Transcripts For BLOOMBERG Whatd You Miss 20170807

Became careless using their own phones to report fires. The European Union has notified safety authorities in britain, france, sweden and switzerland, that was precautionary measures that some bigs contaminated with an insecticide may have entered their territory. The European Commissions say that germany and the netherlands notified the eus both safety alert system over the weekend. Andhey notified the system to share the information so that. Verybody knows bigs are traceable. Great for European Commission also stressed that bigs contaminated with an insecticide have actually enter those countries. Belgian and dutch authorities are investigating how the insecticide came into contact. More hours a day, powered by more than 2700 i amalists and analysts, mark crumpton, this is bloomberg. Live from bloomberg in new york, Joe Weisenthal is uptodate. We are 30 minutes from the close of trading. Thisstocks are higher monday. The question is, what did you miss. Two titans of the bond market are clinging to the idea that inflation will make a comeback. We will see what it bond market has this trade all wrong. Just another day at the office with bitcoin hitting a new record of more than 3300. We speak with robert since on why he thinks it is far from being a legitimate currency. Why commodities are good for traders but that for investors. E dig into why despite their best efforts, inflation remains about 2 . Price measures have declined and are running below their goals. Rising inflation is only a matter of time. Someberg reports talked to Fund Managers about those expectations. We are talking blackrock and vanguard. Inflation is coming. They say the market is a little too pessimistic. They are very aware of what has happened. They are saying that now, maybe the bond market has gone overboard. Future, overthe the next 30 years of 1. 89 . That may be a little too much. Why hasnt inflation picked up yet . Always a story about how it is coming. It has not yet. They realize some of these cell phonetors coverage has gone down. There are a lot of cars rolling off of leases. They said that has dragged down some prices. The phillips curve isnt broken, it is a little lag where the Unemployment Rate goes the inflation rate goes higher. Eventually webut will get to the second half of the cycle and it will build and. To haveesnt make sense this out in 10 years time. Vanguard suggesting inflation should be . A lot of lives and vanguard and they are looking at models, they are looking at the economy and all of the other voices, those tenure breaking rates about two and a quarter. They will slowly creep back up there. A lot are looking for this, not everybody. Like pimco us saying, maybe next year. They are thinking it will happen. It is when. They think the breakevens up onto far. This is doing the loosening work effectively. That is for inflation, the longer time. Some people feel that the weaker dollar increases import prices and make felt and six months down the road to higher inflation. They looking at shortterm factors. That weaker dollar, those listening financial conditions is a push poll. There is a safe haven shortage of demographic changes. They were wanted to put the money on some kind of reliable instrument. That means that they wont stay low. The counterargument is that vanguard and blackrock are offering to that . They see that. They see the best part of this global need blackrock analysts and strategists said that he thinks that will slowly start to dissipate that voracious demand for yield. We are seeing economies in europe do better, rates are going up. Better,es are so much relative to everyone else. They were love. That is what has they were low. That is what has kept us chugging along. June and july are starting to look cheap. They are sent to flickr. We saw a lot after the president ial election. The whole euphoria that things would be better. Some of the fund data starts to show that money came back in. We have to ask about the debt ceiling. Scarlet the treasury is working out different ways to continue to pay the bills. We will hit a deadline by september sometime, depending on how much treasury can really maneuver around. What steps is it taking to make sure that we are addressing the debt ceiling . What are you hearing from blackrock and vanguard about how much of a concern this is . Everyone. Oncern for we are seeing a little bit in treasury bills where people are avoiding those bills, the payments may not be made. Secretary mnuchin has put an end of this december deadline. Of the street forecasters are thinking they can go with these extraordinary measures until october 14 or so. I think the treasury secretary is trying to put a fire under them. They had been down this road before, we need a clean rise in the debt ceiling. I would say the market is not screaming or fearing what happened in 2011 when snp give us a downgrade. It is definitely on the radar, it will get worse and worse if some situation doesnt happen. Bloombergs was mccormick. Ormick. Mcc next, the ceo of michelin. From new york, this is bloomberg. It is time for our stock of the hour. We are looking at cvs. Oliver renick joins us to discuss this further. What are we looking at . Oliver we are looking at the effects of every quarter. This will be an important moment. Today, the stock is up a little bit. They have done pretty well. However, there is also a little bit of news today in terms of at t reaching a deal to include cbs programming. Directv andnto online streaming