continues to descend. ukraine simmers, oil moves south. will putin move further west? walmart is not happy. they replace zone merchandise supervisors with department managers. .ood morning, everyone thi this is "bloomberg surveillance ." i'm tom keene. brendan greeley and vonnie quinn here as well. walmart is the pulse of america -- but is it anymore? brendan: it used to be the best logistics, and one of the things we are learning is that they are behind in logistics. marines too hire help them figure this out, and now they cannot do what amazon does. right now, though, what an amazing market. let's get to top headlines. here is vonnie quinn. vonnie: investors in china may be betting that the government will cut back its effort to prop

up stocks. chinese stocks fell by the most in three weeks. the shenzhen composite index plunged by almost $.70. that is the latest move in what has been a roller coaster couple of months. friday the chinese regulator said it would reduce buying as well as volatility. the price of oil is falling again. trading comes to a six year low. ,est texas intermediate fell trading below $42 a barrel. there is speculation we have not seen the end of the global glut 30% from prices down this year passed high. in bangkok, authorities are saying suspects in the deadly explosion we are's -- were seen on security camera footage, and a man in a yellow shirt is a suspect. at least 20 people were killed, more than 100 others wounded during the bomb -- and 100 others wounded.

screeners of hillary clinton's e-mail have flagged 305 of them. a federal judge has ordered that 30,000 for e-mails as secretary of state be released. clinton has said she did nothing wrong by using a private server. she joked about the messages yesterday while campaigning in iowa. hillary clinton: you may have seen i recently launched a snap chat account. [cheers and applause] hillary clinton: i love it. i love it. those messages disappear all by themselves. clinton turnedek over her service to the fbi. in baseball, a scary moment last night for the new york yankees. pitcher brian mitchell was struck in the face during a game with the minnesota twins. he collapsed to the ground and was helped off the field. nasalfered a small

fracture and will be evaluated for concussion. the yankees went on to win the game. there is something about a blow to the face that is terrifying and almost comical. brendan: and particularly those that are unavoidable. if it is coming at you at that speed, there is nothing you can do. tom: watch his left elbow. this is not the way we were taught. see the left elbow come back. in the old days, you were told to have your glove out front and to get to more speed, they now teach them to put the elbow back, which means they get hit in the face. vonnie: tom, you should totally be coaching. tom: i used to coach little league kids to put your glove out front. the new thing they are teaching kids in college to get more speed -- brendan: are you continuing to fan on this? tom: i do not think it is funny.

a guy in boston lost his career on this about three or four years ago. we have home depot. this is the anti-walmart, that simple. home depot, with backing up bang-upanged up -- comps and sales, this is a compare and contrast with other big-box. $10 billion in buybacks. vonnie: and moving up there forward guidance -- moving up their forward guidance. meeting estimates on the seven quarter -- on the second quarter -- tom: let me get to a data check. it is jaw-dropping if you are part of wall street. crude, 41.65,x down half a percent off that late rally yesterday. onto the next screen, if you would. this indicates brent crude,

migrating on seven dollars spread. the rest -- to west texas, the ruble weaker. was 6.40 when i walked in. let's look at the u.s. economy off the bloomberg terminal. housing starts later today. this is a great chart. here is the average before the crisis, here is the average after the crisis. this is normal, brendan. this is the normal, housing down, terrible, it comes back. something changes in the 1990's. it came back but it took a while. look at this black space. these are different, and this massive into grand here. brendan: this is what i am shocked by with this chart. this is a reinhardt rogoff recession. it takes so much longer to recover. earlyyou ran this chart this morning, i would not have

thought to think about the 1990 plus that way. tom: i would say a good service sector as well. china -- it is front and center this morning. the continued depreciation and test of their central bank -- now the equity market rekindles and it does again. our newsan is in bureau in hong kong and joins us this morning. why did equities move south this morning? enda: it certainly has rekindled fears. what happened this morning is that they are worried that the state perhaps will not be there to support shares the way they have been over the last month or so. better than expected housing prices had people taking the central bank would not have been there. ultimately the market pushing back once again.

brendan: is it possible to say we now have a better understanding of what the chinese style of intervention is? on the one hand they preach openly we want market reform, we want to free up our markets, and allowing foreign capital. a month laterand, they free up to you want, but they intervened last week saying they do not want to go too far. , think the bigger picture is if there is reform passed in china, it might be slower than we thought. of moreand the drop than 6% in the shanghai and the shenzhen today -- if you look at it, the shanghai is still up 12.5%. the shenzhen is up 50%. does that say anything about companies in china? technology companies? enda: the government is actually pushing innovation as an

alternative to heavy industry, as an alternative to export and debt. they want to see technology in china as a key way to transform the economy. tom: enda curran, thank you so much. amoroso has been busy. she is the global market strategist at jpmorgan funds. out on twitter, that exogenous shock, that you must west -- that game of guessing. what is the focus on them? anastasia: china is ok with maintaining that 7.5%. china is going to be just fine with that. commodity-sensitive emerging-market countries that are tied to china's commodity blitz, they are going to be fine. what ien i look at --

look at are the rate of changes. how do they clear markets with the speed of decline we are seeing? the problem is, even though the speed may slow, it is not necessarily going to reverse. china is pulling all these triggers and measures to not 10% but togrowth to maintain 7.5%. if that is the case, we do not see a change to positive anytime soon and commodities. brendan: 1998 is mentioned a lot. the malaysian ringgit is down. have we reached the 1998 moment? think so, i don't because if you look at the level of foreign exchange in asia, russia, we are nowhere close to the low level of reserves we saw in 1998. if you look at the china reserve ratio coverage, it is very good.

