located. he goes in search of the next -- the trump style -- get rid of the tax. and martin sorrell on the speed of the change in his media world. good morning, everyone. this is "bloomberg surveillance " live from our world headquarters in new york. i'm tom keene. joining me, brendan greeley. olivia sterns pulled the short straw. olivia: they called me. tom: now we will take a look at our top headlines. olivia: president obama is taking his bid for the iran nuclear deal to the american people today. in a speech at american university in washington. jewish leaders are still afraid that iran can build atomic weapons but the president how speech is unlikely to change benjamin netanyahu's mind.

benjamin netanyahu: no matter how good your intelligence is, no one can credibly make such a claim. how can you block what you do not know? iran can keep the deal or cheat on the deal. either way, it gives a clear path to iran to get the bomb today or hundreds of moms tomorrow. olivia: you can see the president how speech live on bloomberg television at 11:20 kentucky republican voters will not start picking their presidential nominee for nearly six months. but the field of candidates is already being split into front runners and also-rans. rick perry and six other candidates have been pushed into an earlier event. donald trump will be front and center when the cameras come on. he warmed up for the debate on bloomberg's "with all due respect" by slamming his closest

rival, jeb bush. donald trump: when bush raises several hundred million dollars and then the money is sitting in there and he puts his best friend in charge or somebody close to him, and they never talk, if anybody believes they never talk, it is a joke. olivia: disney shares are down more than 6.5% premarket this morning after the company posted third-quarter sales yesterday that fell short of analyst estimates. disney had been the dow's strongest stock this year. disney is cutting its forecast for cable television. the company's biggest business espn is losing subscribers because of cord cutting. and a volume explosion for apple. more than 120 million shares of apple were trading tuesday. apple shares entered a correction this week, meaning they were down more than 10%. yesterday they fell for the 10th

time in 11 days. the stock has fallen 12% in that stretch. a work for netflix will not have worry about rushing back to the office. -- new parents who work for netflix will not have to worry about rushing back to the office. google, for its part, gives up to 18 weeks. tom: we go to "surveillance" parental leave expert brendan greeley. brendan: why did this revolution not happen five years ago? are you making a noise? one way to get workforce participation up is to give women more reasons to remain in the workforce. one reason to do that -- one way to do that is not to penalize them for maternity leave. tom: the third kid, you are like, when can i come back?

that is a reality. brendan: i used my paternity leave to clean the garage. tom: i was told i was useless and way beyond the maternity era. let's get a data check. equities bonds -- marking down the euro call to 1.05. off yellen and carney. onto to the next screen, and i want to set the tone for "surveillance" today. gold south. brazil real is just one indicator of what this is doing away from strong dollar. brendan: if you search on the terminal for stories with the word "lockhart" in them -- dennis lockhart speaking yesterday -- australian dollar

rises, gold falls the whole world shifted when he spoke. tom: this is a chart i have done for years. this is trade-weighted broad dollar. this is china. here is a rubin dollar, and here is the latest dollar move. all you need to know in logarithmic august is this is the move of the rubin dollar. you can bring this right over and it shows you how much we have done so far of the so-called strong dollar. brendan: you talked about it is not just a dollar story, it is all of the various crosscurrents. does this story shifts two years from now when mario draghi make the difference? olivia: that is the challenge for janet yellen. this is not transitory. tom: right now it is a dollar story. jon ferro is in london. a strong sterling as well.

this is about yellen and carney. what is the distinction between those two central bankers? jon: the only major two central banks on the planet thinking about hiking rates. very different in terms of action. the market is pricing with hikes at the bank of england in may. tom: when you look at the dollar weakness, i look at athens rolling over again today. what is the nearest follow on is it that gold is going south or the equity markets in europe? jon: i look to europe as an earnings story, but there is certainly a tailwind story in the dax as well. you see the spillover from the fx market. i am not looking at euro-dollar, i am looking at euro sterling. that could be a problem. brendan: dennis lockhart of the atlanta fed said it does not see

any reason yet to wait past september. did a clacks on sound in the city of london? did everyone at once put down their gin and tonics? how important are those metrics? jon: i think they are very important. we needed more improvement in the labor market. for the dennis lockharts of the world, it is about moving in september. it is about significant deterioration. how many friends does dennis lockhart have at the fomc? given janet yellen's record -- is janet yellen one of his friends? tom: jonathan ferro, thank you so much. we do see this new dollar strength tied to the fed, but much more it is about real economic effects. sir martin sorrell travels the world as the ceo, the founder of wpp. he lives the reality of ever

weaker currency. it is sort of like marco polo. martin: the english explorer -- i cannot think of one. brendan: john smith. tom: john cabot was way underrated. what is the impact of the stronger dollar and these weaker currencies, country to country? martin: companies were reporting in u.s. dollars or u.k. sterling. part of disney's reporting worthy issues due to currency. most of the major multinationals are under heavy pressure. to come back to the interest rate increases -- from what i see, things are tightening. if you look at the forecast for worldwide gdp this year, the inflation component is put down quite sharply. earlier in the year we were looking for 5, 5.5 nominal.

tom: is it a global recession? martin: it is not a global recession, it is global tightening. on both sides of the atlantic people are talking about raising interest rates, and that obviously has an impact on the currencies and forces them stronger. the euro will stay week because of the -- the euro will stay weak because of the grexit issues. all of that created uncertainty around the euro. i see the world tightening. i do not see the world easing. interest rates from a very low position, we have to be frank about it -- will it make much difference if it goes up a quarter or a half a point at these levels? for our debt profile, because we have the refunding -- we have been refunding all of our debt -- we have been saying this tom, for years. last year revenue growth was up

three-plus in real terms. the answer is, it is a new mediocre. we have been saying that for years. it is not flatlining. brendan: i have been doing my homework. we are looking at a list of great english explorers and we have to look at our metaphor -- henry hutchinson, an extraordinary navigator. martin: the hms beagle. brendan: are we looking at a robert falcon scott? martin: last time we checked, we did not have an agency in the north. stick with the beagle. tom: what is the faulty towers joke? the thick book of great english lovers yet that we are moving on to china. you said that you see the chinese growing at 4%, 4.5%.

