Transcripts For BLOOMBERG Whatd You Miss 20170726

She said today that mr. Trump is trading National Parks like contestants on a game show. U. S. Insurers want the government to pay billions to stabilize the markets created by the informal care law. They say the government have to keep funding costsharing payments that reduce insurance expenses for low income earners. The demands, as the gop controlled congress wishes to dismantle obamacare. In a letter to congressional leaders, the national cessation of Insurance Commissioners says that 15 million each year through 2019 will help. The Trump Administration announced sanctions on 13 senior venezuelan officials today in an attempt to deter the nations president , maduro, from proceeding with a plan to install a new legislative body that would rewrite the constitution. Has strong inp the swift economic actions if the president goes through the election. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im Mark Crumpton. This is bloomberg. From bloomberg world headquarters, on julia chatterley. Scarlet im scarlet fu. Joe im joe weisenthal. 30 minutes from the close of trading in the u. S. Julia u. S. Stocks staying green and of the dollar weakens as the fed keeps options open. Joe the question is, whatd you miss . Scarlet when will the fed reduce their Balance Sheet, relatively soon. Why it could not be the most concern. And sanctions on officials from venezuela today, why they are looking at taken a step toward that country that is rewriting its constitution. And a repeal on obamacare, we go to capitol hill for more details. Isia standing by for moore our National Political reporter who joins us from capitol hill. Explain what we are expecting, a straight repeal vote to be held in the senate. That is a deeply unpopular move, but i guess that have to be done at this stage. This is what republicans have been heading toward, they will be voting on a motion to try to essentially add some antiabortion restrictions, that would need 60 votes. That will not pass, so they will move on to a history of and down bill to repeal the Affordable Care act. In 2015, which president obama vetoed. Joe everyone expects the straight repeal vote to go down, so assuming that is the case, what is the next key moment to watch . It is highly likely to go down, i spoke with Senate Republican leadership this morning that admitted they do not have the votes. Well over three members have objected to a repeal only bill, most notably the moderates who want a replacement in the way of tax subsidies or some sort of bridge on medicaid. So that people do not lose coverage without contingency in place. We are likely to have amendments by democrats trying to get the senate to vote to send the whole bill back, not really back to committee, but to the committee to look into it. This process, they have been complaining, did not go to the normal order of committees before it was sent to the floor for a direct vote. It is grandstanding at this point, the democrats know they do not have the votes to get it through, but they want to make a point on the floor. Julia votearama, i like that word, even if the subject matter is serious. Well be back, no doubt with you soon. We will take a look or the major averages stand now as we go toward the close. Abigail is standing by. Abigail we are looking at gains and record highs for the three major averages. Simultaneous record highs on paper. And mid earnings season, so they are very positive. P 1 my performing outperforming. And along with the stocks, ang in Texas Instruments, they did beat on their secondquarter estimates. Excuse men we have, come away of Texas Instruments offering a thirdquarter revenue review that is solid. Turnaround under the ceo lisa sue happening on the new chip. Facebook, paypal, facebook expected to post more than 40 yearoveryear growth on the top and bottom line, so the growth there. Suggestal, the option that this could move by 6 upper down. Speaking of options, we are going into the bloomberg to take a look at this. Investors facebook, very bullish. White, the shares of Facebook Trading near record highs and in inge the call to climb into the quarter. Earnings reports adjusting the investors are expected to be strong, even though the stock is hitting up against strong selling pressure. Interesting to see what will happen and we will know soon. Julia great work. Those results out in 30 minutes, we will be discussing them. Ask to the Federal Reserve and the decision to leave the rates steady. They say they will run off the Balance Sheet relatively soon. And we have the Oppenheimer Funds ceo cio. Joe thank you for joining us. A couple of language tweaks. We are not seeing much reaction, but a little bit of the lower yields at the long end of the curve. What is your key takeaway . I think the key takeaway is the fact the fed is indicating it is a bit more data dependent than it was in its communication in the past. The fact inflation is being made out the way it is and in the decision could be driven by it, i assumed they would not be data independent. Thingsployment and other driving it would do well. The type they are not fact that they are not taking immediate measures that is new. Joe the fact that it could be driven by cell phone bills and concerns on rising asset prices, this dows back, maybe it is not a oneoff cell phone bill discount. It is a continuation of the past janet yellen and how she has been. It is a continuation. Scarlet when it comes to financial conditions, we have had 4 Interest Rate increases, 100 basis points, and it has none done nothing to tighten those conditions. How does this restrain what the fed can do next . Does it . Tightening financial conditions would be an objective if your sole objective was the fact he wanted to bring down the markets. On the other hand, if you want to support growth, financially, leaving the financial conditions raisingreen format while policy rates, it should have a good outcome. Scarlet so this is the best of both worlds . Absolutely. They are sitting pretty at the moment, it is working out better than planned. Scarlet let me follow that up, why talk down the asset prices . I find that is right. They have been sort of hurt by that phenomenon over the last two cycles. Bubble,and the housing and asset prices continuing to rise, they are worried the same scenario will play out. I do not think that is the case, i do not think the asset prices are as high as they were during those crises. But is something to be concerned about and they are focusing on it. Julia so when we had that two weeks ago with the janet with janet yellen mentioning it and we saw the nervousness in tech stocks, then everything went quiet. Are they periodically going to step in and make noise, a little bit of watching the investors, ignore them, move on . They are worried about it. At the same time, not so worried that they will tighten policy despite low inflation. Prices isel of asset a concern and it will remain so and i think that is not going away anytime soon. Julia so this week spot for the fed sweeet spot for the fed is also a sweet spot for investors . Yes. Into the rates rise meaningfully. I do not think it will happen anytime soon. Joe at the beginning of the year we actually had a discussion about inflation really kicking in hard. Is there still a risk that we will hit some level of full employment, maybe see the investors get caught offguard by the spike in inflation . In the central bankers dream, that is a reality. In that the phillips curve is very much alive and one of these days but unfortunately the data has not really born that at all. They could be the case it could be the case and we are deluded by the data, but proving it is on those calling for inflation to move higher. Scarlet you are sticking with us. We will talk about greece and the emerging markets, next. From new york, this is bloomberg. Julia whatd you miss . The white house escalating tensions with venezuela. Nowions on 13 sanctions on 13 officials today. And we have Krishna Memani from oppenheim refunds. Funds. What do you think of the sanctions . You look at this, either a nervous time or great opportunity. Before there was definition on the sanctions, that they would be broad reaching. But now having it targeted on individuals rather than broadbased, it means the possibility of repayment of shortterm debt is high. So, there has actually been a bounce back. Prices were weaker a few days ago and now they are bouncing back. Julia what happens if they hold the bow and amend the constitution, and the United States says, ok, we will have an oil sanction . Then what . Hans that would be possibly pretty bad, but the particulars of the vote, to some extent it is window dressing and the last hoorah. There is enough in fighting so that there is at some level they are setting the stage for the end of the road. I think most insiders there are trying to protect themselves with transition, but there is sense of inevitability about the transition. The vote can happen, but i would be surprised if any sanctions on the back of that would be broadbased enough to hit. The impact on the economy there would be so drastic, that the population would suffer worse than they have been. Any opposition you speak with are not proponents of broad based sanctions. Joe i do not want to turn the discussion to a want to turn the discussion to a country that is making more progress, greece, which is returning to the bond market. It is a fairly small bond offering. There is a chart of the payments that they have over the coming years. It is a small bond offering. Your firm is participating in this, buying the great bonds greek bonds. Why are people excited to buy the debt now . Hans the thing i love about this, it is cheap. Or seen as cheap. There is enthusiasm, and for those of us in the stress world, you have to explain to people that 19 is actually attractive. Reentrythe countrys into the Global Financial world is usually a stepbystep process. It is really changing the psychology and this is a good first step for them to start reintegrating. Us while certainly any of who are involved in this, there is a lot of opportunity in greece if the psychology changes. I think these are real changes. Greece will continue on a path toward reintegration. Julia good first step. Scarlet is it something that you would be ready to dip into . Krishna of course. We have participated in the offering as well. The idea is the economic environment in europe in general has changed dramatically. 25 years ago if somebody told me the growth rate was going to be 2 in europe, all of us would have laughed. That is the reality. Ecb has done a good job of reviving growth. Beneficiary of that and we are at the point where the exchanges or some sort of debt relief is in the cards, it could be coming down. Ads thenvolved in credibility and i think things are improving. That is why the yields are at 4. 5 . Scarlet we will take a break to let you know that the senate is voting on a straight repeal of the Affordable Care act. No indication on whether it will pass. We will keep you posted on the developments. They have begun voting. Julia we can probably guess the result. Scarlet probably not. Julia as you are saying, this is a sort of turning point for europe in terms of investor perception. We have heard about investment into equities, but the timing for greece is also important because not only are they counting down a year until the exit their latest bail out program, but if we look at the timing of this ecb could be releasing a Balance Sheet and it could be more expensive for them or even increasingly difficult for them to raise debt for grace greece. Krishna right. But the ecb has been very measured, and they have committed to a path i believe will continue to support growth in the eurozone in general, places like greece. Greece is a turnaround story and we like it. Joe i am interested in your comments when he talked about the importance of the first step, reentering the Global Market