reports that the company fosters a prison culture that leaves workers - -- a bruising culture that leaves workers crying. subsidies. an expanding justice department probe of citigroup. pimm: good afternoon. i am pimm fox. liu.: i am betty starting off monday with stocks slightly in the green. equities, and the earlier morning, the futures reacted dimly to the empire manufacturing numbers.

they showed a contraction in the u.s. economy, a bit of a surprised. we have clawed back and we are right now just in the green. in pretty much all the averages. moving to oil prices, we are seeing a slight incline in brent crude, trading below the $50 a barrel level. nymex crude is trading unchanged. we are still trading at six-year lows. pimm: let's take a check on what is going on in the bond markets. a little bit of buying happening all across the yield curve. buying of the two-year at .7 and the 10 year at 2.16. 30 year, a little bit more buying at 2.81%. .10.ar versus the euro, 1 yen giving up a little, 1.24.

pound-sterling, 1.5597. i want to demonstrate something having to do with a specific stock. a stock chart that goes back to august of last year, and annual chart looking at the price of ofeport my koran fcx -- , look at theran see a bigalso you move in volume. volume typically has a blow off at the top or bottom. one of the things i always look volumeaction, increased and increased activity in a stock. and then tried to define the direction. not only has volume increased, you are seeing that the price seems to be stabilizing around $10 a share. this will make it very easy to see.

you see the big selloff going on early. betty: now it has kind of leveled off. pimm: might be something to watch. the stock pays about 2% dividend. betty: perhaps those who wanted to get out got out. pimm: that was the point. let's give you some top stories. homebuilders have not been this confident in almost a decade. the nationals the season of home builders' sentiment index rose to the highest level since november 2005. the report indicates that single-family home sales and perspective buyer traffic both increased. americans are waiting longer to buy their first home. first-timeo zillow, renters rent for six years before buying a home. more than twice as long as in the early 1970's. recent reports indicate that

renters are having a more difficult time saving for that down payment. y measure of factory output fell to the lowest level in more than six years. the new york fed says the empire state manufacturing index 9.unged to a -14. negative numbers indicate factory output is shrinking. big declines in new orders and shipments. wem: the price of oil, as have been describing, has resumed its decline. west texas intermediate fell below $42 a barrel. nymex crude and the world glut, maybe ending? morgan told us crude prices will actually go lower. il prices are below $50 a barrel. we think that is going lower. in the u.s., it is roughly $125. we think that is perhaps 3%, if that. outputran says opec's

may set a record once export restrictions are lifted. some changes at the executive level at the discount retailer target. chief financial officer john mulligan will become the chief operating officer. mulligan has worked at the retailer since 1996. last year, he spent several months as the interim chief executive. new officer was previously at express scripts, the biggest pharmacy benefit manager. betty: goldman sachs predicting that the chinese yuan will fall further. goldman cut its course fast -- goldman cut its forecast and said by the end of 2017, the yuan will be trading at 6.8 to the dollar. lastly, the yuan fell more than 3% after the biggest devaluation in two decades. the national labor relations that footballd

players at northwestern university cannot form a union. this ruling overturns a march 2014 decision in support of the players. formation of a union would have altered the collegiate athletic landscape as players fight for better pay and other rights. atse are your top stories this hour. we are continuing to feel the impact of china's currency devaluation. a bloomberg survey of 11 economist suggests china's gdp is growing noticeably slower than china's official estimate of 7%, reinforcing concerns that demand for commodities are going to weaken in concert at commodity prices weaker today, starting with oil, but really all of them are falling. pimm: with us now is jim, president of bianco research in chicago. worried that the u.s. economy was not strong enough to raise

interest rates. are you sticking with that analysis? normally i would be but the fed has decided that they want to raise rates and the data does not really support them raising rates right now. i am going to give it better than a 50% chance they are going to raise rates, not because they have the data but because they have told us over and over that they want to do it. betty: what makes you think that? views, they've's been saying the same thing. what makes you convinced that the fed is going to do it no matter what? she's going tod raise rates. if you listen to her speeches, that is what she has been saying. i know the fed says they are data dependent. the fact is, the data does not support it. if you look at the third quarter of 2012, when the fed looked at the data and said we have to give 85 early dollars of open ended buying every month because

