Stocks and stories making headlines today. Michael mckee explores this question. Why has Consumer Spending fallen . Begin with bill mattingly in washington as president Obama Asks Congress for 500 million to arm and train rebels in syria. What is this all about . Its about moderate rebels. The bottom line is, they finally feel comfortable with the cia vetting process. That has allowed them to go to congress with this request. Another important aspect that you really cannot ignore here. Isis is coming from syria. They have made their place interior right now. At the administration looks at that and recognizes we have to do something. Arming the rebels is the first and most important thing they can do. Is just thesal first step. How long until opposition rebels see the weapons . We assume they are moderate. Somebody can tell if they are moderate. How long until they are being trained to use those weapons . The process of being able to tell if they are moderate or not you hit on a key point. That is problematic. What the cia has struggled with is if they are having a difficult time separating it. The bigger issue is, if you give these weapons and training to moderate rebels and of the moderate rebels and up losing battles to these isis groups, they get the weapons and they use them in iraq. Its a complex the tuition. Not weeks. Ng months, congress has to approve this money and then they have to deploy it. Its an aboutface for the administration to put this on the table. Say big step forward. One that will take time. We know how it works. We have failed it so many times in the past. Staying international in scope, the new york judge has ordered the west bank to return a 539 million payment from argentina saying it was illegal for the country to make in the first place. The order comes three days before argentina faces default if it fails to pay 832 million. Story,really exciting especially for those debtholders who have held out for so long to get all their money. Really a decade now. This is the closest theyve ever come. Hopefully it will work out for everybody. Right now, what we have is that argentina made a payment that they were not supposed to make without having paid the holdouts as well. A judge said they must treat all their holds to other creditors equally. It i making that payment, they violated the ruling and broke the law. Asked toew york mellon return the money. Thet is holding it for creditors at that agreed to a haircut, basically. Cut, basically. Allete and some other debtholders who never agreed to in past reconstructions of this debt they will get their money or no one will get their money, right . If you dont pay these guys, you can pay anybody. Cant pay anybody. Thats basically what it says. With the judge really stressed in court today was that he wants everybody to sit down and talk. The government had said repeatedly that they want to negotiate. The sideshow is that theyre breaking the law. They want to negotiate that they have not been really doing that so far him even though the judge has made a point of saying this is what you need to do. He made it very clear that he wants this resolved. He does not want argentina to default. Everythingis to put behind them. He has been overseeing this case for many years. If argentina does not want to pay it, nobody can make them agree. Do you think argentina new it was breaking the law and did that purposely or didnt it not itw what else to do did not know what else to do . Andhey were between a rock a hard place. They made the payment, they default, not their fault. They knew full well that bank of new york mellon would be in contempt if they passed along the payment. Bythey have to pay everyone monday. Isailure to pay elliott still a default because they never agreed to restructure in the first place. They still have their original contract that says, you always this money. They have been in default for 13 years. They actually have until july 30 for a real default. There is a 30 day grace period. They have about one month to halfing associations go forward. , ifunit of elliott has said they can show that Good Progress has been made in these talks, they may be willing to consider the effects of the ruling are delayed. Argentina could make the payment by july 30. Thank you so much. European Union Leaders have chosen the former luxembourg Prime Minister to become the 28 block president. He still needs to be confirmed by the european parliament. Taking over from jose manuel. That vote is set for july 16. This week on Political Capital, in a rare interview, al talks with president obamas economic advisor. Here is his take on the overall economy. 4 for the you look for the more current indicators. Manufacturing, autos, consumer confidence, housing. For months now of 200,000 plus jobs growth, we agree with the forecasters that there will be a rebound. We are going to have a solid quarter and rest of the year. 4 . Its hard at this point. Were not forecasters. When we talk to businesses about their hiring, their backlogs and their sales, it feels pretty decent. You can see the full interview with the director on Political Capital with al hunt tonight at 9 00 p. M. Eastern. Consumers are not spending. Adjusted for inflation, consumer lastding has fallen the two months. Why . If you are an honest economist, you are scratching your head and wondering if its the data or us. We could explain the lousy Consumer Spending in the first order because the weather was lousy and so were the numbers. School is out, the sun is shining and we are not spending. We tend to spend what we make and we are making more. And salaries are up at a 5. 