Transcripts For BLOOMBERG Whatd You Miss 20170817

The white house and appreciates the unifying words that Heather Heyers mother spoke at her daughters memorial yesterday. Walters did not address the question whether the president planned to visit charlottesville. In beijing, americas top general says war with north korea would be horrific, but the chairman of the joint chiefs of letting north korea and develop the ability to launch a Nuclear Attack on the u. S. Is unimaginable. The general told reporters that President Trump asked the pentagon to develop viable military options. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im Mark Crumpton. This is bloomberg. Scarlet live from bloombergs World Headquarters in new york, im abigail doolittle. Scarlet im scarlet fu. Joe julia is off today. We are 30 minutes from the close of trading in the u. S. U. S. Stocks are trading at session lows. The dow is separate worst day since may. Joe the griffin is, bloomberg miss . You miss . What did you two suspects were arrested. We will bring in the latest. Speculation that gary cohn could resign causing a minor blip in the vix and 10 year treasury. If you are willing that your job is going to be taken over by algorithms, do not miss our interview with a partner of Goldman Sachs Asset Management who is leading their strategies. Return to the story of the day, the terror attack in barcelona, where police are reporting 13 people died and more than 50 were injured after a van jumped the sidewalk in barcelonas iconic area slamming into pedestrians. Two suspects have been arrested. Here with the latest to get his perspective on what is going on o. Europe is Frederick Asante good to speak with you. I wonder because we have not gone and indication of any claims of responsibility from the perpetrators whether there could be any link to the catalan. Movement in thailan i would say that is extremely unlikely. The information we have is still patchy. There is no clarity on the motives, but i doubt this is from the separatist movement. Although served as movement has a strong base of support in the capital population, there has been no history of this ever getting violent so i think this would be very surprising. In fact, the type of the attack and the details of the attack based on the information we have suggests that this is very much reminiscent of similar attacks we have seen across europe in recent months and years, all of which are linked in one way or another to the Islamic State. Wi would say this is a working assumption at the moment. Joe we have seen a number of these van attacks across europe. What kind of experience has spain had with these so far, or is this fairly new in spain . Federico yes and no. I would say the attack, the timing of the attack is not overly surprising. Analysts have been expecting Islamic State, if the links were to be confirmed, to rely more on terrorist tactics as it comes more and more under military pressure in its territory in iraq and syria. The location of the attack is more surprising. Spain has a long history of political terrorism, including related to islamic extremism, but this has not been the case in recent years. This is the first instance of a n attack of this type on spanish soil in recent times. My First Impression is this is more to do with spain compared to other countries that have experienced similar attacks does not have a large migrant population. Relatively small number of refugees. A fairly open country when it comes to immigration. Crucially, spain is not playing any kind of active role in the military campaign against the Islamic State itself in syria and iraq. I can only speculate, but i suspect the choice of barcelona as a target may have more to do with its status as a major tourist hub for europeans as a whole. Abigail picking up on joes point that we have been seeing an increasing number of these vehicle attacks, it is almost like an invisible weapon. Within authorities do about this, and to what extent will not be a fight against Civil Liberties . When will people talk about that being necessary . Federico unfortunately as we there is before, not a lot authorities can do to prevent this type of attack in particular, which are quite easy for someone to plan and execute. Extentre to some Counterterrorism Measures can help prevent these. There have been those identified as at risk. It requires a huge amount of resources, especially monetary. The number of people at risk, which is bound to rise as a lot of people return from the middle east, have not been involved there. Not much western governments can do i am afraid. Scarlet thank you so much. Just an update here. We now have were thats what people have died and 80 people are hospitalized tha 1t 12 people have died and 80 people are hospitalized. Isis has taken responsibility for the barcelona attack, according to an Islamic State sponsored news agency. Islamic state has been responsibility for the attack in barcelona. Coming up, we will speak with our guest about the equity markets and if bears have a reason to expect a correction this year. This is bloomberg. Whatd you miss . Bob corker just became the first senior republican to question President Trumps confidence in a facebook post. Here with more details is our guest from washington. Joe thanks for joining us. We have seen republicans from time to time offer criticism of the president over various things. How do senator corkers statement differ from things in the past . First of all, senator booker has been a strong supporter of the president. He was a potential secretary of state pick. He was a potential Vice President ial candidate. These are words from infertility who has been an advisor and supporter of the president. Also, the content of the remarks themselves, this idea that the president has not displayed the confidence, he does not understand the character of the nation, these comments