service. That is the piece of news today. It is all about earnings tomorrow. There will be stuck to look at. How did they differentiate themselves . Oliver i think there is this believed that they will differentiate themselves. We had seminumbers come through from some of their peers. We had outlooks moved down from time warner, sinclair drug test. The numbers will be important. I looking at the Financial Analysis page. What i want to call your attention to is the advertising. I will shut the advertising on a quarterly basis. If you look at the trend, this is the fourth quarter, you can see that is continually coming down. It is not so hot. This will obviously be very important. We whats the people that are willing to subscribe, people that are obviously not going toward the overall trend which is moving away from traditional cable, there is so much competition out there. I know they are monetizing this across a number of different platforms. They crossed that one billion mark. What are we looking at, that was a year early. They are looking at entertainment. This will be a big part of it. Local broadcasting is a big part. All those local channels and local programming will be locked into that. This is a stock that the street is pretty bullish on. It will be fraught. Two years ago, disney had one that subscriber thing that espn was waving. Oliver we did see a little bit of a media check out. This has been a part of the market that is a hot button issue bleeding into a macro focus as well. Scarlet thank you oliver. Lets look at some of the biggest business stories. These two companies are working with Financial Advisors and united recently made an offer of 140 per share. They will join the fourth largest suppliers of aircraft parts. They will boost their balance sheet. Record 1. 2 billion in cash in the second quarter. At ts directv now is reaching an agreement to add cbs ants showtime and showtime to his roster. The company is also boosting is Entertainment Holdings with more than 85 billion with the more than 85 billion acquisition of time warner. That is your Bloomberg Business flash. Itshat has just raised growth after the water market remains stuck in the for. What is the Company Getting right . As archery vehicles get more traction. Thanks for speaking with us today. , first. O go big picture consider the landscape. We had u. S. Auto sales for the month of july. We saw the most since 2010. Has the cycle peak from where you sit . The north american cycle is in a plateau. Let me talk about the global context. I think that is important for us. Seeing growth in china and we are seeing a little bit of growth in europe. The global Auto Industry is flatish. Warner it isr, a different story. We are growing. Highest teche the engine systems for traditional combustion but also for electric and hybrid vehicles as well. Ofe us a sense of how much your business comes from combustion gasoline engines versus where you think it will be in five years time. We are seeing a pretty rapid evolution toward electrification. Let me clarify what i need, what is hybrid and Pure Electric vehicles. What i mean, that is hybrid and Pure Electric vehicles. Is thatt thing for us we play across all three, we position the company to be neutral in terms of agnostic. We feel good where it is at. Of animation or technology is pretty interesting us right now. In terms of your business, the largest revenue generator is still combustion engines. Lets fastforward five years in terms of the development of the hybrid or the Pure Electric vehicles. Where do you see your revenue split and how quickly can you adapt . That is a great thought. Today, i came from our investor day. Views of 2020. If you look at 2023, 20 of vehicles will be hybrid or electric. 17 hybrid, 3 electric. We are lined up right against that. We are moving in lockstep with the market. States, we seed how low the gas prices. People go back to the gas guzzling because why not . Gas is cheap. Is it different this time around . Inno, we have seen a shift the mix between light vehicles and the truck. We are a Global Company on the global stage. We typically dont see any shortterm shifts for gas prices. What you are seeing is the Regulatory Environment for the fuel economy and emissions around the world. Those standards are tied in for very good reasons. Problem forreal technologies in vehicles. Less so than the shortterm gas cycles price cycles in the u. S. These discussions about mexico will begin next year. What do you expect . As ayou expecting to come result of that . Do you think a renegotiation in favor of the United States is important . What would be the optimal outcome and the worstcase scenario . Revisiting that there is a good thing. I think it is a longstanding agreement, it has been effective. There are some details that need to be discussed. We welcome that review. From that perspective, we are very balanced, we produce our products in the United States and mexico. I think it is a good thing in general. We welcome it. Are you going to press in light of what donald trump has said and the accusations he has the runaround and Car Companies to recapture jobs . Do you feel pressure admitting that you have workers in mexico and the prospect of reshoring those jobs . We are a Global Company. We have to worry about government and legislature all around the world. We cant wait for that. We have to do what is the right thing for the company. For us, it is about growth. Do, notwhat we will focus on specific government issues whether it be in europe, china or north