The ftcs settlement of its back and the stock climbed towards highs in the session. Romaine lets go to our markets reporter. I am looking at the u. S. Dollar. We did not see the same action and the dollar despite the rally. We see the u. S. Dollar slipped for a Third Straight day versus major currency competitors. Investors are trying to haven currencies they happen to outperform during the day. In the amid turbulence markets and resurfacing u. S. China trade tensions. Traders are weighing concerns for Global Growth and the outlook for the u. S. Interest rate cuts and the rise in american Producer Prices added some pressure on the u. S. Dollar. I was looking at the record highs we had. Lets focus on the s p 500. The second consecutive closing high. Above 3000 for the first time. The day,ed. 4 through enough for the superlatives. We really ground higher through the day. Todays gains were set up by fed chairman jay powell, his comments pointing toward easing Monetary Policy at the end of this month. The s p 500t how performed on a weekly basis. We have a chart that can see the second consecutive weekly gains, the fifth weekly gains in the past six weeks. That was a miserable may, but even more in the rearview mirror. The earnings really get underway next week. Us ise still with Benjamin Siegel of Newberger Berman and vincent cignarella. When you look at the records we have, records can be nebulous. There is enthusiasm. There is a sense that investors have some degree of conviction that the market can go higher. Rooted innviction Monetary Policy, or is it something more . I think it is pretty grounded in the reality of earnings and growth and confidence and spending both on the consumer and investor side. Rates, andted by low with limited prospects for those going higher in the near term. They include all of those things, and if there is a shake in those foundations around the trade discussions or as we move into the discussion around the election and concerns we might have a different administration, or if they are signaling we are done with rate cuts, i think valuations might be vulnerable, which is one of the reasons why we are seeking refuge elsewhere. You are also noticing the weakness in the dollar. If you look in dollar terms, the market is not quite as strong as it is in local currency terms. Joe what does it tell you that the market hung in there despite the substantial selloff in treasuries yet echo treasuries . The equity markets are looking for more rate cuts down the road. Survey estimates are for 75 basis point cuts this year. That would take back almost all of the rate hikes the fed did in 2018. I dont see that. Think the economies of the world are not going to grow that well that the fed needs to cut by 75 basis points, that underpins one of the foundations of the market, Global Growth and earnings. You shouldnt see these valuations at these levels. I want to go back to what you are saying. You are seeing more opportunities outside of the United States but how are you dividing your allocations echo allocations . When youre investing outside of the u. S. , if you think of markets by country and sector. When you have a quality bias, you have to focus on the sectors where value is being added, healthcare, consumer, industrials, technology and select nonbank financials are the areas of quality. Exchanges, ak brokerage, Wealth Management firms, which there are a lot of in switzerland. Those are the sectors you focus toward. Markets are europe, the u. K. , somewhat circumspect about the domestic situation. U. K. , usedals in the to be a publisher, now everything is online, helping decisionmakers with their clients. Japan is the other major market where valuations have been high, corporate governments has been a woeful, but we are seeing a significant change in the mindset there should be is palpable. Capital discipline is gaining traction. Romaine you are comfortable being exposed in europe . Absolutely. We are avoiding the domestic firms in the u. K. And domestic driven retail banks. Europeanbased multinationals and health care and some auto parts in germany and france have reached a low. Information businesses and software businesses, i think these franchises are very strong. Received the valuation for u. S. Dominated denominated securities. Fed chair powell is anxious is because of the global situation. It is hardly in debate if there is instability in asia and europe. Do you see an upturn or Inflection Point echo point . Vince thats hard to see. Some people are seeing that mario draghi could pull a rate cut. Expecting in september, they will get some things back. Around the world, it seems like canada is not an easing cycle. Of the traders are talked to said if the fed goes more than one time, you will see the bank of canada go because the Canadian Dollar will get too strong for their economy. A matter of which is the best of the worst and which economies are going to gain. There are countries and sectors outside of the u. S. That dont have the value of u. S. Does. If youre going to make that investment and risk, you look for sectors where they are on the bottom that on the top. I think that is a smart play. I dont think the u. S. Is the greatest place to be right now. If you were a value investor. Thank you so much. Closings it for the bell and for me. Romaine bostick and taylor riggs will be here. She is coming in for what you mess. The team will be looking at the big week ahead for u. S. Banks. Citigroup starts us on monday. This is bloomberg. Live from bloomberg World Headquarters i am romaine bostick. I am taylor riggs. I am joe rosenthal. Romaine heres a snapshot of how u. S. Stocks close. The reality in risk assets into higher. The dow, nasdaq