and the financial aspect. In your experience, is there a country you can point to and say this is how it typically works, the model to follow . Hans how far back should i go . Joe as far as you want. Hans i remember mexico coming back. By the time you launch a bond issue, whether it is small or large, that is usually the first up. Be step. Behind the scenes, there has been architecture put in place to support the deal and start the transition from greece accessing the official sector to the private sector for funding. Joe and it is not too late. If you had just been holding the existing stock of greece out there, doing extraordinarily well the last few years, so the fact they have returned to the market does not mean that is the peak. There is room to run. Hans i think you can still make money, trading at about 150 basis points. On the fixed income side. If you look at the National Bank of greece on the charts with the action from the last five years they have not gone up enough to register on the charts. [laughter] hans the upside potential in equities is huge. People always say when a country is coming out, it is difficult is different from the other ones like russia, but they have other things they have a competitive advantage on. It is a first step in a number of steps and i think the big thing you will see is when the official sector restructures, the debt load that people have been worried about will be off the table. Julia critical, because in this case the debt has not come before the return to the market. The first one. Hans the official sector debt is what has been weighing on the market. People make the mistake of looking at the debt to gdp, but it is the cost of servicing that that is important. The number can be irrelevant. Look at japan. The official sector, the europeans have been intending to deal with this and have been dealing with it and impose german elections you will see a change in the debt profile of grace. Greece. Scarlet thank you very much, hans and krishna. Julia Bloomberg Business flash. At t surged today while they had a subscriber gain. It increases encouragement that they can censor themselves in a price war. 85 billion acquisition of time warner. And Second Quarter estimates they beat Second Quarter estimates. And moving at the fastest rate since 2011. Worlds biggest luxury Goods Company says they are cautious about the second half of the year because of economic instability. Asmay, surpassing frances most viable company. And chipotle is helping other new queso dish will win back the customers. Illnesse struggled with outbreaks at two of the restaurants. This is part of an ongoing investigation. The case of could be on the queso could be on menus as in a september. Scarlet up next, the Second Quarter earnings for facebook. This is bloomberg. Scarlet another shot of the senate floor where the vote has begun a repealing obama care and our understanding is they will also, this vote includes a delay of a replacement with the paul ryan amendment. Julia absolutely. The vote counted currently at yes, 22, no 38. Still a fair way to go, but it is not expected to pass. Negotiations still needed on this one. Scarlet whatd you miss . Facebook earnings at the top of the hour. We are taking a look at estimates, revenue of 9. 2 billion for the Second Quarter. Facebook along with other Big Tech Companies switching over to or earnings estimates, earnings over all, so looking at about 1. 13 for the average estimate. Billion. Sers, 1. 9 8 thisspeaking of users, but in the biggest perspective we can. Monthly average users, getting closer to the do billion the 2 billion Mark Mark Zuckerberg set as a goal. Extraordinary numbers. Take a moment to realize how incredible to billions 2 billion is. Julia we need to look at the average revenue. Domestically in the u. S. , but also internationally, because that is where the growth is. Monetization not as high. Joe diving into that shortly. Scarlet market close is next. We did have a fed decision earlier today. Dow and nasdaq set the record highs, s p 500 currently unchanged. This is bloomberg. Julia poised to close at record highs, the dollar softer as the fed bounced back and kept options open. I am julia chatterley. Scarlet i am scarlet fu. Joe and i am joe weisenthal. If you are tuning in life on twitter, we want to welcome you to our coverage. Scarlet facebook earnings are due any moment. We want to show you how markets are ending, the dow up 4 10 of 1 . That is another high. The s p 500 waffling in the unchanged zone. It may close at a record high. Bond prices higher, means yields are dropping. The tenure coming down to 2. 29 . The dollar weakens. It continues with the dollar index up 6 10 of 1 . We are awaiting the results from facebook, its secondquarter numbers do any moment. Lets bring in david kirkpatrick. Joe had mentioned monthly active users as a key number to watch, that Mark Zuckerberg had targeted. 98 billion. Us was 2. David they passed it, that is where they are headed. They are pushing on their other products for massive growth, they are getting that from instagram and whatsapp. As a product, an institution, is on such a role that if we do not see another astonishing quarter yet again, i will be surprised. User Growth Continues relentlessly. Joe something i noticed today is one of facebooks competitors, hardly a competitor anymore snap, keeps falling. We do not talk about it anymore, it seems to fall every day. Now. In the 13s is that the market saying there will never be a number two in this space . David i would distinguish between the stock in the company. Snap continues to be a competitor in key demographics, particularly in the United States. I do not think it has shown it would be a massive profit machine in the shortterm. But it is continuing to nip at facebooks and instagrams heels in a way they Pay Attention to at facebook. If you are a competitor, that is one. Wechat in china is another one to watch. Julia they said facebooks future wish they had accepted a buyout. We are expecting to see an improvement. 