We thought the s p was trying to climb up to a high. Maybe. 3 . Yesterday. Up 1 taking some of those gains off the table. Not anything to screen about. We are looking at earnings. Years. N the most in 19 at one point the learned Worlds Largest advertising firm. That sector makes up a third of its revenue. Markets closing down more than 11 . Other earnings that we were following was lows. Lowes and home depot divergence continues. It isnt quite keeping up with where home depot has been. Samestore sales came in at 4. 5 . Its behind the 6. 3 percent samestore sales growth we saw from home depot. Some analysts are saying maybe home depot has a bigger presence in the Northeast Market and thats where shes where you are seeing more of the growth. Continuing to see price divergence as the spread widens. Notet got an analyst saying are cutting the shares of lowes to a hold. Downng the price target 15 to 76 share. To wrap it up we are in the middle of jackson hole awaiting comments down from mario draghi and janet yellen. Taking a look at the 10 year yield. We are lower by about three basis points. We came in this morning and heard comments already from mario draghi. He said qe is a success. Im not sure we expect him to say it wasnt a success but there is the headline. Fresh off his Campaign Rally yesterday in arizona donald trump is now in reno nevada where he will address the American Legion convention. The president is expected to call for unity. Last night in phoenix he didnt quite stick to the theme. He threatened to government shut down and suggested he might pull out of nafta. Complained about the failure of the Gop Health Care plan. Chen. G us now is lanhee joins us from stanford, california. Great to have you on the show. I dont even know where we start. Lets start with the threat over the mexican wall. Do we think we need to take him seriously on that . Take himk we need to seriously because remember there are some Core Campaign promises that donald trump had during the campaign in 2016. One of them was to get wall built. Certainly there is some support within the republican conference to get that done. They need to demonstrate some momentum on legislative accomplishments. Be able too demonstrate they are getting something done. The border wall is one area i would expect them to move. The question is its the agenda too crowded. Julie at a time when the in opent seems to be warfare with some members of congress. Hasnt spoken to Mitch Mcconnell for weeks. He has been criticized by bob corker. He has been criticizing john mccain. Now seeing him enter the hall where he is expected to speak. Can congress act on these measures without the president if they are not working together . The question is can the staff Work Together. So far theres every indication that they are. That is a hopeful sign moving forward. The signs are positive in terms of coming up with some sort of broad consensus. You have hopes that we can do it . Im going to interrupt. President donald trump speaking in reno. I want to thank all of our guests including hud secretary ben carson. V. A. Secretary david schalk and and former secretary of defense bob gates. Where is bob gates . Bob gates has been so great. He started off saying bad things about me and then he said great things and now i like him. [laughter] thank you, bob. Its a great honor to be back here. With all of my friends. At the American Legion. National convention. I want to thank governor sandoval for being here. Dean heller is here. Someplace or will shortly be here. He caught the first flight out. For beingthank him here. The American Legion embodies the spirit of patriotism. That is the true source of our forngth and the best hope our future. You love our country. You cherish our values. Ouryou definitely defend Great American flag. No doubt about that. [applause] above all else, you believe in america. Just like america believes in you. [applause] to honor youhere for the sacrifices you have made to defend our nation and preserve our way of life. We are also here for another reason. We are here to hold you up as an example of strength, courage and resolve that our country will need to overcome the many challenges that we face. We are here to draw inspiration from you as we seek to renew the bonds of loyalty that bind us together as one people and one nation. The nationsr uniform come from all different backgrounds and from every single walk of life. But they are all united by shared values and a shared sense of duty. Teamare all part of one with only one mission. In mind. Most importantly, they are all americans. And they Work Together. They fight together. Together torifice defend our magnificent home. Thank you. [applause] now our nation must follow that same work ethic. That same devotion to a greater cause. To achieve our countrys full potential. Our veteranstoday who have fought in every Major Military engagement dating all the way back to world war ii. You have endured bitter winters. Treacherous jungles. Barren deserts. And stormy waters. You have left your families. Charged into danger. We have been listening to President Trump the National Convention of the American Legion. Now he isit from expected to sign of veterans appeals improvement and modernization act. We will be monitoring his remarks and we will bring you back to them should his comments warrant it. I want to bring back lanhee chen. We have been talking about what Congress Might be able to achieve. You said it is necessary that they were together. A bloomberg editorial today called on congress to constrain trump. To investigate any violations of the emoluments clause for example. Do you think that is a good way to perhaps restrain some of the president s worst