Averages since the middle of may. 500 andins for the s p the dow. The nasdaq up a little bit more, up more than 6 10 of 1 , being helped by technology. And dow transports of the big winner on the day, about 1. 2 . It is worth noting, all of these averages are down on the week. Most, on00 down the her for its worst week since march. So some bearish activity for stocks overall. Dowor what is helping that transports today, we are looking at some of the trucking and transportation stocks, which is jb hunt, two wells fargo analyst positive on the name, saying that the company is benefit that poised to benefit from trouble 02 truckload truckload two in turn, the dow transports, which yesterday has sliced through it two day moving average, now back above the two day moving average. The russell 2000 doing Something Interesting itself around the technicals. Lets look at the one week view of the russell 2000, down more 2. 8 , a more than big decline here. The worst week since february of last year. Or on the year, excuse me, the russell up just 1 at this point, under performing the major averages. A were told a you after member, to small capital was up after the election on tax reform hope. But he is avoiding smallcap for large cap. Lets look at technicals. This is something to think about. This chart is a longerterm chart of the russell 2000. A. In white, hitting on that 200 day moving average. On the bottom, the argue i i suggests the rs it is oversold at this point. Next week could be pretty crucial for the smallcap index, julie. It outperformed postelection, but that game has almost been a raised at this point. As abigail mentioned, architect called markets have called to some degree. To lockedand fury and loaded, this standoff has been termed a game of chicken. In a linkedin post, this analyst writes the world is watching to see which one will be caught bluffing or there will be a hellacious war . For more macro and markets joy s, we are joined by our analyst, covering what is going on in washington. Bill, i want to start with you. Just to get the latest on this rhetoric, that locked in loaded comment was made this morning. What does that mean at this point . What is the Readiness Level of the u. S. Military . Bill the u. S. Military would tell you they are always locked slogan of thee u. S. Armys division in south korea is ready to fight tonight. The u. S. Is a big military presence across the pacific and obviously in the southeastern region. This is what they train for, what they do drills with u. S. Allies for every single year. I think we have seen this ratcheting up of rhetoric really on the u. S. , we are used to hearing this stuff from north korea, but what surprised the markets and a lot of analysts this week is that the u. S. Is responding in kind to the type of language that we usually only hear from north korea. Scarlet and it is President Trump who is responding in kind, because secretary of state Rex Tillerson is taking a different town, talking about diplomatic measures. Mattis, the defense secretary is also leading towards tillersons side. This . N we reconcile are they speaking to different audiences . Bill we have seen a lot of monthsin the past seven to where the president goes out far in terms of his rhetoric, whether it is deliberate Good Cop Bad Cop strategy or top aideselse, his are setting a different tone. What we heard from matt yesterday was praise for diplomatic at from mattis yesterday was praise for diplomatic efforts so far, and seems interested in ratcheting economic sanctions on north korea. He has been visiting Technology Companies like amazon, and will be at google headquarters today. He has not loan back to talk about war plans with the president. So what is the next step, or is there any way to predict the next step . A hard gametion is with the Trump Administration. A lot of people are wondering if there are some back channel negotiations going on or not. On the military side, you would be looking at increased report minced to the region. You have nothing personnel from the state department or department of defense, family the personnel leaving the region. We do not the signs of that. So in terms of major conflict we are not seeing evidence that it is about to happen. North korea that big of a concern among investors, or is that the excuse Everyone Needs to dial back on risk . If you look at the equity market, it might be the excuse that people have been looking for. The fed has noted about asset bubbles, per se. Yellen and fisher have talked about it. Probably been has the straw that broke the camels back in the equity market over the past couple of days to selloff a bit the effects market, not so much. Bit. Effects market, not so much. People are starting to move into haven assets, to hedge against what could be equities or bonds. One currency that is taking it seriously in particular is the south korean is theecause that country that has the most to lose. Everyone would have quite a lot to lose if things got ratcheted up to far. Specifically, what are currency traders afraid of happening . Speaking about the lawn, won, it speaks to but bill said. We are in a tense situation, that because families have not left the center, so we are not at the edge it. On has appreciated. It has not been a crazy selloff year to date, it is still on the plus side. Think this would be a situation where things would start to wayne on south korea, that would be a much, much different situation. Scarlet you put together a wrap every day as to where is to certain key technical levels. And i noticed we are at some key levels. We are testing 50 day moving averages. This might come right when someone is that an inflection point. Are some morehese specific and momentum models. Sophisticated momentum