>> from bloomberg world headquarters, good afternoon. we are covering stories from san francisco, detroit, and tokyo. stock markets crept lower while the dollar remains good. a mixed bag of corporate earnings. in philadelphia, president obama voting for hillary clinton. trying to elevate her as the leader at a time when national security concerns are front and center. amanda: wall street is raving giants,cebook, to amazon and delve a bit. -- alphabet. scarlet: let's head over to the markets desk where julie hyman is tracking the mood. we ended a little chaste

yesterday, not much direction today. the 14th straight session where the s&p has not moved by the close of trading. not saying it will not today, but it is a safe bet that time. we've seen a lack of activity, volatility falling. this is fairly typical of earnings season, but this one is even more so than we typically see. all of the major averages kind of mixed. the dow has been faring the worst, down 73 points. the nasdaq is higher, just barely. it is facebook is keeping it afloat. of course investors are seeking through earnings. facebook shares have pared some of their advances. they are normally down 1.5%. they were up as much as 4% earlier, quite a change even as facebook comes up with sales and rose 59%. 1.97s $1.79 billion -- billion active users.

ford on the flipside, one of the things providing a drag on the major averages. ford coming in with earnings that missed estimates. the company also saying this year will be tough, auto sales will likely contract. we are looking at whole foods and automatic data processing, and, scope. scope to us adp out with its numbers for the year as well, forecasting estimates below. and the telecom also on the insurer on the rise. this is an oncology based business. , and the to bloomberg third quarter. groupon scoring the most in four months, raising the full-year revenue forecast. amanda: what about movers not

drawing attention? from: sunanda: we heard public storage, it appears to be pulling down the others. they saw a slowdown in the same storage net income, same-store net income the measures people look at. we are seeing others down as well. and we are looking at the fertilizer makers, potash coming out with numbers. they beat analyst estimates, they make potash, which goes in to fertilizer. to $.25, so those shares and the other fertilizer makers down as well. scarlet: julie will be back later with the midday stock. amanda: let's check in with first word news. mark crumpton has more. mark: vice president joe biden and u.s. attorney general loretta lynch will speak at a vigil. they will honor three law enforcement officers killed by a

lone gunman outside of convenience or. louisiana governor john bel edwards and relatives of the slain officers are expected to speak. firefighters are bracing for hotter weather and lower humidity near big sur california, where fires destroyed 44 homes and killed a bulldozer driver, working to contain the blaze. it is 33 square miles. it is only 10% contained. hope francis tripped and fell during an open air mass in poland today. he braced his fall with his left hand and several priests rush to help him back to his feet. the pontiff is making his first ever visit to eastern europe with the first ever visit. it is a gathering for young catholics. hillary clinton is ready to make history tonight, fourth and final night of the democratic convention in philadelphia. the former u.s. are secretary of

state and u.s. senator will become the first woman in american history to accept the presidential nomination of a major political party. she will be introduced by her daughter chelsea before closing out the event with her speech. as will come one night after president obama spoke to delegates and made an impassioned case for mrs. clinton to succeed him in the oval office. the number politics has been joining us all week, and we have him again. thank you for your time. this is hillary clinton's moment. she will have to succeed speeches made this week by michelle obama, president obama, vice president biden, her husband bill clinton, our boss michael bloomberg -- she has a big challenge ahead of her. >> it is a very tall order, she has a big challenge ahead of her. this will be the climax to what has been a very eventful and more dramatic than expected four-day convention. bernie sanders' supporters, the

-- shifted toed donald trump. but we should expect to hear from her tonight is not so much ideological and policy contrast between her and trump but a contrast in character and qualifications, her case is that he is dangerous. he is too whimsical and unsteady to be a leader on the world stage and be to message with the mystic affairs. -- domestic affairs. whatever people may think of her and her policies, she has been in government a long time, as you will make the case she is a steady hand. mark: the one thing we have noticed from both conventions, the republicans last week in cleveland and the democrats this week in philadelphia, there is a growing divide in the united states on the issue of immigration. how will mrs. clinton handle that? sahil: hillary clinton is

campaigning on a staunchly pro-immigration platform. he will introduce a legal path to citizenship. she has promised to build up, protect and expand president obama's executive action that protects 4 million people to 5 million people. there is a court battle to fight still. she wants to proceed with that. it is remarkable to the contrast in the history with the parties on immigration. donald trump campaigning on mass it isdeportation. he wants to cut legal immigration, build a wall, restrict admissions into the country. it is astonishing. democrats have moved left and republicans have gone pretty far right compared to previous nominees. mark: one thing from the previous speech of this convention is that those who address the delegates, whether it was from mrs. obama to the president last night, with a touch according people, that they moved people, they were

believable. mrs. clinton has a gap in that regard. the polls show that, even some democrats say that. how does she deal with that? sahil: it is pretty commonsahil: for a residential nominee to be more controversial than the other people speaking. clintont lady, and bill has been out of office for a long time. the first lady has not been a politician. joe biden is outside the main spotlight for these people, so they have higher ability -- higher favorability than the people in the midst of the political arena right now. hillary clinton will have to navigate that. she had character witnesses throughout, nasty has goto make the case people can trust her. only she can make that case, picked to voters why she should be the next president and white they should, despite the fact two thirds not view her as trustworthy, give her a shot at the presidency. we'll hear a lot of contrast with donald trump, because he is

her greatest weapon for making that case. mark: joining us from doubled up you -- from philadelphia, thank you very much. global news 24 hours a day tour by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. back to you. --rlet: we have great news breaking news, l'oreal saw sales grow 4%, analysts were looking for 4.4%, so that is amiss. and in operating margins also coming shy of analyst estimates. nevertheless, l'oreal says for the full year, it is confirming its outlook for sales and profit growth. amanda: still ahead, what is more concerning, rising rates are increased volatility? ♪

♪ amanda: you are watching bloomberg markets. scarlet: while the fomc meeting may have been a nonevent with rates remaining unchanged, there was a big take away. according to the next guest, it is get ready for volatility. she is the investment strategist for blackrock. you know that janet yellen used the word uncertain 37 times in four of her speeches last month, that is a telling sign of volatility. >> it was really interesting yesterday>> with the release of the conversation. she saw the global volatility had been dismissed. or 12 orok at the vix

