-- market. angie: we are from san francisco and london. the bank of england announces a multipronged stimulus program designed to set what the u.k. economy after the brains about. stocks ticking higher and the pound falling sharply. scarlet: jack overseas payment company may be on its way to profitability. in the u.s. aluminum industry is not getting any respect in its uphill battle against china. we will hear from one u.s. aluminum maker who is on a crusade to save his industry from going under scarlet: we are halfway through the trading day. julie hyman has the latest.

looks like we are approaching session highs. julie: yes, session highs. but in recent days, i feel like a broken record. the range is very tight. we do not see much movement. it's a gain of 91.2% here and it has been remarkable how little movement there has been. i believe they are now up to 19 straight sessions where the s&p 500 has not moved at least 1% by the close of trading. always, there are groups that seem to surface. in terms of what is moving the most up word, we've got utilities performing the best. we have surging natural gas. on the downside, we have financials exerting a little bit of pressure in the opposite direction. and then there are moves in the individual stock levels. ball corporation,

which makes a number of different types of roddick's, sales falling. the company is giving a free cash flow forecast for the full year. ofbling its long-term goal 10% to 15% of earnings share growth in each of the next three years. what struck coming out with earnings that beat forecast and western union beating and raising its forecast as well. we have also seen more movement when it comes to oil today. this is one of those mysterious moves. there was news out of mexico that hinted at a crimping in supply. otherwise, there is nothing really to explain this big surge in oil prices. up to point for sense now. point -- up 2.4% now. , consumer acts and devon energy up also.

oil moving. individual stocks moving overall. scarlet: what about deals? julie: we see it to some degree in the bond market. not in stocks. you would expect to see a potential rally in u.s. stocks. but that hasn't happened. here was the movement when we initially got that rate cut and sort of took another leg lower. so 1.25% is where we are now. the bank of japan adding stimulus. the bank of england adding stimulus. can the federal reserve raise rates in that environment? scarlet: thank you, julie hyman. angie: let's look at the first word news yardma -- news. aid of you dog to

you are paul, clinton leads trump 47% to 32% among likely voters. gary johnson has 8%. jill stein has 3%. but voters remain divided over whether clinton is fit to be president. 48% say she is. 46 percent say she's not. is.trump president obama heads to the pentagon today to discuss what the u.s. is doing to defeat islamic state. the u.s. and its allies have made recent gains in iraq and syria. now the u.s. has started bombing use -- bombing islamic state targets in libya. the president will hold a news conference scheduled for 4:15 p.m. new york time. we will have coverage here in bloomberg. agencyy state run news --

gulen lives in self-imposed exile in pennsylvania. he has denied any involvement in the attacks. wildfires in california have expanded, but crews have made some gains. officials say the flames near manyc big sur has charred about 10%is contained. scarlet: thanks. the bank of england cutting rates to a historic low. there could be more stephanos on the way. here is mark carney speaking earlier. mr. kearney: the bank of england stands ready to take whatever the u.k. adjusts to

the realities and moves forward to season opportunities outside the european union. scarlet: but will the measures be enough to measure short concerns? let's get some insight from sam hell. good to see you. you, is theon to stimulus appropriate considering the lack of hard data we have seen up to this point question mark sam: for sure. when you look at the purchasing managers index, the service sector for example, which is three quarters of the u.k. economy, this is the biggest one-month fall in that series in history. this is definitely an appropriate response to a big to the u.k. economy. angie: diminishing the ammunition in the boe warchest, what does this mean for fiscal

stimulus? is the pressure more on the government to act? sam: i think they will do anyway. we will probably have to wait until november for that. the new chancellor hasn't said when he will conduct that audit statement. but there is indication that they plan to reset fiscal policy and there will be big increases. you could see a 36 percentage increase in government borrowing, which would be a .ossible increase in go fish we are looking at big numbers. scarlet: with the anticipated fiscal spending, can this deal prevent a recession with a 25 basis point rate cut? or's mitigating the downturn the best case area at this point? sam: -- best case scenario at this point? sam: they've tried as hard as they can to make sure that the

