yen tumbles. the bank of japan continues to surprise. david: earnings momentum. amazon and alphabet flirt with record highs. hillary clinton officially accepting the democratic nominee and accusing donald trump of generating fear and division. jonathan: to our viewers worldwide, a welcome to "bloomberg ." i hate to say a 20 central-bank disappoints. , a strong again. that struck meg is that we are not sure what is happening. the market is interpreting that as we might be running out to boost inflation. i looking at the big move in commodities. it is all about crude.

wti in a bear market. 40.77. we will assess all these things, monetary policy, global banking buiter.lem his call, a gdp growth of 2.4%. but first, let's check in on the market. we have a selloff. jonathan: we will break it down. by .5%.e up of dollar-yen with a move up. the bank of japan disappointing the yen. this is bear flattening. the long and stays anchored.

in japan, up 10 basis points there. we will be talking about the market a little bit later. but to wrap it up, it is brent and wti. a bear market at the close. a seven day losing streak. down by 1%. we are trading at $40.77. back to the big news that the bank of japan is keeping monetary tools unchanged. lay out we heard today? >> well, you are right. largely unchanged, that is the headline. toolsin monetary policy were unchanged. there was some easing and more purchasing of funds and there was a doubling of the dollar lending program. bush really interesting was the

fact that there will be a review the policies that have been taken over the past three years. and they will do that at the september meeting. so this was a heavily watched meeting. there was a lot of expectations. it did seem in the press conference that mr. kuroda play down the policy review. the are the expectations of market and what did he layout in the press conference? jodi: well, he had interesting things to say. he denies that the bank of japan is at the end of the policy limits at what they can do with policy. he also said that he wasn't pushed into doing things by the government. two daysovernment, ago, laid out a plan for a stimulus program. an interesting announcement

coming two days before this meeting. so there is a lot of expectation that has been laid out. saying that they can do things and they will continue to ease as needed with the economy being so far from the inflation target. so there is already a lot of expectation. unusual, iteview is has not been mentioned before. we will see what it means. but that is a new wrinkle in all of this. alix: exactly. jodi schneider, thank you. so the end of september. and in between, you hope you find out what the policy looks like. from: a continuing mystery japan. jonathan: joining us now is steven englander. this is more two-sided

and it was meant to sound by the bank of japan because the fact yesterday that they didn't increase the overall program, -- it suggests to me that they are a little bit concerned about how much more they can do. to how fasttion as , thatan hit their targets is something they will be focused on. they havelear that that much more room to ease. alix: when you take a look at the fx market coming up against potential stimulus from mr. abe and the bank of japan not unleashing that, what do you do as a trader? until: i think you wait you see some signs of which way the review is going.

and there is possibility that there is tension here. the headlineshat we were seeing in the run up suggested that they were trying to put stimulus on the table for the bank of japan to respond to. and the tepid program that the bank of japan put out says they want you to define exactly what you will do before they do something significant. -- again, there was a high expectation of volatility. going into september you will see the same situation. positions were more cut in the meeting there the an increased. so traders will be cautious going into september. david: take a look at the mechanics. they are buying 90% of the new issuance of gdp's right now.

owned one third. so the government has to issue more bonds? exactlyi think that is at the ball that the bank of japan is tossing into the court. , ¥7 trillionimulus over how many years, i don't think that was enough for the bank of japan to say -- look. i don't think we have enough liquidity to significantly ramp up purchases. so i think that will be what they are pushing the government to do. jonathan: just to wrap this up. how did the market get this so wrong? quite clearly, the market has a huge amount of uncertainty. but given the move to the downside, does this tell us that the market expected something?

why do we keep getting it wrong with the bank of japan? they continue to surprise. what is the lesson from this particular occasion? steven: i think the reason that -- market gets it wrong although i have to say my tokyo colleagues got it right. the reason they keep getting it wrong is that the japanese economy is very weak. thatou keep anticipating they will add additional expenses but they don't, which is why policy relevance debate is something that is important now. englander, youn will be sticking with us. the market keeps getting it wrong. alix: the efficacy of monetary policy versus the efficacy of earnings and tech is killing it this season. it is all about google and amazon.

alphabet, the fastest growth rate in two years. jump for 21%, a huge google in the premarket. and amazon, if the stock opens at this level, a new record high. the third straight quarter of record profits. you also had revenue growth of the fastest in four years and ,he cloud sales were up 58% delivering more and more of the operating income profits. one minor downside to amazon is that the third quarter operating income was lower as they make a lot of investments in warehouse and content. in the eu, a little bit different. beating forclays the corridor. profit did fall at 53% from last year. of -- but thatme was better than estimates.

the beardt up with deal. , 1% of sabmiller miller. yesterday they said, no dice. now, it looks like the deal could be back on. i feel like we need to drink every time we talk about this. now, first word news. shery ahn co. hillary clinton is on aat america moment of reckoning at she is scoffing the donald trump claims that he is the only one who can fix it. she is the first female nominated by a major party. she accepted the nomination on the last night of the convention. thineedled donald trump as skinned. hillary clinton: you didn't hear

any of this from donald trump at his convention. -- 70ke for 70 minutes odd minutes -- and i do mean on -- [laughter] [applause] clinton: and he offered zero solutions. hillary clinton came with a big bang. is wrong toton: it take tax breaks with one hand pink slips with the other. and i believe that wall street can never be allowed to record main street again. and tim kainenton get back on the campaign trail today. a bus trip through the battleground states of pennsylvania and ohio. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries.

this is a bloomberg. jonathan: coming up, we will discuss how the fed and next week's jobs report could affect the currency market. alphabet report over $50 billion in revenue, combined. but which stock is the better investment? dollar-yen, a stronger yen the session as the bank of japan disappoints. this is bloomberg. ♪

alix: this is "bloomberg ." inflation -- is it here? alan greenspan speaking exclusively on bloomberg yesterday as what he sees are the early indicators. >> a pickup in wages.

beyond the rate of growth reported to me. that is usually the best indicator. but, just as importantly, is that since money is what causes inflation, have been seeing, since the beginning of the year, a significant pickup in the rate of money supply growth. alix: steven englander, he is still with us. so five-year five-year break evens. and you say yes, inflation is here? steven: i agree with the former chairman of the early signs of inflation are here but it doesn't mean that inflation is breaking out quickly or will become an issue for the fed any time soon. i think the fed is going on the basis that the phillips curve is flat.

so they don't have to worry about the pickup in inflation. they will probably welcome it. david: what did you take from the fed statement earlier this week about he subject of inflation? steven: they wanted to stay away from it. they wanted to stay away from any kind of comment or statement that would indicate that some -- they talked up the economy by saying the downside has reviews but the output numbers have recovered. assiduousk they were in trying to avoid anything that would make the market think that september was live. alix: take a look at the dollar index by june. up by 3%. what is responsible for moving it? growth or fed policy? steven: we can is abroad. we have europe and the sterling, because that is what is driving

the next wxy. gross matter some. since march we have taken fed policy out of the picture. a benefit when u.s. growth looks ok. but call it a limping divergent trade. not the kind we were talking about last year. david: take us forward to the bank of england meeting. there willy expected be further stimulus or softening on the monetary policy. what will that do to the exchange rate? will take itnk it down. i don't think that they have a model that 50 basis points will be enough to fix the kind of economic shock that the u.k. is facing. we have already had soft initial indicators. those surveys taken after the referendum suggested things were

slowing down. so i think they will to 25. i think that they will have to at least address the issue of something with more qe in the u.k. has far as you are concerned, is there a limit to what they can do on the rate side of things? do you think stimulus from the bank of england could be positive? steven: you know, i don't think they would intend that but he bogeyed that they are facing is that they have to find a way to use capital flows. directknow that investment is likely to flow because of the uncertainty. -- howissue for them is cheap do you have to make theling in order for environment of wheat growth? alix: so cheaper sterling pushes

