Transcripts For BLOOMBERG Bloomberg Markets Americas 20240714

In the wake of several Mass Shootings, he says the senate will look at expanded the ground checks. Red on the table, socalled flag loss to keep guns away from dangerous people. Mcconnell has a post most gun laws in the past. A Political Drama is playing out in italy. His deputy is trying to bring down the countries populist coalition and force snap elections. Salvini wants lawmakers to vote out the government as soon as next week. He says he and his party are tired of infighting with their coalition allies. Global news 24 hours a day, onair, and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Live from bloomberg World Headquarters in new york, im vonnie quinn. Amanda im amanda lang in toronto. Welcome to Bloomberg Markets. Our bloombergby and Bnn Bloomberg audiences. What a week it has been for global markets. We will wrap up the week, and escalate in trade war with the u. S. And china sign currencies, bonds, stocks. One stock caught in the volatility is zillow. The company is blaming the slide on an underestimation of the time it will take to close home purchases. Pressure but the fate of the Worlds Largest Exchange Traded fund rests on the help of a group of twentysomethings. We will dive into that story coming up. First a quick check on the markets. Definitely seeing across the board reaction to those trade talks, including President Trump suggesting no big deal if talks to not resume with china. The broader s p 500 has all groups declining. But industrials are right behind. Energy moving higher today. Take a look at the u. S. Dollar. The dollar has shown strength recently, is expected to do so as yields around the world fall. Speaking of yields, mark mentioned the political turmoil in italy. Interesting to see the reaction in the italian sovereigns. That is the relationship between the yields in italy and the bund. Back at levels we have not seen in some time. Based on the risk quality, it is a tight yield. Something simple but pretty illustrative. Spread, backsury down to 9. 5 basis points. That is from last week. Last week we were above 20 basis points. It has been pretty muted all year but we are far away from the elevated levels of 2016, 17. 2022year but we are far away frm the elevated is a pretty narrowd already. 9. 5, you can see why some people are saying this could be a recession indicator. Amanda we are also watching the stockpile of negative yielding bonds hitting fresh records. The market value of the negative yielding index hitting 56 trillion, and it is melting at a pretty steep pace. Brian, i have read a lot of what you have written over the month with great interest. I am trying to figure out what is going on. I want to start with this. That is being advanced, find out if you make if you think it makes any sense. Because of the way we think about savings, negative yielding instruments of various kinds make sense. Can we buy that argument, or is this just another kind of argument . Over the past few weeks, as this pile has grown, you have seen these arguments come out, that maybe this is something we will have to live with for the foreseeable future. For so long, people would say this cannot last, this is a shoot huge bubble, german bunds, and they have been burned. If you want goes, to have a risk free savings account, you may have to pay a little bit for that, because there is so much saving. People value their Retirement Funds now in a different way because you have People Living longer and spending two decades in retirement. Vonnie even with quarterly refunding going up and more supply, we are not seeing any auctions, reduced demand for these securities. What is to stop at 15 trillion, why can we go much further . That is a good point. Yesterday you saw potentially rumors that germany would start issuing more debt to Fund Climate Change related projects. Set off on that because people are waiting for that, more supply to offset this relentless demand at any price. We still have not seen it. The set off on that because people are waiting for that, more u. S. , at least as ama goes, there is no sense that there will be any decline in this amount of deficit going forward. Amanda just to stick with his argument, if we are changing the way we are thinking about the return we need, when does that factor into riskier assets like stocks . You are sort of seeing it. No matter what happens, every time there is a pullback in the stock market, eventually buyers are merge and buy that did. That is kind of a risky thing to be counting on going forward, but at the same time, it is the only game in town. If you lose all yield on the bond market, you have no choice but to pile into the stock market man hope for the best, hope for a price appreciation. You have this forever rally in risk assets that is kind of risky, but when the bond deal not think what else are you supposed do . Vonnie thank you for that. For more on negative yields, stocks are reacting, and all the volatility we have seen in the markets, we turn to the anna han of wells fargo. When you see the 2 10 spread going from above 200 basis points to below 10, you have to ask, did recession is really changed that much in a week . Anna the yield curve flattening is on the forefront of peoples minds because it is often tied to recession. Putting this in context, you still have from economic indicators, and not just from this quarters earnings season, but previous quarters, that the fundamentals are there. Growth is slowing but we dont think we are seeing recession in the next six months. About thiseresting yield curve is how it weighs on Investor Sentiment. Amanda Investor Sentiment and business sentiment. We are starting to see some concerns about the investment levels at a time when we want to see them. Confidence may be the issue. Issues, what trade these inversions tell people what is happening. If we say recession and off, couldnt become self fulfilling . Anna that is the danger with sentiment. It can have a negative feedback loop. We have had a lot of negative news concentrated in the last week, and that can shift investors focus from the big picture to what just happened. When you shake that sentiment, that can be a blow to consumer spending. That could accelerate the growth slowed and we have seen. Vonnie what our clients asking you this week . It seems like more action has gone on in bonds. We retracted the losses that we had earlier, and that we are back to pretty much flat. We have already rebounded, already hitting again the 50 day. Investors are asking, if i want to be defensive, where should i be . You have traditional situations and utilities, but we are pointing investors investors for the food, beverage, and tobacco space. You have better valuations there, better upside opportunity. Big picture, our stance is mixing two styles. A high quality stance but also with value. We term it quality with the right price. Amanda would you say were at a time when come to securities election, you may want to think about companies that are very exposed to the u. S. Market and not parts of age or asia that are engaging in more protectionist behaviors . Anna it depends on the investor that is asking. If you are confident finding value in the european and asian markets, that could be an opportunity. Our focus is really in the u. S. Where we are looking besides food, beverage, tobacco, we also like semiconductors. Capital goods space, diversified financials. Vonnie do you like semis as a group or do you have to look under the hood and pick . Anna we look at it as a group. The fundamental seem to be sound. You have a lowering in earnings expectations but the fundamentals are there. Values multiple wisely good compared to the markets. If you look at it in the larger picture, it is the macro overhang that is weighing the sector down. We are still in the camp that rather than uncertainty in the china trade situation, you have decreased uncertainty. As that passes, that will be a relief or the group. We do have some the contagion when you look at japan, korea, also getting into trade spats. Is that a concern, that we see the contagion spreading into the region . Anna yes, and we are keeping a close eye on that. So far it has not changed our stance, but something to keep in the back of your mind. Also with sentiment and credit. How do you measure the marginal impact of the president talking about the u. S. Dollar, does it change your thoughts on where the dollar is headed . Anna do you measure the marginal impact of the president talking about the u. S. Dollar, it has certainly been interesting with trump and his tweets. With his stance, it is difficult to put a finger on it and quantify. The best we can do is see the reaction in equity markets. We have seen in the past President Trump has a negotiating