the economy is so bad, the data is no better now than it was in 2012. the fed is saying the same set a rate is justifying hike. they are raising rates for other than the stated reason. everyone of your guests says they have to raise rates because they need something to lower, keeley does not work, that is all saying the fed is doing it for other than straight raisins -- other than stated reasons. betty: what if it is one and done? jim: i know people say they are going to do one and then not raise rates for another couple of months, but once the fed starts raising rates, if there is not a toxic reaction in the , they will start talking about raising it again. i don't think necessarily that we can say they are going to do one, say they are sorry, and

then are going to raise rates until the second part of next year. depends how the markets react. pimm: are you buying stocks? jim: i'm having a problem with stocks. they were talking about earnings estimates of $125 a share. the growth rates are zero, the revenue growth rates are zero. they are kind of being met right now with a fed that seems to want to raise rates and apologize, that is the way the market thinks. return for thet year is a zero and i think that is where they are going to end. pimm: what are you doing with your money? jim: i like bonds. pimm: what kind? corporate bonds? jim: treasury bonds. the risk off trade has another leg down. treasuries were a tremendous performer last year and are outperforming this year. they had outperformed stocks for 18 years in a row, the last 18

years cumulatively. pimm: where in the yield curve? jim: grand of the yield curve. i think we might hit a bout of instability. it world economies are slowing, whether it is japan, china or europe. that combined with yields in europe pushing money out of here pushes our rates down. i don't think we're done going down yet. i know everybody else thinks that but i will take the contrarian view that rates are going to head lower. betty: are you staying away from commodities too? jim: commodities are a measure haverld demand or you negative gdp in japan, port numbers out of europe. china is saying they are growing at 7% come but nobody believes it. if they are going out less -- if they are growing at less than 26%, that would be

a low. maybe some commodities are ahead of the curve, crude oil has got a way to go. some other commodities have a way to go before they find the bottom. could lower prices have a stimulated affect on the economy? line is the sure for a lower prices is lower prices. yes, it will have a stimulative effect sometime next year if we have a persist for that long. it is not going to be that we had three bad days and now it is time to buy. they have to save lower prices for months and months and people have to adjust. then you might get a cumulative effect. thatte, we have not seen effect from commodities, which is why we've seen a slump in gdp around the world. pimm: going back to your long et at the long end of the curve.

what would you be selling in the portfolio? or telling people to sell in order to buy long treasuries? jim: selling anything that would be wall street's risk on trade. cyclicals, industrials, basic materials. all of those that would than if it from local commodities. i would rotate into something safer. don't think it is time to take the kind of risk people have been trying to take. that may come next year. right now is not the time. that is why i want to stay in something safe like a long treasury. line, do you think we are at the start of a bear market in stocks? jim: could we get a 10% correction? yes. especially if the fed is ham-handed with the great -- rate hike it says is coming.

muchnk that is a little right now, 20% correction. through thew we get rate hike. we have not seen a 10% correction in four years. pimm: thank you very much, jim biancoco -- jim bianco of research joining us from chicago. ahead, competition is heating up among the major cell phone carriers. betty: shares of suits sprint -- shares of sprint rising after a plan allows customers to always have the latest iphone. ♪

pimm: welcome back to bloomberg "market day." i am pimm fox. betty: i am betty liu. sprint shares at a two-month high, it may have to do with a new iphone offer. you can get your iphone up graded at any time. julie: if you pay a monthly fee. not seeing anything driving the stock, last week we saw a boost after softbank increased its stake. up 12 point 5%. sprint is saying if you pay $22 a month, than at any point you will be able to upgrade to a new iphone. that is on top of your existing plan. perhaps the thinking is that drive new traffic to sprint and that is what is

