the first person tried on charges of rigging the libor interest rate. former ubss a trader. the panel deliberated a week and concluded he schemed with other traders to fix the libor, the london interbank offered rate. we will have more on this story coming up later in the hour. and for the first time in five --ks, the greeks talk market the greek stock market is open for business and prices quickly collapsed. banks fellwo major 30%, that is the maximum allowed daily loss. june.trading halted late meanwhile, the commission there isson says serious deterioration in the greek economy. hundreds are dead because of us-led airstrikes against islamic state. that is the conclusion of a group monitoring the iraq -- the attacks in iraq and syria. the airstrikes started a year ago, and the coalition is not commenting, though it has previews acknowledged causing to the civilian deaths. --two civilian deaths. matt: trying to provide assurances that the u.s. isn't wavering after landmark agreements with iran. secretary kerley -- secretary we agree that the partnership is indispensable to the security of this region. att: he is in qatar after trip to egypt. american households cap spending in june, capping ace drawn performance -- a strong performance. of 1% forimbed 4/10 the third month in a row. cooled last month, down from the highest level in five months. that is a sign of fiscal progress in the industry. the index fell to 52.7. it was 52.3 in june. order backlogs slumped. 18 -- an 18-year-old american is making a splash in the slum world and could become an olympic star of next year. record at aher own meet in russia. 800also holds the 400 and meter world record. those are some of your many top stories. coming up on the bloomberg market day, the future of bitcoin. sincevalued more than 50% last year, and the head of g has been arrested in japan. --gox has been arrested in japan. and jerome kohlberg has died. he started the powerhouse kohlberg, kravis, roberts. we will take a look at these stories and more coming up. matt: it is the biggest step ever to cut carbon emissions in the u.s. president obama will announce huge changes in regulations that will put coal power plants out of business and provide big boost to renewables. pimm: and to perhaps natural gas. provides half the pollutants of coal, but more than renewables. frank macquarie all of joint that. frank: our reaction to the president's plan is following, with or without this rule, natural gas is well-positioned to be the baseload of choice for future energy generation. pimm: will you support this effort by the president? want to make sure that when this is implemented at the state level, that the -- we want to make sure that the state understand the cost compliance. we provide the opportunity to reduce emissions immediately because we have an abundant, low-cost fuel. pimm: i know that is what you will be saying to the people who want to look at alternatives. but what is your take on supporting or not supporting the president's initiative? will you lobby for this? frank: first things first, we have to see the rule. all we have is an announcement that the administration will go forward. our position has been neutral. with without the rule, we think we are well-positioned to increase -- not just increased fuel diversity in the u.s., but also increase the use of gas in power generation. matt: if we take a look at the breakdown of power generation in america, natural gas is already pretty high up as far as market share is concerned. 35% comes from coal. place, comes from natural gas. and then you got nuclear. beyond coalchanging ? you could see a lot of those plants go out of business. are you seeing nuclear growing? are you taking market share from them, or from renewables? youk: in the last two years have seen a dramatic increase in the use of gas, no question. you've also seen an increase in renewable energy. but this year, you will have the we've evere fuel mix had, and here, you will have the next 20erse out to the years. the inclusion of natural gas into the fuel supply has increased our diversity. about the price in btus, is anyone making money? frank: it is a challenge right now, but also an opportunity, because you see natural gas not only penetrating electricity markets, but also bringing in manufacturing jobs act to the u.s. natural gas is being used in transportation. the price environment is a challenge. the story is a positive one for natural gas. and the opportunity is brighter than ever. matt: i can see that is a challenge for producers. but obviously, that is no challenge for consumers. the price higher? why isn't it growing faster? and cleanercheap than coal, is it a production issue that is stopping you from getting to the end user? frank: markets take time to adjust. we have seen a tremendous increase in production, 40% in the past decade. markets take time to adjust to this new fuel of choice. what i would say is, over time, i would say, number one, it's abundant. it is cost-effective. it is right here in the u.s. and you will see markets adjust and greater utilization of gas. pimm: thank you very much for america's natural gas alliance executive vice president of government affairs, chiarola and we will. -- and we will carry president obama's announcement today. that is at 2:15 p.m. ♪ matt: welcome back. i'm matt miller. pimm: and i'm pimm fox. matt: we want to go straight to julie hyman -- julie hyman. make a wish. julie: i wish we were seeing better investment. that is kind of a lane which. twitter is down by 3%. just as longer downtrend we've seen from twitter a person