tactic. We have tried to figure out that pattern and become more used to it. In equityee shocks market, you know this is unexpected. But any unexpected news always takes time to digest. We like to look longer term. When we think longerterm, we still see upside for equities. Amanda we will leave it there, han. You, anna we mentioned there is a power outage has been a power outage in london, parts of the southeast u. K. Han. Wethey are now saying the power issue has been resolved. They areo information, not releasing information about what caused it, but it has been resolved at this time. Coming up, the end to a rough week for zillow. Shares down 14 as it reported earnings. The company is learning that selling homes is actually tough business. This is bloomberg. Amanda this is Bloomberg Markets. Im amanda lang in toronto. Vonnie im vonnie quinn in new york. Zero voters having a rough week, the worst since november, the stock is down 5 today but it was already battered after reporting its earnings. Homeforecast in their new flipping business would lose 80 million in the first quarter. Patrick clark is here with the story. This is a business that it got into that kind of upset its key clients, that had got itself into the home buying and selling business. When we look at the numbers, will they stay with it . They are now selling homes at a pace of about a billion dollars a year, and that is only meant to expand. They have said in three to five years, they want to sell upwards of 5000 homes a month. They still have a long way to go to get there and i think they have every intention of doing it. While they are building it out to that degree, i think people are starting to realize there will be a lot of choppiness along the way. Did the results have more to do with the Housing Market or Advertising Market . Patrick both, and they are connected. A couple wrinkles in this business of buying and selling homes, had to disclose the number of homes that are taking longer to sell than expected. 4 of their inventory has been sitting 60 days or more beyond what the target date was for selling it. That is inventory sitting on our balance sheet. That doesnt look great. The Mortgage Business they are trying to get into the home flipping business is taking longer to scale than expect it. At the same time, they are also trying to change the way they sell ads to Real Estate Agents. They want to charge Real Estate Agents for leads when home sales close and take a bigger cut. The way they do it now, they sell you a ball budget of leads, do your best to sell the homes. So they are getting closer to the transaction. It does expose them to more volatility in the Housing Market because now they are on the getting paid when homes actually sold so thats interesting. For investors shortterm, it them longerl take for them to recognize revenue advertising is this. Amanda do we feel as if investors will be patient and wait to see . In terms of growth sales, there is some real bulk here. Is their willingness to wait for the profit to follow . Patrick hard to say. Every time this Company Reports earnings, the shares spike in one direction or the other. Advertising is this. Amanda there is certainly some investors who believe in this, who see the longterm potential, think it gives zillow an opportunity to become a much bigger ebony than it already is. You also have a fair amount of skeptics. Noise, whenrt of the difficulty of building out this ambitious new operation leads to a stumble here and there, there is a lot of downward pressure on the stock, as we have seen this week, shares declined by 20 or so. It is not the first time this has happened. They have also headquarters where they have released some good news, and shares have gone the other way. That they havey proven the business yet, it is just that they have shown enough to get Investor Sentiment on their side. Vonnie when you look at the bloomberg, you find competitors, but there are no close competitors. Patrick they are in a unique corner of the real estate industry, they are the ubiquitous place where people start looking for homes in the United States. Now increasingly in canada as well. There is not a headtohead player. Zillow offers, the home flipping business. There is a start up called opendoor back by softbank who is much bigger in this business. Redfin is a brokerage, a tech forward brokerage. Others have tried the same thing. In terms of being the starting place for people to start their home search, having this advertising business to Real Estate Agents, zillow is pretty unique. Amanda we have to leave it there, patrick clark, great to have your thoughts. Spys future. The fate of the Worlds Largest etf pack to the fate of 11 million millennials. This is bloomberg. Vonnie this is Bloomberg Markets. Im vonnie quinn in new york. Amanda im amanda lang in toronto. The fate of the Worlds Largest Exchange Traded funds rests on the health of a group of twentysomethings. Thanks to a quirk in a legal structure used to set up the spy , more than 250 billion rests on the longevity of 11 million ordinary kids born between 1990 and 1993. Lets go to rachel evans who covers our etf coverage. This sounds random. Not a bloomberg story. If it was not a bloomberg story, i might not believe it. This all harkens back to the early 1990s when we didnt have anything called an extreme traded fund. We had a bunch of executives at the American Stock Exchange trying to work out how they can create an Investment Vehicle that could list on the Stock Exchange. In doing this, they explored a number of different structures. The one they settled on was Unit Investment trust. The thing about the Unit Investment trust, theoretically, it only last for 25 years. Normally has a set termination date. However, as spies started to gain traction and interest, they realized what yvonne years would not be enough, and that is where the names came in, allowing the fund to extend beyond the lifetime of those individuals. 2118 isey are very old, one they would next expire. Amanda what made the story fascinating, all of those kids had no idea that they were the beneficiaries of this trust, if you will. They dont get anything out of it, they were just related to people at the American Stock Exchange. They are still relatively young, that is the good news. That whengal fact they die, what happens to the spider . Does it have to be wound up like another trust is wound up . That is an interesting question. We reached out to the Stock Exchange to see what the plans were for when we do get to the point after these 11 deaths. At the moment, they declined to comment. Im not sure if they have a plan behind the scenes. It does leave one speculating about how this might work. There was an interesting column this afternoon looking at the ways that spy might become spy version two in the final scenario. The situation is relatively straightforward in the sense that you have 20 years after the death of these individuals, so there is a long lead time to make things right for investors. You can set up a new fund and encourage assets to gradually move over as people redeem their money. Then new investors would be put into this new trust. It is potentially a straightforward solution to this, when we get to that point. Vonnie you track down these 11. You spoke to them and some of them did not know each other. We spoke to eight out of the 11 people within the spy documentation. A few of them are related to one another. Brother or sisters, or their cousin. But they were not really aware of their involvement in this documentation. One person understandably asked them, tryingishing to steal their identity. Some interesting conversation being had, explaining what an etf was, how they were involved. Tot of the month we spoke were connected through having a relation that worked at the American Stock Exchange at the time. Out, theth pointing internet did not really exist in the 1990s when this was happening. Thinking, was in that irresponsible for their parents to put forward their names . These were arcane documents that were buried away. To reiterate, they get no financial good out of this whatsoever. Our thanks to rachel evans. Fascinating story. For me and amanda, thank you for tuning in. Dont forget to go to gtb for those charts. This is bloomberg. When you rest on a leesa hybrid mattress, bedtime is no longer simply the time you go to sleep. Its time to switch off and catch up. Enjoy me time, and we time. 40 winks or 8 hours solid. The leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket springs provide edge to edge support, responsiveness and comfort, while premium foams relieve pressure. Keep you comfortably cool and limit motion transfer. Leesas hybrid mattress is not only recommended by experts, experts choose to sleep on it too. Try it yourself in