martin: the question is whether 7, 7 .5% is sustainable. given that the government is looking for a health care safety net and building services businesses and they want quality growth not quantum. i do not think it is totally surprising, given where the world is. we are talking about real growth at 3, 3.5%. most major multinationals are facing a world economy which the people i talked to, whether it be -- i was in asia last week, in malaysia with the ioc, and the people there -- generally the people running countries are finding things generally tightening. they are not getting better. they are either flatlining or tightening. and inflation is lower, and therefore pricing power is lower. that is why you see the focus on cost.

most people have not missed the top line but that is because they have brought down expectations about where they were going to be hitherto. olivia: joining 21st, after the bell today, and we will continue this conversation with sir martin sorrell after the break. it is a mega-media earnings day. then swing born -- about what we should expect from time warner cbs -- time warner, cbs, and 21st century fox. this is "bloomberg surveillance ," on bloomberg television, shin on your tablet, your phone, and bloomberg.com. ♪

tom: good morning, everyone. "bloomberg surveillance."

gold is down six dollars this morning. we have olivia sterns with us with top headlines. olivia: neiman markets want -- neiman marcus wants to go public. neiman plans to use the ipo proceeds to repay debt. its revenues last year totaled $4.8 billion. societe generale says its quarter profits were highest since 2007. kellogg's thousand to stop using artificial colors and flavors to cereals and snack bars within the next three years. the company is following an industry trend. breakfast cereal sales are slumping as more consumers shy away from processed foods. tom: it is amazing how it has changed. olivia: i cannot figure out what lucky charms look like without pigment.

21st century fox is reporting its second-quarter results after the bell, as does cbs. aand we will hear from time warner. then morgan joins us on the set. you argue that the sector might be overvalued, yet 21st century is your topic. why that is your top pick. -- 21st century is your top pick. why? ben: we expect them to deliver about seven on ebit.. american idol has clearly been a miss. when you step back from those two pieces of the puzzle, the rest of the growth story has been quite strong. international cable networks in india paid off nicely. fox sports 1 is doing well, continues to ramp, and they have

been buying back stock. we think they get past the currency headwind. for fiscal 17, we think that accelerates into the teens, which would make fox the fastest growing among large cap media. olivia: what is the one thing you want to hear from james murdoch? ben: at times that can hurt shares. i think it is a misconception, but the market's focus on how is james going to invest in this business, that may or may not be different. martin: a really important point -- when you have no separation between ownership and control, companies do better. i think that is really the issue. they think long-term, they think structurally about the business in much deeper ways. tom: but will there be a

generational change at fox? looking at the script, will you see more short termism at fox. thenben: i don't think so. tom: here is my observation. i cannot stand sir martin sorrell's world. i cannot stand commercials on tv. martin: that is not my world. tom: you are the pro. what does tv need to do to keep sir martin happy and keep our houses happy? martin: it does not depend on network television. then: i am not sure there is a solution or a silver will it -- or a silver bullet. incumbents that make a lot of money -- the cable network business -- tom: they do not want to change. then: it is not that -- thenben: it is not that they do

not want to change. tom: the miracle we have seen in the last six years, including -- martin: you are not going to get away with this, tom. if you look at the companies that you follow, we have altered our approach in two weight -- in two ways -- geographically and technically. it is over the top model. tom: has the persistency of class flow changed -- of cash flow changed? ben: on the tv side, the issue has happened slowly. it will be difficult to sustain the margin. olivia: and does he take another run at time warner? ben swinburne covers media for morgan stanley.

tom: coming up in the next hour, he was way out front on the derivative collapse in 2005 2006 2007, from asia. david golden will join us on set . his scathing note on what chinese government in beijing must do. stay with us with sir martin sorrell worldwide. this is "bloomberg surveillance ." ♪

tom: good morning, everyone. "bloomberg surveillance." a big, big political debate tomorrow. here is brendan greeley. brendan: yesterday donald trump spoke on "all due respect." i listened live and i was

stunned because for the first time i felt like i was listening to a conversation where a politician was coming up with answers to questions in real time, like he was thinking about that. he said the fed can create asset bubbles. here is what he said about campaign finance reform. donald trump: i do advocate transparency, and i think the concept of a lot of money is ok, but you have to know where the money is coming from, who is putting it up, and possibly it will not change. therefore who will control that particular politician or candidate? brendan: that is the moment my head exploded because i found myself thinking it kind of makes sense, what donald trump just said. sir martin sorrell is just with us. martin: it does not mean everything else makes sense. brendan: let's talk about his brand, something you deeply understand. what is it, and why is it more

successful than anyone predicted it would be? martin: he is plain speaking. he is speaking at a moment where americans are trouble at a time when things are not happening in washington. he does not surround himself with vast revenues. he speaks his mind, is very much plain speaking. the issue -- and i am a foreigner commenting on domestic politics -- is how long this phenomenon will last? does it have legs? he does not have the resources quite right. i agree with him on campaign finance. the british election all parties spent 25 million pounds in total $35 million, $40 million. in comparison what we are going to see in terms of campaign finance -- he is rambunctious. he speaks his mind. he is very much to the point. he does not flimflam. that appeals to the voter.

but does he have coherent policies? can he handle foreign affairs? brendan: there is one thing you just said that is absolutely wrong. we love to be talked down to buy british people about american politics. martin: talked down to? brendan:'s are and i will have it out after the break. let us know @bsurveillance why trump is doing so well. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." let's get to our top headlines with olivia sterns. olivia: president obama will try to sell the new cleared agreement -- the nuclear agreement today.

he met yesterday with jewish leaders who fear the deal will not stop iran from building nuclear weapons. you can see the speech live this morning on bloomberg tv starting at 11:20 eastern time. we will get a preview in a few minutes right here on "surveillance." shares were down 5% premarket for disney. but there is another star wars flick in the pipeline. >> we are making no estimates in terms of what we believe the film will do. we have probably the most valuable franchise that ever existed. success will reverberate throughout the company. we want to be careful that the market does not get too far ahead of itself. olivia: disney also cut cable tv forecasts, mostly because espn

is losing subscribers. stocks in greece fell for a third straight day down nearly 3% now, but the drop-off is not nearly as deep as it was monday when the market was hit with its worst selloff in nearly three decades. that was the first day of trading after the five-week shutdown. berkshire hathaway traded near record highs at the start of warren buffett's 50th year at the helm. eight years later, there is less to celebrate. shares have slumped 5%. berkshire shares through 2013 averaged gains that more than doubled. tom: i can see the headline " warren buffett fails." 5%? congress comes back i believe back in september.

