Transcripts For BLOOMBERG Whatd You Miss 20170808

And the trend could have a grim , savings for corporations straight in 2015 the ageadjusted shares of americans dying rose for the 1999. Time since at least a Dozen Companies over the past two years said they had been reducing estimates for how much they could owe retirees according to analysis bloomberg performed on filings from verizon to general motors. Global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Live from bloombergs World Headquarters in new york, im julia chatterley. Im scarlet fu. We 30 minutes from the close of trading in the u. S. Julia u. S. Stocks on the water as we head towards a close, bouncing as we see headlines from donald trump regarding north korea. Scarlet but the question is, whatd you miss . Can theme parks make up for millennials cutting the cord . Debt,re holding herztz analysts reject a third credit street quarter of losses. Southr day in office, the african president feedback a secret noconfidence vote, keeping his leadership until the end of next year. Moments ago President Donald Trump made remarks on north korea. He warned north korea not to threaten the United States, saying the response would be quote, fire and fury. Weve seen reaction in the equity markets, weakening already as we head towards the in thejust tilting down last 10 or 15 minutes. Down by 3 10 of 1 . Once again with these geopolitical headlines, investors taking note here. Scarlet its worth noting as well its a slow summer day, its august so it doesnt take a whole lot for indexes to turn around or give up earlier gains. Julia liquidity a premium at this time. Debate overo the the debt ceiling and what would happen if Congress Struggles to raise the limit and the u. S. Is forced to prioritize its bills. Secretary mnuchin respectfully urge congress to protect the full faith and credit of the United States by acting to increase the statutory debt limits as soon as possible. Chiefg us to discuss is economist at menu life asset management. Do you expect a showdown, or they get the deal done . We can expect both. I think there will be some brinkmanship. Unfortunately you dont just have the democrats and republicans, you have the democrats and some republicans, and the Freedom Caucus. I think the Freedom Caucus is trying to tie the debt ceiling to spending bills, and that will make it more difficult. There will be some kind of showdown, but ultimately they will manage to lift the debt ceiling. Scarlet weve seen this a couple times before. What have investors learned from previous efforts . We learned if a government you canthappens, agree on any spending bills, which is separate from the debt funding. If the government does end up shutting down, very little happens with the economy itself and Economic Data isnt much affected and its a parts of the economy that end up not working and you see that in the markets. You see equities tend to fall, yields tend to rise. If you have a debt ceiling showdown, though, back in 2013 we ended up having a downgrade. Rises only a little bit, it increases costs for the u. S. Massively. Even if you dont end up defaulting on your debt, there could be repercussions in the markets. Julia the easiest way to do it in some way is to tie it to a spending bill could be seen this in many mini spending bills passed by the house. This . W do we get around i know you said there will clearly be some negotiation, force play here. Horseplay here. Megan the only way is for the republicans to take the wall and Defunding Planned Parenthood out of it. I think they will have to do something similar to what theyve done previously, which is come up with a way to say in terms of the wall, appropriate money to actually repairing parts of the wall that already allt rather than having funding for it they will be a compromise on that. The big question is whether there will be a clean bill or whether they will try to cut spending as the Freedom Caucus is demanding. Julia Steve Mnuchin pushing for a clean bill here, thats the administrations line here. Whats your sense from the Freedom Caucus . The suggestion was made that perhaps a clean bill might be a possibility, almost recognizing this government isnt all under pressure here. The inciting earned a lot of. It would seem to be contradicted by folks. Where does the land lie at this stage . Megan i dont think anybody wants to be blamed for default of the u. S. All economists agree that would be bad for the economy. There is a chance the Freedom Caucus could back off of it and expect a clean bill. If they dont, theres a bullish case that suggest Republican Leaders will reach across the aisle and in order to get democratic approvals, have to agree to get rid of the debt ceiling altogether which is what probably should happen. Imagine thean just Freedom Caucus freaking out with this possibility, getting rid of the debt ceiling entirely. Congress is out all this month. The house has 12 legislative days, the senate has 17 come september to get this going. The house will be the tougher sell, right . The debt ceiling, i think the house will be the tougher sell. The spending bill is separate but related. Weve already had a spending bill passed by the house. In the senate thats becoming a problem, particularly with funding and Defunding Planned Parenthood. Has steveou mentioned mnuchin once a clean bill. Mick mulvaney, the omb director, has made noises saying it should be tied to perhaps spending reductions and all of that. Does the administration have a clear view on this . Has that been sorted out yet . What are you hearing from washington . Has beenck mulvaney consistent on this. He was one of the leaders of the Freedom Caucus. He had more recently had a coup by jan moment and suggested kumbaya moment. Its not just the division between these two. Theres a ton of divisions between the republicans on this issue. Do you think for all the reasons weve mentioned weve seen this playbook several times before, and actually kind of got it right here . The chart show no one is even talking about it right perhaps now it has accelerated as the press is making a bigger deal of it than investors are. What do you think, complacent or not . Megan the chances of us having a problem this time around are much higher than it has been in the past just because of the unpredictability of that administration. I think they will come up with a deal. Part of it depends on your time frame. You could see yields rise, it depends on what your time frame is for investing. Scarlet speaking of markets and people being complacent, theres one thing in the