an exception may be malaysia because its current account deficit has deteriorated. vonnie: the knocked down effects -- will they be primarily confined to asian countries? anastasia: no, because if you look at what is most high, it is the chinese american countries. the fragile five has now fallen to troubled 10. as of countries like columbia ia andru -- like colomb peru. vonnie: we had prepared a chart. brendan: looking among these currencies, you say hit has expanded to other commodity countries like chile, peru. to 1998, is there anything that the asian economies, non-chinese asian economies have done in the 15

years to prepare for what is to come? anastasia: the biggest thing is foreign exchange services. not to be confined by the fixed exchange rate. they have to build those buffers. brendan: except for malaysia, which is in real trouble. tom: bring that screen back. we have a massive problem at "bloomberg surveillance" this morning. rubleoubled 10 -- russian ? that is not the way you spell ruble. you need to be from new zealand. you need to have a new zealand line worker to spell it "rouble. " accept: i have to say, i anastasia's spelling of ruble over yours. tom: i think of the dollar-ruble

as a vladimir putin litmus paper. is that accurate? anastasia: it is very much tied to the price of oil, but it is benefiting the russian economy. if you think about the earnings of russian companies, it benefited this year because of that extension. tom: anastasia has terrific perspective on this. there are percolating ukrainian headlines as well. brendan: we will go to russia in a little bit as well. our twitter question of the day better,reats employees amazon or walmart? we are throwing hand grenades this morning. let's see who wants to catch it. "bloomberg surveillance" on bloomberg television. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." let's get right to our top headlines with vonnie quinn. vonnie: wildfires are threatening a resort town in washington state. several fires are burning and have destroyed about 75 homes and businesses. so many fires are burning across the west, 200 active duty military troops have been called in to help. sprint is the latest wireless carrier to give out a two-year mobile contract. customers will no longer get a mobile phone for a heavily discounted price. verizon dropped them this month. those contracts. coming up, we will spend -- we will speak with the french ceo marcelo claure.

a study says that those who drank coffee have better survival rates of cancer. it can lower the risk of diabetes. as i take a sip of coffee -- brendan: how much coffee? is it seven cups over the course of the morning? is it three? point ofhere is a diminishing returns. we will find out that for you. walmart is going back to basics, the sam walton way. there is an idea. we will not see the results yet, but we will get a read on the americans whom are -- of the american consumer. olivia sterns is here with us. good morning. their stock is up 1% in premarket trading. obviously people are looking for better results. olivia: it is pretty much flat over the last 12 months.

home depot, who had their results out early this morning, shares are trading at an all-time record high. this is after they raise their sales forecast for the second time for 2015. the big issue with walmart is there is no 2015 earnings growth story. this is a company that is in the midst of investing in a long-term transition. the core mission is to fix the u.s. business because the u.s. business accounts for 70% of their profits. what they really want to do is fix grocery. grocery has been an area of intense competition. kroger and safeway have improved what they are offering. from -- will we hear vonnie: will we hear from the chairman today? olivia: i don't believe we will hear from him today. we will hear from the head of dot-com. tom: you know more than me on

this, olivia, but i know they have had a recent spurt and have done better off of years of malaise. is it too big to turn around? the revenue of half trillion dollars? what do they do, sell more holiday -- move thet is hard to needle on a company that big. we are seeing that amazon's market cap is your than walmart's walmart is doing half of -- half $1 trillion in sales. 10%.they are down like about: you love to talk use of cash. brian yarborough at edward jones said yesterday he is wondering why they are not doing more buybacks like to have done in years past.

if they cannot get their retail u.s. consumer to do better than they have done, you cannot get walmart to do better than they have done. what is i am curious going on in the stores. bolivia, you have talked to executives there. it has been said that they need to do basic improvements in logistics. they used to be the gold standard. olivia: perhaps it is sheer size, but they know this. they are investing and turning around the stores. they are getting rid of the zone managers, getting more localized management. a billionnvesting dollars in raising wages, in training, and in e-commerce. they know they have to fix the u.s. business, and it will not be a short turnaround. brendan: we will get a look in under an hour -- olivia sterns will talk us through it. can get the planters

dry roasted nuts, 55 gallon oil -- brendan: tom is online doing what they call on the channel shopping -- doing what is called omini-channel shopping. and for our twitter question of the day -- somebody had to pull it out of the warehouse, which brings us to our twitter question of the day. who treats employees better, amazon or walmart? ♪

tom: good morning, everyone. "bloomberg surveillance." , -- just ae of auto

tinge of autumn. good morning, goldman sachs, i see you peeking around the corner next to barclays, downtown with oppenheimer funds. they are all in their offices at 4:00 a.m., watching "bloomberg surveillance." how about a morning must-read? we do this in celebration of anastasia amoroso. how would you pronounce that? potpourri? pot-pour-e? grabs thenk kit

moment and we will talk about the fed in a bit, but i want to talk about who is in the markets , who is in the market for the malaysian ringgit? nobody is an nobody should be. it is a perfect storm. you have the commodity pressure and you have got the oil pressure, and the issue is that or oilot see commodities prices turning around anytime soon. tom: the point you make is perfect, the horse before the cart. i get a lot of e-mails about this. brendan: not to harp on malaysia, but it is where all the movement is. from the head of the central bank there, it is one of the last things you hear right before capital controls are introduced. he said i do not see any reason to introduce capital controls. anastasia: it has been a steep selloff and a bleeding of

foreign exchange reserves. inflation has also been on the rise. we are looking at capital controls. something has to arrest the drop in the ringgit, absolutely. tom: anastasia amoroso with us from jpmorgan. in the next hour, we look at american banking. with the american bankers association, frank keating, the former governor of oklahoma. stay with us. ♪

tom: good morning, everyone. "bloomberg surveillance." brendan greeley and vonnie quinn with me. let's get to top headlines. investors arena, not counting on the government

to help as much anymore. the shanghai composite index fell almost 7% today. that is the biggest drop in chinese stocks in three weeks. -- the shenzhen composite index fell almost 7% today. that is the biggest drop in chinese stocks in three weeks. there's more speculation the global oil glut will end later rather than sooner. oil prices fell once again today. trading belowt is $42 a barrel. oil prices have fallen 30% from this year's high in june. shell has permission to drill for oil in the arctic ocean off alaska. project endsimilar in 2012 after a rig ran aground. last month protesters in portland, oregon, tried to delay a shell icebreaking ship that was heading to the arctic.