are divisive. Always looking to see whether republicans will go the extra step against the president , and this is maybe the first time we have seen someone say that he may not be examining these skills a president needs. Cans senator corker, reconsider him almost to be the first domino to fall when we think back to the Manufacturing Council and the Advisory Council many months ago . Elon musk resigned as did a few other ceos. More recently of course, test tim frazier was the first to resign after the tragedy in virginia. Can we see senator bob corker the first to start speaking up against the president on the gop . Arit i think we have to see what he says in the coming days. In may after the president revealed confidential information to russians in the oval office, corker said the white house was in a downward spiral. A couple days later or even the said that is something i would say to the administration, the president himself. It is not clear whether this is senator corker working away, or him saying, mr. President , this is not how you run a country. This is not how you display confidence, give confidence to americans. This is not how you show your competent and prepared for this job. Can you tell us a little more about bob corker, the senator. Who are his allies . I ask because we have already seen Lindsey Graham, the senator from South Carolina, and john mccain, the senator from arizona, come under fire from the president for very specific reasons, but now that bob corker has taken the extra steps to criticize the president , i wonder if there are any natural allies we should be looking to two perhaps followup or push back against. Arit i think that senator corker is an ally of all the republicans. We saw him in the videos you posted saying senator jeff flake, who has been a strong critic of the president , is a great person. Senator corker will look out for his hello senate republicans, especially if they are being attacked by the president. This idea that a sitting republican president would go after other sitting republican senators and say, i am glad he has a primary challenge, i hope other people run against him, that is something i do not think senator corker is also interested in. No comment yet from the president following what corker did, is there . Arit right. He went after jeff flake. He went after Lindsey Graham. It will be interesting to see if this is president if President Trump sees this as bob set some good things and bad things about me, or if he says this is a step too far. Thank you so much. Thank you for bringing us some perspective on this developing story. We will continue to monitor what happens next. As for equities, whatd you miss . Stocks are selling opposition those. We want to bring in the chief investment emo. Tegist list from b give us perspective about me declines we are seeing today because we have not seen sizable moves in u. S. Equities of late. If you look at the chart, they have been steadily drifting lower this afternoon. For all intents and purposes, stocks have really been irrespective of what is going on with north korean rumors and we saw last week, but since the third week of july, the markets have been range bound. Given the fact that next week starts the traditional holiday vacation season, the last couple of weeks of august, people typically go hide away, not surprising we are seeing a bit of a pullback. There are a lot of Different Things confounding investors on a shortterm basis. We are not surprised to see a bit of a pullback. We never want to see people lose money, but it was a little overdue to see a bit of selling pressure. This is very normal and very overdue. Joe do you think any of the political headlines are exhibiting to this, or is that just trying to connect one thing to another thing . Brian i think investors in general have been looking for any kind of opportunity to react to anything, especially given the ascension of stock prices. Actually, we are giving politicians way too much credit. Stocks go up because of earnings and fundamentals and the economy , not because of what is coming out or coming into washington. Again, we would love to be transfixed with headlines, twitter, and all that funny nearterm stuff, but at the end of the day, stocks are driven by continentals. The fundamental construct of the u. S. Stock market is pretty darn good. Following up antha appointment today perhaps is the person we saw investors connect volatility to the stock market when it was rumored gary , economic director of the Economic Council gary cohen economic director of the council would resign. We saw the s p 500 go lower when is that aefuted, but sign investors are in fact starting to really connect the politics to the s p 500 and stock trading . Brian i dont know. The market kind of sold off and was becoming a little bit wishywashy post the inauguration in january and february after the big cap rally. I think the using it as an excuse to tech stocks lower. If i poll my clients around the world that have the Great Fortune of visiting with, i think 150 of them believe nothing will happen in washington with respect to any kind of political platform, so tuned out today be blaming noise and rhetoric out of washington or instability with respect to the policy of trump to be selling stocks, my grandma taught me a cool world a long time ago, bunked. , yourr fair cases 2350 bold cases 2500. Give us a sense of historically what it is going to look like for the second half of the year after some pretty sizable gains in the first half of the year. Brian to clarify, our base case is quite low. Our bull case, we came out with that last year, and to be clear if you take a look at history and how stocks have done well in the first seven months of the year since a precedent in terms of how they will do going forward. When you see these types of moves the first seven months of the year, it typically