apple prepares the latest iteration of its -- we will tell you what they are eyes apple prepares the latest iteration of its flagship handheld. we are getting some movement -- but not volume. still running below average in the s&p 500. warnings's notwithstanding, but we have had other warnings as of late. so there is that underlying market backdrop of this commentary and fragility, increasing fragility, of the rally we have seen. we are seeing a rally today with the nasdaq leading it. up herehe russell 2000 as well. it has been lagging as of late and has given up many of its advantage gains over the large caps since the election. today, up 6/10 of 1%. if you look at the short interests, or the short analog bets, people are more bearish on small caps. 2021. it on g #btv line,hey are above this they are net long. below is net short. the white line, the russell, is now net short on the small caps stocks. in terms of what is leading the again -- the gain, we have a mixture of different sectors. it is not all technology, though we see technology is strong. apple up 1.25%. .xxon mobil rounding it out it was their worst performing group yesterday. we also have a bounce and retail. macy's helping lead the s&p 500 higher. that company making a personnely change -- change. there is a new ceo, who has a big technology background. the company will also streamline operations and cut about 100 jobs. surprising strength from dsw. what used to be known as designer shoe warehouse. that company showing an unaffected gain -- unexpected gain. the company says, sales will -- says comp sales will be unchanged. finally, foot locker, after a two day 33% plunge in shares after the earnings report, they are definitely bouncing -- they are bouncing today, though definitely not making up for those losses. about 36% below the 100 day average for the stoxx 600. -- basic resources leading the advance. in this sector the last three months. bhp billiton, one of the world's biggest miners, are in talks with buyers of its u.s. shale assets, part of a $22 billion spending spree in 2011. skirmishespublic from activist investors led by elliott management. biggest miner taking advantage of rising commodity prices to cut that. it used its free cash flow to reduce that by almost -- reduce debt by almost $10 billion. it has announced a fivefold increase in profit shares. this is the story of the day. the decline of the day in the stoxx 600. provident financial, it fell as much as 76%. the biggest decline since the company went public. chief executive peter cook stepping -- peter crook stepping down with immediate effect, a plan -- after a plan to replace workers with technology backfiring. a pre-exceptional loss in the home credit business between 80 million pounds and 120 million pounds. after scrapping some interim dividend, there will likely be a deterioration in the trading performance of its home credit business. and an investigation into vanquis bank, its credit card unit. some are calling it a quadruple whammy of bad news, sending shares down six or 7%. 67%. 7% -- european utility stocks making a comeback as global yields decline and a dovish federal reserve remark. gains indor is leading , with banks trailing. utilities, according to hsb, declining. utilities are having their month in the sun. we will look more at that later on and different areas of the market. we tried to move past the late political controversies, ray dalio says he sees no important economic risks in the environment, but he is worried about growing internal and external conflict, leading to an paired government efficiency and other conflicts. aboutdalio warns politics, investors are looking ahead to thursday's jackson hole gathering of bankers and central economists. yellen and jockey are speaking friday. talking about this is cameron crise, who writes for bloomberg. if you want to find his findings, write ni macro man. notesite in your recent -- market views the defect as significant, will they become so? is political risk affecting this market in a significant way? cameron: it is hard to say we are significant when we are 1.5% from the dingdong highs in the s&p. it does show a possible risk in moving forward. defections reflect a loss of confidence from corporate america. one of the reasons i think equities have performed so well this year is we had an unprecedented rise in confidence immediately after the election. we had an indicator that confidence,sumer showing two deviations as editor is that -- a direct result of trump's elections to all-time highs. the has not really receded yet. that belies the notion that there are unprecedented risks. if there are, they have not been reflected in confidence numbers. if ceos who are defecting become less confident in the economy and that impacts how they run their businesses, that is the real risk for the economy of the market. maybe they pull back on capital spending, on hiring, and you have the seeds of a more pernicious down trade. vonnie: in you have your own proprietary risk appetite index, which viewers can see a few see .ccrisk g index. you can find we have not had this risk appetite on or off as during thek financial crisis at any point in the last couple of years. and we are still not even at november levels. amplitude has been low. there are three components to this index, which is relative as a performance, volatility, and financial conditions. volatility and financial conditions have been broadly supportive of risk appetite much of this year, hence the generally solid performance of equities. what is interesting is the relative performance between safe assets and risky assets. essentially indistinguishable. it has all gone up or all gone down a little bit. if we were to see the evolution of the market, such that safe assets perform