the u.s. tax code and courage companies to move overseas. how much more does your ceo make then you? scarlet: tesla earnings out today. the one thing earnings will be looking for has nothing to do with the profit or loss line. scarlet: good afternoon, everyone. alix: let's get a look at the markets are now. the s&p up by nine points by rising above all its moving averages. versus theigher 10-day average. a little bit of momentum on the day. scarlet: perhaps because apple

is making its long-awaited bounceback. it has fallen 10 out of 11 days, even with a downgrade from bank of america and merrill lynch. it is getting a bit of a bounceback. alix: consumer discretionary still dragging. it is still consumer discretionary leading the way. media companies overall getting her today. the changes of an interest rate increase best next month actually had 52%, the bar all the way to the right. that is a big jump from two days earlier when it was down to 38 percent. we had that killer service sector report yesterday. scarlet: and a look at the services index, it's a light blue line. 60, highest above

in about a decade. that is a contrast with the dark line, which is manufacturing, a smaller part of the u.s. economy. the service sector can prevail over the stagnation in u.s. manufacturing. what makes ice and services more encouraging is that it is driven by new orders and implement. alix: employment was huge. you can really blame the manufacturing on the stronger dollar. all of this is having an effect on the yield market. you take a look at the two-year in the 10-year. the 10-year levels hit the highest in two weeks. fidelity came out saying they expect the yield curve to flatten so longer rates are pretty stable, short-term rates rising modestly. you see the two-year pretty much flat. scarlet: let's take a look at stories making the news at this hour. the president taking his case

for the iran nuclear deal to the amerco people today. the -- to the american people today. today, the president made a detailed sales pitch in a speech at american university in washington. president obama: it does not resolve all problems. it does not resolve all our problems with iran. it does not ensure a warming between our two countries. but it achieves one of our most critical security objectives. scarlet: two more democrats have announced their support for the iran new grill do -- nuclear deal. alix: the prime minister of malaysia has confirmed the airplane wing that washed up on the indian ocean island of reunion did come from malaysia airlines flight 370. this news comes after french and malaysian experts began examining the wing in hopes of getting a first tangible clue of

the fate of the plane. the boeing 777 disappeared after the hearing for profits after fearing far off its northerly course. 10% et: serpent has a stake. shares spiked on the news and back to down a little bit. they have held around $42 a share. point has third requested a safer the next ceo i in addition to changes in corporate governance. securities and exchange commission has passed a rule, 3-2, to force companies to reveal pay gap between the ceo and a typical worker. companies will get some flexibility in how they find the median. republicans on the panel cited the influence of labor unions for voting against it.

scarlet: the dollar's strength is behind the latest widening of america's trade gap. they commerce department reporting the strong dollar boosted imports and hurt exports in june. the deficit grew by more than 7%, almost $44 billion. that is the biggest jump in three months. alix: and those are your top stories. bid yesterdaylion was made with tools in mind. -- oncea'ss 'scks all to -- wants baxalta portfolio. experiencerst hand in dealing with activism. >> when one looks of the tax code, it is clear that american-owned domiciled companies are at a severe this

advantage. having a fair and competitive playing field is what it is all about. that has really been the strength of this country, one of the reasons for the dynamism of our economy over a long period of time. cost jobs, you say how many jobs did it cost allergan and how many jobs are you talking about in this country? bob: when one looks at the activity,ng pace of it is clear you can't say the only motivator is tax. but clearly, aviary big source of arbitrage is tax difference -- a very big source of arbitrage is tax difference. us, valent first approached the first bid from valiant was about $10 billion, going from

$37 billion to $47 billion in the first bid. when i looked at the tax savings proposed by valiant, it was $500 million. you put a price-earnings multiple on that fairly modestly, you can come up with $9 billion. therefore, in conclusion, most of the first bid premium was paid by the u.s. government or would have been, had the deal come to fruition. answering your question on job loss, i am no longer with the company because, appropriately, i stepped down when the bid from then activist which is now called allergan, they took our name, i stepped off after 17 years as ceo. as far as i can estimate, it is probably about 1500 jobs worldwide. most of them here in california. tale timethis is the and time again when you look at all these deals. of course, acquisition premiums have to be paid for. therefore, synergies need to be found.

