Transcripts For BLOOMBERG Whatd You Miss 20170713

Mitch mcconnell released his new Health Care Bill today, trying to gain support by letting insurers sell lowcost policies and reaching for moderates with added aliens to combat added billions to combat opioid abuse. Confrontationsed across the congress, numerous meetings with constituents, and conversations with members, our congress has a dated last months draft with additional provisions to make it stronger. Mark with democrats uniformly opposing the effort, mcconnell leads 50 out of 52 gop votes to prevail. Theresa may has unveiled a landmark law that would remove britain from the european union, aimed at transferring eu laws onto the british statute vote when brexit takes place in march of 2019. It would hand the government two years to alter u. K. Laws through a fasttrack process. Rex tillerson has wrapped up his tour of the persian gulf with little sign of progress and breaking a deadlock between kutcher and four and qatar and four neighbors isolating it. Withtary tillerson met qatars leaders prior to heading back to the United States. 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. Julia live from bloombergs headquarters in new york. Joe we are 30 minutes from the close of trading in the u. S. Caps offnet yellen gains by noting that 3 growth will be tough. Joe the question is, whatd you miss . Scarlet senator david perdue of georgia weighs in on how the republican Health Care Bill stacks up. Dave two of Janet Yellens testimony to congress, but she does not clarify inflation. And we head back to sun valley, idaho. Billionaire has a sitdown with david gura in just moments. Julia lets take a look at where the major averages stand as we head towards the close. Abigail is standing by. We have the dow, the s p 500, and the nasdaq all modestly higher. The dow and s p 500 are on pace for the record closes. The emerging market index up strongly once again, up more than 1 on janet yellen sharing take a look at u. S. Steel. This is exciting, shares spiking , this afterout 5 President Trump said he is considering steel tariffs and quotas. This really is not news. I just spoke to Andrew Cosgrove of bloomberg intelligence. He says this is ongoing. But with steel down this year, investors are looking for any sort of catalyst, and this seems to be is today. We did see a new gop version of the healthcare bill, and we have a bit of a mixed reaction. 5 . Unity health down about those Companies Stand to lose the most if obamacare is repealed, but we have a mixed reaction with managedcare companies that do have a good medicaid business. Another oneg to be that will come down to the wire, so we actually know what is going on, because stocks are giving a mixed picture. Back for now, lets get to the sun valley conference in idaho, where the biggest names in tech, media, and business have gathered to discuss deals. David gura is standing by for an interview with the ceo of the cargo the break. David, take it away. David great to have you on the sidelines. Let me ask you about the prospects for growth. You have a large footprint throughout latin america. Five years from now, what is the Company Going to look like and where are you going to be . Will continue to be in latin america, and i think we will be bigger than today. We have a leading position in every country. We have basically succeeded that we needed to complete to have an entire ecommerce ecosystem payments, logistics. Obviously a large market place with lots of inventory, great prices, and a lot of Security Trust on safety. Our marketplace is growing very rapidly. We have been accelerating or growth in the last six consecutive quarters. Last quarter, revenues were up 80 , so we expect to continue growing rapidly. As you compound this growth in become moremericans liquid, and it is a much better experience for our buyers and our sellers. Lets talk about your payment system. How big a role is that going to play in your growth . A very large role. It is grown faster than our marketplace business, and we have several areas where we are growing rapidly. One of them is credits. That is interesting because it is very synergistic with our marketplace. We see all this information from our sellers. We are able to land them money when other traditional financial sectors may be are not attending these sellers, because maybe they are too small for them. But we are lending to them because we have statistics on how they are doing in our marketplace. It is safe for us to do it. Theywhat we see, the more get financing from us, the more they sell on our marketplace, and the more loyal they are. The same thing happens with our buyers. Many in latin america do not have credit cards, so we are starting to provide financing for the buyers, as well. We have also started to issue credit cards, growing rapidly, peertopeer payments, the. Igital wallets they are starting to be very useful for people in latin america. They are able to pay for services, pay each other. We see this growing rapidly. David there is opportunity in brazil right now. Rick and mortar retailers are up for sale. Is that something you would be interested in . Are getting into bricks and mortar on the logistics part of the business. We believe the more we can control fulfillment and much is fixed, the better experience our buyers will have. Having asee ourselves Retail Operation to sell directly to consumers, and we dont see ourselves buying inventory and selling to the consumers ourselves. We are in marketplace, and we help retailers sell on our marketplace. We are the largest seller in brazil right now. We have most of the larger retailers in brazil selling on our platform, and we like to help them and do not want to compete with them. David how big of an issue is uniformity of service . That is you can get something from chile delivered to brazil. Probably easier said than done. How do you make that uniform . It is difficult now. The more we get involved, the easier it is going to be. Right