better than risky assets, that would be a signal that what we will see -- the risk is we see a more pronounced downturn in risk assets. mark: we have gone a couple of minutes without mentioning jackson hole. we will get to it. this is year oh yearly against the dollar, going back to 1999. the best start to the year for a euro -- for the year against the dollar ever through august. up 12%. the big question is, a, does draghi tried to -- try to jawbone. b, even if he does, does it make a difference? cameron: i do not think you will lean to heavily against it. the minutes of the july meeting suggest, as is generally the case with central banks, it is much -- as much about the pace of appreciation as it is the level. the last three weeks, they euro has shown signs of stalling out, --ch will assange some assuage some of draghi's concerns. but if he provides a hint of the incipent tapering. but going back to the trump issue, it is interesting the mosthas outperformed measures of relative currency performance. things like interest rate differentials adjust the euro should be closer to 1.12 than 1.1750. it is interesting to see if national investors are signaling a version by getting out of the dollar and into the euro, which obviously also has the benefit of this hope trade in terms of the monetary dynamics. vonnie: and you also say the euro is not likely to have a -- in. coyote moment other words, not likely to fall painfully. let's check in on first word news now. here is emma chandra. emma: in singapore, the bodies of some u.s. sailors have been found aboard the damaged u.s. warship. remains were found in flooded compartments of the uss john s. mccain. malaysian authorities also found and identified body -- an unide ntified body. 10 sailors went missing after the mccain collided with a tanker. in a speech last night, the president announced an open-ended commitment to keep american forces in afghanistan. >> we are not nationbuilding again. we are killing terrorists. emma: american soldiers have been in afghanistan almost 16 years. the president the consequences of a rapid exit would be acceptable. -- would be unacceptable. a pentagon plan calls for 4000 more americans to be sent to --in afghan warriors soldiers. kim jong-un says the u.s. could face merciless revenge because it is engaging in military drills with south korea. wantsbrexit, the u.k. ofdon to state in the middle a territory dispute. english law governs 40% of arbitration cases. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. mark: thanks a lot. coming up here, golden retriever's. investors counting down to the jackson hole summit in wyoming this week. this is bloomberg. ♪ vonnie: live from new york and london, i am vonnie quinn. mark: i am mark barton. gold falling ahead of the central bankers' gathering in jackson hole. oil advancing. joining us now from the cme, todd horwitz. we have talked about gold failing to hold above 1300. shouldn't gold be higher with the dollar so weak? the dollar last time was low, gold was near 1370. a couple of weeks ago, we went down to almost below 1200 and came all the way back to 1300. friday's reversal is concerning, but it is quiet. so i am cautiously friendly. mark: i noticed that bank of america merrill lynch says gold is on track to climb to a ounceear high of $1400 an because of lower rates in the u.s. political situation. how likely does that look from your perspective? todd: i would like to see $1340 before $1400, but i could see that happening. ery when the big banks make these calls, because typically they are trying to get out. i do think that the bear market we have had in metals the last five years is over. we are starting to turn. i think the bear market portion is over, and we are turning into a bull market soon. $49 is the key price for you in oil. are you still a seller in oil? todd: i am. i see no reason that we are coming out of the pippa mann season. shale producers will put as much oil in the system whenever we get close to $50, so there is no reason to believe we have crazy demand to drive the prices higher. i think $40 is the level. was $19, or, oil even less. there is a chance to go back down eventually. the need for oil and that need for more will take down the demand. mark: thank you for today's future in focus -- futures in focus. vonnie: time for the latest bloomberg business flash. isna's great wall motor pouring cold water on a possible deal with fiat chrysler. the company says there are no talks and it may not pursue a takeover a day after great wall expressed interest in fiat chrysler's jeep unit. bhp billiton is giving into activist investors. the mining company unveiled plans to sell its u.s. shale assets and delay a multibillion-dollar investment in a canadian potash project. incomings after bhp's president held meetings. new york city pension plans are on the verge of investing with kkr. pension money would be invested in private equity, credit, and real estate deals. mark: still ahead here, what is new in the new iphone? mark gurman droid -- joins us with a special preview of apple's. latest smartphone. this is bloomberg. ♪ ♪ mark: this is "bloomberg markets ." i am mark barton in london. am vonnie new york, i quinn. smart-beta etf's have let -- yet to take effect in the fixed income change. here with us is air ball tunis -- eric boulton us -- eric b alchunas. specifically when it comes to smart beta, why has it not taken root with fixed income? eric: because people interested in outperforming are happy with the active bond interest fund. there is less room to exploit. on the equity side, people were not happy with equity managers the last decade. etf's had. if you look at how credit managers are outperforming, there are tricks. they will take duration bets. is isart beta really taking things