and s p have rank record highs. Seeing a u. S. L is solid economy with at the mercy of global uncertainty. Why the stock of facebook is shooting up. And rigs at risk. Oil faces a double threat arising stockpiles and Tropical Stormwhy the stock of facebook s shooting up. Barry, which may make rainfall on saturday as a hurricane. We begin with breaking news on facebook. I mentioned the ftc settlement. The ftc has approved their privacy settlement worth 5 billion. It marks the most significant action against facebook we have seen over a series of mishaps that have compromised user data and sent the stock reeling from one crisis to another. We want to bring in kurt waggoner on the phone in san francisco. Restthis settlement put to all of the regulatory issues in the u. S. For facebook . I dont think it does. This is one of the biggest regulatory battles they have been going through and one we have been watching closely. 5 billion is not small. But for facebook, it is not crippling or super dramatic. Numbere still facing a of different issues with other regulatory bodies. We know they are trying to launch a cryptocurrency that is under heavy screwed. While i think this is a major think this ist the end of the road. Joe joe it reminds me of the banks in the wake of the financial crisis, in which legal essentially became a permanent cost of doing Business Year after year, dealing with the cleanup. That the future big tech is facing around the world . There is a belief that these companies have run unchecked for such a long time that there is a lot of catching up to be done on the regulatory side. When you look at the size of google or facebook or amazon, they touch so many people that it really is a neverending conversation when it comes to regulating what they can and cannot do. For facebook, you look at the private and personal information they have with citizens globally, i dont think its conversational and soon. Taylor another insight we learned was that the facebook board could be given oversight of privacy. Simply, the facebook board is Mark Zuckerberg himself. Zuckerberg hasnt proven he can help with privacy issues, what makes you think of facebook board Going Forward would be different echo different . Not a whole lot. Mark zuckerberg has the controlling votes for the board, close to 60 of the voting power. Doesnt really matter who was on the board beyond mark himself. When you look at privacy, they will be people who have issues that this is a board directed and controlled, because the board is really Mark Zuckerberg. Thank you very much. Turning elsewhere in tech, amazon planning to introduce a highend version of its echo Smart Speaker in hopes of fending off rivals. There also ramping up their work on a robot. Mark gurman joins us for more in los angeles. Tell us what is going on. What do we know about the speaker and what strategic purpose does it serve . Initiatives. F many while the echoes are good for alexa voice control, you can control your lights and more, things, truth be told, the Audio Quality is not up to par with some of the higher end speakers like sonos. This new device is designed to bridge that gap. A high and amazon made speaker for music listening. Taylor every time we get excited about a new product launch, amazon announces an upgraded product. Can you put this into perspective you echo perspective . Towe are not expecting them reveal this product into next year at the earliest. Be some minoro upgrades to the existing echo and the echo show with the screen. Basic echoes without for sound quality. A key thing next year. The robot will be a year after that. Things are going slowly but it is still happening. Romaine lets talk about the robot. This is the most exciting. Robot that waser made a year or two ago. Im told the amazon robot is similar to that one. Is that right . Right. A lot of players are trying to enter the robotics space. If you think about Consumer Products in the home, it is the rumba. Doing with this . It is basically an echo three feet high, the same capabilities of an echo. On top ofop things it. You want to send a drink over, you can you you can have it come to you and set it down and it has hightech cameras, which are basically the same cameras and equipment you are seeing on self driving cars to navigate. Joe how much will it cost . Thats a great question. Obot, their vacuum cleaners are about 1000. They have a robotic lawnmower that is several thousand dollars. I think amazon will release this in a limited way. They will probably be for specific people. I imagine it would be close to 1000. Taylor that was bloombergs mark gurman. Wings,up, waiting in the citigroup and bank earnings. This is uber. Romaine time for a look at what stories are trending across the bloomberg universe. Terminal users are learning about new york governor andrew cuomo, said he must read the city subways of a growing homeless population. They said they will confront the organization it with a regard as asian planned by the state legislature. I 23 increase of people there since 2018. Bloomberg. Com has a story on wells fargo, and talks with a bucket Top Executive for their vacant ceo post. It comes more than 100 days for in the hunt. The field of potential candidates haslinda. The appointment of a new ceo is not coming any closer. Tictoc on twitter is reporting that fruit juice might be response before a cancer risk. Researchers analyzed 97 beverages and showed that the role, affect may play a as well as additives found in sodas and pesticides. Tea andnsweetened coffee showed no heightened risk. You can follow stories under terminal on bloomberg. Com and on twitter. Taylor taylor lets turn to the banks. Picking up the week, citibank will be kicking