mania -- may not be what they seem. betty: protests show no signs of slowing down of brazil as the company gets inch closer to a bear market print we will get the latest on the tense situation. mark: there is no ammunition on the war among members of the involvesily that secret allegations that hundreds of millions of dollars were hidden. betty: good afternoon. mark: thank you for joining us on this tuesday. let's begin with a look at the markets. stocks are fluctuating today. down near0 is still session lows and the broader market is falling about 1/3 of 1%.

industrial average this afternoon is trying to recover slightly. about 0.25 points. gold, nymex crude oil is up one full percent today. ofnt crude is down over 1/10 1% and gold futures are down about 1/4 of 1%. we are still watching gold which fell to a five-year low in july and signs of improving u.s. economy brought the central bank closer to raising rates. affecting the bond markets as well so let's check in on treasuries. it's not change in the two-year but the yields are coming up on the 10 and the 30. it shows the housing market is still climbing. data from last month climbed to

the highest level in almost eight years for housing starts even though we are still below our level since august, 2007. looking at the dollar, it is trading stronger against the euro but it is slightly weaker against the yen. other currencies to watch her the ones affected by the chinese de valuation. the singapore dollar and the taiwanese dollar and the south three economies that depend heavily on chinese demand. downs a straight shot toward the latter part of the month after the china devaluation for these currencies. let's look at the top stories of this hour. there has been a settlement in the big data breach at target. during the 2013 holiday season, hackers stole credit and debit

card information from as many as 110 million target customers. the company has agreed to pay issuers of the socratic cards. to $67ssuers will get up million. heart it says the costs were accounted for in previous years. mark: walmart reported second-quarter earnings that missed estimates and cut its profit forecast for the year. the ceo doug mcmillan on the earnings call today -- >> i'm encouraged by the improvement and error constant sales and recognize our bottom-line results should have been better. we had margin pressure from pharmacy reimbursements and higher strength -- higher shrink than we expected couple with higher wage investments impacted eps. the strong dollar has heard walmart overseas and the company is spending more on employee raises. the retailer is also having a problem with shoplifters. in the earnings report, officials spoke of a growing problem with shrinkage which is

industry speak for stealing or losing goods due to damage or poor inventory management. there is speculation walmart could be losing $7 billion per year to thieves. they are serving a program to reteach employees how to spot them. betty: the parent company of t.j. maxx and marshalls posted second-quarter profit that beat wall street estimates. raised its forecast for the entire year and the company said the third quarter is off to a solid start. it looks like the housing industry is picking up steam in the second half of the year. new home construction was up last month to the highest level of normal state years. is 1.2 million homes and beat estimates and buyers are being attracted by low mortgage rates and i lack of homes on the market is persuading builders to start new development. mark: mid-atlantic banking leader bb&t says it may take a breather on m&a activity. earlier this year, they won

approval for its deals with kentucky financial and susquehanna bancshares. we discussed the deals earlier and bank consolidation with their ceo. >> we are really excited about these three. 2 of them being fairly large. to make sure we get them properly executed. they are experienced at acquisitions, we have done 80 or so in the last three years so we know what we are doing but to him -- but it's important to be focused and sure we take the time and are patient make sure we execute with professionalism. that's what we will do over the next several months. let's take a look at the shares of bb&t, they are down nearly 3/4 of 1%. that is a look at the top stories at this hour. coming up next half hour, oscar-winner cate blanchett lists her mansion for more than

$14 million. home prices are surging big-time in the land down under but the housing prices are giving headaches to the australian central bankers. betty: mapping technology will be key in self driving cars. the battlek at between automakers and technology companies over online mapping. it is the dog days of summer when it seems college professors are supposed to be doing pretty much nothing. a few academics devoted their summer break to examining hedge funds and how the industry reports performance data and whether you can believe those numbers. mark: guess what, you can. professors from the university of massachusetts amherst and m.i.t. made their case that hedge fund returns may be half of what indexes say. professor co-authored the study. he joins us along with mike reagan. thank you both.

