you are watching "market makers ." i am olivia sterns here with blue eyes. eric and stephanie have the week off. the big focus is commodities this morning. ceo of the world's largest fund space exclusively to lenders about risks in the market. cory: we talk about the founders behind these. we talk about how that became the goto satchel of the street. olivia: breaking news. let's get over to vonnie quinn. even though 1.22 is the best of the forecast, they were

up 2.4% in terms of cocktails. comp sales. the estimate was 2.2%. it is the beginning of the back-to-school season. we will see more from the press release in terms of the year forecast. adjusted earnings per share for 60-475 460-475. that is a raise. a pretty good outlook for target. we are seeing shares spike in early trading. they are now up to a three quarters of a percent. olivia: thank you so much. time now for this morning's top stories. greece's third bailout has cleared a hurdle. the parliament overwhelmingly voted in favor of the package in germany.

there are now 30,000 firefighters battling wildfires in the west. they are being assisted by 200 soldiers. five states are battling 10 wildfires each. the world's second-largest home-improvement chain. lowe's posted second-quarter profits. the rebound and home prices led to consumer spending more on their houses but that did not translate into robust sales. do it model being imported into china will make gm the first detroit automaker to sell chinese made cars in the u.s.

no sign of a settlement over tom brady's four-game suspension battle. story. the >> tom and his legal team are back in federal court today for a petering and the deflategate saga. the nfl said brady likely knew the patriots played with underinflated walls last season. the two-time m.v.p. has denied all knowledge. roger goodell chose to hear the appeal himself and upheld the original discipline. what is being argued now has nothing to do with brady's innocence. the judge will rule whether the nfl and roger goodell have authority to discipline brady as it did. there has been little progress in settlement talk. that means it will likely be up to the judge to settle the process that has already taken eight months.

i has agreed to a nice but did ruling in today's testimony could be a major step to the decision. cory: those are your top headlines. olivia: let's get you started with the five things you need to know about this wednesday morning. number one has to be the federal reserve releasing their latest minutes on their july meeting. they come out at 2:00 p.m. this evening. watch out for any signal on discussions whether or not there is consensus that some of her is the right -- that september is the right time. we are joined by one of the many people in the building who has convinced you to care about this. i care because the fed is watching it. doesn't it look like voting members of the event are getting on the same page for september. >> it will be unprecedented for the fed to embark on a right hiking cycle without giving advanced warning. that was one of the thing with

the july meeting. they were very vague and did not signal that hikes were imminent. let us remember that i think we get more information from the fed speaking from the next few weeks that today's minutes. at the time of the meeting, the dp. still had not seen q2 g they did not know that quarter q1 had been modified or the chinese evaluation. there are a lot of things that have happened since the meeting. what with the number be that would change their mind and say we have to hike or we cannot hike? carl: i think they are watching for regular feedback from the currency moves. over the first half of the year, the factory sector has been stagnant.

you saw the new york empires survey at the start of the week showing a stick attraction. if that is followed through in the survey tomorrow or the other production surveys, that would bring real concern. olivia: what is some further improvement in the labor market? how does janet yellen measure some? carl: that was intentionally vague. we were about 200,000 the unemployment rate still. that is an indication that we are not there yet. they want to see one more remaining jobs report ahead of the september meeting. olivia: maybe some is a combination. carl: it shows we are moving in the right direction but are not quite there yet. there is not tremendous urgency to hike rates, but the fed feels obligated to get out of the zero

bound now that the economy is not in crisis mode. the issue is to get off of zero and potentially signal the subsequent rate hikes will be slower. cory: we told you we would give you five things and that was just one. olivia: thank you so much. oil hasmber two, tumbled more than 30% this year since its peak in june. olivia: what is incredible is the opec countries were pumping more oil than ever. opec spokesperson said a production booth is important to meet the needs of a growing population. slowing and big production coming out of iran. it has allowed opec to assert control over the markets. olivia: sticking with --modities, they could give

commodities, a 56% drop for glencore. china was a lot weaker than .nyone had expected it doesn't matter they are a big producer because they have massive trading to offset production. cory: it worked the last quarter. when your biggest seller is: oil, you have problems is coal .nd oil, you will have problems watching global markets, the cello in emerging markets spread to europe, sending stocks that there lowereek -- this week.

-- destan has the valued valued their currency. olivia: we do not cover kazakhstan in up. w-- enough. we will cover norway because we have an exclusive this morning. they posted it a billion-dollar losses in the second-quarter. that is the first of the decline of the year. >> both of those influence different variants. then there is the currency. we see the opportunity. olivia: we like to talk about negative yields and european sovereign debt. guess who holds a lot of european sovereign bonds. fund.rwegian

they are literally losing money. cory: fda has approved the boostled pink pill to a sex drive for women. olivia: why is this not female viagra? >> this quest to get a female sex phil or something comparable to what men have has been going on for years. last night we got the news that the fda had approved this drug. .t will be sold as addyi it is one of these drug names that can be a little bit of a mouthful. yes. to some people >> this drug will have to be taken by women every single

for a slight increase in the number of what they call satisfying sexual events. for votes having problems in their sex life, very little sex, this could be something meaningful for them. when people have worried about and what we hear criticism about is the drug comes with side effects. fda has rejected it twice. there are a lot of questions here. andalked to sex experts researchers saying is this really the drug we want to bring to market first? it is a first that, which is but it, may not be quite the robust effectiveness a lot of folks were looking for. cory: where the rejections based on side effects? >> when the fda looks at a drug, it is a balance of safety and side effects versus how good is this drug. when you bring a cancer drug to market, you are willing to

tolerate potential side effects because the alternatives to that are substantial and not great. when you talk about a lifestyle drug or something not treating a life-threatening condition, you are less likely. if you are taking alcohol, you cannot take this drug. there are issues with a birth control pill. olivia: if the drug's life or death, the fda will put up with that. any chance this will be a big success? >> i do not would should think -- we should think about this like viagra. they will push this hard. they have an 18 months they before they do the ads.