now, we mostly rely on thirdparty companies, so depending on the quality of the providers we find, the quality of the service we can provide our buyers. David when you look over your shoulder at who may be trying to compete with you, who do you see . There are attempts to analogize you to amazon or alibaba. There seems to be a few large players, amazon in the u. S. And europe, alibaba in china, southeast asia. We are in latin america. These are solid players right now, and everyone will probably get it to other territories. We will continue to focus in latin america. David do you think about differentiation in terms of competition . Do you weigh in expansion of your core business in that way . Typically when we acquire a company, we are looking for a vertical, where someone has a particular technology or liquidity that we might not have, or a team that we might like a lot. Those are the types of acquisitions we have taken in the past. Jurisdictional problems how hard is it for you to operate in as many countries as you do . We operate mostly locally, so our marketplaces are not so focused on crossborder trade. Mostly on buyers and sellers within a country. Obviously we need to comply with. Egulations for doing payments we need to connect our payment mechanisms to the local payment solutions. It is hard, it is cumbersome. It also builds barriers to entry. We have done it already, so it is harder for others to come and do it. Once you have done it, you just operate. You for your ask perspective on retail in latin america. There is a lot of concern about of health or vitality retailers. How is the health of retail in latin america . It is on a country by country basis, but our largest operation is in brazil. Retail there has been struggling. Migratingcommerce is towards digital commerce. Thats why we are finding the largest retailers in brazil selling on our platform. They know that is where the action is happening. I think retailers are trying to figure out their digital strategies, and we want to help them in that process. David thank you. Julie, back to you. David gura in sun valley, idaho. Up, we will get reaction to the republican Health Care Bill and what may have been the final testimony to congress from a senator from georgia. Julia scarlet a busy day in washington as a new Health Care Bill is released. Janet yellen what may be her final report to congress. Kevin cirilli is on capitol hill with republican senator david perdue of georgia. D kevin we are here with senator david perdue. You saw the new Health Care Bill. Do you like it . Involve. Ontinues to i am hopeful we will get motion to proceed next week. We will get the cbo scores hopefully monday, and move on to this bill next week. This roomask you for for error. We have seen comments from senator rand paul saying he is not on board. Perfection is difficult to achieve, and thats why we have been working so hard. We have a crisis on our hands. Obamacare is collapsing after six or seven years. Information the senator from montana has been asking for for months. The latest information they can give us his august 2014. The irs find 8 Million People in this country because they could not sign up for insurance under obamacare. 85 of those 8 Million People make less than 50,000, and half make less than 25,000. Of thethere are portions majority leaders bill that would keep some of the taxes from the Affordable Care act. Does that frustrate you . Senator purdue of course. What weve got to do is fix the problem that is out there. Weve got to make sure that people continue to get access. There are 28 Million People today after the Affordable Care act to still do not have access to insurance. 28 million. Premiums are up over 105 nationwide. In my state, they are up 40 . One of the big fallacies of obamacare is it would kill medicaid over the longterm. There is no way it can be sustained over the longterm. Kevin carter portions of the bill that say this is not enough . You talk to senator kasich from ohio who says that the amount for opioid addiction in this bill is a drop in the ocean in terms of actually combating the problem. Does that frustrate you . Sen. Perdue there is never enough that some people want. Billion fromt 23 the federal government just for the medicaid expansion. Ohio alone was number two at 4 billion. Of course we would all like more, but we cant afford that. We are trying to do the best we can to make sure we sustain the market, stabilize it, give people access, and get after the affordability. Kevin janet yellen testified before the Senate Banking community. She talked about opioid addiction being a lagging role on the economy. What did you think of her testimony . Sen. Perdue number one, shoot knowledges the economy wants to turn. She acknowledges the economy wants to turn. But there are question marks. They want to bring the balance of the fed down significantly over the next year or two. If you dont do things with doddfrank, the free capital of the banking system, and you dont give confidence to the business community, you could be in a real crisis in the next year or two. Kevin the president has a decision to make to keep whether to keep janet yellen heading the Federal Reserve. Would you like to see her stay . Sen. Perdue i would like more information, the right now i am concerned that there is not a Balance Sheet plan longterm. We have almost 20 billion in four different Central Banks. They are the largest centralbank Balance Sheets in history. Now we have one of those talking about unilaterally reducing the size of the Balance Sheet. If everybody did it at the same time, imagine what that would do to the liquidity of the globe. Kevin do you think there has been some talk that gary cohn could be the first and to lead the Federal Reserve . Do you think he would do a good job . To would you like to see . Sen. Perdue we are way ahead of ourselves. Shes still got another two years, i think. Ive heard a couple names mentioned. Certainly cohn would be extremely qualified. I