25 basis point cut will be affected. that's important. is limits tohere what monetary policy can hope to achieve. i think we can rule out that the economy will have the odd quarter here or there. it may possibly contract. it is likely we will see a small contraction. angie: recession, stagnation, there is a lot of uncertainty now. let's take a look at what our bloomberg intelligence team put together. uncertainty has risen since the restaurant -- the referendum. you see it creeping back up. it is really threatening capital expenditure. firms to larger invest. does the fed do enough to encourage spending? sam: i think it is enough to partially offset it. but you are absolutely right.

it is a hit to confidence. there are longer-term decisions where the cost of reversal is hiter in that's where the is going to come from, rather than necessarily a big hit to trade. for the foreseeable future, the trade relationship will be the same. it is definitely going to be concentrated in the business investment sector. i don't think it is going to be enough to prevent this -- business investment from contracting this year. almost certainly next year, too. england today is mitigating a downside, not completely reversing it. scarlet: you mentioned a lending program for banks. what more beyond that should or could regulators due to address the concerns that is lower rates don't hurt angst anymore than they already have. i think of what is going on in europe. the problems that that has brought about.

sam: as i said, just to reiterate, if the bank of england had just done the term funding scheme and not cut funding rates, that would have almost no effect. but what they have done with the funding scheme, providing banks with a cheap level of funding, it means that hopefully, if they banksght, the impact on net interest margins as a result of this cut in interest rates to 25 basis point today should be no more. and it should allow for that to be passed on to consumers to the wider economy. i think that, rather than doing this funding for lending skin that they have done in the past where they have the explicit aim of boosting total bank lending, the focus today is much more on just making sure that the cuts is notrest rates detrimental to banks margins, rather than targeting higher lending overall. there has been a very targeted intervention in the idea to not

have an adverse impact on the guilt scheme. what point are we going to see past zero, negative? quite catch all of that. but what the bank of england did say and what i continue to believe is that the absolute dust floor for bank rates is slightly above zero. if you continue to see evidence and the hard data post exit, we would look for bank rates to go -- we have said previously not as low as 1%. that point, you wouldn't expect to see qe further guilt purchases would be the main stimulus jian that point. and certainly in an environment where you can be seeing much higher issuance. it is likely the movies room to do much more qe without

necessarily distorting the government fund market you much. scarlet: sam hill, thank you very much. up, eat payments company's class came up looking solid. we will have an exclusive interview with the cfo on how the company can make it more hit to be square. this is bloomberg. ♪

angie: you are watching bloomberg markets. scarlet: it is ti for the bloomberg flash. buyer has signed confidentiality agreements.

that process could take a few more weeks. months and so sweetened offer by bayer. angie: at issue is whether berkshire investment in wells fargo violates the rules on how much banks can extend to corporate insiders. none involved are commenting. scarlet: chairs of square rallying the most in eight months after an earnings report suggested the mobile payments company is on the path of profitability as larger sellers process large can -- large transactions. payment volume jumped 42%. and that is your business flash update. we will have to take a

look at how square managed a a quarter. the company extended $189 million during the quarter. that is up 123% year-over-year. emily chang had an exclusive sitdown with square ceo sarah friear. isah: i think square capital an example of being able to capitalize the core of square. we can see how their businesses turning with real-time data. we know the payment piece. there is also a huge path of the market. we know small businesses do not have access to capital. low or almoste is no acquisition costs. we already have millions on her platform. we have a way of underwriting than in a way that is really

unique to square. that means we can control any losses, about a 4% loss rate. keith is right. still in the very early stages of what we can do in a business. i'm excited to see it grow not only in the seller base that we have, but any potential opportunity for square capital. even as we look out, what are the other places that merchants are looking for to help them manage working capital? how do we insert ourselves there -- how do we insert ourselves there? duke caviar and fast by fit into the bigger plan? it really starts with the essence of square. we never want a seller to miss a sale. eightn we looked at quarter of our sellers, which

are restaurants, how do they get a sale? they can only serve so many people in the restaurants and they can maybe one to two turns a night. so how do they get more? delivery is the way they get more. delivery is not done well. that has brought us to thinking about. square do it in a different way? we have caviar where we can optimize. we have the great way into restaurants for square and we will be able to sell those restaurants more square products. thinking about the buyers. they use founds for payments. and where we can apply a lot of data science. we are optimizing for the routing via data science. ultimately itause comes back to bringing more caviaro our sellers and absolutely fills in that needed.