therefore, legitimately, there is some overlaps. but you have to pay for the deal. mark: you spoke about all of this on capitol hill before a senate committee last month. you said that pershing square lead -- you described it as a wolfpack -- that eventually into allergan foreign ownership. why is he the bad guy here? ott: the deal constructed by allegan and pershing square was the first of its kind. this was a team of a strategic company, a pharmaceutical company with a hedge fund. what was curious was the way it came together, which led to pershing square, on the vary for stay of announcement, making a profit of a tidy $950 million. that was really the first point.

i still sincerely hope that the sec will look into all the details of what occurred before that bid was cast. and secondly, you raised to the of then -- excuse me -- level playing field for activist. that is really the issue they were able to effectively sneak up on us. they had 9.7% of the company before we knew anything about it. and of course, when you make such a move, you clearly want to get the maximum momentum that you can. so other like-minded firms, event-driven funds should also join the crowd. and then off you go. and a lot of pressure is put on the company's board and the company's management. i totally understand it. i don't have it issue with that. things are done the appropriate way, following all the rules and relations aired scarlet: he was speaking with --

and regulations. scarlet: he was speaking with betty liu. alix: the sec has just approved a new rule ♪

scarlet: welcome back to the bloomberg market day. bloodbath ins a media stocks -- a julie hyman is going to take a look at that. this is a vary different picture than we are used to seeing with disney. julie: there was a lot of

optimism going into the earnings report. now it is all dsahed. -- dashed. it seems as though there were concerns about slowing growth at espn, concerns about abc. i should mention the parts revenue came in lower than estimated. and currency is taking a toll as it has on so many companies. so i know, the stock is about 9% down. on an intraday basis, this is the worst performance we have seen in about four years for a single day for disney. take a look at the longer-term chart. the stock has done enormously well, about 365%. so it is unusual the decline we are seeing today. we have only seen a couple of days like this of close to 10% declines are more under his tenure. but this is one of the worst days that he has overseen as ceo. we are definitely seeing this

spread among the other media companies. even time warner, which came out this mining and beat analyst estimates. we are seeing the stock tray lower sharply by 9%. there is some concern, because it did not raise its earnings forecast, the second half of the year may be weaker. discovery communications also coming out. revenue little changed from last year. that is a deceleration from 1% growth in the first quarter. and we still have yet to hear from a large number of media companies. all of them are down going into those reports. all of this means, if you look which s&p media index, includes these companies as well as advertising and cable companies, is about -- it is down about 6.5%. chart want to look at a that comes to us from bloomberg and tell us from bloomberg intolerance that i thought was a really telling one.

i think scarlet may have looked at this one earlier. all of these down here you today are the major entertainment companies. index iludes from the was just looking at the cable and advertising firms. this is netflix. that is the new paradigm. or at least the perceived new paradigm that we are seeing people cut the cord. analysts youthe are speaking to earlier, the perception of cord cutting at this point might be higher than the actual cord cutting. scarlet: yeah, we are only getting the ball rolling just now. but the fear perhaps has taken over investors. thank you so much for the latest on the media's cox -- media stocks. we have breaking news. there is police activity outside of a movie theater in antioch, tennessee. the fireseems like

department did confirm shots were being fired at about 1:55 p.m. police responded to some shots fired. the call came in at about 1:15 this afternoon. says itooking -- it looks like the metro police has confirmed that the shooter is dead. scarlet: we don't have any other details beyond that. again, shots fired at a movie theater southeast of nashville, tennessee. they police are saying that the suspect is that in the shooting. when we get more details, we will bring them to you. this is in antioch, tennessee. alix: top stories crossing the terminal at this hour. scarlet: thousands of firefighters battling california firefighters are being helped by cooler temperatures and higher humidity. the fires are still less than a quarter contained. crews made some progress with help from light rain. the blaze has charred 106 square

miles. it is not excited to be completely contain until at least monday. alix: new sign of openness around the catholics who divorced and remarried. pope francis says the church still has a place for them. his remarks point to a possible change in the church's stand on remarried/divorce people. they are banned from receiving communion. scarlet: while donald trump is surging in the polls, he is also surfing eight sunol me on the internet because the term has become the most searched presidential candidate in every state except vermont where bernie sanders is the democratic presidential nomination. alix: the securities and just handedmission a new weapon to those looking at income inequality.

