Transcripts For BLOOMBERG Whatd You Miss 20171030

Among many lawmakers to update the legal parameters to update their operations. Mathis and tillerson told the panel three months ago 2000 law gave the authority ample authority to fight terrorist groups. Periodual enrollment wednesday comes with new measures by the Trump Administration to scale back house law. The administration is slashing advertising for counselors. And lowering consumer costs expecting to push premiums higher. France president Emmanuel Macron has signed a counterterrorism law that places the state of emergency first imposed in november 2015. The bill, which takes effect migrants Law Enforcement Additional Authority to conduct searches and close religious facilities. It has been extended six times. 24 hours per day powered by 2700 analysts in more than 120 countries. Live from bloombergs headquarters in new york, im julia chatterley. From the30 minutes close of trading here in the United States with the s p 500 index retreating. Corporate tax could occur over the space of several years. Former Trump Campaign manager Paul Manafort and rick gates under arrest after both pleading to not guilty to several counts of Money Laundering and conspiracy. Forcing the white house to play. Efense a different headline out of washington weighing on u. S. Stocks today. Republican lawmakers expects a gradual fiveyear phase in Corporate Tax rates. Proposed tax bill finds no favor with homebuilders while other trade groups lead in opposing the tax overhaul bill. Jerry howard explains. President trumps former Campaign Manager Paul Manafort partnerbusiness appeared completing not guilty to. Brought by special counsel robert mueller. George papadopoulos, the for policy advisor to the Trump Campaign pleaded guilty weeks ago and has been cooperating with the probes. As go to Kevin Cirilli with outside the courthouse for the very latest. A backdrop as we look into and consider Paul Manaforts lawyers saying this has nothing to do with the campaign whatsoever. Was a brief Statement Given by Paul Manafort to president candidate donald trump. President trump tweeting out earlier today that there was no collusion. Says theyabee sanders believe there was no evidence of collusion found in the indictment. But this 31 page indictment suggests the investigation continued well into President Trumps first few months in to office. The white house also trying to distance themselves from that. There is no question mr. Men have aand mr. Gates did side with the administration. I spoke with one former white thought it was inside the west wing at least several times this year alone. The secretary expects the investigation to wrap up shortly. I put the question draghi to senator collins. Within the wall Street Community from people like rick gates. Gates from his business. The investigation on capitol hill is going on. Forsent of silicon the last president election cycle. With more insights, against men afford debt against men afford, we are joined by a partner. He is also a Deputy Assistant to attorney general, where he managed the government cases involving regulatory, commercial, constitutional and National Security matters. How important is it in your mind at the 31 pages in this actually mentioned . A think it is significant. Theres no question that mueller is raised on debtor. Can look into possible collusion of the Trump Campaign and the russian. Is nothing in this indictment that links the russians. Significance is we have it gives the special counsel leverage over these witnesses. Men afford engage these defendants who are under immense pressure to cut a deal, tell the special counsel what they know in exchange for leniency or a reduced sentence. . Ould that apply in this case the president can pardon people anytime at any point. That said there are significant political constraints. In this case of the president were to pardon the individuals today before any of the evidence i think there would be a political price to pay. I would prevent the state attorney general from this conduct. You mentioned from the indictment of minnesota, it doesnt have any thing to do with any collusion and i would establish some leverage. George papadopoulos does speak more issue more closely to the issues. A possible collusion with russia during the campaign. When you look at that indictment and the fact that he has already pled guilty, what do you see their . Thats a very intriguing document. Document does at some level provide a connection between people who are helping with the campaign and the russians, which the men afford indictment does not do. It also shows that this individual has reached an agreement with mueller. He may have entered this guilty plea in exchange for giving molar more information. So exactly what that information does, only time will tell. Is it safe to assume mueller was willing to cut a deal with him . Does it imply something substantial that it is something substantial he has . I wouldnt imply it is something substantial he has. I certainly think it raises that possibility but it would be premature to say that this guy holds all the keys to the