portends to hire markets. Think about the investing landscape and how great earnings were and how great sales growth has been. We have low interest rates. I hate to use the over use the term goldilocks, but if you take a look at u. S. Stocks versus a great run we have seen in emerging markets this year and how europe is beginning to unwind and where asset bubbles can be coming into play with the bond market and private equity market, we still think that u. S. Stocks for the long haul for the next 10 years is the place to be. We have had a call for several years now that we are into a 20 year bull market. We are eight years into it. That does not mean we will not see bumps and bruises along the way. This is the process where it is pretty normal and pretty healthy. Perhaps another bump in the road. Brian, you are sticking with us. If you have a bloomberg, check it out on your terminal tv. You can watch as online. It is like magic. It is magic. Joe charts, headlines. There is me moving my hands like i am doing right now. Seeing what is going on becaus. Complaint, questions for our guests, anything like that, go to tv on your terminal. Scarlet interactive tv is the future of television. From new york, this is bloomberg. Pences is Vice President speaking following the attack in barcelona. Lets listen in momentarily. Vice president pence our futures are forever linked. Scarlet wheel that 11 people have died and 80 people we know that 11 people have died and 80 people have been hospitalized. There was a claim of responsibility from the Islamic State, according to the Islamic State sponsored news agency. In the meantime, we are checking on the market right now. U. S. Stocks are holding your session lows. We are back with brian from bmo Capital Market in toronto. When we talk about the markets being down, the backdrop as they have been on this incredible run powered by the same names, when you have also found that another group of stocks have helped drive this rally that is underappreciated. Lowrisk stocks. What counts as low risk . Brian things like low beta, low volatility in terms of earnings, which are really important because volatility of earnings is looking at how consistent these companies are delivering Earnings Growth. Those are two key metrics which i think are very interesting. You have some utility stocks, clearly, but you are a fair amount of tech stocks because of the consistency of earning. People fail to realize that Technology Companies that actually become increasingly consisted earners since the tech wreck in 2000 and 2001 transfer onto themselves, but in general we continue to think that as more and more companies in the u. S. Marketplace continue to give above market growth, we think we are heading into more of a fundamentally donald driven market, which i think can be very positive for the longerterm breadth and strength of the u. S. Market on a fun and mental basis. Scarlet sticking with technology, something pretty interesting has happened this year, which is the spread between the vix 100, the nasdaq 100 vix, and the s p 500 vix. Blue out highs we have not seen since 2007 telling us that volatility for Technology Stocks really blew out. Is good, think that but on a day like today, we have the s p 500 fixed closer to 16. Nasdaq 100 vix. Item you cannot see this chart, but this is a similar that to what happened in 2007. Does that concern you at all that despite the fact that the Earnings Growth is great for those Technology Companies there has been more volatility, there than for other sectors . Brian yes and no. That is a dangerous chart because you are comparing apples to oranges. The construct of the nasdaq 100 now versus 2007 is a little different. 2007, the market cap structure in terms of how the s p 500 and where the readings were is pretty different because in 2007, it was a record year for wall street. In fact, tomorrow is the 10th anniversary of me going 10 yearsht financials ago tomorrow on friday. I was one of the first religious in the world to do so. Marketcept o construct of the was different versus today. Years, a lot has changed with respect to how the markets were put together. It gives you a picture in terms of how much we have gone up, but stocks do not go down just because they have gone up. Joe when it comes to ideas like save stocks and low volatility stocks as the chart we just talked about before showed they are outperforming this year, in your view, is this a permanent strategy that can outperform, or do you believe in sort of switching of gears and switching up factors depending on the state of the market . Brian it is a great question. What we found in our low risk categories typically is historically low risk works very well. We have experienced some technical difficulties. We lost our connection with brian belski. You have a chart earlier you were going to pull up to talk to. It is a technical chart. Abigail it is a technical chart. Why wanted to ask brian about was the muscle 2000. It is up only fractionally on the year and the s p is up 9 , 10 . We saw the small caps start to before the s p 500. He was the chart scarlet was talking about. Term. A fiveyear you see this beautiful leg up, also the leg up owner of the election. Of the election. At the end of last year, there was a pickup, but look at is the correction here, here, here. This can be an indicator we can see a bit of a selloff. Joe speaking of how we are looking at today, we have the s p down close to 1. 5 today. Nasdaq down 1. 8 . Dow off 2. 9 . If you look at how they are doing today, i will bring that up quickly. Airlines getting hit really hard. Steel, communications leading the downside. Only a few sectors up, but not very much. S p 500 copper sector is doing well. Other than that, red. The dows worst day since may 17. The s p 500s lowest level since july 11. You can see a pretty steady decline into the close. Market close is next. We are talking biggest declines relatively speaking for the major u. S. Stock indexes. 