the dollar up. is there a level where the dollar winds up crimping any ability for the fed to act in september? steven: i think there is the election reality. and they will have monetary policy become an issue. right now, they are calm about the dollar. , not is a damaged economy nearly as big as they were boring about a year ago. it ikeep referring to think these levels -- they are not really worried. david: thank you so much for being with us. that was steven englander. alix: moving to banks. profits, ubs and

barclays are leading to the biggest monthly gains. this october we will dig deep into the result, next. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg. into the bank earnings be going in europe. they beat analyst estimates. manus cranny as live with us with more. thank you for joining us. get to the scene of the earnings? a bit of a tough year for the wealth management. we are only halfway through. and for myself and the conversation that i had, we went volatility tog subdued volatility. it is a tough time for every bank out there. cash is king. i am very pleased with the

strong quarter, not in absolute , but 2015 with a decent quarter and we are up. think we are building strong results across all businesses. the first quarter, paralyzing volatility. will 2016 be a year that everyone has to get used to subdued activity? >> i think so. macroeconomics, geopolitical -- this is translated by risk aversion. we can measure it in terms of cash holdings. 28%.de the u.s., in the u.s., up to 22%. that is the highest level we

have been seeing for some while. a challenging environment. manus: nice metrics in terms of cash holdings. look at the stock this morning. ,esterday story was mopping today it is about cost cuts and that is my sense of where the market is going to focus on the back six months of this year. fx andu saw there was the equity story. jonathan: with the bank operating in a low environment, what does it say about economic advising? manus: low rates have pushed the ceo to move his return on tangible equity. isthis low rate environment an environment we saw -- last year we saw five or six rate

hikes coming and that is not on the cards. that, a sticking with key issue. i thought it was fascinating when he said the social implications in terms of a fundamentally low rate environment. jonathan: manus cranny, live from stearic. thet to have you with us on program. today butas a miss what i thought was interesting was that a 25 basis point cut with the bank of england won't have an impact on us but zero will. you can already hear the calls from the leaders of the big banks in the u.k. with a message -- we don't like low interest rate policy. we don't like what we see in switzerland or japan. it has been a real

problem, particularly in japan. inclays did make out well the fx because of brexit. and different10%, than what we saw with deutsche bank, that was a decline. 9.5% so that was better than you would have thought. there were some bright spots in there, to be sure. coming up, we have u.s. data. what will the results mean to janet yellen as we inch closer to september? this is bloomberg. ♪

alix: this is "bloomberg ." we have big moves in the market. kicking it off is mighty kospi in italy. there are reports that ubs and italy's former development

minister are teaming up for a bailout of the bank. that news is lifting the entire italian banking sector. all of this is ahead of the stress test reports to out at 4:00 p.m. eastern. italy at the nonperforming loans will be front and center. moving on ay surprise first-quarter net profit. that revenue was up 14.5%. sony was also helped by the angry birds movie. l'oreal, coming that missedings estimates up by 4.3%, and that is due to weakness in france. jonathan: angry birds is still a thing? alix steel, thank you very much.

japan,markets, bank of if i am governor kuroda, i will never disappoint you. look at the move of the dollar-yen, a stronger japanese yen by 1.88%. the yen is strong, strong. in the government bond market, expectations up her, this is where delivery was. flattening with the front end of the yield curve coming up. the yield up 10 basis points to -27. es,side the fx and bond mov you have wti south of a moving average. market that a bear equity resilience. ftse is softer but futures are stable. and that disconnect between what is happening between fx and

commodities is what we want to talk about. let's get the headlines outside the world of business. shery ahn: hillary clinton warns that when donald trump says he alone can solve america's alarm bells should ring. on the last night of the convention, she accepted the nomination for president. she said any man who can be beta and with a tweet can't be trusted with the nation's nuclear weapons. and she says it will take more than one person to make america great. hillary clinton: let's be stronger together, my fellow americans. [applause] clinton: let's look to the future with confidence. let's build a better tomorrow for our beloved children and beloved country. and when we do, america will be greater than ever. shery ahn: clinton and tim kaine will hit the road today.

they will come pain in the battleground states of pennsylvania and ohio. federal regulators are putting pressure on wall street banks over risky wall street loans. few guidelines were issued three years ago. abouts are big questions the loans that her reading as acceptable. agreed to spend $24 billion to build the first nuclear power plant in u.k. in more than 20 years. the british government is casting doubt on the future of the project. they are concerned that customers will pay too much in subsidies. the government will decide whether to go ahead in the fall. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. this is bloomberg. david: thank you. fromorning must-read comes

ruchir sharma. , "though many americans see the u.s. as deeply ad hoc to china, the fact is that china is more reliant on easy money for growth, putting the state in washington's hands." is tom keene, and this is a timely piece. you look at the bank of japan and what england is doing, it puts it in perspective. tom: using the phrase -- exorbitant privilege. ruchir sharma is absolutely correct about exorbitant privilege. not only the dollar but also the politics and economic that backs up the dollar. it is the strength of america, politics, as you saw last night, an original position of america

that leads us to be the dominant force. david: and he puts in his piece numbers that i didn't have in my head, two thirds of the world reserves are held in dollars and 90% of trade is dominated in dollars. i didn't realize it was that high. tom: very important within the media blast of the bombardment that we have of negativity about the u.s. and trade economics. ish that said, the headline .hat trade has been soggy david: one of the things he points out in the peas is that it is great that the u.s. is powerful but it limits what the fed can do because it has to worry about the world economy. tom: absolutely. no question about this. -- looking for temporary dollar weakness which is way opposite than the consensus.

most people are looking for a non-brutal strengthening of the dollar. -- what is really important it is friday in july, we are all distracted and we can't be. we talked earlier about the italians. isthe heart of the matter that everyone is struggling. and what the fed really wants is stability. they don't want to see a brutal, stronger dollar. that janettrikes me yellen has an incredibly powerful and difficult job. anything she says or does could affect the world economy. and she has an exquisitely difficult issue where she doesn't want to talk down the economy. but she can't come in with a price hike because it would strengthen the economy but it would have an effect. tom: it goes to the new theory that is out there.

all of these good people are grappling with things that aren't in the textbook and that sets us up for mystery. david: exactly. ruchir sharma will be here with of emerging markets. he will be joining us. and in the meantime, thank you to tom keene. tune in to him for bloomberg radio. jonathan: did he get paid for that prompt russian mark [laughter] he gets paid in oh ties, which he doesn't wear. jonathan: let's stick with asia. uncertainty of inflation. anding us is sam sweeney note -- joining us is james

sweeney. what was your takeaway as far as the review is concerned? james: i think a review makes sense. they are closing in on 40% of the bond market owned by the boj and moving towards 50% and 60%. it hasn't worked so far and market expectations are swinging around. themweek, people expected to come in and do helicopter money. there are costs of these policies and not having success in the policies. jonathan: it depends on how we define success. you can put gdp per capita up on , it depends on what the target actually is. a declining population, fine. you can't do anything about that with monetary policy. to they have to rethink what

their monetary policy is? james: it's true. nominal growth in japan has been low. productivity, living standards -- not so bad when you look at the rest of the world. i think the problem is that central banks have had lots of benefits from inflation targeting but if you can't hit your targets and if the methods to employ two-hitter targets , andbad side effects markets really start to doubt the credibility. and you have the potential for serious volatility in markets at some point if you are swallowing your whole government bond market. so i think that volatility fear is a substantial comes -- substantial constraint. and the fed hasn't hit it either. but we look at the read of second quarter gdp plus divisions. and i plan to gdp is forecast with the tracking index down to