secret. Does appear that he was an unpaid adviser. The Trump Campaign wasnt as formally organized a structure. I think its going to take a lot more evidence to provide a link. Collusion or the money trail . These guys are being hauled in as leverage for further information here. Does the president have to be concerned about the fact that this probe is following the money . Think the white house needs to be concerned any time. He creates hydraulic force to give these people other the government. It could hurt the white house in other ways. It is interesting that mueller was not able to cut a deal in men afford. We dont know whether that means men afford one on hold the line and cooperate. Great point. What would you say to members of the administration . The top priority is to be scrupulously honest and forthcoming. I would say that. He was in charge of collusion. He was in charge of giving false statement and federal officials. Incumbent toly make sure you are truthful. Thats the best approach on the white house. The longer it is drawn on, the longer you get into issues of false statements or perjury. You need to get this thing wrapped up so the nation as a whole can move on. Former Deputy Assistant of attorney general and partner at gibson. Thank you. Games drama and parlor could be coming to an end. For u. S. Central bankers, what to expect for the new leadership from new york. This is bloomberg. Harlan games over the federal reserve, the white house has confirmed the next fed chair will be announced thursday, wrapping up a busy week for u. S. Essential bankers. The jumpy continues toward with bloomberg reporting earlier that he is a favorite for the post. With the prospect of another rate hike and new leadership, what can investors expect from the central bank . We are joined by seth carpenter, chief u. S. Economist. You know them well. J is a great governor on the board right now. It comes back to the point that no matter who was appointed they have no choice but to continue a janet yellen has become. It seems like anybody who is appointed fed chair is going to take the job seriously. J powell is going to become chair and they are looking at the economy. They are looking at how the economy is done. They have choice and judgment to make. What about the event of some sort of extraordinary crisis. The financial crisis in 2008. Ben bernanke, whose life work was studying the great depression. Janet yellen spent much of her time and career looking at the abor market, which was student to the post priced economy. How well is he equipped to deal with that . J is a lawyer by trade and spending a lot of time in the private sector. He also spent time working in the treasury department. When he showed up at the fed he spent a lot of time consciously working with the staff, working with colleagues to become very on monetarye policy. I feel like he has become extraordinary wells extraordinarily well suited. Talking about tax reform in the headlines we have today, a potentially seeing tax cuts here from the gop over a fiveyear period. It makes it cheaper in the shortterm to agree to, what do you make of that . I think that is right. Push off the time when witnesses have to pay less in taxes. The economy is at or very close to full employment. I think it is a dubious claim to suggest the economy needs this massive fiscal stimulus at this point. The administration has been billing this as a major stimulus something that is going to lead a 3 growth. You are skeptical of reform and tax reform. Tax reform has very low probability of happening. Cutting taxes in one place and raising taxes somewhere else in or to make it. We dont see it happening given the political environment, and even getting a large tax cut on the order of 1. 5 trillion. Seems like its going to require low accounting for the incentive. They spent a lot of political capital, a lot of time and resources. If they ares if they are unsuccessful in the end, what of a putting off the . I think what the republicans would point to rest their legislative agenda is tax reform right now and tax cuts. It also Infrastructure Spending that was talked about by the administration. Because of the way congress has been so divided and had to take one issue at a time, we are seeing the serial approach. Is a bigou see Sticking Point on tax reform . Is at the state and local deductions . Where are they going to lose the votes . There you see some members of the house who are republicans. Republicans and states have very high income. Their constituents are going to get hurt. When you think of tax reform they know it and will resisted. Ery fiercely great to chat with you. Chief u. S. Economist at ubs. Up next, mattel is on a roll a coaster. The toymaker up north than the most in a year. Heading for a breakup or a takeover . We will discuss. This is bloomberg. A look at the biggest business stories and news right now. Centurylink to buy level 3 communications to the federal Communications Commission approved a 34 billion cash and stock deal, which would create a single competitor to at t in the Business Internet market. Goldman sachs chief executive officer