43 Revenue Growth on the same quarter of last year. Revenuesg has warned are going to materially slow. News feeds, the number of ads that they can cram on. When you look at figures concerning revenues per user they made it to 17 in the United States and canada last quarter. The rest of the world gets to 10 of that figure. That is where the growth is, international, asia. Monetizing that is appearing to be tougher. David what is the longterm direction of the Global Economy . Growth in all of those areas. View, itke a longterm is a positive for facebook. It may have popped out in countries like our own or yours. But in nigeria, south africa, brazil, indonesia, facebook has huge, ongoing upside. Many of those economies are doing well. Julia do think investors stick with them while they wait for that . Zuckerberg has warned people these will be challenges in the shortterm. David i think that is worth waiting for. If i could for. If i could change the topic zuckerberg wrote a letter about building a Global Community in february. It was unprecedented, 5800. He has talked about the responsibilities facebook has. That is wonderful and impressive rhetoric, but unfortunately, it is not backed up with actions. The only way we are going to believe facebook is taking a different view, is if they are willing to let their page views and revenue slow in the interest of doing the right thing. The fake news problem is partly a traffic problem. They love it, because people want to look at fake news. It is an interesting issue. Scarlet the incentives are aligned to get more news, weather fake or real. David kirkpatrick, stick with us. Were still waiting for facebooks results. We want to get an update on the Senate Voting on the health care bill. Lets check in with our congressional reporter, stephen dennis. Can you tell us what the latest tally is and how things are shaking up . Stephen it is a matter of time before they call this vote. There are already a number of Senate Republicans that voted susant a bill, all except collins, voted a couple years ago to repeal as much as they could and not replace it. Now, some Senate Republicans say they are shooting with a real bullet. A lot of them are not comfortable with that. Even the Health Chairman was voting no. Shelley in west virginia, a key vote for the final bill, she voted no. Ohio voted no. We expected this to go down, it is in the process of going down. The real question is, what will be in the final package that Mitch Mcconnell called together, probably friday morning . Off,et sorry to cut you we have breaking news. A has stepped down from the hp board. Megf questions whitman has stepped down from the hb hp board. There isait to see if any kind of followup announcement from this big personal change. Facebook results also out. Line, 9 the revenue. 23 billion. Daily active users, the one billion mark, it has actually 1. 23n at 1. 22 billion. Monthly active users just over 2 that one, beat on too. Joseph, to david nodding, the smile there. Scarlet i need to get to the meg whitman announcement. What does this mean to you, how would you read this . There is increasing talk that she is a candidate for the uber thing. And hpe. As ceo of hp she is stepping down from one and not the other, as far as i understand it. , of the people, of the people i heard mention as possible ceos for uber, she is the best idea i have heard. It is the kind of thing that would get her excited. I do not know if it would get the employees of uber excited, but it might. The shortlist has fewer than six ceo candidates for this role and the head of Human Resources said they could hire a new one within six weeks. In terms of the timing on this one, a kind of fits. Scarlet you make a good point, she is a member of the hp board, not hpe. But she is the chairman of the hp board. She stepped down from being chairman, then . Scarlet it is a big signal. She one reason people think could be so good, coming into ebay in the early years when they needed someone to turn it into a real business, and they performed phenomenally well. A similar situation for uber right now. David she went from ebay, a different, consumeroriented company to a different market entirely and did generally a pretty good job. To divide theabor company and overall, you have to say, i am impressed by meg whitman. Could she run uber . We do not know. Scarlet they still have to higher a lot of other people, us coo. A coo. David she probably thinks, this could be my coup de grace. The feather in her cap. I could see her wanting to do that. Julia you have numbers on facebook. The stock is down some 2 in afterhours trade. High expectations, despite zuckerbergs cautions. David it has performed in recent weeks and months. Since the last quarter, it has really jumped. A little bit of movement. Did it go up during the day today . Scarlet it was a little changed. David it is fairly significant. Joe i want to reiterate a few interesting numbers. We talked about the eps, 1. 32. And the revenue. Mobile revenue representing 80 of all revenue. In 2016. 4 this was their big break, when they went public. They do not have mobile monetization, the headcount jumping year over year. A littleey are getting more bureaucratic than they would like and i would like to see. They have so much to do, they are a huge global company, hiring people all over the place. Scarlet they indicated 2017 would be a year of investment. Let me reiterate the point that you, david, made. Meg whitman is stepping down from her board seat on hewlettpackard inc. Of hpe. He chairman again, she has not stepped down from hpe. Given the speculation announced regarding a new coo at uber, the timing is interesting. Julia we are joined by cory johnson. I wanted to get your take on the numbers. And if you want to weigh in on hewlettpackard enterprises and meg whitman . Cory i have been covering hp for a long time. Hasen buffett says, when it hp has had a difficult time under meg whitmans leadership, whether