1.8%. that is versus the white light which is gdp, is that over doing it? james: i actually think our tracking is more like 2.5%. so i think there is volatility in the atlanta fed index, not that different from what we are doing. at you could always have surprise in inventories but i expect a good number today. is geared towards exports so it does have a stronger dollar drag at the end of the day. when you take a look at expectations with the fed, unemployment expectations, the fed is hitting targets closely? james: we have had global growth rise and core inflation rise. and the market has been hold in except for one bad number. the unemployment rate has even come down. last year, the fed told us that if we made progress toward their

target, we could expect four hikes. i feel silly for have expecting expect zero. jonathan: you can't feel silly pa. you were told that this was what they had laid out as expected and we go from four to 12 potential zero. alix: what is the data point that fed needs to see by september and say, we are good? by september, at the election and the volatility think globali growth will slow. i think it is a long shot. be december, postelection, that is all the way up to may of next year which is a huge retreat from the old field. -- the old view.

what i think the market is learning is that when they say they will hike in response to day moving towards targets, maybe we shouldn't listen. jonathan: maybe we shouldn't listen. we talked at the bank of japan and change of inflation targeting. inflation targeting is something that came out of the bank of new zealand years ago. has it had its day? james: inflation targeting has been successful in general in creating a stabilizing force in these economies. the volatility in inflation has been low. employing countries, this. and it has worked in smaller companies -- smaller countries. i think the problem is that you can't always achieve the target. wordf the market goes over -- goes overboard, and you have to do whatever to hit 2%, that

is unrealistic. so we think monetary policy doesn't have effectiveness now. that is what a lot of people in markets think. of course they won't do whatever it takes because they have a phobia of volatility. they don't want markets to go nuts. one central it is bank that is not scared of markets, it is the bank of japan. james sweeney, great to have you with us. alix: coming up, drilling down into earnings. googleand alphabet join to sweep estimates. what is the best buy for you now? this is bloomberg. ♪

david: this is a "bloomberg

." i am in the hewlett-packard green room. alix: two huge movers, amazon and google. jasong us to discuss is helfstein. i want to start with amazon. this was a killer quarter. record profits for amazon. can it sustain that? jason: third quarter, i think you will see a slowdown. they did miss e-commerce growth and that was due to underestimating demands fulfilled by amazon.

and i think you are seeing some increased investment in content relating to prime video. but overall, correct. this is now several quarters in a row of improving origins. alix: it seems like the market has become comfortable with that. there is a gang buster rate and making up more of the operating income. that you doof it is check and talk to competition. there are other competitors but nobody like amazon. thisave limited price cuts year. and that business is just growing and cushions other investments. quite ironic that it does that. does that grow or change over the next 6-9 months? jason: it is operating at a much

higher margin. incremental revenue will be cash flow. and what are they doing? building more distribution fresh,, prime now, prime getting one hour or two hours delivery. when they make it profitable it is a low margin business. so really what it has done is allowed them to build the e-commerce business which they can actually invest and they don't have to be as sensitive to investor concerns as they used to be, prior. to google,turns us looking at the fastest growth rate in two years. it was the catalyst for the surge? look like the changes they are putting in place are driving better performance for advertisers. that, allowing more bidding. youtube andisclose

mobile as being drivers but you can see in the result -- pricing was down 9%. so you can see less negative pricing and very good strength in volume. david: so we are seeing remarkable numbers coming out of alphabet and casebook, most going up. who is losing in this deal? jason: money has to be coming from traditional media. youtube has to be taking a piece. to thet has to be going rest of the display industry. the display business was weaker. does there come a point at which one has to go after the other? look, i think mobile is becoming internet. two or three years from now we

won't be talking about mobile, it will just be digital. mobilek cited 50 million businesses. local has been an important area for google but they never want to sell it them selves. is, does google start to say -- well, we have , will you ask facebook we are to get a plumber? we are not there yet but it is something to think about. after the do you buy stellar tech results we have seen across the board? jason: google does seem like the better buy. when you look at amazon and ,acebook going into earnings everyone thought they wouldn't have a good quarter that they are good enough. google, are they losing shares or our product changes going to because youtube

under urns on margins, you are effectively still getting a huge chunk of value in youtube for free. nine edge is $70 -- $970, we think that is good. google, we think that is the place you incrementally by after earnings. jason helfstein, thank you for your perspective. we go to my favorite topic next -- shopping. up, we look at the headwinds that led oil into a bear market. this is bloomberg. ♪

alix: this is a "bloomberg ." wti oil prices are in a bear market. here are the three oil charts that tell the story.

the first, global refining margins. that really shows what has happened in the last few weeks. can you pull that one up? no? there we go. you have refining margins moving basically thatis you had crude supply moving into product supply. refiners buying cheap oil and turning it into gasoline. then we had too much of the product and that has weighed on margins. the problem is that if refiners say, i don't want to work anymore, they will stop writing crude and it tilts back up in inventory. that has morgan stanley calling for the refinery driven correction to be upon us. a $30ee the potential for oil range. check out the 200 day moving average versus the oil price. that is the next chart which shows what happened over the past few days. these are the moving averages for oil.

sitting right at the 200 day moving average. it is a technical level that could inside more washout and traders have to change positions. jeff curry said guys, this is fine, the market will be ok. he is looking at the time spread for brent versus the underlying oil prices. so the blue line here is the right price, it has gone down. the white line is the difference in 12 months. when it goes lower we see a lot of supply, on the market. when it goes higher we see the market tightening. what happens? not a lot. we have seen it stabilize. his point is that we see the revalue its -- see the rebalance in the market. crude intod from

actual products. we have a lot of room if we get the crude build back up. jonathan: what is interesting here is that if i told you wti was down, where was you think the dollar was? it is flat. talking about correlations, right now between the dollar and crude, there he different. a topic for discussion in the next hour. coming up, willem buiter joins economy.e global the dollar-yen, a stronger yen. this is bloomberg. ♪

>> the bank of japan continues

to surprise, keeping its monetary policy largely unchanged. jonathan: amazon and alphabet flirt with all-time highs. alix: hillary clinton officially accepting the democratic nomination. david: welcome to the second hour of . we have been waiting all week long for the bank of japan decision. i feel a little let down. the easing was not a substantial as we thought. as we as substantial thought. this keeps happening over in japan, again and again and again. fed, they dot the

not care what you expect. they will do it when they are ready. david: we will discuss monetary policy and global central banking with a man familiar with it all. he will be with us. news. some breaking alix: we have big oil with a big mess. earnings coming in -- with a big miss. it looks like we are looking at net income of about one and $7 billion. the seventhark straight decline. fact was disappointing production. three-point nine 5 million .arrels prices,lower commodity

weaker refining margins. that stock down 2% in premarket trading. feels very similar to what we heard from shell and bp, they cannot seem to recover from these weaker margins. expected to dos better than it rivals. alix: because exxon is the behemoth. these are some of the big ones, supposed to do pretty well. david: what do you do when refinery margins are down, production down, cost is down? alix: how much more cost-cutting can you actually do? growingnot even production. that is at the heart of the problem. much more happening on the overall market. jonathan: you are talking about

exxon, seven-day losing streak. a bearally closing in market. dollar-yen, the boj disappointment for the yen bears. -- 1.9%. 9% bear flattening is what is called. deeply negative at the front end. what is interesting, you see the risk off sentiment in japanese sentiments. ftse 100 is pretty much unchanged. the pain felt very acutely for the yen bears.