Lloyd Blankfein says they are still thinking of the u. K. Off this. Tweeting todays tweet follows his post, great meeting in frankfurt. Is tapping the bond market. The late king of rock n rolls home graceland was to borrow 88 million in the market wednesday. The majority owner of Elvis Presleys enterprises plans to transform this land from a place to visits to a vacation destination. Thats the Bloomberg Business flash. Our stock of the hour is toymaker mattel. Shares up double jewel up double digits. Emma chandra is here. What is driving the turnaround here . This was an awful corridor. The come basis pens its dividends. Share price plunging, the chart we will show you there. Now it is back up today. Rick deskbeen new there has been talk there has been talk that mattel would take over investor should start looking at mattel from a sale of the company perspective. He went on to say mattel assets could be worth much more in a sale or a breakup. That say mattel isnt right for buying. But they are a possible target that sent the stairs sent the shares storing sent the shares soaring today. They have a few brands that are less popular than they used to be. Last week we were discussing barbie and how she needs to be rehabilitated. They are producing too many products. Thats another thing that is analyst mentioned today and others have mentioned in the past. They have too many toys and most of them are underperforming. We saw that in the results. We saw barbie, hot wheels, fisherprice, and American Girl drop in terms of revenue. The other day drop aside, this has been terrible in recent years, this was a stock near 15 per share. Now under 16. Drop in the bucket that shows how the sales have declined. That. Uarters before they fell last quarter. What the ceo is trying to do is turn the company around. She only said 2017 would be the third turnaround year. They also lost disney princesses and toys r us. I cant believe you talked about barbie without me. Thank you so much. The market closes next. A down day for stocks. U. S. Stocks retreating from record smallcap stocks, bearing will bet that tax cuts phased in over a period of five years. Im julia chatterley. Im scarlet fu. And im joe weisenthal. Welcome you to our closing bell coverage. Every weekday. Market minutes. Modest declines for big cap names. At the nasdaq, the index has barely changed. You can see one third of 1 for the dow and the s p. The russell 2000 worth mentioning. Since august, off by 1. 1 . Are going to talk about sensitivity to the tax news. Some of it may be showing up in the small cap. Plenty of telco names to keep us occupied. One of the worst performers of the s p 500, off by 1. 5 as a group. This is after bloomberg had reported with other out its that softbank stocks emerged, tmobile has had a serious snag and that whole deal is now thrown into jeopardy after months of talk. They were just getting ready to unveil a deal shortly after they reported earnings. It looks like that is not happening as it stands. Shares following by 6 , the drugmaker filing a regulatory brands can see dunkin up by almost 8 . According to david tarantino, you cant rule up the possibility duncan could be a target for jb holdings as an acquisition, because it will be a strong fit with jbs philosophy. It has been era, krispy kreme, it is known for cutting costs substantially. That possibility lifting the stock by a percent. Lets take a look at the startingt bond markets with rate solidly across the board. Perhaps some of those headlines phasing in that a Corporate Tax cut was to happen, causing people to reduce their estimate. Also interesting comments from secretary mnuchin about lack of. Emand for an ultralong sounds like thats not going to happen. Below 2. 73 . We did see them fall before i cannot. Interesting chat interesting action in china. Now that that is over, a little bit of market volatility. Five years at the 3. 7 . Dont even need to go into all the risk events, data, Central Banks as well. Assume relative trade. A 25 basis point. Whether it is good to be a one and done case, it is going to be interesting here. A quick look as far as what is going on. A risky holding just above the zero line. Interesting to see the spanish equity market. A data point for the eurodollar. Taking a look at oil, continuing to gain. Futures taking up a little bit. We talk about a global synchronized they want to buy more money. Lets look at a onemonth chart here to get some perspective. We talk about this range. A lot of bullish story suddenly demand part of it. Suddenly oil having a nice little run of 7 . A quick mention. Third quarter earnings be the highest estimate out there. Shares are up right 2 . Sees organic revenue rising about 1 as well. . 