the president will speak this morning. he will start a pitch on why congress should move forward on the iran transaction. margaret is at bloomberg politics and has perspective on what we will hear this morning. what is the so-what this morning, margaret? margaret: the so-what is that president obama will say that this is the most controversial -- the most tom: -- what is the timeline for the president? is this the most important speech of his administration, or is it a warm up for him to get to september 8? margaret: mid-september is a magical day because congress is going home for the august recess, the president's getting ready to go to martha's vineyard for vacation, and he does not want to blow it. he would like congress to not vote to disapprove of this, but

even if they do, he can veto that and he can probably block an override. that is plan b. his plan a is for none of that to happen. what he is trying to do is preemptively prevent the summer from getting away from him for something turning terribly bad when everybody goes home. brendan: it is beginning to feel like a political campaign. what is the value of a public speech if he is trying to win over members of congress over the short term? margaret: it is short of -- it is sort of -- the other is a long-term legacy bit. he is trying to position himself somewhere along the spectrum of jfk and ronald reagan in terms of engagement with the soviets, in a sort of cold war effort to contain the nuclear threat, and this is obama's modern version

of that. he wants to set the narrative and make the debate go along his terms instead of aipac's terms. olivia: i do not think he will argue that the critics of the deal were along the lines of the 2003-2004 invasion. we heard that the iranian leaders where interpreting this differently than american legislators. what have we heard out of tehran? margaret: it has been fascinating. there is what tehran is saying and what israel is saying. a big part of what tehran's internal pitch is that americans are not in charge, that their military will continue to do what it needs to do. that has been translated in congress to a an attack by the critics who say there is a sigh of deal between iran and the iaea over the military aspect of this negotiation. tom: margaret, thank you so

much. we can hear the president speaking this morning. with us this morning, sir martin sorrell. what do you do to go back into tehran? what does wpp due to jumpstart what you have there? martin: we haven't got anything there in iran. neither do we have anything in cuba, although when the sanctions were lifted they immediately established a relationship with the government. so we have our man in havana. we can prepare the ground in the sense that we can look at the potential opportunities, but we cannot be involved in any activities. one of our competitors did announce -- japanese-based -- did announce recently that they have gone into iran. they have been quiet on what basis they did that because u.s. people -- they cannot have any u.s. people with iran until --

brendan: you are talking about legality. when you look at iran, do you see educated middle-class? martin: a year ago i went to a european-iranian conference. 83 million people -- it is another vietnam in that sense. highly educated, 99.5% literacy both men and women. the deal with iran is pretty much the basis for it what is going to happen over the next 10 to 15 years whether the iranian middle class will start to mushroom and demand more reform from the iranian regime. that is the bet that politicians are making. we have been looking at the market. as a jew i am -- at the iranian

conference last year, i said i was a bit conflicted. tom: do you support mr. netanyahu's efforts against the democrats and the president? martin: i do not support it one way or the other. i asked him the question in a private session flat out, about why is it that -- his answer was that we want to live constructively with the countries in our region. in the public century and -- in the public session, he said constructively with the countries that -- and he's speaks in bush. he knows what he is saying. tom: you are qualified. should the republicans in the

united states of america listen to mr. netanyahu about this important treaty transaction? martin: obviously they should listen to him in terms of what he has to say and how he has to say it, but the concern is exactly what i said previously -- whether over the next 10 to 15 years iran will change the middle class in iran, that young people will demand reform. that is the diplomatic bet that people are making. brendan: the commercial market is there already. martin: if you look at the number of major multinationals not based in this country or the u.k., iran is a major market. there has been a lot of commercial activity that people have turned a blind eye to over the years, despite the existence of sanctions. people have gone around the edges. brendan: we are going to move back to the u.s. the relationship changes in the

late 1990's. so did my hair. that is the subject of the single best chart -- the s&p 500. this is "bloomberg surveillance ." good morning. ♪

tom: good morning, everyone.

"bloomberg surveillance." dow futures -- we need a single best chart. brendan: take the gdp, the most major indication of economic strength. that is the single best chart. one of warren buffett's favorites showed up in a note this week. the chart shows the s&p 500 market cap to gdp now versus 1964. now it is 80% higher than the current average. now i go to chief technical's correspondent tom keene. does this chart matter? tom: it matters but sales has become very noisy. martin sorrell lives this everyday. u.s. sales are wildly multinational. services versus goods also takes

an old line ratio and that is something new we do not understand. am i right? martin: i agree. brendan: you see it right where -- martin: we value brands every year. you look at it 10 years ago as opposed to the top 10 brands dominated by apple microsoft, google. tom: can you buy apple shares here this morning? they are on sale. martin: i would for the long term. a question about the timing, but long-term, yes. the other company i really love is one in china. a handset manufacturer. tom: i cannot remember if you were on the podium when jack ma was speaking. alibaba struggled a little bit.

martin: i interviewed jack ma in shanghai about six months ago. his international strategy was not aimed at the u.s. the competition was too tough, so he said we will focus on europe where the competition is easier. and hugo barra who he took from google, the android developer, hugo barra first took that phone into india. alibaba was going into those markets as well, india and alternative markets, not going head-to-head in america. this move with goldman is interesting because it seems to me that he is looking -- i do not think he will be focused totally on the united states. he will be focused on those markets internationally. tom: the stocks down 33%. let's do photos right now. what have we got olivia? olivia: a super typhoon is

brewing in the west. tom: they used to be like lucy or olivia. brendan: that is in the atlantic basin. olivia: soudelor has wind of 160 miles per hour with gusts to 200 miles per hour. typhoons are upgraded to two -- two super typhoons when the wind is upgraded. tom: if martin was going to china today, he would take the gulfstream and run that puppy right through that typhoon. olivia: number two photo -- in parts of china, temperatures are hovering around 100 degrees. this giant panda is a relaxing on a block of ice to beat the heat. brendan: this is what tom does in the afternoon.