america. They are too slow . Yep to make choices quicker than the government to react . We have to move with the pace of technology for sure. Thank you for talking with us. Coming up next, why equity wars equities may be more stable. We had a chart for you coming up, this is bloomberg. Scarlet markets are pricing equities as safer than heresy. Currency. The acids of gains and swing in share prices, stocks are state prison courtesies. This implies volatility of the s p 500. It is more than one full point volatilityche banks over the same. This is a fairly rare event. Of fallingbination dollar and u. S. Equities. It happened a few times over the last few months. If you max out the chart, you see a different picture here. It rarely happens. It does appear that investors have decided that current are riskier currents are riskier than equities. Interesting times, julia. The s p 500 look at in comparison to the other one. Im concerned about the breadth of the rally. Particularly after the earnings season. Some of the big tech names as well. The blue line is the traditional s p 500 and the was white line shows the equal weighted index. Thesemally like to see two moving together. Even as you keep talking about record highs for these markets, the rally is happening in a breath of equities. The equal weighted version posted biggest week in drops since may and is worst week since the regular s p 500 all year. Stocks risingax and enough to keep the s p 500 itself rallying. You are seeing the big caps listing everything. There is no alternative. The market closes next. I do believe that is a record high. The above well about 22,000. The s p 500 closing in on that round number of 2500, not quite there yet. 1 . Nasdaq is up by half of we have plenty to tell you after thou. Big techwe had these names out of the way. Come, the market closes in just a few moments time. From new york, this is bloomberg. We check our phones 85 times a day. So it only made sense to create a network that keeps up. Introducing Xfinity Mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Scarlet whatd you miss . In the session in the green. The dow making record highs. In youre tuning live on twitter, welcome to our closing bell coverage every weekday. Scarlet lets begin with our market minutes. S p making fresh record highs although we should mention this trading inetty thin the dow, off 23 from the 20 day moving average. This is august. Julia energy down. Oil under a bit of pressure. That is one of the drivers in the market. Scarlet we have technology outperforming and that has pushed the Broader Market to the upside. Sprint off by 0. 9 . It has resumed talks about a potential merger with tmobile. They begin negotiations after sprints negotiating period with other companies expired in july. Rockwell up 7 . Uts and acquisition of the company. Wider margins for exports and the because of lower livestock cost. Right how financial down 4. 5 . Julia lets take a look at the bond markets. In line with what we are seeing in terms of equities, bond yields, high by just a few basis points. Have flopped today, the dollar extending its gain after fridays betterthanexpected jobs report. President er, the fed said that rate should be low because of low inflation. If you look at the dollar over story ofperiod it is a weakness. Even after that recent 8. 3 eback, the dollar down in 2017. South african rand, heading for that comes gain, before a secret new vote against jacob zuma. Julia the important thing being the secrecy of it and people will be bold enough to give their honest opinion is the thing is secret. China is the worst for the commodities market, gains across the board, aluminum, gain we have seen, talk of capacity and aes over in china reorganization of that market keeping a very much in thafocus, goes into Steel Production so it is tied with see. We hear and seeing continued gains in copper, hedge funds seeing their positioning go to record highs. Some analysts saying the risk is on the upside. A quick check on gold. The net impact of gold. Scarlet breaking news on bill ackman, the company has bill ackman for the adp board. Oneell as veronica and other. Julia whatd you miss . We are Just Moments Away from secondquarter results out from cbs. Great to have you on. What are you expecting from cbs . Expectations from investors are pretty low, advertising trends have come in a little bit weaker than it back in. Expected. Han there is the specter of cord cutting and what impact is having on these traditional Media Companies. There will be a bullish tone about the Television Business and cbss position but the real question for investors, how is cbs going to fare in a world where people are getting content out of the traditional bundled. Scarlet we had news that at t recent agreement to target cbs on its programming lineup. How significant is this . For directv now it is a positive development because cbs is the mostwatched television network. It is good for them to get paid all platforms that they are on. Scarlet we have the numbers right now, lets tell them, adjusted earnings per share of 1. 04. From continuing operations it is . 97. 3. 26l revenue, top line, billion. 3. 