behind a share increase. the gains are accelerating. they have been accelerating through the session. we've been talking about tesla and the call from morgan stanley, raising its price target to $465 from $280. adamis based on theory by jonas, neat morgan stanley analyst, that tesla is going to introduce some sort of new product called test mobility. that is what he's calling it. it will essentially be some sort of automated product, a self driving vehicle that may be co-owned by multiple people. visionketching out this because tesla itself has not commented. matt miller pointed out that with is somewhat close elon musk. be calledcould

tuber. julie: not sure if they want to think about potatoes. pimm: if the battery does not work, you can plug it into a potato. julie: if you can come up with that technology -- let's look at tesla's shares. i want to compare it with what we have seen versus the average price target. $465, here's the average price .arget we've seen a pretty wide gap until more recently when shares have been catching up. 305 is the average price target. well below for 65, which is the highest price target for the stock on the street. also want to take a look -- i think we are out of time. we will save that for next time. a little suspense. betty: looking forward to it. pimm: tuber.

is $32ket cap of tesla billion. ford is $58 billion. betty: incredible. thank you. pimm: some top stories at this hour. the securities and exchange commission says two citigroup affiliates will pay 180 million dollars to settle charges that they misled investors. the sec says leading up to the financial crisis, citigroup global markets and citigroup alternative investments made false and misleading statements that their funds or low risk and suitable for traditional bond investors. to thefiliates consented sec order without admitting or denying the findings. betty: a bomb blast rocked a ne at a central bangkok intersection. 16 were killed and dozens were injured. two bombs were found at the scene, one detonated. the area has been the scene of political protests, thailand has been controlled by the military since a coup more than a year ago. chung mong-joon is running

for fifa president. after 17 years, sepp blatter said he was stepping down under pressure from american and swiss investigators of widespread corruption implicating senior fifa officials. the union of european football associations' president has already declared his presidency desk his candidacy and is widely favorite to replace blatter. the tianjin fifa -- the fifa election is set for february. still ahead on bloomberg "market fighting money laundering. the justice department looking into citigroup dealings with companies linked to one mexican billionaire. details coming up. ♪

betty: this is the bloomberg liv "market day." i am betty liu. pimm fox. looking south towards the empire state building. the freedom tower and distance on this monday, august 17. the u.s. justice department is expanding its investigation into citigroup's money-laundering controls. betty: the doj looking at the company's link to mexican billionaire carlos hank rhon. here with the latest is dakin campbell, who wrote the story. what is the doj looking at? doj is looking at for companies within his business empire. th one ofssociated wi

the biggest non-bank financial companies in mexico. two are affiliated with an industrial conglomerate, they make steam generators. basically, doj is asking citigroup to produce documents that have to do with account openings for these 4 companies. checks,r customer things that show that they did their due diligence to make sure money flowing through those accounts was accounted for and was clean. pimm: tell us about the family that controls these companies. dakin: carlos hank rhon is a mexican billionaire. he is worth north of $2 billion. the governor of the state of mexico, i believe. he was a big supporter of the ruling party in mexico now. he is connected politically and certainly financially. pimm: no specific allegations made towards him or his company?

dakin: that is correct. that point.aking we don't know exactly what the justice department is looking at here. they want all the documents he has for this 4 companies. betty: this is out of the bribery situation in their mexican unit. the fraud that happened. yes.: it is not exactly linked. this is an investigation into a small california-based lender citi runs. it moves a lot of money between the u.s. and mexico. we reported last month that as part of that investigation, doj was looking into the big mexico unit, which is much bigger and interconnected. this is part of that here it is basically -- we think doj is .s.a. andt banamex u using that as a window into citi's mexico. betty: how big is that business for citi? citi's biggest branch

network in the world, 1500 branches. a little under 10% of their annual revenue. their biggest market outside the u.s.. pimm: an important thing for citigroup. dakin: it is important that they figure out what is going on. say: didn't michael corbat they were going to increase the people in compliance and regulation? dakin: up to 30,000 this year. betty: thank you for joining us, dakin campbell of bloomberg news. we say goodbye to you. pimm: see you later. betty: coming up in the next half hour of bloomberg "market day," amazon's culture. did you read this new york times piece? employees are crying at the desks. see your jeff bezos comes out to defend his company. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. ♪ ♪ ♪ 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. betty: little bit of wind there in the san francisco bay area. welcome back to bloomberg