impulses . I think congress has an oversight rule. To besue is are you going able to track this. On the one hand is there going to be a congressional track investigating whether its the emoluments issue, the russia issue, all sorts of different potential issues that members of congress can dream up and can there be another track on which they are moving infrastructure tax reform the need to avoid a shutdown raising the debt ceiling. I am skeptical there can be that division of labor. Verynk its going to be difficult for the administration and congress to Work Together if there is any aggressive investigations track on the one hand. Democrats are going to keep pushing republicans to do investigations. Some of that is going to be necessary. Republicans and trump have a shared goal this fall and that is to get something done whether it is tax reform or infrastructure or otherwise. Julia does pragmatism without for the president. I was talking about what percentage of his support he would lose if he failed on things like enacting tax reform or actual legislative policy Going Forward giving the emotional bond he seems to have with his core supporters . Does he recognize there are some he could lose if he doesnt enact policy and hold the line . Im not sure donald trump is the one who suffers for this the most. Going to be the congressional majorities in the house led by paul ryan and the senate led by Mitch Mcconnell. Donald trump is going to have a secondary impact. If you doesnt have a Republican Congress to work with that will make his job harder. In terms of Public Opinion im not sure Donald Trumps support is premised on him actually getting anything done. There is a solid base of support hes going to have. Thats going to be with him regardless of whether he gets something done or not. Im not convinced it boomerangs on trump immediately. Maybe in the long run. In the short run as the Congressional Republicans who really have a problem. Julie paul ryan of currently making comments thing he doesnt think a Government Shutdown is necessary. Seeming to imply that some kind of border wall action will get done. You also expressed optimism that something would get done. Why are you so confident when we havent seen progress on the other things . Obviously the health care the failure of Health Care Reform was a debacle for republicans in congress. When you move to tax reform in particular, thats an issue where republicans feel much more comfortable. They feel like they understand the terrain better. There has been a much better working relationship between the Trump Administration the house and the senate staff on moving forward on a tax reform plan. The reason why i have some talk at its is the issue is much more comfortable for republicans. The work has been going on behind the scenes. At the end of the day that is very vital to ensuring that something actually gets done. Whose responsibility is it to fix the tensions between Mitch Mcconnell and President Donald Trump . Do we see an open attempt to improve a pretty toxic backandforth . Ultimately i think they both bear some responsibility. The issues are many. On the side of the Administration John Kelly is somebody who can have an open tod and extend an invitation congressional leaders to reconcile whatever difficulties there might be and Mitch Mcconnell and paul ryan at the end of the day are pragmatists. They want to get something done as much as anybody else. For them they have an incentive to repair whatever difficulties there may be. Of the day its about personalities and personalities in politics can get very messy. I think there is impetus on both sides to get this fixed. Its up to both sides to make the effort to do so. Chen, thank you so much. A fellow at the hoover institution. Lets check on the bloomberg first word news with mark crumpton. President met with white house adviser Jared Kushner today. Just hours after the Trump Administration cut nearly 100 million in military aid to egypt and delayed almost 200 million more military financing citing egypts poor human rights record on its crackdown nongovernmental groups. Kushner was in cairo as part of the middle east tour aimed at exploring ways to revive israelipalestinian peace talks which collapsed in 2014. To a. S. Navy has responded rash of accidents by firing the admiral in charge of the japan placed based seventh fleet. It lost confidence in his ability to command. Uss john mccain was involved in a fatal collision. Authorities in brazil say at least seven people are dead and dozens missing after a boat carrying 70 people sank on a major river in the northern part of the country. Officials say 25 people made it safely to shore. Theres no word yet on the cause. Andominent russian theater film director appeared in court today and was placed under house arrest pending an investigation into charges he embezzled Government Funds allocated for one of his projects. He denies any wrongdoing in the case against him. It is seen as a crackdown on freedom of expression in russia. Crowds of his supporters gathered inside and out down outside the courthouse. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Julia President Donald Trump is still addressing the National Convention of the American Legion in reno. You can watch his remarks on the bloomberg function tv. From new york, this is bloomberg. Julia this Bloomberg Markets. Im julia chatterley. Julie im julie hyman. Lets turn to the challenges facing the advertising business. In the biggest ad agency. Cutting its fullyear revenue forecast as a grapples with the slowdown in spending in the consumer goods sector. Mark bartone with earlier on Bloomberg Markets. Every business is at the mercy of macro and micro practice. If you tried to simplify whats fromning from postlehman about 2011 to 2016 we have a low growth of below trend gdp growth world. Very little inflation. Very little Pricing Power for our clients. It was an environment that we could work with quite deliveredly and record results in each year. Just fast forwarding to 17 and the Fourth Quarter of 16 and into 17 there have been some changes. Have become very important. The first was digital disruption whether in the way consumers consume media or clients distribute goods. Ecommerce and bricks and clicks or whether its how they produce things he does of changes in digital production, 3d printing, autonomous cars. Thats an opportunity for us. Her business is now over 40 digital and we have learned digitale year 2000 changes in google and facebook are ever biggest and third biggest investment with our clients. Have a 75 billion dollar portfolio that we invest in media around the world. Number one and number three last year were google and facebook. Google and facebook are the duopoly in digital and we work closely with them. Thats more of an opportunity than a challenge. Firstly, activist investors who have been using lowcost capital to its Central Banks have been running the economies of the world on loose Monetary Policy to avoid the negative impact on employment and society of austerity postlehman and buying bonds. With cheap money and the low,est rates have been those activist investors have been able to establish capital to make investments. Has been similar force zerobased budget is who have been buying companies are investing in companies with the low cost of capital and that has put tremendous shortterm pressure in the goods sector which is about 30 or one third of our revenues. Seen the package comes in particular taking cost cuts. They have announced it in their results. They have discussed how they have been cutting Media Investments or their agency fees in order to improve margins and profitability. We are restricted for time. What are you doing to combat those issues . Much more tightly focused than integrated offer. The best people in our business. Not working vertical by agency brand but by horizontal across client and country. Thats the first thing. The second thing by extending expanding our presence. In is already 40 of our business. We want that to be at least 45 or 50 in the future. Last but not least placing greater emphasis on data because the rise of amazon, google and facebook. The control that our clients have of their data is much diminished. They are the areas working on. The critically important one is the first one. What we call for his ontology. Basically its to emphasize we are not approaching our clients as silos. We are approaching them as a fully integrated whole. That was the ceo of wpp speaking earlier on Bloomberg Markets. Donald trump is speaking at the American Legion in reno, nevada. You can watch his remarks on the bloomberg function tv. From new york, this is bloomberg. Julia still ahead, longterm bullish case for gold. From new york, this is bloomberg. Whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if. There was a single site. Where you could find the. Right hotel for you at the best price . There is. Because tripadvisor now compares. Prices from over 200 booking. Sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Julie this is Bloomberg Markets. U. S. Is gaining after those inventories showed declines in oil and gas stockpiles. They have dropped every week since late june and they are at their lowest in 20 months. At the highest since the session. Now a Tropical Storm and it could hit the texas coast later this week. That could quench supply. It is also affecting cotton longestwhich is on the rally since january up 1. 5 . That could threaten the farms across the deep south throughout the weekend. Gold reversing higher as trumps threat of a Government Shutdown gave traders concern. Traders are waiting for the central bankers meeting at jackson hole for perhaps more catalysts. Gold, thecking with ceo of malta in bergen pfizer us it will be set in a range. Goal had a tremendous 12 your gold market bull market. We will not see a similar one anytime soon. Within five or 10 of that level, gold will not run away at this point. Julia joining us as the Portfolio Manager with asset management. Holds a qualified, which just about 12 in gold. Great to have you on the show. Should we be chasing gold . Gold is an exciting market. There is a lot of drama around gold. I dont encourage people to take that at this point, but they should voice have some exposure. Julia what are we talking about here . Herere very well leveraged. Why do you think there is more upside here between now and the end of the year . Douglas i think you can consider it a Financial Barometer to anxiety that is in the market. I think that is a good place to start. People look at gold as an alternative to currencies, inflation protection, perhaps trade flows. It offers investors a lot of different aspects and attributes that can hedge exposure. Julie do you think that will continue . It is interesting how divergent the forecasts on gold are right now. You have bank of America Merrill gold saying there will be ounce. Ollars an so, when you have so Much Division over something, how do you chart your course . Mark Douglas Douglas it is odd because everyone has their own view on the marketplace. That is the beauty of gold. You can use it for your perspective. Gold has been recognized for 5000 years as money, it is recognized around the world through all cultures as something valuable and inherently, there is Intrinsic Value in gold. That and recognize that gold does not have counterparty risk, like monetary instruments