market that is starting to show concern here, the credit default swap on treasuries. Its only at 25 basis points, so its not like it skyrocketed by any search of the imagination. Its lower than where it was in may. If you spread it out further, things are a lot worse earlier on, 2013 for instance. You can see things are a lot different in 2011 when s p downgraded the United States. Theres a little bit of movement on credit default swaps. Do you see that continuing to rise over the next month . We will not get much news out of washington during this period. Megan the closer we get to hitting the end of september as those legislative days fall out of the calendar, they could continue to rise. It depends on the choreography, they end up being outwardly toxic, that i think they will rise. Its unlikely they will come up with some kind of agreement far in advance of the deadline. Casenk its a best scenario. The debt ceiling was put in place so we could fund ourselves for a world war without having to worry about anyone suspending our way uncontrollably. Ultimately its a pretty archaic design. Scarlet the Freedom Caucus talks about the that ceiling is being your credit limit on your credit card. Greene, thank you so much. Moments ago President Donald Trump made remarks on north korea in bedminster. He warned north korea not to threaten the u. S. , saying the response would be quote, fire and fury. Did stock markets weakened slightly on the news. They bounced off the lows. We are underwater. The nasdaq down 3 10 of 1 . Scarlet and not Much Movement in the 10year yield, if youre looking for reaction in the bond market. Up 2. 2 7 . It was high earlier, remains higher. There you go. Not Much Movement there. From new york, this is bloomberg. Julia President Trump made some remarks on north korea in bedminster recently. Pres. Trump north korea best not make any more threats to the United States. Furywill be met fire and like the world has never seen. E has been very threatening julia there with the latest is Bloombergs National Security Team leader from washington. What has created this step up and rhetoric from President Donald Trump . Weve seen the reports from the Washington Post, this idea that north korea has produced a miniaturized Nuclear Warhead. Its a couple things, really. Theres this report today in the Washington Post based on the Defense Intelligence Agency Analysis the north korea produced a new a rise miniature weapon warhead that it could put on a missile. That comes on top of the two icbm missile tests north korea undertook in july, which means parts of the u. S. Mainland are in theory within reach. Are still some important technological hurdles for north korea before they could actually launch and deliver this warhead to the United States, but its clear the pace of north koreas Weapons Program development is accelerating, and north korea doesnt seem to be focusing on the latest sanctions is passed by the un security council. A unanimous decision on those sanctions. The tone donald trump was taking their suggested some form of independent action, unilateral action. Do you think thats a possibility given the threat of United States clearly feels it faces . Its pretty bombastic comments. Theres always been, the u. S. Has always said it never takes any options off the table, including the military option. Analysts who look at word game scenarios will say any u. S. Preemptive attack in north korea will lead to a devastating retaliatory attack on south korea. Seoul is not far from the border with north korea. There are literally thousands of artillery projectiles ready to be launched in north korea against the south. Its hard to imagine the u. S. Making this kind of a decision, military decision, without consulting with south korea and without giving some kind of a heads up to china as well. Isrlet Rex Tillerson traveling through asia, hes in southeast asia, rallying support for tougher measures against north korea. Will the support of countries like thailand or malaysia matter when youre talking about dealing with north korea . It really comes down to china. There is some small trait that goes on between north korea and other countries in the region. But china is by far the biggest trading partner. What the u. N. Did unanimously this weekend was try to target 1 billion in north korean of the, thats about 1 3 total exports trade without chinas help, its hard to see anything getting accomplished on the sanctions fun front. Sanctions take time to take effect. North korea already invested in a lot of the infrastructure in needs to develop its Weapons Program. Its not clear whether these sanctions in the end will bring north korea back to the negotiating table. This is clearly move the dial in some ways for the United States. Do you think china has this level of intelligence . Do you think that moves the needle for them . China probably has better intelligence on north korea than just about anybody. They have a long relationship, they have a shared border. A lot of refugees from north korea go into china and those people get debriefed by chinese authorities, so they probably do have a pretty good sense of where the program is. The thing weve seen with china this year is that their influence despite all the trade they do, the influence can be quite limited. Scarlet weve seen that in action. Bill ferry, Bloombergs National security leader. Julia its time to look at some of the biggest is in us stories in the news right now. Uber is said to be unloading its program, exchange leasing. An estimated loss of 9,000 per vehicle. Down lastm was well month after the company realized costs were higher than originally thought. A sixepisode series premier in 2018, netflix saved each hourlong show that involved quote, indepth conversations with Extraordinary People as well as the in the field segment. That is your Bloomberg Business flash. Time now for stocks at the hour. Has pared back from a advanced but it is higher for a second straight day as the ceo shifts his company from reconstruction to repaying debt. Oliver renick joins us to discuss further. Its always been the credit side of the story, the Debt Holdings of this company. Oliver it has, and now more than ever that they have been solely divested and selling loss in their business to try to get things unto an even keel, stocks of a little bit, quite a bit and the morning and has since come down overall, positive day here in a row. We are looking at longterm stock here, the chart doesnt look much worse than it is. It seems like today and in the past couple of months, the stock is