57 beating the consensus estimates by three cents. The package food company a beat here and raised forecast. A busy week ahead with the bank trios with the treo the bank treo decisions. And trumps asia trip. How big of a deal is all this . Global macro strategist, we had a down day today. Are we reading too much into this . Potential deferrals impact the smallcap stock. This is probably the right one. Big picture, you look at this weekend there is so much going on. Does it matter . It matters you have a position. Potential if you have a large marginal newshe flows against you, you would have been more inclined to cover. Stocks, bonds and currency for month. Into tomorrows clothes. That could be a cause of a little shortterm pain and has no signal, no longterm signal. A little thorn in the side. The mentality wins out . In equities, i think so. That. Ard to say the mentality a strong and equity. Pretty substantial move over the last few weeks hitting nicely above 2. 4 . They are short. At least the speculative community is short. If we look at Interest Rates features in the United States from very shortterm three months eurodollar contracts all the way out to the ultra bond, if we were to assume a parallel shift in the yield curve for every one basis point the yield byve moves the loss moves 94 million. You ask and we provide. Lossis is the prompt and who trades Interest Rates to one basis point move. Positive means lower yields on the money. Negative means higher yields in the money. About 94int it is billion per basis point. And across the eurodollar curve, a couple of euros out we have a similar move. Thats talking serious money. Yard your out the couple of days. The National Association of home built ceos, opposing the tax overhaul efforts. This is bloomberg. Lets get to first word news this afternoon. The attorney for President Trumps former Campaign Manager Paul Manafort address airport short time ago about his indictment. Well saw today that President Donald Trump was correct, there is no evidence that mr. Mann afford or the Trump Campaign colluded with the russian government. Matt forte and his business ciated a federal court in washington is changing hisfrom policy. He announced in a august memo that he intended to reverse calls on a 2016 policy that allows choose to serve openly as transgendered individuals. A u. S. District judge ruled today that transgender members of the military were likely to win their lawsuits from revert from reversing calls. Iranians the head tothe ewing the u. N. Fully abide by their commitments. The government is cracking down on the leaders of the independence movement. Other regional officials will be prosecuted on charges of rebellion, the attorney general has stopped short of ordering their immediate arrest. Journalists and analysts in more than 120 countries. The gops tax bill, the influential Home Builders group will inform the tax proposal that is expected to be released on wednesday. The review comes after the Republican House ways and Means Committee chair forms a group that the legislation would not include homeownership tax credits. The National Association of homebuilders ceo jerry howard. Angst for joining us. What were you hoping to see in this tax bill that you are not going to get . Risks hoping to hoping to see a retention of ownership. It contains a very watereddown of the deduction, only applicable to the wealthiest homeowners in america. Proposal would have taken the shell of the morgan Interest Deduction and converted it to a credit, the benefits of which would have gone overwhelmingly to middleclass americans, spurring ownership and economic growth. It got next. How much do you expect to cost homeowners . Expect this to cost homeowners . We are concerned without an underpinning for homeownership will lead to a precipitate decline in house values. That is something we want to protect against obviously. You were talking to him and kevin brady was on board. I did talk to the speaker on saturday. The concept was so new and bold that in the time frame we had rankandfile members of the house couldnt really have really wrap around. We are going to see if we can get things reasserted. In order to get something done on tax reform, they basically sacrificed middleclass home buyers in order to get something done. Is that what is going on in your view . It sure looks like that to me. The deduction currently in place decreases tax income while credit decreases the tax owed. Which is preferable . And which is easier to understand . Tax credit is clearly easier than trying to figure out your gross income, your adjusted gross income and what the do duction is worth in terms of changing your tax bracket. The amount you calculate and a deck that from the bottom line of taxes and how much you oh. To you by his explanation that the rankandfile meaning many members as possible. You are kind of lobbying them to try to get this back on track. What will you do to prevent the tax bill going ahead and . Do you think other trade associations are going to step up . Ive gotten a lot of communications from my peers around town. We were told we werent going to get something we needed. We were fortunate enough to have members in every congressional district. We will do something we normally read about before, to ensure that either credit gets put into it or the bill doesnt go forward. There are a lot of people who argues the policies in place right now designed to encourage and subsidize homeownership creates distortions in the market and leads to speculative bubbles. Changes