two more senators are voicing opposition to the iran nuclear deal. the majority leader admits it will probably pass. corker of bob tennessee called on congress to reject the plan. democrat bob menendez of new jersey is expected to say the same thing in a speech this afternoon. however, mitch mcconnell concedes there is probably not enough votes to override the president's eventual veto. company bezos says the described by "the new york times" is not the amazon that he knows. more than 100 current and former workers were interviewed. he says the company could not compete if the chart is worth -- if the charges were true. he turned down interviewer requests while the story was being researched and brendan: i'm sure he is right that that is not the company he

recognizes. toetimes the company gets the size where the company you built takes over the culture that you knew. he created a culture -- vonnie: we can only go on the public comments, write? brendan: it was a very thoroughly researched article. in december it was vladimir putin's age. economists at citigroup it moscow told bloomberg will reach 67.50 by the end of september, the u.s. dollar-russian ruble. amoroso, it can remain in surplus even at $40 a barrel for oil. is that right? anastasia: he is right if you look at the numbers. russia did bleed foreign

exchange reserves, but that is because they had to prop up the value of the ruble. but on the trade basis, they have gained ground. brendan: 3.6% contraction this year is not a business cycle contraction. this is structural. how do they change that? anastasia: i'm am not sure this is structural stuff, though. it is a matter of oil, which they will have to diversify the economy away from oil, and it cannot operate at $48 a barrel, $42 a barrel. what has been working to russia's favor so far this year is the fact that the weaker ruble has translated to higher earnings for russian companies. if you look at the unemployment rate in russia, it has not fallen as much as one would expect given a recession. brendan: but the diversification of an economy takes a long time. norway has been at it, and they are hurting from the drop in the price of oil. how do you then go and do it?

anastasia: it takes time. to diversify is to diversify a customer base, which russia has been doing. tom: as we move up this morning to 66 -- we are not there yet -- why aren't we and the new cycle panicking over the ruble here versus the tangible panic in march? anastasia: we are not in crisis mode anymore. the central bank of russia acknowledges this as well. back in september the rates rose to 17%. today they are at 11%. we are actually passed the worst of the crisis in russia. once again, -- because the russian government implemented fiscal stimulus early in the year, which had lifted confidence. vonnie: what does russia need to

improve economically the most? anastasia: it is really oil. if you think about it from the market perspective, what would lift russian performance the most is oil. the challenge with oil is we think we are lower for longer for some time. if you consider break even a year ago, they were between 60 and 80 for u.s. producers. but now the costs have dropped, and the great-evens -- and the break-evens have job as well. brendan: we talk about how growth below 7% in china becomes a crisis of legitimacy for the communist party. within russia, they have contraction -- not just lack of growth, but contraction. does that become a crisis of legitimacy, or is it impossible to compare the two? anastasia: they think the crisis that we have seen this year will

reverse next year because the central bank is projected to cut rates from 11% where they are today to 7%. inflation is projected to decline from 15% to 5%. tom: i do not understand how russia does this with $41 oil, or with $39 oil. what will be the catalyst for the improvement you speak of? anastasia: i will also say that $41 oil is the bottom of the range, and i think we are in the range between -- what would bring that up to the $60 oil would be better u.s. and chinese demand, and that is something that -- note, what doonal you see from the many people you know in russia? are they all exiting stage west? are they just leaving? anastasia: my personal friends absolutely have. i have the most concentration of childhood friends living in london right now. vonnie: what other the people

left behind that are not able -- is it a different russia industry to the smaller towns? anastasia: you would think all the sanctions and the isolation from the west would way on -- russianigh on sentiment, but it has not. the unemployment rate has not dropped all that much. wages have dropped, but not a nominal terms. brendan: we sit around here waiting for russia to collapse, and it is not going to happen, tom. tom: what happens when the ruble hits 70? what does john norman say, your vaunted fx expert? anastasia: the central bank has to go in crisis once again. they have done that once. they actually credibly arrested that crisis once before, so the biggest point is it is not 1998. i think russia is better prepared now. so are malaysia and

indonesia. also, trade is plummeting like a stone for both of those. we ourselves are exit stage west. u.s. housing starts are out at 8:30 a.m. "bloomberg surveillance," bloomberg television. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." let's go to twitter quickly. matt tweets in -- brennan, you are going to love this -- your morning show, i just landed a new job." that carl riccadonna tweeting in? no, he worships the ground you walk on. single best chart. brendan: that is such a common occurrence, i do not even know where to start. it is a 20th century assumption. grow up, buy a house, get a job.

elena cox caught this. we borrowed it from through redding at bloomberg intelligence. over time it averages one. you see long shallow recoveries. it is now at 2.45. this cannot go on forever. tom: it cannot go on forever, and the pros are saying it is heavily weighted toward wage growth. it is the belief that the growth will be there. , the growth is not there, and certainly the belief is not there. chartn: if we run this back over time, there is a time in the 20th century. can we make the same as some this that we used to be able to? anastasia: the culprit is the building permits. inventory. built new i think that is bound to change because i do not believe we have

given up on the american dream. i do not think we are a renter's nation. if you look at it, the inventory of existing homes, we are running at about four to five months of sales, and that is consistent with building permits turning up. to build a house, you also need to have credit, and we think that credit standards in the residential space are on the cusp of getting looser, too. you can get a mortgage that is not necessarily a 20% down payment now. tom: the other one week -- brendan: the other one that we are waiting for is that students have huge debt overhangs. can rent, they can leave their parents' basements, but they cannot buy until they shuck off their student loans. vonnie: if you think about the most significant thing --

anastasia: the most significant thing, even if you have debt, you have to have a job. we see the unemployment rates coming down for people who are older people, younger people, in construction, manufacturing across the board. that is the most significant thing for housing. vonnie: wages are not increasing but housing costs certainly are. where does it all in end up? rate with a mortgage a 20% down payment even a good thing? anastasia: whether you have a job and can get a loan -- which the answer is, yes you do, and yes you can -- that dictates whether you can buy a house. the question is, we are not seeing the 4% wage growth we are accustomed to. -- what housing starts are you looking for? anastasia: we are definitely

seeing an upswing into the summer housing season, and homebuilder confidence is up, so we expect that trend to continue. vonnie: time to have a look at our top photos of the day. number three, germany in 2006 -- construction workers uncovered human bones. they belong to a 7000-year-old group of farmers who are part of a pottery culture. 5500 yearsking about before christ. this is way before the danes and the saxons arrived. of --: many children died the shattered skulls and shins could point to blunt force

torture. relied: we have so long on what we could learn from written sources. so much of this tells us information about before we had things written down. ghani couldoon land later this week. if they make landfall, meteorologists are worried about torrential rainfall. tom: what is different here? together.here are two the photo is chilling because the first thing you see is a very clear typhoon pattern. on the left. then to the right, there is a much bigger system that you can just kind of see in the gray there. vonnie: we will end on a happy one today. number 1 -- stevie wonder

performed a free concert in central park last night to a crowd of new yorkers. it was part of the key of life tour. that heperform in performed in washington, d.c., and in philadelphia as well, all in the same day. saw the very first performance of "songs in the key of life." he got embarrassed because he forgot some lyrics. brendan: sometimes i cannot even remember my own name. tom: thank you for your response yesterday as we look at mr. trump. today, who treats their employees better, amazon or wal-mart? we need your important comments. futures negative three, dow

futures -31. texas, down. stay with us. ♪

tom: good morning, everyone.