"market day." i a betty lium. -- delays latest in -- oil markets, iran says the trend has drivers smiling. stanley's top strategist says it could present an investment opportunity. adam parker was with his earlier on bloomberg "surveillance." owning energy is simple. they are cyclical stocks that are down a lot. people a year ago, june of last year, brent was $100 and people were bullish on energy. it is 47 or whatever and people are bearish. counter cyclical stocks. that is usually a good set up to get long.

oil services companies say the number of rigs is up to its highest level since may the owner of. zulily.uying less than what shares sold for inn zulily went public november 2013. ibm is introducing to mainframe computers that use linux. to helpones expected the company saw software and services. republican presidential candidate donald trump is taking a break from the court of public opinion to literally go to court. trump reported for jury duty in manhattan. the republican front-runner said he would take a break to answer the summons and do his duty as an american citizen.

that is a look at the top stories. amazon founder and ceo jeff bezos is refuting a "new york article that describes the grueling hours at amazon offices that burnout workers. "the times" detail instances where workers would cry after meetings. employees suffering from things like cancer, miscarriages and personal issues were given unfair evaluations and passed over for promotions. disputes all of this. in a negative employees, -- in bezos to employees, writes, "the article claims that our approach is to create a dystopian workplace where no fun is had." joining us is author of the book "the everything store."

did any of this ring true to you when you were doing your research? covered some of the -- by covered some of the same ground and got some of the same push back. the bar is high and they work their employees relentlessly. turnover is high. you don't have to take my word for it. look at a site like glassdoor, amazon gets a far lower ranking and other companies like facebook or google. maybe the "times" article underplayed this, the culture is not distinguishable from amazon's performance.

there's something about the culture and the way they drive employees that works. amazon is one of the few companies that started in the early days of the internet that has been able to hire the best talent and grow as a startup. if you are an investor in amazon, even a customer, the corporate culture has worked for the company. betty: when i was reading through the article, there were some details, as you say, you have seen this firsthand. some of these things like the any time feedback tool, the organizational level review, which sounded like some sort of game. things like using data, printing out 50 or 60 pages of data for your performance review. anything unusual that you might not see at other tech companies or other companies that rely on data? brad: that is a good point.

reviewing your colleagues, reviewing your bosses is not unique. we do an element of it at bloomberg. anzon actually, it is idiosyncratic culture. they do rely on written documents, generally much shorter. think of the story took an adversarial approach. elements of it are true. x-amazon employees and often they have poor things to say. the company, has a survivors' bias they look negatively at people who have left. you have to look at the fact that the leadership team has been together for a long time. none of them have to work there. people can leave at any time. amazon still has a long lines of potential employees.

it is an incredibly dynamic company. i don't think there is a universal experience of working at amazon. it is a huge company. divisions that do not recognize the story at all and there are divisions that live it every day. betty: i agree. this is a huge behemoth. such a big, lofty goal to be the company of everything. you alluded to this earlier, could they get to this point without having that kind of , for them to be able to recruit going forward and striving towards being everything to everyone. brad: that is one reason why jeff bezos thought it was rite hisy to w employees last night. he is concerned about what impact it might have on recruitment.

employees choose to go there, it is a prestigious place to work. they are working on very interesting things. the compensation, when you include the stock price, has been good. i don't think any employee is going to work at amazon clueless about the culture. people make the choice to go there and compete and many of them, even when they have poor things to say, also agree they have done their best work for amazon. structured in a way to get the best out of people. people getting sick and i'm getting poor performance reviews and getting pushed out of the company, those are the things amazon needs to work on. i have some stories of that, i have no doubt it does happen. i don't think it is a universal experience but i think amazon should work on being a little more antithetic to employees. betty: i want -- a little bit