in the mortgage interest to tweak some of these policies that you can still support . We work with chairman brady on all aspects. Im a Firm Believer that the use of the tax code tax code to incentivize certain actions is a valid component of public policy. We work hard to craft this credit so the bulk of the benefit would not go to the wealthy. It would go to the middle class. I think there are a lot of active the missions know we put forward and say that is a good public policy. Do you think kevin brady is still pushing . Did he give you a sense that you have alluded to the fact that he was on board with you here . We will keep trying and i know if the chairman can get it in he wants to get in. The National Association of Home Builders, we will stay in touch and find out if there is any new development on that front. Up, fallout from the russian probe after Paul Manafort and rick gates, placed on house arrest. Bloomberg view columnist says the indictments are shot in the countrys belly. More details of Paul Manafort indictments come to life. There are questions and answers of what this means about the future of the Trump Administration. Author of the new book , that was david gura earlier today. There are two things. When any white house is connected even indirectly with inminal indictment, a shock the countrys belly. Whether you are republican or democrat, it is unfortunate. The more important is what kind of connection is there with the white house. If there is a close connection in some way with criminality, that would be very troublesome. Alleged by couple of people. Thing we are dealing with people who worked on the campaign. What exactly are they accused of doing . It have to do with letter a, a financial misconduct of a certain kind . Noth would be terrible, but in the same nature of terribleness as if we are dealing with a connection of another country. If that is the connection, even ,f the white house is involved veryis something that is unusual. How hotly debated this was . Themuch was impeachment on minds of those that worked on it . It when is it was one of the most intensely fought in the entire convention. Minorities cant have impeachment because we need separation of powers. Revolution that is going to make this person immune from the people. And the decisive argument was people who can knit the most in most defense of injustice and fromble things, they offer their job from the people who are in charge. This is hotly debated. Without impeachment we would not have a constitution. What was influencing . Can you draw the line back to england, to the revolution . What were the ideas that impeachment would come from . It went from england directly to the colonies. In that period americans created their own homegrown impeachment mechanism but actually started impeaching following the impeaching people who were following orders on the king. Those was the first shot heard around the world. It went from what the colonies did to a ratification debate, where we twisted in the best way to a really democratized conception of what impeachment was for. They came at the last moment to remedy a tough situation. That was clearly the grounds. And those were the only grounds. It is a serious and grave offense. The words were suggested in the administration. Then the president is dependent on the congress for continuing his job. Then high crimes and misdemeanors came in to save the day. More importantly in the colonies, while there was no debate that came in and it went by like that, that was the constitution, it did have a pretty concrete meaning at the time. And the debate whether we should have a constitution filled out with references to abuse of party power. Doing things that really mounted to gross neglect or gross misuse of authority. We develop that agreement for the constitution was for us. That was Bloomberg View columnist. His new book hit store shelves today. Come out the next, tech firms leading the way in a strong earnings season, what we have learned and what to look for two next. This is bloomberg. Lets get the first word news afternoon. The fbi is investigating the controversial 350 million to rebuild puerto ricos power grid. That is according to the wall street journal. The contract went to a tiny Company Based in whitefish, montana, the hometown of interior secretary ryan zinke. Puerto rico has said it plans to cancel the contract. Unexpected and emotional apology in court today for all the military personnel who were wounded searching for bowe bergdahl. He described the nightmares and flashbacks he experienced in five yearspersonnel who were wod searching for bowe in captivity. The judge will decide his punishment for endangering comrades for walking off his post in afghanistan in 2009. Kenyas Election Committee has said the president has won last weeks Runoff Election which was boycotted. Elected Officials Say he got 7. 