martin: it looks a bit like tom. olivia: i was going to say that. christine quinn got married in pennsylvania. most notably present was her 89-year-old grandmother. she says it was an easy decision because of her amazing sense of humor and outlook on life. tom: how many weddings did olivia sterns grace this summer? are you up to 15? olivia: last year was 14 weddings. this year the problem is that most of them were in europe. tom: give us the worst nightmare quickly. olivia: being up for 36 hours hung over in coach on the way back. to try to get here for 7:00 a.m. on a monday. tom: that will do it. american democracy is super hung over in coach. our twitter question today -- why is donald trump dominating in the republican field? let us know @bsurveillance.

we go to break. good morning. this is "surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." let's get to top headlines, a

busy wednesday, with olivia sterns. olivia: california is bringing in help from neighboring states to fight that huge fire your san francisco. it has burned 100 square miles and has forced 13,000 people to evacuate. firefighters are making progress. nearly two dozen fires are burning elsewhere in the state. comcast expects ad sales during next europe are summer olympics to top $1 billion. nbc's universal unit has broadcast rights. sponsorships by nike, procter & gamble, kellogg's, and coca-cola are already lined up. the national hockey league is getting a helping hand from the summer game. the company will run the nhl network and hockey's streaming services -- mlb's tech arm. brendan: they did the streaming for the world cup as well.

they know how to do it like nobody else does. tom: it is huge what they are doing, and not just sports. they do "game of thrones" on hbo now. it is major league baseball doing that. this is your future. martin: it is certainly one of the things we have to think and take heavily into account to change. i said to you in the break, measurement has got to improve as well because the old linear media, the hyperbole is too hi new media is too low. tom: brennan, get us started. brendan: the sec meets to vote on one rule from the dodd frank act, now five years old. disclosing the ratio of media pay to ceo pay. this is not the rule right? you could write it down in a paragraph and understand why it takes so long. >> there has been a lot of back and forth.

the sec had 61 of these rules to write and they prioritized those. the top one they wrote was the say on pay rule. they received a lot of comment letters, over 100,000 of them. olivia: it seems like such a meaningless metric depending on the nature of the business you are in. martin: international or not. david: a lot of people said that to me when i was talking to people across the spectrum. the push for this is coming from consumer groups and from unions. there is maybe a populist hunger to find out more about these ratios. the metrics are difficult to calculate. you mentioned you have employers who are broad, you have part-time workers, seasonal workers, and to find a median would make sense. martin: our accounts, for example, you can go back 10 years and you can find them because you take the total

staff, the average number of people. tom: i want to go back 10 years right now. let's look at martin sorrell's compensation, a major debate. take that down and get the right chart up. we see a massive improvement in share price. it is called pay-for-performance. martin: and i keep it all in the company. brendan: isn't all pay pay-for-performance? martin: 90% of my compensation is invested back in the company. tom: mike eisner things like separation between pay and capital gains treated equity. david: really what boards care about his performance. you talk to shareholders and that is what they care about as well. tom: where is capital gains treated equity incentives within

your reporting versus the new pay, which martin sorrell and i know is baloney? he did not get paid $42 million or whatever your ad on was. it was an equity gain. martin: 90% of it was cash. tom: you are willing to tell us martin, that 90% of it -- martin: yes. tom: what was your other insight? david: i am struck by the fact that there has been widespread growth in this. if you look back at 1983 until 2003, you saw it 46-1. now it is 33-1. how this got into dodd-frank as well, this is something barney frank cared about for a long time and tried to wage in. -- and tried to wedge in. tom: here is the moonshot.

martin sorrell began at age 10 at wpp shining shoes. brendan: do boards know how to properly value ceo's? martin: it is not a question about the board. the board's decision is made on a comparison basis. the whole thing about this sort of -- it is not mafia -- it is this group of people that operate in terms of consulting comparison, networks. that is the thing that people worry about. my view is the compensation should be tied to investment in the company. not options. you would not give -- the restricting stock is far that appeared but i believe, and our early plans -- interestingly,

these plans have been mixed because institutions do not like the idea of us investing cash. the best way is to invest cash in a plan on which performance is -- brendan: that is a problem with the mortgage market for 10 years. getting in the game makes you more cautious. martin: where you have a separation of ownership and control is where you have problems. where you have management interest tied into the equity of the country -- of the company heavily in terms of ownership. david: the more disclosure you have about executive compensation -- these boards want -- tom: david gura, thank you. the dollar is stronger this morning. that means it is right to do a forex report. dollar yen 124 -- 1.2436.

brazil real is ugly. three: -- 3.47. that is an ugly brazil real. stay with us. ♪

tom: the dollar fines renewed

strength. the ever stronger dollar makes janet yellen's world more complicated. an emboldened donald trump says style matters. china must appreciate the yuan for their export machine will dine. -- die. we are live from our world headquarters in new york city. joining me is brendan greeley and olivia sterns. dollar strength is something. brendan: everything dripping off the results of what dennis lockhart said yesterday afternoon. tom: why is status lockhart so important? brendan: he gets so little information from the fed. he doesn't make the vote alone. he has other voting members. he says i don't see any reason why not. everyone seizes on that small information and trades. tom: looking at that 8% revenue

pop just one idea doing better. olivia: second-quarter sales up 8%. a lot of analysts say hbo is one of the most least impacted companies by the slowdown. everyone wanted to know what was happening with hbo. what was hbo doing to subscriber growth? that number i do not see but it was a big earnings-per-share. tom: double-digit moves. operating income of 20% speaks to the power of these cash flows. we have time to figure out why that was. do you give an success for game of thrones? the first paragraph in the last sentence, in addition to being nominated for outstanding drama series, game of thrones was nominated -- was watched 14 times by olivia sterns. olivia: that's not true, it's your favorite show not mine. but that is a nice beat. tom: right now to the top