do. That is the important thing. It doesnt have counterparty risk. Julia what about seasonal impact as we head to the back end of the year . Typically, during the beginning of the year, we see good performance. As we get into this ring, global selloff. Ine spring we see the bottom the years price. When we get is august and september, we see a boy and gold market as people are hedging themselves in terms of their profits or portfolio. We will seefall, the correction in the marketplace. People will position into gold to protect themselves from that. Julie 12 of your fund is an physical gold. Most of the rest of it is an goldmining stocks or Precious Metals stocks. I want to pull up on the bloomberg era. Spot gold over the past year versus the gtx, the gold miners etf. The stock largely have lives the metal. Have lagged the how do you choose when you do necessarilythe not moving intelligent . In tangent . Douglas we look at Companies Creating value through operations, discovery, or asset deposits. Maybe theyre accomplishing greater efficiencies and production and greater cash flow. To find theg companys unique in a position to create value as opposed to just writing the gold price riding the gold price. Julia do you plan to hold that stable as you progress or do you decreasethat do you that . Douglas silver is a unique metal because it is monetary and industrial. We have exposure to silver. People have thought of silver as a monetary metal. We do have that exposure. We continue to think over is a metal to have exposure to. These are considered precious and more industrial than monetary applications. Have some exposure to Platinum Group metals, but not that much. It is more goldbased and silver. Julie thank you so much. In gold funds. Let us check the headlines. Trumppresident threatening a Government Shutdown to get congress to pay for a border wall with mexico. The president made that threat at a rally last night in phoenix. Today, paul ryan told reporters that is not something lawmakers are interested in. Ryan i dont think anyone is interested in having a shutdown. While we were gone doing what we said we would do, what we have done already and need to do, which is to control our borders. I dont think you have to choose between the two. Mark Congress Needs to pass the spending measure to keep the government open. The Emergency Management director is pushing for an overhaul of disaster relief. Bloomberghief tells state, cities, and homeowners should bear more cost. He says taxpayers shouldnt be on the hook for homes that keep letting. Met with then secretary of state in sochi. Russian values a trustful and constructive dialogue with the vatican. Putin followedh talks yesterday with foreign , with theergey lavrov cardinal urging russia to use close ties with venezuela to ease tensions. Englands alltime leading scorer announced his retirement from soccer. He will still play on his premier league team, everton. Inscored a record 53 goals 119 appearances for england. Global news 24 hours a day. Powered by more than 2,700 journalists and analysts in more than 120 countries. This is crumpton, bloomberg. Coming up, loads losing out on renovations boom. Why isnt the retailers seeing the same that propels home depot . We will tell you. This is bloomberg. Julia i am julia chatterly. Julie focusing on retail now. Let us look at the threads on american eagle. Up 13 , the biggest intraday rise in 13 months. Up by 7 . This beats expectations from analysts. It is fascinating to me because there was talk at one time about the three as collapsing. Eagle is doing really well. If you take a look into my terminal, you can see they posted positive comparables. That is one of the things that surprised in the earnings report. Sales up 2 when people expected it to drop at. 4 . The ceo was talking about a gross in jeans and womens apparel doing well. This one will brand also doing well. They are doing well online. Their digital penetration continues to grow. It is topping at 25 of total revenue for american eagle. It is a fairly bright spot in retail. How does it fit with what in in terms of stop terms of where they are managing to bring out there gaining compared to other retailers . Emma there was a nice piece written today where they talk about some of the big misses we have seen have translated into some big stocks your today. We have a full screen that will show that. Some of the biggest moves for the year plunged. Thinkingors rose after 11 in may. This is interesting, especially for apparel retail. We are used to retail as a holding volatile, but not necessarily those in clothing. Companyht reflect analysts trying to come to terms with this thing that has been happening for so long. A shift from brickandmortar to online buying. Managementone is not managing the other. And look, great to have you on. The Home Remodeling boom is not enough for lows. Hey reported for lowes there was a gap between this company and home depot. Going on here . Why arent they capitalizing in the same way as home depot . Is the location . Their locations are more suburban versus home depot. Their constant were strong. You were talking about retail as a whole. They had 4. 5 ,. Home depot was at 6. 3 . There is only one time they have been home depot in the past three years. They are not able to get the same traffic. More so, there is no flow through to the bottom line. They have pressure from their acquisition and they are investing more in promotions and advertising. That is affecting their margins. Julie what do they say for guidance, . Can we expect guidance . Can we expect more . Seema it seems like analysts are little more skeptical because it waits for the upside until the next two years. Julie how do they get there . To get that traffic and keep the comps up, they will still have to spend on promotions. Seema i think they expect better sales. If the july was stronger and they ended it at 7. 