angie: that is sarah friar. scarlet: still ahead on bloomberg markets, we will talk spin tech with the ceo of bank of america. this is bloomberg. ♪

scarlet: this is bloomberg markets. how will digital payments change the face of banking? according to brian moynihan, it will make it leaner and cheaper and more efficient.

brian: syntax for us is -- synte ch for us is nothing new. we have 35 million online banking customers. the treasury service is all electroni five -- fied. had 6700r 2008, we branches, 5000 people in the consumer business. we now have 60,000 people and the customer base is up by 10%. it is a much bigger business. has beenbeen a -- enabled by electron ification. david: what about transferring

payment system? brian: i'm going to give you money for lunch. right now we do $2 billion a month. that is a collective of the banks. what the group of banks is trying to do is get clear exchange, which operates today with a better product. the ideas to get that across the system and then we will give it to the smaller banks so everybody will have it. that is ubiquitous as checks. it is the way you pay your banks and checks. and make theecure banks in the middle so it settles and more real-time. ultimately to make -- to get cash out of the system. dollarsts us a billion to move around a year. take cash, sorted out and give it back to the merchant and

all that stuff. if you think about that, it is more secure and more safe as people are carrying less cash. but the methodology of transfer has to be real-time and easy. david: put a size around that compared to a paypal or a vendor no -- venmo? brian: i think they're doing $4 billion or $5 billion a year. david: what will this do to the industry? brian: in the capital markets business, what changed between cation of equity, every room was full and they were expanding. the more, the less people.

safer, secure, less risk, more risk manageable so we can find stuff easier. i think employment will continue to drift down on a relative basis. but we will be doing more for customers at the same time. scarlet: that was brian monahan. next, an exclusive interview with the ceo of american water works, susan story. going to talk with her good utility stocks scarlet: if you take a look at the share prices, lowest since late june. second-quarter earnings beat analyst estimates but revenue missed. we have a lot of questions or on the outlook for the company, particularly when it comes to q&a. there are a lot of concerns about the cleanliness of the water coming out of the tap. angie: especially after flynt. the biggest u.s. water --

bottled water companies are saying more consumers are buying bottled water than carbonated soda than ever before. and they credit flynt and the concerns triggered about that, the quality of the infrastructure in america forcing consumers to go to a shelf instead of the tap. scarlet: what does this mean for a company like a wk? it has had 10 acquisition so far this year and we are only in august. we will talk with the ceo about that. it is a story coming up after this. this is bloomberg. ♪

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another republican says he won't vote for donald trump. illinois congressman adam kinzinger says trump is "beginning to cross a lot of redlines of the unforgivable in politics. note told cnn that he will support hillary clinton either and may write someone in at the walls or skip voting altogether. survivors and family members of the pulse nightclub shooting are set to learn this afternoon how the more than $20 million in donations will be distributed. the administrator of the fund, ken feinberg, is hosting to town halls -- is hosting two town halls today. authorities in london now say that the woman killed in a knife attack was an american. five other people were wounded

in that attack new the british museum. norwegian ofld somali origin was arrested. to haveck appears stemmed from mental health issues. there is no evidence that the attacker was radicalized. arecials in dubai retrieving evidence from the airplane that -- the emirates airplane that crashed and exploded yesterday. investigators are expected to focus on the landing gear that apparently did not deploy before touchdown. angie: thanks so much. let's turn now to utilities in the nation's biggest traded utility, public waterworks. the company reported earnings that beat analyst estimates.