want someone who understands the full breadth of global finance. Kevin the Congressional Budget Office scoring the budget of the administration, what do you make of that . Sen. Perdue i am frustrated with our this is congresss Congressional Budget Office. Peoplessed the number of who were supposed to sign up for obamacare by 12 Million People. This 20 million number they have right now of people losing their insurance is totally incorrect. Weve got to tighten that whole thing. They are telling us it is going to get eight weeks for some of the models done that we need done right now. I come from the real world where it does not take that long. Kevin senator perdue, the man caught in all the action today with senator janet with the fed chair janet yellen as well as health care. Scarlet Kevin Cirilli on capitol hill. Julia time for the Bloomberg Business bash. One day after defending their planned merger, daily sports fantasy companies draftings and can dual are calling it draft fanduel are calling it quits. The breakup is said to the mutual. ceo said that the threat of the legal battle was a factor. A turnaround could be on the cards for target. Shares were up as much as 7 today after announcing sales would likely increase this quarter, reversing an earlier forecast. Target also expects earnings to be better than previously predicted. Thats your Bloomberg Business flash. Scarlet next, we take a deep dive into the bloomberg. If you have a bloomberg terminal, you will want to catch it tv. Charts, graphics, all of this so you can interact with us directly. Just had to tv on your bloomberg terminal. Scarlet they buy signal for tech stocks. Is forg of equity rally real, because the dow industrial, the blue line, and the dow industrial average, the white line, have made waves, the first time back in march. That is a bullish sign because the thinking is moves in the companys that make the stuff we buy should be confirmed in the companies that move these products, the transportation companies, and vice versa. When they move higher, that is a bullish time for equities and the overall economy. A lot of people talking about stocks being overstretched at the current valuation. That all depends on earnings. Julia is that the sound of a bubble popping . Not yet. I am talking about the everything bubble of 2017. It could be severed currencies, Goldman Sachs cybercurrencies, Goldman Sachs, who knows. When we talk about the everything bubble, though, Michael Reagan of bloomberg says what he sees accompanying it is an increase in Household Net Worth to disposable income. In the 2008, 2007 region, that was the burst of the housing bubble. Matter, theographic white line, this is the median age, and what it is showing you is that people do get richer. Net worth does increase with age. We are not making a judgment call up in the likeness of bubbles popping, but you have to median agethat when is rising. That fits the chart. Tech. Ets talk about im pretty impressed by how quickly tech has bounced back after getting slammed over the last couple of weeks, but there is still some anxiety. The blue line looks at the premium people are paying for Downside Protection versus upside protection, still close to its highest levels in a while. Even with a comeback of tack, some of these stocks going back to new highs are still very close to it. Not out of the woods yet. Even so, you have been down touching a record high once again, up by 33 points. Julia the dow closing at a new record. Im julia chatterley. Scarlet im scarlet fu. Weisenthal. Joe we want to welcome you to our closing bell coverage. We begin with our market minutes, the dow jones closing at a record high. As we mentioned earlier with dow transports also hovering near those highs, that is a good sign for equities. The two indexes confirming each other, showing that recent gains are sustainable. You can see the s p ending higher by almost five points,. Nd nasdaq climbing 2 10 of 1 when you look at the breakdown of equities and a lot of this was on the heels of Janet Yellens day to testimony, where she stuck to her message, dovish, and no real rush to raise Interest Rates area raise Interest Rates. The big laggards are telecom of 1 , andby 6 10 that is after bank of America Merrill lynch downgraded at t to neutral. That is one drag on the major indexes. In terms of individual movers, neil gorsuch, the steelmaker nucor, the steelmaker, finishing at a high since early may. Jumping after President Trump saying he is considering both quotas and tariffs on steel imports. It said sales would likely increase this quarter, so that increases in earlier forecast for decline. Tiffany coming up with a plan to it, asesel, the head of its next ceo. Delta off while most a dollar, the worst since may 30. Ahead at what is coming tomorrow, you can see the banks that gained, all three of them will be reporting earnings tomorrow before the bell. We will be breaking out for you in daybreak america. Joe as the Government Bond market yields higher today, note that yields dropped yesterday when a gallon testimony came out and said that they were still concerned about inflation, yellen talking as yesterday less yesterday about asset prices, more about the lack of inflation. Nothing too new from yellen today. This was her second day and the preparer remarks were the same. Julia teeny currencies. The dollar bouncing off a 10 month low. Swedish inflation rising faster than expected. Also looking at aussie dollar. The highest since march 21st. Stock related buying their. Lets also have a look at what is going on in the world. ,orea leading the gains in asia a twoweek high. India quite interesting as well there relations surprising to the downside. 1. 