alix: oil prices getting some pain on the day. let's check and with our bloomberg team. dan maes has the latest. morning's gdpthis report. i want to start with dan. would you take a look at what the boj dead, surprising on the upside -- i what the boj did. >> the steps they took were pretty minimal. they had to do something and they did the bare minimum. the real dark horse is a comprehensive policy review. at a crossroads. does he let the government take the running for a while or does he double down and hit the gas pedal? alix: did the review windup

signaling that the dio -- boj is out of monetary policy tools to stimulate inflation? dan: i do not think so. he kept talking about wanting to hit the 2% inflation target as soon as possible. if he was going to walk away or weaken that commitment, he might not have said that. alix: good point. what do we expect a beer from mr. abbe -- what do we expect to hear from mr. abe? amountat is the actual of new spending? some of the figures that came out this week were massive. know the size of the supplementary spending for 2016 and that is really the key when we talk about stimulus. or additional stimulus. alix: dan moss, thank you very

much. david: from tokyo to washington. we have cement for news coming out -- we have some important news coming out. gdp numbers wehe will get in 24 minutes. remind us where the trend is. what are we looking for? we have seen three consecutive quarters of growth below trend. for the u.s., it is approximately 2%. given recent data on inventories and trade, it looks like we will miss the mark again. 2.6% andnsus was at it looks like tracking estimates 1.8% we areo

looking at gdp growth at about 1.6%. that is about the speed the economy averages as it slips into reception. by no means do i think recession risks are elevated at this point. a slow-moving economy is a troubling development for the fed. the september meeting is entirely out of the picture for the federal reserve. david: this is the first reading for q2. carl: we have comprehensive ofisions going back to q1 2013. david: how much should we focus on this number? is this like a first draft? karl: this is a first draft. generally, the first print is pretty close to the mark.

if we are below trend, i do not suspect we will see a substantial strengthening over the course of the subsequent revisions especially with this new strategy of releasing some of the missing trade and inventory data ahead of the first print. david: thank you so much. we will be breaking those numbers in about 20 minutes. we have had barclays and ubs today, michael. michael: it has been all about cost cuts so far and you are starting to see barclays and ubs that.me credit for both stocks up a decent amount after posting earnings. barclays missed on the earnings number but they forecast a lower cost from the unit from last year -- next year and that is been encouraging for investors. jonathan: they also need to

follow the stress test results. 4:00 eastern. michael: i think it will all be about italy and deutsche bank. the italian lender's, five of test, if they have a shortfall, it might give the italian government some way to inject some capital. some loopholes in those rules that they could act on that. deutsche bank continues to have capital questions, trying to put those two rest. -- trying to put those two rest. jonathan: michael moore, finance team. thank you very much. know -- need to -- sheary clinton warns

is scoffing that donald trump's claim that he is the only one that can fix that. she is the first female candidate officially nominated for president by a major party. she said he is messages based on fear. >> you did not hear any of this from donald trump? spoke for 70 odd minutes and odd --an - and he offered zero solutions. >> clinton took aim at the big banks. >> it is wrong to take tax breaks with one hand and give out slips with the other -- pink slips with the other. street canve wall never ever be allowed to write

main street -- wreck main street again. >> clinton and tim kaine get back on the campaign trail again. donald trump will be in colorado springs. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. is bloomberg. alix: we do want to take a quick look at what is happening with shares of exxon. shares are down in the premarket. it was a mess all across the board -- it was a miss all across the board. the real culprit is the refining margins. refining margins are down 30% overall in the u.s. we had a difficult crude price environment. the production miss will be what people are talking about, including the profit.

sure we saw this coming. i am not sure we anticipated it was going to be this bad. alix: refining markets just started to roll over. after this, it was going to get fairly difficult. this is the best we going to see. this is a challenging environment. jonathan: last year, it was about refining. i think -- things have shifted, what do they do? cut costs and boosted production . over the last year, they just keep beating. 30%. capex is down jonathan: coming up, we keep the earnings coming. shift to

profitability. the boj opting for limited stimulus. we will discuss what happens next to central banking. from new york city, this is bloomberg. ♪

david: this is bloomberg . let's bring in cory johnson. let's start with amazon. profits are on the rise and we have a chart to show exactly how they are doing. : we are talking about amazon and profits.

david: fair enough, don't bury the lead. cory: they have taken every available dime of profits and reinvested in the business. is jumping ahead. thesewe want to contrast two. these are there operating margins. david: 4.2%. not: the profits are coming from the stuff always showing up at our doorstep. the profits are coming from the web service.

david: here we go. >> rapidly increasing. margins.ncreasing i think it is the most important business in all of technology. 20's.you go from 12.5 to have we leveled out? here's the last chart i want to get to. 10% of the business. it is 10% of the overall topline business. 56% of their profits. it is most of the profits in this business. david: and it is growing overall

very dramatically. cory: that is pretty extra to narrate. -- extraordinary. the way that amazon's business works, getting people the products quickly. can they ever have serious profits if they keep profits -- prices low? they are able to give big amazon a slow profit. david: let's go to alphabet google right now. >> really strong results from google. results fromd twitter this week and strong results from facebook. google is having terrific success. lots of ads and lots of clicks. they do not tell us how much people are paying for ads. >> we have the click growth.

overall.wing >> superstrong. how much are they getting paid for it? less. they have added some new types of ads. the advertisers wanted them so badly. what you also see, because of the switch from desktop to mobile. google has told us for years that will start to slow down, but it has not. it is something to keep an eye on. the value of an ad on a phone is less than the value of the ad on the desktop. that trend has not been friendly to google. they have had so many clicks on

ads and marketers want to go toward google with their ads. david: i am so glad you are here from the west coast. alix: the boj keeping its monetary policy mostly unchanged. review of theor a effectiveness of policy. this is bloomberg. ♪

alix: this is bloomberg . citigroup's global chief

economist joins us now. --ore the break, he said >> they have been sitting on their hands for quite a long time now. it is a fiscal stimulus that would be monetized for an extended period of time by the bank of japan. until that happens, they are wise not to pretend to have tools that they really do not have. clicks i think you -- >> i think you ask exactly the right question. this is not the first time we have talked about stimulus. we have been going through this for quite some time. stops too soon.

you have to keep it up until the economy cries uncle and the capacity gap closes and inflation starts rising to the point where it exceeds target inflation. longer and do it monetize it persistently until the economy caves in. jonathan: why are we having this debate all of a sudden like it is something new? additional, be right? it has to be additional for skill -- fiscal stimulus. only 3kely to get

trillion additional stimulus this year which is complete peanuts. then you have to monetize it in an additional way. you have to do more on both fronts and if you keep it up, it will work. alix: helicopter money feels like it is a dirty word. how will they make that turn? >> people use it in crazy ways. it is simply the monetized fiscal stimulus. monetize for a specific period of time. it will be more effective the greater relaxation of the government fiscal space. -- or canceling the

debt. i can cancel the debt today. make a credible commitment that you will keep it up. some credibleake signal. jonathan: u.s. gdp from new york city, a stronger yen session in the fx market. this is bloomberg. ♪

hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business.

you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. ♪olympics 2016, let me get you on my level. ♪ so you never miss a moment, ♪ ♪miss a minute, miss a medal. ♪ ♪ why settle when you can have it all? ♪ ♪soccer to wrestling. track and field to basketball. ♪ fencing to cycling. diving to balance beam. ♪ ♪all you have to sa♪ ♪ is, "show me," and boom it's on the screen♪ ♪ from the bottom of the mat, ♪ ♪ to the couch where you at? ♪ ♪ show me the latest medal count♪ ♪xfinity's where it's at. ♪ welcome to it all. comcast nbcuniversal is proud to bring you coverage of the rio olympic games. jonathan: this is bloomberg. let me get you up to speed on the markets as we await u.s. gdp. future stable, marginally down. the big move in the fx market,

dollar-jan. -- dollar-yen. big slew of data in the united states. second quarter gdp, 1.2 percent. estimates for 2.5. .he original read was 1.1% personal --e, the in core pce, that came buying in line with estimates at 1.7%. gdp, 1.2% well

below estimates. this is even lower than that tracking. jonathan: yields were a little bit high, yields now lower. down about a basis point on the front end. the dollar was already soft. the dollar index down by 6/10 of 1%. futures still negative, a little bit lower. s&p futures down a little bit. citigroup's chief economist is still with us. a surprise to the downside. you have been warning about a softening of growth for quite a while. the data that was held up in the united states, what do you make of what we are seeing? interpret ar over single data point. the bank of england, i learned to ignore them completely until

they have been revised to the final state. it is a small negative. domestically generated growth in the u.s. is weakening. maybe because of election uncertainty. dragging thee world down into a growth recession. that happens elsewhere, in europe or possibly china. david: go to fourth quarter 2015, the same random numbers and you can pair them over time -- >> they are slowing down to somewhere below 2%. may come down a bit. slashything to really one's wrist about. alix: i also have some more data.