get ready. they have to wait a while. there are a lot of restrictions in place on this drug initially to get a feel for how it works out in the real world. olivia: thank you very much for doing that story with a straight face. just pointing out i appreciate that. cory: when the headline came out i was having dinner with some friends and we said this place would get busy and have an hour but it did not happen. as ceo will be with us at 11:00 this morning because it is a big story. olivia: did target hit the bull's-eye with quarterly results? what to look for ahead of the company's conference call.

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olivia: will come back to "market makers." many are anticipating target release. us --d mcgee joins patrick mcgee joins us on the phone. is this enough for you to upgrade your rating on the stock from neutral to a buy? >> i could not say that. quarter from a bottom-line standpoint. sales are right in line and went up 2.4%. that was where i was and where the street was. it is pretty much where they were in the first quarter. they have tougher comparisons in the back half of the year which is something to keep in mind. in the first half of the year, they have been cycling the fallout from the systems breach in late 2013. it took a lot of very aggressive

promotions in the second quarter of last year. they saw improvement this year in gross margin. it is a good story. i do not think it is a great story. atxpect some moderation least in the top line in the back half of the year. it is certainly a different story than it was a year or two years ago. they had a gated operations dragging them down. now they have a new ceo that has been there for a year now trying to focus on what is target's core? is trying to get out of things target is not known for. even pharmacy and getting out of that. trying to get back to target 101 is the idea. patrick said it would take time to tell. certainly a different story than with the story last year. olivia: they are working with cvs. for the pharmacy.

olivia: how are they doing with grocery? patrick: it has not been doing that will. they did not mention in the press release. they called out the signature categories they have been focused on more recently. wellnessby, kids and grew three times faster than the company average. grocery has been a weak spot. they put off fixing that business for the most part anyway. the improvement is expected to come next year. shannon: it can be interesting to see what they say on the call about measuring. target has been trying to compete with walmart or kroger or a big grocery store to be a place to go every week to get groceries and that has not panned out. people are thinking them to focus more on not your big weekly grocery trip, but things you want to pick up on the way when you are in target for

something else. i think people are expecting to see more organics and things geared to younger shoppers. those things that you will not go to get your meat and produce but you may get things you like and enjoy. cory: those could have higher margin as well, yes? patrick: yes. grocery overall is certainly lower margin than the signature categories i mentioned. i think they can shift the mix within grocery to more higher-margin products. have had macy's and walmart and out target command. what is your take away on the now?consumer and no patrick: i think the consumer is healthier than a year ago and certainly more than two or three years ago. that has been -- unemployment is

at a cycle low. gas is down. there is more spending power. consumers are spending differently, spending more on big-ticket items. durables, cars, and homes. more on smartphone bills and digital downloads. they are spending differently and have more power. retail has been very mixed. we got that numbers at walmart yesterday morning. very good numbers in the apparel space. not so great at macy's and colts last week. pretty good out of target today. it has been mixed. the consumer has more spending capacity today. cory: interesting. thank you very much. opec keeps pumping. the strategy next. ♪

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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. olivia: welcome back to "market makers." julie: it is time for futures in focus and we are taking a closer look at gold today. valuations around the world have been good for gold. more than 3%d since reaching a low a few weeks ago. fromng me now is rj chicago -- is filled from chicago.- phil from we have seen risk aversion take

hold around the world. what happens now? do you think that hangs around and continues to support gold? >> it is a tough call. you have that ou uncertain outlook in china. the devaluation could spread to other countries like vietnam. ,f you will look forward here we have inflation data that is expected to be muted. the will be a big impact today. a lot of people are gauging the level of hawkishness and whether or not a rate hike would come in september or would it be delayed to december. there is indication that there are dissenters that might single sees remain -- that might

gold prices remain. it looks like september is back on the car, that break down to 1100 could be a move back down to 1080. julie: give in the wild card the fed continuing to be a big factor, how to use it yourself up in terms of trainin trading gold? phillip: you have to look at the ranges that are outlined here. on the cbi data, somebody might look at call options especially over the 1120 and 1080 level. you could strangle the market. is the market breaks in either direction, you lift the other leg here. once we do break out of some kind of range within the two guidelines, i think the move

will indicate the next direction a lot higher or a lot lower. julie: hedge fund managers have met short gold for the last several weeks. en does it make getting in or out of the gold market when you have that huge amount of sentiment working against it? phillip: when you look at guys like paulson cutting massive amounts of their exposure to gold, it does provide some kind of concern. money managers have been short for the past few weeks here. they are smart money and right in the trend. what they are looking at is these problems we have had geopolitically and financially with greece and russia. gold cannot rally on that kind of maneuver. the possibility of the fed raising rates -- they are playing a big wave down. there will be opportunities with some of these smaller developments like the fed

minutes coming out. there is some money to be made with currency devaluations. julie: got it. thank you. appreciate it. olivia: time for a look at this morning's top stories. target shares rising in the market right now. the posted second-quarter numbers that the estimates. costs ando has cut focus more on the company's best categories such as apparel, home goods, and toys. later today, the federal reserve releases minutes from last month's policy makers meeting. we will see of december is the -- september is the right time to raise heigh rates.