5 million votes, 98 of the votes cast. He was the winner of the president ial vote back in august. China is warning the u. S. Not to interfere with ongoing the disputedin south china sea. The countrys ambassador to the washington has no territorial claim. President trump leaves this week on a five nation trip to asia. Global news 24 hours a day powered by 2700 journalists and analysts. This is bloomberg. Scarlet lets get a recap of todays market actions. Modest declines for the big names and the nasdaq, little change. Than 2 ,off by more the biggest drop since august. The talk of all this phasing in of corporate hitting the small companies. Joe we look at the small caps being more sensitive to u. S. Tax changes so that might be a contributor to the selloff. Julia more than half of the s p 500 listings, u. S. Equities put in a Strong Quarter with earnings up almost 10 . Lets talk winners and losers with our guest. The tech stocks are going gangbusters. Guest rightfully so. Microsoftzon, google, absolutely destroyed numbers last week and that is more upward revisions for facebook, alibaba, across the board. It is interesting when you get that reflective event. Those future upward revisions are usually a good sign. Joe people are cranking up their facebook estimates in the wake of last weeks numbers. We see the facebook rally a little less likely that facebook because numbers beats its numbers. Leigh the numbers are priced in and it is a little more reflective. Joe we spend a lot of time talking about these big caps, tech stocks and their incredible rallies but there are other areas that have done phenomenally well. One of them you have been watching closely is entertainment companies, doing well. Leigh paypal, visa. Huge momentum in revisions which is what you want to see for the stock. Mastercard this week, square will report. Scarlet what is the take away . What does it say about the state of Consumer Spending and traditional retailing . Leigh the economy is incredibly strong as we saw with the gdp. What is interesting is you see the amazon friend which was huge trend which was use and then the j jcpenney guidance which was terrible. Joe another one you did not mention was square, one that is doing phenomenally well. That stock was 10 in 2016 and 35 now. When people look at these companies now, do they see a pie that can be divided many ways or do they feel one of these companies has the possibility of winning out . Allocatethink it is an all kind of approach. Square is a story stock. The Revenue Growth is incredible. I think investors believe there is a sea change in who controls the flow of those payments and they want to be allocated to the future winners. How the exact fundamentals play out in terms of how they generate bottom line, profit, still up in the air. Scarlet we talk about how the Investment Companies beat projections. Were investors too negative . Leigh multiples have gone down and people are saying the stocks continue to go up. But multiples has not risen. You look at facebook in every quarter they put up these incredible revenue numbers and people say how much higher can they go . As long as they are putting up the fundamentals, it is hard to believe they will take the stock down. Julia you talked about jcpenney and the divergence we see with the ecommerce retailers versus traditional retailers. Isalways ask how much fight in for these guys . Leigh i dont think we are done. Jcpenney, really bad warning. I think you will see the auto part store names, autozone, advance auto parts, that is going to be ugly. Under armour will be interesting tomorrow morning to see how their channel is going and where the margins are. They obviously have a lot of exposure to some of the other retailers, dicks sporting goods. That will be really interesting read. You mentioned jcpenney and some of the retailers. Is it like the flip side of these big tex Companies Tech companies in that sense the numbers keep getting worse and they keep executing for tech . The fundamentals, the stocks cannot get cheap enough . Leigh on the downside, there is always opportunity to turn it around. We have seen that. You always get these shot rallies in a downtrend which is what we have seen. Then, it hits the trendline and continues to go down. The fundamentals usually play out in the direction of the primary trend and that is what we continue to see. Julia this is an interesting moment we are talking about tax reform, deregulation. Actually what we got from the European Central bank last week, continues longer than we thought. What do you think of this sector . Leigh multiples will continue to go up. The trend is in that direction. Looking at what happened in goldman this quarter, it is like no matter what, goldman will find a way to make money and did. The Underlying Research and trading businesses are not very good but they will always find out a way to perform. What is really interesting and this is really more longterm did. Jamie dimon not really paying attention to currencies. He buys a payment company. How do they see potential longterm and when do investors say does the banking model really work . I dont think we are seeing that all. Scarlet i am glad julia brought up tax reform because we were saying how small caps are responding. The prospect of phasing in tax cuts over five years. Do you see investors pricing that into the different estimates