Transcripts For BLOOMBERG Bloomberg Markets Americas 20170714

Start to gain a bit of momentum once again, going into earnings season. There is some them is an serenely some optimism seemingly surrounding earnings for the major averages, so that is something to note. The nasdaq is on a six and winning streak, but it is the odd man out here in retaining the record. It has not gotten to that level. And there is an interesting note out from bank of America Merrill lynch, who is not very optimistic on the s p this year, talking about income inequality, pointing out more hours are needed now to buy one unit of the s p 500, 110 hours, in fact. So that is at a record high here. That is less attainable for particularly low income workers to get to that kind of lone where they can invest in the stock market. Interesting observation here. That is also one reason why we need to clamp down on that level of inequality and might be more aggressive next year. At thealso looking nasdaq, which is lagging the other industries. It is down, not by much, but a few tenths of 1 . On june 8,cord was and it is falling the most in the nasdaq over the past month, we have those big down movers like costco and tesla that have been holding it back. Oreilly automotive is also on that list, along with the auto parts makers and retailers and salon has been pulling back after an impressive run going up to that. I wanted to point out as well we have some news out in the past five minutes or so that the ceo of astrazeneca does plan on staying on that drugmaker. There was some support that he might be departing. Of interest says he is staying put, as adrs have been spiking and the shares are taking a leg lower, by 4. 6 . And a quick check on the banks. Not just today, but the past month, because we saw those stocks pulling back the nasdaq over the past month. Despite the climbs today, the banks have had a pretty big bounce over the past 30 days or so. The index up 2. 3 , jp morgan and citigroup are some of the big gains within that. Of time. Within that amount of time. Julia as we mentioned, stocks are dropping across the financial stuff stocks are taking off across the financial sector. Will does be market sick around and questions about loan growth and credit quality. Analystus now, the bank at far keep. Jason, great to have you on the show. We wanted to run over the numbers for the individual banks. But the banks seem to have started so well going into this that they have managed to beat these order to numbers. Why are investors disappointed here . Is it washington . What is driving this . Sell onuy on a rumor, the news. So you do have a big runoff and the prince, and the prince come out prints and those come out. Sachs has been held back all upr long, and wavy was not as much as expected, and while the short and increase, and increases, the long and credit quality was pristine, cost controlled, and the bank continuing to buy back stocks. Scarlet that return of cash to shareholders to use to be a team for financials. I want to talk about about trading, because that slowdown was well telegraphed to investors. But there is a distinction between good volatility and bad volatility. The bank ceos are talking about how Capital Markets want some kind of volatility driven by events to boost the trading. What kind of events are on the horizon that can provide his opportunities to the Capital Market division . Been very subdued, at historically low levels. If you look at add cap of the year, the fed is taking off the qe, and has the potential to add some volatility to the Interest Rate market. You have read that ongoing, and that could add volatility to the currency markets. You have some more elections to get through over there as well. And diverging monetary policies across the various countries. It more volatility there is, is likely to go higher than lower from here, but it is something to be mindful of on the back half. Julia if i look at the declines across the board, even citi was down 52 . What is going on here . Everyone who has is already moving out in the servicing gain as well . From a refinance perspective, despite the fact that rates are low, we got into a lot of driven by the spring selling season, this has come under pressure amid a more competitive landscape. Mortgage is not what it used to know it is more driven by the purchase side in the refinance side. Julia one trend scarlet one trend we saw was slower loan growth overall. When we see this, what tends to happen . What is the sequence of events . South,it trends turn necessarily . How does this play out . This turned out to be a lagging economic indicator. Ofwth has kind of slowed late, and it will be reflective of that. We do not expect things to loosen standards much, if anything you see tightening in things like commercial real estate and auto, which has contributed to the slowdown, but what you are hearing on the corporate side is that a lot of uncertainty right now in corporate america, whether it is health care reform, tax reform, information reform immigration reform, infrastructure, and if the extent that washington could get clarity around these areas going forward, you will see borrowing come back and corporate looking to expand. Good luck with that. Do you presume that the regional banks that begin reporting in earnest next week will show similar trends in regards to slower loan growth . That will continue to be slower than you would want to see, so yes. I do think that will continue. The bigger banks actually got help out by some credit cards, which regional banks are not as much of a player in, but loan growth is good across the industry. Loan growth will be the same across the industry. Julia and i wanted to pick up on jpmorgan turning down on the Interest Income for the second half of this year. Talk to me a little bit about that across the board, and what we have talked about already with the trading environment here what the read across is to the likes of Morgan Stanley, Goldman Sachs, that are