up. Investors are potentially trying to look more positively on the company, and perhaps a little bit bullish in terms of getting cash around to pay over that debt. Through a lot of the businesses. Theyve had to find a way to come up with money, to get through this wall of debt thats coming up, and thats what i want to pull up on the terminal here because the visual is quite striking. Im looking at the didi i. S. Function, debt distribution. Heres the big wall of worry they have here. This is the blue showing the principal bond amount. We have term limits in the pink. This is a big chunk of money here and this is something they need to officially find a way to get through, because its quite a burden. Thats a lot of payments there. The yellow part of the bar is interest. It gets uglier once you factor this in. Haser the stocks story kind of mellowed out. If you look at where the equity price has been, just given the longterm history and the long levels that were, this is probably going to be the focal point for investors going forward. Julia stocks, focusing more on that, they didnt change the guidance. I read a piece on gadfly, saying for as long as that lasts, the concern, they want to cling to their guidance for as long as they can. Oliver you have to find a Silver Lining in whatever information you will be putting our word forward. The comments about bringing down the debt and the chief executive officer took over a little you over a year ago for michael pearson, he said we a cop list what we needed to accomplish in the near term. Earnings here are pretty solid. And this is aons, bit of a relief. In the past year or so, pretty much every corner of earnings they had was disappointing and lead to doubledigit losses. The fact that they can now go through and at least sell investors on their guidance, staying flat, not having to constantly bring down expectations, that will get them through the day today. For them its about that monthtomonth, quarter to quarter. Up next, markets not expecting anything pretty. We will look at these grim figures facing hurts. Hertz. From new york, this is bloomberg. Scarlet im scarlet fu. Trump whatd you miss . This is a glimpse of hertzs debt distribution. The second panel here is hertz. Even though the bars are comparable, theyre not really. In 2018, the second column here, about 314 million in 136rest, while avis owes Million Dollars in interest. If you go over to 2022, this is a big discrepancy between the two. Hertz owes 1 billion more than avis. You go to the third panel, and this is basically hertz minus avis. You can see that hertz owns more than avis until 2023. Avis has more debt do beyond five years. This is a sense of the cash flow problems they might encounter over the next couple of years, especially as their business slows down overall. Julia hertz shock everybody when they canceled their plans to refinance some of their debt. That will be one of the questions on the call as well that the ceo gets after. Let me give you a sense of what investors are thinking on this one, the gilad line here, we are showing you the equity performance for hertz down over 30 this year. We are showing you the blue area and the white lines. As you can see, chunk, chunk, chunk lower like a step. Theyve been cut by 75 since march of last year. They are incredible. This is a chart that i want to show you. I sneak around to do 2 charts. I mentioned this yesterday, Short Interest on this one which is really interesting, more than 1 2 of the free floating shares held short, close to an alltime high, up 55 in july. The data that showed u. S. Airport rentals rose in june and july of last year. Heading into these earnings, we have avis cutting their forecast yesterday as well. Scarlet there could be a lot more bad news ahead with hertz reporting this evening. The market closes next. As julia has been telling us, the index have given up their gains. Amount but ithuge certainly follows President Trumps comments on north korea, saying the u. S. Would respond with fire and fury. Before itsng as well earnings report. You can see its currently up by4 10 of by 4 10 of 1 . The ceo ofbob iger, disney will be joining Bloomberg Technology at 5 30 p. M. Eastern time. Julia from new york, this is bloomberg. Julia whatd you miss . Turn lower and volatility spikes after President Trump gave a warning to north korea. S p closing at session lows. Im julia chatterley. Scarlet im scarlet fu. Joe weisenthal is off this week. Julia if you are tuning in live on twitter, coverage every weekday from 4 00 to 5 00 p. M. Eastern. Scarlet we begin with our market minutes, u. S. Stocks closing lower, turning negative in the last 30 minutes of trading following Donald Trumps remarks on north korea. Remarks,me very fiery heactually use his terms, said, dont threaten the United States. Here, the step of a Nuclear Capabilities of north korea. The question is does it result in unilateral action. Scarlet its the s p 500s worth a since july 6, which gives you a sense of how much we tend to decline, how rare the declines are and how sizable the declines arent. Julia you said it earlier, liquidity softer. These are very small moves in the grand scheme of things. Scarlet if you look at the industry groups, 10 out of 11 groups are lower. The lone exception is utilities. Certainly some flocking to the safe haven. Youre looking at a couple of individual movers, hertz and avis down by quite a bit. Kors surging by 22 , its best day since every 2016. Pharmaceuticals, sales of its biggest drug, that offset declining sales elsewhere. The stock averaging as much as 10 , but gave up some of that advanced rate and a quick check of the vix as well. We talked about this low volatility. We did get higher in volatility. We now looking at vix within 11 handles. Thats a sizable move given it was at 9 yesterday. Jeffery gardner lock remarking the vix could easily go to 20 from 10, telling cnbc that. Julia lets take a look at the bond markets, we want to give you a sense of where the u. S. 10year is trading. Said, not much reaction in the bond market. I want to take you over to europe as well and give you a look at whats going on in terms of the italian, german spreads here. They are the tightest they did in eight months. It ties a gain to the story we have about the improvement, not only of the funds mental numbers, but the sense of politics in light of the French Election results. Scarlet, currencies. Scarlet monitoring the rand, it tumbled after jacob zuma surviving a noconfidence vote. This is the eighth attempt to remove him. Hes been president for 8 years. Eight