>> adding more the fed because of inflation and the dollar going up hits both inflation and growth. with a domestic market that is solid, from the forecasting point of view, should be looking at that to push up inflation overtime so it is a close call. olivia: with reports of economists say the fed will raise rates next month's meeting. we have breaking news. let us go to vonnie quinn. year-over-year, core inflation is up but if you look at the month-to-month numbers, a little bit of a deceleration. increase of a 10th of 1% for cpi. in both of those cases, economists looking for a gain 2%.

a little deceleration in inflation. that could be thanks to the stronger dollar or the price of food inflation. we look at market reaction. treasuriesng unchanged. olivia: speculation the fed may wait longer. this slight slowdown in inflation will not be inflicted. cory: you do care. see? olivia: tom king made me and inflation are -- an inflation narrativnerd. we will be back with much more on "market makers."

you are looking at a beautiful wednesday, august 19 in london. ♪

reboundedices slightly yesterday from six-year lows. they have back in the red. was driving the volatility in oil and why are we now seeing cheaper prices at the pump as a result? now.e joined great to see you as always. looks like oil is hanging out above $40 a barrel. why do you think $65 to $70 is the new normal? >> this is really because i do not see the industry will put a at a $40 price. we believe in the next two or

three years prices will or 70's --o the 60's the high 60's or the low 70's. this is the sweet spot. not many companies will survive $65 oil. number that we a grab out of thin air. if you normalize oil prices over the oil 15 or 20 years, industry used to make money at $20. 15 years going for basic consumption for spending, oil.nies used to have $20 going to see a lot of cost-saving and cut costs and capital spending cut. we will see a lot of headcount

reduction going forward and mergers and acquisition. the industry will consolidate and create much stronger bigger companies and will be more resilient to lower oil prices going forward. cory: when you look at the shale plays and the lifting costs, they are a big contributor to this in the states here. is lifting costs are so much higher and other places. that is the reason, right? why it is not as profitable. fadel: that is correct. margins and cost dollars coming out of the ground -- it is not $95 oil or $35 oil. aty will probably break even $50.

we are going to see a lot more efficiencies in the system in the next six to 12 months. mergers and acquisitions will squeeze additional cost. the supply side of oil services will have to lower their asking price for goods and services in order for them to oil companies stay in business. they depend on each other. cory: how much can they cut? they have pretty tight margins as well. asian fee is not selling tom graves with a 60% margin. technology is somewhat harder. fadel: you will be surprised how much more costs can be taken out of the system. the more layers they take out, the more they discover there are additional layers that can be taken out. i used to work for a company ,alled mobil oil 30 years ago were costs were cut, they

bought 10 years ago and cut even more. olivia: what do you think is the cost per barrel for new production? fadel: depends where we are. in the middle east, because cash cost is between $10 and $15. olivia: in the u.s.? $20,: it is about $15 to the cash cost. total cost is between $35 to $45. cory: do you think it is possible we will see more conventional developed unless horizontal drilling, less multistage fracking, so the focus may be on the old way of drilling? fadel: the industry will have to be smart and efficient. they will have to be better than they were a year ago or five years ago. as long as they continue to cut costs and improve operating efficiencies, i think shale has

a lot more upside. the recovery rate in shale is only 8%. the recovery rate of oil in the ground is 70% to 80%. there is no more room to grow in the conventional area, but there is plenty of room to grow in the shell area. -- shale area. olivia: thank you so much. we are talking about u.s. shale. some say oil may only find a flow when opec starts to flow because they are still losing production. cory: they are depleting so much faster. this oil renaissance in the u.s. -- the question is how long it will be. olivia: we have not spoken about the man and the threat of a slowing china. cory: and the threat of solar. it is all related in one big energy family.

joined exclusively by how the company is heading off further problems. ♪

olivia: coming up in the next hour, we will be joined by the president of the american action forum. he will speak with us about the fed and how he thinks republican candidates should be looking at the economy. .ory: it has been a rough month --res that 50% in 30 days shares down 50% in 30 days. the ceo joins us now. good to have you on brian. when you look back, what happened last quarter? there has definitely been

an impact across the sector we have seen. sellers has been rewarded for its growth and execution, but clearly you see a shift in sentiment across the sector. olivia: julie: when not everybody -- olivia: but not everybody in your sector lost half of their value. brian: that is true. when we have done the last two weeks is short of -- shore up liquidity. the moves we made over the last couple of weeks is to add an additional $2 billion in the quiddity of the company to allow us to continue to execute through 2016. cory: it is through a separate entity, right? i find it confusing. why does the company have to have such a convoluted answe structure? is it about the tax incentives or something else? brian: the business model i

think is quite straightforward. we have a development company that built and constructs renewable assets. whiche holding companies are the ones you referred to that hold the assets long-term. value of building an asset and selling it is less than building an asset and owning it or it's life.- it for its to enjoy the long-term low risk high value cash flow of these assets over the next 20 to 30 years. olivia: you have been on an acquisitions we buying wind and solar assets that will feed terraform global. went via think they will start to pay off? brian: immediately. is -- in thisem her vehicle. vehicle. share it is back to the basics and

continuing to drive value for our shareholders. cory: where do you expect the growth to happen most? there is no question the u.s. is a great market for renewable energy. $52 billion was invested in renewable assets last year. china, india, brazil are the highest growth markets. china continues to be supportive of the renewable energy efforts. last year they invested $84 billion. olivia: you are borrowing to grow and just got a $1 billion sachs.om goldman's act how expensive with that debt? brian: consistent with the rest of the company. very cost competitive cost to capital. cory: do you talk to a lot of companies out there? is that your go to bank? brian: we have tremendous access to capital.