headlines here is olivia sterns. olivia: president obama will try to ease the worry's of those who will oppose the new iran nuclear agreement. he will pitch for the speech and a major speech at a university. you can see the speech live right here on bloomberg television starting at 11:20 eastern time. the field of republican presidential candidates is already being split between leaders and iran. the first nationally televised debate is tomorrow and fox used the latest surveys to pick the top 10 from the pack of 17 republican candidates. the network says that donald trump will be front and center. seven other candidates are getting second tier status. among them is former texas governor rick perry and carly fiorina. trump warmed up for the debate

with a call into all due respect and he slammed the fundraising tactic us his former -- of his rival jeb bush. >> when he raises $100 billion in waits and waits because you cannot talk to the pac and in the money is there any puts his best friend in charge and then they never talk. if anybody believes they never talk, it is a joke. olivia: it will be nearly six months before republican voters begin to pick the presidential nominee. disney shares are down more than 6.5% in premarket trading. disney had been the dow's strongest performing stock this year. there are also cutting their forecast and the biggest business espn is moving subscribers. more than 120 million shares were traded tuesday a day after the moving average fell through

a line monitored by analysts. they entered a correction technically this week. yesterday they fell for the 10th time in just 11 days reaching a six-month low. the stock has now fallen 12% into that stretch. new parents who work for netflix will not have to worry about rushing back to work. they're offering up to one year of paid paternal leave. that sets them apart. google gives workers up to 18 weeks. tom: two stories right now, motorola solutions. brendan help me this is the tech part. it gets my attention. silver lake which has hipsters and technology investing is putting one billion internet motorola solutions.

greg brown will be with them at 10:30 this morning to explain this is like one of those twisted and intriguing deals. brendan: at one of the things we are finding out, take nokia for example it's one of the things left over when the mobile phone business collapsed and it turns out that them nokia mavs was really valuable. tom: i do want to point out that bank of america -- they take apple from a price target to 1.30 to 1.42. so the movements you see apple sales and the last five days. brenda knight were talking about the brazilian rail continuing -- brazilian real continuing and ugly dissent. it folds into everything that

has to do with our investments. tell our viewers and listeners why dollar dynamics and currency dynamics matters to the 401(k). >> the impact you see on ethics and earnings so far this year has been unprecedented. even in this quarter alone everyone is talking about how bad earnings and sales are coming in. our estimate is roughly a 4.5 -- four-5% interest. there is a real impact on the competitive of the u.s. companies. brendan: i want to bring up our single best chart from last hour. for those of you we are just measuring the market cap of the s&p 500 against gdp in this space to what you are saying which is that ratio is higher than it used to be. one expiration is that there is

a bubble and the other exhalation is that companies have moved abroad. >> over the past few decades you have seen a massive globalization and our estimates are that s&p gets roughly a third of its sales and roughly 40% of its profits. it is a major driver and that will not be captured. the other thing to consider is when you look at a market cap gdp ratio is two major flaws. one is that you're looking at the price of sales which is the equity value and not the firm value the other thing you are not capturing is profit margins everybody likes to highlight close to record margins today. if they are sustainably higher than you should not be looking at field margins because it will not capture that increase in profitability. olivia: what is your biggest margin call for the second half deck of -- half?

>> we in the middle of a global thought hatch and we're that is reflected in the weakness of the market you have seen. the question is, is that the beginning or the beginning of the end. you could see further weakness in these markets and if you later on that the uncertainty and volatility get. -- tom: you get to wake up every day with francisco. how do you take his commodity world over what you are doing. a lesser like modern implosion is no big deal and i like you really. it is a huge driver of global growth. it means a lot if you think about gdp. lower commodity prices are generally going to be a positive. you seen that with earnings down 60%. tom: preempt the gold chart. you follow gold tick by tic to you have crew grand in your

kitchen -- you have cougar kugerands in your kitchen. brendan: the commodities market and the implosion really starts to make a big difference. >> it makes a huge difference. we have always been saying that the negative impact your seeing is a lot more impactful than the positive impact you see for the u.s. consumer and it is coming through in earnings. it is a huge deal and in the noon -- near-term it adds downside risk. tom: what does it signal that a market leader is rolling over. apple is enjoying a buying opportunity, that is her you frame it. what does it signal to a guy like you? >> if you look at the technicals of the market you see decreasing amount of brett -- breadth this year.

that is not a great sign but as i was mentioning before it is a reflection of this global thought patch. it is hugely negative in the near term and i think it as so the near-term downside risk but as you get out you'll probably see growth pickup. olivia: it is a shallow bull market. one third of stocks are in correction territory. tom: i did not know this red on the screen the dow is down 1.5% your today. coming up later this morning with their announcement in the last 20 minutes, greg brown. motorola solutions. must watch. say with us. ♪

tom: good morning everyone. the lead this morning is dollar strength. bloomberg lp founder michael bloomberg writing today, the president didn't kill coal, the market did. reducing emissions coal consumption is met to healthier country with more jobs. his or anyone who thinks that's a bad deal?

he was on to say even those americans were skeptical of climate change opposite for the epa's new plan. it will save lives and create jobs in red and blue states alike. the fact is we are a cleaner nation. brendan: what i find interesting is that you chosen the seven hour for us to comment on the opinion of my loss's loss's's's boss -- boss's boss's boss. he also points out that attitudes are changing. that is changing the price of coal. that i find harder to buy in the simple case that she fracking has changed it. olivia: he also writes that king: stein because of natural charges. he says the price of wind power

is lower than that of coal in most parts the country. brendan: that makes sense but i think moving forward we create historical mtyths. the matter what happens with a look back and say barack obama killed your economy. tom: we may say that but with attitude change are we some way driving policy because people at pickens told us that natural gas is cleaner. olivia: that is the part of the point he is making that washington is catching up to the rest of the country. brendan: refund the difference between marketing and lobbying fascinating. -- i always find the difference between marketing and lobbying fascinating. tom: what we can say for certain is that coal has had a struggling month.