it has been growing an. we are joined by susan story in philadelphia. thanks for joining us today. when you look at water as an investment, it is appealing right now. it is a scarce resource. you've got the talk of all the droughts out in the nation as well. talk about how your investor base has changed since you joined the company as cfo in 2013. susan: thank you for having me on. investors,ok at our first of all, in the whole utility space, there is the risk to safety -- the fight to safety that we have seen. we had challenges nationally, especially in water supply and water infrastructure. and then you narrow the universe of investor on water companies

and it is a scarce space. so you're questioning is very interesting. the type of internet -- investor today has an changed in the last three and a half years. and it has. it is interesting that we don't just get yield investors. nor do we get those that typically by the utilities. we are finding a lot of interest in international infrastructure funds. interest in sustainability funds. in march.the s&p 500 look interesting, when we at the investors of american water, it is a pretty broad group. scarlet: you look at the performance and people want that growth as well. inside the bloomberg, there is a function called buyp. isrican water works described as endlessly acquisitive.

and he's right. the wastewater assets of pennsylvania, $195 million in march of 2016. wondering,n, we were especially after flynt, would you bid on a troubled water system like the one in flint michigan -- flint, michigan? susan: unlike the electric and gas utilities space, water, 84% of water providers are actually municipal systems. out of 52,000 systems in the nation, the vast majority are provided by municipalities. that is very different than the electric and gas space. what that means is that, as these music tallies are struggling with the myriad of responsibilities, like police and fire and schools, parks, debt -- when it comes to water and wastewater, sometimes the investment, the ability to put investment there is better handled by companies like us who by the system, give the money up front to fund other priorities that they may have, and then

allow us to invest in those systems. part of the reason you're seeing such a pipeline of opportunities is for those reasons. thery fragmented space in opportunity for private companies, investor and utilities -- investors in utilities, to solve those infrastructure issues. scarlet: is privatization a trend that is not going to go away? number.here is a large there are a large number of systems out there. 52,000 water and 57,000 wastewater. only 180,000 meters are wastewater. as the nation is grappling with this issue of water and looking at water as one water and not separately drink water, wastewater, stormwater, we are finding more opportunities to buy wastewater systems where we already own water systems. that's popular. they know us. we are branded.

our people are in the communities. it is a natural progression from serving water to serving water and ice water. scarlet: one thing you have been very vocal on is addressing the nation's crumbling infrastructure. you wrote in your capacity as one of the cochairs of a bipartisan committee that for a nation that thrives on competition and leading others, we have fallen to far behind in our roads, bridges, waterways and airports. angie: susan, how do deals need to be structured to make this value plan a profitable one? susan: i really appreciate you referencing that rapport. it is one of the best in the issue of infrastructure in the u.s. in a long time. that report advocates for public-private partnerships. it is everything from the gannett of maybe having -- from gamut.nnet

the fact of the matter is this. peoplebeneficiaries of 50, 75, 100 years ago who invested in infrastructure in this country, whether it was water, wastewater, rose or bridges or electric grids. the point where we must reinvest. it is not enough. government cannot do it on its own. we have to come together to investor the future of our children and our grandchildren. scarlet: based on what you've heard, based on the platform that you know of, susan, would a trump or clinton organization be a better partner for the sector? susan: they both indicated each amend his commitment to infrastructure. . so whatever happens in november, i think we will have a president who is very much advocating for infrastructure investment and understands that not only is infrastructure investment critical for the services that

every citizen in this country needs everyday, but also creates jobs. they water research foundation, for example, says that for every $1 billion we spend in water infrastructure, we create 16,000 jobs. american water this year will spend between one point $4 billion and 1.i billion dollars, the majority of which is going to infrastructure. think about those jobs. every time we invest in infrastructure, we are not only improving services. we are creating jobs, which is good for the economy. scarlet: i've got to ask you this. in are one of the few women the utility industry. recent reports showed that. c suites makeup is more profitable. how are you seeing that play out in your boardroom? american water, over half of our board women are actually female. our executive team is about 50/50 also. when we are deliberating, that