thinking that with its earnings, and in particular it outlook -- it outlook that disappointed investors. shares are down 3% today, and that means at least on a closing basis that it is trading a record low. take a look at the long-term .hart the ipo was at $26. we have seen a pretty volatile stock price in the past couple of years. the right, 30.15. another stock that we are watching today in technology is apple. we are not seeing it fall by very much today. there is not a lot of fundamental news, just the idea that apple has not been performing as well as investors were used to, perhaps. for the year to date, it is pretty much intersecting with its 200 day average. we will see if it can climb above it. is the best performer in the s&p information technology index today. to thesuisse added this focus list, saying it will drive growth. right now it is driving the stock up by 4%. pimm: thank you very much, julie hyman. an interesting move on autodesk. we will get aig earnings as well. exciting asot as autodesk. pimm: some 1200 residents in california have been forced from their homes by a huge wildfire near san francisco. it has already scorched more than 90 square miles and is one of nearly two dozen fires now burning in the eight. hot and dry conditions -- in the state. hot and recognitions are making it difficult for firefighters. another sign of trouble in the coal industry, how fun natural resources is filing for bankruptcy. the company's or by plunging gold prices and the ever-increasing use of it -- the company is hurt by plunging coal prices and the ever-increasing use of natural gas. and another sales plunge for sears in the second quarter. the retailer headed by eddie lampert, saying sales fell by 10.6%, the second consecutive time frame of double-digit declines. the company enjoyed a -- an 11% drop in the first quarter. some good news, sears expects an earnings improvement for the fourth consecutive quarter. last year, bitcoin was 80 investment for silicon valley. bitcoin prices are down -- was a big investment for silicon valley. bitcoin down over 6% -- prices are down over 6%. wasfounder of mt. gox arrested in japan. you could look at it possibly as a blow to bitcoin. , don't really follow the logic .ow that is a blow to bitcoin since he was already a despised figure in the bitcoin universe, and mt. gox collapsed a here and a half ago, but go ahead and explain that to me. cory: i think this is a point it was in theay early stages of bitcoin. came out with this amazing statement that it had somehow lost 850,000 bitcoin, about half $1 billion and value of the time, and then months later saying, you know, we found about $100 million worth laying around in an unused wallet. i think it shows the hobbyist nature of this poorly written software and this poorly done exchange, and in the arrest of a man who had pocketed from unknown services -- sources under his control, i think we will say those are the early cowboy days of bitcoin. years ofe biggest venture capital investment ever, the biggest chunk of that in silicon valley was on block chain and bitcoin technology. , let's nott. gox forget, that was magic, the gathering exchange. they traded these playing cards that nerds, kind of d&d people would use. from ark ellis took that playing card exchange two make a bitcoin exchange. i don't think a lot who used it were big fans, but there was not another exchange of that size and volume. power of thes the marketplace volume. if you have enough buyers, you will get a seller. inserted to lose market share before his big problems were started to- mt. gox lose market share before it big problems were announced, and byn the safed -- the theft that company. again, the fantasy trading cards that led to real money, that led to some real problems. but investment in silicon valley was in real businesses, and that possibility that it could eclipse trading. we might not someday put up that chart to show the changing value of bitcoin. but we might talk about the way we record transactions or memorize what has happened in that involve in finance and trading, and we are talking about things like the collapse of the greek market or getting fair trading in china, that bitcoin might be the solution to all of those things, those are the hopes of some in silicon valley right now. a swiftll it ever be transaction medium for banks? be.: it might very well it might not be something that uses the block chain technology. within every dollar, if you will, there is a record of all the transactions that proceeded it. thingsges the notion of like title transactions that go along with artwork or homes or so on. there are a lot of businesses that get tossed out the window with this block chain technology. bust -- "fromm to which is the way you change the headline by adding the question mark at the end. cory johnson, our editor at large on the west coast. we will take a quick break. the alleged ringmaster of the libor rigging scandal found guilty of eight counts of conspiracy to manipulate that rate. 14 years in prison is his sentence. ♪ matt: the first trader tried in the libor rigging scandal was found guilty today. tom hayes was convicted in the u.k. of eight counts of benchmark to rig the rate and sentenced to 14 years of prison. susie joins us from london. today, onege day that we've been waiting for about six or seven years now. the libor scandal was one of the big scandals of the crisis. the library was really the start of all of this. and tom hayes has become synonymous with the wrongdoing that emerged. he was found guilty today and to get 14 years in prison was a real