i lookedere on set, and you give a sense that there are a lot of internal biases that maybe people are missing. study, it's to the a fact that hedge funds only voluntarily record their returns to public services. that way you can get an average return from the whole industry. the study is looking at the average return of hedge funds. you go bying that if what is recorded into the lipper database, the average return as well .6%. if you adjust for the -- return 12.6%. if you include other funds that may drop out of they are not doing well and you adjust the numbers for those biases, the average goes down to about 6.3%. betty: it cuts in half.

that's the common wisdom of hedge fund returns back to 1996. betty: professor, it begs the question whether we should be relying on any of this data. is any of it useful? >> thank you for having me. it has been an extensive study. weant to be clear that looked at lots of literature in this area and other academics that contributed to writing papers on different biases. if youll documented that just look at the head funds -- hedge fund data and returns, the numbers look higher but it's important to adjust for biases that include hedge funds but also ones that are liquidated.

fundxample, if a hedge started and performed well, this hedge fund might decide to enter the database. side of theite spectrum, if a hedge fund has not performed well and decided not to enter the database, if we thet include those numbers, analysis will be skewed. we point out in the study and use the database to calculate the biases and returns adjusted for the biases. it'sottom line is important to adjust for the biases correctly. naive estimates and looking at the data without doing analysis will underestimate returns and volatility. i want to be clear that the current indices of the hedge funds that people use are

already adjusting for this bias. are of the indices we use out there in the literature and in the industry, they already know that and they adjust. >> is it possible some of the hedge funds that outperform the market are not recording into services like this because they don't want it to get out there to the general of like how well they are doing? exactly, some hedge funds when the better average return even if we don't adjust for the biases. digitally have double returns. they actually don't report to the database. is toason they do report get advertisement and for consultants and investors to get to know them. some of the outperforming hedge enoughre either have

investors or don't need advertising. we don't have the top hedge funds and forming -- performing but in that case, their returns it should be higher than even what we report. understand,hat i you say you can even have some hedge funds stop recording for long periods of time but the industry thinks those hedge funds have shut down. how is that possible? there are some hedge decide not to report at all and some report but they decide to close the investment because they have reached likeity or they don't feel they need new investors. that is the reason. report toecide not to a hedge fund database. if you -- if they open a new

investment, they can come back to the database. fundsd say 90% of hedge , report for a while and then decide not to report are there because of liquidation. they decide to liquidate and you report,in our 135 page thank you for reading it, that was a good weekend of reading -- betty: who says we don't do anything during the summer. >> i will comment on that if you want. vacation is not something in our vocabulary. betty: they are earning their pay. >> we learn how to sleep late and how to work until 2:00 in the morning and how to use those hours effectively.

>> the interesting feedback on your study is that your co-author runs a firm that offers a mutual fund that replicates hedge fund strategies. people are wondering if that is a conflict. he is running a product that would replicate the returns of hedge funds. is there a conflict of interest there? anything about the company. i have worked with andrew lloyd. it was my advisor as a student. clear in terms of separation. he was wearing an academic hat and an industry had separately. and we worked on this study had published other studies, it was clear we only used academic research and the data from

eisenberg or m.i.t.. i don't see any conflict. it's clear when you read the cited -- where we sided in terms of the applications. that one make sure was found inesult the study about illiquidity. this is something that andrew and i worked with a long time ago, looking at illiquidity. we look at risk and return. we added an additional component which is illiquidity. it would be great for you as an investor or consultant to look at three dimensions, return, illiquidity and risk and decide. we found that a liquid funds usually adhere to earn a premium

but sometimes, they pay a penalty as well. that's what we found in the study. mark: fascinating study, thank you. stay with us, bloomberg market day continues in a moment. ♪

betty: in south orange, new jersey is senator bob menendez who is reportedly going to be the second democratic senator who will not support the iranian nuclear deal. that is following chuck schumer of new york. mark: it's interesting because these are two of president obama