0 9 billion was the consensus estimate. Stock up fairly in afterhours trading. How much people were looking for cbs to do given the disappointing forecast from the likes of time warner . Cbs is still a company with a lot of advertising space or best advertising exposure they had done with a lot of advertising exposure. They are still viewed as an advertising driven store so they are taking the headwinds that some of the other Media Companies are. They had generally strong ratings, consistently strong programming and they had a very good upfront advertising this spring which bodes well for the upcoming broadcast season. Julia you mentioned the content and the fact that they managed to be there on target for revenues for retransmission, 1 billion in 2016, expected to decrease 25 in the following year. How sustainable is that kind of growth and are investors factoring that in already . Theres still some growth to regrow the revenues headway stream. The broadcast networks are underpriced relative to some of the other Networks Given the audience they deliver. Scarlet retransmission consent increase 25 in the second quarter. These are numbers any company would love in this environment. We are talking about the benefits of skinny bundle packages. Tv. Letv, hulu the skinny bundle, whether it or others, it has not been enough to offset the core revenue impact that has fell by these Media Companies in terms of the advertising. They are losing more revenue from getting dropped off the core cable bundles then picking up on some of these new platforms. The question is typically back into the growth curve again. Bet ahink there is a good lot of its high Quality Content will be valued in the marketplace appropriately going forward. Contentrguably the best in the marketplace. We are in a transition here. If we were to look at what cbs reported and carry it over to what we might expect it isisney tomorrow, espn, it is the theme parks. Disney is a diversified media at of three businesses is performing well. The one business not performing well, their Media Networks business is being dragged down by espn and that is what investors are focusing on. You think about the cord cutting networks, yesterday and has the most to lose. When they lose 2 million subscribers a here, the real revenue hit at a time and their cost structure, those cost structures are fixed, the exploit every year and they are on a longterm contract. Is a tough margin story at espn. To communicate a strategy. Scarlet he often needs to think about a successor. Any new insight . That is theone and problem. It has been deferred twice, investors are going to what you very bighing, shoes to fill. Is arguably one of the best jobs in Corporate America that is also one of the toughest jobs as you are following bob iger. Julia unique time for the industry. Great to get your insight. Coming up, the greenback has been shut out of the summer party, what is driving the dollar decline. This is bloomberg. Crumpton, it is time for first word news. Massachusetts senator Elizabeth Moran is blocking president the pick to head pick for antitrust chief. Sayses finance minister paris will come out ahead of frankfurt in the race to become the European Unions Top Financial Center after brexit. We will take the difficult decision. We will lower french taxes. Weill make our country will take the structural , werms that are needed will simplify the markets. He spoke exclusively to bloomberg in paris. He said the labor market has stalled frances efforts to woo bankers. Dans king health talks with the palestinian president. It was his first visit at the west bank in five years. It came at a time of rising israeli, jordanian and palestinian tensions over the shrine known by jews as the temple mount. The crisis disrupted when israel installed metal detectors at the site last month after air gunmen killed two Israeli Police in there. The dump ofme to the rock mosque. Two u. S. Envoys are going to kuwait to help defuse the gulf crisis. The envoys will visit the Foreign Countries and the alliance before heading to qatar. Saudi arabia, the uae, bahrain and egypt isolated qatar on accusations of funding extremism. The u. S. Is leading mediation in the suit with little progress. Global new swing for hours a day. This is bloomberg. Scarlet whatd you miss . U. S. Stock markets at record 500s, u. S. The the s p up. U. S. Dollar hit 15 month lows against rival currencies. Lets ask a global strategist. When we look at the dollar, you could blame the weakness on centralbank policy, Interest Rates or is it Political Drama in washington . Normalou look at the cyclical measures we look at for the dollar, the dollar index should be about five7 stronger than it is right now. There comes points in time for the capital flows cycle overcomes the normal cyclical ents, i. E. Interest rate differentials. The u. S. Continues to run a large private account deficit japana, europe and running a current account surplus. You need to get inflows to keep the dollar from falling and there is a lack of Global Capital coming into the u. S. And with that current account deficit is the dollar ke eps being way down. Julia there is always a gainer and a loser when you talk about currencies. If you look at the relative political situation in these two countries, there is a great deal of optimism about europe versus of the United States. If you had no Global Capital flows at all been the currency with the current account surplus would go up with the current account deficit. Youre Getting International capital flows into the eurozone. You are seeing that in the Mutual Fund Data in the United States. I think you have, if anything, the capital flows are exasperating the currently cap the current account flows and that puts pressure on the euro. Julia what is going on with the dollar index and what is going on with dollar china, despite the weakness we have seen in the u. S. Dollar since the election, on a relative basis weve not seen the chinese yuan strengthen back to the basis. Is that an active situation for the chinese government, they dont want to see the dollar weaken relative to their currency . Normally you would expect to see figure movement in dollar china, we got paid out last night that chinas reserves are starting to grow. As a market to market effect, as the dollar goes down, their dollar denominated basis goes down. Keeping dollar china from going down as much as you might expect over the last 67 months, the dollar index is down 10 versus major currencies and 3. 