subtracted about 1.6 percentage points and this has been the big issue. it felt $8 billion, the biggest fall sense of third quarter of 2011. if the demand picks up -- plannedly not a inventory accumulation. to the extent that it is accurately measured -- big question mark -- we will most likely see a correction. you always hope when you have a big drop in quarterly gdp that inventories account for a large -- you willecause likely receive it reverse. -- you will likely see it reverse. i am not ready to jump out of any windows yet. alix: chevron also out with

earnings estimates. $.47, much better than the estimate of $.32. i'm also looking at production, that was slightly light at about 2.5 million barrels per day. i want to go through the numbers a little bit more to dig a little deeper. that is a different take than what we saw. jonathan: let's get back to the u.s. gdp number. two quarters of softening growth. let's talk about companies wary of investing in the global environment. looking forward, and your experience, -- in your experience, there is a terrific amount of uncertainty.

how difficult is it for a business to operate in this environment? >> very difficult. if one of the candidates gets global, certainty of trade wars. you have to invest in this environment -- no, you hold off. i expect this to be reflected in capex data. alix: the first quarter was revised down. the fourth quarter was revised down. the third-quarter was flat. the second quarter was revised down. does this change the fed projector he -- trajectory when they look at longer-term growth being not as strong? >> it should probably. never believe the gdp data --

this is key. -- even less likely to raise rates this year and beyond. warning tois is a the fed that the economy is probably not as strong as they thought and the implications for policy obvious. do less and do it well. david: gdp numbers are not the numbers to look at. what do you look at? , filtered payroll data. very noisy, but more interesting and more predictive than gdp david -- gdp data. household and business. for the rest, you talk a lot to your cabbie.

you one thewill pay fomc. fomc.ill you on the >> the fed should stop paying attention to much to the short-term response of markets. the fact, more than any serious central bank, appears to be the captive of the financial markets. they used to respond excessively to what the financial markets did. act in response to the fear they have about how the market response. the market will do what it does. think about your target and your model of how the economy works. think is the proper action and what the market sort themselves out?

jonathan: the monetary policy committee, we talk about global uncertainty. let's talk about domestic uncertainty in the u.k. now. do you target inflation or do you target output? inflation, at some point everything is interchangeable. it is clear the bank of england with the incredible volatility of inflation, an environment of rapidly depreciating sterling, is a lousy indicator. uncertainty is massive. the bank of england could certainly deserve its name. just the bank of england and wales. if it gets to that, there will be further uncertainty. the uncertainty is pervasive.

hopefully later this year, the fiscal will come through and they can monetize the fiscal stimulant. jonathan: that is a huge adjustment in anyone's book. what do you think the adjustment needs to be? 120.ound that is just my subjective view. i would hammer away if i had control of the instrument on .ates, go to zero on balance sheet expansion, not so much qe. qualitative balance sheet expansion. you have to do what you can.

there is still a bit more room in the u.k. they have rates in positive territory to play with. a lot more scope. david: moving to the continent just for a moment, how important are they and what will they tell us and is it really about the italian banks? whatever the eba comes up with in terms of capital shortfall, multiplied by at least 20 and you are closer to where you want to be. -- it is verytime unfortunate that it has been

done this way. it is not just italy. italy is the tip of the iceberg. the italian banks are backed by a week sovereign -- weak sovereign. alix: portugal as well. what is the contagion effect? these guys all on each other's bankshares. >> the risk of catastrophe has been eliminated. the omt an asset purchase have been sanctified. there will not be a financial crisis, but there will be a downward drag on growth.

big up fears spread over the confident -- confident. -- confident. -- continent. jonathan: on the back of the soft gdp figures for the u.s. let's get to the headlines. warns whenclinton donald trump says he alone can solve america's problems, alarm bells should start ringing. on the last night of the convention, she accepted the party nomination for president. she said any man who can be baited with a tweet cannot be trusted with the nation's nuclear weapons. together,e stronger my fellow americans. let's look to the future with

courage and confidence. let's build a better tomorrow for our beloved children and our beloved country and when we do, america will be greater than ever. >> clinton and tim kaine will hit the road today. they will campaign in the battleground states of p ennsylvania and ohio. the area represents 17% of u.s. holdings in oh canal at -- oh canakinawa. u.s. intelligence and military officials warn that turkey's coup.ma

global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. approaching up, oil a bear market, reporting its biggest decline in a year. is the worst over? billion dollars in the second quarter led by the upstream unit. ugly day for big oil. this is bloomberg. ♪\

david: this is bloomberg . morgan stanley investment management, his take on the boj's restraint on more stimulus. watching big oil today. chevron, exxon down in premarket. exxon made 1.76 billion dollars in the second quarter. chevron reporting a loss of 1.5 billion. it is not just the story of chevron. it is also the story of ep and shell. what went wrong this quarter? bad,e operation is not as but prices collapsed. ago to prices a year what we have in the second

quarter, 35% drop. matter howrecover no efficient, you cannot recover that gap when you have $50 or so drop in oil prices in the last two years. things do not look so great. in the case of at sun, -- of exxon, they are pretty bad. down 36% from the estimate in the street. the street was looking for $.64 a share and they came up with $.41 a share. alix: we knew oil prices were down. we knew refining margins were rolling over. numbers-- why are these

shocking wall street so much? a lot of optimism that companies will cut costs and improve operating efficiency which would offset some of the impact of lower oil prices. unfortunately, that was not the case and the exposure was more in the west. exxon continued to lose money. tovron took on a write-off reflect the economic value. we need a lot more -- higher oil prices in order for these companies to make money in the u.s. alix: what oil price do they need? you had chevron looking at about 36. >> all these companies need at

least $50 oil in order for them to keep capital spending. these companies cannot continue to offer at a deficit. at the end of the day, capital spending will dry up and that will reduce production and that will bring the market back into balance. survive ony cannot capital pressures. the question is not if, it is when and by how much. alix: it was supposed to be third quarter, fourth quarter as the balancing took place. >> correct. there is a lot of hope that hope is not a plan -- but hope is not a plan. we canes keeps saying make money on five dollar oil but they do not their money where their mouth is.

recover toes do not about $55 or so, 50% of u.s. a production will be uneconomical. exxon, this is a company that will continue to increase its dividend. the bad news, exxon debt level is the greatest ever and that is not a good sign. alix: thank you for crunching those numbers for us. david: we will look at how europe's purchasing power has fared sense the brexit vote -- since the brexit vote. this is bloomberg. ♪

jonathan: this is bloomberg . mark barton versus alix steel.