"bloomberg surveillance." let's get to tuesday headlines with vonnie quinn. indonesia, a search team has arrived at the site of the crash of a passenger plane. no one has survived. the turboprop had 54 people on board. it crashed in the mountains of region.a's papua a chinese company has -- a company has agreed to make smart phones in india. market forbooming smart phone makers. the government has offered tax breaks. a harvard professor will be the new president of the dallas fed. spent more than two decades at goldman and ended up running its investment banking unit. robert kaplan replaces richard fisher. tom: often with us on "bloomberg

surveillance." many reports compare him to the former president fisher. they are both very different. i love that robert kaplan is out of kansas, and then went on to hbs. brendan: they are similar in the sense that they are not traditional. the dallas fed has a tradition of doing that. vonnie: interesting how most federal reserve banks stay with tradition. tom: each bank is different, and dallas always has taken its own path. being at the border of mexico. vonnie: it is a very different economy than the rest of the country. you would have to imagine that he will continue on with a hawkish trend. tom: i will not say what mr. kaplan's policy will be, but he, like mr. fisher, will be vocal about representing capitalism in business.

he is not going to apologize about wall street. we are not going to apologize about talking about the markets in a moment. and this goes over to the fed. this morning it does continue. there is a weight -- there is a wait to emerging markets. all of this of course is a countdown to september 17, where a trend to higher interest rates may flow across america and possibly abroad. anastasia amoroso is the global market strategist of jpmorgan funds. anastasia: it is janet yellen against the world right now because she is the only one in any position to hike rates, whereas the rest of the world is in no position to hike rates unless you are brazil and you have to. the question for emerging markets is that with this -- is this a massive dislocation?

it is not because we have already seen it. emerging market fx is down pen percent -- is down 10% this year. who is going to be surprised if janet yellen raises rates in september? brendan: aren't we seeing the pre-tantrum rate hike tantrum right now? which is more important to anastasia:rkets? the fed, oil, commodity prices -- they are hitting different pockets of emerging markets. but because freight balance has deteriorated in some of the latin american countries, they are more susceptible to the freight -- to the fed rate increases. two key differences between now and 2013 r-value and positioning. by virtue of depreciation of the currencies we are seeing, we are not looking at the overvalued effectivethe real

exchange rate like we were in 2013. then there is positioning. fund flows have not gone into emerging markets. where is the bet now on emerging markets? who is making that that -- who is making that bet? anastasia: china is the place to go. if the housing market now supports the chinese economy, that is a far better thing than the state supporting the market. china is our favorite position there. differentials play a huge role. anastasia: it will play a role. we do expect some currencies to come under continued pressure because of what you mentioned -- the rate differentials will start to shrink. absolutely. so the dollar, as i say, is about the only currency we are

bullish on in the world. brendan: these dynamics are going to sharpen as the likelihood of a rate hike reaches 100%. how close are we to 200% in september? -- how close are we to 100% in september? anastasia: we are not close to 100%. it is not a probability position for the fed. it is a yes or no decision for the fed. probabilities are misleading in that regard. are definitely mixed messages and we are looking for better housing -- anastasia: the big test was when we got the statement from the fomc last month. what i was looking for is how the fed thinks about the slowdown in retail sales in june and the service pmi's and so forth. what they said is we are basically willing to look through that. tom: anastasia amoroso, with jpmorgan. let me do a forex report. weakness.so testing

16.46. dollar-canada -- the story is simple. .t has not weakened stay with us for another hour of "bloomberg surveillance." ♪ . . .

>> this is "bloomberg surveillance." considers further

managed depreciation. china considers further unmanaged equity meltdown. ukraine simmers. will putin move west? and walmart, they are not happy. they replace zone supervisors with department managers. i have no idea what that means. they are out in moments with earnings. good morning, everybody. this is "bloomberg surveillance." we are live from our world headquarters in new york. tuesday, august 18, i am tom keene. with me vonnie quinn and brendan greeley as we await walmart earnings. brendan, what is interesting if you wonder what part of america walmart represents. not the same as that used to. brendan: there was a note that basically said income inequality hitched on walmart because if it increases, how much money on the bottom they will spend, they are squeezed out of the top. these kind of economics,

thomas piketty, matters. tom: they are getting killed on the bottom down below. i really wonder where they fit in and five years. vonnie: they are definitely paying their employees more. the question is -- do the employees, were they able to spend more and walmart? tom: we will go over top headlines. vonnie: china's economy and what the government there will do to kickstart it because it is making headlines again. was the worst day for china's stocks in three weeks. down more than 6%. for each stock that rose, nearly three dozen fell. 600 companies hit the daily drop limit of 10%. i want to move to walmart now because we are indeed getting earnings. tom: i want to emphasize, vonnie, that this ain't home depot. they do it much more clear, it

is much more opaque. vonnie: it looks like a mis s, but we will wait and see, it looks like a $1.08 share. they were looking for $.93 to $1.05. it is updating its guidance there. we are waiting on revenue numbers. tom: i want to emphasize, folks, every company is different across bloomberg. into thet vonnie dive information feared i will say walmart is just about worsen class in the way they distribute their earnings, and it is more embarrassing when you see how home depot was clear and to the point earlier. there is a full year impacted by about 11% as welker. let's turn to olivia sterns, who takes a different view. "he took the "surveillance gulfstream down to bentonville. what is the distinction now versus five years ago at walmart?