we have a twitter question today. it is important as we move to the thursday debate, why is donald trump dominating the republican field? stunned by with a response -- by the response we need your adult answer. there is absolutely no charge for that transaction. you're fired! ♪

tom: let's get right to our top headlines. olivia: neiman marcus firing -- filing an initial public offering. neiman marcus plans to use the ipo proceeds to repay its debt. and shares of standard charter are on the rise. the ceo is lower -- vowing that

the bank may not need to raise capital after profits dropped. the bank cut its dividend in half. the revenue fell short of analyst estimates. and kellogg's vows to stop using artificial colors and flavors in its serials within three years. the company is following an interesting -- industry trend. sales are slumping as more consumers shy away from processed food. tom: now an important conversation. david goldman and bank of america was adamant that the coming derivative implosion would be felt more in the quality stuff. not in the garbage that everyone was focused on. david goldman was resoundingly correct as he lost billions of dollars and now he darkens the

door of surveillance this morning and it joins us. he is the managing director and head of americas. these are the most interesting times. what does the commodity implosion signal to you and why is it different than the two to three others we have seen? >> we have a global economic growth. the fed model is completely broken. we found that that economic growth is nearly a percentage point lower and we are now 10% off trend in terms of total size of the u.s. economy. add to that economic weakness in europe and add to that the chinese erroneous decision to let their currency appreciate with the dollar. tom: i want to go to china in the next session. right now what does the commodity implosion signal to our listeners and viewers? >> it tells us that the fed

signaling a future tightening is a dangerous mistake. the thing we should all be worried about is that brazil has $900 billion in external debt. that is the single biggest debt problem in the world economy. tom: that is a lot of greeces. brendan: you don't see a troubled economy you see a debt problem. >> i see a troubled economy with a debt mushroom on top of it. we're strength to talk about an emerging market debt problem that could have systemic implications. brendan: when warren buffett says when the tide goes out you see who is wearing shorts. who is naked? >> brazil is the one furthest out in the water with the least swimwear. brendan: which is true in brazil anyway. why did i say that? olivia: so back to tom's question, you responded it was dollar strength driving the

commodity route. >> supply is always relative to growth. we have extremely low growth. i don't think that quantitative easing or fed policy is responsible for the low growth. we've invested in the hostile environments and we have all the problems we have been talking about that in that situation the worst thing for the fed to do is tighten into weakening growth. the fed should announce that the model is broken and that it will do nothing until it figures out what went wrong. tom: do you agree with alan at the numbers will go longer or even further into next year echo -- year? >> what the fed should do is absolutely nothing. tom: what do stanley fischer need to tell janet yellen? >> he should tell her that the problem is not monetary policy.

the economy is weak and in that situation the best thing for the fed to do is nothing at all. brendan: as with the case of mario draghi as well, you're obviously right that monetary policy cannot do everything, but in a lot of countries there is no other game in town. >> that's right. but the fed should not be tightening into a weakness caused by fiscal and regulatory policy. tom: when you look at the derivative blowup is that the equivalent? in other parts of the world is there that leverage sense that you observe now? absolutely not. we had a unique event which is that the fed in its wisdom allowed the banks to leverage up aaa's 70 times. when the aaa's lust toy percent or 30% of their value the banks

lost -- tom: so he will keep his job for the next three years? >> i don't of the compensation and employment policy. tom: damn. brendan: i want to steal one of tom's favorite questions. yesterday lockhart made the announcement and the entire world spat their coffee and began trading. is she the central banker to the world? >> she is the central banker to the world. we should underestimate the deflationary effect of 60% appreciation of r&b in terms of real effect of exchange rates. tom: did you see our script? that is right where we are going. next, we will look with david goldman in china. his note is flat out skating over what beijing must do. we will not keep you in suspense. they need a depreciation of the roman be.

stay with us with david goldman and daniel suzuki.

tom: good morning everyone. let's get to our top headlines. olivia sterns with us this morning. olivia girl the parent company of cnn a and hpo saying that the sales rose 8%.

the earnings-per-share topped estimates by 22% as revenue reached 7.3 billion dollars. president obama will try to dispel doubts about the iranian nuclear agreement today. the president met yesterday with jewish leaders who fear the deal will not stop iran from building nuclear weapons. you can see the speech live right here on bloomberg tv at 11:20 a.m. disney shares are down about 7% in premarket trading. the company posted numbers yesterday that fell short of estimates. but the ceo is still up beat partly because there is another star wars flick in the pipeline. >> at this point making no estimates whatsoever in terms of what we believe the film will do. we know have probably the most evil film franchise that ever existed and the success of this film will reverberate throughout the company.

we were to be careful that the market does not get too far ahead of us. olivia: disney cut cable tv forecasts mostly because espn is living -- losing subscribers. stocks increase falling for a third straight day. not nearly as bad as monday when the market was hit. the worst selloff in 30 years the cause it was the first-day of trading after the five-week shutdown. the field of republican presidential candidates is already being split between the leaders andy a -- leaders and the also-ran. the network says that donald trump will be front and center. he warmed up for the debate to a call with bloomberg's all due respect. mr. trump: i'm not sure if he likes it but honestly, mark, if

he is happy i am happy. he was a terrific guy. his policy and his demeanor -- there was something very solid about him. his demeanor was very good. olivia: it will be nearly six months before republican voters actually begin to pick their nominee. tom: you saw this interview and listened to the interview live and you were quite taken. brendan: it didn't feel like a normal politician interview. that is his appeal. we can talk about the things he has said earlier and that doesn't negate them but it was fascinating within a campaign to hear someone speak straightforward about campaign-finance reform. to hear someone say something that was not focus group tested. he said basically something that activists have been saying for decades. the thing that could help us with campaign-finance is transparency. don't limit it just let everybody know who is paying what to whom. i was stunned to find myself

quietly nodding in agreement with donald trump. olivia: we have all been struck at a fact that donald trump has been maintaining a double-digit lead in the republican presidential field. i was wondering what he would do to the right lane of the party with rick santorum and ted cruz but josh green told me yesterday that prompt -- trump's popularity goes across the spectrum. tom: david goldman is with us. dan suzuki as well. he could decidedly not speak on bank of america but it screams third party. what is your perspective of the world of perot? >> third-party would kill the republicans and since i am republican i am not for it. but more americans have left 2008 since -- then. illegal immigration is a problem