mark: not just about the boj today. acould dive in and give you boj chart. we are talking about inflation in the eurozone. inflation gauges telling us? look at german breakeven .,84 percent. the record low was last january. mario draghi's preferred inflation measure. 1.35, i am really sorry, percent. this is for jonathan ferro, will he ever get to raise interest rates? morgan stanley says no. 58 more months until you raise

rates. bring on september. chart marioas a draghi does not like. prices innsumer japan, excluding fresh food. this is when the road up to the stage.- kuroda took the inflation decelerated. this is where the boj went negative and inflation decelerated again. that sums up why they will undergo this review, what is not working and what they could do better. david: between you saying how friendly you are with mark barton, i am with alix. jonathan: my vote goes over to

barton. barton --k mark barton wins. there is no bias on this program whatsoever. hour, he in the next weighs in on the bank of japan's decision. from new york city, about 34 minutes away from the open. yields lower across the curve. from new york, this is bloomberg. ♪

e jonathan: this is "bloomberg ." gdp --st reading of soft. futures with the ftse 100 down

by .4% on the session. dollar-yen, a 1, 2 punch. over two percentage points. in the commodity market, seven straight days of losses for wti. yield front end of the curve in japan, selling off. 10 basis points. we trade at -27 as we come to down to the market open. this is "bloomberg ." ♪ david: we are under 30 minutes away from the opening bell in new york. this is "bloomberg ." punch, dollar-yen. the gdp numbers for the second quarter. disappointing. jonathan: the second punch

coming from the bank of japan earlier. not a big punch that a lot of people wanted to see. and the third punch if you are an oil trader or investor, terrible earnings out of exxon as well as wti is now in a bear market. a really rough ride. , head up, ruchir sharma of emerging markets -- we will talk u.s., emerging markets, china -- you name it. we have julie hyman here in new york with a look at what is moving. abigail doolittle is at the nasdaq and mark barton is in london. julie, so much moving. i will start with big oil where we are seeing disappointments this morning. exxon mobil coming out with profits that decline, the earnings-per-share number missing it.

and below the lowest estimate out there, margins are plunging by 30% at exxon mobil with chairs down by 3%. chevron posting the third state -- third straight loss. profits did actually beat estimates. a bearseen oil now enter market again. we had numbers this morning from cigna, the health insurance company. they were acquisition by anthem. shares plunging biceps percent and they cut their forecast. $1.98.s-per-share are missing by a wide margin. it is having the conference call so we will get details potentially on the anthem deal. elsewhere, the drugmakers. we have a profit beating estimates with strong sales of the januvia diabetes medication

and cancer treatment. sales are up. bbvie is up 70% in sales. so those stocks are trading higher. let's see what is moving at the nasdaq. it is all about alpha that and amazon. amazon beat top and bottom line estimates. bottom line estimates beat earnings by 59%. it looks like the profitability really was driven by strength in the cloud. this is the fifth straight quarter of profitability despite the fact that the company is investing in the future. pretty bullish year. still appearthey to have the street price market at $1000 per share. -- a home run in

the june quarter report. beating top and bottom line estimates for more than 20% growth. it appears that mobile revenue was the big driver there. that is according to gene munster, the company overcame some problems they had in the first quarter. let's head to london with mark barton. mark: before they of gains and performance best since october. look at who is leading? thanks. 7%,lays shares are up by the biggest rise since 2012. profits greater than estimated at 53%. fixed-income trading revenue outperforming european rivals. the bank says the non-core unit will weigh less on profits in 2017. ubs, shares up today.

second quarter beat estimates and it is a -- it is on track. remainingt news -- cautious. the chief executive on the outlook says there is very little visibility. thes finish off with world's biggest dealmaker -- highest quarterly profit since 2014, beating estimates that rallied in steel prices. boosting prices in europe. iron ore rising to the highest level in a year. david? david: thank you. let's turn back to the u.s. economy. a little over half hour. second quarter gdp rose one than -- rose less than the 1.25% than expected. >> this is all one thing.

we had a small first quarter. companies went into the stock rooms and sold what they had. that lines up with the idea that we have seen weak manufacturing numbers. inventories, a huge cut in inventories. off the gdp.% we would have had gdp at 1.4% which is what everyone thought if it were not for inventories. david: at some point they have to build them back up? michael: absolutely. more. q4 should be we don't have enough stuff to sell. that is the problem now. and right now, consumer spending has been strong. 4.2% in the most recent quarter.

everybody helped. everybody went shopping. we have the numbers like that in a long time. the forecasts are good for the rest of the year. lousy looking headline numbers but we should see renaissance macros -- saying that third and fourth quarter should be up. -- said something similar but we got revisions and the first quarter was revised down to .1%. so if the first quarter was worse than we thought, how much faster does the growth have to be? achael: you have to pick up little bit more but what we got was the annual benchmark that goes back three years. numbers,ook at those the numbers actually work a little bit better in a prior years. the first quarter was something of an anomaly. so it is a little bit higher

because of the size of the economy which makes it little bit harder to make significant process going forward. joining us now is ruchir sharma. head of emerging markets. here we go. but fiscal good spending is not so great. how does that evil through the rest of the year? ruchir: this is how the economy is going to progress. havend to forget that we an anchoring over the last three decades. world, the after crisis seen, the u.s. has been flow back come through with the international weakness. much stronger than they used to be 10 or 20 years ago. and that is what is coming through here.

alix: so when you take a look at how the fed winds up interpreting data, how do they do that? ruchir: i think the fed is stuck in a bind. even though the u.s. economy share in global economy has declined over time, 23% today, the role of the fed has never been as great as is the case today. because the fed is so powerful today because it really is the only reserve currency with the u.s. dollar. and that has increased over time. and if you look at the world today, never before has the dollar been as widely viewed as it is today. so this is really what the fed faces. nomadic what is happening in the global economy, it is a central bank. david: does that give them a dilemma?

the mandate is what is going on in the u.s. economy but it has to be thinking that everything that is being said about the global economy. does it limit what they can do? take a look at the statements out of the fed three to four years ago, they said that it was the world's problem. but for the first time, last january, they explicitly mentioned -- as a big factor and since then, china and brexit keep finding mentions in the fed. that cans not the fed a fedo the mistake, it is that finally understands that it is the investment bank of the world. jonathan: a fed with a global view, that is how any business would view the world as well. i wonder, with that in mind, why should business spending come

around? it has gotten a whole lot worse, hasn't it? ruchir: i think the global economy remains in this low level equilibrium. 2%. ad historically, there is growth rate that has been considered to be a global recession. one big shock away from the global recession. what is really having a big impact on the global economy now is china. china are the only two economies that matter. and china slowdown has been having an impact on a u.s. investment spending and on some of the profits. so in this connected world, look at china as to what is going on out there and it is coming back to the u.s.

the fed is finally fully understanding that. ruchir sharma, i want to say he is also the author of a terrific book. now we will turn to what you need to know outside of the business world. shery ahn: hillary clinton says she is ready to lead. trumpe once that donald can't be trusted in the oval office. at the democratic convention, hillary clinton excepted the party's nomination to be the official candidate. she belittled donald trump's claim that he alone can solve the nation's problems. she said that a man you can bait with a tweet cannot be trusted with nuclear weapons. take taxit is wrong to breaks with one hand and give out pink slips with the other. [applause] hillary clinton: and i believe that wall street can never be allowed to record main street again. [applause]

shery ahn: hillary clinton and tim kaine will get on a bus today to campaign in the battleground states of pennsylvania and ohio. the irs says that facebook may oh as much as $5 billion in taxes. that has to do with the social network's decision to transport operations to ireland. facebook says the balance sheet -- it plans to challenge the irs in court. $24 billion spend to build the first nuclear power plant in the u.k. in more than 20 years. the british government is casting doubt on the future of the project. they worry that customers would pay too much in subsidies. they will decide whether to go ahead in the fall. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries.

alix: coming up, after getting slammed at the start of the year, emerging markets have bounced back. is it sustainable? at theead, we will look best bets in a small-mid-cap markets. this is bloomberg. ♪

alix: this is "bloomberg ." it is the central bank story of the week. else -- going to have a strategic review of monetary policy in september. so what does this mean? joins us now. what is the focus on a and the

¥28 trillion stimulus plan? what will be the effect? ofhir: we have lost count how many stimulus plans japan has had over the last 15-20 years. doon't see that all of these not do much for the underlying economy. and it goes back to the problem about what is the underlying problem with the economy. if you look at the per capita income of japan compared to the united states, it has been similar. better demographics then japan had. but going back more further, there is a real problem in japan with productivity, it is a closed system. that the fundamental problem is that people don't recognize that japan's trade is barely .5-1%.