the preferred equity placement we did last night as well was led by kkr, so we have a wide breadth and access to capital. olivia: what is your take? you feel the u.s. is behind the curve on renewable energy? brian: i think the u.s. has been a great job. olivia: really? brian: when you look at the growth of the industry, it continues to grow. over 50% of new additions over the first half of this year in renewable. 10 or 50n you look years from now, what do you think the split will be where your revenues are from solar to wind? brian: i think it will be equally split between the two. we like the diversification of

our portfolio. olivia: what you have in your house? brian: solar. olivia: all solar? cory: i am not off the grid, but there is a letter in my house. olivia: i lived in a rental in manhattan. i am all plugged into the grid. thank you so much, brian. the world'sto come, largest sovereign wealth fund. ♪

olivia: was biggest sovereign wealth fund reported its first loss in three years. 8.8 billion dollars. in a dismissive interview this morning, bloomberg spoke with the ceo of the current investment environment.

>> looks like a very quiet market. interest rates crept up again after going down. i think the most interesting thing has been the currency and the currency volatility. >> those currencies are moving constantly. my question is can we expect bigger moves, more expensive moves? the chinese have depreciated the currency. perhaps you can define for me what word you would use. >> volatility in the currency markets is likely different. some can move out of the fixed income markets and into the currency market. >> you also mentioned during the

news briefing that less money overall coming in from oil revenues, this is a challenge for the fund in terms of the risk and duration. how will that on the mentally change how you invest? >> one of the things we have is we take 100% of the government revenues into the fund so we have a net positive influence. it doesn't really change anything, but we do not have the same amount of cash flow. it is stable and large so we do not move around that much. >> if i asked you what the biggest challenge is for you when you joined, is at the fed hiking rates? is it china? what are the biggest issues for you? monetary policy and china. .hen there is the currency

didn't seem toeam those biggest issues -- do seem to be the biggest issues. cory: picture this. marco rubio with a fumble. really? watch this in slow mo. he hits the kid in the head. that is a doink. the child was fine. he was thinking about voting for chris christie right before that. olivia: i was through a frisbee into a toddler's face. it was horrible. cory: maybe you should run for president. olivia: i will not say anything.

sent quinton is california's oldest prison and also home to -- santimental giants quentin giants. games the multiple played it season. -- each season. cory: some innovative things there. it is a horrible place full of people that have been horrible things, but they have a yoga program there as well. they try to get their heads straight enter in the lives around. olivia: vladimir putin is known opportunities. is latest stunt is no different. he took a ride on a miniature submarine to view a shipwreck. isn't anything this man cannot do? it dove 83 meters beneath the surface. cory: how about trust?

he cannot do that. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. olivia: good morning everybody. you are watching the second hour of "market makers." cory: erik schatzker and stephanie ruhle have the week off. eyes on the meetings being released at 2:00 p.m. the fed has a 2% target for inflation. the economy though not cooperating it seems. cost of living in the u.s. rose in july at this the was ace in three months. the consumer price index rose

1/10 of 1%, less than economists had forecast. we make it a better sense today about whether the fed is ready to raise interest rates and next month's meeting. at 2:00 p.m., the fed is releasing their last notes on the meeting. those may show whether september is the right time for the first hike in years. we spoke with bruce earlier. >> the reason why the fed is itnking about heightening is is leading to a tightening labor market before we see gdp growth. the dynamic here is a get lower equilibrium rates before a given rate of growth, you have to get there. olivia: reports of the economists we surveyed say the fed will raise rates at next month's meeting.

germany overwhelmingly voting in favor of the $95 billion eight wreckage -- aid package. move over tesla. tesla struggles to get its next model out. audi is now getting out a car. it will unveil an electric crossover. uattro willron q drive 300 miles before you need to recharge. olivia: the plunge in energy prices are erasing billions of dollars. been more, there have than $17 billion lost from energy investments. this drop has many watching kkr acquisition of simpson resources.

here? what happened how did energy turn into a minefield for kkr? david: they made it to massive 2 massiveey made bets. futuresay massive, the deal was the largest leverage lannett history. samson was the second-largest in 2011. when i say leverage, they financed the deal with a lot of debt onto the company's balance sheet. the revenues were tied to natural gas prices. one prices plunged, the kkr ands tanked, and other firms invested in those just went out these two deals.

cory: it is an unusually big loss for them. david: that's right. as your lead-in said, a lot of firms have ailing oil and gas kkr isents but talking about a huge amount of money in these deals. twice. burned cory: these were commodity bets, which is unusual for kkr. energyi think because future was a regulated utility, it had both regulated and unregulated subsidiaries. kkr was good on the business strategy. revenues are tied by a formula to gas prices. no one saw prices plunging the way they did. wouldne thought demand outstrip supply because of rising demand in china and

emerging markets. instead, that whole equation flipped because of the fracking solution that sends a surge of gas and oil. cory: gas an in particular collapsing a lot more than oil. olivia: they still make hundreds of millions of dollars from management fees, right? david: they did, but that does not compensate a $5 billion loss. olivia: kkr has a 9% annualized return. i am just saying. just because energy went sour -- olivia: this is a small -- david: this is a small slice of their business overall. these investments are definitely a drag. samson's looming

bankruptcy should take place in the next month. it will not put a dent in the kkr investment in the losses are not mostly kkr's. ors'. the investmen cory: the world's leading commodity trader slumped to a record low. how low can they go? ♪

shares slumpede to a record low this morning. this after the committee reported a 56% drop in first half. shares have tumbled 41%.