reporting next week . At one points billion at this year, now they are saying 4 billion plus. The 10 year treasury yield is coming down, and it has weighed on banks and margins. Not just the end of the world but slower world, growth there, but still good growth. While trading front, down, revenues in the quarter are better than what the company has gotten into. They were down 14 here and at onewhat point point they were down 15 plus, citigroup was down by 11 , 12 . We talked about volatility earlier, and some of that has picked up and a lot of june. That is better than expected. When the banks report next week, i think trading will be pressured, but a little bit less pressure than some of the companies pointed to during the quarter. I would say the exception would be goldman, which is under a bit more pressure than the rest of them given their exposure to the commodities segment, and that is an area that has had to do our difficulties this quarter. Particular difficulties this quarter. Scarlet coming up later today, we will get more analysis on wells fargos result with the ceo john shrewsbury. He will be joining us at four clock p. M. Eastern time 4 00 p. M. Eastern time. Scarlet we were warned that julia we were warned that trading revenues were going to be down 12 , 13 , and now they are down 6 . Scarlet is in that part of the game, playing conservative . Julia scarlet at what point do we learn . At what point do we learn . Scarlet people are conditioned to think the worst of the banks, or they were after the crisis. And now some of that this some of the frustration around the dysfunction in d. C. Listen to some of the commentary that was given. Recession,e great which is now eight years old, we have been growing at 1. 5 2 in spite the stupidity and political gridlock. One of the most bureaucratic, confusing, litigious societys on the planet. It is almost an embarrassment being an american citizen, traveling around the world and listening to the stupid we have to deal with around this country. Scarlet yes, we had to be about the expletive that he used. He was pretty frank and frustrated as well. Quite illuminating about some of the frustrations that are out there. We know jpmorgan and jamie dimon in particular tends to be pretty colorful on these earnings calls, but he is the man who scarlet scarlet yeah, does not mince words. Julia he said we should not have expected anything to come from washington in the shortterm. But yes, very frustrated. Scarlet and he did mention in theracts contrast to United States, he applauded probusiness policies and places like france, us drilling of argentina, brazil, and ireland. Julia anyway, frustrated man. Ahead of Goldman Sachs earnings, Lloyd Blankfein is creating the cover of the latest issue Bloomberg Businessweek. Now in his 12 year as the banks leader, he is pushing goldmans in new directions and taking through official media to make his own views better understood. Joining us now to discuss is michael moore, who leads the u. S. Climate team for numbered news. Interesting. As we pointed out, one of two ceos, along with jamie dimon, that survived the financial crisis, but the argument here is which direction do you take the bank, and how do you adjust, particularly with concerns about the trading environment . That is the big question for lloyd. He has been there a long time, seen the highest of highs and also the crisis. But the question is do they stick with the strategy they have been doing this whole time . He has been a staunch supporter of waiting out this trading cycle and that things will get better and that goldman will be there to take it vantage of it, but you see another quarter like this one, where trading down across the board for the big banks. It calls into question whether they need to look at different areas they can go in. Julia a bit of praise from the article that i thought was quite interesting, has the thinking at the top on stale . Scarlet goldman relies on a formula that has worked so well for it. Michael, you talk about some of the other things that Goldman Sachs is working on, new initiatives like the Consumer Bank, more lending, resources for asset management, including new etf. Is any of that gaining traction . Michael you are seeing a little bit. The Consumer Bank is so small at ais point that it is bit of around your for goldman. If it takes off, great, but it is not some thing at this point that is medically changing the shape of the bank. Asset management has been a bit more impactful. It has grown quite a bit over the past few years, but in the last 48 quarters, it has not grown to the level they were looking for. Do they need another boost or an or do they need to do something differently there, because that is one area they are smaller in than their rivals, and there is only a much they can grow in Investment Banking and trading. Julia and also asking whether they are taking that sentiment internally. A suggestion from one of the heads of trading, that we need to strengthen these kinds of relationships. One of the other things that struck me was the idea of the bank being in really revocation mode rehabilitation mode. Does that what is that what it feels like internally for the management. Is that about reability and . Michael i think it was for a while, and terms of the management and public image. They are starting to get through mentioned the conference from last weekend. That is an embellishment that some of this is the cycle, but some of it is goldman internally needing to execute better. It is not just that trading has come down, they have lost share to other rivals. They need to recapture that, in addition to getting a better environment. Julia i bet he is hating the fact that this has blown up. Unfortunate comment. You can read the profile of Lloyd Blankfein in the latest edition of Bloomberg Businessweek. We want to get you to bloomberg first word news with Mark Crumpton. Of a adam schiff, the top crowd on the house Intelligence Committee, says new