indication for the regulators and prosecutors who have been pursuing this case. pimm: are there any others that will stand trial? are others. it cannot say much about them because of restrictions. that the a to say prosecutors will go forward with the charge. matt: for this kind of crime, you go to a federal prison that may have a golf course, even. is it the same in the u.k.? not the same. he will serve about half the time, which will be about seven years. we have a lot of prisons linked to the court where he was sentenced where he could be in his cell of 223 hours a day for the first couple of weeks. toer that -- in his cell up 23 hours a day for the first couple of weeks. after that, he will be moved. there are others involved in this libor rigging scandal. he worked at citigroup and at ubs. what other institutes are being targeted? suzi: in the last three years, prosecutors have already fined a dozen brokers. there have been a number of nonprosecution agreements entered into with those institutions as well. he's already seen a lot of the fallout from the institutions -- we have already seen a lot of the fallout from the institutions themselves, and we will see more from those coming to trial in the coming years. communications that he had, the e-mails, you do not rig the rate yourself. you need help. he did, he had a stepbrother. suzi: he was at the center of thatcandal and was the one relies cap easy it was to rig the rate. a number of individuals have been charged. we cannot reference them now because their trials are coming up. but yes, he was at the center of about 25 traders and brokers. matt: have we learned how much money he made from doing this? : as a salary, he had more than $2 million a year and was offered with an tree million dollars a year from other institutions. in terms of other prophets, we don't know, really. matt: thank you. pimm: that is it for me. more of the bloomberg market day coming up. ♪ ♪ (ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. to theelcome back bloomberg market day. i'm pimm fox. onejor reinsurer turns down takeover bid and access another. -- partnerre is partnering with companies looking to diversify outside manufacturing. at&t is bundling phone and wireless services. the offer will be available nationwide a week from today and include high definition television and mobile phone service with unlimited talk and of dataand 10 gigabytes for four lines. and automobile sales are on a roll in the u.s. demand is strong mostly driven by the sale of suv and luxury vehicles. posted their best combined figures in nearly eight years. and for sales in july rose nearly 5%, the best performance for the company since july, 26 -- july, 2006. jumpedres of suzuki today in tokyo on word that third point is taking a stake in the company. it is run by the billionaire daniel low. brighten aent could long dispute with volkswagen. otherach have accused the of lack of cooperation. president -- vice president joe biden's son has joined a local action committee that is urging him to run. a few -- few democrats have come forward to challenge hillary clinton, the party's presumptive favorite. one senator does not think biden would bring anything new to the table. i have known joe biden for years and i'm very fond of joe. seeinghink americans are disappearing income and equality, and the citizens united disastrous supreme court decision, they want to go beyond conventional politics. pimm: the death of the vice president's son prompted an outpouring of sympathy for him. he died of brain cancer in may. closing in europe. let's go to hans nichols in athens. hans: markets are closed here in europe, and also here in athens after the first day that the exchange was open in 25 trading days. that is five weeks. what we saw was an overall decline of about six -- 16.2%. it's not that bad when you compared to earlier lows of 23% stop -- of 23%. banks led the decline. most are down about 30%. but the stoxx 600 across europe was not that affected. we saw it was up mostly on the and hsbcing the gains can which of course is the biggest bank in europe. they were up ever so slightly. and heineken had a strong report that said heineken up 5%. see the ruble really getting hammered, down almost 2% against the dollar. and looking at the story in government debt, germany trading mostly flat. the yield was down ever so slightly. it looks like the cost of borrowing from their german government will continue to remain low. hans nichols reporting from athens. coming up, president obama will lay out his plans to combat climate change. that is at 2:00 p.m. eastern. we will hear from one of his supporters, robert f kennedy junior. all fore is a voter for the top 14 republican candidates tonight. a gop strategist tells us what the candidates have to prove in this crowded field. endcalifornia has a plan to the automobile industry as we know it. could the golden state mandate mean that everyone will drive electric cars? puerto rico is on the verge of default. it missed a $58 million payments over the weekend, and the government says it just doesn't have the money. it also needs to renegotiate its $72 billion credit with -- debt with creditors and that could lead to the biggest restructuring ever in the market will stop -- in the market. trader thisa bond morning on market makers. >> it doesn't mean a thing. they defaulted on that one bond. the moral obligation bond. prepa, thatook at is a standalone corporation. at what point does the rubber meet the road for prepa? >> are having this discussions now. they talk a lot about it. it's not really a company in distress. if they were ever to get chapter nine, in our view, they would not even go to prove they were insolvent. erik: puerto rico does not have a chapter nine, unlike detroit or jefferson county. there is no way to restructure under court supervision right now. >> correct. erik: and you are saying that even if they were to get chapter nine, which is something you clinton and jeb bush has said they should have, prepa would not qualify? >> if you look at the raids were they were last august, about $.28 per kilowatt hour. -- $.22.are today, 22 downe rates are coming substantially, it means they could actually, if you will, raise rates to meet their debt obligations, which is what the documents say they are supposed to do. if all they did was raised by two -- by two cents to four cents, they could be a completely solvent company. 