more empathetic to employees. betty: i want to read another part of jeff bezos' letter. "i believe anyone working in a company like the one described in the article would be crazy to stay." you have covered him for so long, is there any possibility, is he removed from what is going on throughout his company? or is he elbow deep as a manager? brad: he is elbow deep. the passage you just read is the key point. i think he's missing something. linkedin, search for former employees of amazon. you come up with all these employee this day six to eight months or a year or a year and a half. there is incredibly high churn. people look at the culture

around them and they decide that it is not for them and they leave. experience universal and many who have stayed there longer. there are people who have left and gone back, they call them boomerangs. many employees get burnt out very quickly. decide whether that is a sustainable culture or whether they need to throttle back and try to maintain high standards while being a little bit more empathetic. in the piecessage that made me chuckle was when they said that jeff bezos looks over at microsoft and causes a country club -- and calls it a country club. brad: that was actually an anecdote from my book. amazon is one of those first-generation internet companies that continues to thrive. they have not created a culture where you can be passive. everyone is contributing their best work. pimm: --

betty: one anecdote in your book, he was buying ikea tables. you have got to be scrappy and be as cheap as possible because it is about the product you are putting out and nothing else. thank you so much. good to see you. the author of "the everything store: jeff bezos in the age of amazon." coming up, a ruling that threatens to upend college football as we know it has been shelved. why northwestern players will not form a union and the impact on college sports. ♪

betty: welcome back to the bloomberg "market day." i am betty liu. let's get to julie hyman.

holding onto are some gains. julie: earlier today we had a lackluster picture when stocks open. economic reports, one from the national association of homebuilders showing that the confidence of home buyers is at the highest in nearly a decade. counterbalancing news that manufacturing in the new york deepestmped at the pace since the last recession. the nasdaq leading the game, up .4%. greener than it was earlier. consumer discretionary leading the pack, up 2/3 of a percent. utilities, health care and material doing well. energy the only group showing significant losses at the moment, down .25%. that is oilehind

prices. oil prices continuing to pull back. they made a run at a recovery but has not been able to maintain it, down about .5%. it gets back to capacity in terms of pumping oil and when sanctions are lifted should reach record production. given the already stretched supply, oversupply out there, that is not likely to improve that equation. watching copper today. copper has been pulling back. down for 6 straight weeks. oil has been falling for about seven. on concerns1.3% about growth globally, particularly as we see the pullback in emerging markets. i want to look at gold while we are doing the commodities roundtable. nd extending the gain it's all last week with its biggest in about two months. a little bit of risk off when

you look at growth measures like copper, people are getting into gold again today. you so much, julie hyman with a look at what is going on in the markets. what is going on in sports? a ruling in college sports. the national labor relations board says football players at northwestern university cannot form a labor union. this overturns a 2014 decision. the boards that allowing the players to form a union would undermine competition between union and nonunion schools. the players cannot appeal. crumpton and mark .loomberg sports reporter mason how surprising is this decision? pretty surprising. i spoke to a bunch of lawyers and they really expected with the board changing hands and

some overturning figures on the board, they expected it to go the other way. it is a landmark decision. they really did not do everything they could have. they decided that northwestern cannot form a union. what they did not discuss is whether college athletes can be considered employees. they basically punted that and decided not to roll on that -- rule on that. the landscape is changing in college sports. this leaves open the possibility of a group of schools getting together to try to do this at some point -- betty: on their own? later on.form a union they did not want to go in the face of any legal decisions. there are so many court cases out there involving college players. mark: this is not just about money, that is what the folks who want to form the union say. it was basically about this is a

right to work country and they feel they should be represented. mason: they want to be compensated, in the board report they said that over a decade period northwest had made about $76 million in profit. and the players did not see anything from that. want to negotiate health care. concussions are huge issue. 2014 when they first announced that they would be hasng this route, there been action from schools, conferences, from the ncaa to head this off and make some proactive change. it has been affected already. they: when you say that punted on the issue of are they employees are not, why did they do that? why is that significant? mason: one of the things they said as they have never had a case like this before. this is the first time that any college athlete has tried to do