5 year on year in june. It is incredible to see a that low, convincing the market they will cut rates on august 2. That is putting pressure on india. Joe on commodities, oil rising a bit again, above 46 a barrel. Gold not really doing much, selling off a bit, consistent with that treasury selloff safe haven pulling back a little bit on the second day of yellen testimony. I wanted to mention soybeans. Yesterday the agriculture self commodity complex selling off after the u. S. Fewer usda report showing a total acreage of some of these grains was higher than expected. That selloff continuing. Soybeans down 4. 5 . Also in ugly day for corn. Some of those followon moves from the usda. Scarlet whatd you miss . Chair janet yellen raised uncertainty on inflation, but she said she expects the economy to grow, saying expansions do not die of old age. Joe our next guest does not see a hike in september, but possibly want in december, and only if inflation picks up. Joining us is an pimco. An advisor for pimco. We just wrapped up two days of Janet Yellens testimony. What is the biggest thing you learned from her appearance on capitol hill . Guest i did not learn a lot of things from yellens testimony, so i think she was steady as she goes. I think she made it clear what the feds game plan is, repeating what was said earlier. The game plan is to focus on Balance Sheet runoff, quite likely that they will announce this in september for an october start. The other message was not really surprising. They are still looking to hike rates one more time, but it will inflation, andon i think there is a low inflation problem for the feds. Yellen said there were probably someone offs in the data that explained part of the reason for a turn down in inflation, but they are not sure. I think whether or not we get a hike in december really depends on whether the inflation data go. On our forecast, inflation will be pretty flat between now and year end. If thats the case, they are not going to hike, but if they are right that this is temporary and inflation picks up again, they will probably put another hike in place. Joe you mentioned that your forecast for inflation is it will stay fairly muted. Why hasnt picked up the way so many economists might have otherwise expected . Guest that is tough to say. This does not explain the last two or three months, but generally we have global pressures weighing down on inflation. Also technology is playing an Important Role in holding down inflation and reducing the Bargaining Power of labor, which explains why wage growth has not really picked up much. What explains the last three months, the turnaround in inflation, core inflation creeping lower, that is more difficult to say. Some of it is due to one offs, but only some of it. The decline was pretty broadbased. It could be that the bls has started to implement some methodological changes and become better at measuring the quality improvements. It is hard to say. That is why the fed is on the fence and wants to see out the numbers pan out. Scarlet obviously this is a huge debate among economists, over what is causing this huge deflation. In the debates at pimco, what about the argument that low get lowertes inflation and higher nominal rates generate more inflation . That is the debate we have had for quite some time. I think there is value to the argument that if you keep rates low for a long time, it will have an impact on Inflation Expectations and dragged them lower. I think this is one of the reasons why Central Banks are now keener to remove some stimulus. But i think it is not the main explanation why Central Banks all of a in what i would call all of a sudden engaging in what i would call spontaneous hawkish hurting. Julia i love that phrase. Spontaneous hawkish herding, which you said was rational as well. Why . I dont think it is coordinated. There is all this talk about a central pact. I was not central, and i did not see a packed being made. I think it is rational for Central Banks to move at the same time without being coordinated, simply because each fears currency appreciation more than anything, given inflation is so low. If other banks are talking hawkish lee, then it makes sense that you join in because you will not be punished by excessive currency appreciation. I think this explains the spontaneous hawkish herding. But there is a risk attached to this kind of policy and talk, and we have seen this in the last several weeks. There is a risk that markets overreact and the message has to be calibrated very carefully. Draghi tribe that in central, but the markets would not listen. Joe i have heard people characterize that to the tour de france. Makes more sense for everyone to ride together. The market punishes the bike that tries to go out in front. Youa the problem is, if are all connected, you all fall over together. Centrals assume that banks will get it right, because if they are overly hawkish at this week and we see a repricing of asset prices, Central Banks will turn back and say, this is not what we met. Can we assume that Central Banks will calibrate this appropriately, particularly if they are doing it together . It is tricky to do. Clearlyrocky draghi tried it in centra. His speech was balanced. He said there are some reasons to remove accommodations, but he also said we have to be very gradual and prudent. The firsts only heard part. Remember the temper tantrum in ben bernanke uttered some innocent words which had actually been in the fed statement before, and still u. S. Treasury yields rose by 100 basis ands or so area basis points or so. I think what draghi fears is that we will see a repeat of the temper tantrum. Thats why i think in his jackson hole speech at the end of august, i think he will try again to send a clear message that they will be gradual, the they that they will be patient, but the time will come soon to remove accommodation. I am not sure the markets will take this smoothly. We will be talking more about your business as well, and the possibility of a slowdown, recession coming in the next several years, and how you adjust your folio for that. More to come. This is bloomberg. Mark senator john mccain says the revised Health Care Bill today, does not include the measures i have advocated for, and he intends