information on donald trump jr. s meeting last summer with a russian lawyer ads another deeply disturbing fact about this secret meeting. Congressman schiff says the shifting explanations about the ofting paint a portrait constant consistent dissembling and deceit. A russian lobbyist now says he was also in attendance. Of donald trump challenge the that he didllenging not receive the information he was promised. The lawyer brought a dossier of documents that detailed what she believed was the flow of illicit funds to the Democratic National committee. President donald trump plans to put veteran lawyer ty cobb in charge of overseeing the washingtons legal and media response to russian meddling in the 2016 campaign. According to people familiar with the decision, he is intended to be the enforcer of discipline, a public spoke Department Justice special counsel robert mueller. An american doctor who specializes in conditions as such is the one affecting charlie guard will travel to britain next week to assess the critically ill baby. 11 month old suffers from a rare genetic disease that has left him braindamaged and unable to breathe unaided. The parents have been fighting to take him to the u. S. For treatment, and after much legal this doctor from Columbia University has decided to go to them to examine the child. Number of italians living below the absolute Poverty Level almost tripled over the past decade as the country went through a doubledip record long recession. Poorumber of absolute reached 4. 7 million last year, up from 1. 7 million in 2006. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im Mark Crumpton, this is bloomberg. Scarlet . Scarlet thank you, mark. We are monitoring shares of sprint, spiking right now after it was reported that the chairman of the company had engaged in conversations with Warren Buffett and john malone and in participating with some kind of deal with sprint. He met with Berkshire Hathaway and liberty separately, and of course this was happening apparently at sun valley, idaho. We will continue to monitor these headlines. Sprint up by better than 2. 5 of the moment. From new york, this is bloomberg. Julia not to washington, Senate Majority leader Mitch Mcconnells health care draft is headed to a further rewrite again. While in paris earlier today, donald trump voiced his support from oconnells work on twitter, tweeting republican senators are working hard to get their failed obamacare replacement approved. I will be at my desk, pen in hand. Is an unfortunate word. Take three. We knew this was destined for a further rewrite yesterday, when we got that quick take statement from john mccain, suggesting it probably needed more work. The bottom line is here is that the moderates are not happy. They cannot justify the cuts to medicaid, among other things back home with voters. I think what we are looking at now is that they are to hard noses, rand paul, saying it does not go far enough in repealing the Affordable Care act, and susan collins, saying these cuts are to tape and she has not seen deeph in the bill to and she has not seen enough in the bill to justify voting for it. And one other republican with a hard know on the motion, this will could die before further debate. Further revisions are a possibility, it is unclear whether mcconnell will try to do that during the amendments process after the bill comes up and republicans vote to move to consider it, or he could just rewrite the bill and change some provisions before bringing it up at the outset. It is not clear that he needs to do that yet. There are several republican senators on the fence, like Shelley Moore capital, lisa some on the hard right to are not convinced yet. Keep an eye on those senators, as they will probably determine whether this goes across the finish line. Julia he added 70 billion dollars on top of the 112 billion to stabilize the insurance market. Do you think he held back some cashier, because he could shelve some of these future plans for deficit reduction and put some extra cash outofpocket here. Do you think that was always the plan . Yes, i think he knows what hes doing here. Yet it not just the 70 billion, but 45 billion as well for opioid treatment, and that will probably help with cap toe portland, was are struggling with that epidemic. The most significant change made would include deregulation that allows Insurance Companies to sell skimpy and cheap plans that do not abide by aca essential benefit requirements. That is a big, big deal, and if the seat be oh cbo finds it will cost more money, that could reduce the amount of money and mcconnells pocket to play around with. I think he has given himself a decent cushion so that at the end of the day, he might have some cash. Julia thank you so much. More on bloomberg markets. From new york, this is bloomberg. Scarlet this is bloomberg, im scarlet fu. Julia im julia chatterley. Scarlet equities at record highs in the s p 500. This is the intraday chart of the s p, dow, and nasdaq, and the latter is the dow with the or lagger lag is the dow with the yellow line. Julia still ahead, well president trumps financial policies hurt the u. S. Longterm . We will discuss. This is bloomberg. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Scarlet from bloomberg World Headquarters in midtown manhattan, this is bloomberg markets. Im scarlet fu. Commodity markets closing in new york, lets start with agriculture. Corn, soybean, and coffee are higher, gaining on forecasts of hot, dry, weather, and coffee on its Third Straight weekly gain on supply concerns. It is also meeting its 100 Day Moving Average as well. Turning to metals, you have gold, silver, and platinum all climbing, gold set for the biggest weekly gain since may. And theil sales and Federal Reserve is probably going to hold off on the next rate increase. Crude is on a weekly gain for 5. 