smart managers did to get alpha and converting them into an index. are looking to do those things and convert that alpha technique into it and index for a third of the price. ultimately, if people start looking at costs, and they say the beta etf's does the same as an active manager but does one third as much, that could move the needle. julie: what are some examples of this strategy, where you convert the more active strategy into index form? eric: ishares has a good one. ag, where itly the has too much interest rate risk manon of credit risk. creditely -- not enough risk. if you look at the best performing credit managers, they are the ag-plus. new agg is another one. the other interesting one is the powershares fundamentally weighted corporate broad etf. this one says we think bond indices are not good, because they way the biggest debt companies pay let's weigh the index on the company's fundamentals. it takes a smart-beta approach. all three of those are outperforming the agg. isie: and "agg" "aggregated," right? eric: right. this is the bloomberg barclays of the. index.egated bond julie: just deconstructing the finding for the layman. eric balchunas, thank you. vonnie: still ahead, donald trump is adding to his list of policies. his strategy for afghanistan runs the risk of alienating his followers. ♪ ♪ live from bloomberg world headquarters in london and new york, i am mark barton. vonnie: i am vonnie quinn. this is "bloomberg markets." as parts of trump's policy agenda is at an impasse, he is announcing a new military xiao jie in afghanistan. he announces commitment to keep troops in afghanistan in contrast to president obama's and his campaign -- and trump's campaign promises. let's bring in one of our political correspondents. >> the president acknowledged he had a change of heart. tosaid he originally wanted leave afghanistan ample our troops out, but he realized it is a much different situation in the oval office and you're making positions that impact national security. it appears he is planning to get tough on afghanistan and crackdown on corruption, potentially sending as many as 4000 american troops to back them up. to haveident appeared an open-ended commitment to the war in afghanistan. it is an indication that the war could continue several years to come. vonnie: we will get into the details of his proposal in a few minutes. let me ask you what affect his speech and the rally tonight, which presumably will build on that, have on his approval ratings. a versionst, we saw of the president we do not often see. he was somber, reading directly from the teleprompter. tonight, we can expect a different version of the president, what we are more accustomed to. the trump police on the campaign trail, rally in with the crowd, againstchants opponents, whether republican or democrat or the media. this is something trump has done , potentially sort of divided between his supporters and people he believes are his opponents. we can probably see the president practice that later today. strategy does the announced yesterday play to those who voted for trump to disentangle the u.s. from these costly overseas wars, overseas and others -- endeavors? these: that is one of reasons this decision took so long to make. he realized this is a departure from promises he made. some of his supporters are not happy. we can see and right wing media, number of negative headlines after the president's speech, saying they believe that globalists and moderates within the president's orbit has taken over after he has gotten rid of people like steve bannon. that is something the president will try to address as he speaks to much of his base during this political rally. but that speech yesterday was definitely a departure from much of his base, who has voted for the president hoping he would not continue some of these wars we have been in several years. vonnie: thanks to toluse olorunnipa. for more on the implications of xiaoresident's military jie, let's bring in the senior -- er of the truman mark lyons. we did not get any specific plans, but we got some hints+++ about how this could change, including policing pakistan more. i am wondering if this is a new strategy. mark l.: we did not get strategy. we got tactics. the military got strategy. an outline that we would not take over afghanistan. in afghanistan, the taliban had taken back so much of the region his marines had taken over. one of the things the military do not want to do is fight for the same real estate twice. that is why we have to continue to fight in afghanistan, send more troops there, to get to the point where we break even, make up some ground for the last two years, and bring the taliban back to the negotiating table. vonnie: after 16 years, what does a win look like? mark l.: what winning looks like from the president's perspective is the afghan government says "we have this." but they will have a government that is not corrupt, participate in the world market. the afghan security forces to defend its own borders. i think it is the same concept of the way the united states remained in western europe after the second world war and the way the united states remains in south korea today. the reason to leave is not necessarily that important, as long as we continue to move forward but we have perceived to see the goal. we're not looking to take over or colonize or remained at the long, but the bottom line is there is u.s. national security interests in afghanistan. fellow saidsearch militarization is the recipe for more bloodshed and destruction. he said a strategic stalemate will persist for the for seeable future. you back any of that? mark l.: moore is an extension of foreign policy. it is very much with the president's proposal to get other nations involved. when the