13, i am concerned about volatility picking up, in light of the brexit still trying to find its way in in terms of the election. and the geopolitical issues we have been seeing. amanda: we talked about this wall of worry. investors are worried. the markets are more sideways. de people that want to -risk, what is your advice ? heidi: it was a tale of two halves. the first week with a complete selloff, and oil prices tarted to retract and come up the markets have a risk on. those that want to continue to have risk off and can take that you --ity, gold or i a iau, that is compelling for trade. if you think about these equity markets, it is told and treasuries. what if you want to

embrace portfolio volatility? those,with all of volatility, evaluations --? heidi: if you want some market volatility, having minimum volatility type of strategies, they are looking to minimize the downside exposure and the downside risk, that would make sense. looking to be selective in terms growthme generators like and preferred. if you want to embrace volatility and as a long-term investor look to be, where should i be buying up, it should be emerging markets, equity and debt. scarlet: there is a couple we listed right there. we have been watching this into emerging markets. the concern is that, i missed the moment. if volatility is your friend, your horizon is long. we are not talking about a short-term horizon. heidi: you can think about the

stability of the dollar after considerable strength and weakness in the start of the year, there is stabilizing, and commodity prices have stabilized off of lows we saw earlier. those all benefit emerging markets. there is less concern about a strong dollar hitting the emerging markets. for long-term investors, valuation is more attractive than in 10 years. despite the fact there has been a lot of slow going in this year, i don't think inventors have -- investors have missed the ride. scarlet: and minimum volatility, let's broadenf -- the conversation and talk about japan. the boj meeting is tomorrow morning. and shinzo abe announced a ¥28 trillion fiscal stimulus plan. what kind of option does that leave the boj? heidi: if we look at the election last week, it was overwhelming support for all big helpfulabe, which is

for the economics. i think there is still some strength in those arrows, and we will see a move that likely on monetary policy but also physical and reform. -- fiscal and reform. amanda: we are watching the boj for clues for yield here. it is so externally driven. does that change the way you are thinking about investors? heidi: you are right. we can't look singly and look at just the fed. it is about this version of bank policy, whether it is what we do, the bank of japan, the ecb, and emerging markets and the policies there. scarlet: the talk in the markets is that we are at a turning point, shifting from monetary experimentation to actual fiscal spending. what does that mean for investors and how they price risk? heidi: when we are talking about pricing risk, there has not been a lot inheriting these classes.

if you look at the vix, that is an indication. if you look at the vix of trading at 12 or 13, long-term thisge is 20, not a lot of priced into the market. investors in the u.s. move forward, they need to think about the risk in the various asset classes. amanda: it is one of the concerns we could name. when you have rates this low for this long, these are the very ones suffering. many the return in portfolios. we have seen a move up the risk curve. we worry about some big correction and five senior citizens are in things that could be devalued? heidi: i am not worried about devalued, but people being selective. those in pairs are the ones at risk of evaluation, lower volatility, and consumers stability. even the much more exposure to cyclical areas, you have the biggest bang for your buck. scarlet: head of investment strategy at blackrock.

still ahead, ford is moving out of gas in the latest quarter. we have the ceo on why he is worried about a larger u.s. auto industry go down. ♪

♪ scarlet: this is bloomberg markets. amanda: time for a business flash, a look at the biggest stories in the news right now. oracle is getting its tote services strategy a $9.3 billion boost. that is what it plans to play to netsuite. they have been tried ship their business to the cloud. netsuite cells cloud business software that includes e-commerce and customer relationship management tools. scarlet: cutting jobs and security unit miles -- the bank is also ending research

coverage. it did not disclose the number of jobs cut. the reported bb&t was cutting 61 employees. ford came up short in its second quarter. the automaker is warning us off target is at risk -- a soft target is at risk. with the biggest first half gain in six years, but there is concern the brexit vote could lead to a slum. -- slump. amanda: that is the business flash update. scarlet: number two automaker in the u.s. reporting that it missed wall street estimates. outlinedlobal -- threats and that they may need to take their foot off the pedal. he spoke to matt miller. >> it was a strong quarter by historical standards. potterinue to grow the -- bottom.

the transformation in europe is gaining steam. record quarterly cash flow, $4.2 billion. a strong quarter, and even the first half of the year is a record, tax operating profit for the company. in the second half, what we said in the beginning of this year is the second half would be weaker than the four staff. we have -- first half. we have seen risks. we will look at those risks and do with them as realities, and take decisive action to go after this new pressures on the business. reputation your precedes you, you have been up front with shareholders and stakeholders, it is possible you don't need the full year financial target. why is that? we are committed to financial guidance. what we are missing is these risks that that guidance, that we are working towards. there is a couple of different risks. one is lower pricing and higher

incentives here in the u.s. and china terry we are seeing a softening here in the u.s. of the retail industry. it is down overall, the industry in the second quarter. at the same time, we are also seeing the effects of brexit, particularly of exchange and volume in the u.k., which is the biggest market in europe. r&b. weak chinese and finally we are seeing lower option values for slow vehicles in the u.s. those are the things we are seeing, and we started seeing those things earlier this year. that is what we amps up efforts in the company to have better market strategies to compensate. matt: how is the outlook for the u.s.? people are concerned about peak auto, the industry may come down

. do you see the industry meeting last year's level are being reduced? mark: given our guidance, we have winnowed our guidance between 17.4 and 17.9 million units. top and his beat, but at the first point we were 17.5 million units. retail is actually down 1%. so the view in the second half of the year is the industry, the retail industry, will be down versus last year. you can argue the industry has plateaued. i think what we are seeing is early on in the economic recovery, out of industry sales were good and outpaced the general economic development in the country. so what we are seeing now is although the industry is still relatively healthy, we are seeing intensified competition and the retail industry has softened. that is resulting in some volatile factors each month,

because that will put commitment on certain manufacturers trying to move the market. scarlet: that was matt miller speaking with first ceo mark shields. let's take a deeper dive into what could be the start of a slowdown across the u.s. auto industry. auto numbers due to a mixed bag the biggest carmaker. in theuld be slowing growing economic uncertainty, creating a sluggish consumer. analysts morningstar has raised a warning flag. jp morgan, morgan stanley has a warning coffee -- profits. the u.s. auto market is probably leveling out at a time when u.s. economic growth is heavily dependent on the consumer. you have housing, but it is purchased. if you heard from this man, incentives being used to lure people into buying cars are