2 . The International Energy agency says demand is climbing faster estimated than previously estimated while citing declining stockpiles. Energy, thisg with Italian Energy Economy Company earlier, i spoke to francisco stood at say, star francisco starace. I think it probably will provide the United States a little bit of delay for a few years, but this is such a big country and such a diversified Energy System that parts of the u. S. Would continue the trajectory they have embarked upon. Parts will wait for a while. What will happen is that you will see a much more diversified u. S. From the energy standpoint that you see today, but the u. S. Will continue to invest more in Renewable Energy than anything else. Julia we are talking about a few years delay in in certain cases. When you are saying is in many ways, whether it is electric cars or the battery improvements we are seeing for storing energy, this is a critical year that could be lost. For these technologies, these are the years. For batteries, the next three years are an inflection point. So those companies that will be there will benefit those will benefit, the companies that wait too much will be left behind. So Renewable Energy versus fossil fuel, it is probably not as critical anymore, because it is something that has been picked up by most parts of the world. Going to if youre invest, you already generally have, and you know your assessment. Yes. Julia we have a headline of nrg energy saying they will be selling off their renewable assets. What do you think when you hear headlines like that . I think it is a choice, and like all choices you have to respect those that make that decision. They have maybe a different view of the world. You may never have done Something Like that, but the world is good because people see things in a different way, and deals often happen because of that. So those that will buy the assets will be happy. They are smarter and monopolizing on an opportunity that should not be missed. Yes. Julia interesting, isnt it . Like i said, the world is full of different views and that makes deals happen. Julia there is a politics angle and that . I think it is the difficulty of understanding refusing thes, and complexity around this and saying i want to be simple and i want to do this. And i i do not think there is more than that. Julia i have heard from members of your company that your investment in the United States are not going to change. You are used to dealing with complex countries in the political environments, particularly. Washington is one example. Does it give you pause for thought . In general . The United States, no. Like i said, from an energy the sumnt, the u. S. Is of many states. We deal with more than 30, and they are very different in many ways. In common, what do you see in the United States . Business that is unique. This is a place where the business is really at its core attention. That is what we like about it. We will keep investing in this country. Think politics has little to do with what happens on the ground. Julia talk about latin america as well, because you have been thinking about this over the past number of years. How much more of this do you see happening in the future . Latin america is a fantastic place. The democracies interesting, the Economic Cycle has been one of the areas where there has been less back to the crisis, it is one part of the world were today, you have no wars, no terrorist threats, so from that standpoint it is quite a unique part of the world where you want to be. And demand for infrastructure, investment in energy is really huge. America, they in have just gone from a totally fossil fueled economy to renewable without [indiscernible] because they took advantage of the improvements that happened in the meantime. Is one part of the world that is benefiting from this transformation in a very interesting way. Julia and proving that it can be done. Basically invest half of our 7 billion in the greece, andears in 36 in renewables. Nowa do you see yourselves more of a sponsor, an operator rather than a sponsor of assets . Yes, we definitely operate time weand most of the own them, but to recently, we have started to sell assets while maintaining the operation of the assets. There is a lot of appetite for that, a lot of Companies Looking for a clearer idea. I think renewables are a great opportunity. Julia and financials. Yes, very compelling. Julia that was francisco we will later on here more about the formal that you racing with the ceo and founder. Withet car racing but electric vehicles. They go just as fast but are a lot more quiet silent, in fact, because they are electric cars. It will be held this weekend in new york city. Julia is it the growling . Scarlet that is the part that gets some people excited. But other people get excited by the fact it will be green and carbon neutral. Julia that is a good point. Scarlet so a few are for the environment, that is a selling point. Huge. Moving on. Julia lets check on the headlines with Mark Crumpton. Take it away. You ladies,upting thank you. President trump said it was a great honor to represent the u. S. At the annual bastille day parade in paris. Mr. Trump said the military parade, featuring american and french troops, was magnificent. And he also graduated congratulated french president , emmanuel macron. They are now in route to the United States, scheduled to land shortly at new art airport. Mitch mcconnells latest health care draft is almost certainly headed to a rewrite again. This in order to appease a handful of republican moderates worried about medicare cuts. The bill has already drawn to mcconnell agiving slim margin to give the 50 votes he needs. The turkish president met among the diplomatic dispute surrounding cutter. Rex, it would tillerson shuttled diplomacy to way to end the dispute. Saudi arabia, the united arab emirates, egypt, and the crane severed relation with qatar and cut air, sea, and land routes accusing qatar of supporting extremist groups. Qatar denies the allegations. Meaningful advances were working women could be rolled back in the eu. After brexit, the eu europe britain will not have to it here to protections for workers. Prime minister theresa may has promised to maintain womens rights. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im Mark Crumpton, this is bloomberg. Scarlet . Coming up, a changing of the guard is coming at the worlds secondbiggest money manager. We will tell you about how tim buckley may change vanguard, next. From new york, this is bloomberg. Is bloomberg markets, im julia chatterley. And im scarlet fu. Lets get a check on some notable movers with julie, some notable resourcing . Some involving sprint, one involving sun valley. Goingteresting meetings on at their between the sprint engaged warrenas buffett and john malone into discussions about some kind of deal with the company. This is according to the wall street journal and dow jones, who found the chairman sat down between separately but with separately with buffett and malone. A fit investing more than 10 billion in a transaction, sprint shares spiking on these headlines, coming out. If you look at the other telecom stocks, we are seeing some activity there as well. Also a spike in tmobile, although it has come down, verizon and at t training a bit higher. Another story has to do with the drug industry. According to bloomberg reporting, astros at us eeo astrazeneca ceo planning to stay at the secondlargest drugmaker for the foreseeable future. This follows a report by an israeli news source that they the form a new ceo in of this ceo, leaving astrazeneca to come to that company. Their shares have a shares shares are nowa down. We have actually seen a spike in those shares with that story coming out for astra seneca. Now up about 4 . A new ceo. Uard names tim buckley will replace bill mcnabb in january. He will have take shoes to fill. Mcnabbs leadership, revenues have trouble. Joining us now is charles stein, who is in washington. Amazing performance from vanguard of the last 10 years, the world has changed. The competition is more fierce in terms of cheap index trackers. There are other options out there. How does he approached the new world . Moreere is a lot competition. You can buy a lot of the products from fidelity, schwab, gettingk, edit is harder for them to differentiate themselves. Historically, they did it with that powerful brand name. When you say the name vanguard, people think lowcost investing, someone i can trust. That has acted as a magnet to pull in a lot of cash. I think the real question is does that continue, or does competition continue to eat away at them . So what scarlet so what does tim buckley do . Does he continue on course or have new initiatives in mind . Newe will have to see the see. One of the new areas they have gotten into a lowcost advice. Instead of going to an advisor and paying 1 , you can do a hybrid rowboat visor with basisrd and pay maybe 30 points. That is growing quickly. They might come up with some new funds, but you do not want to tinker with the formula too much, because it has been remarkably successful. Julia i want to quickly ask, because i was looking at the inflows into vanguard we saw on the first half of this year, 194 billion into vanguard, two thirds more than the black rock, 10 times more than fidelity according to morningstar data. What matters most here . Is a brand, price, or product . It has been brand. Otherwise you cannot explain why people put that money into vanguard. It is a brand that john vogel at 88d 40 years ago, and he is still around telling people about it. There is a trust elements there that is not easy to erode. But again, we live in a transactional world. Used to comparing prices, and we may reach the point where people decide an extra basis point or two, i will go with black rock or schwab. I think that is the big forward. If we go scarlet i noticed in the story you wrote that vanguard has been hiring people. It is looking to put itself in a better position as it competes against his rivals. You mentioned advising, but where else are they looking to deploy these extra resources . Dealing withis customers. On the one hand, it is magnificent to take in all that money come but you have to service those customers when they call up on the phone or come through the internet. You have to answer their questions quickly, and vanguard last year did have some stumbles in that people complained about longer waiting times, so they have had to add 15002000 people really to help serve customers. That is a plus, but it costs money. The question then becomes can they keep lowering costs or are they near the bottom . Scarlet interesting. You can have robo advisors, but nobody likes to get a computer answering their phone call. Scarlet thank you so much for that perspective. It is now time for the Bloomberg Business flash, a look at some of the biggest business tories in the news right now. U. S. Representative david onility has called for a the effects of the pending amazonwhole foods deal. The democrat from rhode island says the 30. 7 dealer 13. 7 billion acquisition is part of a consolidation made in the u. S. That has lowered wages and resulted in gross inequality in the work lace. Workplace. Korscores preparing preparing an indicative bid for jimmy choo, competing with investors from the u. K. And china. The company was put up for sale in april as part of the streamlined plan. That is your business flash update. Coming up, sass in your seat belts. We will be taking a look at the economics of formula e racing with thunder and cheer the electric cars can be at 140 Miles Per Hour and it is coming to new york city this weekend. From new york, this is bloomberg. Julia bring you some breaking news in the past few moments. Reports of a potential investment in Warren Buffett or sprint. We will have the details on that story. Warren buffett considering the 20 billion investment, also potentially talking to Liberty Media sprint also talking to Liberty Media as well, now trading by just shy of 4 higher. For now, we will continue to watch that story. Scarlet . Scarlet lets turn now to the world of car racing, where the engine might become a thing of card arebecause race going electric. I spoke with a founder and ceo of formula e racing before this weeks race. Racecars,re proper driven by proper pilots from championships. They go 140 Miles Per Hour in narrow streets in the city, so that is pretty quick. Scarlet extra drama. Extra drama, but nothing bad. 02 100 and three seconds. About 0100 in three seconds. Scarlet what about the sound . They make enough sound to where it is exciting, but [indiscernible] cars need toula e be changed during the race as well, because of the Battery Power that does not last throughout the race. How does that work . The technology is not there yet. At this speedgo will go for 35, 50 minutes. Halfway through, the driver goes in when the battery is finished on his first car onto the second car. Only 1. 