we are joined by andrew cosgrove and jesse. let us start with the thesis that it doesn't matter that glencore is a big mining producer, they have a trading arm.what happened ? >> that is the key issue investors are grappling with right now. they marketed themselves as the best traders in the world. a steep drop in commodity prices. this is the first time they have really revealed that trading business is slightly fallible. they had to slightly cut there for your target -- their 4 year target. they had to adjust their forecast. olivia: what are the key concerns besides the trading arm? jesse: the balance sheet is a big focus. $30 billion of debt.

the credit rating is so important to a trading co-editor like glencore. that will come under pressure. aboutare question marks how sustainable it is going forward. cory: so many things going into this. coal and copper in particular. when you look at these results, can you attribute most of that to the slowdown in china? >> yes. it is troubling that he or i can say they have very low visibility in china. visibilitynot have -- then nobody has visibility. cory: maybe the gdp numbers out of china are fixed. andrew: exactly

the lowest since 2009. olivia: percent to 4.5% growth in china. >> it was actually negative in june. olivia: which of those commodities is glencore more exposed to? >> have a big copper and a big coal business. the depreciation of the australian dollar and the canadian dollar is really helping lower the cost for coal specifically. cory: volume has not been terrible for them. of the loweste cost producers in the world so they can withstand any commodity cycle and they have done a pretty good job in terms of lowering their over the last year years. years.ast few it goes to show you that even the lowest cost producers are shrinking in this environment.

olivia: you spoke to the ceo. for so long, he has been pointing to china. interesting to see him say no one has visibility. what else did he say about china? jesse: that was a candid comments about having no visibility. he said it contributed to the crackdown in china. is delayed a number of large infrastructure projects, thus hurting the demand for commodities. he said there may be a pickup in demand and next year. i am bullish about the long-term prospects. cory: the crackdown and corruption is meaning deals cannot be done? jesse: yes. it was stunning. he said some people there have had to hold back on the large infrastructure projects because of the crackdown. olivia: it is something we heard

from the luxury companies saying the crackdown was hurting. how likely is it glencore will out?le to of war afford paying jesse: i asked about the credit rating of the dividend and those two things combined, he said we can walk and chew gum at the same time. i am not sure the market is buying that at the moment when you see the market price today. thata: i appreciate expression by have not met anyone that cannot walk and chew gum at the same time. awesome interview. awesome story. our thanks to jesse and andrew. cory: on behalf of the two of us. olivia: you cannot walk and chew gum at the same time? cory: some people can do it with great coordination. olivia: the chairman of bloomberg lp is a senior

independent director at glencore. cory: pass or fail? bank of america is the only big backthe stress test came week. -- bleak. ♪

olivia: welcome back. let's take a look at this morning's headlines. explosions and gunfire as were heard outside of a palace now used as a museum. twowith automatic weapons were arrested. there have been a number of attacks in istanbul by allegedly kurdish and islamic militants. hillary clinton's e-mail

controversy is surfacing among voters. she still has a big lead over democratic rivals for the presidential nomination, but the survey shows donald is surfacing voters. trump was up 6% in a hypothetical matchup. women'sesigned to boost sexual drive is heading to the market. critics point to an array of side effects and say it is not that effective anyway. those are your top headlines at this hour. cory: stress tests were spiteful for bank of america. it is a big moment for the ceo. he came under fire recently from top wall street analyst. >> looks to me like the cfo got fired at the same time the ceo is the same. no change of the board.

over the last eight years, you have had now 4 chief financial officers, 4 heads of the brokerage business. the message from this is it is good to be the boss. now, ioining us right just finished this great book about the history of bank of america. since the 1950's or 1960's, this bank has been through problem after problem. this is as big as it gets. >> it is fascinating. i call moynahan the teflon ceo. they messed up on the stress test three times. the investors i speak to are getting impatient. olivia: this is a do over for a third time. it is supposed to be three strikes and you're out. hugh: basically. he said if we cannot do this, i should not be here, so he is taking his job on this.

they got rid of their cfo. they say it is amicable. this is coming at a special time. he did not take the summer off, let me say that. he is at risk of losing his title, and that would be a big blow. olivia: we are talking about failing stress tests. that suggests a lack of oversight. is that not an argument to have an independent chairman split of those roles? hugh: that is what a lot of people have said. it comes at a bad time for moynihan. they're holding a special vote eight days before the stress test was due. people will be upset and they will talk about this. the dividend is five cents. cory: b vote for is better than a vote after. hugh: exactly. why they decided to hold it before they knew about how they did on his do over it is questionable. cory: it makes you wonder if

that suggests they are not -- if he knew they were going to pass and he has control over the board, he would pick the date after. hugh: it is a question. i think he gets reelected chairman. most of the stockholders are huge it's original -- huge institutional guys. olivia: why are they feeling the stress test? hugh: it is complicated. you have this huge institution following technology and the come from dozens of acquisitions. to get all the technology working together -- olivia: all the other events are in a similar situation. cory: they probably get more weird accents than the others. hugh: absolutely. cory: are they still trying to digest? there are a lot of acquisitions they have made over the last decade or 15 years. absolutely.