plus key allies in the united states. they are coming out against this deal and we will continue to monitor senator menendez and his remarks. we will bring you more details as we get them. we mentioned strong housing data out this morning is helping home builders. julie hyman takes a look at that. julie: hi there, you talked about the strong construction data, building permits and new home construction is the highest in almost eight years. these stocks are seeing multiyear highs. lennar and the s&p homebuilders etf are at their highest in more than eight years. toll brothers is at its highest and almost a decade. we have seen the long-run for these stocks and they are back to where they were pretty financial crisis and pre-housing crisis. it's an interesting round-trip. we are lookingrs at is patterson companies

who make dental equipment and the shares are higher by 3.5% on an analyst note who says this company could be interested potentially and taking itself private or that it's a reasonable takeover target given that it is undervalued. that is sending those shares higher. memory chip makers have been downgraded over at bank of america. you can see micron and send this k are trading lower. versusory chip makers the philadelphia semiconductor index which is a price to sales metric. in white is the philadelphia semiconductor index. pc's have slumped and many of the chipmakers are linked to

that. price to sales is really seeing a gap at memory chip makers versus the rest of the chipmakers. mark: thanks so much. up, brazil is hurtling toward its worst recession in over two decades amid protests and a slumping currency and we will tell you what is next for the country. ♪

mark: emerging-market stocks fell to the lowest level since 2011 amid speculation that china will reduce stimulus measures.

the benchmark in shanghai posted the second-biggest drop in eight years. betty: it does not look better in brea -- in brazil where the real has slumped to 12 years lows and they face a recession. here to talk about the challenges in the face of mounting protests against the we goy's president, with to sao paulo. describe to us what these latest protests are about. the protests are about a huge corruption scandal at the state oil company, petrobras. people of say they are tired of corruption at a time when the economy is expected to contract. we have huge inflation and all this corruption that is making people tired. do we have any sense of

what the reaction from the government has been? how have they reacted to people taking to the streets in such large numbers? calm andesident is control so you cannot see what she is dealing with. she has been meeting with government members for the last few days at least three times per day which is not common. our off the record sources say they are evaluating that it was not a complete [indiscernible] it was smaller than previous ones we had this year. it is really worrisome because people were asking for her impeachment. betty: it's certainly a crisis that is deepening. how are companies responding? are we seeing mass layoffs? who is being affected? >> everyone, basically. our inflation is at 10%. higher than the

president approval. betty: go ahead. >> the last piece of good news we had was when movies gave us a stable outlook. we were downgraded to junk but there is nowhere to run now. off peoplere laying and unemployment is rising. mark: thank you so much. aming up in the next hour, visiting fellow at the peterson institute will join us. brazil is fascinating. quick look at the top stories of this hour -- major league baseball has announced a schedule for postseason play. the world series will be contested in november.

the fall classic will start october 27 in the american league city with the seventh game if needed on november 4 and the playoffs will begin in early october. mark: there was a game last night at yankee stadium between the yankees and the minnesota twins. the pitcher for the yankees got hit in the face. that line drive came off the bat of a former yankee. mitchell fell to the ground and was helped off the field and the manager of the yankees said he suffered a hairline fracture of the nose. i guess the bone in the nose. betty: the bone and the nose. mark: yes, the septum. betty: goodbye, mark. mark: goodbye, betty. ♪

♪ ♪ ♪ 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. mark: welcome back to the

bloomberg market day. let's go straight to your top headlines at this hour. 2 more u.s. senators say they are opposed to the iran nuclear deal but the majority leader admits it will probably pass. republican bob corker of tennessee calls on congress to reject the plan. new jersey democrat bob menendez is speaking right now at seton hall university in south orange, new jersey and says he will oppose the nuclear agreement as well. the senators making his announcement in front of an audience. it makes him only the second democrat in the senate to oppose the accord. senator chuck schumer is the other. theremcconnell concedes are probably not enough votes to override the president's expected veto. in bangkok him authorities say a suspect in a deadly explosion was spotted on security camera footage. they are looking for a man who was seen taking off a backpack and then walking away.