jonathan: we judge monetary policy now by currency. we judge abenomics by a currency fair. the dollar-yen. this is a rich, rich country. the way we talk about it is a central bank trying to solve the problem. it is an incredibly rich country. how should we view japan? how should the authorities view their own economy? ruchir: recognizing the trend growth rate in japan. the labor force is contracting, it can't get much bigger than 1%. rates ande growth make widespread cultural changes, some of which they are credited with. down to the major demographic headwind. one of the things is

participation of women in the workforce. so that has happened and that number has gone up. but the second-most important is immigration. on that front, we see a big world of deportation and japan never accepted immigration. so it is very hard for japan to grow on behalf of that. and the stimulus policies are a japan has toecause cut corporate tax rates, find women in the labor force -- provide a sugar high. list: in your book, you destabilization. depopulation, debt -- ruchir: debt levels have been stable. de-globalization -- that is not a pretty picture. ruchir: but these forces impacts

the entire world. brexit was an outcome of these forces, in a way. the weakest economic recovery in history. populous inn this many parts of the world. but my concern with the picture is a bit more varied. i would be more concerned about china. china is impacted by these. for the first time, china's population is spring getting -- population is shrinking. real one.s a but talking about politics, the issue -- one thing i would point it is people is that opposite to believe that you will have right-wing extremists come to power and populist party -- look at how politics is evolving in latin america. we just saw the election of the in argentina and

brazil. adoptingces are orthodox policies but market forces are on the rise. sharma, thank you so much. you are sticking with us. next we will talk about more reducing opportunities in emerging markets. this is bloomberg. ♪

ruchirstill with us is sharma. he is the head of emerging markets at morgan stanley. a couple of countries we haven't talked about -- turkey and russia. or three days, you had a piece about what vladimir putin has done with the russian economy.

tell us about what you think he has done right? years ago, if you had told me that the russian economy would be in such trouble with the oil prices, i would have thought he would have taken a more populist approach. increasing fiscal spending. instead, he has been going the more classical orthodox way. which is where you focus very much on telling people we need to be prepared for a long amount of time of belt tightening. morning dids this not cut interest rates. thet isn't even lecturing central banks. he understands that his back is to the wall. and he is doing this relatively well. david: it strikes me from your piece that one of the advantages he has is that the russian people can enjoy pain.

-- 14,000 to 18,000, that is an amazing cut. but what you have to offset that is the naturalistic popularity. that is the message across the world. the only leaders who are able to have strong incumbency are useers who are able to nationalism and putin is doing that. this is a leader we like to bash a lot. front, sometic credit for playing well. david: one quick answer about turkey, host the coup attempt. where is it going? ruchir: it is quite simple. turkey has come out weaker. it has been good for the

president, because it certifies his power but for turkey, it makes it much more vulnerable given how dependent it is on oil capital to grow. david: fascinating. , thank you for being here. he is also the author. jonathan: coming up, it is the market open coming up on "bloomberg ." futures are a little bit softer as well. futures are off by three points. switch a keyboard, the big move in the fx market is the dollar-yen. a stronger japanese yen and yields lower on treasuries. this is bloomberg. ♪ ?c+sv

>> from new york, i'm jonathan ferro. we are moments away from the opening bell. down 46 points, the

s&p 500 down 2/10 of 1%. gdp read in the united states means a weaker dollar and dollar-yen. yen is stronger japanese a move in the fx market after withank of japan hit limited easing. in the bond market, limits are lower, down two basis points, down .49%. crude, south of the moving average, down for a seventh straight day. the moving streak, a 40 handle and 90 three cents. let's wrap up the trading licks it we can get friday started with julie hyman. julie: it looks similar to yesterday in that the dow and the s&p are under pressure. the nasdaq is doing better. is causing oil pressure on stocks. earlier, we saw the tight

correlation between u.s. stocks and oil prices. we saw the correlation of every. rate. operate -- evapo now it is not as usually tight correlation. a fine point on it, the decline is the seventh straight decline. longest can verify, the living streak since january. we saw oil hit the low in february before bouncing. it is now down again and close to entering a bear market. that is relevant to the earnings report. we heard from exxon mobil, chevron, and philip 66. coming in below estimates, margins under pressure. chevron posting a quarterly loss, the third straight. those shares down 1.4%.

phillips 66 beating estimates. the chemical business doing better, but it's refining margins are also under pressure and those shares are down as oil prices fall this morning. of course, the green this morning is coming from the big tech earnings. that is why the nasdaq for the moment is holding on to gains. amazon.com profitable. services counting for 56% of the operating income. only 9.5% of revenue, but it is a profit engine for revenue. the company has been spending more on opening fulfillment centers. our for that coming out with the beating estimates. they benefit from more mobile users using its search products and ad businesses. nonsearchs other businesses growing in sales by

33%. that is encouraging to investors. we heard from ups, related to amazon. shares are down 1.6%. earnings batching estimates. it has been in a fitting from the rise and online shopping and the shipping that goes along with that, but some were disappointed they did not raise the forecast is that accounts for, or possibly a counsel for the decline in shares at the moment. amanda: no real drama in this market. the nasdaq up by 1/10 of 1%. the s&p 500 marginally negative. the dow down to 10 soap 1%. insee where the problem is the equity markets, becoming a small and did cap stock. give me your view. what will the story be for 2016? capsr take is that small

had a good run off the bottom with a 28% gain. valuations are rich for the small cap market. domestically oriented and they should benefit from that. is the our argument dollar will strengthen. with the dollar strengthening, you will see small cap underperform. we will wait on the reporting season. s&p is more than halfway through the reporting season and we are one third of the way through. i need to see earnings growth accelerate for small cap before i get more excited given where we are in valuations and that the risk of the markets go up given some of the softness in data. what we are seeing in europe and japan. from the election cycle. that tells me that risk proxies must go higher. small caps do poorly with that.

amanda: we get have a conversation about risk all day. volatility has stumbled. how surprised are you? areen: it is shocking we below the historical average. if you look at the intraday difference between the high and low, we are at a five-year high. -- we areing, quality thinking that quality should caperform in the small market. we like higher quality tends to outperform when the market shudders a little. everything quality looks cheap. the way we think about playing it, i like the consumer discretionary sector. that is a play on domestically oriented, good numbers in terms of the revision trends. the gdp number was weaker. if you look at the retail sales

numbers, they have been good. if you look at another sector, industrials -- even though it looks like it has foreign exposure -- it is average. manufacturing in the u.s. will do a little better. the group is relatively cheap and has not performed as well as other areas. we like the real estate sector because the dividend yields are two percentage points higher than the 10-year. it would normally be 140. >> one thing that struck me was that you have several retail picks. you have urban outfitters, american apparel -- why are you confident in those? steven: i think it will be individual stock collections inside consumer discretion. it will be more about trying to capitalize ont

the overall business or brand. we rely on analysts in putting together. they like individual stories. there is a way of outperforming the market. if you will outperform it will be stock selection. consumer discretionary gives you more stock selection, individual name ideas. 2013at if we get a tantrum? yields in the 10 year moving up. how does that shake out in u.s. stocks and in the small cap names? steven: we like to see interest rates rise a little that means the economy is doing better. small caps do better when the rates are going higher and the economy is doing better. there's a correlation between earnings and sales growth here discretionary will benefit. they will also benefit from a better economy and rising rate. thank you very much for

joining us today. hitting biges keep oil. exxon and chevron reporting weaker profits. more next. this is bloomberg. ♪

david: this is "bloomberg ." i'm david westin. coming up later on bloomberg television, the gps chief financial officer. ups chief financial officer. is bloomberg, i am jonathan ferro. we are 10 minutes into the session. a bit of an outperformance on

the nasdaq of 1/10 of 1%. at the top of the hour is bloomberg markets with mark barton and vonnie quinn. vonnie: we will be speaking with ups. we will be talking about changing trade relations around the world and how that will impact the carrier. you know how great of italians are at making engines. talked to one of the largest defense contractors in the world and preparing the moon for human habitation. changing geopolitical arrangements around the world make life interesting for defense contractors. and we will speak luxury. -- $25,000 plus watches. jonathan: thank you. we're looking forward to the program.