is not an issue. what matters is that everyone comes to the table with a viewpoint. and we have healthy debates and we debate issues to make sure we come out with the very best dancers. so i think this -- very best answers. so i think this issue of diversity, it is backgrounds and experiences. are women population and it is women who add to this discussion. i think it is just good business. statistics are actually bearing that out. scarlet: but it is still a challenge. had you get more young people, especially women, to leverage their assigns, technology, engineering and math skills and tackle real-world if a structure problems rather than going to silicon valley? susan: i'm glad you brought that up to my undergrad is an -- is in engineering. what we know is that girls tend to decide in the fifth or sixth

grade they don't like math or science. boys, its seventh or eighth grade. we have to make sure that our companies are getting into schools early, that we are promoting it, making it fun, just like pokemon go, that we go in andics fun and have competitions around roboticsnd math and science, just like we do around sports, which i am also a big sports fan. i think this point about -- any utility -- and this is one benefit the water industry has. we are finding that young people today love the fact they can come work for a company that has a stable job but also is doing something that matters so much to the environment. from a sustainability standpoint, from a human health standpoint, the provision of clean and safe water is right up there at the top. it is a critical service that every civil citizen in this country must have. and it is very special. our company, what we say is that it is not a job, it's a calling. scarlet: well said, susan story joining us from philadelphia. coming up on bloomberg

markets, the ceo of century aluminum is on a resaved to save his industry from what he sees as impending doom at the hands of china. what's his next move? this is bloomberg. ♪

mark: you are watching bloomberg. voniie: brian moynihan warns against knee-jerk reactions to brexit. he says it is way too early to talk about what the impact will be. be.

mark: -- newie: iran approves a model, welcoming foreign investments in its energy industry. brian moynihan says the sky is an falling yet because of the brexit vote, despite all the speculation in the follow from the u.k. leaving the european union. it is too early to say what the real impact will be. he hasn'toted that made any adjustments to the business plans to a kafir brexit because no one knows what the rules will be. it also pointed out that brexit trading did not drive second-quarter earnings that much. brian: the stability in the markets actually started driving the earnings during the course of the quarter. the issuance market opened back up. after member what was in march-april.

best ability is what drives it. mara: -- mark: regulators entered their probes with that issuing fines. million in fines have been levied at other banks by global authorities in the last four years and more than 20 traders charged. the european union is cracking down on cheap steel imports. regulators imposed five-your tariffs on chinese and russian producers of non-stainless steel. they found that imports from the two countries unfairly undercut european steelmakers. adidas is bound the -- bouncing back in north america. sales in the u.s. and canada rose 26% in the second quarter.

adidas has been grabbing market share from nike in nike's home theet china, fastest-growing region, by 30%. vonnie: iran has long been wary of outside influences, especially when it comes to exploiting its natural resources. but now that government is offering international oil companies their biggest role since 1979. iran's oil output returns to its pre-sanction level in april, three month after the country won relief from sanctions. the government has called on foreign companies to invest $100 billion in the oil industry and has drafted a new template for contracts to lower them. a working group set up by the supreme leader gave an amended contract model a nod in july.

here is the background. from the first concession given to a british speculator in 1901 until the 1979 islamic revolution, iran had almost no control over its most precious, natural resources. the british government effectively owned iranian oil and received the lion's share of the profits. when the islamic revolution 1979 -- willm in

they are global business report can head to bloomberg.com for more stories.

this is bloomberg markets. we focus on aluminum. steele has long been in the spotlight as an american industry losing in an unfair aluminumh china paired has been left in the dust. century aluminum company one of only two smelters in the country, is on a crusade to drum up in destin drum up interest.

joe: this is the century aluminum smelter in huntsville, kentucky. it is century's largest plant. -- it once produced -- >> they hired on a lot of people at one time. it was haslam bussell. joe: with the aluminum price factoring the lowest since 2003, the factory is struggling to stay afloat. >> you're used to see everybody around and now you don't seen a body. it is also at a ghost town. joe: to keep running, century cut capacity in huntsville by its workforce.d it also cut production in high tier metal, which commanded a higher premium. but still survival is uncertain. >> this plant doesn't work -- anymore.