at least 20 people killed and more than 100 others wounded and the bomb exploded in the bangkok shopping area that is popular with foreigners. investors in china may be betting the government will cut back its effort to prop up stocks. chinese stocks fell today by the most in three weeks. we spoke earlier with anastasia amarosa about the situation. high inu look at who is the china play, it's latin american countries. the fragile five is now fallen to a troubled 10 because countries like colombia and peru have everything to do with the china commodity trade. they are in that troubled 10 bucket. mark: the shin sang composite held by 6% which is the latest move in a roller coaster couple of months. the chinese regulator last friday said it would reduce buying as volatility falls. authorities in indonesia are hoping the discovery of a

plane's blackbox will determine why the indonesian flight crashed into a mountain on sunday. all 54 people aboard were killed and more than 70 rescuers reached the crash site today after being hindered by rugged terrain and bad weather. all of the bodies have been recovered. russian president vladimir put taking a small submersible craft the bottom of the black sea to see an ancient ship recently discovered off the coast of crimea in another of his well-publicized exploits. he went scuba diving and brought potterynt greek shards. the items were planted for him to find. next half hour, what do we make of the brazilian economy as the country heads for its worst recession in 25 years? we will get answers from the peterson institute.

servicernal revenue says the hack into its database maybe triple its original estimate. the agency says more than 334,000 taxpayers may be affected. to the latest twist in the war of the glocks, the ex-wife of gaston glock has potential explosive ammunition in the battle against the man she was married to for 49 years. paul barrett has been following this story extensively and is the author of the best-selling book. he joins me in the studio. before we get into the nuts and bolts, take us through the divorce to where we are now. glock is the inventor of the most influential handgun since the 1980's worldwide and extraordinarily lucrative product. helga,rces wife in 2011,

and married a much younger woman. this led to the internal acrimony that often afflicts family-owned companies. acrimony has spawned lawsuits in austria and this country and most recently a civil racketeering lawsuit by helga against gaston. she has accused him of hiding assets around the world. the proceeds from this very lucrative gun empire that are rightfully hers. mark: we were speaking before we , i found that i was doing this story and i found but iivil rico statute was under the impression that the feds could only file this. was enacted in 1970 to go after organized crime has civil provisions in it which can be used by private parties. over the years, it has become an increasingly common weapon in corporate battles of all sorts.

in this instance, some creative lawyers have basically translated helga glock's austrian divorce proceedings into a racketeering lawsuit in this country. it's potentially a far-reaching for tripleovides damages if the plaintiff wins. if she can prove that he has hidden hundreds of millions of dollars from her, you can multiply that by three and get to one million -- $1 billion quickly. mark: what does this mean for the company? >> it's a fight for the future control of the company. there are three adult children in the background who are allied with mom. all four of them lost their positions with the company on the occasion of the marital split up. in part, this is a struggle over who will have say over who controls this phenomenally valuable brand in the future. handguny has the glock

been so influential? >> you see the pictures there. glock invented the gun that looks like that. almost all large capacity likeutomatic distills look the glock. it would be as if one new car came along and all the car manufacturers basically knocked off the same design. that's how influential the glock is. police departments, military agencies around the world have adopted this and civilians in this country have bought it in great numbers. for that reason, it turned gaston glock into a billionaire and now there is the fight over control of this money generating product. ruling will be out of atlantic? why atlantic? >> atlanta is very close to the u.s. subsidiary of glock which is the main most prolific arm of the entire glock empire. the main market is the united states. helga glock has come to the

united states, she has hired in lawyers in the united states case inused this rico atlanta ruled that pages of internal company documents that she was able to obtain in connection with the divorce back in austria can now be used in the united states in the wreck during case. -- in the racketeering case. she has a pile of ammunition in this lawsuit she did not have before. about the possible ripple effect throughout the gun industry depending on who wins this case. >> gaston glock is 86. one assumes he will pass from the scene it or to retirement or data. -- or death. there is a question as to who inherits this juggernaut. or who might want to acquire it and which other gun company

might want to fold it into its area products. the person or persons who will be able to answer that question will be those who are standing after the legal fight. any damagesing on or money that is awarded, how would that affect the company plus bottom line? >> it wouldn't necessarily affect their bottom line going forward. it would would affect the glock family fortune. there is the question of an equity stake. helga glock contends she was tricked out of a 14% equity stake. that is not a controlling stake but it is a substantial amount of the company and she further contends that she and her wereren who are now adults given the impression that they would be involved in the future management of the company. if she were to prevail on those claims, whoever might want to acquire the glock company in the post test and glock your would