eroding. scarlet: you companies missing out on profitability. companies missing out on profitability. there is rolling over of auto sales for the adjusted annual rate. we know for the most part, this has been a pretty straight line. they talked about the aging fleet on the road, but that rolling over as we saw on the cycle, that is a great look what is going on here. amanda: this incentives even to process, will watch the stocks. scarlet: it is earnings season, and we are tracking companies like groupon, working higher from february. facebook trying to become the king of the mobile app space. ♪

amanda: live from bloomberg world headquarters, i am amanda lang. scarlet: i am scarlet fu. let's begin with first word

news. mark: hillary clinton's running mate is taking aim at donald trump. senator tim kaine went on the attack at last night's democratic national convention, saying the united states is too great to be put in the hands of a "slick talking, empty promising, self-promoting, one-man wrecking crew." this is mostly false, donald trump says. a aaid, i guess i take little bit personally, but you can't get it let you down. -- you can't let it get you down. british prime minister theresa may is back on the road today, seeking allies for her brexit talks. she travels to slovakia and poland. both countries are skeptical about assets of european union membership your to hundreds of thousands of their citizens are ependent on jobs in the u.k.

the powerball jackpot continues to grow. since no one matched the winning numbers in the last trying, the prize stands at an estimated $478 million. the next drawing will be saturday, nearly three months have passed without a winner. global news 24 hours a day powered by more than 2600 journalists and analysts are more than 120 countries. i am mark crumpton, back to you. scarlet: we are looking at u.s. stocks trending lower, but they are small declines. look at the s&p 500 within 10 sectors, utilities and staples are the only ones not to decline. you can't really say investors are flocking to save havens, but they are not dumping. amanda: looking for another big tech name to report, facebook is waiting for the nasdaq. there is not -- winning for the nasdaq. there is not much else.

abigail doolittle is live. looking ate are uninspired trading action at the nasdaq as well. the index is fluctuating. we do have a few huge winners to talk about. up 25n shares are percent, having their best day in six months after the online beattplace company did second-quarter estimates. they raised of the full-year outlook. important, stairs are up 50 on the year, is it too late to get up? we did an interview with sam kim, the analyst at hyper leadsy, who took on the with their overweight rating. and $.52.x dollars -- $6.52. but sam can't says based on customers upon is adding, gross

profits could increase $240 million by 2018 as opposed to the estimate of $140 million. potentially a huge upside we could believe could drag the stop -- stocks higher. and they are talking about trust valuations, they are very solid. he is impressed by the new management team, proving they can execute consistently. groupon may be an interesting stock. scarlet: what about the positive side of the ledger? reporter: we have a few more of these. here's logic up 91%, the biggest 2014.nce december one of the big apple suppliers, helping apple. cirrus logic put up a great quarter, raised the fully year quarter. this analyst says they are firing all cylinders, and it

looks like it has to do with the cycle around the iphone seven. gopro, the beaten-down action camera maker soaring today after the company put up a nice quarter to reaffirm the whole your outlook. they see the company returning to profitability in the first quarter -- fourth quarter. this is the beaten-down story, so lots of analysts still on the sidelines. they want more proof gopro is firing on all cylinders. scarlet: thank you so much. a quick reminder, rich williams, ceo of groupon, will join us next hour. amanda: facebook exceeded expectations for every metric by 59% sales in the second quarter. strong mobile demandant is supported more engagement on video, ad revenue and instagram. we want to look at a preview of amazon and facebook. we have been who joins us by

phone. -- bwen who joins us by phone. anything that would disappoint anyone. this is a just a knockout quarter. andhey beat expectations perform exceedingly well, nothing to be turned -- particularly asked -- concerned about. scarlet: when you look at facebook's time spent per user, that has been in a downtrend. it takes us all the way back to march of 2013. capturingther apps attention whether it is snapchat or pokemon go. this trend, if it does not improve, is it concerning? ben: you have to be careful with the data. it is not particularly from facebook. it may not be accurate. takee usually look at dau monthly users.

you saw that fall slightly in the u.s. and europe. certainly a place we are watching closely. has done snapchat well. pokemon go is not concerning in it relates to facebook. othersing snapchat and capturing attention among young people has concern for facebook over the long term. amanda: looking at that church, we are seeing instagram. it is a place facebook has been surprised with in terms of engagement with the stickiness. when will you monetize that piece of their business? ben: they have already started monetizing that and doing quite well. it will be one of the key drivers for the rest of this year and next year. instagram has been a huge win for facebook since they bought it. the next question is how do they monetize newer initiatives they are working on, messaging and search and the facebook audience network, oculus and others. amanda: i want to bring in a chart, facebook against twitter,

looking at basically their mobile app revenue. you can see as facebook continues to climb, twitter is really declining. the you see these two as really two different outcomes, this is done for twitter? ben: i would not say it is done, but i don't recommend the thought, they have some significant challenges. until the creators actually leave and the people that are generating most of the content, until they leave, there is a chance to turn it around. but after the recent orderly results, they need to -- quarterly results, the duty to turn it around. scarlet: i want to move forward to google which will be -- i should say alphabet. they were asserting and volumes for google specifically, but the pricing on those ads, whether it is programmatic or mobile, is

not as robust as it was. will that rectify it self this quarter? ben: i don't know about that, but it is complex. you can't get too caught up on one particular metrics for google. they continuee if to grow search revenue, closer to 15%, other businesses like google play and youtube and display, higher than that. that is a people are focusing on, not just cost per click or the single metrics. amanda: we are waiting for amazon after the bell. it appears amazon has committed to delivering profits after the quarter. we are looking for one dollar 11 . this profit is, wonderful margins on the web services. are you seeing if they can grow that? ben: for amazon over time, we hope to see that grow. i expect it will. we have never been focused on

one quarter versus another on amazon. what you see now over a 20 year history is basically the doubters say they will never make money, never grow. what we have seen over 20 years is this is an unstoppable force in retail, and we think amazon prime in particular is the key driver. whether it leads to higher profits today, or we have to wait more time, we are willing and see if investors will wait as well. scarlet: amazon has never been shy of investing in its businesses. to what extent is it upsetting that amazon has reaffirmed its commitment to showing a net profit? ben: i think they are going to continue to spend. the difference is they are making money in certain areas. they are showing they can achieve scale. these investment burgs are worthwhile. that is what is worthwhile to investors.