when you make an acquisition you have to say we will spend billions of dollars to knit all of this together or we can do better on our balance sheet. olivia: we haven't even brought up one of the chief criticisms that in the board suggested to give him as chairman and ceo, they did not mention the $4 billion accounting error. hugh: right. that was the second strike. that was last year and a huge mistake. from my understanding the reason why they are scouring the data to make sure the data from the acquisitions is accurate is that error was from merrill lynch. olivia: got it. thank you so much. appreciate your time this morning. cory: we will be right back. ♪

>> a comeback. we are of the minutes away from the opening bell. here with the is three things you need to be

looking at today. also, rbc capital markets here. they to have you here. joe, number one? joe: i want to talk about the big brewinghe company. the stock is getting slammed because of weakness in russia. one of the rings i really love about following carlsberg is the stock is almost identical to the ruble. you can see when the ruble strengthened, that carlsberg stock sank and lately, it has been getting slammed. you could've anticipated today's big slam. it makes sense because carlsbad sells a lot -- house burgs a lot to russia but it is nice on the two charts. olivia: i wonder what that would look like with the price of oil. joe: it looks like the price of oil and carlsberg, so fascinating. corey: but it's not consumed by the barrel. olivia: jonathan, your take on the russian market?

not sure i have a take on the russian market, but i do think that we are seeing the impact of lawyer oil -- of lower oil, the whole chinese discussion on the view of the emerging markets and global growth. it is a really big deal and you are starting to see it kind of reverberate through the system. we want to get that process going and i think that will be a good thing that moves forward. i know the nonconsent is -- hear that weeds to can go from zero interest rate to 25 basis points and we are not so fragile we cannot handle it. olivia: that we will not the recovery off. jonathan: if we knock the recovery off by going from zero to 25, we have a problem and we do not. we have not had an i am -- and ifn below 60 in like something like 50 years. we are ready to move up to zero and i hope this chapter does not

derail, frankly, a bit more optimism we are entitled to. olivia: unfortunately, we will not hear the chatter today. number two. out saying that penicillin may need to dump into gold and like many other commodities, it is having a rough time. venezuela is having an extra narrowly rough time with a lot of the foreign currency in gold. apparently, there is skepticism about whether it will get this as it continues, been a swellable have to -- joe: a to tailspin. why would they need to do it now , particularly with gold prices so low? it keeps getting worse and worse and they might have to raise cash basically but that is something where you have to pay attention. it is very complicated in exchange. corey: it could be going down to something like 13 to one. defaulted were saying

venezuela was inevitable and it would be question of sovereign default or national oil companies, is that still the view out there? joe: there doesn't seem to be any hope or optimism right now for venezuela. besides a tailspin. corey: that is the sound of the opening bell. what do you got? currencies,market making new lows. last night, two major evaluations, vietnam and cause asked on both devalued the currency. kazakhstan was nearly 5% weakening in its currency. the biggest since 2014. today, fresh lows in the turkish lira. olivia: can you pronounce the kazakhstan currency? : i'm not 100% sure. i did not say it because -- olivia: we have been talking a lot about kazakhstan.

currency it seems is -- kazakhstan is a neighborhood of prussia, so it has that on top of it. it's an ugly situation. jonathan: if you look at what china did by stopping their currency at 3% and not letting it freefall, there was all this discussion about emergent market currencies and they did the right thing which is not to let this turn into an all out currency war and to create some stability. it does not mean that it is not going to be additional pressure. is a difference between this thing becoming disorderly and remaining quite orderly. right now, even if you look at this&p 500, it is saying is an orderly market. we talk of these rings as if there is a huge amount of uncertainty, but in reality, things are still trading at a very orderly manner and you are talking about, in this case, much smaller, less liquid

currencies. olivia: all right. corey: thank you so much. olivia: jonathan, you are staying with us. joe, to our. you can see more of joe this afternoon on his new show, "what you do not want to miss" with joe. corey: let's go to julie hyman for a quick look on stocks. retail once about again today. let's take a look at target and see how those shares are doing after a 4.6% of game out of the gate in the second quarter earnings beating analyst estimates. same-store sales rising, two .4% better than what analysts anticipated. better than competitor walmart which we heard from yesterday. the company is selling more in key categories like apparel, home goods, toys. it has been focusing on baby as back therying to bring company and that does appear to be paying off. take a look at lowe's right now. home depot looks like beating

lows in the home improvement market. even though sales doing well, up 4.3%, outpacing that of home depot. the company missed on the bottom line and it could be a growth in administrative expenses. they were supposed to bring down or analysts were estimating they would bring down and they did not. more they might have sold low-margin items according to analysts, said those shares taking a little bit of a hit. finally, analog devices at chipmaker, up 23%. sales of 20%, beating estimates. the fourth-quarter forecast ahead of estimates and pointing toward force touch feature of apple as a growth driver for analog devices because it makes a chip that powers that, so it looks like analysts are optimistic about not just looking backwards but looking ahead at the prospect for that. i'm sure i saw your ears perking up.