but not our problem. to scapegoat immigration lowers the political dialogue and it is dangerous to trump has set a bad thing. brendan: illegal immigration for mexico -- even if you see it as a problem it is not nearly at the scope of what it was 10 years ago. it's like were fighting about a problem that doesn't really exist. >> we are looking for someone to blame about our problems and that is it dangerous policy. tom: and i would predict there will be a huge audience. i think it is captured the imagination of any and all. our twitter question links to mr. trump this morning. why is he dominating the republican field. we need adult answers. don't give me the wiseguy answers the starkey stuff. i want to know why is donald trump dominating the republican field. the me look at the data check. dollar dollar is where he have

to go. euro-dollar at 1.0873 showing dollar strength to we mentioned earlier this morning brazil is particularly weak this morning. we will continue that discussion. brenda bouygues's bloomberg surveillance i am brendan greeley with tom keene and olivia sterns. tom: the classic david goldman. china in the throes of a deflationary spiral and they must depreciate the yuan. they have not. it is the one surprise that will changes for 2016. beijing, all of asia and all of america will do a collective blank. what be the catalyst to get beijing to act? >> the catalyst is their industrial sector is hurting because their exports are doing terribly. there is a nearly perfect relationship between chinese currency appreciation and

declining export growth. your strong services, strong consumption but very weak manufacturing and that is something they cannot live with forever and eventually reality will catch up and they will have to do what various other people have told him for a long time which is they will d-link from the dollar paid. olivia: then you and know it's that these points are holding up despite this. >> this is good news that china is strong enough that despite an erroneous monetary policy the economy is still struggling -- chugging along. this is one of the reasons i'm still a china bowl. i think an eight 2-3 year horizon chinese three years are good and chinese h shares are the cheapest way to buy growth in the world. brendan: this news yesterday from the imf. the staff report gingerly

recommending that the imf extend its decision area on whether or not to include the yuan. does it belong in the basket? >> i think it does but i think china has put too much emphasis as a matter of prestige. chinese government tends to put a great deal of weight on such symbolism and i think they are wrong to. it is not really important to them. market reforms and monetary policy that suits their domestic requirements should be the priority. tom: dan suzuki how should u.s. investors plate china. you do direct investment or do you play through? olivia: or h shares which david said is the easiest way to buy growth and the world. >> i think you need to take a longer-term suspect -- perspective as he do it in the near term you'll probably see

more negative news in that low pressure those shares but out of the long-term you have really high-quality companies doing business and these companies have been beat up so much that the long-term potential is really good. olivia: why is dan wrong? david: i think that growth is weaker than we think that it is inflated by a lot of share buybacks and that u.s. companies are systematically failing to account for depreciation. you compare it to american company depreciation, capital investment debt is much lower than it looks so i think there is lot of bubbly manipulation and the underlying valuation and terms of the growth you are buying is not comparable to what you can get elsewhere. >> what is china need to do for equity markets? what kind of structural reforms

is a need to put in place to assuage dan's concerns? david: the chinese regulators did a terrible job of controlling leverage. the capital leverage was to get take and is still being worked off. the regulators have to come up to professional speed. chinese regulators are long serving public servants. they are not market people with the kind of experience that we haven't even our regulators occasionally make disastrous mistakes so they need to bring in market people who understand how she can or he is done and know how to present -- prevented. brendan: it is also they need someone like you? >> i am not going to be advising the chinese regulators but they have to put this in the hands of people with market knowledge and take power out of the old line public servants who do not have that kind of experience in outlook.

tom: coming up later this morning on bluebird television a conversation with gregory brown of motorola solutions.

tom: good morning everyone. bloomberg "surveillance."

olivia sterns with us. vonnie quinn rumored to return and august. brendan: we watched apple fall through the 200 day moving average pre-tom keene says is for at -- amateurs. i say you may not be interested in that measure but that is interested in you. olivia: that is not interested in tom keene. we've seen apple down almost 11% over the last two weeks through the big question is why it? we will be sitting down not with johnny ives but dan ives from sbr to parse through this. it was a month and a half ago where carl icon said this company is extraordinary. whether you want an iphone or not the apple ecosystem everyone was to be a part of it. brendan: here is a question from

yesterday are we looking at a fundamentals question? olivia: if you look at this company and their growth and how much money they are making hand over fist. take apple versus these social media applications. they are growing and growing but on their balance sheet they are not necessarily making dough. apple makes money while you are sleeping. tom: a price target reduction on apple this morning. let me look at the chart. help me out with this. >> i think bank of america is using palm pilots. this is a really ugly short chart. i was stunned when i saw this. i have no idea. >> it looks like a bracelet they are selling. these are called kisses and i'm not kidding they are ugly. >> it has been on an incredible tear but it is just letting a little steam out. at any point, tim cook if he

really cared all he would have to do would hand of the wood -- would be to had a little bit of cash back. tom: this is an idea of china and commodities filtering into u.s. equities. >> one of the things we have been talking about is how all of these great companies have great fundamentals are getting punished severely. so if you have been timing at london in six months you don't with the time these things. olivia: we are remiss if we do not mention the bank of america note out this morning downgrading apple because they say significant slowdown in revenue. brendan: the answer i want to hear from later is it is not just about cash flow. you think apple makes money while we sleep but the valuation has always been a little bit about the promise of the future and has that faded? olivia: they continue to deliver. what are they not delivering?

brendan: to watch the people want to buy. >> and a driverless car but there was a story saying that they have now outpaced apple. brendan: that might be the most important part of this conversation. steph ruled he talked about apple and market makers. >> tom keene things that is elegant you and i think is elegant? olivia sterns doing dance cardio.

tom: good morning everyone bloomberg surveillance. let's get to our top headlines. olivia: a new sign of openness to roman catholics who have divorced and remarried. pope francis says the church still has a place for them. the pontiff says they have not been excommunicated and should not be treated as such. his remarks point to possible change in the church's stance on remarriage divorced people. and ad sales in the olympic games next year are expected to top $1 million. nbc universal has the broadcast rights to the games.