it is hpe or hpq. They have had restructuring charges going back to 2001. Two after they split into supposedly viable companies. It was a business collapsing, in terms of the pc and printer business. She was unable to rescue that, in spite of billions spent in acquisition. I thought it was a great surprise to see her name even floated when it comes to uber looking for a new ceo. Scarlet lets shift gears to facebook. That is what we brought you on here to discuss. Everyone has talked about how instagram is a new frontier, the new focus for the company. Facebook has never disclosed instagrams numbers on its own, even though it has been selling ads on that platform since 2013. We have seen how alphabet has to disclose numbers for youtube. Do we presume facebook will have to itemize instagram . Cory it comes to a point where it is 5 of revenues. The fcc has never made that really clear. They are given some wiggle room there. There is a perception when you look at the number of ad units from instagram that full deployment of ad revenue is beginning to start. It is interesting to look at the two businesses, whatsapp versus insta graham. They are massive, global platforms. They show virtually no competition in terms of their size. Wechat might be the exception. The path toward monetization seems to be different. Graham, having relevant rences,ed on users prefe what likeminded people look at. On whatsapp, it is much more insidious. Within whatsapp, it seems the monetization strategy is to capture the ideas that those types of people are using and use the data in other apps. Julia i want to interrupt and say the senate has rejected the straight obamacare appeal with the twoyear delay, and the rand paul amendment. That was what they were voting on, it has been rejected. This was expected, no one believed this vote would pass. They will continue to send new amendments. This leads to what is being called the votearama. Joe this story is a long ways from ending. David, i want to go back to facebook. I was thinking about comparing and contrasting it with alphabet, we got their earnings earlier in the week. Alphabet has all these new bets they are making. Alphabet making possible bets for a possible future in another field. Facebook, not as much. What are the frontier things facebook is doing, whether it is vr or other subjects . Notd facebook has structured itself the way alphabet has. Vr, the oculus, and other parts, they have made it clear it is the future of social networking. They have this Internet Access program for global connectivity, with the drones in the sky that are put solar powered, etc. They celebrated winning a prize for a paper. Zuckerberg sent a congratulatory note to his people. They are doing major, Major Research in ai, almost to the point of thinking of it as a business. They could apply it to so many parts of their business. Julia elon musk has his own views on what zuckerberg is doing. And this is another comment zuckerberg made. We know attaching advertising to some form of content has been critically important, not only for facebook, but their competitors. Zuckerberg said they would spend the 3 million an episode to create original content. How important is that for facebook, how are they progressing, how does it hit the bottom line . David that is something that surprised me. I would be interested if corey had a comment. Facebook producing original conduct content is a major shift for them. They wanted to be a neutral platform for content created by others. When they have deviated that from that in the past, they have given it up. Scarlet what do you think about facebook as the new netflix . Cory the best business seems to be in selling content and making hbo. Nt, whether hulu, facebook looks at this and wants to make it work. It is part of its culture, experimentation and trying new ideas. Dt is so sexy, they have glomme onto the idea. Cory johnson, and david kirkpatrick, thank you so much. Julia the Senate Rejecting a straight Obamacare Repeal amendment. Lets go to the latest, to steven dennis, who joins us from capitol hill. Nobody expected this vote to pass. It has been unsuccessful. Where do we go now . Thatn it was interesting seven republicans voted against this repeal. I think they are sending a message to leadership on what they want to see in a final package. It looks like they are going to start off behind closed doors with what they call a skinny repeal, getting rid of the mandate and tax, and see what they canbuild if build consensus behind closed doors. We will see lots of amendments, probably tomorrow night into friday morning. There will be a final package unveiled, that they have to be ready to vote for. The question is, can they build in anything more significant than that . There are a lot of conservatives that want to cut medicaid in the longterm. Fromad a lot of no votes Medicaid Expansion states like west virginia. It is hard to get Shelley Moore capito to vote for that. You will see negotiation on that in the next couple days. Joe is it plausible that the vote for this. The taxepeal affects and mandate, and it goes to conference and what comes out is essentially the aca or something that looks like the bcra . Steven i think it is unlikely you go from something really skinny to something really big. Keep in mind, there is a reason they are talking about something really skinny right now. That is because they tried and failed after month after month, week after week, in a door meetings to get that consensus. The idea the house will put a magic ingredient that makes it easy to pass seems very unlikely. There is still talk, maybe it will go to conference, maybe the house will say, lets take it as a win and move on to the next bill. They have a lot to do in september, from the debt limit, to keeping the government open, to the s chip program. Julia steven dennis, bloomberg head of congressional coverage. The Senate Rejecting that twoyear delay. Seven republican senators voting against that repeal. Susan collins, Shelley Moore alexander, all came under fire from donald trump this morning for voting against even discussing this. And john mccain, of course, as expected. Scarlet lots of breaking news. 2. 