9 for three months. To be fair, home depot and Tractor Supply also had a strong comp in july. Julia what about Opening Hours . Increasetrying to Opening Hours. Seema they are investing in promotions and in the store when they feel like they will have higher traffic. The question is, will actually work . Is that enough to improve sales . I think that is a waitandsee but it will definitely impact margins. Julia better than a loss, i guess. Have you on. To Something Else you want to keep an eye out for, a conversation with the ibm ceo. She talked to David Rubenstein. How the company is reinventing itself. D ibm is a hardware company, a software company, a consulting company. What you think it is today . Keep going. When i say and enterprise at a deade are intersection of tech and business. As he said, it will rebuild overtime hardware. Then, weve layered it with software. We built integration onto that services and we are becoming a cloud in a Cognitive Solutions company. There will be another reinvention of ibm someday in the future. Today, it is about that. It isnt about buzz technology. It is cloud, it is ai right now, it is the why. I feel like were the champion for business. To pickw, if you ask me one word what ibm is reinventing around, i would tell you it is the word data. Were on the verge of companies being able to use all that. This is companies to go on the offense. Against disruption. You do it with that data. You will need new tools and that is where ai comes in. David one of the tools is watson. After . On named ginni our founder. Jeopardy the game show. It is funny how people remember that. You asked why did early in my career, i was an ai specialist at one time. Ai is brandnew, there are a number of things that make it different at this point in time. Was we did back then it 2011 with jeopardy, we have been working on ai for a good five years before. This gets back to the idea of if you are always moving to where there is value, we believe there will be value in this data. You have to be prepared for this role to do it costeffectively. He would have to have technology that didnt get programs. Are. Is watson and ai if dont say, do that this, do that. , someone has to tell it what to do. Watson takes data of all kinds, understands, reasons, and lords over the data, and that will help you make better decisions. This is an interesting stat we are sharing. In the world, we think there is a market of 2 trillion for making Better Business decisions. The of it is rooted in plane fundamental fact that when , onend i make decisions third are right, a third are not optical, and a third are wrong. It transcends everything. Julie catch the full interview tonight at 9 00 p. M. Eastern on the David Rubenstein show. It is sent to the Bloomberg Business flash. A look at some sorry, what are we doing here . Julia i think you can take it here. Julie good ventriloquism. Blackrock and Vanguard Group have all lower their evaluations by as much as 50 . They have struggled with lawsuits in recent months. The chief executive officer was ousted in june. The companies did not respond to requests for comment. Bill gates and two more are investing in a clean, unique startup. They produced beef and chicken without water. They have raced 22 million so far. Cruelty demand from free food. That is your business flash update. Coming up, how have managers been faring this summer . We will show you the charts. From new york, this is bloomberg. Julia this is Bloomberg Markets. The past two weeks have been next to no volatility. Julie gave us a clue before the break. Oliver julie, you jumped the shark. Just kidding. Goode know it has been a year for active managers. It has been a rough couple of years the start of the bull market. I want to revisit a chart i love. This is based on Goldman Sachs mutual fund picks. Blue line is looking at the top of the stocks and mutual funds that are overweight and. Thee is the one they are ones that are underweight. One of the highest ratios for outperformance of those heavilyweighted talks. Going all the way back to early wavy on this chart. You reasons why. Look at this chart. Momentum. A big factor play. One of the best ways to look at markets right now. Thinking about the factors and watching those flows. Look at the bottom panel. This is showing you the low into the income back to her income factor based. Chase is a topperforming stock. The green bars, inflows. The highest sometime earlier this summer in late june. We think what is winning will continue to win. Even if we had a few couple of rocky dates here, the stock held on pretty well. You can see were off the highs of the highs are not very far away. A couple weeks ago. This has been a strategy that is paying off. Before this, momentum have rocky. Throughout 2015 and 2016. Finally, we talk about the long investors. What about the short investors . This is the white line. This is all exchange reported on the s p 500. This is three point 9 . You can see the plateau. One of the highest in a couple of years 2016, 2015, we have had shortages. We saw a pickup throughout the year when investors kept getting more shorts. Then we want to see with the shorts have done. They have been holding onto them for quite a while. These stocks have led the markets on the downside. The shorts are doing pretty well. The right shorts. The lawns are doing solidly because they picked the right long. The takeaway if i think the version within the market has made it somewhat of a market a little bit more manageable to Picking Companies and finding the ones you think will do well. Amazing because stock pickers will always say it is a stock pickers market, no matter what kind of market and is. It there is a good bit of bread within the markets see you dont necessarily always have to get the right ones. Ofy are driving a good bit the gains, but there are a lot of companies right behind doing well. Went nowhererkets during earnings season. 