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. Scarlet u. S. Stocks across the board are down more than 1 . The dow is having its worst day since the middle of may. If you are tuning in live on twitter, we want to welcome you to our closing bell coverage every weekday from 4 00 until 5 00. We begin with market minutes. A long awaited decline for u. S. Stocks. Session lows. 272 point drop in the dow. One point 25 . Steeper losses in the nasdaq, almost 2 . He s p 500 losing 1. 5 . Jobless claims came in pretty well. The economy is not the story. Abigail politics is the story. Concern about what happens with is way the president promoting his progrowth agenda. I want to look at the industry groups. S p 500. In 10 groups. Come inside the bloomberg, all of 11 groups, im sorry. All 11 groups are down by at least 0. 7 . Worst performance. Tech shares off by 2 . Financials losing 1. 7 percent. You cannot have both of these doing badly and not have the whole system be affected. Joe, this was something you were highlighting earlier. In the that wobbliness morning. There was a lot of speculation about what would happen to gary cohn. Joe some rumors going through the market about him possibly leaving. The market does not like the idea of him leaving. We did get a spike when those rumors came through. A preview of what could happen if that should happen. Speculation was tossed aside and he is staying on at the white house. Volatility continued to climb through the day. Individual movers. Airline Companies Falling today. You are looking at the bloomberg u. S. Airline index, off by 4. 5 . The attacks in barcelona. Concerns over travel and terrorism coming up repeatedly every time there is an incident. Apple down by 1. 9 . Cisco moving 4 . Predicting another revenue decline. It is trying to remake itself. Looking to get more of its sales from current revenue systems. Earnings forecast for walmart. Investors are worried about heavies ending in order to maintain its edge in Grocery Sales and commerce. Joe let us take a look at the Government Bond market, content consistent with this risk on market with equities. Yields lower across the board. To 2. 19 . Eld down let us take a look at the same intraday chart of the 10 year, the corollary to what scarlet was showing. With the vix. We saw similar action with the yield dipping in the morning on the rumor that went through the market about gary cohn. And again, the effect of that rumor got washed out because we had the selloff and then the move but the key idea is that when there was that rumor, we did see a sort of reflexive action that gave us a hint that, were that to happen, the market would not be excited about him leaving this administration. You have anyase question as to whether or not stocksas risk off, with being down so much, let us take a look at currencies. We can see that the bloomberg dollar index is getting a bid on risk off days. Sometimes, and we have breaking news. No, actually on infrastructure. I am trying to pull of the information. Here we go. You sent me the headline. We now have a headline with the president planning to form an infrastructure dropping the plan to create an infrastructure advisory panel. This comes a day after the president decided to disband the other two panels. Joe i will freely admit that i did not know there was a plan to have an infrastructure advisory panel, but i take it that if the ceos of the existing panels did not want to stay on it, the odds of other ceos joining this panel were pretty slim. Another sign, perhaps, that Business Leaders are stepping away from President Trump. Not cutting their lines but publicly, not stepping up. On us also get you an update what is happening in barcelona. Apparently, in that terror attack, 12 people have been left dead and 80 injured. There is a related incident. A driver ran through a checkpoint, a white ford focus ran over some officers and was intercepted i policed two miles away. That is where troopers began to shoot and one man was shot dead. We will continue to bring you the latest as it develops. Again, a separate but related incident following the van that jumped the street in barcelona. Another headline. Millionne adds 10 dollars in Energy Assets with the harvest acquisition. 1. 8 ,tone did close down having nothing to do with this. Just a risk off day. We will continue to monitor those headlines. So many headlines to monitor. Joe a lot of breaking news with a lot of market news. , fundamentals are not an or is lyrical concerns political concerns or geopolitical concerns . With nervousness moving across the investment landscape. The headlines are extraordinary, but the Market Reaction or price action is ordinary. What has been extraordinary about the markets in the last few months is not that it sells off a percent and a half, is that it has not sold off a percent and a half. And we have not seen any sort of volatility. This is actually what a normal market looks like. Joe we were looking at a chart yesterday. Without ae have gone 5 correction. What would you look for to say that this is getting a little more interesting . 1. 5 percent decline is not that interesting. I have been tracking the the index level volatility. One of the reason the index was not moving at all was that the correlation of stocks within the index was zero. Half of them go up and half of it goesdown, net net, nowhere. In the last week or so, on an individual basis, stocks are not moving that much more than they were a a week or two ago, it is that they are all moving in the same direction. To answer your question of what would make it a more lasting episode of volatility . That would be the signal that something has changed. Joe when you think about extreme risk off scenarios or high volatility scenarios, those tend to compress. Things are swimming in Different Directions and that is a sign of quiet waters. Exactly right. In crisis mode, the shortterm coalition would be. 8 were. 9. 