have to do business with helga and her children. mark: this is a fascinating story. there are so many implications here for the company and the family. keep us posted. >> it is like a reality show. mark: thanks so much. still ahead, we will tell you what the price of cate blanchett 's home is and what it says about the housing market in sydney and why it may affect the australian central bank's next decision on interest rates. bloomberg market day continues in a moment. ♪

mark: welcome back to the bloomberg market day. let's check on the markets with julie hyman. how are things looking on this tuesday? julie: not great if you are a

bull on the market. major averages are pulling back in the nasdaq is feeling the pain, down about half of 1%. commodities are continuing their slump broadly. weighings to be out the positive news we got this morning on the housing market that construction data. looking at the various sectors, consumer discretionary is up a little bit helped in part by the homebuilders. besides that, the groups in the s&p 500 have turned red. energy and materials are leading those declines. we have a bit of a divergence between energy stocks and oil prices. had a a look at oil, we midmorning reversal in oil and now it's moving to the highs of the session, up 1.5% as energy stocks move lower.

the commentary, oil still remains broadly negative about there being ample supply. tomorrow we get the weekly inventory data and that usually has an effect on where oil prices are going. as we see this pullback in commodities, it continues to have an effect on emerging markets. the emerging market index is of 1% which is the lowest since 2011. so many emerging market economies are dependent upon commodities. we such final fall sharply over not and the bombing in bangkok that is raising concerns. all of that is weighing on the stocks. issues been seeing these index are seeing the msci trading with the widest gap to the s&p 500 in about a decade. that's a big diversions. big diversions between developed markets in the u.s.

and the emerging markets print mark: we can see how far it is down. thank you. let's take a look at today's market close in europe. elliott gotkine reports from london. t: europeans stocks were rising for the second day after the selloff in the wake of the devaluation. there are gains in spain and austria and ireland as well. ,he kleins are slight in france germany, and the u.k. and of course agrees. economists expected prices to be stagnant and the sterling pound is making gains. basic materials are still suffering along with oil prices. there are some companies bucking that trend. glenn corp. is out with earnings tomorrow.

harris associates it's upping its stake. it has been trading at its lowest level since its ipo. the dutch financial services company, the stock is cheap and it's a big gainer and wire card is the biggest gainer. payments and a good set of results from them today. on the downside, commodity companies are down. the national bank of greece is down 7% which is the biggest decline ever and greece is waiting for five european parliaments to approve its third bailout before it can get its hands on that money. back to you. mark: thank you. home prices in sydney, australia surged to a new record in july. celebrities like oscar-winning actress kate blanchette who were looking to sell their properties may face record prices.

our cohost for the next half hour is scarlet fu. is that a housing bubble? potentially, this is right up our alley. sydney housing prices are pretty high. prices have gained about 13% this year and this follows a 12% increase in 2014. you mentioned kate blanchette who was looking to sell her for 20hich is listed million australian dollars which is $15 million u.s. which would be a record for that area. packer is ajames billionaire businessman. he is dating mariah carey. mark: now i know. scarlet: he sold his house in a sydney suburb for 70 million australian dollars. that set a record and he sold it to an australian chinese billionaire. in case you were wondering, he

and a riot carrier doing well and traveled the world. mark: how do you know that? scarlet: she gave him a shout out when she performed on stage. mark: what don't you know? scarlet: i had to do extra digging for that. mark: the australia central bank governor said that the sydney housing market was crazy. because of these a record prices, this is one reason why traders think the second -- angst the central bank won't cut interest rates next month or any time soon. the central bank wants to see prices deflate a little bit and moderate before they continue reducing interest rates. mark: deflate without them stepping on the brakes? scarlet: they have regulators come in to find out how the prices don't grow the way they have been. high soment is at a new they have to consider ways to support the economy. housing continues to be the thing that gets in the way. mark: in july, the home prices