70: why did they take the bondholder plan? it had some issues. they need to take their power plant and fix them. they need to go out for an rfp and seek new opportunities to build these plans. all that can be done within their business plan. they didn't take that plan because they didn't like some component of it. needs to do prepa is to raise rates to become solvent and meet its principal payments, why does the government refused to do so? >> we don't understand it. they also need to do some structural reforms. fix one off you can your bond problems, in theory it should make it easier to start fixing the others because it would show there is at least a way. >> if you look at any restructuring, including all municipals, fix one thing at a time. don't try to do it all at once. other than hoping to take losses for creditors because it is convenient, we do not understand why they won't take a deal right now. everyone is ready. we are all together in rooms every week. there is no reason why a deal could not be struck quite easily. stephanie: didn't the bondholders offer a much lower service then pressa even -- than prepa even asked for? >> they offered something that would help them get through the changes they need to make. that was just done magnanimously. i don't even they need that. but there will be a lower rate for now. ultimately, they will be just fine with no restructuring. dallas jim: speaking with erik schatzker and stephanie ruhle this morning -- that was tim coleman speaking with erik schatzker and stephanie ruhle. we will have more on jerome kohlberg next. ♪ pimm: welcome back. i'm pimm fox. let's begin with a check of the latest headlines. the lease in tennessee are searching for a suspect in the fatal shooting of a memphis officer. the 29-year-old man is facing a murder charge in the death of sean bolton. he was shot several times saturday night after approaching a car where a multi-marijuana deal was in progress. three memphis officers have been bitterly shot in the last four years. -- had been part fatally shot in the last four years. and the wing part that was found on an island is being tested in france. investigators are trying to determine whether it is the wing from mh 370 missing since last year. they've already confirmed it is a going 77 seven, and mh 370 is the only missing flight of that type. the world third-largest for her, heineken, beat analyst estimates and sales rose 6.6%. shares are rising. those are your top headlines. now to the man who orchestrated the creation of the leveraged buyout -- leveraged buyout of powerhouse has died. kohlberg along with two equity stakes in companies that were at crossroads. he died of cancer last week. bureau chiefs the for bloomberg news. he joins me now. theagine if you look in index of the book, there will be a lot on jerome kohlberg. jason: he was at the center of it all. it is safe to say the industry would not exist, and certainly kkr would not exist were it not for jerome kohlberg. quickly on his life, and the u new york city public school, then goes to the navy, .lso gets a law degree he goes into business and also goes to bear stearns. jason: hened there? zeroes in on this idea of using equity and borrowed money to buy companies. as you say, not just earning fees on buying and selling stock, but actually taking companies over. he recruits couple of young guys, two cousins, henry kravitz and george roberts, to be part of his gang at bear stearns. of it andto do more bear stearns said, we are not so sure about this, and then they strike out on their own. pimm: and jerome kohlberg puts in $100,000 and the other to each foot $10,000. jason: that is right. and at that point they are in their young 30's and jerry was their mentor. facttook advantage of the that public pensions were able to invest in different sorts of vehicles at that point. so they would win commitments from places like oregon and washington state and they would use that as the key equity, and then take advantage of the fact that wall street is willing to loan against the takeovers. seems wonderful and they are making lots of money, and then a deal comes along that maybe highlight some differences between all three. jason: most people point to the beatrice food deal in the 1980's. pimm: it was hostile. jason clinton and that is a key right there. -- jason: and that is the key right there. sure kohlberg wasn't so and that part of the partnership splits up at that point and and formed his own firm and george and henry go on to fame and fortune. pimm: i notice on the kkr is no detailed mention of jerome kohlberg. maybe that will change. jason: it is possible they would. both gentlemen speak very highly of jerry kohlberg, of him having the initial idea and giving them the confidence to