votes in 8 years. Fiveday, look at a chart here. Pound falling for a fourth straight day, retail sales fell less than expected in july, more evidence the u. K. Economy is slowing us exit talks get underway brexit talks get underway. And a quick check of the kiwi, this is before the reserve bank of new england meeting later this evening. There speculation the central bank will lower the protective path of its benchmark interest rate. Julia give you a look at whats going on in terms of gold as well, a bit of a choppy performance straight we were flatlining until the early part of the morning, then we sold off and now weve rallied again. Not surprising in light of what weve seen. In the latter part of the trading session, a rally there which makes sense given the north korea headlines. Quick check on whats going on with that wti as well, back below that 50 a barrel. I want to show you the price here. We are very much stuck in a range. Those are todays market minutes. Scarlet lets take a deep dive into the bloomberg. You can find the chart using the function of the bottom of the screen. Monitoring the anxiety in fx markets before Mario Draghis speech at jackson hole in two weeks. This is the implied volatility of eurodollar in three weeks time. But itcking higher, doesnt mean well below levels brought up to the French Elections, thats the pink circle, and its on par with volatility before the ecbs june meeting. All this suggests traders are concerned with not losing sleep over what hell say. When you look at a five year time frame, you spread it out more, draghi last spoke at jackson hole in 2014. What happened there was fairly interesting. After his speech, the threeweek volatility doubled to 10 by the end of the year, and he had said Inflation Expectations had fallen and also rises, that helped lay the groundwork for bond purchases. Julia taking a look at the earnings crossing the bloomberg care, we have priceline, secondquarter numbers, the adjusted etf coming in at 15. 40 15. 14. Billion, the estimate just shy of 3 billion. Scarlet earnings are out. A couple of things to focus on here, earningspershare 1. 58 one dollars 55. At headline and looking here, its going to buy majority ownership of Major League Baseballs streaming business. Disney had already bought a stake but now its going to buy majority ownership, paying 1. 58 olein dollars for an added 42 stake in bam tech. Disney making a big investment in streaming brady will launch its espn branded multisport Video Streaming Service in 2018 as well, followed by a new disney branded direct to Consumer Streaming Service in 2019. He needs to do something about declining tv ratings. With us is the director of north American Research for Bloomberg Intelligence, and the cohost of bloomberg daybreak americas. Im going to come straight to you. This is an exciting announcement. The announcement is disney is going over the top. Espn is directed subscriber. Its not just espn, its also disney and pixar. It bought up 1 3. They are taking up to 75 . They will still be partners with the nhl and mlb. They have a lot of the sports leagues committing their rights with this, so youll be able to get on your iphone and television, wherever you want, a direct subscription, huge amounts of sports. Julia they are tackling the subscriber hemorrhage weve seen. Share beingg market stolen to counter that. Julia also theyve announced a branded direct to Consumer Streaming Service. What do we know about that . Is basically the Disney Library of movies as well as pixar. They had a deal with netflix which continues for a while, but they have an option they can exercise. This is a bit later. We are going to see that espn overthetop in early 2018, it will be 2019 for disney and pixar. Instead of going to netflix, you will go directly to disney to get your disney and pixar movies. They have a huge library, if you think about it or it is not just their current movies. It. Its not just their current movies. Big move for disney, a move investors have been waiting for. You can argue this has an slow to the digital party, particularly with its espn product. It was always going to be the platform for them to get over the top and go go direct to consumer. It looks like they will get a pretty decent breadth of sports programming on the espn streaming app with one notable exception, the nfl does not appear to be on there. This is a very good first step and we will have to see how much content really gets on this streaming product. Julia what does this mean for the competitors . After hours in some of the media space, netflix, whats your reaction to the likes of netflix . They have been getting away from the product coming out of the big studios. Theyve been weaning themselves off of that and investing and original content. Is seen as coming down the pipe. Its a question of when these Hollywood Studios want to take full ownership of their streaming product, and as an example here of disney with their product going direct to consumer. Scarlet what other kinds of companies can do Something Like this . As david mentions, disney is in a unique position here because it has this rich library here. Warner do this, can time do this to the extent disney can . I think they can. You think about some of the big conglomerates that have a big deal. Time warner, 21st century fox, Companies Like that that have a rich library of content, movies, tv shows that can go direct to consumer. This strategic shift, disney will and its Distribution Agreement with netflix for subscription streaming of new releases beginning in the 2019 calendar year, theatrical slate. They are exercising their out. Not great news for netflix straight at the same time, netflix is well on their way. I dont think they need to much of the from us. Otherou talk about companies, no one has the sports and entertainment put together. When you look at this announcement, normally over and above what they do with espn, they say there will be 10,000 live events be able to subscribe to. Its not that you will get all of these straight you will be able to buy packages the way you have an on directv if i want to see all my direct tigers Detroit Tigers games, i will pay money with my credit card directly to disney and they will give me my tigers games. Whats interesting about this is people will have to change the way they think about consuming live events and movies. No one really thinks about, disney released this movie or time warner through paramount. Now you have to be conscious of that because of the library of which companies will allow you to stream it. A lot of what