any west elm store. Or order online and well ship it to your door so you can try it risk free. The leesa hybrid is american made. Built to last. And, because Everyone Needs a place to rest, we donate tens of thousands of mattresses to those in need. Experience the leesa hybrid mattress. Right now, its on sale. Order today. Go to leesa. Com. Mark i am Mark Crumpton with bloombergs first world news. Britains National Power grid says issues that led to outages just before 5 00 p. M. Local time have been resolved. Earlier, officials said this afternoons outage was due to a failure of the National Grids network. The u. K. Press Association Reports the outage involved issues with two generators. Said somefor london traffic lights in the city had been knocked out. A u. S. As accused diplomat of being the main cause for the protests in hong kong. Chinas state media published the personal information of the diplomat, including information about her family. The move comes after images surfaced of her meeting with opposition protesters. Leaking anthink that american diplomats private information, pictures, names of their children, i dont think that is a form of protest. That is what a thuggish regime would do. That is not how a responsible nation would behave. Releasing any of that information of an american diplomat is completely unacceptable. That is not a protest. That is what he thuggish regime does and is unacceptable. Mark the protests have expanded to improve hong kongs international include hong kongs international airport. The strongest typhoon number of the year typhoon of the year is expected to make landfall soon. More than 500 flights have been canceled and highspeed rail operations in the region have been suspended. President trump said he wants background checks for gun purchases. The president spoke to reporters about his plans at the white house this morning. Needdent trump we intelligent background checks. This is not a question of n. R. A. , republican or democrat. I will tell you i spoke to Mitch Mcconnell yesterday. He is totally on board. Mark the move comes after last weekends pair of Mass Shootings in texas and ohio that left 31 dead. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. Caroline it is 2 00 in new york, 7 00 p. M. In london. I am caroline hyde. Scarlet i am scarlet fu. This is Bloomberg Markets the close. Caroline a roller coaster week for markets and set to continue as President Trumps latest trade threats rock currencies again. A surprising contraction in the u. K. Ahead of the brexit deadline. G. E. Tumbles. Renewed cash concerns loom over the turnaround plan. Shares falling for the seventh time in eight sessions since earnings. All that and more coming up. Scarlet first, lets get a check of the markets. Trade tensions have returned to the forefront again with the president suggesting the next round of trade talks in september may not happen. We have come off the lows. Pretty thin trading. Anything could happen in the next two hours. Caroline we know that story. Bloomberg also reporting the white house delayed licensing. That has impacted the Chip Technology sector. Sector thee tech worst kleiner in the s p 500. Up for an 11th straight day. At a record low. Caroline we are still looking for a haven. Scarlet lets take a closer look at some of the action beneath the numbers with our reporters. Are you watching . Trade tensions have been escalating. This is a fund that tracks emerging markets. Investors have pulled about 3 billion so far this month. Money is instead going into funds such as an etf that tracks the price of gold. We saw investors adding about 800 million into it for the month of august. We saw that coming as the price of gold was ticking above 1500 an ounce earlier this week. We had analysts saying gold prices could go as high as 2000 an ounce. As you were just saying, that is investors seeking safer assets. Thanks. Im also looking at something that zeros in on defensive positioning. He highlighted the correlation between the momentum factor and the antibeta factor has reached absolute extremes. You can see how the lines are more or less the same for the year but really accelerated recently. Recentlyn for that is in u. S. Equity markets, we have only been able to rally when yields have been rising. Yet, as the chart shows, the winners are very defensive minded. That is a scenario that might not be able to play out for long. Max feels the same way. He is recommending a trade that call instors sell the the utility etf in september and buy a call in the tech etf to try and play a more risk on play. Haven yen, this is a sevenday chart. The dollar against the yen down six out of seven days. The haven yen has been bid up. The best trade since 2018. At the highs for the yen. The best streak since 2017. This is worth thinking about relative to the s p 500. Rises,g in 2011, as it it tells you that is risk on. The yen is not being sought. As it happens, the s p climbed. In 2015 as the yen strengthened, we had the correction for stocks. That was true in 2018 at the beginning of the year. Certainly at the end of last year. Even this year, we have the same situation. If the yen should break down, the dollar yen breaks down even more. Could be a bearish tale for the s p 500. Caroline what a great setup for us. Lets dive into the Global Economic slowdown. The u. K. Economy saw a surprise drop in gdp and manufacturing. German exports had the biggest annual decline in three years in june. We are joined by vince cignarella. Lets start with the u. K. Because many blame the inventory. 2 does not look pretty for Boris Johnson. It does not. Is probably part of the buildup in anticipation of brexit. Similar story with canada. With see large outlying gains in canada. You wonder how canadian jobs can grow while u. S. Jobs are faltering. We saw this morning that flip around completely. The next six months will be difficult for both countries, particularly the u. K. It will be interesting to see if it drops off quickly, will carney be pushed into a corner to make a move in Interest Rates . Scarlet is the chancellor of the exchequer justified in any way . There was the drawdown as a result. Can he say with confidence this was a blip and everything will be fine the next quarter . It is entirely possible things pick up again. It depends on the conversation with the e. U. So far, the conversation is not going well. The u. K. Is pushing back hard. If the e. U. Blinks, will be fine it will be fined if they give them more time to reach agreement. Right now, it is a nonstarter for the e. U. Mark german imports are looking ugly as well. This is extrapolating the ongoing narrative in germany that things are not great. The whole trade picture in germany has been driving on global trade. Trade oriented and export oriented. Now things have flipped the other way. When reason is seeing one reason is seeing a decline in imports from china. Global inflation falls. That is a byproduct of slow growth across the board. Scarlet calls are growing louder for germany to do something about it. Lets turn to turkey. I feel like with all of this evidence around the world that things are slowing down, it gives cover for a country like turkey to make changes to the central bank. We know erdogan has been active on that front trying to push his brand of economics. Do investors care about it as much when there are these data points out of germany and the u. K. Reminding them of global recession . They do. The next round of changes caught people by surprise. The central bank change was telegraphed. The chief economist, not so much so. It is more of erdogans fingerprints the central bank and what happens next. As global yields have been declining, the turkish lira has been outperforming because of the yield play and the carry play. Most of the traders i talked to are getting nervous about this because it is getting close to a point as to where these carry trades blow up. When they snowball, you cannot get out fast enough. Turkey is a play people are starting to pull away from because it is getting dangerously close to a play that could fall apart. Scarlet nicely put. Thank you so much. For more on this weeks market action, we want to welcome the ubs senior bp of Wealth Management senior v. P. Of Wealth Management. The conversations must have been different on monday to thursday two today. Yes. Markets certainly pivoted. This is an indication of the entire year. With thethe year tightening policy and then them being neutral. Right now, we are looking at the possibility of easing. You are right. The conversation with clients was different on monday versus now. The market is extremely reactive to the trade related headlines. As are all of us. Comfort in the relative of the possible truce. We are hoping for resolution. It does not look like it