in australia were the highest ever. scarlet: exactly, and if you look at australian interest rates, they have been going down like the rest of the developed world. the u.s. is an exception as well as the u.k. in that they are looking to raise interest rates and the us trillion interest rate is at a record low of 2%. and withnd on exports china slowing down, there are fewer exports going to china. mark: what's coming up next hour? scarlet: we will continue the resource conversation because will join us to talk about the brazil economy and the political turmoil there. mark: this is interesting because that's another emerging market that has been seeing the ad and flow because of what happened with the chinese devaluation. scarlet: they have their own problems as well with some corruption scandals. the petrobras issue, we will talk about that coming up and thank you so much. the fuelad, they are

in the self driving racecar, we are talking about maps and we will to you which tech companies and automakers are ahead of the curve. that is next. ♪

mark: welcome back. there is a war brewing for the future of the american highway. it has traditional carmakers facing competition from tech companies like google, apple, uber and even by do. the goal is to acquire the most advanced mapping technology. cory johnson takes a look at some of these map battles. there is a car race underway putting traditional carmakers against upstarts in silicon valley. getting self driving cars on the

and maps are the fuel in this race. >> it's really about getting from a to b. have gone from something visual to something and embedded in the car. not only helps you get there but it will help the car drive. corey: it is also knowing everything in real time. >> it's extremely complex. bmw and othersd team up to spend $3.1 billion to acquire the gnocchi a map division question mark because the carmakers are afraid they would give up control to apple and google. was -- what makes the maps valuable -- has a nascent product and google has google maps, there is tom-tom out of amsterdam and the gnocchi a product. niokiagnocchi a -- product. they may have landed a sweet deal but in the map of the future of the auto industry.

mark: cory johnson joins us. you are here in studio. the race for self driving cars, are these maps the key? the battle over maps is important beyond the self driving cars. it's a crucial piece of the deciding factor. what you see with car companies and the extraordinary alliance bmween bmw and audi and spending money on mapping is they feel they have to have over maps and not use what's being offered to them for free from google and apple. on fact that they will spend something that consumers want -- might -- what consumers might want to sit down and have your

favorite iphone experience on whatever, the fact that the carmakers are trying to imagine a different future that will cost them literally more than a billion dollars says to me that they are worried about losing business to google and they are worried about losing business to apple. they don't trust those companies as partners. mark: if they are concerned about losing business, does that mean we will see more of these map consortiums? cory: there aren't that many out there. google has there's an apple has theirs and nokia has been acquired by the three luxury carmakers. databasea tom-tom waiting to be had in holland and that's interesting. there is talk of a move toward an open source database. the mapping is so complicated and it requires so much continual work to improve and

change as the roads change that it's a hard technological problem and only the giant companies have been able to spend the money to build up their systems. apple has been spending vast fortunes, hundreds of millions of dollars to improve their product which is strong now. mark: are other technology companies getting into the mix? dedicatingoking at their research and development to this? cory: we might look that the $1 billion acquisition of wave by google as a smart investment because it will open up to more revenue streams. they will come through every time someone gets into a car. mark: do we know what investors think? companies, ittech makes a lot of sense to push the boundaries of what they are doing.

they took it from the desktop to the mobile. , aren't a tech company you supposed to be doing that? cory: indeed, and that is making the carmakers nervous. mark: yes you are joining us from san francisco. hour, up in the next half parent company softbank is boosting its commitment to its struggling wireless provider trillion -- $70 million worth of stock in what this means for the company. we will hear from the sprint ceo in just a moment. ♪

mark: it is 11:00 a.m. and tempest go, 2:00 p.m. in new york and 2:00 -- itsil is hurtling toward worst recession in two decades.

we will tell you what is next for the country. was worse recent hack than initially reported. we have to go back to hardcopies and file cabinets? mark: good day from bloomberg world headquarters in new york, i am mark crumpton, here with scarlet fu. a lot of red on the screen again. scarlet: a selloff in commodities weighing on other risky assets such as stocks. now industrials adding a emerging-market stocks falling at a four-year low. li turkish