from bloomberg world court in new york i am mark crumpton. this is bottom line. the intersection of business and economics with a mainstream perspective. today we look at the effectiveness of u.s. airstrikes in northern iraq. and then amazon takes on the disney superheroes. to our viewers here in the united states and to those of us around the world, welcome to we have full coverage of the stocks and the stories making headlines on this monday.

we focus on priceline and it big investment in china. third largest city expand.r efforts to >> u.s. officials of thrown deputyupport behind the speaker of parliament to be the new prime minister. this is the final break from what has become irreparably damaged relationship between the u.s. and current prime minister malaki. they tried to form a cap the and and the political deadlock. expressed a willingness to mute judiciously -- move judiciously. hope thisials

might be the answer they were waiting for. >> where has the prime minister been wall all of this has been going on? >> defiant. it started last night. he had a midnight statement on state television saying that he was not going anywhere, he threatened to sue the iraqi president for unconstitutional acts. this is gone on throughout the day and prime minister malak he has shown up for a group statement with those loyal to him, saying they reject the choice for the new prime minister. the security apparatus remains maliki.

what we know for a fact is that there have been major gains by kurdish or sues over the past two days this is almost entirely due to the airstrikes and the help they have been able to get from above. thepposed to relying on central government in baghdad, u.s. officials are now sending heavy weaponry up to the kurdish forces. there has been positive news on the pushback. as the president has referenced multiple times, there is no long-term solution without a political solution in baghdad. in the long, still a lot of questions. thank you. more now on the u.s. airstrikes in iraq. the violence is centered around erbil, the capital of curtis dan, where some military

personnel are based. little -- that little is this to the economy? this is the lifeblood of the .ntire region the city had a lot of plans to music calls and daydreams. focused area.est it has its own security force that help to keep the suicide bombings that pay for the past few years. the international community paying attention, is

business support forthcoming? >> it is quite huge. they would prefer to do business in kurdistan then the rest of iraq. the foreign companies get to own the oil that is actually in the ground. iraq basically get a fee for services rendered would just the end of the day can be below two dollars a barrel. big oil, because of that, has relief locked to that northern region -- has really flocked to that northern region. big names, like exxon mobil. some say it is one of the, if productiont exciting opportunity in the entire world. >> the irony is that for kurdistan it seems to be part of the problem. >> they want to keep about 70% 17% ofof the sales, --

all the sales, and the rest would go to baghdad. thoses not validate contract obligations, so there is a big conflict there. not to mention the fact that we're seeing all of those this violence which raises questions of will will the national pullout? these companies will be much more cautious going toward about investing in kurdistan, and take a wait-and-see approach rather than going full in. great that seems a short-term thing. in the long-term what is to sidestep this issue? >> it is about the pipeline buildout. there is a pipeline that now intersection the main pipeline that goes to turkey. if they can extend that into turkey, it is independent. baghdad will have nothing to do then in that is where they are placing a lot of their bets. inthey have an election

turkey this weekend. in nigeria have confirmed that eight people are being treated for the virus, two people have died. over 900 people have been killed by the outbreak that is sweeping the worldca where it bank has pledged $2 million to fight the epidemic. we spoke with the president. worst hope is that the part of the crisis can be brought under control in weeks. int we can extinguish it three to six months. ist we need right now immediate input and that is why we have moved so quickly. 75 million will go to immediate needs. >> right now, time is of the essence. quickly, if we get all of the technology, all of supportive actions

in place we can shut this down. but we have to move despite the fair. ear. we know what to do, if we have the equipment. we can make progress and we can make quicker progress. can watch the full interview on charlie rose tonight right here on bloomberg television. coming up, income inequality in america. the u.s. council of mayors report onts income inequality. we will continue in a moment. ♪

>> good look buying the latest captain america movie on dvd from amazon. the e-commerce giant has blocked cree orders of the disney summer hit in a dispute over pricing. julie hyman has the details. what is the issue? has commentedty publicly, but amazon wants what it has wanted in these negotiations, either the ability to discount these products versus what the content provider would like, and/or a larger cut of the sales. titles include captain america, the winter ,oldier, million dollar arm these have been across the board struggling to some extent.

the various studios are dvd andg upon the streaming revenue to make them whole and then make them a profit on these various properties. this streaming content is not affected, just the dvd pre-orders. customers do have the option to go elsewhere. amazon, as the world's largest e-commerce retailer, does have some clout here when it comes to these negotiations. in a battle already with the publisher hatchet, are they seeing any movement? >> more than 900 authors saying thattatement they do not think it is justified. they say that amazon is holding their various work hostage great we spoke with one of the authors involved this morning. she talks about the rights of the authors.