to file amendments raising with concerns raised by arizona. Are not able to reach a consensus, the senate should return to regular order, hold hearings, and receive input from leaders of both parties, and introduce a bill that provides americans access to affordable and Quality Health care. The latest changes are geared toward increasing access to barebones private insurance. There is also an additional 45 billion to help states confronting the opioid epidemic. Senator Mitch Mcconnell with deep in place medicaid cuts which moderates have objected to for it objected to. No moderates are supporting the plan. The city Judiciary Community plans to vote on the nomination for fbi director next week. Democrats have expressed support, but it is not clear if they would delay that vote. Rate would replace former fbi fired i james comey, President Trump. At a hearing yesterday, ray promised to never let politics interfere with the bureaus mission. Sessions is calling it the Largest Health care fraud takedown operation in american history. Prosecutors are charging more them 400 people, including six michigan doctors and a florida rehab facility, in connection with Health Care Fraud scams that totaled 1. 3 billion. Those charges include more than 120 people accused of prescribing and distributing opioids and other narcotics. Turkey has agreed to pay 2. 5 billion to acquire russias most advanced missiledefense system. It is an aboutface from the nato military alliance that has angered turkey from the west for more than angered turkey from the west for more than six decades. Redwill allow ancho turkey from the west for more than six decades. News 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Bill mcnabb is stepping down to be replaced by tim buckley, a veteran of the firm. He will be stepping down at the end of the year. Tim buckley is investment chief ,urrently and is also a veteran but has been ceo since 2008 and will remain as the chairman. Joe one key thing about mcnabb s tenure at vanguard, the size tripled. Vanguard is eating the entire industry. It has dominated the world of passive investing, so the moves have ramifications everywhere. Scarlet are etf specialist says that vanguard is the walmart of the etf world. Lets go from passive to active. Pimcos Global Economic advisor is still with us. Pimco is gradually derisking portfolios because of the elevated risk of recession. When we talk about recession, you are looking at it as three to five years out. Tell us how you are positioning for that. Joachim we are not looking for a recession in the year term in the near term. The nearterm recession risks are very low. There are no major imbalances in the u. S. Economy. The fed is still cautious. It is really more about risks over longerterm horizon, the next three to five years. They are i think a lot can still go wrong. I think a lot can still go wrong. China is likely to decelerate leveraging. The eurozone is not safe, despite the recent election results. There is still high political risk. A lot can go wrong, and thats why we think that gradually, investors should start to. Repare for the next recession we dont know when it will come, but if it comes, it will likely again be accompanied i am bear and credits. Ities we have been gradually derisking overtime. We have been moving into the safer parts of the critic spectrum. I think it makes sense to have duration in the form of safe Government Bonds in otherwise risky or folios, even though yields risky portfolios, even though yields are low. And also makes sense to keep some powder dry. This all speaks to the value of active asset management. Joe i want to go further with the specifics of the portfolio moves. One of the things that characterizes this market is very little is cheap, and not only have equities been an incredible market, but so has fixed income. Spreads are low. Duration has been an extraordinary bull market for a long time. Do you see pockets of cheapness, or is it just you want to be more weighted toward that end . You say, it is difficult to find absolute value in any asset class, but i think there is still a lot of relative value, and this is what we are focusing on. Relative value opportunities within and across asset classes. To give you a couple of examples in the credit space, we like assetbacked securities like nonagency mortgages in the u. S. , so that would be one example. Also within corporate credit, we prefer consumer related credits. If you look in the emerging market space, we still like a basket of highyielding emergingmarket currencies, and we like some of the local bond markets like brazil, for example. Again, it is difficult to find absolute value, so it is really bottomup micro opportunities that we are pursuing. In your previous answer, you were flying the flag for active portfolio management. Do you see the next two to four as anan offer opportunity for active managers, bonds more passive strategies . Doubt that you will see a big move back into active in the equities space, where i think there are a lot of good arguments why passive next more sense, but in the fixed income space, which is a different market with noneconomic players, a lot more different bond issues , there is a much stronger case for active management in the fixed income space, and especially if we are moving into an environment where Central Banks are removing accommodation, which is likely disruptions in markets, then i think there is a lot of room for active management in the fixed income space. Scarlet can close global like pimcos local Economic Advisor joining us from california. Republicans cant seem to get a break on the Health Care Bill. Mitch mcconnells bill lacks the votes to advance. We discussed the latest, next. Scarlet julia Senate Republican leaders released a revised Health Care Plan. ; released it senator mccain released a statement today. He says, i intend to file amendments that would address by leadersised across our state about the bills impact on arizonas medicaid