strike out on their own. walkas become -- if you down the street and ask anyone who knows anything about private thety, kkr is probably best-known name in private equity. what is the newest thing in terms of private equity? jason: private equity has come back in many ways to what he was as muchwhich more of a partner to the management team and to investors. pimm: thank you for being with us, jason kelly. still ahead, the latest chapter in brazil's investor darling turn pariah. ♪ pimm: eike batista is brazil's most notorious and leaner. now he has battles with bondholders and owes his company have to billion dollars. what is he doing with it and what happens to his cousin -- his companies? liu.oined by betty good to see you as always. it has to do with a floating oil painter off the coast -- oil tanker off the coast of brazil. betty: he is basically bust. his company filed for bankruptcy. his oil company. betty: his all caps on company, right, filed for bankruptcy. this is one of the most fascinating stories of from riches to rags. he lost $30 billion and got caught up in the commodity glut. there is a shift -- a ship off the coast of brazil and it continues to pump oil. pimm: because it is a production vessel. betty: exactly. borrowinghey are about $100 billion. it is humongous. have and some hedge funds loaned the money. betty: and they are saying they want the ship back. however the company, which is is the sayshich group -- which is his group, there go gx. -- they are ogx. night -- might not be a good move where grabbing the ship is worth less. -- worth lessorth than $5 million. and if the bondholders were to grab the ship, they would have to go through court to get permission. essentially the way i like to put it is that batista and his company are essentially holding the ship hostage. if you want to get it, you will have to pay a price for it. the bondholders, they are fighting right now. but it is just another moment in .his whole saga of eike batista at one point going to be the world'smost -- the richest man. and in a span of less than five years he has gone down in value to a negative ranking. as far as the legal , are the hedge funds, the various lenders, are they going to go after him in court? looks like that might be their only recourse, in court. but this will be a complicated situation. the company itself says what they would like to do is now change our relationship, so let's be partners and we use the ship as collateral in a partnership. they are trying to find a way to work with the bondholders, because they are both stuck in a pretty nasty situation. we will see if they find any compromise. pimm: the future of spending money to make money. betty: exactly. and we will talk about this in the next hour. pimm: much more coming up with betty liu. let's go to julie hyman. julie: we are approaching the top of the hour. let's take a look at what stocks are doing right now. the dow and the s&p right now lower. the nasdaq has peaked it said into the positive at the moment. joining me is jim stroker, a derivatives strategist at an km holding. mkm holding. it is the first trading day of august and you definitely feel it. are we in the summer doldrums at this point? jim: there is deftly a move in the equity markets this morning, and our move is predicated on volatility preening -- being pretty low and stable into the fall. we could have several weeks of relative quiet in the u.s. equity markets. julie: how would you play that? means relative bids could bounce between 14 and 16. the future is relatively stable looking out as far as the eye can see. one way to take advantage of that is through a product called xvxy. many people are familiar with vx. you don't need volatility to go lower for this to benefit you. if it doesn't move a lot, there is a phenomena called negative curve yield. so they move the spots lower. if the futures curve is frozen in place, svxy will go up. -- just looking at the charm commit looks at it got more expensive. do you expect that into august? to bottomility tends in late july and then grind into the fall. julie: one thing that will not necessarily be quite over the next couple of weeks, we will maybe get some more retail news. i know we are going to get michael cores and coach out with kors and coach out this week. ,im: look at the industry group retail is the best performer and to date, about 17% up, the best performer since late july. a lot of that is attributable to netflix and amazon. julie: not the traditional retailers. jim: that is right. in the srt, they are equal weighted. netflix and amazon have a slightly less positive impact because of the retailers have the same weight. the 31 components, 20 still have to report. this is trading saying the group is doing well overall because of two stocks. we think it could broaden out to these other retailers over the next couple of weeks. julie: what is the trade? jim: we want to go out to december. we want to buy the 110. it costs about two dollars $.80. -- $2.80. about 12% or 13% higher over the next couple of months. jim: -- julie: thank you, jim. don't go anywhere. ♪ .imm: good day welcome to the bloomberg market day. we get a preview of the new regulations for power plants. jeb bush and scott walker and other republican candidates joined to answer questions. look at whyll the billionaire investor is in trouble with his bondholders. pimm: good afternoon, i am pimm fox. betty: i am betty liu. let's take a look at how the markets are trading at midday. stocks are fluctuating. the dow is down about 68 points.

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