01 and now, it was. 37. There is ample room for this to go higher if we are moving to a more negative environment. To bring in something , the hindenburg. Do with a, it has to number of different signals. A lot of new highs and new lows telling us that investors do not know what is going on. There is a lot of uncertainty. The fact that we have had five in a row, maybe six, could suggest a lot of uncertainty. Where is jupiter and gemini . I am not a big believer. I would say, that further this year, the Technology Sector has been the horse leaving the cart behind. It has been the driver of equity gains. The end of july, july 27, we had a key day reversal. It opened higher than the previous close and made a new alltime high and then closed the low, below the previous day. A behavioral aspect to that rather than for data mining. The height of this index that session was 6000. From my perspective, until we can surmount 6000, the risk has to be that we finally get a dip rather than what i would characterize a blip. 5 is a dip. One thing we have not mentioned is the fed. A couple of fed officials made comments today including kaplan. The jackson hole symposium coming up next week. Our people starting to think the fed the fed could be a risk . I would not have thought so in the sense that the market narrative to the minutes yesterday was a dovish interpretation in terms of the Public Discourse on inflation. That was ay thought little misplaced. In the sense that people tended to focus on the notion that many members of the Committee Said there were Downside Risks to their inflation workout. Inflation ish under shot, if they did not recognize risks, what are they doing on the committee to begin with. On balance, they did continue to of firm their insulation framework in terms of the phillips curve. Fed could bere the andreat to markets concerned about financial stability, including tightening policy, not because there is too much inflation at the grocery , walmart, or amazon, but because stocks and bonds are too high and they are worried about when it all goes horribly wrong. From that perspective, kaplan made some comments today that suggest he is fairly sanguine about things in terms of the buildup of leverage. Good stuff. Cameron, giving us some perspective around todays drop. He called the day b he called it a blip and not a dip. Of 3. 7 4 billion coming in ahead of 3. 6 9 billion estimate. We see the stock up. Raw sure earnings. They put up . 82 in earnings, better by 7 . Up 4 versus the estimate of 2. 2 . Soaring. E up nearly 10 in the closed market. From new york, this is bloomberg. For first wordow news. Islamic state has claimed responsibility for the van attack in barcelona today that Officials Say killed 12 pedestrians and injured as many as 80 others. The Extremist Group called for its followers to target different states. Is inresident mike pence panama city and said he was sickened why the attack. The United States condemns and we willattack do whatever is necessary to help. Todays inspired attack, the United States stands ready to assist the people of spain and find and punish those responsible. The police force from spains catalonia region say that troopers have shot and killed a man who was in a car that hit two officers at a traffic blockade in various in barcelona. The president criticized the foolish movement to remove confederate mop confederate monuments and he lashed out at his critics. He said it is sad to see the country getting ripped apart. He responded to Lindsey Graham saying that he was stoking tensions. The United Nations humanitarian remains theemen greatest humanitarian crisis in the world. There are now more than 20 Million People in the country in need of a assistance to meet basic needs such as health, water, sanitation, and food. Morear there has killed than 10 million civilians and displaced more than 3 Million People. Global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton and this is bloomberg. We have a gap secondquarter earnings crossing the wire. Shares are searching a big beach. They put up . 58. The estimate was . 52. The boosted guidance for 2. 02 to 2. 10. It is not coming as such a surprise to some because if we look at the options ahead of this, looking for a 7. 3 move. 10 ead, we have nearly a move. Mixed bag. We are monitoring any headlines out of gap. We want to get more analysis about the terror attack in barcelona. Avn plowed into pedestrians in a van plowed into pedestrians in las rabmblas. George, i want to start with spain being a target. It is not necessarily an obvious target for Islamic State. It has claimed responsibility for this attack. What is the significance of targeting spain . George hundreds of years ago, spain was occupied by muslims. Among some, it is seen as land seized. It is not that odd that spain would be targeted. We also have to remember that these people are using targets all over europe. These things have happened in many countries you would not have expected. Spain, they have a reason. But it could also just be that they were there. Of response would you expect to see . Of attacks a number in other countries. Similar attacks using trucks and vans. What would you expect the playbook for spain to look like right now . George they will put blockades all over the world all over the place. They will flood the area with police. The problem with these attacks. They take place. They are over. The perpetrator is killed. Support, or maybe he is alone. And there is nothing you can do after that. You often hear folks in Law Enforcement or Homeland Security saying how many attacks have been prevented that we are not even aware of. Because of authorities intervening and stopping them. What is your sense in terms of these kinds of attacks being