system. Joe joining us from washington is kevin whitelaw. How many votes down do we know the republicans are . Kevin we know there are two republicans who say they will vote no on a procedural motion that Republican Leaders want to hold next week, which means they cannot lose anymore. If they lose a single republican, this gets stalled as well. There are still several withholding judgment, waiting to see what the cbo says next week, and they are still reading the bill, but some of them are going to be tough ticket to yes. Joe specifically, who are the republicans who are nos right now . Kevin we have rand paul from kentucky and Suzanne Collins from maine. Endsare on the opposite for opposite reasons, but we are watching a number of other moderate senators and a couple can service with the potential a couple conservatives with the potential to be wildcards. Scarlet julia, you were talking about john mccains statement. I cant tell if that means yes or no. Julia i feel like it is a soft know. Kevin, weve got a bit of time before the canceled before the recess effectively kicks in. Of timehink that amount and negotiating is going to be enough, when you look at what of the three are saying what they are still not happy with . Do you think mcconnell and somehow tile those things together . I guess what im asking, are we closer as a result of this edit . Kevin we are marginally closer, in that we had several republicans who said they were going to vote no on even the who have nowtion said they will go ahead and support that, even if they are not ready to support the underlying measure. It certainly does not get you there yet. Some of the objections are substantial and not easily overcome. Its not the kind of thing where you throw money here and there and everyone goes away happy. You were talking about changes to the Health Care System at a potentially very enduring and significant for states. You are looking at a lot less money going into the system overtime. For states with governors who are looking at this carefully, they are looking at potentially losing billions of dollars for their medicaid programs, compared to the current law, saying this does not work out well. Some objections will be hard to overcome. Joe quickly, what specifically does this bill offered the moderates, particularly regarding medicaid, that the old bill did not . Kevin frankly, this bill does not do much on medicaid. There are a couple of provisions, but thats not all it is doing. There is 7 billion or so and to ensure the exchanges a little bit more than before. There are one or two other nuggets for moderates. E think it gives more friendly, it gives more to conservatives and moderates. It you have senators like what im seeing, and if this stays, senators like ted cruz saying, i like what im seeing it, and if this stays, im ready to vote on it. Moderates are worried it is disruptive to the insurance market. Julia next, the big banks reporting earnings tomorrow. We will be previewing from new york. These days families want to be connected 24 7. Thats why at comcast were continuing to make our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Mark i Mark Crumpton in time for first word news. Steve scalise who was seriously wounded in last months shooting at the congressional baseball practice in virginia, today, underwent more surgery. The hospital said the louisiana congressman is in fair condition that needs careful monitoring. Senate Republican Leaders released a revised Health Care Plan that will provide an added 70 billion to stabilize insurance exchanges over a decade in an effort to win over gop holdouts. The change comes on top of the 112 million in an earlier version by Mitch Mcconnell that hopes it will provide prospects for the embattled obama care repeal effort stalled about two weeks ago. Chuck schumer was not impressed. Schumer we have seen the revised bill and it appears that little has changed. Seen thet having latest plan, half a dozen republican and Democratic Senators have discussed alternatives, a bipartisan approach that would infuriate conservatives and would probably be a hard sell in the house. Their own plan to got obama care. The budget would not balance within 10 years contrary to the white houses claim according to a report by the nonpartisan Congressional Budget Office. Deficitimate the annual in 2027 would be 720 billion under mr. Trumps plan. Said the proposal will result in a 16 billion surplus that year. Still, the cbs is the trump budget would reduce reduce the deficit well below current projections. The Trump Administration denied a request for major disaster declarations. It would have helped cover part of the estimated 38 million for Police Officers handling protests of the Dakota Access pipeline. Moving oil from north dakota to a Shipping Point in illinois last month. Chinas jailed Nobel Peace Prize winner has died from multiple organ failure related to cancer. The 61yearold author and former University Lecturer was transferred from prison to a hospital last month after his conditioned worsened. He called for direct elections and freedom to assemble. In a statement, Rex Tillerson expressed condolences and called on the Chinese Government to release someone under house arrest and allow her to leave china. News 24 hours a day and powered by 2700 journalists and in over 120 countries. Im Mark Crumpton. This is bloomberg. A recap ofts get todays market action. We saw banks leading the advance in the s p 500 that closed up by. 2 . The dow closing a record high by 21 points. The laggards in todays trading for Telecom Stock after bank of downgraded at t and the nasdaq finishing up by 13 points. Another record high for dow industrials. Joe what did you miss . Sorry. [laughter] just in case you missed tomorrow, stocks jpmorgan, wells fargo, and more get a sense of what to expect. Lets bring in the u. S. Finance team leader. Bloomberg intelligence head of Global Financial sector. Start with you. Plenty of these banks have warned about the