joe: century shares have tumbled over 60%. >> the problem is that the demand is into there. there's too much supply. china accounts for 55% of total aluminum production. the nation is expected to boost production by 4.4%, perpetuating a global glut of 2.2 billion tons. being rocked up by subsidies. something has to give. that production has to stop. by far the biggest cost for smelters. -- hey are consumed joe: subsidies for power are giving china an unfair advantage. issues.is one of our china is subsidizing the aluminum sector. joe: it is likely that the world

trade commission will take it up. that would mean 300 job losses in huntsville. companies like airbus and boeing , along with the u.s. defense department, rely on century's high. aluminum and will have to buy for supply. >> we are very proud of our product. but we can't compete with somebody that doesn't follow the same set of rules. that was jojo. the bank of england moved to lower its benchmark rate and is having an impact far beyond the u.k.. oil continues to trade above $40 a barrel. what's been interesting is, for the most part, as goes oil, so goes emerging-market currencies.

that is kind of breaking down right now. this goes back to january this year. you can see emerging-market currencies follow. emerging-market currencies climbed to a one-week hi -- i'm sorry, a one-year high this week. over the past decade, a longer-term, you see the annual correlation that cm currencies have would bring crude. so far this year, the correlation is only 0.7. you have the snapshot and the rest of the world. low interest rates or negative interest rates. that means investors are flooding into emerging-market bonds with all their money looking for yields and dividends. i want to tell you about

one emerging-market currency .hat is not doing well in fact, it is one of the worst performing currencies in asia. i'm talking about the malaysian ringgit. you understand why when it comes to oil because it is absolutely a net oil exporter. as the fortunes of brent goes, so does the malaysian ringgit. in white, you can see as it moves in step with oil. but it's not only oil paired it is also the one mdb scandal that has foreign investors questioning the root -- the regime. now the other concern is, again, the search for yield. but we have the central bank governor of malaysia basically cutting interest rates for the first time in seven years back in july. and there is anticipation that they will do a lot more. because the gdp is lower. you got energy prices that are

putting pressure on that as well. and of course, local businesses have a problem with that slowdown. all, there is anticipation of a cut, which means those yields are going to go low and not so good about the malaysian ringgit. brought upm glad you that mdb scandal. it is like a slow-moving train wreck. it is going to play out in the years to come. let's get a quick check on u.s. stocks right now. they are slightly higher. the dow at this point is a little changed. we have more coming up on bloomberg markets. bloomberg. ♪

♪ >> it is 1:00 p.m. in new york, and -- london, welcome to "bloomberg markets." ♪

>> from bloomberg world headquarters in new york, i'm angie lau. scarlet: and i'm scarlet fu. here is what we are watching. u.s. lots -- u.s. stocks fluctuating. friday's jobs report for clues on what the fed will do next. moynahan sat down exclusively with bloomberg. why he thinks banks are in better shape, and more coming up in this hour. >> how well is the professional networking site doing? we will break down the financials? . >> we are halfway into the

trading day. let's head to the market desk where julie hyman has the latest. julie: i am going to start with oil. that is where we are seeing movement. here is the today gain in oil prices. a bounce back as we had seen oil entering a bear market. now it is up 6% over the last two sessions. we see the rebound effect. part of that has to do with crude output continues to decline. this is crude output versus the price of oil. here is the output you see trending lower and lower even though stockpiles grew this week. there is his optimism that would production falling, the stockpiles will come down and the u.s. will continue to work down its apply what -- it's supply glut. this really puts it in perspective that it is in the

back of a long decline. stocks, we're not seeing much movement here. this is what we had been seeing as of late. name of the u.s. stock market, even though a lot of strategists are predicting a return to volatility at some point. it is not happening as of yet. perhaps the jobs report will be the catalyst. well.tocks are doing -- we did see a social velocity. western union raising its forecast, facebook is another one in the game. on the downside, we have insurance stocks. some disappointing earnings from a number of different companies. metlife saying its profit tumbled 90% as it reviews its prospects of it variable annuity business. the ceo is seeking to exit the business.