off the earnings on monday followed by j. P. Morgan and wells fargo and bank of america on wednesday. Morgan stanleys head of banks and diversified finance Research Says increased Economic Activity driven by fed rate cuts a not be enough to help u. S. Banks. If we were earlier in the cycle, may be i would be able to bring down my expectations for provisions a little bit more. We are 10 years in. There is less room for me to cut provisions this late into the cycle. Because companies have increased their leverage. Consumers have increased their leverage. At some point, we will get a psycho. Joining us a cycle. I think what stuck out in the first quarter, we were looking at fed hikes, and then that totally shifted. We have gone from expecting flat debt interest margins to expecting a contraction. That is the question. That is the metric everyone willing will be looking at. What is the guidance Going Forward. Takedown ofy seen a guidance from several banks a couple of times in a few months. Analysts are bringing down their estimates. Downgrading of stocks. If we lose this tailwind, what can replace it . Credit should be solid. There is less room for error. Etsy is making the point that there is less room to cut provisions. We are so late in the cycle. There already has been a buildup in terms of the leverage ratios. There should not be opportunity there. Of the did see measures spread, had pretty significant steepening this week. Start to see that pick up, and im not going to draw an extrapolation from five days of data, will that continue the steeper yield curve is obviously good for financials. Why is it happening echo why is the yield curve steepen steepening echo also, what happens with rate cuts in terms of being able to stimulate activity. Not to say we expect a doomsday scenario. Its just the fact that when we have this huge net interest if that tailwind goes away, the credit cycle will turn at some point. We are at unsustainably low levels. We will get some pickup. That is the only possibility for a real negative surprise. If we got any pickup that people started worrying about on the credit side. Romaine they telegraphed we are expecting drops on trading revenue. It seems to come up every quarter, despite the fact that stocks continue to rally. I understand some of the reasons. Is this something that is temporary, or is it something we are talking about that is a complete change. Since the financial crisis, we have had a reduction in trading revenue. Got someter, we comparisons with equity trading in q1 of last year. It was very strong. They have talked down estimates in the near term. We think they might be able to beat those lower estimates, but it is about the outlook. Joe allison williams, bloomberg intelligence. Taylor coming up, it has been a big week for fed chairman jay powell. We will break down his today testimony here. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. The house of representatives today overwhelmingly approved a bill ensuring that a Victims Compensation fund for the 9 11 attacks never runs out of one a. Where Majority Leader Mitch Mcconnell has agreed to call a vote before Congress Going on its august recess. President trump is pushing back against freshman congresswoman alexandria ocasiocortezs description. She was well she was among a group of house numbers who visited texas border stations. The congresswoman made that says. E a ocasiocortez testified under of the before the House Oversight committee about what she witnessed and what she was told when she visited the border. When these women tell me they were put into a cell and that they are sink was not working and we tested the sink ourselves and they were told to drink out of a toilet bowl, i believe them. I believe these women. Fabricating stories of cruelty and providing humanitarian assistance does not solve the problem. Putting a bandaid over the border crisis does not fix the root causes. Todays hearing was held as ice rates are expected to begin around the country this weekend. Bracingsiana coast is for Tropical Storm barry, which forecasters say could dump nearly 25 inches of rain. New orleans could see a storm surge of up to six feet. The storm could plow through the heart of the gulf of mexicos operations. 50 oil output and 45 of all oil and Gas Production are now offline. Nearly 200 production platforms have been evacuated. At least 13 people have been killed and 47 others injured in airstrikes. The strikes took place across much of northern syria. Those killed included three children about 45 miles south of aleppo. The city is home to large numbers of people displaced by the 10 week offensive on the rebel held area. Will news 24 hours per day on twitter,tictoc on powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton, this is bloomberg. Ship fork for jay powell. Globaldly citing slower economic expansion and laying out the case for easier u. S. Monetary policy. Lets welcome a fellow at the roosevelt institute, where he works on the financials asian project, and also an assistant professor of economics at john jay college, focusing on the economy of political credit. You seem to be the person to ask about the phillips curve. We are talking about this more and more, more than i thought we ever would. I guess what i dont understand is why there seems to be so much agreement that the curve is either irrelevant or needs to be tweaked in some way. Is becauseous reason we have had this big falling on unemployment with no change in inflation. If you think there is a strong stable relationship between i think there is an argument that the relationship is never as strong as we thought. Brought us a chart. One reason perhaps the inflation rate hasnt picked up along