republican bob corker of tennessee urged congress to reject the plan. Bob menendez will say the same thing in a speech this afternoon. Mitch mcconnell conceded they can probably not override the president ial veto. More Research Backing of coffee, matt miller. Coffees studies showed lover the risk of diabetes. There is a cup of stairs. Matt i dont drink coffee. Cory you drink this. Matt that is lemon tea. You cant hold that up on camera, apparently. Cory i broke a rule . Matt that is a very bad thing. Stay with us on market makers. Matt welcome back to market makers. I want to get back to julie hyman. I hope it is cheering you up a little, jewels. Turn that frown upside down. Julie ok. Tion to changing its payment plan yesterday, which spurred an increase in the stock am a softbank is raising its stake. 73 million is what it bought in stock. They would cap the level at 85 . Softbank buying the shares is helping spur the stock higher this morning. The memory chip sector is being downgraded over bank of america. There are stocks eligible for downgrade. Are spendingicron too much money. They lacked discipline on their Capital Expenditures and that is bad news. Urban outfitters, lets talk about this one. Earningspershare beating estimates, but that was largely the effect of buybacks. Comparable sales up by 4 . Anthropologie really missed estimates. There was an assortment problem and anthropologie. People did not want to buy the stuff they were offering. [laughter] walmart, home depot, tjx. Lets take a look at the winners and losers. The chairman of thinning cow finaco. When you look at issues like that, like the wrong stuff for sale, i feel like that is the hardest thing to get right when it comes to covering the retailers. Problem is that you pick these goods 69 months before they are actually hit the stores. Sometimes longer. And consumer taste changes. Reasons of the there is no strength in apparel or general merchandise. It has really flattened out. The consumer is not spending in that area. Matt where is the Consumer Spending . Home depot with a place where consumers dont mind putting extra money. Number improvements, one. Travel and leisure, recreational products. Restaurants. Can you go into a restaurant anywhere, not just an east coast or the west coast . They are all crowded. That is where people are spending money. Interest inack of the goods that we have all been buying and spending a lot of money on. Cory are these companies doing deals so they can bolt on or grow faster . Is there an appetite for that . They are trying. You talked about tjx. Great earnings compared to Everything Else going on. They have just had a spectacular ride. I have been in the business 45 years in the best deal ever did was when i sold marshals to tjs. The market cap went from 1 billion to 7 billion in three years. Matt if people are not going to spend money on are gravitating to off prices. They are gravitating to fast 21. Ion with h m and forever matt that is what we hear Nordstrom Rack doing well. That is to start like a macys backstage. At her know why they have been slow at it. Bloomingdales has three outfit stores open or maybe five now. Between what Neiman Marcus has done. Between when nordstrom has done. They have realized that this is a different customer and a different market. They are an aspirational customer and they are willing to pay a little bit less for the goods that are similar to what you see in the stores. Brooks brothers has one of the great specialty retailers and has done a phenomenal job and so has ralph lauren. Ralph lauren outfit stores make a ton of money for that company. Cory that is interesting. Matt are they the same goods . They are similar goods. Cost. Re last year cory do they heard the brand by doing that . Obviously, the consumer does not think so. To some extent, it is a different customer. The goods you see in the store are more fashionable, better holiday. The consumer is not done. They see the difference. If you are looking for aspirational products and you cannot afford to spend what hundred 50 on a shirt and ralph lauren and you can spend 75 in the outlet store and still have the polo flare. Matt and that case, there is nowhere for urban outfitters, with its clothing lines to go. That is the problem. They are still a great company. These are the challenges that everybody is facing. Also, consumer confidence. Consumer confidence is a big problem right now. We hear the jobs are going down and so on. The fact of the matter is is that the consumer still does not feel totally comfortable. Matt a little posttraumatic stress disorder. Gilbert, thank you for joining us. That is it for market makers. Stay with us for the market day. Good morning everybody. It is 10 00 a. M. In new york city. Welcome to the bloomberg market day. Walmart says a minimum wage hike was the move actually bad for business . Housing boom helps home depots bottom line. Higher forsales the quarter, but how will that impact the companys growth . Bb t is expanding its banking footprint. The ceo joins me later on. Olivia good morning everybody. Im Olivia Sterns. Matt im matt miller. Just a half hour into the trading day. Markets down across the board. The s p 500 down 2 10 of 1 , as is the