scarlet: it is a rule required by dodd-frank, five years in the making. what will this final rule require? david: this was in the original dodd-frank. ceos would have to provide in their proxy statements a ratio between their salaries and what a median estimate of a worker in that company is making. over the last two or three years, commissioners and their staffs have been working on what this rule is going to spell out. it is surprisingly tricky. scarlet: i remember elementary school math class and a median was straightforward. alix: but can't they leave some of the numbers out? david: they will be able to take a 5% of their workforce. you have a big multinational company, it will have part-time workers, seasonal workers, workers working overseas it in different offices and compliance will be different. now sounds like, with this

rule, they will be able to divine in their own way to find a median. rule?t: so why have this it is certainly inflammatory and it shows the income inequality between the highest office in the front line worker. but how useful is it really when everyone knows that there is income inequality? david: a lot of people say this is vary political. but when you look at how highly , if a lot of these ceos are you look at the last 30 years -- and a lot of it is stock options. if you go back to the 1980's, the composition of these pay packages started to change. it is not a vary valuable metric. i was talking to -- a very etric.le mitch the financial services roundtable say, while they appreciate meaningful disclosure, this instance will not be materially helpful.

we know that ceos are paid a lot of money in a variety of different ways. but what is this ratio really telling us? alix: what if the company doesn't do it? david: some companies are exempted. but it will have to be part of the proxy statement starting in 27. i was talking to a sick -- in 2017. i was talking to a securities , knowing this will be so difficult to do, they want to get ahead of it. some energy companies do it. when you look at those ratios, they look pretty good. again, i think you will see companies having some latitude, some crack the median their own way. scarlet: think is so much. alix: let's go ahead on the bloomberg market day. 10 of the republican candidates

are said to face off tomorrow the first prime candidate. scarlet: we will tell you will has the most to gain and who has the most to lose. ♪

scarlet: we know who is in and out of the foxnews debate tomorrow. see donaldct to trump, jeb bush, scott walker, mike huckabee, arco rubio. alix: ben carson, ted cruz and rand paul. and barely squeezing in our chris christie and john kasich. which means that we can expect a lively primetime debate tomorrow. margaret, tomorrow night's debate is generating so much attention. i'm even excited to watch it. who has the most to gain and lose. ? margaret: donald trump i'll accounts as the most to lose only because he has come so far so fast, defying semi-people's

expectations. i think republicans who have been in this a while would like to take him by -- taken down or set him back. trump has the most potentially to lose. as who most again, that is a good question. john kasich and chris christie could find more secure footing for themselves. and jeb bush and scott walker, who are vying for the number two spot right behind donald trump, each has potentially an opportunity to break past the other one if the format allows him to do so. scarlet: do we know much about the format? are people going to be able to interrupt each other constantly? will it be a free-for-all? margaret: it is the give-and-take with debates. the organizations. that set them up one it to be organized but they wanted to be lightly also. right now, the ground rules is that it is a two-hour debate. there are moderators.

get aandidate will question and have a minute to answer each question. then there is like a 30-second rebuttal period. probably that is when we will see sort of the daggers come out with donald trop if they go in that direction. but there is another path. to minimize the trump aspect of the debate and try to refocus it on for policy or whatever issue the candidates want to. what does donald trump me to do in the debate tomorrow? margaret: if he is serious about staying in this debate for the long-term, he needs to tab down -- tampthe criticism down some of the criticism about immigration about and hillary clinton and president obama for that matter. there is another path for him as

well, which is to continue the red meat populist rhetoric that a minorityexcited but a sizable minority inside the republican base. good stuff. think is so much. scarlet: i will be home because i will be playing hockey at that time but i am going to tape it and watch it. it should be varying pertaining --very entertaining. pain coming up, is apple's over or is it about to get worse? apple has had a pretty bad two weeks. ♪