on these investments going to lead to profits over the longer term and, given the track record over the last few years, investors are willing to give them the benefit of the doubt on many investments. amanda: that is a look ahead. thank you so much for being with us. analysts at mccrory security. scarlet: still ahead, brewers and budweiser. why sabmiller may be going for the deal. ♪

♪ scarlet: you are watching bloomberg. amanda: this is your global business report. credit suisse ceo tee shot jim

-- how the bank managed the surprise profit in the second quarter. scarlet: the merger of sabmiller and ab inbev is on eyes. they are holding out for a better offer. amanda: nuclear power has always been controversial, but the debate is more polarized. we'll look at the energy needs and environmental anxiety. scarlet: credit suisse posted a surprise profit, a first positive since the ceo set out to reinvent the swiss bank. he took over a year ago. he has been scaling back the investment bank for the wealth management business. he told bloomberg he is happy with the profits being made, but is cautious there are bumps ahead. >> you know there are a lot of clouds on the horizon, political uncertainties. nobody knows the payout. scarlet: more cuts are on the way at lloyds.

they will cut an additional 3000 jobs and more in expenses. they are trying to stave off a brexit induced earnings slump. the first half fell but did beat estimates. mcdonald's is joining backs -- black stove smith line. they will add 5000 jobs by the end of the year. profit will invest 60 million in the u.k. to increase capacity and make respiratory medicines. it is the biggest british drugmaker. scarlet: time for the bloomberg quick take, where we provide context of issues in interest. nuclear power has been controversial, that the debate is more polarized. reactors produce 11% of the electricity worldwide. 60 more are in construction. itsu.k. has a fifth of country under nuclear power. there are ambitious new plans

and its joint venture with china. to increase fourfold while germany is heading in the opposite direction. chancellor angela merkel wants to close all nuclear plants by 2022. nuclear pioneers after world war ii envisioned an abundance of clean energy at low cost. radiation ateased long mile island and chernobyl back in the 1970's and 1980's, the benefits outweighed the dangers low. forear power seemed poised the renaissance because of worries about climate change. he was the argument. supporters of nuclear energy say accidents like the fukushima meltdown are rare. are gettingrs safer, fossil fuels are responsible for more deaths, mining and pollution. opponents say reactors cannot be made to withstand meltdowns.

and the cost of environmental risks of disposing of nuclear waste, it is easier to develop cleaner sources like solar and wind power. the question is whether it will be enough to head off extreme level warming or nuclear energy is no longer an option but a necessity. you can read more about this debate and the quick takes at the bloomberg. that is your global business report. go to bloomberg.com for more stories. ♪

♪

scarlet: this is bloomberg markets. opened tobmiller has the $4 billion takeover by ab inbev. shareholders were looking for more value following this plunge in the pound, but they sent signals that anheuser-busch revised a $200 billion offer. this is recording two people familiar. -- according to people familiar with this. if the brexit plunge in the pound was the catalyst to rethink this, that is a matter of negotiating a price.

>> we have to be careful about the characterization to date. they want to stop the ongoing process to put these companies together, and there is good reason for that. they have a new offer. sowas off one pound, and they are seeing until they accept or reject, it will be improbable to continue the process of sticking the two together. it is not as severe as it sounds. it is just them saying, look, if we integrate this implicit sustainable, and we disagree [indiscernible] it is a way of been thinking about putting things down well they decide. amanda: markets reacted inevitably -- negatively to this news. we have got tom buckley reporting from london there are large shareholders that are prepared to back to this deal. this is the process that we need

to keep this moving forward. >> that is right. the big shareholders, they talk about having come out or behind the scenes in favor of the new price. they were the shareholders making noise about this not be a good price before. they did not like the structure, there was not enough cash, too much stock in the opera proposal. in the new proposal there is a higher cash component and one pound of share in the overall price. you have companies where is the big hedge funds that say previously, they had less publicly to the companies saying this was not enough money, get a better offer. it sounds like they are now saying behind the scenes they approve of this. scarlet: what happens next? in the timeline, what are you looking for? >> it would be for sabmiller's board to meet and discuss the offer, whether or not they approve it. many to go through their own board.

scarlet: how long does that take? >> it may be possible, but this is not one they want to spend much on. the most important parts of the offer have not changed. the antitrust risk is the same. how do we accept the one pound in addition and the slight change in consideration, enough to make this deal? they have already accepted the lower offer. it would be strange if they come away and now saying we reject it. and it would be a 3 billion pound break fee. amanda: we saw earlier in the screen when competition was rejected staples and home depot's tie up. those are weak players. whatis deal comes through, -- one and three beers worldwide is sold by this pairing. why not more concern? >> initially there was a fair amount of concern about -- it is very market specific.

in some regions, they would have too much concentration, that was considered the problem. they have outlined this expansion package. some very well-known brands. the coors brand is the most well-known. so i think antitrust with beer and a lot of these consumer products, whether it is a strong brand is fully less because when people go into a store, they buy a beer because it is sab or anheuser-busch. brand is fullyso selling indivis were they would otherwise have too much over there. amanda: i want to go back to pricing. if ab inbev is raising prices by one pound a share, to we expect that to set a precedent for other deals in the pipeline, where you see the buyer get more cash? were questions raised about the pipeline. it is entirely possible you will see shareholders doing this

thing, taking a position in companies on the deal of the u.k. side. the value of this deal is less attractive than it was when it was agreed, so you need to walk away from the deal or try and renegotiate and get a better price. this one in some ways was better. it is so big and high-profile. it was full, but it has been dropped by the brexit. amanda: how far down are these two? how much left is to be done? >> reasonably far down the process. they were looking at each other for it feels like forever. they were very familiar before it announced the deal. they have done a huge amount of work in what they need to invest, what works well, where they create synergy. they are quite are down the integration process. the idea of stopping it now is a way of saying we have an offer.

we need to think about what that offer is, and then he will start again. scarlet: thank you so much. time for the bloomberg business flash. a look at the business stories in the news. massacre posted profits and beat estimates with customer card spending increase. the time for the bloomberg business second-largest networks benefiting as people replace cash and checks. they are investing in new technology including a refrigerator that can order groceries and were about to take customer orders at pizza hut. torlet: entertainment try put a headlock on the business of online streaming. it is succeeding so far. wwe has 1.5 million wrestling maniacs who signed up for this to put a headlock on the business of online$9.99 a month package. it exceeded the company's own forecast and is up 21% from a year ago. amanda: and oracle is giving us cloud service strategy a $9.3 billion shot in the arm. they are going in for netsuite the cash deal.