stopped . A van before it plows into a group of people is just a van. Dorge much of it has to with aggressive intelligence of what is happening among muslim radicals in the united dates, and much of it is controversial. One of the reasons that we have been effective, to the extent we have been effect of, is that the government has been intrusive. People objected that. It is the intrusion is the only way to do it. You are looking for a needle in the haystack. You have to have a needle finder. This is the problem they have posed for us. To be true to our values, or to protect ourselves. But i do think that u. S. Intelligence has done a pretty good job. George friedman. He will stick with us. Steve bannon said that the u. S. Is at economic war with china. Response togeorges that. Here in new york, this is bloomberg. Were back with torch friedman, founder of geopolitical futures. Talked abouthas the friction between the u. S. And china. He says to me, the economic war with china is everything and we have to be maniacally focused on it. Aree continue to use it, we five years away from hitting an Inflection Point from which we will not recover. Joe with the dissolution of the business council, and with the business side of the weld dice with the white house using some clout, george on the question of china, the president has made it clear that if they help us on the korea issue, the United States will beheld full with them. Right now, the korea issue and china is crucial. The chairman of the joint chiefs of staff visited the korean border with the chinese chief of staff in an unprecedented meeting. Stayed there for cup several days. He has been talking with the chinese. In that context, if we want chinese health, the president has already said he will give it in on some trade issues. Steve bannon must be looking at this attempt to find conciliation with china and is worried that this could lead to an undermining of his views in this position. I think he is exaggerating the catastrophic effects of china. Korea, ing with north that same interview that steve bannon gave, he mocked the president s position in korea saying until someone solves the part of the equation that 10 Million People in seoul do not die, there is no military solution. George the north koreans prepared for this moment carefully. Or may notry may cause a large number of casualties. We have the ability to take out some of that artillery. President is facing this question. He is the president of the United States. Hithey get an icbm and they los angeles, the number of casualties will be astronomical here. The president is facing the fact that south korea does not want a war that will cause devastation to seoul. Quickly, did steve paint theomments president in a corner when it comes to north korea . George the president is going to camp david this weekend with george general mattis and other leaders. I think this is the weekend that the u. S. Will make a decision regarding a military strike. And north korea will be deciding also whether to make concessions. North korea does not want to be hit, despite its bluster. Out of this, i think there will come a kind of settlement. Weekend coming up. Our thanks to george friedman. Strategies going against Goldman Sachs recovering from the meltdown. York, this is bloomberg. I am Mark Crumpton. There has been a second incident in barcelona following todays deadly attack. Police in spain say troopers shot and killed a man in a car that struck two officers at a traffic blockade. This incident came after Islamic State claimed responsibility for the deaths of 12 pedestrians and the wounding of as many as 80 others. Islamic state called on its followers to target countries participating in a coalition to drive it from syria and iraq. Iraq has acknowledged incidents of abuse by Security Forces against civilians. And may prosecute. The allegations were reported by an iraqi photographer. It alleges that an elite force linked to the interior ministry tortured and killed civilians. Tennessee republican senator bob corker has delivered his harshest criticism of the president yet telling reporters in chattanooga today that the president has not shown the theetence needed to lead nation. Senator corker warned that america is going to go through great parol and there needs to be some radical changes at the white house. Separately, tim stopped from South Carolina tells vice news that the president s moral authority is compromised. Nancy pelosi is calling for the removal of confederate statues from the capital. Allowed to place to statues at the building. She wants legislation to remove the statues. Senator cory booker to place says he will sponsor legislation to have them removed. Global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton and this is bloomberg. Let us get a recap of todays market action. It was a rough day for stocks in the senator u. S. They opened lower and finished lower. All of the averages are down more than 1 . A rough day especially for the dow having its worst day since the middle of may. The momentum oriented Philadelphia Semiconductor industry, down. Look at the steady decline. A rough day for stocks here in the u. S. That drove the nasdaq lower also. 10 years ago, an abrupt meltdown shook the industry. Quantity unit of Goldman Sachs has clawed its way back and it is growing again. Joining us now is gary, the cohead of Quantum Innovative Solutions at Goldman Sachs. Joe thank you so much for joining us. Meanword quant can different strategies. What to you is interesting in the quant space . We think about three broad things. One is around the ability to capitalize on big data. That is one of the biggest trends we think is here to stay. The idea of being able to take data, print information from it nonmarkets including satellites and credit cards. The things you can harvest from the internet. A combination of both. Credit card