olivia: this is a company that knows it is in the midst of a medium-term transition, and they are investing heavily to turn the ship. you will see a big 2015 earnings story. was the estimate. that is now a huge surprise. tom: what is their nearest competitor, or is it just amazon now? what is their big box next door neighbor? box, the biggest competition in the last couple of years has probably been from the dollar stores. they have been providing a lot of fresh, new competition. walmart's, 1% of overall sales. half $1 trillion in sales. tom: we are finally getting substance on the sales. these are not home depot-like. vonnie: no, they are better. increaseate was for an of 1%, but if you look at the third quarter, the comp's guidance -- tom: it is not nominal gdp --

olivia: but what should the comparison be? -- i bett is able to the stats pop on 1.5%, sales growth. that is my guess. vonnie: we are not seeing huge volume, but the stock was down 2.3%. i want to point out through the second quarter, just to put a cap on it, revenue did beat marginally earnings per share missed by four cents. the margins are not there. olivia: because there are investing. brendan: the one word we hear is on the channel. -- is omni channel. olivia: they are not very far along. e-commerce is growing 17%, 20%. they have that 4500 horse nationwide. the challenge is to figure out -- they have got 4500 stores nationwide.

the challenge is trying to figure it out, but they are a long way from doing that. wantsole country everything delivered within two days. they are experimenting with click and collect and pick up in store. vonnie: we have got different leadership is welker to have a new chairman -- leadership as well. we have a new chairman. stores, the very granular detail at each store. olivia: i'm not sure that is fair to say. penner is the son-in-law of the chairman. the man most he and walmart history since sam walton ran the company. vonnie: inventory, for example, they were low on stock, customers were complaining, and

then they had to replenish the inventory. olivia: that is why they are very much focused on trying to improve the u.s. store and play -- store experience. we have a media call with the cfo and the head of walmart.com. i thought you wanted to know about china? vonnie: yeah, of course that is another open question. will walmart be able to expand the sales in china? that, itt could boost could be helpful. olivia: it could. a couple of interesting things with walmart in china, they just bought out a partnership. they bought out the partnership they have going, a lot of people think that is going to be a precursor to making a much bigger investment in e-commerce in china. the idea would be to better compete with alibaba. -- less than 1% of

the chinese e-commerce. they are both hoping that the economy will adjust toward more consumption. olivia: perhaps. tom: olivia, thank you so much. walmart cuts their forecast, the stock is down, it is night and close to what home depot did an hour ago. a really difficult performance. we will see how they do on a conference call. -- i ame they were be sure there will be a lot of questions. of's go to carl riccadonna bloomberg intelligence. where is the american consumer? e american consumer is the core driver of economic activity in the second half of the year, so if more -- if walmart is seeing something that other macroeconomists are not seeing in terms of the second half outlook, that is a troubling prospect. we are three years out in front on this, i do not understand the bifurcation we see in american consumption.

it is two americas, and walmart is not getting it done. carl: absolutely, and wage growth has not picked up yet. this is a story that has been well advertised. brendan: certainly don't raise interest rates. carl: once we get later in the cycle, economic recoveries are not evenly distributed. it will trickle down to the part of the demographic that has leased benefited from the recovery to this point and which has the highest unappointed rate. vonnie: how important will the back-to-school season the this year? carl: i think it will be important. a lot of states have sales tax holidays for these back-to-school sales and whatnot. they were not in july this year. most of them were in august. we saw defense july results. i think we will see even better results in august. tom: i tried to do back to school online two days ago, and

there is nothing online. it is all summer stuff. brendan: we just got an urgent e-mail from your good friend neil dutta at renaissance macro -- when walmart is back, the rest of the country does well. tom: i like that. carl: there are two issues here. one, as the economy improves, you see a lot of working and middle-class household may be moving a little further up the spectrum to target or other mid-level retailers. that does pull some of walmart's business. however, you have the improvement in the lower end of the spectrum, the dollar store crowd and whatnot. they are seeing an increase in the minimum wage, and eventually better wage pressures. tom: did you write on twitter about the seattle migration on minimum wage where jobs are moving out in the first six months out of seattle proper into seattle suburbs? do you buy the idea that the jobs will migrate? carl: i think there will be some

migration, but it is very expensive to pick up your business and move elsewhere. the employers can maybe shift production around. vonnie: free cash flow, tom. month,llion for the six return on investment down to 16.2%. tom: i just look at const versus nominal gdp. comps versus nominal gdp. this is a nuanced question. we want your serious responses. who treat their employees better -- amazon or walmart? stay with us worldwide. "bloomberg surveillance." good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." tom keene, vonnie quinn, and brendan greeley with us as well. china, you know about the continued depreciation. a little tweak -- equity markets down 6%. we link in commodity implosion and currency dynamics. what is the sweat level in financial hong kong, or for that matter in beijing, date four, da y five, day six and this

depreciation? uest: it is a bit of a paradoxical story. it seems to be triggered by housing data, which we have not had in a while. the central bank also pumped liquidity into the system. on the other side, there is a feeling that the government regulators will not be there, so there is a growing nervousness around the stock market, even though people are still watching the yuan with an eagle eye. tom: the minutia on the depreciation, is there collar strategy working? got awell, look, it has long way to go. there's a big debate on what is the strategy on the yuan. is there a third angle? is it a deliberate intent to free of monetary policy?

we are in the dark as to what china's strategy is on this. the valuationut of exports, it is not a game changer. they have a long way to go. they are succeeding in keeping and where they want it, tom. endabrendan: in the u.s., whethr the federal reserve should pay attention abroad, is there any sense that the chinese communist party is aware of the effect they have on their backyard -- indonesia, malaysia, thailand -- and whether or not they will take that into consideration? enda: that is a huge issue here, right? on the being squeezed it one hand, the china move has sent currencies in a tailspin for it on the other hand, they are facing a potential fed rate hike over the coming months. it is a kind of perfect storm. the economy is most vulnerable. when their own domestic currencies weaken,

investors want to pull out. tom: enda, thank you so much, greatly appreciated from our news bureau in hong kong. coming up, the american bankers association and the former governor of oklahoma, frank keating will join us here we will also talk to the governor from florida. vonnie: you spoke to him last week. you should remember. tom: we will talk to frank keating about donald trump. i wonder if frank keating has ever done jury duty? ♪

tom: good morning, everyone. "bloomberg surveillance." from new york city, we welcome you. here is vonnie quinn with headlines. vonnie: nearly 100 major wildfires are now scorching out west. in washington state, about 75 homes and businesses have already gone up in smoke. active-duty troops are been called in to help firefighters. sprint is the latest wireless yearier to end two-

contracts. customers will not get big discounts on phones anymore. u.s., only at&t offers contracts and subsidizes phone purchases. later this hour on "bloomberg surveillance," we will speak with sprint's ceo. claure.lo new studies show that those who drink coffee have better results. brendan: cheers to coffee. vonnie: sodas and other caffeinated beverages do not have the same result. tom: we have lost several guests over the last two years to this terrible part of the cancer story. coffee. i have coffee. does scott -- quietn: tom will be very

as he drinks his coffee, and i will take it to iowa. would-be presidents are shaking hands and inspecting hogs. north of the fairgrounds on euclid avenue, i'm sure you know where that is, there is a branch of the community state bank. frank keating is the ceo of the american bankers association. he joins us from d.c. governor, which one of those candidates of the state fair is going to do best by the community state bank on euclid avenue? frank: it is still early, brendan, so i'm trying to think, and i had charter he -=-- i had chai tea this morning instead of coffee. that said, i am completely puzzled. obviously the iowa caucus is surprised. they are people like rick santorum, my cook a be who won the iowa caucus. who became -- mike huckabee won the iowa caucus.