this any first time that any single team in any league has try to form a union that they have had to deal with. it leaves openg the possibility that some point another group could they basically were not prepared to make a landmark decision is the way it sounds. mark: the northwestern football players, do they have any recourse? mason: not with the nlrb. that process is done. there is no avenue for them. by ruling the way they did, we have not heard from them yet because this just came out, there is still potential that another group will file, maybe a bigger group. what issue was that northwestern stood alone in doing this. there are 17 private schools, maybe if they banded together, that could change things. it is tough to say. betty: $76 million in profit? mason: over a decade, that is what the report said. betty: thank you for joining us. what is coming up? mark: alix steel is going to

join us. commodities in the news. , aot has to do with china lot has to do with the nuclear deal with iran and how that will affect oil prices. expert.our commodities we will talk to hers. betty: she is our commodities guru. thank you for joining us. the end of an era. era -- thesubsidy cepp phon -- the cell phone subsidy era. ♪

betty: happening now, some breaking news on the dallas fed. : federal reserve bank of dallas has named a new president and ceo. going to assume

that post on september 8. notable also is that he is former vice chairman of goldman sachs. former goldman sachs executive and most recently at harvard business school. he will replace richard fisher, president from april 2005 to 21.h , 2015 he will not be voting on policy until 2017. this is an important part at the fed as it weighs not just win to raise interest rates but the pace at which it will be raising them. robert kaplan, harvard business school professor, will be the new head of the dallas fed. betty: thank you so much. buyching gears, how do you your cell phone these days? how you by your cell phone may change. verizon is getting rid of phone subsidies for new customers. decades longwn a pricing structure that tied

customers to providers and determined the cost of the phone. here to talk about the end of the celfin subsidy era -- the cell phone subsidy era is walter. verizon was the last holdout. t-mobile was the pioneer and verizon said we don't know if our customers want this. they are basically requiring everyone to now. it actually helps of them generate a higher printed ebitda . betty: how? walter: they are recognizing all this revenue the day they sell the phone. betty: is this going to be good or bad for consumers? walter: it is great for consumers, they can get an iphone for free. when apple earnings were

in decline, operators were saying you cannot upgrade your phone until you have it for 24 months. chargere saying we would you $234 for the baseline iphone . they are saying have one for free. did news for the consumer. the operators are find with upgrading phones more often and at a lower price. betty: why now? in other countries, they do not have subsidies. walter: they have figured out finethe payment plan is for accounting. in 2013, the reason they did that was because when everyone was upgrading their iphones, verizon's earnings took a nosedive. now from the accounting standpoint, they can do book earnings ahead of time. if they can tie you into the phone payment plans, that helps lower churn. contract,w form of a

if you are paying them, they are not feeling it in the earnings but they are tying you in. isn't as ultimately not good news for apple? they are phones are generally substantially more expensive than android-based phones. weren't they the ones most reliant on the subsidies? walter: at&t was talking about this. the consumer is going to figure out how much they are paying for iphone. the consumer goods to and at&t or verizon webpage and they see of 25and monthly payment dollars. rather than paying $200 upfront or getting a six plus for even more, the difference is twice seven dollars a month versus $30 a month. you can get a better iphone for an extra two dollars or three dollars. the perception is you are getting low value -- you are more value for a better price.

great news for apple. the consumer thinks they are having to spend less. betty: because it is over eight time. -- a period of walter: they are not preventing you from upgrading or you can walk into a store and say give me a new iphone. that will help the replacement race. betty: thank you for joining me. telecoms analyst at btig. much more ahead -- a new man in charge of the dallas fed. that in a moment. ♪

betty: it is 10 a.m. and san francisco, 1:00 p.m. in new york and 1:00 a.m. in china. mark: presidential candidates have been descending upon iowa.

we will find out who the winners and the losers are at the iowa state fair. betty: then disney shows off its new star wars theme park. it's one of the largest expansions in company history. you insidell take the billion-dollar mind that goldcorp built despite plunging gold prices in recent months. betty: good afternoon. mark: they don't call them dog days for nothing. it's hot in new york city. with a look at the markets on this monday, august 17.