0. 2 was the overall valley for the s p 500. What about the next couple of months . Oliver earnings are usually a pretty reliable time when you can look at the markets and assume the companies will do well. That is because of the way estimates work. At these valuations, earnings season is not a valuation. You have to hit the bottomline and the top line to get any type of stock appreciation. Julia is politics casting this dubiousness on the market . Julie coming up, we will look at how changes in banking regulation promised by the president could add money to the industry. This is bloomberg. It is 3 00 p. M. In new york. I am julia chatterly. Julie i am julie hyman. Welcome to this is Bloomberg Markets the trump economy. David gura Bloomberg Markets. Bloomberg World Headquarters in new york over the next hour. Here are the top stories we on the bloomberg and around the world. A trump bump could be on the horizon for banks. The president s proposed world back of regulations could boost their profits by up to 20 . Staying on wall street, the sec to the rescue. The top regulator could help ease the headache caused by european rules that crackdown on big research. One money manager is not convinced by the recent rally in u. S. Equities. Says markets could be at the end of this long bull run. We are one hour from the close of trading. Let us get a check on markets with taylor riggs. not a whole lot of moves within the past couple of hours. Down about 3 10 of 1 . The s p was up 1 yesterday. Not a big change overall in the last couple hours. Let me talk about earnings during that is the big news of the day. I am focusing on lazboy. It is down 20 . 341 million would be topline sales. That was down from estimates of 358 million dollars. This is the biggest move since more than 30 times its peer group. Take a look at lazboy as we continue to head into the close. Mitch roddick i looking at because of his driving down the overall s p 500. 3 , lowest since february. Volume at two times the average. Notable because it has been otherwise a sleepy august. Miss. R topline sales a haven forat because julie and i were talking about a risk off field, so to speak. That equities were down just a little. I am looking at the 10year yields. To d down to eight to 17 2. 17. All of my eyes on a weaker dollar, stronger yuan. When we wrap up the week with janet yellen. Ia donald trump has with has been planning to ease regulations. This goes rate profit 20 for banks. Benefit jpmorgan, chase, and morgan stanley. Here are more details. Great value on the show. The killer question is how this will go back to shareholders. Take us through the details. Where is the money coming from . It is about the assets they can hold on the balance sheet. These are the rules that banks have complained as they would be implemented. They were being dragged into these things. They always said this will hurt us. Of course, the earnings have been down over the years, but slowly they have been improving. There are small things but they add up. They could buy more treasuries, they could buy more municipal bonds. All these things. They make more money because they dont have to hold more cash. The liquidity doesnt have to be as much. S, butare small tweak when you have them up it will save a lot of money. Julie how likely is this actually happen . Most of these are regulatory, not legislative changes required. Resume ugly, that would be easier. But the instrumentation that the administration is still something up on this. Yalman right after trump came to the white house, things looked even rosier. They were saying, everything will happen now. Clearly, the timetable hasnt slowed down but it hasnt stopped. The appointments are going through. The sec already got new fcctments in place already got new appointments in place. It could happen pretty soon. Things are moving along slower than initially expected. The treasury import in june focused on changes that regulators can do without any congressional approval, which is very key. All the stuff on the chart is independent from congress. Is way too much struggling, infighting, and lack of coronation that things probably wont go through congress. Regulators can do this. Julia critics would say these are regulations that have been put in place since the financial crisis. Give us a sense of what is going on in terms of the comparison between the regulations we have gotten in europe. This is a case of the pendulum shifting further and the United States than it has on an international basis. Yalman after the crisis, we went harsher than anyone else. Europe dragged its feet for a while, and even when they caught up with us, they didnt really go as far as our regularities once. Regulations went. It wasnt like theyre based in and get in trouble. We usually went head on into the International Rules beyond what was required. Back toback in going more International Standards is like, oh my god, were getting rid of all the regulations. Is leveling the field. I want to make a point about the chart. Euro stoxxin yellow, 50 banks and whites. You can see the underperformance, despite what were saying about the overregulation. How much money goes back to shareholders . Yalman a lot of it can. It is hard to tell what banks will do, but what i try to do is assume partially it goes back to