>> what amazon is trying to do is take control of the book market, and also trying to take control of e-book prices and trying to devalue them. theyis something that should not necessarily have control over. everybody who makes a product should have the right to price that product at a place where they can make a profit. e wase 900 authors' not published in the new york times. for itself, amazon has started a website called readers united. itis going back and forth, is unclear at this point which of the two sides will get the upper hand in these negotiations. >> thank you. of mayorsonference

has released a report on income inequality. it documents the gradual shift of income distribution in favor of upper income whole sold over the past four years. the wage gap has doubled from the 2001-2002 recession to be one of the late 2000. we have a mayor in texas, welcome to bottom line. the nearlys regained 9 million jobs that were lost during the recession, that is the good news, but the bad news is the double-digit wage gap represents $93 billion in lost earnings. how did this happen? >> a lot of the new jobs that have come back, we have replaced not only the jobs that were lost, we have added to the job tallying united states. but a lot of those jobs are at at muchwer job rages -- lower job wages than those that were lost.

the lowest quartile is going further and further behind, and the middle class is getting much smaller. this is the first generation that we will have less opportunity and fewer processed next than their parents did. looking over some of the information from your office. california county in is one of the highest medians in the nation, but that soaring wealth is creating a widening income back. gap. is the middle class in america disappearing? >> absolutely. of it in terms of what is the middle-class? the peopleclass is who agree jobs, small businesses. it is people who get up and go to work everyday, and earn what we would hope would be a reasonable income to sustain a family. >> a living wage. >> there are fewer and fewer

people who are able to get up for other people and do that. there are few opportunities to stay in what we would consider a middle-class lifestyle. more and more people are sliding into poverty. we have always in this country prided ourselves on the fact that if you come to america and work hard and prepare yourself and educate yourself, that re would be a path to success. in gap has become a chasm the last two years. >> is this a legislative problem or is technology to blame? we have people on bottom line saying that the technology is expanding so rapidly that people are finding themselves on the outside, looking in. alsotechnology problem is an education problem. there is a complex of issues.

in our meeting of mayors we have talked about income and inequality, but we'll start about turle early childhood education. 80% of the jobs require the internet to apply, just assume that your application. nest markethe pharmacy down the street, that you have two center application in on the internet. -- to send your application in on the internet. in the short term, is there anything that can be done to mitigate this? > you mentioned education. >> it will be structural unless to bringnd mechanisms our youngest kids up to standard. the disk devices the start in pre-k, and they last throughout

primary education. start in thees home. the number one world the child is exposed to. we are sharing best practices on what we can do to push down. what we can do to bridge the lide, if your parents take you to museums, you may stay at the same educational level you left this rthe last school year. not have a partner in washington do you? are mayors alone? never stop. we do not have time to talk about things as well. but we execute things. what we did in this coming , wether of u.s. mayors

share best practices across a range of areas and then we go back and implement them and come back in two months and give progress reports, and test for what was done and continue to refine and improve. advocated inenda washington, but we are going to wait. >> we want to continue this conversation. joining me. houston thank you for your time. makes big moves to expand abroad, in a moment. ♪

>> priceline reported earnings this morning. second-quarter profits topped estimates, and bookings expanded

on the travel website. the biggest online travel agent has been making moves abroad recently. they announced a $500 million that meant in chinese company see trip. we are here with more of the news that is so exciting. china is the fastest growing travel market in the world. chinese people are spending the most money when they are broad, they are traveling more and more. they are packing their bags like crazy. two years ago they passed the americanand counterparts in being driven by tourism spending. $129 billion. they are spending massive amounts of money and this is a massive market to capture. >> there has to be something

else behind the surgeon training travel -- the surge in chinese travel. >> restrictions are starting to tease up a little but, which is good for the chinese traveler. they are booking their own troops, they're not getting on guided tours, it is empowering to go online and book their own travel. >> what are they spending the money on when they travel? >> luxury good. ds. that is a huge market. and most of the money spent on luxury goods are outside of the u.s.. arepercent say that these the nickel to their travel plans -- 18% say that these are critical to their travel plans. >> thank you.

we are coming up on 26 minutes past the hour. that means that bloomberg television is on the markets. here is julie hyman. look at were a stocks are trading right now. we actually do have a rally today, somewhat of one. the nasdaq has gained the most today. let's take a look at some of the movers within that larger market. since falling by the most operating in the most difficult environment it has ever known. it also reported a larger than ever loss in the second quarter. georgia bank of graded shares of elon musk company from baidu but toy to hold.