there try to ship more deals to the cloud. cloud business software includes e-commerce and customer relationship tools. the cash deal. scarlet: that is the bloomberg business flash. in the next hour, we look at deeper at oracle deal with netsuite in an effort to boost its cloud services strategy. more on that next. ♪

amanda: 1:00 in new york, 6:00 in london. scarlet: welcome to bloomberg markets. ♪

>> from bloomberg world headquarters, good thursday afternoon. amanda: in this hour, we are covering stories from toronto, washington and azariah. -- former federal reserve chair told bloomberg today that we will have more highlight of the interview this hour. >> oracle -- the cloud computing firm is not other than oracle chairman -- >> credit suisse kelly returns to profit in its second-quarter. eliminate -- a limited hundreds of jobs and comments are coming up. first, we head to the markets desk were julie hyman has the latest. earnings season is not doing much in the way of market

direction. julie: investors seem more focused on these individual companies that are reporting these numbers than on the big picture. a lot of economic data, we did not see a lot of movement. we are more red than we were an hour ago with the doubt now down about 65 points or so, the nasdaq has now slipped into the nonetheless, still not a lot of change for the s&p and the nasdaq. one of the things that investors have been looking at this earnings season are valuations. take a look at the bloomberg here. s&p 500 has now gotten up around 20. these are the standard deviation bands in that price-to-earnings ratio, so it is one standard deviation among the mean -- above the mean, the average we have seen, going back about 10 years. it is unusually high versus what we have seen historically and relatively short-term history,

the highest since 2010 right now. that is something in the background as investors are waiting what to do with stocks. we are seeing technology leave what gains there are in stocks, 1%,book has -- 4/10 of apple shares have been gaining and amazon is out after the close of trading and it is gaining into that report. i also wanted to bring you the latest on this evolving situation with anheuser-busch and miller. miller's management had told employees to halt all integration efforts with anheuser-busch integration -- all integration efforts with the operation, but today, bloomberg news is reporting there are some major shareholders that have signaled they favor a deal. is it happening? is it not? the shares are up today as they were down, yesterday. >> we got some natural gas

inventory data, how is that affecting the market? up the most in four weeks. it showed the smallest inventory gain in a decade, so you see it comes out at 11:00 and we saw the big spike in those natural gas. we are also seeing a fee through to some of the natural gas stocks, either pipeline operators or enp companies that depend on natural gas, soap you look at the individual energy shares, we are seeing some gains in those shares as well. a pioneer natural range resources are seeing some gains today. i also wanted to mention in the past few moments, we had another auction of treasuries, this one, a $28 billion auction and it looks like the yield was 1.34% and the six prior auction average was 1.6%, so again, we are seeing a little bit of a

difference, it looks like this is a little bit stronger than some of the auctions we have seen over the past week or so, so we are seeing the yield on the seven year note fall back with a little more binding. recently, some of those auctions have not been as strong. this one does not look to be as week at some of the other auctions we have seen. >> thank you so much. >> time to check in on bloomberg first word news with mark crumpton. >> hillary clinton is ready to make history tonight, the fourth and final night of the 2016 democrat national convention in philadelphia. the former secretary of state and u.s. senator will become the first woman in american history to accept the presidential nomination of a major political party. she will be introduced by daughter chelsea for closing out the evening with her acceptance speech. her address comes one night after president obama spoke to delegates and made an impassioned case or her to succeed him in the oval office

-- for her to succeed him in the oval office. an age gapfinds difference between supporters of hillary clinton and donald trump. ms. clinton leads donald trump 51% to 44%. among voters between the ages of 18 and 34 who have graduated college, clinton leads -- donald trump 54 to 34% -- 54% to 34%. french officials identified the second man who attacked a normandy church, took hostages and killed an elderly priest. he was a 19-year-old who was spotted last month in turkey as he supposedly headed to syria but returned to france instead. authorities sent a photo of the man with the warning that he could be planning an attack. boris johnson made his first

official visit to france as the new british foreign minister. he met with his french counterpart with talk -- for cooperation and fighting against extremism. global news 24 hour was a day powered by more than 2600 journalists and analysts in more than 20 countries. scarlet: thank you. alan greenspan is nervous. the former federal reserve chairman says he is worried bond prices are too high. treasuries have rallied as the fed has held off on raising interest rates. earlier, alix steel asked him if lowering yield discouraged investors. >> let me tell you what i think is causing the general sluggishness in the american economy. we are seeing or have been

2011, ors of thereabouts, the spread between the 30 year u.s. treasury bond that and the 5-year note, "he widest level in american history, and what that is telling you effectively is that as you get out into assets of any kind, the longer the life of the asset, for example, structures and there are always more than 20 years, software is three to five years and as you move out on that spread, what you do is, you create a definite bias toward producing only those purchasing, only those capital assets with short life expectancies. what we are seeing is software is doing well.

nonresidential building has not moved at all. >> it is like the quality of the sector seems to be what you are honing in on. what is the solution? fiscal stimulus is what many economists are talking about. >> the solution is basically removing the uncertainty, which is tendering to the extraordinary heavy discounting of the far distant future. if you're a corporate executive right now, you don't have any clue as to what the corporate tax rate is going to be 20 years from now, and investments you years,e going to last 30 the present value of the income you are expecting to receive in the 23rd year is so heavily discounted in today's environment that the present value of all of those that are

various parts of the -- investment tends to be concentrated in the shorter lives assets and it is hard to see anything other than the the 2008 2009y of recession in the short life capital goods, but very severely in the long-term capital goods. bursting of one of the biggest bubbles in history. a lot of people are saying some and similar is happening. people in the market with substantial capital returns. inflation becomes reality, what is the bond market and -- >> stagflation means that you don't get 2% long-term interest rates. you have to remember that there is no long-term trend in

interest rates. -- in 2007 ouras and i would say in ancient rome. we have data daily on the bank of england's discount rate since 1694. that discount rate has not buried until very recently, post-world war ii. it stayed between 5% and 10% for decades and centuries. thatit really says is human time preference, which is what drives interest rates, has not changed. to believe that we can keep rates down for very much longer strikes me to say that human nature is going to change and that is one thing i would not bet on. >> i heard you were good at

avoiding the point of questions, but i did not know how good. what is happening in the bond market right now? is their financial stability concern for you? >> you want to be looking at the price-to-earnings ratio in bonds to income. you lot of a somewhat nervous when the bond rate does that. >> that was alan greenspan on go. oracle's larry ellison and the battle in the clouds. will it be enough to make inroads against sap and microsoft? ♪