01ook results, 2. 0 billion active users. Shares up 1 10 of 1 . Meg whitman stepping down from the hp board. She is coo of hpe but a step down as the chairman of the hp board. We will follow up. This is bloomberg. Julia whatd you miss . Another week of record highs, simultaneous highs for the nasdaq, s p 500, and out. Valuations not seen in years. I want to hand it over to abigail doolittle. Abigail i am here with a strategist and we are going to look at a few charts. Thank you for taking the time. This is our first chart. We have simultaneous record highs for the s p 500 and the dow. I believe you think this is bullish . As a technical analyst, it is difficult not to be bullish. You have the longterm up for quite some time, many years, depending on how your measuring it. We had a breakout not that long ago that targeted a measured move projection, what you see on 26. 40. Art here about and now intermediateterm target with the time that has passed. It is bullish. We have intermediate momentum turned positive again recently. After having wavered throughout the space we saw. Abigail that first measured move before was a consult consolidation to the moving i am Mark Crumpton, it is time for first word news. As we have been reporting, the senate rejected a simple repeal of obamacare that contained a twoyear delay. Several republican senators voted against the repeal only plan. Lawmakers are still in the early stages of an unpredictable floor debate on health care, amid significant doubts republicans can get the 50 votes they need to pass any type of measure. On leaders will hold votes Different Health bills to see how close they can get the passing something. It will include obscure rolled in parliamentary challenges, to culminate in a all night votearama later this week that could feature dozens of amendment votes. Secretarye press Sarah Huckabee sanders says decision toumps ban Transgender Americans from serving in the military is just that, a military decision. The decision is based on a military decision. It is not anything more than that. It is simply about obviously, it is a difficult decision. It is not a simple one. But the president feels it is the best one for the military. Sanders also said the president expressed concern since the obama administrations policy on Transgender Service members went into affect and called it this expensive and disruptive. Israels removal of metal that sectors at a compound for mosques. Forces wererity documenting those entering the city. They saw metal detectors at the site, which is considered a holy place for both jews and muslims. Muslim leaders have alleged the detectors encroached upon their rights, a claim israel denies. That ash judge has ruled critically ill baby will be transferred to a hospice unless is terrence and a hospital agree on an endoflife plan to keep the 11monthold alive a bit longer. His godfather told reporters that he feels for him. Charlie, toshes for spend a few days at home with him, to do things normal parents do with their babies. Him, spend a few days at home and let him spend life as a normal little baby. The godfather also accused the hospital of being so harsh over the last few days. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Julia Senate Republicans rejecting a simple appeal of obamacare, which has delayed replacement. Lets go to the head of congressional coverage in washington. Joe kevin, with the failure of the state repeal straight repeal, and what everyone is calling the votearama, people trying to put their amendments this is the socalled skinny repeal. What is the time this year we could see that happen . Kevin everything is a little up in the air. There may be a handful of votes over the next one before our over the next 24 hour, 30 hour period. We couldin the morning see a final vote. On some level, that final one could be an amendment vote that strips out Everything Else that was done up until that point and puts it into the context of the skinny repeal, which might be a slimmeddown attempt to get rid of a couple elements of obamacare. If they are able to get 50 votes, they will do a conference for the house. They areote shows, really struggling to get close to 50 on anything. Scarlet if any of these initiatives pass with more than 50 votes, are they put into effect right away or is there a delay . How does that work . Anything the senate does has to be acted on by the house in some fashion. Or the senate passes, and they go to conference. This is just one more step in the process. These will be test votes to see if there is any way for the senate to arrive at a more ambitious repeal bill. They can find different proposals or start to creep up or even 50 republicans on board, they may fastforward to be more ambitious. There will be votes where each party tries to force the other party to take votes that are embarrassing or difficult. A lot ofgamesmanship, testing the waters. At the end of it, the most likely thing is, put in this tiny repeal only, strippeddown repeal bill and see if they can push that through. Scarlet gamesmanship in washington, testing the waters i never. Thank you. Joe i want to recap what we got from facebook at the top of the hour with its earnings. That company seeing its stock up 1. 3 . 1. 32 per in at share, a little behind estimates. Daily revenue Beat Estimates at 9. 32 billion. Daily active users topping 2 billion for the first time. That topped estimates of 1. 98 billion. Julia emily chang spoke to sheryl sandberg. Emily, what did she have to say . And sarahryl sandberg frier talked about what really drove the numbers this order. She focused on engagement and adoption of ad products. Facebook surpassing 2 billion that is up, yearoveryear. Ad revenue up 47 , yearoveryear. They are seeing 15 million new business profiles on instagram. They have slowly but surely ramping up instagram. They do not break up that revenue, but it is contributing meaningfully to the bottom line. They estimate instagram will bring in 3. 