5 years away, and the cars will do the hope that whole race in one go, even a higher performance. We will show how much these batteries have evolved and four years. Scarlet so it will halt in quickly it will involve quickly here. Audi, bmw, they all sponsor teams as well as some indian companies. So why is tesla not involved in any way . We met elon musk about four years ago, and he told me he wanted his people to focus on the road cars. Would they are doing is brilliant, they are pushing the electric car forward incredibly. But they do have the tradition of the brand to have been racing for decades. Audi, they jaguar, have been in the racing world forever and see the value. A new company is maybe not that interested in racing but hopefully we will convince them. Scarlet what do you think it will take for him to get involved . We first need to get him into the race, we tried that. Scarlet he has not seen a race in person yet . Know, but it will be great. But the stakes will grow a lot with the new model t of tesla, so when they become a company that is making half a million to one million cars a year, that is when racing as a concept. Scarlet you have an interesting background. You are active in spanish politics until your early 30s and moved on to business, dabbling in business media, money management, and were described as an ultimate dealmaker. What is the next deal for formula e . It needs to keep growing. It needs to bring more benefactors and, go to new in, go to new cities. But our goal is that all the cars are electric. Maybe we can elevate that and help a little bit, and tesla is doing a lot, other companies are doing a locked, a lot, bringing in electric models. Seen a lot have changed since september 2014, when the first formula e race was held. We have seen full strike in another car makers have cheated on their emissions testing, mobile has announced plans to go electric completely. Of these external factors, which one has been the biggest change to align with what your goal is . Things around the world have gone the direction they were going. Five years ago, the world was not like this. But a few days ago, we are hearing news that france is going to ban the sale of combusting cars in 2040, a huge country like france. Volvo, that is old news, but the same thing is happening with jaguar, audi, apples they are going more into electric. Audi, they are going more into electric. Everything is going electric. Scarlet Moore Bloomberg markets just ahead. From new york, this is bloomberg. Julia it is eight p. M. In london, im julia chatterley. Scarlet welcome to bloomberg markets. Julia were live and bloomberg World Headquarters in new york over the next hour. Here are stories were covering on the bloomberg and around the world. Considering an investment stake in sprint. Especially diluting ishares, fighting on the news. The u. S. Economy giving the fed more reason to go slow. , droppingnged in june unexpectedly for a second month. , loan growth. And one hour from the close of trading, a check with markets. It is the financials. Julie trading on a record on a closing basis as is the dow jones transportation average. 18 below the 20 day average for the s p 500. These new highs not necessarily being confirmed by strong volumes. The financials down. 5 . Technology also strong as weve seen a winning streak. Consumer staples are strong like health care. That weak spot. Bond trading revenue that has been lagging as well. In the case of vols fargo, it has to do with auto loan originations, falling by nearly half. All of that pushing down the big banks that have come out with their earnings today, ahead of the next wave of earnings next week. One of the other things that can be putting pressure on the banks is helping the real estate group, the 10 year. Because of the Economic Data, we have the treasury markets. It yields on the 10 year down by three basis points. That is causing some of the interestrate sensitive activity we are seeing. Stockt and driving that is the inflation. At janet yellen addressed extensively during the two days of congressional testimony this week. The cpi was unchanged in june, missing forecast that would increase by. 1 . At 1. 6 n is running below the fed target of 2 . Joining us now is gina. Whether youre looking at a month over month basis or yearoveryear basis. If you were janet yellen, this was a bad report. This will keep you up at night. ,he is sensing time and again there are much lower than it expected. Is this really transitory . Does this fit with what we got from janet yellen this week . She clearly knew this was coming. I think it is pretty consistent with what we heard this week. Allowed during her second day testimony, she allowed that there might be Something Else going on. There might be Something Else happening here. Potentially Something Else happening here. Economists, investors, and we are looking month over month, more closely these days. Why the shift . In no way are the numbers today the feds goal. They look at the index. Its on the momentum going forward. Janet yellen has written yearoveryear one off the table. You are some