>> you are watching bloomberg markets. >> time now for the bloomberg business flash. shareholders have signaled they favor anheuser-busch and the revive and the 2 billion -- in the $2 billion takeover. the board will meet in the coming days to vote on whether to support this deal. investors including alan gray and elliott management corp. are said to be among those pair to back this offer. a sick -- a second quarter's sales miss for l'oreal. the maker of maybelline makeup is facing a slowdown in hong kong in latin america and is looking to make acquisitions and rollout more premium price

products. >> facebook shares are in record territory, so is mark zuckerberg's wealth. nearly foured dollars, a gain of about $1.7 billion for the company cofounder and ceo. according to the bloomberg billionaires index, his net worth has now topped $53 million , good for seventh place on the list. that is the bloomberg business flash. >> oracle continues to shift its business into the cloud. today the announced they are buying this week for about $9.3 billion -- buying next week -- tsweep for about $9.3 billion. i want to bring you inside the bloomberg to put some perspective on oracle.

oracle is a serial acquirer that has been making acquisitions for years. it feels like it has been fairly quiet with the acquisitions and if you look at how many deals it has made this year, this is really the largest. sort it by largest, the last big deal was peoplesoft, though that ended up being a much bigger deal, more than $10 million worth. has there been a shift in strategy over at oracle? >> i think the strategy was to first figure out how they are going to get into the cloud. the last three years, they have been moving their products on the infrastructure side as well as the application side on the cloud. downs of the first part of the cloud transition is behind them. they are projecting decent results for the next couple of years. now i think the acquisition -- >> perhaps a little more

tentative, i initially and now they are taking bolder steps? and nowtive, initially they are taking bolder steps? >> right now, cloud accounts for about 8% of the revenue. when you look at oracle, that moves up to about 10%, so even then, they need a lot more revenue coming in from the cloud. scarlet: or call dominated relative to sales -- oracle has dominated relative to sales. has that protected them a little bit from being slower to get into this? >> the corporate customer has been a dominant for microsoft and sap.

the world is moving toward the cloud, both on the application side and the infrastructure side and that these companies do not move their products, they will have a tough time which is why reallymicrosoft aggressive in this area and oracle aggressive in this area. >> 10% after this deal with netsuite. is this cannibalizing some of oracle's existing business? >> that could happen. that should continue for some time. thatll it accelerate deceleration in the licensing business? >> the catch over there is that what makes the customer's move? some of them that run critical systems are not ready to move to the cloud immediately. with that, they can manage it a little bit better. >> i never forgot the second quarter conference call in 2000 and a local saying it was like they turn the customer acquisition process for this

kind of thing has such a leadtime that really any weakness can slow you down. concernsalking about about ford, profitability, a sluggish consumer. are you concerned about the outlook for these companies relying on corporation willingness to make big spends? >> i expected that after the brexit vote. the results that have come out since then for the likes of sap, eat -- ibm. there has been no impact at this point. whether that translate into next quarter or after that, we will see. at this point, we are not seeing corporations going down in spending. >> what does this mean for salesforce or microsoft? will they make and i as well to better fortify themselves? >> you will see a lot more solar -- smaller deals. the larger deals are very expensive and difficult to digest. the biggest company in the space

is salesforce. after that, you have worked day. workday has some poison pill ownership stuff. there are multiple companies after that in a small space which could be potential targets. >> from investor interest, it would be those smaller cloud players you would want to look at because there is going to be consolidation? >> you are absolutely right. the smaller cloud bases are the ones people should look at. >> thank you so much for joining us. >> still ahead, credit suite is all smiles today. the bank posted its first profit thanks to a turnaround plan. they are still cautious about the future.

>> credit suisse posted a surprise profit, showing the ceos turnaround plans our

church -- are paying off. we asked if the major overhaul is working. >> i think there are indications it is working. -- they areat flows up 60% -- 16%. i'm very proud of what we have done. i believe if we can produce these types of results against such a backdrop, we will show the power of the franchise. you are confident that this trend will continue in the second half? >> you never draw a lot of crowds over the horizon, political uncertainty, it would he knows how praxis is going -- brexit is going to play out. all of this is going to weigh on markets, but what we are confident in is that we will

remain -- we will continue to execute on our priorities, taking down cost and risk and continuing to grow selectively. i mentioned our international wealth division -- management division. we don't believe know how brexit will play out, does it mean -- you say we do not know how brexit will play out, doesn't mean it will be more volatile for a trade environment? isin the short-term, there no impact from brexit because the government said negotiations have not even started. it is going to take a wild. that uncertainty is going to weigh on the markets. >> what is the worst-case an area or brexit -- worst-case scenario for brexit? -- given the weight of

financial services in the u k economy, that would be a bad outcome, not only for the u.k. but for the rest of europe. you have activities that are more market dependent. global markets have done a good a loss in back from q1. awas determined to do resizing, quickly. six months, we said we would hit 16 billion by the end of 2016. target sixbelow months ahead of time. if the teams can focus on serving more clients and doing what we do best to help our -- nts, profits and results

mean that you don't need to raise capital? can those rumors be laid to rest? consistentbeen very in saying that we do not need to raise capital. we have been clear. we raised $6 billion. we have the highest ratio we have ever had. we have shown that we can pull many lovers to drive -- pull many levers to drive forward. you never want to be -- we have been in a reasonable range of outcomes. we are at a perfectly adequate capital. >> credits wiese ceo speaking to francine lacqua. ♪

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♪ amanda: live from bloomberg world headquarters, i am amanda lang. scarlet: i am scarlet fu. but the human first word news.

mark crumpton has more. mark: hillary clinton is bleeding donald trump and the lost -- in the must win battleground state of pennsylvania. to 41% in a new poll by suffolk university. the libertarian candidate gary johnson and green parrot -- green party candidate jill steiner close. clinton leads with 46 perfect 10. 5% for johnson, 3% for stein. reversing on a major policy think -- blank, no donald trump is in favor of a $10 per hour federal minimum wage. last year he said wages were too high. the european commission approved $1.55 billion in support for refugees in turkey who fled the war in syria. the funds will be used for education, health, and socioeconomic support.