or is that too far away, too abstract . Leigh i think the in district think i think the interesting space is industrials. What we are seeing is those estimates for caterpillar and the other names like that, about a year out, continue to go up. That is how investors price those stocks. That is probably taking in some kind of tax reform and the general environment we are in here and what is going on with china with the economy continuing to hum. I think that is in favor of the cyclical industrials right now. Julia the u. S. Industrials have a medium tax rate of 31 in 2016, fourth highest in the s p 500. Scarlet leigh, thank you so much for joining us. A recap of earnings season so far. E facebooksr efforts to fight fake news working . Ofeep look in their process quashing fake news involving human beings, not robots. This is bloomberg. Quashing fake news involving human beings, not robots. This is bloomberg. Facebook is continuing to struggle to fight fake news. Checkers is of fact can only tackle a fraction of the fake news that floods the platform. All of this as facebook officials are set to appear at congressional hearings tomorrow and wednesday. Bloomberg techis reporter sarah frier. Just explain to us to start off with how they are currently tackling this. I mentioned there are some sort of outsourcing. Sarah right, at facebook, they dont actually want to be in charge of saying what is true or not. They feel that would give them a Media Company problem. They dont want to be in that position. Yes, but also, do you really want facebook to be in charge of facts . They have outsourced that to work as asians that have toerience in this matter organizations that have experience in this matter, reputable news organizations. Thathave this dashboard people who work there have to log into their personal facebook account to access. That is all the worst of the worst in the internet. They have to go through and mark true or false for each of those posts. Sometimes the links are duplicated many times over because on one site you might debunk that article but then there are 20 different versions of it out on the web. It is really a cumbersome process that is not addressing the bulk of the issue. It is more training the machine for future use. Joe that is interesting because it seems like the problem would be virtually impossible to scale as humans. I dont know how many billions of things are posted every day and the idea of having people go through them one by one to see if it is true or false sounds implausible. What you are saying that ultimately all these people doing this will be fed into algorithms. H the algorithm will not be necessarily good at saying what is true or false but might be that are at the tech aspects of flagging something before people do. E way now is a couple of people on facebook flagging it as disputed and then they can get it gets populated. Goinghole process from from the story being posted to it getting debunked can take up to three days on average, sometimes even longer. Some stories dont get check that all. Are involved in the process themselves and dont see a disputed tag in their newsfeed. I have not seen it. Julia how do these things get flagged . How do they investigate something as fake news . Sarah if we see something that bogus and physically flag it, facebook is putting this in the hands of their users. Over time, they are Getting Better at using the machine to learn that this story is fake and maybe this similar story is fake, but this is still a very human process. Facebooks head of security spoke on twitter, he had many posts on twitter where he warned about the fact of trying to automate this to quickly to o quickly. The only way to train the system is to rely on our own personal biases. Scarlet what do we know about the group or the company or the people facebook has outsourced this Fact Checking to . Who are they, where are they, how many people . They are putting a lot of responsibility in these guys hands. Sarah it is funny you mention that. This is such a menial task, it seems. Going through and marking links as true or false and posting a story that ask you what. One of the organizations told me they love having their interns do this. Yeah, this is something that, it is very mechanical work. The organizations in question are politifacts, abc, factcheck. Org. Two more toadding the lineup. One of those is the Weekly Standard which is a conservative magazine. Sarah frier, thank you for enlightening us in the process of facebook Fact Checking. Julia there is an article talking about tech stocks. Guess . Snapchat. Joe yeah, it is all human stories. Julia they have a times the users of snapchat but somehow snapchat is managing it and they have inhouse news team. Snapchat can do that. Julia it is something perhaps facebook its field. Next, make or break for the merger. Mobile have negotiations met a snag . It appears they have. That story next. This is bloomberg. Scarlet it is time for the Bloomberg Business flash. A group of investors managing trillion wants Drug Companies profiting from opioids to be more responsible. The investors for opioid