6 annual rate. That is with inflation. We have some more money. Apparently, we are stocking it away or something instead of spending it. Incomes are up 3 but spending is only up. 9 . It actually contracted. Michigan confidence rose today. People are feeling better, but not spending. You have to wonder. Where is the money going . We dont really know. The government takes what you make, subtracts what he spends and assume you saved the rest. You look at car sales and home sales, the gut feeling is spending is delayed. It will come. But nobody can prove it. What happens if it doesnt . We would be in a spot of trouble. The consumer is two thirds of the economy. That bad gdp numbers, Second Quarter growth was tracking 3. 9 . Today, down to 3. 1 . Business spending is up. Interest rates at the lowest ever. Consumer confidence up. Earnings up. If you arent spending now, when are we . There are people who make their living forecasting recessions. I love reading their websites. Higher Health Insurance costs. People who got insurance through readyges may need to get to pay more. We will have the details, coming up next. All familiar with the map of the united states. At the regular one. That map is getting a makeover thanks to broadview network. Showing the Largest Companies by revenue in each state. Mapping of america. The song. W this land is your land, this land is my land. Is it really . A new map of Largest Companies by revenue in each state suggests organ should be renamed the just do it state. Nebraska is Berkshire Hathaway country. Can give thanks to walmart, the top earner on the national map for creating a whole lot of that opportunity. T employs 49,000 arkansans exxon mobil is number one in texas where oil is still king. Some names may surprise you. Costco comes microsoft in washington and the growing Coke Industries just conceded sprint in kansas. The country small estate, not smallest on this list. Rhode island posts cbs as its as its top cvs company. Verizons empire in new york is rising rapidly while calling it home. The most tax friendly honor goes to wyoming. De justeak energy ma over one billion dollars last year. Theyre one of seven states without an individual income tax. Some of these states arent as business friendly as others. You mentioned the taxfree states. Are we seeing states make a play for some of these companies to move headquarters their way . States do offer some kind of headquarters tax credit. Ofsee a vast majority Companies Remain loyal to where they were founded. Despite the tax climate. Thats not to say that companies dont relocate. Map. G is not on this in 2001, boeing moved its Corporate Headquarters from seattle to chicago after illinois offered a 60 million in tax incentives. There are examples of Companies Moving their way to take advantage of a Better Business environment. Most companies, especially the ones on this map, tend to stay put where they are. They know they have clout. Companies are a loyal bunch. Thanks for joining us. Are calculating what to charge in 2015. Recent data show that people who got insurance other the importable care act and to have higher rates of serious conditions. Chen says this could mean bad news for democrats. Joining me now on the phone from santa cruz, california. Thanks for joining us. Wasnt this clearly going to happen . Its just logical that people who could not get Health Insurance other ways would get it this way. Thanks for having me on this afternoon. I do think it was something that was bound to happen. The way the law was set up and the way the law seeks winter others who were not covered before. That some supporters have denied that this was going to happen, the reality is very different. At the most basic level, i would assume people who cant afford health care or who have incredibly High Health Care bills will tend to sign up. People who have no Health Care Problems or dont feel like paying for it, they will not sign up, right . Thats right. That dynamic has taken place. We have seen something of a split in the marketplace. Havee who are healthier managed to stay in their plan. Byproduct of the political flak. People could keep their plans. You have relatively sicker people signing up for plans are obamacares exchange. A lot of young people still not signing up for any healthcare plans. Because they are young and consider themselves immortal and very healthy. They dont bother to sign up at all. Thats exactly right. This is the problem with the group of people known as the young and invincible spirit people who dont think they will ever get sick. The economics of the law are aligned against them. Its a lot cheaper for most people in that category to forgo insurance and pay the tax penalty. What happens here in the end . Is reallyistration not going to give up on this, of course. It does not look like they have to. There