♪ ♪ ♪ get excited for the 1989 world tour

with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. alix: we want to get straight to a look at the top headlines. -- police intelligence see

the police and tennessee are saying that a suspect is dead after reports of shots fired in a nashville area theater. it happened in antioch, southeast suburb of nashville. suspect wasay the armed with a hatchet and a gun before being shot by an officer. -- metroional police nashville please said one person hatchet one.ered a -- hatchet wound. say john hauser killed two people and wounded nine others in louisiana before shooting himself. betanies in the u.s. have -- have added 187,000 workers to their july books. the job market holds the key to whether interest rates are raised to this fall. that is according to the view of one top investor.

rifkin boiled down how the federal reserve will make its decision. mr. rifkin: they want to raise rates. a combination of what happens on the wage front and a good seasonally adjusted number, i think that keeps him closer to raising things in september. alix: we get the july jobs morning. friday our survey is looking for a rise of 200 when he 5000 workers with a jobless rate holding at 5.3%. for netflixwho work will not have to worry about rushing back to work. the company is offering up to a year of paid time off for new mothers and others. the policy -- and fathers. we are now learning that microsoft is enhancing its paternal leave 12 weeks at 100% pay. a new research on gender pay from the federal reserve bank of new york, in a study found women

who recently graduated from as men --rned as much this group of women earned $.97 for each dollar earned by men. 2016 summernd the olympics are coming to rio de janeiro. to network expects sales exceed a billion dollars with commitments from sponsors like nike, procter & gamble, kellogg and coca-cola. on pace to top the 2012 london games. it is one hour ahead of the eastern u.s.. all those events live. that is a look at some of the top stories of this hour. coming up, netflix is offering new parents unlimited paid leave in the u.s. will it catch on with other companies. tesla earnings out after the

bell. will talkt hour, we to chief u.s. equity strategies for citigroup and get his take on what is ahead for the markets. he is not that doomed. no doom and gloom for him. all that and more coming up. apple's comeback story continues. shares were down to the lowest levels since january be forced that -- before snapping back. erik schatzker and stephanie ruhle sat down him why eyes and asked he is so confident that apple stock will keep going higher as he predicts. guest: it is a white knuckle period with the apple number that was vary strong but did not beat expectations in terms of the june quarter. i think this is a three-month battleground period.

to of iphone user upgrades 6. you have the 6 s coming in the fall. i do believe this is what i view as a massive opportunity to earn apple. you are going to see a lot of peers yelling fire in a crowded theater. companymes x cash for a [indiscernible] growth in the next year and a half by 15% to 20%. -- erik:let: scarlet: how much do you follow this stuff? guest: it doesn't really matter. except for sentiment. they borrow so cheaply. what i will say about apple, which i think really resonated with me -- by the way, i saw bob iger last week and i love his articulate a plan for the future.

the stock is down 10 but this guy is brilliant. but it relates a little bit to apple with the ceo is as innovative as the former ceo. and can apple manage that massive innovation from the plastic it into the future? i have really -- from the past into the future? really a lot of respect for brilliant ceos. guest: the apple watch has come out softer than expected, which has been a headwind. this do think that apple, period, is going to mirror what apple investors went through back in 2013? the start started near 80. bottomed midyear where we are now, below 60, and then was back up to 80 that he and of the year. on a split-adjusted basis, it is

at $114. the companyan see from excel are rated buybacks, using $200 billion more -- we have seen in the past, they have been able to take advantage. cab driver was talking negative about apple on the way here. just like you said, it becomes more -- it is a consumer to retail name. this is the golden standard for technology. this is more of a correction and they have proven september going into success. i find it amber seeing what people compared to 2.0. stephanie: let me ask you a question. guess: einhorn proposed in his letter to apple that they recap it out and that he can get

better or way for their shareholders if they change the capital. guess: it was -- guest: it was just a starter. now you face serious questions. as much as china has grown, it now does really be do they do an accelerated by back? erik: why are tech companies so afraid of capital efficiency? guest: a lot of caches trapped off shores -- cash is trapped off shores and haven't pay taxes. or they cantriate, borrow against it to pay dividends, they can make a more efficient capital structure, which i know our government has to fix. i know orrin hatch is working on that, for example. i am concerned about corporate tax rates and things like that. but apple is probably in one of those quagmires, right? guest: right now, they are going through a period try to figure out what the next step is after that $200 billion.