with the drop in Unemployment Rate is the number of an implement rate. The labor market slack does not matter that much. Wages rise profits may go down but theres not the ability to pass that on. That is one point of view. The other possibility is the labor market, we are not measuring slack correctly. One reason is when the on employment rate falls, we see more people entering the labor force. The on employment rate is in capturing the pool of labor available. He made a very good case in cutting rates. Economy lookse relatively strong, better than expected cpi, Interest Rates are global. Cant be the only one out of step. And stablemandate employment if we now have to be examining global Central Banks and global Interest Rates . I thought what he said was convincing. Its the rest of the world that sets rates a somewhat the fed is doing. World is inof the setting lower rates, its because they are facing relatively weaker demand conditions than the u. S. Is. Lets go back to this phillips curve question. It was spurred by some questions among others. He may have been a little bit and said maybe we havent hit the key level yet. Tensionnotion of a between employment and inflation were to be destroyed, what does that say about how we can we even reconcile our approach to Monetary Policy in this country if that tension doesnt exist . We are going to have to make some big changes. What you said was right, the idea of a phillips curve makes easier makes it easier for the fed. What if they are actually two different goals. The other point is if this relationship is weak, there is no reason the fed should be responding to falling unemployment. What it also means is if Monetary Policy is effective at all, then there have been real costs to the fed tightening as soon as they did. When she asked him, were you over question mark did you estimate the sustainable level . Its a mistake that has major costs for working americans. They wants sense why to rethink the dual mandate. Create a mandate or guidance for Monetary Policy system without putting yourself in another box . One thing that comes out as you need a product if you have multiple targets that dont line up with each other, where everything then you need more instruments, you cant rely on one overnight Interest Rates to do the job. I thought there was an interesting line of questioning, where she said what other tools and instruments you need. He didnt really want to pick up on that. I think thats the conversation we should be having. The tv doesnt translate so well, but i have it here on my screen to make them mad. If you throw out the phillips curve, you think of our other models . Is thet even know what real rate at this point. We dont have to throw out everything. Faster growth leads to rising employment. Have some labor ,arket slack, and i think we do we see faster wage growth. Part two part hard to figure out is the end is the inflation piece. We shouldnt be incurring those real costs. At some point we will have an inflation problem. I think we dont have any confidence to say there is a tight relation. We cant make policy on that basis. That was fellow at the roosevelt institute. President trump has a favorite currency and it is not bitcoin. With the crypto rep cryptocurrency rally over. That is next, this is bloomberg. Bitcoin getting a new vocal critic, President Trump breaking crypto hearts online and everywhere. The president lashed out at ,acebooks digital decline saying, im not a fan of bitcoin. It is volatile based on thin air, unregulated crypto. Wants to do a currency, they are going to have a banking charter and so on. He said there is only one real currency in the u. S. And it is called the u. S. Dollar. Bitcoin shrugged off the president ial attack. Us now, joe carlson, principal of the bc firm and cofounder of the open money initiative. York, founderw and ceo of Cryptocurrency Research firm. I want to start with you. All hell is about to break loose on crypto twitter. As everyone was waiting for this moment, whether or not the tweet would finally come, what is your initial reaction when you saw it . Hell may have broken loose, but it didnt in price. I think, as you say, a lot of people have been waiting for this moment to come. It has been inevitable for a long time that at some point cryptocurrency would be dragged in the spotlight. It seems like libra has accelerated that. Here we are. Talk to me a little bit. We were talking about all the excitement around facebook partially brought. As weve had week it, more of that from President Trump and even jay powell this week. Does that hurt the efforts . Or does it bring it more bring in more legitimacy as people are continuing to talk about it . I think libra and bitcoin are apples to oranges. Because it is President Trump, i would be remiss if i didnt read another quota of his, the feds reckless policies need to be stopped. In some respects he has been right. Certainly i think chairman powell had it right. Be ain is not going to useful currency for the foreseeable future. Is it could said compete as a historic value type of substitute, particularly for a younger investor base. If you take that framing and look at libra instead as a bona fide threat to the u. S. Dollar, because they are thinking about structuring this with a basket of International Currencies and decoupling the feds influence over that currency envisioned, it seems like libra should continue to draw them attention and higher, because it is on the wrong side of the political cycle. And just because it is a stable value that could truly be an alternative to the massmarket overnight. He makes a good point about this. We heard from the cofounder, where they actually talked about this idea that