these Media Companies are trying to do is, they are trying to preserve their existing ecosystem where the comcast world will distribute all their products. But, at the same time they also and develop these digital platforms to combat the disruptors of the marketplace such as neflix. Thats what were seeing, try to play in both fields. This is a move that disney and espn in particular had to make. You could argue they are late to the party. This could be a bold move for them. Julia what else can they do here . I think espn is the Biggest Issue here, because its by far the biggest profit generator for the company. The real question for them is, is not a technological question, its a programming question. What kind of programming are they going to put on their and will it be compelling enough that netflix has compelling programming from all the studios, but what really set netflix apart and put it on its most recent growth trajectory is the original programming. They are making huge investments in their programming. Lets see what espn puts on their highquality programming, sports programming is available on the streaming platform. Its also a relationship matter. They have the fulfillment. You give them your credit card once. Then disney will have the data about what sporting events, what entertainment events he went to. Disney has a lot of other products, called theme parks, all sorts of merchandise. Disney now will have access to all that information about you, the disney consumer. Julia to tailor it to the audience. Powerful. Scarlet join back to this direct to consumer streaming, at least for disney, it makes. Sense because they already own the property they have their rich library. Out forll have to pay all those rights. Thats a cash lead on a constant basis. It is. The espn model is always been, we have a high fixed cost of programming rights, but were able to cover those costs by raising our monthly rate we charge our consumers, now seven dollars per subscriber per month. That always offset the cost. With subscribers declining into core package, thats not the case. Julia thats very high for the industry, isnt it . 7. 3 billion a year. Scarlet the value is in the life sports. Is there any value to the old games or anything . Pn, its a live sporting events. They have the rights to just about everything, if you think about it, certainly in the north america based it also globally. They have plenty of content to put on this platform. The question is, do they have the high quality nhl, mlb, that type of thing. From just what we are reading here, they have a pretty good breadth of content. We shouldnt assume its the traditional model of we will pay for sports rights. Both nhl and mlb are partners in that. Theres another model that will say we will cut your sports leagues in on the revenue you get from your games. Over and above what you may be doing with Cable Companies and things like that, so we shouldnt rule out the possibility that they will essentially be partners or at least revenuesharing partners that will be incremental money to the other leagues. Julia is going to be fascinating, isnt it . I want to ask you a question about amazon here in light of the 10 Million Pounds they were going to pay for the tennis writes. Where does that leave them . Lets reiterate what weve just heard here, Walt Disney Company not even looked at the earnings result, theyre going to acquire techity ownership of bam bamtech here. They have this Distribution Agreement with netflix as well for subscription streaming of new releases beginning of the 2019 calendar year in terms of the theatrical stake here, they will and that distribution but clearly for the industry, much bigger, this is direct to consumer. Disney really taking the fight to every other one. These guys have got some serious diversification already. Dont forget to tune in, david westin will be talking to the disney chairman and ceo bob iger on Bloomberg Technology. Its going to be great. From new york, this is bloomberg. Scarlet lets recap what happened with disney here. A bead on the bottom line, miss him the top line, but the real announcement is disney agreed to acquire major ownership of 41. 58 billion dollars, additional 42 stake in the streaming technology company. It was a unit of major league baseball,. The nhl also owns a stake. In addition to that, disney is going to unveil a disney brand director Consumer Streaming Service starting in 2019, and as part of that, its ending a distribution pact with netflix for subscription streaming which is why you see netflix shares down more than 4 rate we included comcast as well because it too would be affected as a Cable Company when disney pulls out or starts offering its own direct to Consumer Streaming Service. Comcast not really trading afterhours but certainly meant to watch. We have paul sweeney, director of north America Research for Bloomberg Intelligence and david westin, coburg cohost of bloomberg daybreak americas. The number one question for bob iger when it comes to this new announcement on streaming . This a recognition that the business they been in for all these years is going away . Not gone. It will take a while. Is this really saying 5, 10 years down the road we are going to be accessing all the video content on our smart owns and smart tvs a not going through the traditional means. You look at netflix, its the greatest disruption to the Media Business in my 30 years of covering the sector and it affected all parts of the media sector. We are starting to see big Media Companies thinking about how do i monetize my content in an overthetop world. Disney was arguably the most important valuable content in the world, that is espn conten. , perhaps even more pointedly, is this the end of the bundle . His basic cable over . It rained supreme for so long, so many people have made some much money from it as a practical matter. Does this mean we wont get bundles anymore . Julia what do you think his answer will be . He will say its been a wonderful way of delivering product and it will continue to be for many years. By the way, were going to the future. Julia talk to me about the reaction and comcast. We were just showing you, we know they are going to attend the agreement with netflix and that ends as well. You can predict the response there. I think whats happened with the cable stocks, they recognize this is coming, and cable investors own cable stocks not for the corp. Video business but for the broadband business, the highspeed Internet Connections the companies provide. Isnt a traditional video product anymore. What