will be happening at the moment. Ultrae i am happily an High Net Worth individual for the next few minutes. Are you saying to put cash on the sidelines or remain committed . We need to have a game plan, especially right now, especially with the volatility because it is here to stay. It is not going anywhere. This time in the market is a great time to rebalance your portfolio. It is a great time to be opportunistic. It is not a great time to make major changes to your portfolio and asset allocation. On cash, i do not believe this is a good time to hold cash. Our position is in the lower Interest Rate environment, you would be better off holding bonds or dividends in stocks. Scarlet youre saying you want to finetune and not make massive changes. Give me an example. Great question. When it comes to rebalancing, major market fluctuations create inefficiencies. Your portfolio that was crafted well right now is out of tune. This is the time to bring it back. By doing this, you are taking opportunities from the market. The asset class that underperforms, small caps for example now, by rebalancing you are building it up and buying it at a lower price. Caroline interesting. Make the most of the lower price points available. Im interested in how fx comes into this. We had more headlines from President Trump about the reserve wanting more cuts. He said he will not be aggressive on the dollar. He does not want to push the dollar weaker. Do you believe that . What are your clients thinking about the u. S. Dollar . We dont see the weakness of the u. S. Dollar being priced into the market at this point. We are extremely focused on the fed. The good thing is the fed is data driven. From now until the next meeting in september, we have to look at all the data coming on. So far for this year, there was negative and positive data. Although the Global Economic decline is undeniable, there is also positive earnings. An argument can be made theres a little bit of a bull market still left that we have to take close pay close attention to. Scarlet you could argue treasuries are overvalued. Is it time to go into gold or bitcoin as an alternative . Gold is an interesting asset class. Generally, we have the perceived notion this is our defensive play. But it is a nonyielding asset. To your previous point on cash, there are so many other Asset Classes we can go to that would pay dividends and generate income. Although sometimes gold does play a role and certainly in the lower yielding environments, it would be a good play. We do not believe it is here yet. Not quite yet. Caroline how low to u. S. Interest rates have to go . Probably several more rate cuts. Caroline interesting. Do you anticipate that . We anticipate a rate cut in september. From this point on, it is data driven. We will have to look at the numbers as they come in. Caroline wonderful to have some time with you. The ubs senior v. P. Of Wealth Management. New troubles for Goldman Sachs. Current and former employees face charges in the scandal. U. P. S. Is potentially putting hundreds of jobs at risk ubs is potentially putting hundreds of jobs at risk. With the category facing a burgersnce, how veggie are fighting to stay relevant. This is bloomberg. Caroline time for our top calls, a look at key movers on the back of analyst recommendations. It is downgraded to neutral after disappointing results for the first half of the year. Analysts seeing a long road ahead and more potential for bad news. Lowering the price target to just 16 after mixed secondquarter results. The analyst saying earnings reflect industrywide discounts. The market is taking on the stock, 25 lower. To 70ce target lifted on a buy rating. The analysts saying the quarter has not been strong. Tech underly with pressure, off by 1 . Those are some of our top calls. Scarlet lets turn to the banking sector. More than a dozen of Goldman Sachs current and former executives have been charged by malaysian the scandal. To break down the story and more, lets bring in the Bloomberg Financial reporter. Talk about the significance of the overnight charges. We were expecting something to happen. How big are these names . This seems like a technical, legal maneuver. The malaysian government has charged three goldman units earlier in the year for their part in the scandal. They have identified the directors of those units at the time and also included them in the net. It is not like they honor new evidence or have fresh allegations that ties these individuals to these dealings. It is still significant because it does name senior executives, current and former. You have the head of the international operations. You have folks like mike evans who has gone to a senior role at alibaba. This could possibly be a pressure tactic being used by the malaysian government to dry and bring the bank to the negotiating try and bring the bank to the negotiating table. Caroline Goldman Sachs says the charges are misdirected and will be vigorously defended. They have already offered them a certain chunk of change that malaysia thought was too little. How much does malaysia want . There is some dispute on that. The malaysian government has said 1 billion is not enough. Goldman has said they have not had any formal negotiations with the malaysian government. There is dispute on that. Aey will throw out as high figure as possible and try to find middle ground. That is how these talks usually end up. You will not see bankers in jail but you will see a substantial amount exchanged. Scarlet meantime, the rhetoric is very heated. We spoke with the head of the ruling party in malaysia in february. Here is what he told us at the time. They were complicit to the crimes. Country, image of the the confidence of investors and the state of the economy, they must bear responsibility. Scarlet he even said there is the top of Goldman Sachs was not aware of what was going on. Are people talking about the ceo or the higherups being named in any kind of lawsuit . There is a lot of anger in malaysia. In terms of legal developments and risk to senior executives, we have to turn our attention to what is happening in the United States. The department of justice has gone on record and said they are ready to prepare settlement negotiations with goldman. It has been nine months since they came up with the stunning indictment. It was the most information we have had to date in terms of goldmans dealings. We know one of the former partners who pleaded guilty has been cooperating with prosecutors. It remains to be seen if information he provides will help the department of justice implicate more senior members of the firm or they have to figure out a good middle ground to get a settlement out of the way and put this in the rearview mirror. Caroline lets look at another Investment Bank everyone is talking about. Ubs. After a shakeup, there are further shakeups to come. It does feel like the summer of gloom, especially in europe. Caroline nicely put. The last few months, you have at barclaysjob cuts and Deutsche Bank and others. We dont know for certain if there will be job cuts as part of the restructuring. We do know it has been a year since ubs has had new Investment Banking heads. They are taking a broad look at their strategy trying to figure out what they could change. It could be management changes. There could be a bunch of job cuts. It is a volatile unit. It is not the same as dealing with Wealth Management where you can rely on a steady stream of fees. Caroline always great to get your take. Thank you. From new york, this is bloomberg. On thee a quick check latest business flash headlines. They are preparing to settle 18,000 lawsuits. Bloomberg has learned the company is willing to pay up to eight alien dollars 8 billion. It has lost value since it acquired monsanto. Veggie burger brands are fighting to stay relevant in a meatless world dominated by newcomers. Frozen patties ruled the markets for years. Impossible meats have captured the attention by developing plantbased burgers that imitate meat. They changed the recipes and upgraded packaging, but not quick enough. Which hadorningstar, a big chunk of the market before. Even as it has been helped by beyond meat and impossible foods, they have more revenues but the market share has collapsed. Scarlet that is because the pie is getting bigger. They also have the scale and production experience to take advantage of that. I was in the supermarket looking for beyond Meat Packaging and could not find it, but i found everything else. It was a lot bigger in the freezer than it used to be. Caroline probably sold out. From new york, this is bloomberg. Mark i am Mark Crumpton with bergs first word news. The pentagon will not rush to award the 10 billion contract for cloud services. Rivals have complained the contract is all but rigged to