trading business in this quarter. Who should we be focusing on most here . To your point, the banks have lowered expectations. The one to watch will be Goldman Sachs because the company came in with weaker than expected results last quarter. There are real reasons why that happened. , and they clientbase had a hiccup in the one quarter. They can sort of recover from that. People will feel better. To getestors will start worried about the run rate for that business. Sort of guided down 15 ,. L trading 10 to goldman is expected to be down 20 to 25 . Watching onmpanies the outside would be morgan stanley. They downsized over a year ago but theyve been able to beat. Those are from the u. S. Side. I think Deutsche Bank will be the one to watch. Theyve had it restructuring on some underperformance there. Investors will be looking for them to recover, including barclays that had a notable miss the last quarter. The comparison between the u. S. And europe, we have a chart to illustrate the performance in these businesses. . Hat about expectations there is the growth and the slowing that will certainly be in focus as well. The Net Interest Margin has been the big bull case for u. S. Banks and the fed has delivered in terms of delivering on fed interests to rate hikes. That is great for banks. The increasing worry is the yield curve which did flatten significantly throughout the quarter. We have seen the reverse of it. The question is really the sustainability because the yield curve does take a while to work its way through the books. Banks, including jpmorgan that report tomorrow, and citigroup says it is the shortterm rates that are more important in the. Ear term investors will be asking about the yield curve. What does it mean for futures earnings . The other part of it is loan growth. That Interest Income equals margin times loan growth. Play. Form might come into that is what investors will be looking at. Those of the specific items on the agenda. It when you look at banks overall, what is the narrative driving them . There is a lot of questions about credit quality. But that has been resolved. Growth butowing loan by most accounts, the economy is doing well enough. What is the narrative the ceo wants to be telling . To be pushing . What will be the pushback from investors . They want to tell a story of stability. You mentioned credit quality has improved and the economy has improved. Banks have talked about returning a lot of capital to shareholders and they got the goahead from the fed last month to do so. If they can show stability of earnings and maybe some momentum behind the fed rate hikes, it can really change the story for them. You referenced the stress test their. What else from a regulatory standpoint are they really keen on in terms of what they want to see happen to unlock more products . Each bank is a little different with what they want on the deregulation front. Like tor banks would see some tweaking of the volcker rule to make it a little more clear what is able to be done. Think they want clarity on the timeline of the deregulation. At the beginning of the year, people were more optimistic. There are some doubts that anything would even get done this year. Some better visibility on the timeline might help. Management has been a huge theme. What has been the hiring trend over at the big banks . They are no longer firing and hiring and huge waves like they once were. But what part of the business is attracting talent . I think you have seen a lot of the cyclical moves happen. Trading has been down. I think it is more of a secular move. Some areas are getting automated. You see that on the retail side, the liquid products. You have a lot of hiring on the tech front. You also have to write that code. Compliance hiring which was strong for a few years has kind of leveled out. It kind of depends on what area you are in. Scarlet finance team leader for Bloomberg News and allison williams, head of Global Financial sector. Of course, it that jpmorgan reports earnings at 7 a. M. And followed by citigroup and wells fargo at 8 00. We will hear from legendary Value Investor on what it is going to take to get a tax or form deal in washington. From new york, this is bloomberg. Scarlet what did you miss . Republican lawmakers were reaching an agreement on health care and investors were looking ahead to tax reform. Cio of valley portfolio spoke with the bloomberg Surveillance Team about what it would take to get a tax deal done. Within the framework of reforming the tax years later, you need mcconnell and schumer to have a beer together. Youve got to reach over and say, what good for this country . And more importantly, how do we get people more money and give them an earned income credit. That is what the dynamic should be. Reform, the 1. 3 billion and how to get the eu. We will solve corporate taxes on a territorial basis, not a global basis. Drop the corporate rate down, make it competitive. Lets move on. When donald trump was in school realized, he probably that 200 50 years ago, lafayette help the United States and a little skirmish they had. The u. S. Economic surprise index, starting to rise again. Our expectations as low as they will go in terms of this president ial period . I have held up doing things. , come july 4, i said it is over. I have to move on. I cant wait for them to act in washington. Im not answering your question, but try another one. Anything willk come out of washington over the remaining period . Will it help the u. S. Economy . And does it matter either way . The Global Economy guy is 80 trillion next year. Europe is 20 in dollars. China and japan are 22 . The u. S. Has a problem. We have 20 trillion in debt. In terms of the economic dynamics and we have a trading deficit. So you have a lot of moving parts. We have 20 trillion in debt. The American Consumer jobs are rising. Confidence is good. And you have changes when you look at retail sales. What is going on with technology . What henry ford did 100 years ago is happening now with bezos and the framework of compressing distribution. Theres always a lot of change. And so we have a margin of safety in the market. 