weve seen over the years is a steady decline in paytv video subscribers but steady growth in highspeed internet subscribers and those subscribers are much more profitable. Its a pretty good trade for the Cable Companies. Scarlet julia why is disney reacting the way it is today . A bit of a miss here. A couple things here. Revenue came in a little bit lower, which brings it to western is there an advertising , that we seen from discovery and scripts this quarter, and whats going on at espn in terms of subscriber losses. This Digital Investment is something that had to be done but i think people might be a little disappointed that this new Digital Product wont have nfl, or maybe doesnt have the highprofile nca product. We will have to see what they said on the call about what type of sports programming will be available. Scarlet as you cram for your conversation with bob iger, what about succession . Does that even come up right now . Im sure theyre discussing it behind closed doors. Bobs reaction im sure will be, the board is working on it, they will make a really great decision when the time is right and its not appropriate for me to talk about it or it julia lots to discuss. Thank you both. Dont forget to tune in, david westin will interview the disney chairman and ceo bob iger at 5 30 p. M. On bloomberg. Results,hertz reported secondquarter adjusted loss per share was wider than what analysts anticipated. It also said it sees it has seen objects with similar trends through july. Not necessarily great news there. Is encouraged by preliminary , up byrder per day trend three by 2. 6 in afterhours trading. Scarlet whatd you miss . Hertz reported earnings at the top of the hour. Lets give you a rundown of what they are. The company has struggled to compete with ridesharing Companies Like uber. The loss per share was wider than analysts had anticipated. Did earnings show any promise . Lets ring in the global head of fixed Income Research for Bloomberg Intelligence. We will Pay Attention to the credit in addition to the stock. What did you see in the results that may have been somewhat encouraging . The data point everybody saw today is the news that we were giving everybody last week, which is that pricing on airport rentals was up 1 , which gives people a feeling of hope that all the over fleeting thats been going on in the industry over the past several months is finally under control. Ceo saying, significant progress in the first half of the year on the turnaround plan. Whats your assessment of their hopes for this turnaround plan, switch in terms of the types of cars they are targeting . Also, whats he going to say about the debt refinancing that suddenly got pulled as well . All these questions being asked about whether that was a good idea and what precipitated it. The good news for them is it sounds like they were very oversupplied, especially in smaller, compact cars. Getting rid of that and cleaning it out and making the demandsupply balance more and line with each other is a strong positive. But theyre so much work to be done over at hertz. This is one little chink in the chain that needs to get improved. They need to come out and be transparent about how theyre going to approve, whether its their accounting system, their internal controls, their liquidity, and when it comes to debt refinancing, what will they do with that money . Using letters of credit, or is there Something Else thats going on . Scarlet lets put up a chart. Its g btv 6610. The stock price in blue. It has cratered from where it was not so long ago, august 2015. The white line is the insurance policy and perhaps hertz debt defaulting. Is this a company that can survive on its own, or does it need to partner with someone . It probably needs to partner with somebody down the road and whether thats going to be one of the ubers or lyfts of the world are getting some sort of thirdparty money, it probably needs additional liquidity from where its at today. Julia so you say we need less secrecy, we need more understanding of whats going on financially with the company. Do you think they give us that clarity, or do you think in some way they are afraid to . A little bit of both. In the press release today there wasnt a lot of transparency. I havent had a chance to see the slide deck yet. Its clearly something the market is demanding and short of doing that, and it might be a shortlived upside on the stock today. Lets just take another look at whats going on in terms of hertz, in afterhours trade higher. A significant downturn this year. Scarlet at least it didnt cut its annual forecast like avis did. Julia expectations were pretty low on this one. Scarlet from new york, this is bloomberg. Got you outnumbered. The dinosaurs extinction. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Find your awesome with the Xfinity Stream app. Included with xfinity tv. More to stream to every screen. I am mark crumpton. It is time now for first word news. President trump responding to the north korean threat. Sanctionsmpose a new nucleariation for their missile program. President trump north korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen. He has been very threatening beyond a normal statement. Postthe washington reported that north korea has developed miniaturized Nuclear Warheads that can fit inside missiles. President trump has exchanged private messages with robert through and it was said a lawyer that the president has been sending messages to him, saying, he appreciates what bob mueller has been doing, and they have called the widening investigation into the russian interference with the election a witchhunt. And there was Excessive Force and public Rights Violations against demonstrators in venezuela, according to a human rights group. Electric shock, and some were handcuffed, hanging detainees by their wrists for long periods,hg and threats of killings and, in some cases, threats of Sexual Violence against detainees or their families. Some believe the situation venezuela cannot be solved through these measures, and they are urging the government and opposition to relaunch negotiations. And preparing for a longawaited assault against hundreds of Islamic State militants near the Syrian Border in a campaign that will involve coordination with the militant Group Hezbollah and the syrian army on the other side of the border, although they say they are not coordinating with the government of syrian president bush are assad. President zuma has made it through a vote to remove them during a sinking economy. A surpriseent made decision to allow a secret vote. He has survived six previous attempts to remove him. We believe more on this story coming up in a moment. Global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Mark, lets recap some breaking news, disney with a launching of an online only and alsoogramming dropping a deal with netflix, because it will be offering family films directly to consumers over two new streaming services, one for sports and one for family film to take advantage of and also dropping a deal with netflix, because it itch its rich library. Talk lets move on to about Online Booking giant, priceline. They cannot catch a break. Estimate lower. The problem is that that trailedarter eps estimates, and that is what has dragged the stock down. They are ramping up their marketing, with the likes of and airbnb, b falling afterso hours, getting dragged down. Beate advisor, however, estimates trip advisor, estimates, and as you can see, the entire industry is taking a bit of a hammering, down 5. 