data. Things that companies are saying. And using computers and machines to read through that and come up with an opinion on the future performance of that company. That humanry is beings do not have as much of a role. They are not as necessary because you have a sheens doing the number crunching and analysis. Where is the Human Element . One of the big misperceptions people have is that there is not a lot of subject to duty and decisionmaking going on. Decisionmaking goes on throughout the traditional quantitative process that we have. If it is deciding what research to go through or what data to what dataacquire, to a choir. To aqcquire. Subjectivity issue plays a big role. Something that i think about with quant strategies is that they seem to work until they dont. I am thinking back to 2007. How much money do you spend on this technology and what is its shelf life . When we think about the bonds criticismnts and the we really want to look for how long signals will work and be able to adapt and understand markets. The combination of understanding statistics and robust quantitative skills. Maybe understanding when they do not work as well and adapting new strategy to come up with new signals. The ability to continue to invest, research, and add value as new data comes out. Joe abigail mentioned the 2007 want meltdown. We are also coming up on the 30th anniversary. This is the source of persistent concerns. One day, the computers are doing the same thing, and maybe they will get into a cycle. Is that a concern for you . We have very good fire alarms. But, when we think about portfolios, that is one of our biggest concerns. We went through a very difficult time in 2007 but there were tremendous lessons learned. Ourselves in a significant way to be able to adapt to markets to understand the massive amounts of data out there. Data in it self is useless but data used with market practitioners scales creates an informational advantage which ends up in returns for clients. Markets more robust against Something Like this . What has been done to preempt that . To look atity companies through so many lenses gives us phenomenal comfort that there are a lot of ways to look at companies and their fortunes. Not just looking at balance sheets. Possibilities is very large. If we think to what was traditional signals or factors 10 years ago, maybe you had five or 15 signals, but now there are hundreds. That gives us comfort that people are moving in Different Directions and the idea around crowding is of a lot less concern. Can i ask a basic question . How much of Goldman Sachs Asset Management uses the strategies . A specific Quantitative Investment strategy team. Ourinue to grow our assets have pulled in the last four years. We have roughly one hundred 10 billion in assets. Largely because we have driven strong performance. Beatingur funds are their respective peers and we are proud of that. We have good performance and assets usually flow after that. I know you cannot give away your secret sauce, but can you give us a sense of what a top strategy is . Quantitative investing is arguably the most transparent investment style in the world. We write down in an equation what we like and what we dislike. We write down the characteristics of a company we believe will pay off. When we think about investing, there are four key pillars. We look at growing companies. Most investors will look at that. We also look at the sentiment around it and the themes and trends they are associated with. That has become more important in the last few years. Joe im curious what you make of some of these macro veterans who when they leave the industry, right letters in which they partly blame their inability to generate out on all of the machines. Their inability ha on all ofowalp the machines. Is that fair . The world has moved substantively. It has affected every industry in the world. We believe that we are wellpositioned to take advantage of that trend. We have been doing it for 27 plus years and we have a good framework. How do you factor in macroeconomics to your Investment Strategy . Translook at what macro are going on and what industries and subindustries are associated with those trends. We try to put together pieces that most investors do not put together. As an example, casino and gaming. A sub industry. You also have Home Entertainment software. That are instries separate sectors. But they are related in virtual, online gaming. Pick up on these related associations, that could be very profitable. Similar to what you see with trend or, with them coming up what is trending on the hashta g . Mentioned that some of the classic macro investors have cited quant as why they are not doing that well. It is not like those strategies have been doing phenomenally well either. Fairly mediocre compared to the overall s p 500. Nothing goldman specific. What is the selling point of quant ultimately . Is it absolute return . Being able to capitalize on data is the pitch. Category ry broad quant is a very broad category. Ctas strategies. You have smart date is. Smart ada and the dataty you have smart and the ability to capitalize on that. Thank you for joining us. Coming up, walmart struggling to keep up in the grocery race. Shares taking a disappointing cost ofuse of the high keeping up with amazon. From new york, this is bloomberg. The company boosted its earnings for share forecast for the full year. Yet also climbing. Gap also climbing. Sera joins us now from the washington bureau. We were just commenting that the retail results this quarter has been a mixed bag. What has been the distinguishing factor . Out one hard to point trend but we have seen winners and losers. Department stores have been challenged. Macys, jcpenneys, kohls. Hard to see the path forward for them this quarter. Showed a really strength. Even in this ecommerce era, some people like that make brick and mortar