corey? corey: it was movement of my ears. analog devices got much love. olivia: thank you. jonathan still on set with us. equities, you'd think that stocks will rally after a fed hike? what sectors? jonathan: first, let me play why i think that is the case. if you look on days where interest rates rise, stocks rally and they rally in all 10 sectors. olivia: on the day. jonathan: on the day, so what is your best signal? if i told you today the 10 year bond yield would be 10 basis points higher, stocks of being higher as well. what is the biggest winner? unequivocally it is financials. the biggest losers are those bond proxy and defensive groups and then you have stuck in the middle which are tech and health care and energy and materials and the like.

olivia: we are talking out in the quarter after rate hike or specifically? jonathan: in the environment of a rate hike. if the fed moves in september, they are also telling you that you are ready to go and raids are going to start in some type of a process moving forward and the market is not going to question. done. it is not one and i think the worst response would be that if the fed moves and you start to see the long end of the curve folk, so the 10 year yield moves below 2%, oil comes off, if you see that kind of response and it is one and done, that is probably bad news. i don't think that will happen. i think this is the beginning of a slow and stable process towards stabilization of rates and the market will like normal. corey: we have highly speculative violations. if you look across the world at the teslas and the sales force companies with slowing growth that are seeing extreme valuations and i will go amazon in there, too. jonathan: we just did a report

because a lot of people have been saying the same thing. how extreme are the values? there is always something inding at a 100 multiple stock. in fact, the distribution of valuations is more narrow than normal. theexample, if you look at health care sector, apple trading at below market pe multiple. look at the biotech sector. if you look at the growth rate on them, they are trading extremely cheap, so i don't see this as an expensive market in general. there are obviously individual stocks that might be. olivia: how sensitive are eurozone stocks to u.s. infrastructures? jonathan: the eurozone stocks are the most sensitive to u.s. interest rates. olivia: really question mark jonathan: yes, and it is because they have about double the weight in banks as the u.s. and that matters. embassies.he jonathan: yes, so the indices are more sensitive. more sensitive than ge, probably not.

again, individual companies might not, but if you look at the mutual fund that invested in europe versus the mutual fund investing in the u.s. -- europe once higher rates more than we do. corey: interesting. i would not expect that. jonathan: i am full of surprises. olivia: that's why we like having you on. corey: thank you. chief and u.s. market strategist. the 2016till to come, campaign is ramping up but where do republicans stand on the u.s. economy? our next guest has advice on how to strengthen policies and they just tell us how much donald trump's immigration policy with actually cause. ♪

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really, doug? reason youink of any think inequality is good. doug: here is the question, what is the right amount? why less? i give you a lot of reasons. one, the economy is at grade it -- at greater risk because a slight change of the markets could lead to a pullback because the markets are the things that are deriving a lot of economic growth. olivia: the broader base of economic game. the big change in the past 10 years has been declined in the middle class and housing values. it is not contradiction at the top of loss of fire in the middle. that's what we have to get back. the second piece of advice is, -- doug: the second piece of advice is to not buy narratives.

a lot of stories are wrong. your rages have become a product of -- wrong. we have research that we will put out shortly, you find that productivity and compensation of up just the way they always have. olivia: which is stagnant. doug: productivity is not good and that's the big problem. identified the real programs and go to to things that will solve them. there is nothing we are doing right now that is pro-productivity like structural reforms like getting entitlements under control, getting debt on the stable pat. people need to understand -- my top piece of advice to republicans and conservatives is that their economic narrative is simple. governor writes a check, you get better off. ours is much complicated. people pursue their dreams, people start to innovate, sell products people want and everyone is better off. there is tangible proof. the u.s. economy was the greatest in has ever seen but in has to be taught. olivia: you are say republicans should talk about economic

freedom? doug: and they should talk about the ability to have people get ahead through work. the narrative here is we need ander government programs not reinforcing work. every policy needs to be about getting people to work with the the dividing line between poor and people who don't work cap a much higher chance of poverty and the dividing line between success and skills. olivia: give us your inbox of the top two or three priorities, legislative priorities for potential next republican president? ? doug: i think to generate put our safety net on a sustainable path, medicare, medicaid, social security, the affordable care act, none of it adds up. 10 years from now, we are running a trillion dollar deficit. if you want to be president, you will be president for the next eight years. good luck with that. olivia: so far, no movement on entitlement reform? doug: no, but some republicans

talked about it. jeb bush talked about raising and chrisment rate -- christie. increasing the, everyone, republican and democrat will have to talk about this because the numbers are overwhelming. corey: we were talking about donald trump's immigration plan, what is the cost of that plan? doug: we did look at what it would take to literally identify the 11 million illegal immigrants and find them, you have to process them, they need judges, here is coming up to house them all they are are waiting for here is, that you have to literally deport them. it will take about 20 years and cost about $4 billion. corey: does that include the price of the wall? doug: that does not include the price of the wall. olivia: is there a republican candidate that you are thinking of backing? doug: i have talked to a lot, but no.

i think it is a really good field. campaigns forto jeb bush, scott walker, marco rubio, carly fiorina, lindsey andam, you know, doors open i welcome. corey: who do you think is thinking the most among this people? doug: i think there are a lot of people who put up imported pieces. wish is made 4% growth at what he wants to do. as christie has had a pretty policy rich campaign with lots of proposals and rubio is a great policy risk kind of guy. walker talks about his record in wisconsin. there's been a lot of sound immigration issue and terms role in that, but if you push that aside, it has really been about the economy. olivia: is bush's 4% growth plan realistic? doug: we have done that many, many times. i have not seen his tax form plan, we will see, but no one should accept what we have done recently.