7 . And another taking a beating after hours, a 23 loss in afterhours trading, fossil group. Once again, fossil giving a disappointing fullyear sales outlook, off by 22 right now. Julia South African president jacob zuma beat back a removal vote held in secret today. I bloomberg reporter filed this report from johannesburg. Our bloomberg reporter filed this report from johannesburg. No confidence in parliament. This after those from the Ruling Congress rally in close ranks in a motion of noconfidence. 177. Tes to present, some choosing to abstain from the ballots. The markets were affected by as much as 1 after the vote outcome was red, dropping 1 against the u. S. Dollar. Read,er the outcome was dropping 1 against the u. S. Dollar. We know that the National Congress will be going to elect leader leader a new in december, which could mean he is asked to step down after a in december. Moodys will be releasing a ratings review, and people will noteeping a very close eye just about his survival after the vote of noconfidence but what happens after this decision. Julia that was our bloomberg reporter from johannesburg. Lets bring in peter, head of emerging europe, middle east, and africa, and he joins us on the phone from london. So much for joining us. I am not sure everyone expected president zuma to be ousted, but do you believe he will now be emboldened in some way because he survived . This is really maybe the big debate in the market over the next few days. Ultimately, i think he will be emboldened, because, once again, that they go back on themselves, and there was a secret ballot. Majority, who would rather he is god. Ultimately, he will continue who would rather he is gone, and ultimate, he will continue. Scarlet more than two dozen Party Members voted against him. What about his victory with this noconfidence vote . Peter it was probably around 35 , and the vote tends to be secret, of course, but there are all large number who told me before the election, before the vote, that they were worried and that there may be some repercussions. We are particularly watching two in the motion, so it is definitely being watched very closely. Julia the election is in 2019, so even if the african National Congress were worried about some as a result oft what is going on with their president zuma, he is expected to step down as the party had in december anyway, isnt he . So what does this mean, and what is likely to happen . Peter the question is does zuma step down, does he really push power, or does he relinquish and looking out for his best interest with the network he has and the power structure. The question of where reform comes is basically a continuity that we think probably zuma will be in power beyond december. Scarlet peter, very quickly, what does this mean . The economy has been in recession. There are concerns about politically where it goes next. Leader we see an extended peter we see an , and we see the economy stuck well below the arential, and that means we on a steady slide towards further downgrades in south africa. Scarlet peter, painting a , speaking onicture south africa. Coming up, shaking up the Media Industry by disney get we will take a deeper dive into its announcement. From new york, this is bloomberg. Scarlet whatd you miss . S,sney had a beat and a mis but the big thing is disney will be offering sports programming as well as family programming over two wl streaming services two streamingver services directly. Hey have a deal with bamtech lets bring in cory johnson. We were always wondering what that stake, that investment, in bamtech would mean. It is really interesting, a technical acquisition by bob iger and the board at disney. They wanted to own some assets contentps him gather and then disperse that content to all of the broadcast partners , and i think it is widely seen i think the nhl is using bam to broadcast their stuff, as well, so whether it is more consumer focused, like netflix, does not seem to be the case, but this is big technologically. Bob iger willing to spend billions of dollars to buy lucasfilms billions of lucasfilms, to buy pixar, and the most recent acquisition like that was lucas, and the success with star wars has warned this out. There will also be owners, nhl and mlb. Were talking earlier about the share price reaction, and there is the Growth Strategy for the company, but they still have a pretty egg and diverse core business. A pretty big and diverse core business. Percentage of revenues, if you look at what he is the yen means, it is very big, well over 30 if you look at watch espn means, it is very big, well over 30 . This is a very big thing for them, and furthermore, if you , operatingt it means profits, they will be spending more there, and it is costing more to get viewers, so it is costing, but still, 36 of profits when it is only about 33 of revenues. It mean fort does netflix . What does it mean for amazon . Content creators. With star wars and superhero movies that are dominating across the board, it is so important to be creating content. To be a seller and distributor, that is big. I want to mention, the theme saw thesiness we opening of a china theme park, and as a result, that Revenue Growth is nice yearoveryear and increasing. That is shanghai, right there, but look at profitability. Profitability at theme parks, mickey mouse, really strong. 23. 