wacky things happening here. Because of those effects, you need to look at the more iterative numbers. Julia do they take the rate hike off the table . On whether or not they could manage that hike. The inflation being weak could the dragging on regional sales. Consumer sentiment has come off a little bit. And even in areas with retail were lessy fraudbased than they had been the entire month. There are a couple of reasons in the details that think there may be something more problematic. It is usually problematic in that has been the problem the last couple of months. Thats a great point. Scarlet cell phone bills. Julia very important. What janet yellen alludes to frequently. Thank you, said reporter janice malik. The bloomberg yield earlier today, Jonathan Ferro argued roundtable whether it was transitory or a trend. , it is 1 thista month. The threemonth average might be a little more relevant going forward. A slightly different take on that. A fourth consecutive month. Its hard to make the argument that this isseen just a transitory phenomenon and leading to onetime effects. See you start looking if you look at some of the data. It would be consistently going down. As we look over a summary of the testimony, did you get a sense that she would lose it . I did not get that sense. Andink that chair yellen the majority of the fomc have s amunicated with the market policy plan, a policy normalization track, that they would like to follow. And that involves raising the funds one more time. No question about it. Im struck over the fact that since the recession, we have had this pattern of relatively weak or softer Economic Data during the first part of the year. That has affected bond yields as well. Maybe we are still in that pattern. Going back to chair yellen, she is obviously concerned that she wants to see the rate of inflation move toward 2 . Remember as she said, they cant wait until they get to see 2 before they act. Anticipationng in of somewhat stronger inflation data moving forward. I think that is still there plan. Scarlet Jonathan Ferro with his roundtable on bloomberg yields earlier today. You can hear everything you need to know or want to know about fixed income every friday at 12 noon new york time, 5 p. M. In london on bloomberg real yield. In the meantime, lets get a check of the headlines with Mark Crumpton. Attorney general Jeff Sessions announced today that his Justice Department is seeking a review by the San Franciscobased federal Appeals Court of a ruling by a hawaii federal judge that the Trump Administration did not conform with the supreme courts instructions rolling out a temporary travel ban. Yesterday, the judge in hawaii weakened the band by expanding the list of u. S. Family relationships. That those can use to get into the u. S. Including relatives such as grandparents, grandchildren, uncles, and aunts. Schiff, the top democrat on the has Intelligence Committee says new information on donald trump jr. s meeting last summer adds another deeply disturbing fact about this secret meeting. A russianamerican lobbyist says in attendance. It dont trump jr. Discounted the information he was promised. The shifting explanations paint a picture of deceit. Former president jimmy carter out of the hospital after being treated for dehydration in canada. The 92yearold was volunteering at a habitat for humanity homebuilding project in winnipeg for 90 minutes wednesday or thursday when he appeared to wobble and was taken to the hospital as a precaution. A spokesperson says he was discharged this morning and returned to the building site. Global news powered by 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. Scarlet the shares julia the shares are no longer abide. All the details next from new york. This is bloomberg. Scarlet this is bloomberg markets. Im scarlet fu. Julia im julia chatterley. Time for the Bloomberg Business flash, a look at the business stories in the news right now. Billionaire Warren Buffett and john malone talk about investing in the wireless company. They are considering an infusion of 10 billion to 20 billion. The loan would put additional according to people familiar with the matter. It would dilute the state currently held by softbank. Rupert murdoch may have to wait until next year to find out whether the u. K. Government will allow his 21st century fox to buy the rest of sky. Karen brady does not plan on pushing the deal to parliament ahead of its recess next week. It would not be able to start until september. That is your business flash update. Scarlet lets head to San Francisco on more reaction to the sprint news we just reported and a wrapup of the biggest tech headlines as of late from snap to uber. Technology that covers uber companies, they try to get john malone to them best invest 22 billion. It has not been at the top of the list of his best investments. This is a company losing money. It slips to fourth place in the rankings of u. S. Wireless companies behind tmobile. Verizon, at t, and tmobile ahead of it. It has just not gone well. Hes been looking for a partner, looking for a way to work on sprint and make it a better investment. Tmobile is often mentioned. We see shares up on this news. This is a way of infusing capital into the company, giving it more firepower, and maybe making it a more attractive partner for tmobile. Emily they tried to merge once before as far as regulate once before, and it didnt work out as far as regulators were concerned. We dont think the Trump Administration will be hard on mergers. The verdict is out on at t and time warner. Emily lets talk about snap. The second downgrade in a week. Snap shares not feeling it. And underwriters are downgrading them. The stock is falling to near lows. 1530 when i looked last. So it is well below the 17 ipo price. It has really been punished here. Lots of competition from facebook. They expressed concerns about the monetization that you see taking longer than expected to pan out. Snap has been, ever since the ipo, it