i do believe the next two weeks, and excel are rated by back could kick in. you are going to see more throw in the towel, losing investors. this is the apple -- this is the end of the apple growth story. this is the third inning. stephanie: how about the fact that apple makes money hand over fist. we have these incredible growth stories about companies that make absolutely no dough. that, cab driver talking negatively about apple. coming up, microsoft takes a cue from x, -- cue from netflix, expanding its paternity leave policy.

gained today mostly thanks to some big tech movers. julie: closed unchanged on the dow. it is not negative. the major averages have been fluctuating after a strong open. pull down mostly by disney which is taking a big chunk out of the dow. the s&p and nasdaq remain higher as we head into the close. on the one hand, big tech is performing quite well today.

facebook and trimming the most to what we are seeing -- facebook contributing the most to what we are seeing. facebook is now going to be allowing celebrities to conduct live q and live stream over their feed. apple, an amazing turnaround after five straight sessions of the clients, even as bank of america and merrill lynch downgraded the stock to neutral and questioned its ability to grow revenues. revenue will be significantly hit by declining demand for the iphone. but apple is rebounding today. his is what is bouying the stock today. comcast beanpole down as did time warner even after earnings beat estimates. beingis an -- comcast pulled down as did time warner

even after earnings beat estimates. pushing for some changes, including being able to a point a couple of people to the board. baxter came out saying it wasn't engaging in a conversation with loeb. the stockes affecting market is moves notable in oil. rebounding.ad been then we saw an abrupt reversal downward, even after we got a drawdown in crude inventories of 4.4 million barrels. alix helped me to understand what is going on. it's not just about the crude inventories. it's about the refined products inventories. food had been trending slowly down. on a seasonally adjusted basis, still way above where they typically are this time of year. gasoline inventories had a bit

of an increase last week. you can see the trend has been higher. so a couple of things going on. the fact that gasoline demand is not high enough to draw down this gasoline inventory is a negative sign. as you did out to me, this is affecting refining margins for the refining companies that make these various products. does that mean they will stop refining as much as not need as much crude oil and then you will see the inventories go up again? alix: that is really the longer-term problem. if we do wind up seeing margins go down. we have seen inventories frequently build. we see these inventories build overseas, like in asia. it is a worldwide phenomenon we are experiencing that is a risk to the industry. alix: it is interesting -- julie: it is interesting when these stories come out. alix: oil production was up to 52,000 barrels last week as

well. thank you so much, julie hyman. now to a look at our top stories making headlines. wendy's posting second-quarter earnings that fell short of estimates. adjusted earnings per share was eight cents. wendy's also reaffirmed its full-year earnings forecast to $.31 to $.33. shares up 14% since the start of the year. 20% in -- 27% in the last months. kellogg's is also going all-natural. the company will stop using artificial colors and flavors in its cereals and bars within three years. oh, my god, what is his going to taste like -- what is it going to taste like? sales are slumping as consumers are shying away from processed foods. neiman marcus has filed for initial public offering. it filed with a $100 million play folder.

no word yet on an underwriter. niemann plans to use the ipo proceeds to repay debt. of $8mpany posted revenue billion last year. is offering employees a whole year of paternal leave for new parents. and now following suit is microsoft, expanding its own parental leave policy. emily chang joins us now from san francisco with more. how do these policies stack up against the other big tech companies? emily: the most generous parental leave policy in the country. 52 weeks for moms and dads. it starts immediately. you don't have to take disability. which means you can still stay connected to work if you want to. you can break it up, take a little bit now and take more later. microsoft also updating its policy, not nearly as generous,

giving moms and dads 12 weeks of paid leave. moms get up to 20 weeks of paid leave. but still a huge step in the right direction. this has been a major topic of discussion keeping women in the technology industry. and mostlytly white male industry and there is concern about women, especially moms, leaving early. at facebook, you get four months for moms and dads paid leave. you also get $4000 in baby cash. google, you get 12 weeks paid for moms and dads. moms get up to 18 weeks paid. so there is a bit of a difference at some companies in terms of what women and men get. but you are seeing a number of these companies taking big steps toward more equity in these parental leave policies, which is a huge thing when you talk about recruiting and competition for talent. thoughtat was my first when i studies headlines. yes, they want to keep more women but also does this demonstrate how come it in the