models. Especially as you get into friday, things revert to the meet a little bit. We have come back today, haven is not as well bid as it was during the week, traders are trimming positions. But what tends to happen in these situations is they happen on sunday nights. We all of this. We are all gearing down a little bit. Nobody wants to go in with a big position because a very small position will use or lose a make orof money, lose a great deal of money, as you have seen the vix go up. It does not take a lot to go in the right or wrong direction. The dollar is going in the wrong direction, if you are able. Year to date, is down 9 . So when you have rhetoric like we have heard over the past few days, is there any hope for the u. S. Dollar to immerse . Vincent the thing that will change the direction of the u. S. Dollar is not what is going on in north korea, but hopefully that will , but what will happen in washington in terms of fiscal policy. Ie the cpi today does not instant vincent a lot of people have not picked up on this yet. We are looking at the phillips curve, and maybe it does not work. We have mobility of labor now that we have not seen for in history. If a company can move from state to continent to country, inflation, Wage Inflation is probably not going to be present in the phillips curve is an outdated theory. He has hit the nail on the head when he says we are looking at the wrong models. We have to change what we are looking at because inflation will not react as we thought it would be in the past. And we will take more into that with you coming up at the close of trading at 4 00 p. M. Thank you both so much. Lets get a check now with first word news and mark crumpton. Mark more on that situation around north korea. Reported differences with President Trump. Australian Prime MinisterMalcolm Turnbull is making it clear where he stands in the escalating crisis with north korea. We stand shoulder to shoulder with the united states. This treaty means that if america is attacked, we will come to their aid. If australia is attacked, the us trillions will come to our aid. We are joined at the hip the u. S. Will come to our aid. We are joined at the hip. Prime minister turnbull also said he discussed the issue with what Vice President pence last night. President trump ascending Jared Kushner to israel to pursue a peace deal. They are trying to take advantage of a moment of relative calm following violent clashes last month. To set antrump wants ambitious agenda for the talks, including the israeli andpalestinian israelipalestinian conflict and addressing the humanitarian issues in gaza. The president has said mitch disappointed him over congresss failure to eliminate obamacare. Today, he tweeted a fox newss story saying republican senators were learning the hard way about the fallout from turning on the president. Some dramatic video. Police in austin, texas have released this surveillance car plungingng a seven stories from a Downtown Parking garage and missing another vehicle as it lands in alley. People were able to pull the driver from the wreckage. Police say the accident happened when the car drove through retention wires on the seventh floor. The driver of the suv was not heard. 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 . Scarlet thank you so much, mark. Some breaking news three investors and uber were talking sherpa capital and investors, have asked benchmark, one of the biggest shareholders of the company, to resign its board seat. Follows benchmarks decision to file a lawsuit against Travis Kalanick as they tried to remove him from the board. The board battle at uber heats up, with three Board Members asking benchmark to resign its seat. We will have more on this when we get more. From new york, this is bloomberg. Scarlet julie this is Bloomberg Markets. Im julie hyman. Continues to stock sink, hitting the lowest price yet since its march ipo. The ceo asserts that new features like a map will help snap gain some popularity. Map,nce the launch of snap we have seen increases of 30 . Incentivizes our community to create more snaps and contribute their point of view. Scarlet joining us now from San Francisco, our bloomberg tech reporter. New features are great, but a matter when user growth is slowing and facebook and instagram can copy those new features better than snap can . Iswhat snap is arguing it is the new features that draw in new users to their plot warm platform. That gets people addicted to the point where they are spending a lot of time there and therefore generate a leading generating a lot of advertising revenue. But will people always compare them to the juggernaut in the market, facebook, because beenook not only has copying snap features, but they are also very dominant in the Digital Advertising market. Snapchat should prove itself against that challenge, and it is a very difficult thing for them to convince investors they are a different. There is wall street, and snaps original investors and the Silicon Valley community. Between the two, do they have the confidence of their core investors . I think snap is a company that people completely put their ahead of the ipo. The company tried to frame itself a something new and different outside of the realm of what facebook controlled. Snap. Is no news feed on they are not putting ads like that d stories like facebook and twitter do. When it comes to competition, they will still be drawing from the same user bases of people who would otherwise spend time on instagram, facebook, messenger, or any of those apps. Scarlet and this is a young tech company, so employees can soon start to sell their shares, or insiders can. Evan spiegel talked a little bit about this on the earnings call. Lets listen in. Given the amount of speculation