9. That improved profitability is all about lowering costs. That is good going forward, also with good results in europe. Julia advertising here. So the Advertising Market has been strong because they fixed the business. Abc was really struggling. They had some strong programming. Espn has had some good numbers, so even as they lose subscribers, they are charging a little more to advertisers. Julia interesting. Johnson, bloomberg editor at large, thank you, and, of is going tod westin be speaking to the ceo of disney, while tiger, on Bloomberg Technology. It will be a good conversation. I will wait for that. From new york, this is bloomberg. Scarlet it is time for the lookberg business flash, a at some of the biggest business stories in the news right now. A reduced combined headcount for the departures, all former Janus Capital group employees. Earlier today, the Company Reported cost savings in the second quarter. The merger of Janus Capital and henderson was completed in may. The u. K. Government needs more information on Rupert Murdochs acquisition of sky. According to people familiar with the matter, they what further clarification on the 15 billion deal. Has untilulator august 15 to provide more details. A new high today, about the same price as the currency now has an approximate market value of 56 billion. The word is out on whether it is a transformative technology. And that is your business flash update. Toll. And taking a a magazine publisher reported better than expected earnings, but its ad revenue was down. Times ceos spoke with bloomberg spokebe as david with bloombergs david westin. We have put together a plan that we are thrilled about that we believe and are confident about in terms of growing this company over the next three to four years. We announced we see 500 million or more of ebitda, which is a Significant Growth for us. David there is a revenue site at a cost side. Side and a cost side. That is a big chunk. How can you do that without undermining your brand . One is two thirds of the cost justout is related to operating more efficiently, infrastructure, old systems that need upgrading, procurement and how we buy, purchasing power. That is a big part. We do not think that that affects the daytoday business, and then we are finding new ways and we are reimagining how we build our products. How can we eat more innovative, resourceful, how can we be more innovative, resourceful, and we are reinvesting for growth, so, of course, some cost savings will go into the high areas of growth, and it is important for us to continue to aboutate that we have 600 million in advertising but another 300 Million Dollars or 400 million that includes other business, and that includes brand extensions, television, video, and the like, and we think this is a plan that is very dual before us and excited for this company as we transform. Think that this is a and that us and doable for exciting for this company as we transform. David time warner. Why is this time different . I think a couple of things. I think the Management Team of this company is really important to note. We now have an adequately diverse team across all leading with track records. The Management Teams have largely been from the publishing sector. That is really important as we build revenues in the new spaces i talked about. Years, we havest a whole new energy, and hold new culture that we are infusing at the company, meaning we are really focused on building new Revenue Streams beyond the additional revenue we have had at this company. See us do and you this aggressively, is leveraging our direct consumer relationships. We have 30 million active print subscribers and another 100 million on our file. We have millions that come through our sites every day. As you know, a lot of companies in this space, they do not have any data on their customers. They have new no idea who they are or where they live or how old they are. Timeet that is the ceo of on bloomberg earlier. President trump has exchanged private messages with special counsel robert mueller. Messages of appreciation. Tell us more. Messages of appreciation. It sounds like President Trump is trying to convey to special counsel mueller that he has nothing to hide and that he wants to put this behind him. All the while, the president has been blasting the investigation , questioning his legitimacy of his presidency and the legitimacy of the election, which he does not think he is getting enough credit for, so there is a lot going on. Julia talk to us about north korea and the comments the president made today, the president saying fire and fury. In terms ofshifted north korea in terms of what their capabilities are now . It is powerful stuff. This is the strongest we have heard from President Trump in korea, andth north this comes after this is in line with what i think military experts have been expecting out of north korea, so we have seen the markets react negatively to this. We have seen, you know, a number of people shocked, i think, and we will see what happens next, everybody in this moment is paying attention to this now. Julia thanks for the context. Our bloomberg reporter. As we mentioned earlier, netflix shares are falling as disney says it will stop selling movies to netflix, and they continue to do business tv. Cluding with marvel we will continue to keep you posted on these developments. From new york, this is bloomberg. Tv ceo boby chairman and iger joins david westin at 5 30 p. M. Thats all for what did you miss . Bloomberg technology, is next. Have a great evening track your pack. Set a curfew, or two. Make dinnertime device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. Introducing xfinity xfi. Amazing speed, coverage and control. Change the way you wifi. Xfinity. The future of awesome. Alisa im Alisa Parenti in washington and you are watching Bloomberg Technology. Lets start with a check of your first word news. President trump send a warning to north korea that threats to the u. S. Could be met with fire and fury. As after pyongyang said that the u. S. Would pay dearly for sanctions. Meantime, the post reported today that north korea had developed a miniaturized Nuclear Warhead that fit into missiles. Democrats on the House Oversight committee are making a push for Additional Information on money spent by the federal government at trump properties. They sent letters to cabinet secretaries and departments across the country, requesting documents detailing payments to travel businesses. They want that by august 26. President Trump Exchange private messages with the special counsel robert mueller. Communicated through this layer that he appreciates what bob miller is doing. Publicly, trump called the widening investigation a witchhunt. The times says the government report concluded the average temperature has risen drastica