tech industry is when it comes to talent? mom, and i'm, as a sure for you as a new mom, this is something that would really move the needle if i could take a year off every time i had a child, to spend with that child. is somethingthis that employees are increasingly thinking about and could move the needle for someone deciding between one company and another. i recently sat down with cheryl brandt -- sheryl sandberg and richard branson. one of the things they disagreed on, sheryl sandberg said, look, we know we are facebook here and can afford it.ny and branson disagreed. he said he thinks company's candy more. sandberg: not everybody has the face ability -- the flexibility of facebook to mr. branson: i'm not sure. if you are flying for an

airline, you have to check in at a certain time and check out at a certain time or the plane doesn't fly. but for the head office type of jobs around the world, they can offer complete flex ability. is starting to put his money where his mouth is. weeks of parental leave paid shared between moms and dads. virgin says they are tried to do that at all virgin companies around the world. -- are trying to do that at all virgin companies around the world. her big thing is, if you get more leave to moms, that reinforces the idea that women are the primary caregiver and dads shouldn't be taking as much time off as moms. the most of what an thing is that men and women get equal time off. it can be tricky because

sometimes, when employees get unlimited leave, they take less leave. so it will be adjusting to see how this netflix policy plays out. alix: they are watching each other to see what they do and then follow suit. thank you so much. "bloomberg west" today. tesla earnings out after the bell today. the one thing investors will be looking for has nothing to do with the company profits. ♪

alix: tesla motors reporting today after the close. stock is down marginally as wall street expects it to reported quarterly loss of $.59. edward niedermayer joins us now with a preview. what's the number we ought to focus on?

edward: anyone who focuses too much on just a profit number in this stage of the company's growth, doesn't understand. what investors should probably be looking at with tesla is their deliveries and generally their ability to introduce new models and to scale up. now, tesla is behind on its goal to meet 55,000 deliveries this year. that is a real cause for concern. it shows there are real challenges with scaling up. alix: and the total for the year is just over 20 thought -- 21,000 so far. what pressure is this putting on the back half meet the 55,000 will? edward: i think it's huge. tesla says this is an issue of production constraint. i think they think that is a positive spin on the situation because it implies that there is more demand for their vehicles. but i actually think that is a

warning sign. scaling up production while at reducing new models is really, really hard. i think that is underestimated, how difficult that really is. so that is cause for concern come i think. alix: they introduced the ludicrous mode for a car that can go really, really fast. what does that signify for you that they need to add these kinds of bells and whistles? edward: one of the things i have models not stick with a your model and really just push out updates as a become available. i think it is good. it shows that this is a forward thinking car company. but the latest one with ludicrous mode, it shows that it has reached the limits of what he can do with performance. a challengetuates which is a transition from being a low-volume luxury manufacturer to one that can produce high volume of cars that satisfy more

typical consumers. i think they have run out of bandwidth to keep report -- to keep pushing the performance angle and they will have to look at delivering more everyday value in order to keep growing sales. alix: what about growing sales and other markets like china? it seems the cover session we are having has to do with the u.s. consumer. but they may have a huge untapped potential, especially if tesla can withstand the recent fall we have seen an auto sales? edward: that has been a thesis for a while now. what has been shown is they have real struggles in china. there sales are down. it is miniscule. they have their own organizational and operational challenges in china. on top of which come other demand is coming from the top end of the market, which i think has suffered because of this stock market downturn. i would not look to china. alix: you say don't pay

attention to profit, but how long can tesla keep burning cash? edward: that is really the big question. the way they are burning, it will disappear at some point. i would expect some sort of capital raising. one of the things our revenues that is important to note is a major source of revenue in the california dev credit might be going away. staff has told me that they are potentially closing this loophole for faster feeling credit. much.thank you so much more coming up on what you missed. apple. ♪

we are moments away from the closing bell. i'm alix steel. joe: and i'm joe weisenthal. ♪

[closing bell] alix: u.s. stocks closing higher today after three days of losses. joe: the question is, what did formiss? a small day stunts. should we worry? our expert thinks otherwise. apple wobbles, we have two charts the company should fear. joe: times maybe tough for oil, but we talked to and asked -- and activist investor thinks that money can still be made. alix: you could call this up number wednesday. volume is flat, but all up 22% extra volume. i would not have expected that looking at a flat market. joe: i would not have expected that either.