accountability is calling for accountability measures. The company includes Johnson Johnson as well as cardinal health. The ioa is made up of unions, public Pension Funds and state treasurers. Bonuses street could rise for the second straight year. The industry set aside 4 more compensation in the First Six Months of 2017. Profit among security firms soared. Merge sprintlks to with tmobile in jeopardy. The companies have stonewalled on valuation. Top Board Members have raised concerns about giving up control. Softbank could propose ending the talks as early as tuesday. Business flash update. Julia for more on why this merger is hitting a snag, lets bring in alex sherman. When you and i were tmobiles earnings, we made a point that it was great. This gives tmobile great negotiation leverage with this deal. Alex it is possible tmobile shareholders after earnings spoke tmobiles earnings, we made a point out more aggressivy towards tmobile and said look, i think we are not getting as much as we deserve. We dont know that for sure. I would say it is probably more complicated than just that. Tmobile has sources around sources around tmobile have consistently pushed me for weeks there was potential valuation concerns. But always in the background was the momentum that the deal will get done. Part of the thinking was softbank and sprint needed a deal so badly that in the end they would probably give on valuation. What we are seeing probably is one of two things. Maybe softbank drawing a line in the sand and saying no more. If the nikkei is right, they may formally say tomorrow. That could be one option. The second option could be this is just more public negotiations, and that is possible that the negotiations do continue and maybe this is a sign that they cannot keep pushing so hard on valuation any to give a little bit. Scarlet the argument has been made that sprint needs this merger or something because they want to monetize all their spectrum and need funding. What about from tmobiles perspective . Can they go it alone . Alex in the near term, they absolutely can do it alone. Tmobile has been the wild Success Story of the four phone companies. There is a reason to not think it will continue. In the longer term, in the fifthgeneration world right in theare 4 g lte new world, tmobile is not as well positioned because it will take a huge capital investment. Still a much Smaller Company then at t and verizon. In a longterm game, those companies are much more wellpositioned and that is the logic that maybe now is the time for tmobile and sprint to make the argument they should be pushed together, in a Trump Administration, with the rationale being that tmobile and sprint would work stronger together. You have a Faster Network and if the pricing concerns werent so mitigated, that would be best for consumers. Julia you remember that slogan. If the pricing concerns werent so mitigated, that would ahead and they if this goes continue these talks, regulatory concerns is still there. What has changed since 2016 . Alex when the story broke initially, my gut reaction three years ago, sprint and tmobile pulled away after u. S. Regulators told them on the hushhush it was not going to go through. My original thought was maybe hump hump not get over the interim that this deal was going to get passed. They still were willing to try this deal from a regulatory perspective thinking that if ever it is going to be announced, it will be announced in this administration at this time. It is still very much a question. I dont know if the Trump Administration will ok this deal and neither do these companies, but the uncertainty alone may be enough, or we thought may have been enough for these companies to move forward. Reporting. T alex ahead and they continue these sherman, thank y. Joe coming up, what you need to know for tomorrows trading day. This is bloomberg. Julia a busy week. Scarlet the bank of japan announcing fiscal monetary decisions in a couple of hours. Joe numbers for the eurozone gdp. Capitalnd dont miss for facebook, twitter and google beginning tomorrow at 2 30 p. M. Scarlet Bloomberg Technology is up next. Jo who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. You are watching Bloomberg Technology. The white house says most of the alleged activity for which former Election Campaign chair Paul Manafort and a former business associate were indicted have nothing to do with President Trump and everything to do with president ial rival hillary clinton. The white house also pointed fingers at a Research Firm that produced the dossier about trumps alleged ties to the kremlin. Manaforts attorney addressed reporters a short time ago about todays indictment. I think you all saw it today that President Donald Trump was correct. That theno evidence Trump Campaign colluded with the russian government. Alisa manaforts next Court Appearance is november 2. Prosecutors want bail set at 10 million. The fbis report lee investigating the controversial 300 Million Contract for rebuilding puerto ricos power grid. The contract went to a tiny Company Based in whitefish, montana. The hometown of interior secretary ryan zinke