will be some cost problems. The big worry is that you theyhave insurers deciding will not offer coverage through the exchanges. That in turn will decrease competition and increase costs. We will see it in 2015. The administrations response is likely going to be to continue to cover the fact that they think the law has been successful. At some point, they will have to consider changes. Particularly if republicans are able to win the senate. Is there a republican solution . Does the other side have a way to ensure all americans and keep costs in check . I think some republicans have articulated some solutions. Have putch, tom coburn together proposals in the senate. The basic point is that republicans do need to be better about articulating solutions and not just saying we dont like the law. We would all agree that there is a problem that needs to be solved. You can have millions of americans with no Health Insurance. You have to find some way of getting them on board. Otherwise it makes it more expensive for those of us who do have Health Insurance. The status quo before obamacare was unacceptable. Republicans have to own up to that fact. The basic point is that they have to be able to say, we have a weight which were people who have previous conditions are able to get access to affordable Health Insurance. Disrupt that does not those who already have insurance. Do you think the obamacare push was the only compromise democrats could think of . They knew it would not work out well. That is the unfortunate reality of our political system. People have to say things to sell a particular piece of legislation. A lot of things were said about obamacare at the time. Knew would not be true. One of those things that people could stay on their plans if they liked them and it would cut costs. It is not designed to do that. Thanks very much. Coming up, a check on the friday markets. The cofounder of Blue Point Brewing Company joins us to talk americas favorite summertime beverage, cold beer. Stay with us. Coming up, bloomberg is on the markets. Julie hyman. Take a look at the markets today. Seeing a mixed picture with the nasdaq a bit higher than the dow and s p. Its forecast. We are looking at go pro again today. Shares surging in their second day of trading. The Company Makes those cameras. Byraised 427 million selling shares for 24 a piece. At the stock was already up more than 34 yesterday. Also looking at dollar general. It is looking at a new seo. Ceo. Oking for a new the shares falling by the most in a year on that news. Interesting story because there is so much consolidation in the Dollar Stores industry. On the markets again in 30 minutes. More bottom line is next. Welcome back to bottom line. Much stuffho have to in their closet, there is now an easy way to clean them out. Make money at the same time. The company has a website and then after that allows women to sell fashion items they no longer want. They can also shop of the womens closets. Joining me now is pot smart ceo ceo. Sh smarts ive heard a lot about this website. Ive heard it mostly from me n core interested in the idea as an Investment Opportunity who an interested in the idea as Investment Opportunity. People know its a good idea. Spent 350 billion a year in fashion. Years, women put a trillion dollars of fashion and their closets . Just in the u. S. . Just in the u. S. Globally, 3 trillion. Half of it is never used. There is the opportunity. What we have done is make it super simple, from your phone. Can put your closet up for sale very quickly. We provide shipping and all of the safeties and guarantees. , we have more than 1 million worth of inventory being uploaded everyday. , the equivalent of a nordstrom store gets uploaded. As i think about women buying all these clothes, i do the same thing probably. Is there a reason you decided to focus the site on women . Consume fashion at 78 times the velocity of men. That is where our focus has been. 75 is womens fashion. They really own that market. How has the reaction been . They are uploading a lot of stuff. Are they buying a lot of stuff . We sell an item roughly every 15 seconds. Our top sellers are making hundred thousand dollars a year are making 100,000 a year. They are helping each other shop as well. The turnover is close to 80 . How much stuff goes out . One out of two items sells constantly. A third item can sell depending upon the quality and condition of the item. Do you have a list of the hottest things that are on there . Shoes and handbags are at the top. Athletic wear, lululemon. A woman will wear another womans yoga pants . Absolutely. Interesting. I will stop right there. Move to the investment side. Zoeon kutcher and rachel are investors. Its not just wall street guys who find this fascinating. Celebrities a real following as far as people who want to invest in it. When you look at the opportunity in these marketplaces, whats happening is the convenience of being able to shop and sell from your phone you see that in other industries. The scale of fashion makes it very attractive. Two Silicon Valley and fashion trend since. New york, l. A. We do these live parties. We had 300last night where thre people showed up. We have physical parties as well. You have