we will have more on the markets in 30 minutes. ♪

>> welcome back to the second half-hour of "bottom line." let's check some of the top stories we're following for you at this hour. an egyptian brokered 72 hour cease-fire has taken effect in gaza. resumetors agreed to talks in cairo. the egyptian foreign ministry says the cease-fire will allow for humanitarian aid into dozens neighborhood. turkish stocks fell to a five-week low, and the election of the prime minister as president will do little to

improve the credit profile. and three-time nascar champion tony stewart says there are no words to describe his sadness over the crash that killed a young driver. junior was struck and killed by his car after he was walking on the track after his car spun out. that is a look at the top stories in the news that we're following at this hour. we turn our focus to the summer selloff in high yield. more is our head of high yield that alliance bernstein, and our reporter alicia. are calling this unprecedented. it's a? >> not at all.

you can see in the price action that it is not unprecedented. bys may have been driven panic in the retail side, but the institutions are buying. >> what i'm hearing is liquidity. outestors are nervy ab being able to get out of the market when they want to. how significant of a concerted liquidity? how much of that is driving this? >> liquidity is not what it once was in the bond market. you've to take that into account. we actually give a lot of cash in treasuries against the positions to deal with liquidity. >> what proportion? >> over 10%. never know when the selloff will come, but we want to have ample liquidity. in our fund we have exposure to europe, emerging markets, have you bee.

>> have you been increasing to have more flexibility and liquidity? >> we have been using derivatives in our funds for 15 years. >> i'm even seeing any risk taking behavior? of funds that are --wing more leverage employing more leverage? >> there is some leveraging going on especially in the bank loan market. they are on pace to have record issuance. >> is there reason for investors to be concerned? reason to always t when you have high yields, but we do not see that short term. >> this conversation we have been hearing about some horror of a meltdown. do you see that on the horizon? >> i do not. i think it is a buying

opportunity. >> why don't you see that? >> companies for the most part are in really good shape. they do not have excess amounts of leverage, they are not doing stupid things like they did leading up to the last cycle. remember that these are contracts that we are investing. if you do not have los ses, institutions are in their buying in the marketplace. that is why we got to the level we got to even with the tapered talk last year. >> is danielle and wrong? is this arcade not frothy? it depends on your definition of frothy. with yields around 5%, it was a little expensive. that just means that your returns will be lower than they would have otherwise been. frothy, couldn't lose a little more? it could. but in the role on rented it is still in good shape -- in the long run it is still in good shape. >> there seems to be some

concern on the part of banks that the market does seem to be weakening and not just slowing down the issuance engine. do you think that will pick back up? do you think the companies will be out there selling? do you think that is smart on banks?t of the >> things are good for the markets. ago, there was a deal that would have gotten 7% that got wide of 9%. that is a good thing so that people who cannot access the market might be able to. >> have you been buying or selling? quiz we have been adding risk. we are reducing risky portfolios, but playing it safe. going forward, what do you

think is the biggest risk to this market? what could derail this rally act go everyone is saying the this .s a concern is there anything that could derail this until the big kahuna? what are you looking for? what signs? credite seeing real leverage. if the federal reserve keeps its rates low and you have stimulus from around the world, will we see deterioration before it is too late? how do you see it if they are such easy credit? >> we may not. we may be in this low rate environment for a long time. stay very low. >> going back to the clady point -- the liquidity point. have been funding

longer-term assets. what is that mismatch and maturity as an issue? >> becomes a big problem if you have default losses. that is when you have the 25% negative returns in 2008. >> even though there were huge outflows last week, that was not sufficient? buying, and there we are not the only ones, that is why you had more outflows in may of june at last year. >> are you surprised the values have not declined more? >> no. what institutions are looking at is that it is the same risk a month ago. cheaper. basis points that is ultimately what happened

last year. that is why the high-yield market came back a lot faster. when yields are closer to 7% the institutions that it is the same kind of risk that the same companies in the same leverage price.a lower it is pretty broad-based. we particularly like european bank capital structures. increase regulatory action is a good thing there. exercise.ttom-up credit is not about having default or losses. we are funding opportunities around the world and we think a und shouldtured f reflect that. >> are the geological -- geopolitical stories we are hearing impacting your investment? >> short-term we know the

concerns could derail markets in the short-term. thank you both so much. we appreciate it. up next we will get today's latin america report. we continue in a moment. ♪

>> breaking news from the iraqi prime minister. he said that iraq faces a serious constitutional violation . earlier today the iraqi national assembly nominated a new success .r to maliki he believes that that election is legally worthless. says he thinks people and security forces are in a holy battle.