procter & gamble and coca-cola are already lined up and the national hockey league is getting a helping hand from the summer games it has signed a deal with the interactive media branch. they'll run their streaming services and tom keene and brendan greeley are very excited about this. tom: it started out as an afterthought of mlb owners. brendan: they are teaching everyone else. it is a little bit like amazon. amazon suddenly realize what they had was servers and they can tell something else. they are teaching everyone how to do this. we pointed out that mlb helped the world cup stream as well to -- as well. tom: in what they say the careful out there -- forget about that. be complacent out there. daniel suzuki, a senior u.s. investors strategist at bank of america merrill lynch and he writes a lot on a fearless this

masking what is really going on underneath. you know know it is 13.000 with the market down 600 points. >> it doesn't make sense and what people are not really talking about is the volatility. the volatility of the fix has been quite high. tom: at what is that signal? >> it be people are skittish. when you see a move in the market people get worried and they at fast. every measure ascension -- sentiment that we like that is extremely skittish. tom: do sell into the sentiment or do you apply capital by share in? >> it depends on your time horizon. i am notoriously bad at predicting the market over three months. but if you have that short-term view you want to be a little bit cautious. but if we have learned anything over the last five years is that trying to position for pullbacks can lead to underperformance in a bull market and i think people

are not giving enough credit to how fast and violet the moves up can be. last year you had the october market pullback and the markets shut up over the next month or so and i think that is the type of thing to be worried about. brendan: do you have a floor under which you see too much complacency that still waters run deep is it 11 or nine? >> i don't think the fix is a great gauge of complacency which you can see now. cash levels at the buy side firms are very high. the market is extremely high. sell side recommended positioning is very low. all of those things tell you that no one is position for a strong bull market here. that is a lack of complacency. olivia: your noses to the opposite of what you have done in the past 30 years -- your note says do the opposite of

what you have done in the past 30 years. what is that mean? >> as you see a shift in this curve you want to do the opposite. over the last 30 years they have all been beneficiaries of low credit costs. small cap stocks and emerging markets. i think you want to do the opposite. we like equity over bond liquidity over leverage we like large caps over small caps. tom: you like big banks? dan: we tend to like big banks over smaller banks if you look at their balance sheets they are very strong. there is lot of regulatory risk and their capital constrained but if you look at where we are today there is a lot of room for them to do well. brendan: du think in 2025 will be able to look back historically and see a long trough with 2009 at the bottom? >> i think 2009 is the bottom

and i think right now is that shifting point. we really haven't seen the turning in interest rates and i think that will be the key. over the next 30 years you are going to see a shift. tom: you are trend based and you write with mathematical rigor. are we still in a bull market with these modest corrections that we see along the way it -- along the way? dan: i think we are still in this bull market. what you will see is a change in leadership in these markets around the time that you start to see the shift in monetary policy so i think you what to do the opposite. not only for the next 30 years but also in the medium term get away from these crowded trades and look for that trade in leadership which is the opposite of what is worked over the last five years. olivia: we are saying it is a shallow rally and only a few

companies pulling up the index and only 20% of the s&p 500 is in correction territory right now. >> i think you will see it increase but that will happen when you see signs that growth is picking up again. as i mentioned earlier we are in the midst of this global soft patch. in the near term you can see further downside risk and further momentum and the ones that have carried the market but as you look out over the next six months i think you will definite signs that growth is picking up and i think once you see that you could see a strong rally. tom: let me be quick because i have to run to radio. i looking at the agenda of the dollar today. my agenda is that this morning and maybe even not next week but brendan i would go back to your focus on brazil the number one litmus paper right now. the brazilian real decline has that character of a big move. brendan: i was shocked to see

david goldman say he is not looking at it as a shocked economy but as a possible that problem. tom: i have to go to radio. olivia: if you cannot wait to hear from tom stay tuned fort bloomberg radio. it is time for my agenda. i looking at 21st century fox. it is the first time that james murdoch is going to lead the call as ceo. we want to hear how much they're spending on content and what are they doing with this cash pile they are sitting on. are they interested in doing any smaller digital acquisitions. does he want to take another run at time warner and the fx hit we have been talking about all morning. brendan: you were talking about james murdoch earlier and i wonder how much do you think the game of thrones will be. looking at cash fundamentals? olivia: think it is interesting

what we're hearing earlier is that of all the big media companies here is a guy who will still have his job in 10 years. he is not in this short-term as an quarterly to quarterly. it's what happens at the business model with time warner with a beat out this morning. brendan: my agenda is iran. the president's speech. the president is making a very political speech today about foreign policy. he is going to remind people about the iraq war and my take on that is what he wants to do and accomplish is nothing more sophisticated than to say look at all those guys, those guys were wrong wants. olivia: a lot of that critics of the deal today are the same people who rushed to support the invasion of iraq in 2003. time to our twitter question we ask why is donald trump, knitting the republican field? -- donald trump dominating the

republican field? >> the other republican candidates are out of touch with mainstream america. brendan: when i read that the political scientists are having an alan greenspan moment right now. everybody has to rethink what we have been thinking. olivia: we say it is the phenomena of him being a celebrity but the poll seems to suggest a resiliency. second answer. trump cannot be bought. and trump proves celebrity trumps substance. brendan: two which ago i would have agreed with that tweet. i am curious to see what he will say in the debate. i know the rest of america is as well. listening to that interview with bloomberg television yesterday he said things in an open way that you do not always here and politics. it is shocking.

bloomberg "surveillance" continues on radio. thank you dan suzuki from merrill lynch for allowing us to not make you say anything you didn't want to about donald trump. ♪

>> live from bloomberg headquarters in new york, this is "market makers." stephanie: good morning. erik: i am erik schatzker.

if you take a look at the closest the apple shares are moving lower this morning. is there really something wrong with this company? stephanie: apple, they can do no wrong. also this morning, snack maker amplify starting trading later this morning. you and here yet all morning long. the debates tomorrow. donald trump toss about his views on big business. can i just point out one thing? i want to -- i want you to know where i was. i was trapped on the parking lot known as the turnpike. usually, i can spend as much time in the garden state as possible. being trapped on the turnpike