favor amazon. President trump has also complained. The Defense Department subcontractor bids are still under review and the winner will only beginning to 1 billion of the possible 10 billion. Kurdish fighters have attacked a turkish base in northern syria. Two soldiers were wounded. The Turkish Defense Ministry Says the base was attacked with an antitank missile. The move comes days after washington in and kara reached a deal ankara reached a deal to establish a socalled safe zone in the region. Trumpats criticized administration over the largest immigration sweep in a decade. About 680 Food Processing workers were rounded up in mississippi this week. In many cases, children came home from school to find a parents missing. More than 300 workers have been released. Democratic front runner joe biden says it shows President Trump is morally unfit. Indias Prime Minister has proclaimed a new era in the disputed region. He says he ended seven decades of autonomy to get rid of corruption and dynastic politics. But pakistan wars there could be genocide when the curfew is lifted. Pakistan also claims part of kashmir. Powered by more than 2700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. From bloombergs World Headquarters in new york, this is Bloomberg Markets the close. I am caroline hyde. Scarlet i am scarlet fu. Trade rhetoric is intensifying between the u. S. And china with President Trump saying talks to be called off causing a pullback in risky assets. He also said he will not intervene in currency markets to devalue the dollar. Seanore, lets welcome in washington. You are being asked to translate President Trumps comments to the market. What do we make of the idea the september talks could be called off . Have you read that . How do you read that . Just a week ago, we were watching an escalation by the president threatening tariffs in september. The first question that raised is whether that would mean a cancellation of the talks in september which were announced a few days before the president issued that tariff threat. Here we are a week later and the president is acknowledging those talks could be called off. That is not good news for anyone hoping for a deal. You cannot get a deal if you are not talking. Caroline at the same time, he has been firing off a visit the federal reserve, he has also noted perhaps the dollar does not need to be recognized. Nexte talking about the trade fronts that could be called upon by trump. The dollar is one of them. No doubt. The biggest weapon in trumps arsenal is the potential weaponizing of the dollar, the disruptive effects in the markets would be immense. There are a lot of people in the administration arguing the president and the u. S. Treasury need to be more aggressive in trying to target the dollar. Some people inside the administration calling for the use of the 93 billion fund at the treasury to intervene in foreignexchange markets directly. That is a conversation going on in the white house right now. There are advisors advising against that as well. The president for now seems to have decided the better approach to targeting the weaker dollars to keep pressuring the fed to lower rates and get rid of the Interest Rate differential between the u. S. And other Major Economies like the e. U. , japan, and so on. Targeting the dollar is full of problems because you dont know how that could turn out. The president does have lots of options when it comes to pushing china to do more when it comes to trade. You have a story on all of this, including Action Companies can request now that treasury has labeled china as a currency manipulator. Walk us through some of those options. Absolutely. That option is one the Commerce Department is actively pushing. They have an idea out for Public Comment right now that would allow companies to claim currency manipulation as an goods thatubsidy for makes them cheaper which means it is harder for companies to compete against them. That would allow companies to bring specific cases for specific products for what are now antidumping duties or. Ountervailing subsidies the stuff is complicated. There is also stuff on investment they can do. The Trump Administration has been cracking down on chinese investment. There is stuff related to export controls. The controls on sensitive technologies. We have seen that at play with huawei. Huawei is far from the end of the story. The administration is been considering similar cases against Surveillance Companies in china. It is also considering pushing through a broader reform of the control system where it is trying to define areas of emerging technology that it wants to limit exports of two critical countries or countries it sees as economic rivals such as china. Caroline bloombergs shawn donnan making something highly complex relatively easy to understand. Thank you. Lets talk more about china and technology warfare. Bloomberg has learned the white house has delayed the decision on licenses for u. S. Companies to restart businesses with huaweis technology. The Chinese Company is one of the worlds biggest purchasers of semiconductors and vital to the fortunes of chipmakers. Joining us from San Francisco to break it down is ian king. The last thing we knew is the white house had been talking to intel. We thought there was some promise licenses would start to be regranted. It seems wilbur ross has changed his mind. What we know from our we have the meeting, a lot of ceos met with the president and his top advisors. They left believing licenses to resume shipments to huawei were only a week or so away. We also had sources saying maybe as early as this week the license will be granted. Then we found out amidst all of the trade escalation you talked about that the actual working level work has been done. The lessons are ready to be signed. But they are basically sat on wilbur ross desk and he is looking at the political situation not favorable to signing it and they might sit on his desk for some time to come. Scarlet that is not encouraging for anyone. You have noted for a while digitalnd western supplied huawei. Are they able to do anything to push the process along or is their fate in wilbur ross hands . There are a couple of things going on. There is an element of when there is listing of huawei being a danger to the u. S. Security, everybody stopped shipping. Then the lawyers did their work and looked into this and said some of the things commerce is telling us we cannot do we actually can completely legally. We understand they are still shipping a large chunk of what huawei needs. The problem comes when you look at some of the more sensitive products, things that potentially huawei cannot get anywhere apart from Companies Like intel. Those we believe are not being shipped, crucial components particularly related to 5g networks. Caroline to a certain extent, this is significant pain on huawei even though we know huawei has been trying to repair supply chains to become more selfsufficient going forward. In many ways, this will hurt its business significantly. Yeah. It is a very fluid situation. I know it is not saying much, but it is true. There is a very complicated supply chain based on where things are made, where they are manufactured, where they are shipped from. We are being told there are a myriad number of ways huawei will get what it wants. It probably will not get it as quickly as it wanted. It may not get as much support as it wants. But realistically, the ban has not crippled one of chinas most important companies. We understand if not business as usual, we saw from the earnings reports they are not suffering as hard as perhaps some of the more hawkish members of the administration hoped they might. Caroline great context. Thank you. Lets return to geopolitics and global issues. The u. K. Under pressure. We saw the Second Quarter gdp fall more than expected and it is putting pressure on the pound with the pound falling to the lowest levels since january 2017. Sentiment continuing to sour as we see the risks of a Nodeal Brexit rise. We have not seen these level since january 2017. The pound breaking through a previous support level. Scarlet it is friday afternoon. It is not exactly heavy trading in currencies at this time. It is falling on thin volume. The talk about parity is growing louder as well. Maybe people are seeing if they can test it when volumes are low. Airline seemingly all of this coming from a europebased trader. Coming up, it has been a bad day for barbie. Mattel falling the most in almost six months. We will tell you why in todays stock of the hour. This is bloomberg. Scarlet it is time for your bond update. There were some big outflows from riskier credit funds as investors grow more concerned about global trade tensions. Lets go to lisa abramowicz. Lisa esau bond funds getting their biggest outflows of the year. Look at the etf flows which can be indicative of Broader Market activity. Oneweek fallgest since 2016. Lqd is an Investment Grade fund with nearly one billion in outflows. Risk aversion when there is an escalating trade war between the u. S. And china. That said, lets put it into perspective. Look at returns this year. Height of return 9. 