4 versus the chinese currencies. Chinat were seeing spending a great amount of money when the dollar was rally, preventing their own currecy from weakening. They have put a lot of money into doing the opposite. Operation,smoothing everything about china is about stability, stability in the economy, growth and the exchange rate. The evidence would suggest the currency is not moving again other currencies not moving against other currencies as you might expect. Scarlet is there a cost to doing this for china, keeping these currencies at this level and artificially preventing it from doing what it should . I dont think so, earlier in the year we had the opposite effect when they were trying to stabilize their currency because that require them to hike interest rate, try to defend their currency and that was creating risk for the economy. This takes a lot of pressure off of them and introduces a new level of flexibility for the pboc which they appreciate. Costs when are the you have an administration talking about some form of sanctions, steel sanctions, we dont know what is going to come out. Is there a political cost . If we are not sure, the chinese are not sure either. This is a president who likes to do deals. As long as china, there was this big runup saying were going to announce a program against china, awake they are going to about with north korea, going to help us out with north korea, we are not going to do that now. The chinese are learning to deal with the administration and like Everything Else they are doing it extremely well. Scarlet were going to talk more about bitcoin very shortly. Julia for now, were going to take a break. Company the health care coming out with an adjusted loss ider than analysts appreciated. Best analysts anticipated. It has adjusted the outlook range for 75 million. Tenet health care off 8. 5 . From your, this is bloomberg. Julia whatd you miss . Bitcoin has been hitting new records but thanks to changing rules, the currency is anything but steady. Bitcoin as sees having a long way to go before it is seen as a functional currency. You are not happy even calling it a currency. If you look at a currency, it is a medium of exchange at a store with value. I dont know anybody who has a bitcoin account. I do not have any stores that announced that they were taking bitcoin. I dont think it functions as a currency. In terms of stored value, its volatility has been amazing. It has been a great speculative investment. It has been a fabulous speculative investment and the best way to play the weaker dollar but what that means is if we get policy action from the fed later this year that table stored value may lose quite a bit in a short time. Scarlet what happens when equity markets enter a correction. Does this one could out with it does bitcoin go down with it . I see bitcoin as an anticurrency. Risk on, risk off. If you get calls on your position, you may have to liquidate things and bitcoin has been a good return in the last year. Things that go up quickly come down quickly. People have been looking at this as the antidollar. At the dollar goes down, there is more interest. Its a bit like gold was 30 or 40 years ago. Gold was discovered as being the anticurrency, it soared in value in the 80s and 90s, during the inflation period. Bitcoin has taken the place of antidollar. Julia what does it need to do to become mainstream, is it on the regulation side to lock down . What we have seen in the recent hacking attempts and it has been used as a seeker way of ransoming. Anyone you dont know who owns a coin account and there is a reason link they bitcoin owns a bitcoin account and there is a reason. It tends to attract people who are doing illegal things. It is not coincidental when those hacking attacks took place that people wanted to get paid in bitcoin. A lot of people who may have been in that situation did not have a bitcoin account and had no way to pay the ransom. Is an early mover in this space. Julia it is seen as the corporate spring lever. Scarlet more on that next time. Thank you so much for joining us. Next, lawmakers turning up the heat on the russia pro. Russia probe. From new york. This is Bloomberg Mark it is time for first word news. Talkskorea is ruling out on its Nuclear Weapons program and said the u. S. Will pay dearly for what the north considers crimes. That was the response of kim jonguns regime after United Nations Security Council imposed more sanctions. Chinaangs latest ally backed in an attempt to start negotiations. Moving to protect the trump name according to the New York Times which says there are questions about the constitutionality of expanding mr. Trumps trademarks overseas. Macau longo surpassed las vegas is the Worlds Largest gambling market. Constitution prohibit the president from accepting any economic benefit from foreign governments. Court issuedreme mustbenjamin netanyahu supply his phone records with Sheldon Adelson and a former newspaper in israel. Police released last week that he is suspected of Crimes Involving fraud, breach of trust and brides. Policebill de blasio is imposix on the wealthy to pay for the city deteriorating subway system. It would affect about 30,000 people, above 5,000 and 1 million for couples. The move will raise as much as 800 million each year. The plan must be approved by state lawmakers. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Scarlet lets get a recap of todays stocks. Record highs for the s p and dow. Trading was relatively quiet given that it is early to mid august. The s p 500, 22 below the average. A stock moving in late trading now is avis. This is after it missed analyst estimates, . 30 per share. That is . 22 lower than what analysts anticipated. It also revised its outlook as well. The shares tumbling in extending trading and that is putting a drag. There are a lot of concerns about these rental car agencies leading up to the Earnings Report from equity and debt investors. Julia here is looking at the short interest. Going into the earnings tomorrow. A number of names that have got high short interest. 62 , short interest. Reaction to earnings tomorrow will be very interesting. Whatd you miss . The chairman of the Senate Judiciary committee is turning up the heat on the russia probe. Chuck grassley criticized the Trump Administration to provide lawmakers with information as he plans tothe chairman of the sene Judiciary Committee is turning up the move full speed ahead with the investigation. Steven dennis is joining us now with the details. We are a bit confused. If we go back in time, the democrats were criticizing him, saying he was not trying hard enough. Now he is getting all sorts of praise. What is going on here and has is he ag changed or straight shooter doing his job . Steven i think democrats were certainly come planing early on that he was very slow to get started on investigating the whole russia issue, but that changed after fbi director james comey was fired. And then you had a series of subsequent revelations that are really in the Judiciary Committees purview. If there is any of structure and of justice, that is a Judiciary Committee issue, not a Senate Intelligence committee issue. Now, before judiciary started getting wrapped up on their it had all been in the intel lane, which is much more buttoneddown and conducts almost all of its business behind closed doors. That might change now that judiciary is getting much more involved. Isrlet what specifically Chuck Grassley and the Judiciary Committee looking to investigate here . Is it russia ties, Paul Manafort, james comey . A number of areas. Steven there is a lot of different threads they are pulling together here. One of them is the firing of james comey, getting to the bottom of why donald trump fired him and whether it had anything to do with of structuring of justice or russia. Another piece of it is the foreign reporting act were people like Paul Manafort, michael flynn, having taken hundreds of thousands of dollars overseas and not reporting that they have been getting those payments from foreign governments. This is the kind of thing that is right down judiciarys lane and we could see public hearing with thes next month donald trump jr. And Paul Manafort after that big meeting they had last june with russians promising dirt on hillary clinton. Julia the Senate Intelligence committee, as far as i can see, does not have access to classified intelligence documents. I know i have asked this question before, but how does the investigation of the Senate Intelligence committee interact with what bob mueller is doing here and how does that then interact with the fbis own investigation because it feels like different people are going in lots of different directions. How do they all interconnect . Steven this is a little bit of a concern from some senators and more congressional committees investigating, the more you can start tripping over bob muellers investigation, the fbi investigation. There has been meetings between the chair of the Senate Judiciary committee and bob mueller as well as senate intel and mueller to deconflict in their different investigations so theyll cause trouble dont cause trouble. When these people start coming in from the public hearings there have been over 70 interviews at the Senate Intelligence committee you never know if there is going to be some overlap or something that actually trips up the bob mueller investigation. That is a concern that some people have heard. On the other hand, the public wants to know what is going on and having a public hearing before congress is really nothing like that spotlight. Julia it is the secrecy element they are trying to undo. On whats going on with north korea as well. President donald trump tweeting over the weekend that he was happy with the u. N. Resolution. What does it mean in terms of actual action in line with Rex Tillerson offering an olive branch, saying if the north koreans step down some of their nuclear testing, the missile testing, they would engage in conversation. Are we moving forward here . Steven i think this is the one area of real bipartisan support for the president. Whether you are a democrat senator, republican senator, it was part of the big sanctions bill that the president tsai. He was not happy about the rush of piece of it but it did have north korea sanctions as well. I think this is something that there would be bipartisan support of the u. N. Action. It is an area where the president to have the