shareholders. There is one chart in the article about easier surcharges. When they lower that money would go back to shareholders. That is nice. One years returns one years returns. Tead of returning to returning the cash, they could expand business and make more money. That gets returned to shareholders to, but in a different way. A good amount goes, they will be happy. Julia that is the bottom line. We will see. Julie sticking with regulation losses, they have been urging washington to help soften the blow from the new european rules. And Exchange Commission isnt set to be working on a solution. Secus bring in bloombergs reporter in washington. Are they potentially doing to stop the blow . Have beenly, staff picking up the pace in terms of fighting some kind of fixed. Taking a step back, one of the biggest issues for wall street right now is new requirements coming out of europe that brokerages will have to sell their research separate from how it would normally be bundled together with other services. Here in the u. S. If they were to do that, they would have to register as investor investments. Investor advisers. They have been lobbying here in washington for them to come up with some kind of fixed. Europe, these regulations went through 28 countries. There is no way it will come up with some type of thing before january. Industries are getting more and more hopeful they will come up with a way for the u. S. To not run a follow of rules but still comply with european regulations. This can be a get out of jail free card. You can keep doing what you are doing and we will not go after you if you comply with european rules. Julia there are a lot of different angles here. Talk to me about this twoweek window. January is the day here in the Companies Need time to react. He need a decision quickly in addition, i want you to answer what impact this has had as well underneath and chairman. He is a former wall street guy. How much of that played into the process . It has played quite a difference. From january to may, there was no permanent leader. You have jay clayton. He is a former deals lawyer. We hear is staff has picked up the pace. They have changed the tone when to industry. Ing there seems to be a general impression they are working toward coming up with a solution. As you mentioned, the window is closed. These are Big International firms. You are talking about asset managers. The issue is they do not want to have a situation where they will have to pay for a research and one way in europe and a separate way in the u. S. , that will be a big headache. They will have to charge it can become very complicated. One study says even if all these rules are worked out, it is still going to impact the research industry. There could be about 1 billion less to spend on research per year. Be an way, there will impact, but with industry is saying is they need a couple leeway l time eeway time. Julia let us get a check on the headlines with mark crumpton. Ministerreally prime benjamin you do not who is in russia to raise concerns about irans expanding foothold in syria. After a meeting with putin, he said it was about irans attempt to make itself in syria. Moscow remains firmly ties with israel and establish military contact to prevent incidents in syria. Eures a push for tighter rules to protect workers in france and other prosperous countries in western europe from cheaper labor stemming from the continents eastern nations. After a meeting in sulzberger, the president said france and austria have the exact same issue. This Angela Merkel says she understands the support in the United States for the America First attitude that helps get President Trump elected, but she says in the end, she believes it will only hurt the country. Speaking at a forum, chancellor merkel set many in the u. S. See globalization as a situation in which one country profit at the expense of others, but she says her view is that everyone can win. Is criticizing an arizona senator. The president tweeted this morning that he, loves the great state of arizona, but he of thee was not a fan senator. He has been very critical of President Trump. He held a Campaign Rally in phoenix last night. Global news 24 hours a day. Powered by more than 2,700 journalists and analysts in more than 120 countries. Crumpton. This is bloomberg. Julia . Julia coming up, we will get ts on the bed. How this could affect the market. The blow for lyon manager for pimco ways in ahead. From new york, this is bloomberg. E this is Bloomberg Markets. Julia it is time for the Bloomberg Business flash. Inle is planning on building iowa. State officials published a Meeting Agenda for the authority board. They say the board will consider an undisclosed amount of incentives for apple. Putting says theyre global antibiotics use in chicken. Theyre taking a tiered approach with changes in the u. S. , canada, and japan. Europe, australia, and russia will follow suit. Mcdonalds goal is to have the policy implemented worldwide before 2027. Venezuelan bonds are falling. To the wall street journal, the Trump Administration is considering additional sanctions on Nicolas Maduro for suppressing the countrys democracy. The deepestosted losses since july. Crippling recession have weighed on markets. That is your business flash update. I didnt know mcdonalds had antibiotics and their workers in the u. K. I just assume everything does. Noted. Julie you learned something new today. Central bankers are heading to jackson hole, wyoming. Janet yellen will be speaking, but what will it mean for the markets . Mark barton and vonnie quinn discussed that question. I think what will be whilesed at jackson hole the titans are here to talk iout very important things, tend