experience in websites and apps. This is not your first rodeo. Companyated another that was acquired by hearst back in 2007. That was a womens Fashion Shopping site as well. It whats the next step for this site . Looking at an ipo . Is there an exit plan . We are focusing on growth. We are still leading in the united states. Our next up is to go international. Expand this into other countries. Europe and asia. Does john donahoe ever come over and say let me buy this from you . I think there is a lot of conversations. The big thing for us is we see this as a 20 million independent company. Typically, you are either competing with amazon or ebay directly. We have the best of amazon and ebay and combine it with the social side of interest. Pinterest. Alibaba is interesting. The unique thing about us is, what we have done is build upon 400,000 closets today. That is pretty unique. A billionghly half items shared in a given time period. Thank you for joining us. Very interesting. Coming up, justintime for the weekend. A brewmaster joins us to talk about the business behind americas favorite summertime beverage. Alix steel will do the interview while i drink a beer. It is time for todays latin america report. Nissan is headed to mexico. They will produce luxury vehicles and a new 1. 4 billion factory in mexico. The biggest project to date in their fouryear relationship. The german and japanese automakers will assemble as many as 300,000 mercedesbenz and infiniti compact cars in the facility near nissans plant in agua calientes. They will roll off the lot in 2017. Its officially summer and we are headed into the fourth of july weekend. You know what that means. We will drink a lot more beer. We drink 13 more during the summer and more of what we guzzle is craft brews. Lets go to alix steel. She is with the cofounder and brewmaster at Blue Point Brewing Company. We dont have any craft beer onset. Youre going to have to wait until after work is over. A key ingredient in the craft market actually comes from hops. You use over six times more hops in craft beer than regular brew. It how hard is it to find your supply . The industry has changed in the last 10 years. There has been a seismic shift. I used to be able to say i need that is now gone. Its all contracted and futures. They have to become sophisticated and learned that you have to predict to three three years out. We are contracted until 2016. Is already tight now. Anybody out there who is not done, get it together. The craft beer craze is nothing new. We heard it back in 2009. What do you feel is different about now . We have maxed everybody out. The land. Nothe heart of beer, its cultural product. The ingredients, barley, hops grow from the ground. If you need more hops, you have to grow it first. If the hop growers are all maxed out and their land is full, its not easy to buy the farm next to you. They have to do that whole procedure of finding more land and all that. Its not the move into more aroma hops. This year might be the first year ever that it exceeds other hop production. Will you be able to buy more hops . I dont see that anytime soon. The way craft beer is growing and the trends happening now, the hop craze is alive and well. They cost a lot more. Seven times more than regular hops. What does it do to your margins . The consumer has been good at understanding. Andchainch real everybody stuck through it. Its been a steady increase over time. Can you offset it in other ways . Thats right. Brewers have done a good job at that. Talk about the craze. 8 of the beer market is craft beer. That is not a lot. 18 growth last year versus beer sales. Selve eventually come all things come to an end in business. It is still strong growth yearoveryear. You see the demographic is in our favor. Who is drinking it that makes it more sustainable . Young guys turning 21. They are starting to drink more beer than they normally do. They are starting up with craft beer instead of the larger beer companies. The past generation, they were still drinking the big beers as young people. Bought youy cant be considered a craft beer. I invite everybody to come out of our tasting room and see what it really looks like. If you sit and have one of our beers and look at our facility and dont think its crap, thats your decision. The courses ceo said yesterday that craft makers were overvalued. Ceo. Ors ultimately, there will be some m a. Its a complex issue. I think they are undervalued. Thank you so much. We really appreciate it. We can go down to brinkleys on 50th street. , encore. Your guide to the biggest newsmaker of the week on bottom line. A bloomberg tv exclusive. It is friday. We bring you encore. Look back at the most notable newsmakers from the past week. We think it is quite sustainable or if you look at you haveent accelerating gdp growth and good earnings growth. Low inflation is key when you think about valuations. It is hard to imagine any real internal relief to the market right now. Existing home sales which we saw yesterday were up pretty nicely. Most of the survey data we see looks pretty positive right now. I do think we are finally shaking off that ninemonth malaise. Like things are back on track. Pretty good increases in home sales. We see