with the's check in movers. where 10 minutes into the open. let's talk about angry birds. that is a highlight in earnings. julie: you are way too excited about early birds. sony reported earnings after the close of japanese trading's, but it trades in the united states. you posted unexpected profits due to its games division and a virtual reality release in october. you can see shares up by 8% in u.s. trading. xerox has adjusted earnings beating analysts' estimates. the split of its legacy and newer businesses is on track to happen by the end of the year. though shares are up better than 3%. an interesting deal with in the utility industry. buying energy future holdings oncor electric or livery.

it is electric transmission operators in texas. billion dollars. it is privately held and the old txu if that means anything to you. next era up. thank you. let's get over to abigail doolittle who is live from the nasdaq. interestingly, we have the nasdaq well below the record high. it will be interesting if big tech and other stocks can drive that. probably not today, but maybe in the weeks ahead. expedia shares down 3.6%. the company posted a mixed second quarter. they beat earnings but missed revenue. the biggest troubling fact is that organic room growth year-over-year declined.

analysts say this has a lot to do with terrorism. travel to france was down year-over-year. he says different feel, that some of the surface facts are masking what he calls a solid quarter. they beat estimates and perry gold moffett said he was positive on the shares of expedia. of thisto another drag morning, went resorts down 6.4%. that is after they reported a mixed soft june quarter. las vegas revenue down 1.1% year-over-year. what is troubling analysts is that went resorts -- one resorts had feweresorts tables fan estimates beer they're looking for 250 tables to be at the new resort. on this, we have 2 downgrades.

it could be a tough road ahead for whynn resorts which is now one of the top stocks for the nasdaq. alix: if the nasdaq closes at this level come it would be an all time record for a closing week. thank you. week for oil big earnings, you are probably in a bad mood. exxon and chevron missing estimates. exxon coming in one point seven $6 billion. chevron losing $1.5 billion. the chief energy correspondent joins us from london. what was the biggest pain for the oil companies? mobil and chevron, one was the defining sector with good margins compared to one year ago. even the first quarter of this year. and willappearing probably get worse in the third quarter. margins are getting weaker.

that was number one. number two was production goals were week. -- were weak. in part because of what is going on in nigeria with rebels sabotaging the industry of the country of chevron and exxon. those are two problems that they are suffering from. obviously there's a third problem that is well known, the price of oil remains low. much lower than it was two years or three years ago. chevron8 for crude and $36 for its crude. exxon underway, what has been the big take away? javier: analysts were concerned about increasing the concern about what would happen with refining margins in the third quarter. we saw a positive with $1.7 billion. let's remind ourselves that that is the weakest for exxon mobil

since 1999, the time of exxon mobil. that is the take away. analysts will be asking questions index on mobile and for chevron about what is going to be the outlook for their intake in the second half of the year. companies at the moment are failing to make enough money from their operations to pay for the investments in new production facilities and for paying into shareholders. a couple of numbers from the presentation of chevron, they had their conference call later today, the first part of the year chevron spent $14 billion in investment in projects and paying shareholders. over that same time, they made $5.1 billion. you can see a huge gap in what chevron makes in money and what it is spending.

jonathan: to put that together, looking at the majors, talk about the reserve replacement ratio. who is managing to invest 10 to 20 years ahead? .avier: none i have been surprised by the results of big oil. total, butception is we are seeing real trouble with lower.ining market be we are the company is really struggling. coming down. not one company is presenting an outlook that you can see is conducive for the second half of the year or going ahead. alix: thank you. .he chief energy correspondent i want to correct that the nasdaq is at a one year high if it closes at this levels. it is all about google and amazon. david: that is what we will talk about. disappointing oil numbers to

encouraging numbers out of amazon and google. they are up after reporting numbers that top estimates. let's start with amazon. rolling in revenue, what is driving the growth? that. we'll get into i think that the success of amazon prime, though it comes at a cost, that is really driving revenue. in termsdoing so much of whether it is the prime day promotion, that was the biggest day ever, including holidays. they are also spending billions and content. they say will double again. $2.5 billion this year in content exclusive to amazon prime. amazon prime customers spend more money than regular customers. amazon prime has accelerated growth for the company. took downy

expectations for q3 in part of because of the investment in content. originally it seemed to dip and come back up. what do m -- what do analysts think? say -- at analysts it is important the way the business evolves. they are spending so much money in original programming to compete with netflix and hbo, they are out there with the best producers and actors in hollywood to do great shows. they have any nominations and golden globes. what we see is it is driving people to buy shoes and toilet paper and other things from amazon. prime, theddition to cloud service that they have, their numbers are growing faster than basic services. sales are huge. they had the biggest quarter ever and will have more for us to keep business.

one complaint to you here in the technology business is that you think amazon services are hosting, but you switch to a google business, and may have good numbers as well, but it is a sticky business. and people use amazon, they stay there because they are architected around it. the result is 2.9 billion dollars in the quarter that ended, and the growth rate is growing faster. it is bigger than ever and growing strong. david: on alphabetic google and what we heard yesterday. cory: the key drivers for amazon, alphabetic, is google alphabet.s as part of youtube is also having tremendous success. that is more expensive than search. youtube has been very successful. , you get a much higher rate. the revenue as well. cory: you also see that they

have trend cost. -- trimmed cost. that helps them in the operating line. they tried to dampen expectations. by most cases, you can see revenue changes accelerating the last two quarters. david: any headwinds for alphabet google? cory: it looks strong. marketing is directing to google and facebook. thank you. cory johnson from san francisco. key: coming up, the 2 events that investors need to watch next week. this is bloomberg. ♪

alix: this is "bloomberg ." i am alix steel. this is the chart of the month. the u.s. 10 year yield. this is where we saw a record low yields. 1.3%, along with record highs in

the yes and he. -- in the s&p. intel story of the flight to safety, into the u.s., and what you have when you have a spillover from brexit turmoil. jonathan: the story has been an epic rally in the back of what has been happening in the bond market. when we talk about those things hitting records, first with the bond market. in two or three weeks, it has really backed up. david: you saw it bump of at the end. overall, the story is of a flight to safety. it does not say anything good about where the world economy is or going. alix: we have a -- jonathan: quarterly inflation report for the bank of england, a big threat for anyone who works at the bank in the u.k.. the expectation of moves is up here. it will be interesting with the

post brexit monetary response will be in the u.k.. david: there will be a cut, but by how much. and we have jobs day. alix: june was relatively solid. the fed is continuing to watch jobs. will we see a build or at we -- or are we at full employment. david: and wage pressure. jonathan: a big week ahead for global markets. from jonathan ferro, david westin, and alix steel, thank you. the s&p 500 down 2/10 of one percent and a weak u.s. gdp report. from new york, this is bloomberg. ♪

vonnie: it is 10:00 a.m. in new york, 10:00 a.m. in hong kong. i am vonnie quinn. mark: i am mark barton. this is "bloomberg markets" on

bloomberg television. ♪ vonnie: we are in new york and london for the next hour covering stories in san francisco and tokyo. 30 minutes into the trading day in new york. stocks fluctuate as u.s. gdp growth misses estimates. european shares going for the biggest monthly gain since october with science leading the way. mark: google in the cloud. u.s. tech earnings having their best earnings quarter. we will tell you what is driving the result. vonnie: the earnings reports continues with ups missing estimates, benefiting from a surge in online shopping. we will talk with the cfo