250,e Interest Rates are and if they go to three, we would have a challenge. Scarlet chief Investment Officer of valley portfolios. A look at some of the biggest business stories in the news right now. The ceo will sit down at the end of the year. Take0 year veteran will the secondbiggest money manager. He became ceo in 2008 and will remain with the company as chairman. Is said to gain 30 in the first half of the year. According to people familiar with the matter, it runs high return since bucharest announced plans in late 2015 to keep give back client money. Power producer warned of significant job cuts as it looks to overhaul the business under pressure. The ceo said todays announcement will affect every businesses function at the company. The toprated shows that the nominations for the emmy awards this year. And Satellite Network scored 110 nominations. Netflix is closing in. The streaming network had its nearly double from last year. Host theolbert will awards show airing live on september 17. That is your business flash update. Coming up next, we take a look at the tech scene in china. From new york, this is bloomberg. Chinas tech startup scene is young and booming but they have had little success accessing it. Our success knows about the challenges and opportunities. Our guest was previously the cofounder of lightspeed china partners. Great to see you. Thanks for visiting us. And anytalk about china kind of investments there, i think about ping on this mission to curb financial risk. What is it doing to the chinese tech startup scene . Speechou listen to his at davos, it is clear the future of china in many ways relies on innovation, technology, and starting new businesses. I think the Chinese Government is committed to getting there. You reforming the financial industry, providing an environment for Venture Capital. For young people to really create new businesses. The think the environment is very positive. Scarlet notwithstanding the rhetoric. On the ground floor, the energy level is very high. Arent quiteple into taking risk. I think theres room to wiggle for new ideas and new technologies. It feels like a very entrepreneurial culture in china. His Foreign Investment as welcome as chinese Venture Capital money . And what do you think they see the value of having sovereign money know is a point where, you , if you look at the last 10 years, Venture Capital has been around 10 years versus 40 years in the u. S. Invention. Eign funds, in 10 years, there is a lot of learning how to do startups. So it is really a hybrid model. For certain sectors where youre investing. There are sectors were the u. S. Dollar is more favorable. It is more scarlet strategic. Yes. And there is a lot more strategic money. In the area of technology investing, different than the u. S. . What do restrictions on chinese internet due to the development of this Startup Community . It shield the local player from the international player. Theres global competition which makes our job so much easier because we can focus on the domestic market in many ways. Julia the concept hit china super quickly. It feels like chinese startups are quick to copy and replicate . Learn from not only the culture, but the speed with which chinese startups adapt, learn, copy. They end up doing it better. What can we learn . Culturally, everyone is an entrepreneur. Creating wealth is great. I think what is interesting is theres quite a bit of innovation on china domestically and the ideas are very regional. Get there first. I think five years from now, there might be stronger conversations about what is happening in china. How do we modify it . Largest ecommerce market in the world. You are an investor in the airbnb and chide of china. Else, how do you compare and contrast . And airbnb taking on the local governments. And how it proceeds in the mainland . Is something that happened in the u. S. Quickly, we are comparable to their size. It is mostly domestic. There is a chance they can be bigger given the size of the domestic market and the trend of chinese consumers traveling overseas. Days, it wasrly quite different. Market didnt really exist so they had to create that market and the online model altogether, which was much more heavy in terms of operations. It was quite a bit of offline management and properties. Therethe market has is a habit for chinese consumers as well to stay in someone elses home. It didnt exist years ago. Sky noncapital managing director joining us here in new york. Joe and coming up, what you need to know for tomorrows trading day. This is bloomberg. Scarlet a busy friday coming up. Dont miss this. Andrgan, wells fargo, citigroup reporting earnings. The ceo of wells fargo will be joining us at 30 p. M. Eastern time. Julia and president bob kaplan speaking. Be watching the u. S. Cpi and retail sales data, both of those out at 8 30 a. M. And alisa i am Alisa Parenti from washington and you are watching bloomberg technology. Mitch mcconnell has released a revamp of the republican Health Care Bill which seeks conservative support by letting insurers sell low premium policies with minimum coverage. It is unclear whether it will survive a vote next week. Revamp of the republican Health Care Billfrench president manuan concludes to differences with President Trump. But says the disagreement will not hold back discussions. They held a News Conference in paris today and followed it up with dinner with their families at a famed eiffel tower restaurant. President trumps proposed budget would not balance in 10 years, contrary to the white according to the nonpartisan house budget office. They estimate the deficit in 2027 would be 720 billion under the plan. Prosecutors call more than charge more than 400 people with health care scams. It is called the Largest Health care fraud takedown in u. S. History. Former president