it is time now for the commodities report. >> good afternoon. we're seeing hedge funds cutting bets, buteir oil coffee, sugar, and orange juice are stealing the show. they are soaring in today's trade, particularly copy where we saw futures spiked better than 4% in the session. to quote one veteran of the theres group in chicago, aftermath of that prolonged drought in brazil is continuing to play a role in prices. the recent rains there could cause premature flowering. it would result in the first deficit in years. nonetheless, is the winningest

motto be this year --commodity this year. those tropical storms off the coast of florida could pose a threat to florida's orange juice. forming,ard the storm they got excited, and that is what you saw, a on runaway rally. >> what are the crosscurrents we are seeing in gold? >> for all of the geopolitical events that caused some analysts to retool their forecast upward, it is actually causing prices to set up for a decline according to the latest data we have. lack of any news out of ukraine pushing that state of haven premium aspect lower. the bigger picture, after rising more than 9%, defying a lot of

errors forecast, we're seeing money managers cut their positions by 15% as of last week and hedge funds also becoming bullish. iraqexpect supplies from to remain safe while those u.s. airstrikes are taking place. mass in ag to be a rock for a while -- iraq for a while/ . chief spoke cabinet at a news conference today. he said that president obama uld intervene in the debt case. it is the responsibility of the executive ranch when the bilateral negotiations are effect it. when dealing with the violation of the sovereign countries

rights, it is necessary for the executive to intervene. argentina defaulted on july 30 after a u.s. judge locked and payment because the nation did not comply with rulings to pay holdout creditors at the same time. come, famous fight scenes on the big screen. we will show you the stunt double company behind the bruises and broken bones. ♪

>> ever wonder who choreographs and designs the fight scenes and stunts and action movies? behind moreunt team than 100 productions including the hunger games, the wolverine, rambo, ninja fashion, and ron -- ninja assassin, and tron. we went behind the scenes.

>> being the stunt performer, you are maybe one of the coolest able onset. we get to play for a living. ♪ 87eleven does action scenes for a film from beginning to end. graph them and then we execute them in the actual movie. have acrobats, free running artist, some of them have a dance background. we need people with extreme talent. >> i was a gymnast. i do not have a fight background at all. i literally threw my first punch when i stepped foot into this jim. -- gym.

the hunger game was more running and jumping, the rest of it was fighting and flipping. >> that passion for martial arts but let me -- that led me to get into this career and start this company. and matt damon, give jackman is one of those athletes, but the stunt double is essential to how that eritrea ves.s -- character evol the stunt double is more critical to the film and you realize. rigging, wiring, green screen elements.

>> an action scene or a fight scene, you cannot see the face, it is usually a stunt double. usually they are not hitting or kicking or making contact. there are accidents were you get hit, and sometimes you get bruised. my wrist andken four places, and had a knee reconstruction. it is part of the job. you accept the risk when you get into stunts. no truth to the rumor that my colleague matt miller is a stunt double. we will continue in a moment. ♪

>> get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet and bloomberg.com. that doesn't for this edition of bottom line on bloomberg television. thank you for joining us. on the markets is next. i will see you tomorrow. >> it is 56 past the hour, that means bloomberg television is on the markets. let's take a look at where stocks stand until an hour after the closing bell. still hanging onto gains. for the s&p 500. double that for the nasdaq.

we look at the interplay between stocks and bonds. a very little movement in the treasury market. the yield was unchanged at 2.41%. by portfolio manager at western management, one of the largest bond fund managers in the nation. let's talk about what is happening in the bond market recently. one of the things i talk about frequently is how the bond market defied expectations this year. rates remain stubbornly lower. to me about the action. >> an explanation is the three f's. .he fed is all-encompassing the third would be flows and the war -- the second would be flow and the third would be fear. we don't think the recent

volatility we have seen is necessarily because of the fed although some officials are talking about specific flopping's on the market face. --re have been huge loads huge flows. we have nine offices in internal across the globe. i think that is a big reason. a lot of people have looked to reverse those and take some profits. that feeds into the final, which is fear. what do people here right now you know a couple of things. in part liquidity that exists in marketplaces, getting broker-dealers, problems in some of thets, and geopolitical and european problems that have popped up recently. >> do you think these dynamics are going to change? where do you allocate money right now? >> we have changed a little bit.

number one, treasuries. we felt that given our expectations of economic growth that 3% was ok for the markets. we are not as enthused about rates where they are. that is driven by our expectations of fundamental and growth. the other or area we have shifted is high yield, where we have been cautious in second quarter and have taken allocations lower in broad-based portfolios versus constraint portfolios. in the last seven to 10 days we have been adding their, approaching 6% yields. >> i am curious where else you are settling right now. >> other than treasuries, nominal treasuries, and also inflation protected treasuries,

we don't have large exposure right now. we are in the mode when it -- in the hold mode when it comes to investment grade corporate. >> we have to leave it there. thank you for your time. i appreciate it. click stocks are off their highs as the dow tries for back-to-back games for the first time in nearly a month. "street smart starts right now. -- street smart" starts now. iraq leader struggle to break a political deadlock wall militants fight for control of huge areas over the country. what is at stake is baghdad's politics. of