whole country behind him. Scarlet Steven Dennis joining us from washington. Of l be quite a couple quiet couple of weeks in washington. Thank you. Invest in your own risk. Commodities are good for traders but bad for investors, so how do class . Ar this asset this is bloomberg. Scarlet commodities not taking part in the recordsetting rally in equities. The index down almost 3 this year. Although it has recovered since late june, you can see the rebound has stalled. Ben, director of institutional asset management, says commodities are good for traders but bad for investors and joins us now. The basic crux of your argument is commodities give investors lower returns in cash and higher volatility than stocks. Tell us different ways in which you can invest in commodities. What is the most conventional way of doing so . Ben the easiest way is to invest in index funds and the Broad Spectrum of stocks. Roughly 10 of money in basic materials or energy companies. Another way to do it is owning the equity of a company that only does commodities a Precious Metals mining fund. Finally, to get the broadest exposure to commodities themselves, you can etm that owns the commodity futures and investor equity in those commodities. Julia it is tough to know where the turning points are. You kind of get creamed if you call it wrong. How do you adopt a strategy that bypasses those turning points if you can . Ben these things have bone crushing volatility. Like you said, the returns are lower than cash. The volatility is higher than the stocks so that means even though the longterm returns are pretty low, there is huge a cyclical swings in between. Between 2002 and 2007, commodities was up 150 . Since 2007, it is down 50 . What you want to do is figure out an easy way to follow those trends or avoid the bad ones. Trend following where you are following a moving average that tells you when to get out. The idea behind that is you want lose aw when to run and short because investors tend to panic and sell when they are down. Thenlose a when things are going well, people get greedy and things could go up on the upside further than most people would think. They want to find a way to ride those cycles. Julia you go with of love. If it is going up, you buy it, if it is going down, you sell. You follow the momentum of the market. Ben these are very momentumbased industries. A lot of speculation involved. There is no fundamental driving commodities. You might be dealing with you follow the momentum of the market. Ben these aredividends, interer earnings so it is really a supply and demand game. If that is the driving force, that is a really thing that pays. Finding the prices are heading, that is the best way to determine what will happen next. Julia you managed to reduce the volatility by doing that, but you also manage to produce of the drawdown the models produced by 37 percentage points. Thats huge. The loss wesaid, see in commodities can be enormous. It can be even worse than stocks. Commodities cut in half since 2007 like i said. Areasidestepping those can really help your returns and help your risk adjustment which is what a lot of investors are looking for. Scarlet taking a step back, what is the argument into nowsting in commodities because for a while it seemed like a hedge against inflation but we are having trouble generating any meaningful inflation. For a couple of years, it seemed like a way to bet on chinas growth resources and growth over all. What is the thinking now . How has evolved . Ben i think that is where a lot of investors went wrong, the mid to thousands where we had the 2000s. T 2000s. Investors were seeing stocks that were chopped in half because of the tech bubble. A lot of investors assumed that commodities was the right way longterm to get high expected returns and local relation stocks and bonds. What they found was the correlation was low but the returns were also low. Its really hard to define these things fundamentally, use a valuation figure to know when that turning point will happen and when they are cheap. Julia you can do it by managing futures. Ben, fantastic to chat with you. Ben carlson. Concerns over disneys espn unit. We will dig deeper into the subscriber losses. York, this is bloomberg. Scarlet Walt Disney Company will be returning reporting earnings. They released guardians of the galaxy volume 2 last quarter. It raised more than 360 million wortldwide. Lets take a look at disney in todays of the numbers dont lie. We start with how disneys revenue breaks down. We hear a lot about how the Media Networks unit is big he is not regret that represents the biggest slice of the pie at more than 40 . The runnerup is disneys theme parks followed by the movie studios and that consumer products. Disneys espn is under massive scrutiny due to subscriber losses. In the past three years, espn has lost 9 million subscribers even with factoring in tv over internet. When you look at the month of june, yes, streaming content is helping slow some losses, but espn lost subscribers in that month. Ceo bob iger said the pessimism surrounding espn was highly exaggerated. Some of that is reflected in disneys stock which has fallen due to renewed industry concerns on fewer viewers in ad revenue. The cable ratings fell 18 in the month of june. There are reports that tv networks are racing for a drop in at revenue for Football Games in the upcoming season. Perfect timing that disneys theme parks are doing better. A big driver for that unit is the shanghai disneyland resort. Even though it is more than