9 . Investment grade have returned 12. 1 . A very good year, albeit march by caution on the fact you do see that a return on Investment Grade bonds and highyield bonds which is unusual when both are up. When you look at what this means for borrowing costs, they remain very low despite the federal getting outflows from investor caution. They are substantially below where they were in october of november and november when they were almost two Percentage Points more when it comes to highyield bonds. Even know there does seem to be some risk aversion, still not a bad time to borrow. It is coming after a really good time for credit. Caroline great context. Thank you. Lets turn to stocks. Our stock of the hour is recalculating its finance needs after unexpected news. Is all related to the bond market. After as reeling whistleblower made undisclosed allegations that may prove to be material. Dave wilson is looking at this. Last week, mattel announces they will sell 250 muellers it 250 million in debt privately. Pretty routine. Sales closed yesterday. Instead, the Company Comes out with a statement talking about an anonymous whistleblower letter they received on tuesday. Whatever was in that letter, we dont know what it is, they are not telling us, it turned out they decided to pull the sale. You can see the effect on one of mattels bond issues and a similar effect on other bonds, including those maturing next year that would have been refinanced. This is an issue for the company because they have more than 3 billion of debt. They have Something Like 2 billion to deal with in 2021. Most of that is in the form of a bank credit line. It does not look like they have drawn it down at this point. They have to go back to the banks and say, what terms are you going to give us if they want to keep the financing in place. You have to wonder if it will be harder for them to line up new debt or they may have to pay more down the line. Who knows how things will shake out. Scarlet how capable is mattel of weathering financing issues if it cannot get anything going . This is a company trying to turn itself around as it is. The top line and bottom line were fine. You see analysts looking for Revenue Growth to return next year. Analysts are still concerned because of the companys debt level. They are also suffering from weakness in their American Girl doll business they are trying to dig out from under. This is a company trying to work for issues in its business. Here they are facing issues with financing as well. Not the best timing for mattel it would seem. Caroline certainly not. Dave wilson, great perspective. Thank you. Coming up, we will speak with pakistans ambassador to the u. S. As the Company Halts trade with india. This is number. This is bloomberg. Pakistan downgraded diplomatic relations and bilateral trade with india after new delhi revoked seven decades of autonomy for the disputed muslim majority state of kashmir. New delhi responded saying its thesion was entirely internal affairs of india. Joining us is the pakistani ambassador to the u. S. Thank you for taking the time to speak with us and shed light from your perspective. Explain to us what pakistans main concern is about the india decision to revoke autonomy for kashmir. Simply because this is an issue that is pending final resolution. This is very much on the u. N. Security councils agenda. There are parties other than dispute kashmir. According to india, it has enjoyed special status. India has unilaterally changed the status of the territory which is recognized by the entire international community, including the United Nations, as a disputed territory. We as a party to the dispute have a very serious issue with how india has done it. I think one consequence of the region isthe entire under a lockdown. Increased its troop presence in kashmir, turning the whole valley into perhaps the largest prison in the world with about 12 Million People being watched by thousands of troops. It is serious escalation in our neighborhood which we are very concerned about. Caroline how serious could it become . Many feel this will be sorted through diplomatic lines of communication. Is there any risk we could see a breach to your crucial bilateral nonnuclear aggression agreement . Saw ournk the world restraint and responsibility even during the crisis where india violated our sovereignty and sent in their aircraft to bomb on our side of the territory. Even in the face of that kind of aggression, our response was very measured. Our response was dictated by restraint. Our Prime Minister was here on a andt to the United States consistently spoke about pakistans desire for peace. I think we remain committed to that. But essentially i think what is really important is that this escalation we are seeing on indias side needs to be deescalated for the two countries to engage in dialogue. Scarlet lets talk about the role of other countries. The state department has not addressed the legality of the move yet. I wonder what kind of conversations you have had with u. S. Officials. What would you like to see from the u. S. In terms of responding to the decision . Something thes is state departments spokesperson said, that there is no change in the u. S. Position which is to see kashmir as a disputed territory. When Prime Minister khan was here, President Trump offered mediation in resolving the longstanding dispute. By itself, it was a recognition of the existence of a dispute that needs resolution. I think we welcome the president s desire to do so. India did not accept the offer. For us, i think the united engagement hased an Important Role to play in not just addressing trying to help two countries have a dialogue to resolve the issue, to undo to urge india things they have done over the last week in unleashing pressure, arresting people across the board, in turning the valley into a huge prison. Caroline what additional steps could pakistan take independently . Are we likely to see more deployment of troops perhaps at the border . It could not come at a worse time for us. As you know, pakistan is occupied on our western front. We are doing whatever we can to facilitate the Peace Process in afghanistan. We also are trying to manage a border which is very treacherous, very porous, to make sure no insurgents come into pakistan. So we have a huge deployment already on the western border. For us to see this escalation, and for us, this escalation, could not come at a more wrong time. Also, we need to guard our sovereignty. We also need to prepare against any aggression that could come from india, as it was done only a few months ago in the context of the incident. We are prepared to meet any eventuality. To be the not going ones who would resort to any action that would endanger peace and security in the region. That is why we are urging the toernational community reciprocate the consistent offers for dialogue be Prime Minister pakistan has made since he took office as Prime Minister. Scarlet the pakistani ambassador to the u. S. , thank you for joining us from washington. We appreciate your time. Thanks a lot. Caroline lets have a quick check on the markets. We are coming off the lows after the jolt from the latest trump sayingn terms of trade the talks with china in september could be off the agenda. The nasdaq still the key underperformer. Gold the know will no longer haven of choice. Gold no longer the haven of choice. Scarlet all italian assets down, italian stocks down. One dollar 26 handle for the pound. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. [music] im mark with bloombergs first word news. Much of the chinese coast is bracing for the strongest typhoon of the year. Is expected to make landfall saturday, south of shanghai. Could bring wind speeds up to 141 miles per hour. More than 500 flights have been cancelled and highspeed rail operations in the region have been halted. Received trump says he a letter from north korean about the jongun growing number of missile tests. The president spoke to reporters at the white house. He wasnt happy with the testing. He put that in the letter. But he also sees a great future for north korea. And so well see how it all works out. In the meantime, ill say it again. There have been no nuclear tests. The missile tests have all been shortrange, no Ballistic Missile tests. The Trump Administration says diplomacy with north Korea Remains on track, thanks in part to the president s personal with chairman kim. The United Nations refugee aency says that over half muslims have received Identity Cards for the first time. A number of agreements that have been signed, both bilaterally and relation toy, in the potential registration. Sorry. Potential repatriation. We have made clear that any repatriation needs to be voluntary. They fled to overcrowded refugee camps in neighboring elsewhere in 2017 when myanmars military launched called a clearance campaign, reportedly in response by insurgent groups. Been stuckessel has in the Mediterranean Sea for more than a week. European government will offer safe harbor to the migrants on board. 