united states together a military force, the writer that easily. i think that is the same feeling that general mattis has now. based on the technology, working with a more confident afghan security force, who take tragedies every day -- they are putting their blood on the line to defend their country. they still have challenges. still have a literacy, things to go, but that is why we do not need 100,000 troops there. the president did not mention troop numbers, but i would not be surprised if it is more than 4000. with a total naval force of 2000, i think that is the final number. that is enough to go with a 300,000 afghan security forces to rout the taliban again. mark: what about pakistan? what is realistic when it comes to putting pressure on pakistan, on the afghanistan issue? mike: that will be a test of american soft power. the president has to to change something he said before. trying -- he will have to reengage the state department, who will have to take the lead in pakistan. we do not have military forces there. same in india. be the state department, the cia, leading in pakistan on american soft power to get them to go along with this objective. not mentionedas last night. that is definitely a massive player in the country now. also, trump left the door open to actual talks, including the taliban. how many generations are we away from that? about iran,oint because russia is also supporting the taliban there. but i think he has to leave the door open for the taliban to negotiate. look at history. when the ira decides to join the political process. the same kind of situation. they have recently sent the president a note saying you guys are over. we will eventually take over afghanistan. so the taliban will be part of afghanistan. the question is when they can be part of the political process. mikee: retired major lyons, thank you for joining us on the president's foreign policy. breaking news -- lecture hathaway's -- berkshire hathaway's outlook has been by s&p.to stable it was on negative watch. the stock up about half a percent. mark: coming up, the 10th anniversary of the iphone just adding to the buzz surrounding the release of the iphone. we will look under the hood of the new features of apple's star products. this is bloomberg. and we are looking at facebook and why stocks are bouncing around as there could be a major warning sign for the social network. this is bloomberg. ♪ ♪ live from london, i am mark barton. live from new york, i am vonnie quinn. sees its, facebook first decline among teen uses in the united states, according to emarketer. it is also the first time emarketer has predicted a drop in facebook. is this way much on the stocks? no, because even if you have a lot of teen users leaving, is not a huge problem for facebook, because it was smart enough to get instagram a few years ago. 3% 12 ordecline around 13 years ago, so not bad. i would note that if you want to come into my terminal, g #btv 4732, we will look at facebook's revenue growth. they are still growing, just at a lower grade. growth year-over-year about 30% versus 60%. maybe not the 80% or 100% growth we have seen, but nonetheless, pretty good. it brings up the question of the monthly active users. facebook crossed the $2 billion mark earlier this summer. instagram and snapchat is very far behind. instagram less than 600. snapchat below that. that should give room for snapchat to grow, especially if they keep targeting teen audiences. vonnie: that was going to be my question about snapchat. any negative comments in relation to facebook you would think would be good for snapchat. taylor: snapchat has struggled a little recently after the ipo, in part because they struggled monetizing users. how do you get advertisers to monetize the user growth. a projected negative even of almost 900 million for 2017. 2254, you will see their share price has struggled. i also note just a little, adding to the selling pressure today, is the lockup from the ipo expires august 29, next week. continuing to put a little pressure. it is all about how you monetize the growth. vonnie: if you can figure it out, pass it along. mark: let's stick with technology. the bar for the iphone is set high. on the features of the phone and how it coincides with the 10th anniversary of the iphone, mark gurman has the details and joins us from san francisco. is the new iphone the super -duper version, will it be a demonstration of apple philosophy of let's not be first, let's be best? mark g.: you got it. screen,per contrast inductive charging, slimmer bezels, these are all ideas that have been tried before. new samsung phone launching last week, another samsung phone launching earlier this year, the essential phone as well. although this to put a bigger screen and a small phone, that is what apple will do. some are calling it the iphone 8 pro. mark: so what new ideas is apple bringing to the table? mark g.: besides those ideas that other people have tried, they will get -- have this 3-d sensor. we call it the crown jewel. instead of using your fingerprint to log in, you will able to scan your face. it only takes, according to people familiar with the development, a few hundred milliseconds. you can have your phone on the table, take it out of your pocket, and the wide angle will lock, unlock, or approve payments when it is you using the device. vonnie: we are calling it the iphone 8, but that is a placeholder. we do not know what it is called. mark g.: the iphone "8" is a colloquialism. a would make sense, given lot of people calling of the name to, to use the "8" go head-to-head with the samsung s8. vonnie: and there will be huge demand, because a lot of people skip cycles. -- skipped cycles people that set up activity? mark g.: this is a pattern we have seen. before the