they became known. it is kind of a show thing, so i suppose they could do better, although most able to not think trump will. i am not a doubting thomas -- i am just a confused thomas. brendan: we have hard numbers to your skepticism. trump at 24%, a scene in po -- a cnn poll. bush is only 13% e are you are a hard-nosed policy guide. do you have any sense of which of these candidates has the most serious plan? an optimist.lso we americans always do the right thing ultimately. maybe all the other good ideas or some bad ideas were in the mix, but ultimately we do the right thing. i think it is a long way between now and the election, so you will see a lot of movement, but i happen to think it is exciting to have, what, a baker's dozen and three, i mean, 17

candidates. no one has had that. in iowa certainly, retail politics is everything. showmanship i think would have a lift to it. it is really hard to say. spend a lot of time there talking to people in their homes, see people to times, three times during the course of the caucus discussions have a better shot. this is an upside down case election cycle. it is really fascinating. brendan: governor, you are a friend of the show, but i have to go back to my first question -- which of these candidates is best for american banks? there has been a lot of conversation about small business developments, the need for tax and regulatory policy to encourage those small banks to survive. to your question and to your comments, since the fall of 2008, we have lost one community bank a day, eight days a week, really seven days a week. as a result, quite truthfully, obviously competition from nonbanks, but most particularly

by a huge regulatory burden, some 12,000 pages of proposed ,nd final rules in dodd-frank and there are 35 employees and every community bank. i have listened to conversations with the candidates. i think jeb bush has talked about tax policy. chris christie have, donald trump have. carson --en like dr. all of them have talked about the need to get off the chest of small business, not just banks, but small business in general. it is really interesting how anti-big, antibusiness, and anti-big bank people are, yet the successes mystified to me, a billionaire who actually has lift. vonnie: right, and bb&t extending his takeover for $1.8 billion. i want to look at the "financial times" this morning. higher capital is the most painful way to fix the banks. he basically says shelve dodd-frank. well-capitalized banks need to

be less fettered in their primary economic function to assist in the directing of the nation's scare savings to find our most potentially productive investments. but is ityou agree, helping the banks increase the price of the of the united states? frank: well, of course we have a very different banking system in the u.s. in small-town america, in my own state, if it were not for community banks in the there would be no growth in those small towns. there is a place for big banks to kick ass overseas, there is a place for them to help build big business. american banks have never been better capitalized. former: to the chairman's point, what higher capital requirements replace dodd-frank? frank: anything to replace dodd-frank is good. have been a lot of capital calls, higher capital requirements. i think capital is always good.

sometimes you can have too much because for every dollar of capital, we have nine dollars less lending. tom: frank keating, thank you so much from washington this morning. our twitter question today on walmart, walmart and amazon, who treat their employees better? ♪

tom: good morning, everyone. "bloomberg surveillance." let's get the top headlines with vonnie quinn. second-quarter's results falling short of estimates, the stock fell 3.1% in premarket trading. profits per share were four cents fewer than analysts

forecast. the company you blames pharmaceutical headwinds and wages for workers. meanwhile, home depot shares are up. it reported a 9% increase in banking quarter profits. -- areloans are in encouraging homeowners to spend on improvement. chinese economy is making headlines again. this is the worst day for china stocks and three weeks. it was down more than 6%. 600 companies hits the daily drop limit of 10%. as shares were falling, china's central bank to another major step, pumping cash into the financial system. it was the largest such move in 19 months. theysts say it shows government is worried about capital outflows after last week's currency devaluation. a new poll finds nearly 1/4 of republican voters think donald trump should be the party's

presidential nomination. 24% of those surveyed back him. among the 16 other republican candidates, jeb bush is the only one in double fixtures at -- double figures at 16%. senators voicing their opposition to the iran nuclear deal, but the majority admits it will probably pass. in a "washington post" op-ed, senator bob corker f tennessee once to oppose the plan. senator menendez of new jersey is expected to say the same thing this afternoon. however, mitch mcconnell concedes there probably are not enough votes to override the president's eventually become. jeff bezos said the company described by the "new york times" is not the company he knows. report.ted the "times'" he says his country could not compete if the charges were true. he urges employees to contact

him directly about malpractices. more than 100 current and former workers were interviewed by the paper. bezos turned down a request. more publicity for amazon. that is the conclusion. tom: they will always get the publicity. vonnie, this is an amazing chart. over the bloomberg terminal, i want to bring in carl riccadonna from bloomberg intelligence. here is walmart as a failure. here is above 70. they are now trading premarket just below 70. i cannot imagine the pressure on their management if they get back to this $55 level. what a signal of failure. things are changing structurally. can you really get there without matching gdp? they are looking for third quarter, sales or that is not enough. riccadonna, home

depot, granted, they are a different business, seems to be getting it done. walmart is completely tied to the american economy. carl: walmart is completely tied to the average american consumer where as home depot is tied more to the housing market, obviously, and the housing market is a bright but in the economy. it is too small to do the heavy lifting right now. it is not going to be able to carry the economy at a pace that is going to satisfy the fed in the second half of the year. i have never said this on air before, walmart's gross profit is $120 billion. they have got some wiggle room to re-manage, restructure -- vonnie: complaining about the impact of investments, waiting, training, additional hours. i am overwhelmed reading the announcements from the sell side, walmart, it feels to me like i just realized there is something fundamental about the economy that i just picked up on. assumption that walmart is a