we are averaging under 2.5%. the city opaques a long-term growth rate at 2.1. that is disgraceful. we need to do much better. olivia: what is your prescription for 4% growth? doug: immigration, tax reform, the reality is our entire future population growth and labor force growth comes from immigration, so we have to pick troops with immigration. we had to do something about regulatory burden. we have added billions of dollars in regulatory cost in the past. over $100 billion a year of regulatory costs, so we've got to take care that we need a genuine education reform. we have identified 30 and the u.s. education system. the teacher, the principal, the school and we never fix it and we need to get that right. corey: thank you very much. take a look at the top stories. firefighters from across the country are helping overwhelmed crews on the front line with wildfires. 95 fires are burning in 10

western states, hundreds of homes and more than one million acres have been destroyed. the forced service says a are a two-year fight with u.s. state bank regulators -- new york state bank regulators. work -- excuseat me -- four standard chartered. they say they violated sanctions by handling transactions for iran. the company admits they stretched currency rules. the hackers who extolled data from ashton madison.com are naming names online. the website that encourages marriage to -- married people to have affairs was breached. identities, user addresses, phone numbers and payment information. the hackers want the company to shut down and ashley madison -- want to shut down ashton madison and related sites. still to come on "market makers," how did a small canvas tote bag company become a wall

street model? ♪

marketcoming up in our day, the ceo of sprout pharmaceuticals. the makers of the controversial pill to boost women's sexual drive. it was approved yesterday. olivia: doctors work scrubs, lawyers were suits, and bankers carried the bag, the blue or green canvas bags that new analysts traditionally receive when they start at a bank. over the past 20 years, they had come to signify a badge of honor on the street. your guess is the creator of those bags. she is the founder and president of the scarborough and joins us now on set with a bunch of these so-called field bags. i got one right in front of me. corey: and morgan stanley over here. hailed.and he

lisa, how did these seemingly simple bags become so wildly popular on wall street? for: thank you very much letting me on the show today. i think basically it is because it is just a really great way of being proud where you work. it is a simple, really durable product that people use on the weekends or to carry their gym clothes and it is just something that has become a staple, an industry standard. corey: particularly for the new hires. lisa: absolutely. it is funny because it's sometimes i'm at airports and i see people with the bags and i go up and talk to them and most are younger and they say, we are in college interviews and after the interview, that's all he can think about. i hope i get my bag. it is on for me to hear that. i think it is something that people just feel they're really proud to have with the company needs. corey: what do they use the bags for? what's in this one? cash!

lisa: that would be nice. usually, it was a conference giveaway, so people were taken it and putting market research and it and then realizing it would be practical and useful for their weekends. of course, as things that -- corey: i thought your bankers did not get weekends? lisa: that's true, but maybe family. olivia: they get them now. corey: a good gym bag as well, so people had to the gym after work and that has been useful. recently, we find a lot of markets where it has grown and kind of changed in the generation, so it has changed. olivia: it is not just ranks anymore. lisa: i have had my firm for 23 years and this is my first year of actually advertising. many of the growth that i have had throughout the 23 years is because people receive the bags, so someone at a conference will say, this is an amazing and

practical and inexpensive product and i want to do it for my firm, so have moved from financial to locker rooms, consumer products, tv, a lot of schools, so it is really spreading and also internationally. we do a lot of our bags overseas. corey: are all the bags the exact same model, same size? lisa: not at all. this is the simple original duffel version. we have over 50 versions now, so the last 23 years, i have designed lots of styles with bells and whistles. i still think this is definitely the most popular. others that have pockets and zippers and adjustable straps and leather trim and all kinds of things with it, but people tend to really like the traditional model the most. olivia: tell us about this charitable component. lisa: i'm really excited because when i had my 20th year anniversary, i wanted to think about ways to make a difference. we started doing a gift that component to our business. now, right here, we are announcing that we are excited to announce that we are going to

form a partnership with our world food program where for every bag purchased from our catalog made by scarborough in the united states, we will be giving -- it will be giving one meal to someone in need. we are excited about those and something i have always wanted to do and i'm really happy. olivia: that's fantastic. corey: are you able to see hiring trends of the banks because you can see their plans when the order of the number of bags? lisa: not really. i try to stay out of that market of it. i seecally just -- fashion trends, i see fashion trends, icy different changes of andrs, icy green one year, then grades come into play. i think the suddenly has always been really important to them. olivia: not really an indicator. lisa: no, no. corey: there are clues everywhere. really interesting stuff. the store is on bloomberg.com.

lisa maccallum, founder and president of scarborough and tweed. thank you very much. jack rifkin isw, going to be here with us and so is john hofmeister. the former president of shell oil. we will ask him all about what he thinks about the latest round of selling in crude prices. have we finally found a bottom around $43 a barrel in west texas? stay tuned. corey is going. corey: i'm going to radio. olivia: i will be back on "market date." don't go away. ♪ ♪

(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...)

(the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store. olivia: good morning. 3:00 p.m. in -- 3:00 p.m. in london. vonnie: welcome to -- matt: welcome to "bloomberg market day." olivia: could the fed further

delay a rate hike? matt: speaking of slowing down, growth slowedles last quarter, one day after home depot showed gains. olivia: he wants to deport every so-called illegal, as he calls them -- matt: they are literally illegal. not so called, they are generally illegal. olivia: we're going to be 'slking about donald trump immigration policy as we crunch the numbers and came up with surprising legal findings. good morning. i am olivia sterns here with matt miller who is coming in hot. matt: there are definitions of words that we all