experience. Joe we have seen a number of retailers see nice stock pops after recent earnings. How much of that is fundamental strength . More that theis bar has been set so low. Urban out of Urban Outfitters got me this week. The executives have said it was not a good quarter but the stock was up Something Like 17 . That was where the expectations were low and it was just not that bad. Walmart put up a mixed quarter. Meeting or beating estimates slightly for a Second Quarter but guidance was disappointed. We are hearing about amazon taking of the retail world. I would like to ask about putting amazon in proportion with walmart who has half a trillion dollars in revenue this year relative to amazon at less than 200 million. Is retail really over with amazon or are there still some survivors . And walmart isd trying to fight on both fronts. They made a lot of progress with cleaning up their stores, making sure there produces fresh. And the stock is better. They are trying to make it better. They it knowledge to that they have no no choice but to fight on the ecommerce front. That is why youre seeing them trying to dramatically expand their assortment online. Had time last year, walmart 20 million items on its website. It is up to 67 million items. Amazon has 350 million. Walmart is making some big strides but still not in the league of amazon. Thank you for that perspective. Next, janet yellen disagrees with the president s policies. Should she not serve another term if he asks. From new york, this is bloomberg. If President Trump asks fed chair janet yellen to stay, should she say no . Asking what chair yellen would succeed by doing by declining an offer from the president. Achieve is notld being associated with this president and this administration. Part of it at a high level is the moral connection of accepting employment from this president. I think it is likely to be viewed by history in a very negative way. Beyond that, i think from a is thatl point of view, to be effective at doing this job, you rely on the president being willing to give you space, it being aisting on job that requires absolute loyalty. I think it would be difficult to be sure that the president would accept that role going forward. Is that because you think implicitly, if he were to reappoint her, that implicitly there would be some understanding that she would need to be loyal to him . He did not appoint her to begin with. Narayana that would be a concern of mine. Is this specific to the fed . Where would this apply to other appointments as in on the cabinet . You take on a position of this kind, there does not have to be an absolute correlation on every issue. And there should not be. On the other hand, i think that over the last few days, the president has made clear that are certainly different on many issues from even past republican president s, to set one example. That there may be large gaps between himself and the potential cabinet appointments. And i think people should take those considerations into account and not just think of a technical issue of how will i be able to do this job . Think you will and of being judged by history in a broader context. At the same time come there is a special status of the fed as independent. They are not political appointments. If janet yellen were to take to take yourhat advice and turned down the president , is there a danger that it would politicize the fed . Astutea that is an comment. That is asomething worthwhile consideration. On balance, given this president , and given the concerns with this president , i think that what i tweeted about this morning i view that as being more important. That was the former minneapolis fed president. Time now for the Bloomberg Business flash. Investors reacting to the claim that the stock could double by 2021. Adp stocks dropped to 5 , the took asince the ceo stake in the outsource last month. He has received a hostile reaction from p. Victorias secret parent brand falling to its lowest in six years after a disappointing forecast. It also missed it is having trouble connecting with younger customers. Backed by jack ma has agreed to purchase an asian unit. It will pay 1. 7 billion, most of it in cash. It built its reputation catering to wealthier clients and is reaching out to regular clients. The revolution could force gold to go digital. Are drawingrkets the attention of banks and retailers which consider it a revolutionary way to support transactions. They are rolling out similar platforms. 27 billion dollars in gold is traded each day. And that is your business flash update. Update on the terror attack in barcelona. Overovernment saying that 100 people were injured and 13 people killed. A group ofd into pedestrians on the sidewalk. You are watching officials from catalanle o government. This is bloomberg. With the dow posting its worst decline since it may. All of 11 groups in the s p also declining. The university of Michigan Consumer data for august drops at 10 00 eastern time. The president will be meeting with his Security Team to discuss north korea. Estee lauder reporting earnings before the bell. Bloomberg are your are watching bloomberg technology. Here is a check of first news. Islamic state has taken responsibility for the attack in barcelona that killed 13 pedestrians and wounded about 100 others. A van jumped a sidewalk and plowed into a crowd. Islamic state is calling for more attacks. Police say troopers killed a man in a car that hit two officers at a blockade. Spain has condemned the attack saying the nation will not be terrorized. The Prime Minister denounced the violence. Other leaders including tracy mae, donald trump and others have spoken out. Tennessee senator bob corker delivered his harshest criticism of President Trump. They said he has yet to show the kiwi require dense to lead the notion. He says trumps moral authority is compromised. They say some of the