libra in and of itself could threaten the blockchain ordeal some oxygen out of the fundamental nature for what made the blockchain the original cryptocurrency so attractive. I think we do a disservice to the whole space by conflating cryptocurrencies, Digital Currencies like libra that are less decentralized, that you slightly different technologies. Togethero lump these as a single asset class. Moreld argue bitcoin has in common with gold than it does with libra. If we thing about Legacy Financial assets, we dont lump them together based on the technologies we use to settle and clear them. We lump them together based on different characteristics. I think in trumps tweets, he starts to get at this. He starts to differentiate between libra, the centralized entity, versus cryptocurrencies and bitcoin that have different characteristics. He was very specific. Facebook wants to get some money. Let them get a banking license like anybody else who wants to get into payment. Does he intuitively get that essentially libra is a form of regulatory way to make a payment without doing the work of what you are supposed to do to provide payments . I wouldnt even pretend to try to get into the president s had on a number of matters. I do think he has a good slate of advisors studying this closely. We know some of his former and current advisors do no a thing or two about cryptocurrency. Mulvaney was part of the congressional concord congressional caucus. There are informed people that can make these distinctions between a cryptocurrency like bitcoin and others that might present more regulatory challenges and Something Like a centralized currently centralized payment like libra. Aboutant to ask you cryptocurrency. Not inherently political ideology. A lot of the critics of President Trump have a right stream to it. Is that part of why there was this heart break . People thought maybe trump thought he was a fellow traveler to bitcoin . I think some thought that. For the most part, part of the is thein bitcoin complete diversity of people that it to appeal to. It appeals to the libertarian its hard to put in one bucket the types of people who are interested in this space. I wouldnt say there has been a sense of disappointment around President Trumps statement. I think that has been reflected in the price. We hear from the types of people that get excited. Ceoocus we spoke with the we spoke with the ceo. Is it like the ceo of supply chain . What types of companies are you seen breaking this technology . Depending on who you ask, this is a cureall for every sector of the economy. And so Title Insurance is one thing, currencies and payments are another. I do think its important to distinguish, you talk about the applications of Blockchain Technology and some of these permission systems that might be corporate run via a consortium and a truly decentralized system. I think that goes to joes point about conflation. Its going to be a hedge against the volatility and a long terms longterm perspective. On the other hand some of the blockchain applications say no and will not necessarily need currency to secure those networks. Post to pose to you the question that i asked ryan earlier about libra and trump seeing, get a banking license. Do aibra and attempt to run around existing payment regulations . I dont think so. Team is being intelligent about how they are rolling this out. Surprisel you it is no that regulators are coming back and saying we need to talk. Announcementthe long before they intend to go live with the product. Have experience building other technologies and financial institutions. I dont think they are doing just regulatory arbitrage. That was joe carlson and founder and ceo of the Cryptocurrency Research firm. Up, bracing for impact, Tropical Storm barry making landfall as a hurricane tomorrow. The impact on the energy industry. This is bloomberg. The u. S. Gulf coast is bracing for impact. The Tropical Storm is intensifying as it takes aim at parts of louisiana and mississippi, threatening key energy import infrastructure. On how weather will impact the futures market. Hurricane mayis be heading, looks like it may hit about 70 of u. S. Lng capacity. Effect on assume the the Energy Market . Most of the natural Gas Production treats us now on when mostly shale production. This really depends on whether we have a hot summer more than this hurricane. Storm for some explosiveness. When you look at the price action we have been seeing ahead of the storm, these price spikes, are they going to be temporary or more longlasting . Now having hot dry weather. I think with el nino weakening, the gulf is warm. We could see more hurricanes like 2005 unfortunately. That could impact oil production. What will you be watching most closely in the hours ahead . For residents of louisiana since katrina, this is the first storm that has produced flooding. With 20 inches of rain along the coast, the levees are going to be breaking. The situation in which harvey was much worse in the oil market because the refineries produce more in land. With the refineries out of commission you saw gasoline sore back in 2017. Lower Interest Rates. We have to cut you off. Thank you so much. Whatd you . Or this is bloomberg. Why do so many i dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Emily im emily chang, this is bloomberg technology. The ftc approves a record privacy settlement against facebook, finding the company 5 billion in connection with the Cambridge Analytic data scandal. Does it change facebooks future . Act like a bank, ba bank, thats what President Trump wants facebook to do if it launches its new digital currency. Why the president
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