second-quarter operating earnings per share, $1.84. $2.50 is what analysts were predicting. some news that came out in the last hour or so, it is more incremental news on a potential buyer acquisition of montesano. the buyer is examining montesano's accounts. remember, the date is 125. it is been trading substantially below. >> thanks, julie. let's check in with first word news. mark crumpton has more. it mark: despite donald trump's refusal to endorse him, ryan paul -- paul ryan -- paul ryan said the only endorsement he cares about is

from the voters in his congressional district. president obama is riding a congressional bump. a poll has the president's approval rating at 54%. the highest in four years. people surveyed said things are going badly in the u.s. a judge has appointed a special prosecutor in a murder case officer, police indicted for killing laquan mcdonald's. . mcdonaldideo showed being shot 16 times. a senior officials tells the associated press he hopes to see the north korean flag on the moon within 10 years.

outside expert says the plan is ambitious, but conceivable. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. angie, back to you. angie: exclusive insight from bank of america's brian monahan. he said his bank was in a good .osition to weather a reception -- he topic of european voted surprise on the brexit vote. >> it was a surprise it went that way. people are still adjusting to that and adjustments are raining from personal disappointment to we have to figure out what will happen. we have plans to guide us to the initial thing. long as going through the roof.

-- volumes went through the roof. right now, we are trying to get people to calm down because people have kids in school. there are real people. until that becomes clear, all you can do is think of scenarios and plan against it. >> have you seen clients pullback on deals? or are they saying it is cheap because the pound is down? >> it is only a few weeks. clients will adjust their business plans. like any client, you will adjust your business plan when you know what you are adjusting it against. you can't adjust it against an unknown. don't expect a lot of activity.

the uncertainty can cause people to think twice about something. >> the uncertainty in the volatility helps big banks making to earnings revenue. the question that seem to come up is that boost sustainable? volumes, then one day it is something else and another day it is something else. it doesn't drive earnings as much. of stability in the market started driving earnings during the course of the quarter. the issuance market opened back up. you have to remember what it was in march and april. that stability is what drives it. people say earnings are driven by brexit. ok. [laughter] >> there is something going on

every day. david: let's talk about european banks. how bad is a situation for european banks, and help does and how doesash that affect bank of america? the domestic activity, retail and commercial banking, we do not compete in that business. the capital markets activity -- as european banks continued to address crisis changes, market share comes up. you can see banks that have made those changes with limited risk are gaining share. that is good for us. the thing that people need to remember is europe is much more difficult to manage. in the u.s. it was more difficult because the size of the economy and multiple regulators. that just makes it so much harder. the second issue, don't have a

capital markets desk. there was no place for the loans and securities and assets on the books to go. we can restructure the balance sheet. merrill,me we bought $800 trillion of shrinkage went on. that is harder to do in europe. , itiple banks, real economy is all on the books of banks. that just made it difficult. they are doing it at a pace that is more slow, but it is hard. 8 we have stress tests. what do we learn about the state of european banking. exceptions,w companies had the capital for reasonable recession to get through. it also showed on a relative basis, there has been a lot of talk, the u.s. stress is much

more severe. areou think about it -- we in a mature place in this recovery in terms of banking structure. they will get their. >> that puts the focus on italian banks. there nonperforming loans. , andshould have been done what should be done now to help capitalize a time banks? mark: they are doing it now. what should be done is, you have to balance the effect on the real economy and the effect on the stability. if you think about the late it0's and early 1990's, pushed asset so far you kept your eye on the economy deeper and deeper. they have to make a choice. policy makers in the country made a choice to go slower to make sure that the real economy

could be supported. -- those to get that assets in the hands of people. >> dallas brian moynihan, ceo of bank of america in an exclusive interview on bloomberg . >> could we be closer to the monsanto deal. microsoft's purchase will revise linkedin. we will dive into those numbers. this is bloomberg. ♪