has been a real storybook of overvalued companies that once they go public and get in the whitehot light of public scrutiny, not doing so well. Emily Morgan Stanley talked about the ad products that hadnt involved. Facebook, the same moment snap went public, they really stepped up at how aggressive they were being. They have copycat at snapchat features across all platforms whether it is facebook, messenger, instagram. Former ing to a take a look at what he had to say about the prospects of snap. Theyre going to try to figure out these letters on facebook on the outside. Emily very positive about evan spiegel but cautious about competition from facebook. What do you think . Havent had this whole story that we would be the product innovators and we will have to keep updating to stay ahead of facebook and it clearly hasnt sort of reuven true yet. We will need to see a facebook is just a really good copycat and they are not too embarrassed to say it. Their stock price took an even worse beating when they first went public. You come out, you have a lot of shares tied up. Time wevee first seen it. Emily uber backing out of the russian market. It will still have a stake in this company, but the Market Leader in russia, basically the google of russia, essentially, has one. Uber is ready for a profitability story. And the losses in russia compared to china werent as big. It was like 150 Million Dollars over three years compared to 2 billion in china. It did not look like either business was going to turn a profit. The index was way ahead. Ubers 500red to million. Over got more than one third of the company. Uber sees this as an opportunity. And let a local leader run the business. Emily lets talk about the search for the uber ceo. There have been reports, a lot of names. At some of those people werent even in the mix. What do we know . I have been super skeptical of the names thrown out. I think names like Marissa Mayer it doesnt seem like they are truly in the mix. There is a lot in Silicon Valley to talk about the tech names. It is very likely that we look at the airline industry. There are a lot of names being thrown out, but they are going to have to get travis was involved. It will be interesting to see how that works out. You want someone who can deal with regulators. They brought somebody onto the board that has this background in industries outside of Silicon Valley. I do you guys will keep chasing that story for us. Thank you both. We will send it back to you in new york. Scarlet our thanks to emily chang from San Francisco. Julia still ahead, jpmorgan and wells fargo trading lower. Options insight is next. From new york, this is bloomberg. Julia this is bloomberg markets. Im julia chatterley. Scarlet im scarlet fu. Julie joining me as chief options strategist at interactive rochers. Like us, watching the Bank Earnings weve got today. What is your impression so far and what you think it tells us about what we will hear from some of the other banks . I think the takeaways today, that the trading business is not very good. That should not come as a major surprise for anybody paying attention with the lack of volatility. And sort of the Oneway Movement of the markets when they do move. And to a certain extent, the bigger banks have these big couch cushions to keep finding stuff in. To keep thee numbers where they need to. Ignore market tends to the trading numbers to a certain extent, unless it becomes secular. The the fact that they have acted so well. They have a tough road in terms of beating expectations. Themarkets sold off a little b. Julie some of the banks reporting their couch cushions are less large, so to speak. You are looking at Morgan Stanley in particular which doesnt have the consumer business, for example, to sort of fall back on. So do you think that it is really going to be hit by portrayed in . Mr. Sosnick i think Morgan Stanley will be the most susceptible to being hit on the porch reading results for the reasons you just said. Resultse poor trading for the reasons you just said. There arewinners and losers. Could be winners on the other side of the bad trades. Unlikely. But it could be the case. I think the illustration im using is sort of the highlight of if they miss and if they are susceptible to it, the stock could follow little bit. Could fall a little bit. Julie so what is the potential strategy . Mr. Sosnick it could be used as a long position or an outright trade. These options expire next week. The 43. 5. 5 put, so would. It only cost you . 35. We will put the trade together. Its a small amount to pay. If it pays off, how do you profit from that . Higher youve a are using a slightly higher volatility put versus the slightly lower volatility. Were talking about a roughly 30 applied fall which implies a roughly 2 move. Roughly a 2 move. Julie we will see what happens. It thank you for coming in, steve suspect sosnick. Tgif, julia. Julia it is friday. [laughter] still ahead, reporting secondquarter results for. Arlier we get an outlook on the banking environment amid a regulatory standstill in washington. From new york, this is bloomberg. Mark im Mark Crumpton and its time for first word news. President and misses trump have arrived back in the United States. Air force one landed at North Liberty airport. His second trip abroad as president took him also to the g20 summit in germany. He returned to the United States, then went back to france where he helped celebrate the 100th anniversary of the u. S. s entry into world war i. Macronpresident emmanuel taking part in to steal they celebrations. They are hosting the u. S. Womens open. Talked on air force one with installment of saudi arabia who congratulated the president on the u. S. Led coalitions victory over the Islamic State in muscle. The leaders were also said to discuss recent diplomatic resolves in a dispute with qatar. The white house and the tosident emphasized the need cut funding for terrorism and to discredit extremist ideology. Israels government says