proxy for the american economy, that it was the best at disturbing things -- that decade-long assumption is over. are we in a new kind of economy? carl: i do not think it has really changed. the people who are shopping at walmart -- the delivery method from my shopping and whatnot -- i think it is not there yet. if you need something in a pinch, you go to walmart. if you do not want the huge amount of customer service and all that stuff. there is still very much a place for that in middle america, but the economy is moving slow. this is the point, this is what the fed is dealing with. brendan: so it is the proxy for the american economy. carl: right. this cycle has a lot longer to run. yellen will keep rates low-key or when a momentum picks -- sales for the business for the big boxes will improve. tom: a little under 3% now,

touching $70 and below. let me do a data check, euro-dollar $1.1069. nymex crude cannot find a bit. $41.60 as well. i'm watching the ruble, mexican peso as well. brendan: this is "bloomberg surveillance." i am brendan greeley with tom keene. theelo claure has been at head of sprint for a year now. it has been a great time to be a wireless customer in the u.s. it has been a more difficult time to be a wireless ceo. calls what is happening competition, equity analysts call it a price war. congratulations first on your year. you announced today you are done with contracts. how long until the entire american market is a contract-free zone? all, thanksst of for having me. it has been a fascinating year, a year of many improvements your let's tackle the contract issue.

i think the american consumer is the great beneficiary from this. pretty much the american consumer will know what they are paying for a phone and what they are paying for a service in an industry that used to be so confusing. bring each reference the to consumers is a must. the big winners in this movement is the american consumers. also, sprints, we decided to get away with contracts. more importantly, we decided to completely change the way consumers get a mobile phone. what we are doing is -- we have done a lot of research. our customers are telling us if we want the latest device always at the latest available -- at the lowest available price. we launched iphone forever, which is the first iteration of this program, which for $22 a month, every time there is a new iphone, you basically drop off your own iphone at any sprint store and pick up a new one. if you wouldlaure, not mind me asking, softbank take, overprint's s

80% now. you came in with a softbank investment. what is the plan for your spectrum? iscelo: well, the spectrum we're going to utilize 100% of our spectrum. last earnings call, we basically made -- basically laid out a plan, and basically we are going to once and for all be able to use an entire spectrum, which i think will be the competitive advantage in the next two years. we have been very public, we are in the midst of continuing to build of our network, and we said in the next two years, sprint will be number one or number two and everything will market. brendan: you talk about the advantage of transparency for the consumer. one thing the transverse he does is bring down average revenue per user. t-mobile is down there at $48 a month, you are at $55. how much farther down the rabbit hole can you follow them? marcelo: we haven't. the way you measure is not

average revenue per user, it is average billion per user. you have to take into consideration how much it costs for the phone and how much the customer is paying you for service. when you add them both together, you realize that after you have sprint for one year, it actually increases from a customer's perspective. we are not lowering prices. what is happening is transparency to the customer. brendan: can you compete with $25?ile with your arpu at marcelo: if you look at the turn trajectory, we were at 2.3, now we are 1.56. 1.56 makes it the lowest turn and sprint's 19-year history in the mobile business. customers are loving our programs. they are staying for it we have one of the highest drops in the history of telecom in the u.s. in such a short period of time.

the way we will compete us by launching different services like iphone forever. vonnie: all right, but in the larger scheme of things, is there some kind of deal in the works? why would softbank again increase its stake? it was below 85%. marcelo: that is their prerogative, but if they believe sprint stock is highly undervalued, they will continue to invest in sprint. they will continue to provide us the support they have been providing. massiven the verge of a spring turnaround, and we feel very good about our prospects, we feel very good about the huge are, and that is why softbank continues to invest in sprint. claure, ceo,elo seller rating his year anniversary at the helm of sprint. thank you so much for joining us from kansas. our twitter question of the day, we looked at the news flow on walmart and amazon. who treat their employees better -- amazon or walmart?

let us know about how you feel about american labor. this is "bloomberg surveillance." good morning. ♪

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

tom keene, brendan greeley, vonnie quinn with us as well. all i know is at uber, the guy at uber the other day had four cell phones going. "market makers" this morning, they will talk about the four, the five, the big ipad that drivers have. this is all about maps. brendan: barry goldwater has a cell phone? tom: he was way ahead. is thishis, cory, west coast fixation on i need technology in my driver's seat. who is going to win the battle. carmakers were there long before the pc makers. they want the latest engravers -- latest and greatest. they want the drivers in their cars to be happy. i want to get in my car, but my iphone down, i wanted to charge, and i want to use wazw. tom: -- waze. tom: they want you to use your iphone. ity: i get in my rolls,

works great. the debate among carmakers is what do we do. we make it easier to use the google system or the apple system with the car? what do they give up? we had this huge bidding war over nokia's map systems. there are 4 -- google's, apple's, tom-tom, and this nokia system. a handful of carmakers spent $3.1 billion to buy these maps. they want to have some control over whether drivers and users are doing in the car, and they do not want to get back control over to apple, they do not want to give it up to google. that apple will do to carmakers with a good and the music companies which is take control of their industry. brendan: do the carmakers know what they are doing? are they good technology companies? cory: they are fantastic technology companies. car companies are very aware of what is going on in the

dashboard. almost every car company have a separate development process for the head unit completely separate from the car so they can be a top of the latest. tom: give us the update or the uproar over apple maps where you plug in something and they give you a location in queens. cory: apple has been very aggressively hiring -- tom: are they better? cory: infinitely better. tom: may i automatically go to google maps? cory: apple has a lot of defaults within their os. you click on an address, takes you to apple maps. you click on an e-mail with an address, takes you to apple maps. do not count them out at all. brendan: we are used to upgrading every six months or every three months, apps, as you you but also os -- a car, buy it, you own it for 5, 10, i like to keep my cards for 13 years. thus is the villain of for

the carmakers. they want the users to get with the users want, but they -- thus is the dilemma for carmakers. they want users to get what the users want. tom: cory johnson, thank you very much, smart west coast stuff here on the east coast. the winner of the u.s. open, zach johnson. i 9:30 this that morning, "market makers." stay with us. ♪

tom: good morning, everyone. "bloomberg surveillance." watching oil -- $41.46. new recording weakness as well. let's get to top headlines. here is vonnie quinn. survived thee crash of the indonesian airliner. it struckaboard when a mountain two days ago. investigators say bad weather may have caused the crash. another chinese the bay will make smart phones in india. attracted by the company's -- the country's huge market for them and tax breaks. lenovo will make billions of funds a year. xiaomi already has a factory there. robert kaplan will be the head