an additional $78 million has been approved for united nations agencies to assist refugees. the international olympic committee wants to make sure there is no cheating the next month'smer -- next summer olympics, so it hired a london-based firm to look out for suspicious gambling. this sports integrity monitor will use data from gimli markets to look for anything that -- from match fixing gambling markets to look for anything that looks suspicious. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. yields starved investors from around the world are finding it in debt. companies are logging in record low rates. what are the rewards of this trend? let's bring in the pioneer

investment portfolio manager. great to see you. we have a chart that shows how investment-grade debt drives almost a third of the yield income. clearly crowded as of yet. what is making this so popular? michael: we are living in a world of lower for longer, so to a certain extent, investors are that generateeas yield income they can't find anywhere else among typical high-quality government bonds. we have seen a lot of money coming into the u.s. given the relatively attractiveness of u.s. investment-grade credit. it becomes very crowded trade. at what point do you see interest rates begin to move up if we start to see interest rates move up more dramatically, put is clearly going to pressure on the higher-quality space in the credit market. amanda: when you expect to see the early signs of deterioration ?

you worry about the put pressure on the beginning of creeping credit default. where in the rate hike do we start to see it? michael: when the things we are trying to figure out -- one of the things we are trying to figure out is where are we in the credit cycle. this is creeping up over most credit asset classes. we certainly see a lot of debt being issued as you pointed out earlier by the blue chips as they are utilizing this as a buyback stock. it has been the right trade for most company management. the question is, when you start to see that leverage become an issue? the first line is when the fed is starting to raise rates, the cost of that debt begin to impact their cash flows. they become more fragile, can't cover that debt as much. in the investment-grade world, that is not a big issue typically. he will see signs and cracks in the high-yield part of the market where you have more leverage and less cash flow, but

we are looking for is, when did we see rates rise? that could take a while for it becomes meaningful. scarlet: we have another chart that shows high energy yield versus everything else high-yield. the premium has come down. it has shrunk. high-yield energy companies are the white, all of them the blue line. it is below $40. what does this do to demand and supply. ? has been all about energy and energy-based materials for the last six to nine month. has given tremendous yields. even they have compressed, it is about energy. the energy has been driven by default that are going to be lower and the energy and oil prices are heading back up again. the? seen is,arc we have oil has come off quite substantially, are we going back to $20, $30 oil?

we do not think that is the case . we are moving into more supply-demand rather than -- supply-demand balance. amanda: we have see low interest savers, andzing governments taking advantage to make long-term investments. a smart move. corporations issuing debt, raising capital are not doing that. they are not actually investing, which is what much banks are doing. they are buying a lot of stock. they are providing dividends, so there is an into engineering going along to create a massive level. cap problematic is that? michael: long-term, that is problematic because of the stable financial engineering. it is better to invest in new productive capability, or is it better to buy my stock back? stock prices have risen, the equation has tilted more to

investment. the problem is we have excess capacity globally. companies are having a tough time justifying a long-term investment. many are focusing on shorter-term investments. the question will be, do we get back to making longer-term investments in this country? one of the things we are focusing on is whether or not the government starts to do this through infrastructure spending. weter who wins the election, are likely going to see investment in longer-term infrastructure spending. it is a big question, do not know the answer. amanda: we know the fed has signaled they will not make any moves on the balance sheet to help interest-rate normalization, whatever that looks like. you think that will state attached? -- stay attached? michael: we are in that camp. we are dealing with a lot of difficulties transitioning to

abnormal interest rate in the market. it will take a long time. the last thing i want to do is create a gigantic steepening of the yield curve. it is more rapid down in the balance sheet. we expect the fed's balance sheet to be fairly intact, coming down slowly over time. scarlet: we were trying to figure out where we are in the credit cycle. to what extent is this not raising rates right away, but from the bank of japan, bank of inland -- england ? not raising rates rightmichael: it is distorting n the sense that by this stage in the current cycle, usually you see interest rates rising and corporations beginning to seek defaults, raise systematically through the system. what is interesting is you are seeing many credit cycles -- mini credit cycles.

there was one based on materials and energy, and now the full cycle is coming back down. more defense sectors are not releasing that pressure. the view is because of distortions, you have mismatches taking place. we think the credit cycle will be longer, business cycle will be longer. scarlet: thank you so much. michael temple of pioneer investments. amanda: shareholders of today's mystery stock getting their just desserts after earnings higher. we will give a slice of the prophet. ♪

♪ scarlet: this is bloomberg markets. amanda: time to go to the

markets desk. julie hyman has the mystery stock. journalists are getting their just desserts after earnings. the stock buyback will give them a fatter slice of the prophet. -- profit. cheesecake factory. that has something to do with her own purchasing behavior. i like this company because every time i buy a meal, i have a dinner for the next three days. that is very true. amanda: there might be half portions with some of the stock. i am not a big chain restaurant fan. but cheesecake factory is one of the few chains i will eat at and enjoy, although i don't usually get the cheesecake. the stock is up 14%, and is going higher once again today. it does not have to do with sales. it has to do with earnings.

you look at the stock and the gains it isthe stock is up 14%,s going seeing, second-quarter earnings be the analyst estimates by 7/10 of a share. they are also returning cash to shareholders. second quarter revenue and comparable sales both missed analyst estimates. the company is talking about margins, increasing because of lower food cost, and because cheesecake factory itself is cutting cost. take a look at the bloomberg. you have same-store sales, that is the orange line. you can see it not going down, but the growth pace going down. only three protest last quarter. -- percent last quarter. this is the phenomenon we are seeing. one of my producers pulled out some funds on the calorie counts of some of the popular cheesecake. cake, 1680te truffle is the calories in that. one slice?

it is your daily intake of calories. amanda: you have got to fast. or you just enjoy yourself, live a little. of the other restaurant stocks are bouncing, texas roadhouse is on the rise, buffalo wild wings, darden restaurants. we are hearing from these companies coming up. and people a few days ago were out saying we are entering a restaurant recession. it is interesting we have cheesecake as a counterpoint today. amanda: after shown the calories, that may hurt them. john: that is part of the fun. julie: you are not worried about this. you so much.k it is time for the bloomberg business flash, a look at the biggest stories in the news right now. in other restaurant news, chipotle is ramping up and opening a burger restaurant.