1 vessel could face a million euro fine if the ship enters italian waters. Global news, 24 hours a day, on air, at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. [music] its 3 p. M. In new york, 8 p. M. In london. Is Bloomberg Markets, the close. Its a roller coaster week for the markets. It continues as President Trumps latest trade threats rocks stock, bonds and again. Ies a surprise Economic Contraction in the u. K. Are the stakes . Loomenewed cash returns over the c. E. O. s turnaround the, shares falling for seventh time since the earnings. All that and so much more, coming up. First lets get a check on the markets right now. Weve seen a little bit of a comeback in u. S. Equities. Theyre still down for the week, nasdaq the worst performer, mainly because of concerns over technology now that the white house has indicated its not going to necessarily make a decision on whether it will allow u. S. Companies to continue selling to huawei. Licensing decisions being pressure ont much a stocks in particular. And it caused tension between china and the u. S. And then was further byet President Trump as he renewed the escalation, saying that scheduled next month could even be cancelled. Of 1 . 9 10 italys stocks, you mentioned the bonds earlier, getting sold off. Deputy Prime Minister threatening to break up the ruling, pushing for elections, unrest in western europe. We see it creeping high, then subsided to 16 by yesterdays close. Now elevated once again, least. D to before at lets dig deeper into todays action, with our reporters. Well, you mentioned that roller coaster ride for markets this week. Crudeertainly true of the oil market, up big today. Rose asas intermediates much as 4. 5 to almost 55 a barrel. 7 over two days. But it was very weak earlier in theweek, obviously with china trade tensions causing concern about the demand outlook. The stockpiles report this week showed a gain in inventories. Rebound comes after saudi arabias signal that it exports to below seven Million Barrels a day next week. Todays gain follows a really big options trade. Oil, 25 Million Barrels of the equivalent of about thats also boosting sentiment today. But traders, not exactly confident that the rally will last. Well, the 10year yield. Yesterday, we had a reversal from higher to lower, telling us that bonds had been trading off. Then they were rallying. Today were seeing the reverse. We had bonds rallying earlier. Beenat point, stocks had off well more than 1 . But more recently, bonds pulling back. The 10year yield up two basis points. At the s p 500 chart. The beginning of the year, we had rates falling on the feds, that pivot. Then in april and may, there were trade tensions. So we had rates falling. Perhaps on the safety haven, stocks falling on that. July, the fed stocks rising and then its really pretty amazing. 10year yield goes below 2 absolutelynvestors dont like this. It will be interesting to see how all this plays all. Thanks. Stick withing to bonds. Heres one of the charts most developments over the past week. We have to remember, theres been this big expectation that get this twist over the next year. The fed will cut rates, the thet end goes down, but long end will go up, because the fed will be successful in reflaiting the economy. What this chart shows is the ten forward. Year you can see thats absolutely collapsed to its lows of the year. In other words, the amount of forward implied increase in the 10year over the next year in 2019. En this low this comes as trade head winds are intensifying. Other Central Banks are starting to cut rates. Scarlet, my read of this is this is a complete capitulation once longero the lower for environment but its also a sign that the market is starting to of centralbility banks to reflait the economy in the face of these head winds. Just to follow on what luke bond marketing, the has been relentless in pushing rates. To cut the treasure yield reverted to 33 basiss negative points. Our next guest says that asideors may have to set the conventional wall street wisdom that the fed has a heavy hand in markets. The idea that lower interest pushes people to stocks, thats been something weve been working with for years now. Even. De dont fight the fed, is what everyone says. Is there any sense that this is a misguided approach . You always hear when the fed is on the move, dont fight the fed. Cutting rates, you know, prices are going to go up. Risk, asset prices, stock. When they raise rates, watch out. Seems to me theres a couple of assumptions underneath that advice. One is that the fed actually controls rates. The second is rates have an on asset prices, including stock prices. I just went looking at the Historical Data to see if i any correlation fundr between the feds rates or between longterm Interest Rates and the movement orthe economy or earnings stock prices. And i couldnt find any correlation anywhere. So it just seems to me that thats probably that conventional wisdom is probably for investors. Certainly. When you look across the pond, you look at whats happening in europe, as far afield as japan, very low rates doesnt always in thegreat outcome stock market. What is the market getting wrong riskrewards of the calculation that they do . Is thatnk the problem over the last 10 years, investors have been using low rates as a reason to get into riskier assets. So its not just stocks. The spreads on credit, on high yield, the spreads on almost all riskassets have come down. When you ask investors about this, they say, well, its fine, im getting paid less from bonds. So if i pay more for risk assets, the premium i get is basically the same as what im usually used to. Theyre forgetting is, yes, the premium may be the same but the risk is. Buying stocks at 7 or 8 is a whole different matter than an earningswith yield of 3 , 4 . Over time, that earnings yield and prices and earnings yields are inversely related. Low earnings yields today will eventually become higher and higher, and earnings yields will become lower. When you buy them at the lower end of the range, you can expect will move against you. I think thats what investors are overlooking at the moment. So whats going to make them change their view . Conventional wisdom is hard to break, because its worked for so long. Tend to work until they dont. Whats going to be the trigger work anymore . Ont i suspect it wont be my column. But im trying to you know, to just throw out a slight warning, to remind know,ors that, you this the bias i think is really strong at the moment, years, over the last 10 theyve seen Interest Rates low and everything booming. And i think the natural takeaway from that is that when Interest Rates are low, everything is booming. Know, asn, you caroline mentioned, look around the world. Europe, you know, japan, other places where low Interest Rates have coexisted a longw asset prices for time. Also look at the longer history and just realize that theres there. Correlation and then if you want to take risks, take risks, but dont let low Interest Rates be the balance for making that decision. Your expertise as an investor, where then to go when youre perhaps seeing an end to road . I think it depends on what calculus is. Maximize theis to return, then i think you have to in the u. S. Assets and i think you have to probably leave the u. S. Altogether. Assets are pricey. So i think you have to go and buy risk assets in the rest of the world. Is, its not going to be a free lunch. Markets are very smart. Risk assetsason why around the world are priced the way they are. Its going to be a tradeoff. You want higher expected returns, i think you have to leave the u. S. Hand, if safety is the most important thing, i think you grin and bear it. See any other way. Well, theres still about lot higher than you get in other countries at the moment. We thank you. Meaningful up, background checks. President trump and Mitch Mcconnell weigh in on the gun debate as it continues to be in the spotlight. Rails. E. Goes off the shares falling just as the giant seems to be back on track. The meatless meats take over. All that and so much more, coming up. Bloomberg. Bloomberg. [music] its time now for social climbers. The stocks making waves in social media today. Find all this on bloomberg. Up, brodie come making a broadcom. Chip maker is spending 10. 