92 billion this year. Compare that to 170 million for all of snapchat. And we had a scoop out that facebooks foray into original television will happen in august. They have been investing in episodic content. I asked about the size of this video opportunity, what it means for the bottom line. Take a listen to what she had to say. We are seeing a lot of content of viewing and engaging shift to mobile. Our goal is to be a platform for content providers to find their audience and monetize. Right now we are doing early investing and kickstarting the ecosystem for more episodic viewing on facebook. We think that kind is important, so were making that investment. Our goal is to be a platform and a content providers creating that content in finding their audience. Plan for facebook is to monetize original shows through midrole as. Ads. We had that soundbite about what she thought were the main drivers of growth this quarter. We had a really strong secondquarter, that is based on increased engagement and increased ability to work with marketers. If they can reach more audiences, we are up to 17 , yearoveryear. That is exciting. Ad revenue is up 47 , yearoveryear. We have 50 million business profiles on instagram. And, 70 million business pages on facebook. Emily we will be listening in coming up, any contribution to fromue to instagram messenger and whatsapp. We will have more on bloomberg technology, coming up. Joe i want to clarify something, that 1. 32 was a miss. Estimates had been for 1. 13. It beat on both top and bottom line. Scarlet julia has a special look at this company. Julia the main highlight during the quarter was amazons deal to buy whole foods. Investors will be looking for details on that acquisition and how prime day and its Cloud Services will affect to the current quarter. Amazon is the focus of todays the numbers do not lie. Lets talk with the whole foods deal, the largest and amazons 23 year history. Until then, that 1. 1 billion purchase in 2009. Amazon is likely to disrupt the 800 billion u. S. Market for food and beverages. Thisan see here, up to point, amazon held only a tiny share of this space. Another push for amazon is the increasingly competitive Cloud Services space. This unit has seen eight straight quarters with growth of more than 40 . It accounts for much of their operating profit. They have diversification in revenues and should balance spending growth for the firm. Amazon added 22 million u. S. Prime numbers in the last 12 months, said its recent prime day sales event was its biggest day ever, generating around 1 billion in revenue, according to estimates. That is triple its daily ecommerce revenue made daily in 2016, according to bloomberg data. The prime members helped fuel their unbroken revenue streak. They will be looking at the revenue number and margins in the earnings report. They remain optimistic, sending amazon stocks to a record high this week. We will be following the release after the closing bell. Scarlet thanks so much. We will be speaking with Morgan Stanleys head of Interest Rate strategy for his take on the fomc statement, and the wind down of the fed Balance Sheet. This is bloomberg. Scarlet whatd you miss . The fed committing to maximum optionality. A wind down of its Balance Sheet, relatively soon. Where does that leave the Balance Sheet and investors . Matthew hornbach joins us. Had to investors begin pricing for this Balance Sheet reduction when it does begin . Matthew i think the market is pretty well prepared for the beginning of the Balance Sheet normalization process. The fomc statement was in line with our expectations. There are been speculation that perhaps the fed might have announced the beginning of the process at this meeting. But we never put too much credence into those views. It was a pitch rate down the pipe. The market took it really well. I think the market is prepared for this process to begin. Scarlet the Way Investors should position themselves is to get along the belly of the treasury curve. What is the risk of doing so . Matthew the next focus of the market will be the next rate hike. If we get the Balance Sheet normalization in september without a rate hike, the market will naturally look to the december meeting. Trying to figure out when the fed is going to hike rates again. When we are sitting there at the september meeting and we get those papers in hand, we are going to be paying a lot of attention to what is happening fomce dotplot, how many participants are expecting the fed to raise rates in december. The arbiter will ultimately be the inflation data we get between now and then. Joe i hate to go into the past and dig up old stuff, but i still think this is interesting, what youre saying about the t. Tes and the dotpo dotplo what does it say about the importance of qe . Matthew it is not that the Balance Sheet normalization process was not a big deal. Part of the reshaping of the yield curve that we saw since the president ial election has something to do with Market Participants thinking about the normalization of the Balance Sheet. Since last summer, the fed has hiked Interest Rates three times. Usually when the fed hikes Interest Rates, the yield curve flattens. From last summer to today, the yield curve has not flattened. That is a very interesting factoid people are not aware of. The yield curve has not flattened much since the fed began hiking rates last summer. From my perspective, the yield curve has hiked in the Balance Sheet normalization process. It is not to say it is not meaningful. It is meaningful, and worth around 50 basis points. And we want a steeper yield curve because it supports the Smaller Banks in the economy, surely. We are looking at what happens when the Balance Sheet starts to be reduced, the reinvestment proceeds they get from the bonds a mature are going to be bigger