this will open in lancaster, ohio. the have already opened an asian food concept called chophouse in the pizza place amanda:. more americans sought unemployment aid, but the applications remain low enough that hiring is still helping. labor department said his by 14,000ncrease the to a seasonally adjusted 466,000 . the number of people seeking aid has stayed below the 300,000 level for 73 straight weeks, which is good since 1973. the ceo has stepped down. he will be replaced by robert brand. in light of the -- the vitamin and supplement retailer is retaking its 2016 earnings. we could demand has forced gnc to take alternatives which would include selling itself. amanda: that is the bloomberg business flash.

in news from canada, other big investors turning bullish on guilt -- gold. oversees $233ho billion as upgraded gold to a maximum overweight in the latest market outlook report. we go to market wind. nting.k bu \ what is the rationale? mark: let's take a step back to see what td is saying. this is a story from bloomberg reporter allison mcneilly. the capital preservation, you don't want to shoot the lights out right now. td is cautious and conservative in their investment portfolio. they are expecting low single-digit returns in fixed income and mixed incomes in equities. we are not talking about, they are not talking about the meaning of canned goods.

it is not like that. the global economy is growing. it is tepid by growing and stable. alix: that is what -- maximum overweight? how do you even quantify that? mark: it is a term that they use, and various portfolio and address can figure is that means 4%, 7%, that is up to them. volatility cooper is talking about has to do with what he sees as unprecedented central-bank policy, quantitative easing, negative interest rates and so on. volatility cooper is talking about has to dohe sees uncertai. and europe continuing for a long time because of the brexit vote. he is also looking at asian demographics, elevated consumer levels in various parts of the levels as well. maximum overweight gold from modest overweight. with goldy sharp calls. they went positive in early

2016. the timing was perfect. gold took off as we now. even more so, gold equity. they have done well with that call. amanda: that goes all the wealth -- whatnt, what else else do you have to persuade investment to give you to own cash? michael: exactly, they are upgrading the u.s. dollar. they are downgrading their view on the canadian dollar. so what do they like? they think investors should be holding high-quality north american dividend cares, high-quality corporate bonds. cooper says the yields are low, but if he can get 100 basis ,oints over a government bond he will take it. it helps with diversification, hedgeity and a bit of a against deflation. back to gold, cooper and td think a currency alternative

insurance against risk from what they call the possibility of extreme outcomes, and you want to have cash as well. amanda: thank you so much. what can weing up, expect from the boj on fat -- friday? and is earning season. we are tracking a lot of business and tech companies. groupon seeing the most since february. facebook proving it is becoming king of the mobile ad space. and we look at amazon and google which will report. ♪

♪ scarlet: after yesterday's fed meeting, eyes have turned to the bank of japan meeting overnight. we spoke with credit suisse vice-chairman neil staab about what it is about this meeting

that has people paying attention. abe's government, government, has sent signals about fiscal efforts that suggest we are at the threshold at least of seeing a more coordinated fiscal and monetary push not just in bank of japan but more broadly around the world. a lot of central bankers have been of this interview. -- of this view. >> on that front of course, the bank of japan is getting more creative because options are limited. experts say all the time we are in uncharted territory, don't know what the outcome will be. japan has a long history with failed experience on monetary policy. how cautious are you? >> japan has been different from the u.s.

japan is a high savings country. two to the degree that there are distortions they manifest themselves in different ways, we would see them. i am not sure this is distorted as it might seem at first glance. rateshey went to negative in a number of central banks, my first was that, does bond math still work, and it still does. it is remarkable in its own way. supposing they announced they have got an inflation target of 3% or 4%, that will encourage people. it is suggestive but that is not in the material. they have bought a significant fraction of all of the government debt. this notion of money does not mean much. is there really an expectation the boj will someday insist the treasury pay it back? this is helicopter money in

everything but the name. i think it is not very helpful. if they go in to a deeper effort to buy private issued security, then you have to ask what part of the government is supposed to influence the allocation of capital, which we traditionally don't think of the central bank but rather as a legislative function, executive branch function. i think that has got to be the next extent for all of them. scarlet: you could argue and some would say that she is already has a greater mandate -- shinzo abe has a greater mandate to do this after the election. is there anything him or mario draghi can do to achieve their targets? is there a limit to their no limits? >> one way to think about it is that fertility is so low that the population of japan is smaller this year than last time

and has every reason to expect to be smaller next year than this and so on. that willty like through the laws of demographics age. what kind of dynamism to you get from that? the real solution will you will to japan is to re-create an environment in which young women and young men decide they are having the next generation of young women and young men as a desirable activity. scarlet: that was neil sauce. and now joe weisenthal, keeping a look on the dollar-yen. it is a proxy of what fiscal stimulus may look like for the monetary divergence. joe: tomorrow will be such a great day between the bank of japan, european bank stress test, gdp, so one thing i am excited about on the show is sort of all this stuff to be

excited about. amanda: one thing that didn't muddy the waters is not going to details of what would come fiscally. we get clarity tomorrow from the bank of japan, or is it equally boring kind of boring -- meeting? joe: the expectations are all over the map. some people think they will break new ground in how monetary policy works. others say it will not be that much. that is why there is so much interest, because it does feel like the frontier of possibility. amanda: that is well said. scarlet: another thing with a lot of attention is emerging markets, the next take that. the developed world at emerging markets as competition where geopolitics can turn the world topsy-turvy. goinghere is two things on. one is the politics have switched. last year was defined in some ways by emerging markets,

political scandal. brazil, the issue with south africa's finance minister. two finance ministers in one weekend. turkey, malaysia, the 1mdb scandal. now also emerging markets scandals -- stocks look cheaper. there is talk to be made that e.m. seems safe right now. amanda: thank you. coming up on "what'd you miss?", the latest tech earnings from amazon, apple bit more. that is at 4:00 p.m. we have got it covered. ♪

david: it is 11:00 a.m. in san francisco, 2:00 p.m. in new york. vonnie: welcome to "bloomberg markets."

david: good afternoon. vonnie: we are covering stories from san francisco, chicago and new york today. david: an exclusive interview with alan greenspan. what he is most worried about following the fed decision yesterday not to raise rates. vonnie: groupon shares surging by the most in five months. we will hear from the ceo. david: they four of the dnc. hillary clinton will accept the party's nomination tonight. markets close in about two hours. julie: stocks were trading a bit