iphone 5, 6, there was an uptake in people waiting for the next phone. said, people are awaiting the iphone 8. and we are in what is traditionally an off year. in even numbered years, apple has a big release. thelast year, they maintain design of the iphone 6 for the iphone 7. but they will do a new design for 2017. it is sort of unprecedented in terms of pattern. i think it will be a pathway for new revenues and app developers. mark: it does seem that customers do not care that the iphone 8 will not be a case study of innovation? mark g.: nobody will care. i will still buy it. there will be tens of millions of people who still buy it. it is part of the apple playbook. they are not first. tim cook told "bloomberg theyessweek" when announced the homepod speaker that they will not be the first to develop a technology, but when they do, they will take it mainstream. we believe they will hit it out when they announced the iphone 8 in september. gurman out in san francisco. time for the bloomberg business flash. a look at some of the biggest business stories in the news right now. is facing month of haggling with monsanto. they are concerned the composition -- competition could reduce pesticides. ford is the latest automaker to offer british drivers cash to get rid of the dirtiest cars. ford will pay drivers up to $9,000 to replace older diesel powered vehicles and vans with newer models. they are targeting 50,000 vehicles built before 2009. vonnie: still ahead, irish prime minister leo varadkar tells bloomberg tv he remains confused and puzzled about the u.k.'s global trading plans following brexit. moore, next. -- more, next. ♪ ♪ mark: prime minister theresa may's government is trying to rebut criticism the u.k. is unclear about what it wants from brexit. thevaradkar is adding to criticism. he spoke about the state of the brexit talks in toronto. >> it is important to say that --xit is a reddish party see british policy. they are the ones who decided to leave. as far as ireland is concerned, we are staying in the heart of europe. as far as the negotiations go, the european position is clear. we will only be willing to talk about the new relationship, the new terms of trade, when there is sufficient progress on free -- three important issues. the first is the rights of e.u. citizens. the divorce settlement, if you like. and specific issues related to ireland. they are our next door neighbor, our largest trading border, and there is a shared border. it is only when the european side, the 27 member states, who are saying -- stain, are satisfied we have made enough progress that we can talk about the new relationship. t do get a sense that you -- he e.u. is pleased with the progress they have seen so far? >> no. there not satisfied with progress we have seen so far. however, the talks are ongoing. ofhel barnier leads the use -- elite the use side. david davis leads the british side. we hope that talks can continue into the next phase, but to date, progress has not been sufficient. >> where have they been the most frustration and the lack of progress? main areas. when it comes to citizen rights, someone who is italian or french or publisher has been living in london for years, paying taxes, should be allowed to stay there. people who are british and started a new letter somewhere else should be allowed to stay there. we also keen to know what will happen with family members who want to relocate and live with their loved ones. there is no agreement yet on the amount of money britain will pay. for sample, pensions paid to european civil servants, many of whom are british. there has been some progress. we are satisfied we will keep the common travel area. that british and irish citizens can move freely between the two health andcess education in each other's companies. we are also reassured with the ongoing commitment to the peace process in northern ireland, continuing to fund peace building measures in northern ireland, an area i feel strongly that there should not be a trade border on the island of ireland. >> on that note, let's say the u.k. does not get the kind of trade deal it once -- wants with the e.u. how concerned are you that they will put a hard border between ireland and northern ireland? >> where we are confused and --zled is where the u.k. one wants a trade union with ireland. what they seem to be suggesting all along for the last 14 months is they want to have the advantages of being in the bu but none of the response abilities. that is not a realistic position. we are waiting to see what they would like to see. one thing that strikes me, being in canada, a month from today, the canadian european trade agreement comes into force. when britain leaves the european union, it does not only leave europe, it leaves trade agreements it has made with countries like japan, south korea. so it is not clear to us what the british government really wants from other countries. mark: irish prime minister leo varadkar speaking with bloomberg television in toronto. the "european close" is next. stocks are rising. the first day of gains in four. stoxx 600 up by 9/10 of 1%. this is bloomberg. ♪ . so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. ♪ mark: hello 12:00 a.m. in new york and 4 p.m. in london. 30 minutes left in the trading day in europe. from london, i am mark barton. vonnie: i am a vonnie quinn. this is the european close on bloomberg markets. ♪ mark: a massing -- massive plunge and providential. underway.gation is are things really as bad as they seem? , phillips ands responding to activist pressure, now in talks to sell it u.s. shale assets, why are they reversing calls. we will hear from their chief executive. bonds are the alarm bell surrounding the credit market selloff, are they a bit overblown? againe bulls month