of the dallas fed. he spent more than two decades as goldman and led its investment bank and -- banking unit. tom: an inspired choice, and of course a long time "surveillance " guest host. he has brought us immense value on corporate leadership. vonnie: he just made that window before he was announced. tom: he has got a great research combine down there. i hope he keeps the dallas tone alive as each bank is different. there is a tone and the emerging markets as well. let's call it a commodity meltdown. cap support fenske -- katia porzecanski covers emerging markets. i do not even know where to sort this out in terms of news flow. i understand that canada is winning because they are weakening less than the others. which is the currency you are most focused on? katia: is canada and emerging-market? [laughter]

tom: what are you focused on? katia: morgan stanley have this new troubled 10 list. you are seeing a ton of asian currencies, a kind of latin american currencies, and then the ruble. what you have here especially with latin america -- metals. the decline in metal prices will hurt our copper producers like chile and peru. with this in mind, there is -- it is hard to see a bottom within the currencies. australia, south africa -- tom: what you do so well as you link in the balance sheet of the miners and the countries, chile and the rest of it, where is the market clearing? katia: it is difficult because everyone is depreciating at the same time. who gets the benefit? tom: that is part of it. what happens -- the two of you, what happens in brazil to clear the balance sheet? brendan: brazil has for an

exchange reserves, but the thing we have been hearing is no, it is not 1998. eh. except for brazil. katia: it is not 1998. countries are not as pegged as they used to be, which is a relief, right? as theycurrencies move, should be, and that is what is keeping us from having the crisis. especially like we had with the tequila crisis. with brazil, you have domestic issues that are really the challenge here. it is not just about oil prices or metal prices, it is about what is happening domestically with the corruption scandal, with slowing growth, now we see the central bank of brazil coming out saying the economy will shrink 2% this year, it will shine again next year. that is the longest recession brazil is had since 1931. at the same time, you are like a, well, they are both kind of lucky. thesen: when you read

50-page imf reports, they talk about institutional strength and governance. that is not matter until right now, and brazil has terrible institutional strength in terrible governance. katia: at the same time, to see a judicial branch attack the legislative branch, you do not often see that in latin america. tom: the value you bring, as the bogotá? i don't know how to pronounce that. bogotá and columbia, the currency is imploding. when does that work out? what is the catalyst? katia: people don't know. when you have china slowing, the growth momentum is not there, so it depends if the growth momentum and trade momentum comes back. tom: people talk about ecuador 2000, which is really not good. -- andecuador is its own it is in trouble again. you just got back from

argentina. you have to give us an update on how consumers are down there. katia: so the primary has the success of cristina kirchner's candidate. what we are seeing is a big showing of change. a lot of the other candidates in the primaries that good support, which means it is a signal that president, they will have some change. we need to see how things progress from here on out to the october elections, and then there is a run-up in november, but the pressure for change is there. brendan: looking around these emerging markets, and we cannot put them all and if they basket, the signal they seem to have taken from the chinese evaluation is not trade that is coming but panic about the strength of the chinese economy. katia: exactly. we are seeing in places like -- 10, we areuble td

seeing commodity, russia for example who has the oil issue. heavily driven by chinese growth, but everything is imploding at the same time, so there really isn't any strength there for anybody. brendan: what you don't know, katia, is thomas happy because for the first time, they spelled ubel the american way. tom: we are doing it right. katia, in mys, looking for catharsis or market clearing functions? in play, and oil goes to $40 a barrel, west texas. katia: the question is -- where is the chinese bottom? people do not see this to be the end of the depreciation in the yuan. barclays a saying for chinese growth to really be -- you need to have a 20%, 30% depreciation.

a lot farther from where we are right now. if we are going to be seeing that bottoming out in the yuan, then the end is not inside for latin america. tom: katia porzecanski. brendan: that brings me to my agenda, we will be taking a tour of the foreign exchange reserves of the countries around china, malaysia's underneath $100 billion. we will look at india. that is a real sign of their strength in the coming years. tom: i would go to oil, which i horse before the cart here. i really know the deferred jail -- i really know to the differential between oil and copper. the bloomberg commodity index, folks, has really good underlying mathematics for you to watch easily. the all-in commodity implosion. and the litmus paper -- we're not talking about the ruble. i would suggest that it's going to change rapidly. brendan: particularly with oil, vonnie, i keep reading analyses

that have oil reverting to the mean. why? how? vonnie: exactly. my agenda is housing starts. we have been speaking about how housing is getting better, but we might see it getting back this month in those figures. last month it was up 9.8%. we are looking at .5% today. it should be down according to economists. tom: i'm glad you bring it back to this because janet yellen will tell of the world of katia porzecanski is so removed from what they are going to do. vonnie: housing is its own separate thing. yesterday was more confident. it is nevertheless very high. tom: ok, there it is. vonnie: time to answer out toward a question of the day. we asked about walmart and amazon. who treat their employees better? first answer -- walmart has started a campaign to improve

employee working conditions, but overall, it is a tossup. there you have it. that is pretty blunt. walmart's employment style seems the new economy. amazon seems to the old style. i'm not sure what that means. think theeah, i most important decision is blue-collar and white-collar. that description in the "new amazon was af white-collar paradise or a white-collar nightmare. i'm not sure which. vonnie: and anyway according to jeff bezos, it was not even true. [laughs] third answer -- definitely a trick question. not really. brendan: how can you buy anything in america if you do not buy it from walmart or amazon? employees plusn 154,000 employees. that is a lot of people. katia, thank you so much for

dropping by this morning. we continue. on bloombergohen radio. "market makers" continues on bloomberg television. good morning. ♪

>> live from bloomberg headquarters in new york>>, this is market makers with erik schatzker and stephanie ruhle. erik: good morning.

i'm matt miller. cory: i'm cory johnson. you are not erik schatzker and i am not stephanie ruhle. they have the week off. matt: walmart is out with important housing data in 30 minutes. winner of the 2015 british open, zach johnson, is with us. how he plans to stay on top just months out from the next big tournament. i'm excited to talk to this guy. no relation to cory johnson. right now it's time for the top stories this morning. shares of walmart are down in the premarket. it reported second-quarter earnings that missed estimates. walmart also cut