a year old, that is the fourth most popular park across asia. Ey taking a couple of number of hits. This includes guardians, pirates of the caribbean and cars 3. Later this year, disney will release the latest thor and star wars movies. Hopes these movies offset some of the concerns over its immediate unit. The stock has not have a doubledigit rally at we have seen. We will get a better sense after tuesdays u. S. Closing bell. Julia thanks. Whatd you miss . Overhauling the tax code is not just on the agenda of america policymakers but also a european concert too. Caroline spoke exclusively to the finance minister in paris and he says taxes will be lowered and eventually harmonized across europe. It is always the same strategy based on the same rules for everybody. When you are doing business in france or europe, you have to pay taxes. You cannot take the benefits of doing business in france or europe without paying the taxes that other companies are paying in europe or france. The same goes for all companies and states. Caroline does that mean you want to lower the tax to 25 everywhere in the eurozone . Bruno we will lower the Corporate Tax to 25 by 2022. Step, we want to have tax harmonization among the members of the eurozone. You have 19 members. You have one currency, the euro, then you have 19 levels of taxes. You have 19 different economic policies. We cannot do it this way anymore. That is life we are educating is why we are educating for tax harmonization. The first step at the open level would be a tax harmonization between france and germany. In quite convinced that 2018, we should be able with germany to have a common Corporate Tax which should be the basis for harmonization, all Corporate Taxes, and the 19 Member States of the eurozone. Caroline what concession do you expect from the germans in order to further these european integration . In exchange, would you accept a german as the head of the ecb, for example . Maire the of the patient. We are in 2017. It means we still have some time before deciding what will be the next chair of ecb. But, we should not wait before taking decisions as far as the integration of the eurozone is concern. I really think we should be able at the end of 2017 to make a First Step Towards more integration within the eurozone. That was french minister economy and finance Bruno Le Maire on bloomberg earlier. This is an interesting one for me. I heard him speaking about two speed europe. Julia greater coordination between france and germany here. The Corporate Tax rate. What is the rest of europe going to say about that . Scarlet that will be a big question. France and germany working together, who would have thought that a year ago . If you bring it back to the United States, a lot of questions over what happens to president s plan to overhaul tax . Is a tax reform, tax overhaul, tax cuts . . Ratesies with high tax have been flying high since the election. Not so much anymore. This is 8075. The white line is the stock basket. You can see after the election, they outperform compared to the Broader Market, the s p 500 in blue. Since then, they have lost their edge and the s p 500 has been trading near record highs. The high tax stock basket has not yet recovered. Julia significantly worse in the last few weeks. Recognition since the order adjustable tax disappeared. T scarlet where are they going to make it up . It is time for the Bloomberg Business flash, some of the biggest business stories now. Hedge funds are benefiting rising stock market. Fundg global and an equity have built up more than 9 this year. s kensington funds are also higher by about 7 . Netflix has agreed to acquire the publisher of comic books together. Netflix and millers world said they will bring critically acclaimed franchises the film, series and kid shows. The terms were not disclosed. It was discovered by mark miller. The purchase is the first ever by netflix. Bloomberg business flash update. Julia what you need to know to gear up for tomorrows trading day. From new york, this is bloomberg. Scarlet another update on u. S. Equities, making record highs. Dont miss this to pain reports trade balance data. China reports import exports over the next. Julia now looking at South African legislators at the low confidence motion on the president 8 p. M. Eastern. Scarlet bob is this a phone . Or a little internet machine . [ phone ringing ] hi mom. It makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. See how much you can save. Choose by the gig or unlimited. Call or go to xfinitymobile. Com introducing Xfinity Mobile. A new kind of network designed to save you money. Alisa i am Alisa Parenti in washington and you are watching bloomberg technology. President trump and secretary of state Rex Tillerson held an hourlong phone call to discuss north korea and mr. Tillersons weekend trip to manila. The u. N. Unanimously approved new sanctions on north korea over the nuclear and Ballistic Missile program. Pyongyang has ruled out talks and says the u. S. Will pay dearly. Guidantagon has set new on to the Armed Services drones. The policy was approved in july. Additional Public Information is being sent so officials can alert communities. Chicago has sued attorney general Jeff Sessions over his threats to withhold federal funding from sanctuary city. The city says the d. O. J. Has no authority to impose sweeping conditions on chicago and other cities that do not assist the crackdown on undocumented immigrants. Is york mayor bill de blasio promoting attacks on the wealthy. It would impact