to think in terms of the financial markets, that the andome might be a bit flat not really causing much in the way of volatility. To thel due respect talented speakers, i think conditions around the jackson hole area are going to be equally engaging in terms relative to what will be set at the symposium. Andhat not because its also interesting but it has theth the very of theory of qe. This is that it would help the economy through the portfolio channel. There seems to be reasonable evidence that that could happen. Also had an even larger amplified effect on asset prices. That is what happened when it was implemented. Reversed, we can collect quantitative tightening, there can be an increase in risk premium and there might be detrimental impact on risky asset prices. Put themselves put yourself in their position. The central bank needs to be very gradual and careful in signaling and implementing the extraordinarythis accommodation that was put in place over the last few years. Worth warning for various causes that assets are looking rich . We can also bring that in terms of, it is very difficult to find a cheap assets these days. Be that in real estate, equities, fixed income. You name it. That has to do with the liquidity that Central Banks put into the system. Central banks will want to avoid an unwarranted tightening of financial conditions. They dont want to be printing potential bubbles. I think the signals we will see out of jackson hole might tend anbe on the relatively exciting level in terms of their impact. Of course, well have to wait a couple of days. Wait moves ahead to when we will get announcements. To dom is not big enough much more than it has been doing. At some point, it will have to stop buying the bond assertion countries. When do we get that announcement . How does it come out in the marketplace . Oecb has these tw the calendar. I think we will see something along the lines of september that the euro system working groups have been in charge with looking at ways. We will get the details maybe in october. Julie pimco Portfolio Manager for germany. Juliejulia thing really julia fun for us. Poor director. Julie domino effect on wall street. How to come out on top. From new york, this is bloomberg. This is Bloomberg Markets. I am julia chatterly. It is now time for options insight. Julie joining us for todays options insight is the equity derivatives strategist at macro risk advisors. I was saying during the break that right now it seems there is a bit of a herd mentality. Everybody who comes on in the options insight segment talk about how volatility tends to go sort of later, august 2 going into september. We have seen some signs of that. Do think that is indeed what will happen . Do think there is danger and everyone thinking the same thing at the same time . I think there are definitely dangerous. For what it is worth, i think you make a really good things. At this point, it is becoming also a consensus of view that it will pick up again. They have good reason to say that. If you look at the seasonality , in that sense of take up a little bit. We have the debt ceiling to worry about in october. There is reason to think volatility will come back. A lot of it has to do with a human tendency. When you look at the base and it is at 10, you think it have to go up at some point. Julie we have seen signs of it. We have seen it start to go up a little. Pravit a little bit. When i do think is interesting is the amount of volume going through. Julie we actually have a chart of. Let us bring up and you can talk about it. Were showing the open interest on the vix. It has gone up quite a bit. Pravit i find it amazing that resultough the average is on track to be the lowest on record ever since the banks went live in 1990 the vix went live in 1990, you are seeing more options than ever before. People are selling close to the vix. They say i dont think it will go below a certain level in october, and i think you will go a lot higher. Long on the 20 in october. Gom not saying it will lower, but that is the one thing that would hurt the most people right now. For a there is a place contrarian trade, and that is what youre looking at. Were showing it up here. , what september 13 puts is the rationale . Pravit we have seen level vix settles and i think we can get more going into the next couple of weeks. Julie dont necessarily count on volatility Going Forward. Thanks so much. Macro risk advisors. Julia. Julia some comments passing the bloomberg terminal from this from Mitch Mcconnell. Sharedommitted to his agenda with donald trump. From new york, 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. Thats how you outmaneuver. Mark it is time for first word news. House Speaker Paul Ryan responded today to President Trumps threat to shut down the government if congress does not fund a border wall with mexico. I do not think a Government Shutdown is necessary and i do not think people want to see a Government Shutdown come ourselves included. And congress and the house has already done work on the issue. Mark the remarks came after he toureda an intel plans in orego. Congress must pass a spending measure by september 30. And as it heard on bloomberg news, Mitch Mcconnell has released a statement saying he and the president are working to andent a adding that he the president and their teams are irregular contact. This comes after the New York Times reported that the relationship between the two of them was so bad i have not spoken in weeks. That Mitch Mcconnell has expressed uncertainty that mr. Trump will be able to salvage his administration after a series of crises. The stock market has done well since dona
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