that the markets in general are playing in our favor. We see that they are playing a bigger and more Important Role in the equity sense. Theyre looking for more services to deliver to the enduser. We are focusing on building the right solutions to accommodate that growth. The game is a changing name every single minute. You have you Just Announced it. We may start raising rates in the firstquarter of next year. We were others talking about Forward Guidance and what we have. We dont know. This is all a guessing game. Weve already seen higher gasoline prices in the first and Second Quarter. That will take a toll on Consumer Spending. We saw a real wage growth accelerate over a recent quarter because of inflation below. Now it is rising. Nominal wages are not picking up. Intotion is going to eat purchasing power and that will likely lead to a bit slower Consumer Spending growth which could have an impact on the entire economy. Lets get you the bottom line on whats happening next week. Yang yang joins us from washington with a preview. What themes can we look forward to next week . Cars, economics features and jobs. How much will gms victims get . We find out on monday when consultants unveil the Compensation Plan here in bc d. C. E in we also have the gm switched defect lawsuits on wednesday in new york. The judge who oversaw their bankruptcy back in 2009 will hear arguments to decide whether customers suing for a decline in the value of their cars consume the new gm or they will have to try to get their money from the bankrupt old gm. All that is happening as mark fields takes over as ceo of ford on tuesday. The same day nissan starts to offer free lease battery thirdrs in 10 markets monday of the usual data releases. We also have three speeches to look forward to. On first from jack lew tuesday discussing u. S. China relations. Fromdnesday, we will hear janet yellen speaking at the imf followed by remarks from imfs managing director. Atn its jobs, jobs, jobs the close of the week. We get the june jobs report on thursday. Economists surveyed by bloomberg expects 210,000 jobs added this month. The unemployed rate should hold steady at 6. 3 . Bond inequity markets will be closed for americas birthday. The u. S. Is turning 238 this year. Happy birthday, america. Stay with us. Another check on the Market Movers on the other side of the break. Bottom line returns in just a moment. Get the latest headlines at the top of the hour on Bloomberg Radio and streaming on your tablet and on bloomberg. Com. That is it for this edition of bottom line. Have a great weekend. Mark will be back on monday. On the markets is up next. Were coming up on 56 past the hour. Bloomberg television is on the markets. But look at where stocks are trading an hour before the end of the session and the end of the week. We are seeing a mix right now. Not much change in either direction here today. Material stocks falling because of dupont. Lets talk about whats going on for the year. Monday will mark the last trading day of the first half of the year. He s p 500 has risen nearly 6 it has had records a number of times. Joining me with any cap Halftime Report is eric. When you look back over the first half of the year, what are the big trends we have seen in etf . Lets begin with where the money is going. 71 billion has gone into etfs. Thats the same as last year. A lot of that came in the last six weeks. A lot of assets have been spread out amongst the classes. Its pretty spread out. The trend i think thats most impressive is vanguard. Ts. Of all asse it has 67 etfs. They put up astonishing numbers. The average vanguard etf has this year. 61 million a lot of the hot money has been moved quieter this year. There has not been the hair in the race that has taken on the money. Vanguard is like the tortoise. They have slowly plodded along as usual. Six out of the top 10 etfs are vanguard. We will wait to see if any of the hot money wakes up. Thes coming back in second half. Were there any that stood out in terms of getting in close . Is ae ishares etf fascinating product. Like a better version of eem. Its like their answer to vanguard. The vanguard product has done very well. Some of the beyond bricks products have done well, too. People want to get exposure beyond the brick country emergingmarkets. , small capa etf india. It has been the best performer. The small cap is the best performing, up 60 on the election inmate. Political change has spurred a lot of single country etfs into higher returns. Election in may. Are we seeing with the pace of new etfs been created . 99 launches this year. To 72 last year. Investors actually want more products. They like the innovation and they like them to be cheaper. Momentum a strategy has taken them 300 million. We look forward to the second half. Street smart is next. What happened to the dow 17,000 . Heading for a loss in the past three weeks as stock falls. Is this rally finally running out of steam . I am trish regan. Starts now. Important the most hour. We have a few nine minutes on the clock until the closing bell. Facing increased scrutiny from regulators. Barclays scrambling to overhaul its halter over allegations of fraud. The np
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