than the bond they allowed to roll off. Where are they going to invest that money . If they do it at the front end of the curve, that will accelerate the process, a retraction of the Balance Sheet. That would seemingly allow the curve to steepen. Do we not have a problem at the back end of the curve . Matthew it depends on if the treasury makes up for the lost funding, and the fed will no longer be providing them. It kind of depends. By the way, we will hopefully get some color on the treasurys plans to make up for the lost funding when we had the august 2 refunding documents released to the public. It will be interesting to read through those documents to better understand what the treasury is thinking about doing in order to make up for the lost funding. Of theely, how the back yield curve trades from here Going Forward will be more a function of the treasurys decision than anything the fed does with the run off of the Balance Sheet. Meeting the july fomc has ended, the testimony has ended. Tomorrow, there will be testifying to the banking committee. How could that move the rates market . The interesting thing is, we do not know much about his Monetary Policy inclinations. Hopefully he gets asked questions that give us a better idea whether he sits more with the hawks on the committee or the doves. Keep in mind, mr. Quarles will have the 17th dot. Now we only have 16 participants. It is a very interesting situation if we only have 16 dots. You could have a no mans land, which the market pays a lot of attention to. Dot could be an interesting policy. Joe with the latest statement and yellens testimony, it seems like the fed and the chair are speaking to what seem like transitory factors. Maybe more longlasting than they previously thought. Aside, what isid the persistent inability of inflation to get back to 2 saying about the economy and also the models economist have to analyze the economy . Matthew joe, that is a great question. It is something i have thought a lot about. What itity is this, tells you is that financial conditions are not as loose as everybody thinks they are. Look at the dollar, for example. It is still about 15 higher than it was two or three years ago. That is a very sustained appreciation in the price of the dollar. I think that continues to weigh heavily on goods prices. I think it is a little aggressive to say financial conditions are super loose, when you have the dollar sitting out there at these very expensive levels still. Julia matthew, great to chat. Matthew hornbach, thank you for joining us. If you have a bloomberg terminal, check out dayb. You can check us out online, interactive with us directly. This is our options insight. You can scroll down, look for different segments, look at what the senate were doing today. Super exciting opportunity if you have a bloomberg opportunity. Scarlet you never miss breaking news. What do we call it . Joe the future of tv. Julia tv on your terminal. This is bloomberg. Scarlet it is time for the Bloomberg Business flash, we look at the business stories in the news right now. Boeing at a yearly high. The Aerospace Giant raising its profit forecast, channeled billions of dollars back to shareholders. They squeezed more cash out of its 787 program. They will spend some of its cash haul on dividends and buybacks. President trumps military transgender ban facing opposition from several tech leaders. Tim cook tweeted his response saying, we are indebted to all who serve. Discrimination against anyone keeps everyone back. Mark zuckerberg and others tweeted their disappointment. Claims claims says it will cause too much disruption. Continued strength in mobile video advertising. Sheryl sandberg spoke with bloomberg about her new mission of the company. I am really excited about the new mission. I think it is what we have been doing and will have an increase Building Community. We see it with the groups. I thought with the work i did to form groups on facebook, which has surpassed any of my wildest expectations. I see it when i meet people forming groups, and how marketers approach Building Community on facebook. Scarlet sandberg set higher user numbers increasing gauge meant. Note, a programming peertopeer conversations tonight at 9 00 p. M. Eastern. Will bebes speaking with paul singer, to discuss his concerns for the economy. Do not miss that interview. Joe coming up, what you need to know for tomorrows trading day. This is bloomberg. Scarlet whatd you miss . Record highs for u. S. Stocks after the fed basically nothing. Relatively soon at the start of its allen sheet reduction. The u. S. Dollar weakened. Joe tomorrow, i will look at u. S. Durable goods. Scarlet and, a massive day in your earnings in europe. We have Deutsche Bank and others reporting. And comcast and verizon before the bell. Julia amazon intel, starbucks reporting. Scarlet that does it for whatd you miss . Whoooo. I enjoy the fresher things in life. Fresh towels. Fresh soaps. And of course, tripadvisors freshest, lowest prices. So if youre anything like me. Youll want to check tripadvisor. We now instantly compare prices from over 200 booking sites. To find you the lowest price. On the hotel you want. Go on, try something fresh. Tripadvisor. The latest reviews. The lowest prices. I am Mark Crumpton in new york, you are watching bloomberg technology. The u. S. Senate has rejected a simple repeal of obamacare that contained a twoyear delay. Several senators voted against the repeal only plan. Lawmakers are still in the early stages of a floor debate on health care as doubts continue to surface that republicans can get the 50 votes needed to the 50 but he did to pass any measure. It is a cruel and arbitrary humiliatedesigned to Transgender Americans who have stepped forward to defend and preserve our country. Weets revealss t the president has no respect for the men and women who risk their lives to defend our freedom. Mark pelosi and the department of defense revealed that the department of defense spence 20 times more on