around the lack of expiration, i feel it is important to note that bobby and i will not sell any of our shares this year. The company will withhold the shares needed to ask if i task of i our our holding operations. Scarlet is that something that investors are talking about, the leadership of evan spiegel . It starts with him not selling his take, but being able to share his strategy with investors . A lot of people are talking about his arrogance, about this position. On the call yesterday, when he was asked about it seems like you are using similar growth tactics to facebook, and it seems like you do not like those growth tatts growth tactics, he had an arrogant answer to that and said listen, we are always the underdog, we always have in. We are the last market and all of these areas and have always been sick ethyl. Successful. So a lot of yards im hearing m investors and others concerns im hearing from investors and others is that he does not seem to think he is threatened by facebook. He thinks that snap cans will succeed, which might be a good option to have but i think they are looking for a bit more of a reality check. For giving us a reality check. We appreciate it. Ll ahead, why well fargo Wells Fargo Securities analyst says that the big banks are Strong Enough to whether two financial crisis. Will hear from next. Scarlet this is Bloomberg Markets, im scarlet fu. Julie betting on the banks. U. S. Financials had a rocky earnings season, but the analysts at Wells Fargo Securities as optimistic about the road ahead. Bullishe structurally on banks at wells fargo security. Balance sheets are stronger than they have been for a generation. Banking regulators have forced banks to increase capital liquidity, and now banks cannot financial crisis, but to financial crises, and that is the feds own data. Revenues have been somewhat flattish this decade, and we think revenues were poised to break out, a combination of the headwind, the biggest noncredit headwind in the history of u. S. Banking are now over, in addition of a few Interest Rates hikes help, this is before any big benefit from lots of rate increases, deregulation, or some kind of reflation trade. And returnsenues going higher, returns going lower, and it is a paragon shift if that happens. Is that the street evenly across the sector, particularly when you talk about money makes big money banks is close to regional banks. It is equally is it equally beneficial . Recommendations, we see one half side over three years, bank of america, the jpmorgan. The big guys. Think about it. In 1990, 1994 that is when you have the First Ever National banking. But the big banks did not fully integrate the acquisitions in the tech bubble burst. Then last decade, you had more financial positions acquisitions, and what happened . The initial crisis. Since the first time interstate banking released in 1990 four, the big banks can focused on the international bank. They can retool their operations, and they are not doing other Bank Acquisitions area they are not distracted. This is the time of the big banks finally doing what was promised from 1994. Here is what i do not get. You come here, you do not have a prop, you are really subdued, what is wells fargo doing to you . This is week six at Wells Fargo Securities. I will say we have 30 individuals analyzing Financial Companies and individuals. I launched on the banks yesterday. This is my debut at Wells Fargo Securities, but i collaborated with about a dozen different individuals in research as part of my launch. I love having those resources. Out is working together feel for you . I love regarding another peoples expertise to make a better call when i can. So you like it over there . So far, so good. Is there one big bank you cannot cover . I have cover the industry for a long time, and the market cap is well over 1 trillion of the companies that i cover. I have a lot to do. The big issue coming up is deposit data, this will be the first mover and what does it do to margins. What do you stand on that . The negative is that the margin decline this decade with the banks is the biggest it has been in 80 years. Of ais a function not only lower interest rate, but able to cash on Bank Balances sheets. Has increased from 1 trillion to 2 trillion is before the financial crisis. Markets have been impacted by many factors. Rlet that was mike mario mike mayo, bank analyst at Wells Fargo Securities. Julie up next, iron ore has been on fire this summer, but will tensions with north korea put the brakes on that . 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. From bloomberg World Headquarters in midtown manhattan, this is Bloomberg Markets. Im scarlet fu. Lets get caught up on some of the days big movers and the weeks big movers. Oil has erased its earlier losses and is moving up for todays russian, but it is not enough to session, but it is not enough to change the directory for the week. This would be the worst week since july 21. The ia this week reduces cash demand for opec in 2015. This could be a sign for opec as well. That isshows starting to make a come back here, particularly in the market for crude. Opecs plans to clear this up what what might start to take hold. Lets also get a check on metals. Higher week, off a tensions over north korea defending gold futures to their best week since april. Gold with a gain, at least for the time, of do we have the right one . That is morgan stanleys. But it is higher for the week. Julie i will tell you how much old has gold has gone up this week. It has risen about 2 on the week. Lets talk about metals beyond gold. A big summer for iron ore and copper, both of those commodities posting big gains as chinas economy has improved and demand is strong. Can it continue, especially with