7 billion to serve business customers. This agreement comes less than a month after the two Companies Merger fellfull apart. Amazon under fire once again after a major contractor allegedly flouted labor law and cut wages. An Advocacy Group accused of to workemployees overtime beyond legal limits. Foxconn says it is now fixing problems. And finally, huawei took the wraps off its operating system, glimpses ofe First Software that could reduce its reliance on u. S. Technology. Now, a somber viewpoint here. Shootingsmass devastated dayton, ohio and el paso, texas, gun control has become the subject of conversation across the nation. For renewed calls background checks for all gun buyers. The president earlier today. Need intelligent background checks, ok . This isnt a question of n. R. A. , democrat. Or i will tell you, i spoke to Mitch Mcconnell yesterday. Hes totally on board. To welcome, we want our investigative reporter. I mean, as a brit, i find it amazing that background checks arent done already. . Ut how different is this i think one of the biggest is thences were seeing republican willingness to even discuss this. Obviously we havent gotten into specifics yet. But the fact that this discussion is on the table is notably different than what we year ago after parkland. Thats prompted a lot of people to ask whether theres really a shift taking place here. Of course, the n. R. A. Plays a role as well, because if instances, especially after parkland, the n. R. A. Came out and President Trump then on what hektracked said as well. Where is the n. R. A. In all of this . How has it reacted . We do know that wayne lapierre, who now controls the with. , has been in touch the white house on the matter. What we saw after parkland is , the chief lobbyist at visit to thee a white house. We know that the n. R. A. Is involved in discussions. Theyre totally staying out of this. But perhaps they arent as handson as they were in the remains to beally seen. But we know that the n. R. A. Will fight very hard for anything they view as infringes on the second amendment. We know that trump himself is for a the hamptons fundraising campaign, a already inr 2020, full swing. And this has become a politicized issue. We starting to see this be a dividing line for the voter, not only for whats been happening . After parkland and continuing on through the 2020 campaign, seen people become single issue voters on the matter of gun control. Were long time, they single issue voters for gun weve seen that base fully develop for gun control. I think thats really going to be a big difference in this election. We already saw it had ramifications for the 2018 midterms. That was a really big deal. It can only get bigger for 2020. To a lotly has to lead of republicans looking at their constituents and going, what can i do here . To get reelected if i go pro, you know, gun control . Absolutely. Thats certainly something all these politicians are thinking about. Mitch mcconnell is up for reelection in 2020, which i hadnt realized. And does him coming out saying that he would certainly look into the idea of background for his reelection process . He certainly does not want to have to deal with a primary fight. Thats exactly right. This could lead to a primary fight. His constituents are such that, is a really big deal for them in that part of the country. This is a very big deal. Sees a primary challenger on the point of gun control, it could be dangerous for him going into 2020. Certainly something to keep in mind and something also to hesber when he does say looking into all of this. Thank you so much. Bloombergs investigate i have reporter investigative reporter. Now, shifting gears, if you want your career, at your office place, according to the latest in business and research, youll want to get a sponsor, a powerful an advocate onn, the corporate front. However, the same Research Finds white men tend to be the best sponsors, white membe men o well. One oftentimes, sponsors look for proteges who look like themselves, which means that a of women, black and Hispanic Women especially, kind of get and whats so amazing about this data is that important aing how sponsor is to how much you can get increase in pay. Ad notably, how important white male sponsor is for your increase in pay. I mean, some of the statistics are just horrendous. Black and Hispanic Women are the such aikely to have lucrative connection. Were starting to see that impact. With a black sponsor reported 11 less money than a with a white sponsor. Even worse if youre hispanic. There. That blows my mind. Were starting to see this really evident in how much people are taking home in their paycheck. You can measure it. The reason is, when you have a is high up, someone who is in the room and hears about opportunities before they else, available to anyone and before you even know it existed really, and someone who can just speak up on your behalf and basically introduce you to their network, to their connections. You wont have that right away when youre entering that organization. Its like this person can open many doors for you. Set of data. Hat from new york, a rather depressed situation. Time now for options insight. Joining me today is greg. Happy friday to you, greg week. My gosh. The volatility, stocks up and down. And right now, were looking at a down week. Talk to us about what you saw options. S, so in talking to clients, longer term, both trends still intact. Over the 200day moving average. Sloping upward. Option traders tend to focus on the short term. Monday morning. Made the low sunday night. Futures. The s p and were back, filled that gap. Were literally right at 50 the lowthe high and with the selloff. I think option traders are scenarios. Two one is we, in quick order, go back and retest the lows of this week, starting next week. Weve already worked off a lot of the oversold conditions that with this latest bounceback. Number two, not quite as an muddleg scenario is we along sideways for the rest of very low volumes. Lets take a look at the chart of the s p 500 that you have brought with you. Of those moving averages, plus this years low. We were just asking the question, whether or not you think we go back to the low in yellow. Yes or no . Well, if we go back and take out this weeks low, i think retestonna go back and that, june 3rd low, highlighted with that yellow line in quick order. You break below that, i think you change a lot of peoples longer term outlook of this in general, considering bullisho backdrop from to bearish. Lets now bring the vix into it. Of the a good chart here vix. Earlier this week, we put in the high on the year. What does this tell you . It sounds like you think that the vix is going to spike to even higher highs. If you look at this chart, i think a lot of traders, including myself, were a little surprised at the magnitude of monday. E on you took out the may high and on the spike. We also saw an increase in the volatility market, the gold the currency markets alongside this. Are you seeing a lot of volatility, vix . So positioning right now, there was a lot of volume in the and open interest. Which tells me that traders are actually positioning for a for the vixe mean and new highs for the s p. However, as we know, that can change quickly. Yeah. Maybe those traders get caught offguard. For joining much us. Back to you. Thank you so much. Thes get you a check of latest business headlines. We start with malaysia where criminal charges have been charged against 17 current or former Goldman Sachs employees. Goldman says the charges are misdirected. Zillow, investors hammering the companys shares as changes, combined with mounting losses, spooking investors. And that is your business flash update. Quick check on the markets. A quick headline now. The unendingm, continuum about their merger. Latest headline on the said to be near a merger after agreeing to the board. Viacom. This is bloomberg. G. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you preorder a new samsung note. Click, call or visit a store today. [music] news. Ombergs first word british Prime Minister Boris Johnson is urging the european to show common sense on brexit. Johnson wants the e. U. To says isthe deal, he unacceptable. The Prime Minister adds there is plenty of time to get a new before the october 31 deadline for leaving. The British Parliament has deal three times. Trade negotiators are currently meeting ino washington in september but recent escalations have raised the possibility that talks could break down once again. President trump spoke to reporters at the white house today. What is happening with china now, we hav