♪ this is "bloomberg markets." i'm scarlet fu. one of the biggest deals is

microsoft's purchase of linkedin for $26 billion. let's see what microsoft is getting for that hefty size tag. this deal has a high earning multiple of any takeover this year with $5 billion. if i use linkedin at 84 times. what makes up the value? the latest data show that lincoln had 105 unique monthly visitors. $250 per is paying each of those subscribers, or orh -- $450 for linkedin -- $50 for each linkedin subscriber. speaking of users, while many people use the site, fewer than a quarter science of the service on any given month. the deal is based on the theory that people will both use linkedin and microsoft if the

platforms are combined. the bar is set pretty high for microsoft to justify the steel. theund this purchase, third-largest debt issuance of the year. this was done despite microsoft having enough cash to buy linkedin four times over. by selling bonds, it is capitalizing investor's appetite and lowing -- lowering tax bills. to abigail doolittle at the nasdaq with the big movers there. abigail: before taking a look at the big movers, we have another day of wait-and-see tight trading -- type trading. the nasdaq is up 1/10 of 1% as investors are treading water ahead of tomorrow's jobs report.

beneath the surface, we have lots of movers. in terms of the plus side of the ledger, we are looking at a very nice day for some of the mega cap companies including facebook, amazon, microsoft, and intel. we have nice moves up on an apparent lack of fundamental news. we reached out to bloomberg intelligence analyst paul sweeney. he said the market has been sloppy and investors may be looking for the tried-and-true somewhat -- atat a somewhat better price. >> but the nasdaq every higher, what stands out as a notable lack creating the tension in the market? abigail: one big loser on the day right from the beginning is trip advisor. shares are down 9% at this point after tripn lows advisor ms. second-quarter earnings and sales estimates. a pretty big miss. year-over-year decline in growth.

isall of this, terri gold saying that chip adviser tripped up and missed relatively low bar estimates. he sees a modest downside for the stock. on the other side, we have mike olson at pipers saying this miss reflects a transition around the company's business model. over the longer term, he believes the business model transaction will be successful. he raised his price target to $95 per share suggesting that trip advisor could climb by nearly 50% at current levels. it could prove to be an interesting stock for investors today in -- investors to date in. -- abigaildoodle doolittle reporting live from the nasdaq. >> buyer may increase its takeover offer for monsanto. people familiar says buyer has signed confidentiality agreement to examine monsanto's financial

accounts. the process could take a few weeks. last month, monsanto rejected an offer from buyer. largest create the supply of pesticides. let's get to our reporter that broke the news from london. what is the latest? >> as you say, it is a very large deal. companye a big european -- they are a big european company trying to buy a very large u.s.-based rival. bayer is going through monsanto's books trying to understand what the monsanto's financial accounts look like as considerto discuss and how much they increase in new

offer. >> this is monsanto allowing bayer to come in and do due diligence. debt is a very crucial that people understand is making the deal progress. it is a very, very important step. while the two companies acknowledged they wanted to continue conversations and talks, they deny get exclusive a tr access to the books. this is an important step because it shows how the deal is making the progress. >> we have seen megadeals in this space. how does this reshape the global industry? >> that is a great point. we have seen so much consolidation and agriculture -- in agriculture.

this is really the last -- the biggest a lebanese to happen for the sector to truly consolidate. it has real implications. a lot of people are watching this one very closely. , thank you, bloomberg news in london. below the 10 year yield 5%. this is bloomberg. ♪

♪ >> you are watching "bloomberg markets." on angie lau. scarlet: and i'm scarlet fu. the bank of england decided to cut interest rates in seven years. joined the bloomberg team this morning. they began by asking dr. pozen whether the latest rate decision was just right? >> about right, but probably too

little. i give the nac a lot of credit. policyd do multifaceted into the recut they needed to do. economist saidm it was going to be near recession. at the margin, there -- they are assuming too much benefit. if they think they are not going to end up in technical recession, or even real recession in the next three quarters. i think the whole complicated funding/lending scheme is not necessarily going to have as much effect as going further into negative rates would. we can talk about that, but bottom line, they got it probably right. at the forecast right in the message probably right. >> you are really doing with the financial crisis. this is a somewhat different problem they have. as it were, the decision to leave the european union. does monetary policy work well

in this sense? >> that is executive right question to ask him a david. they made allusions of this. this is a real shock. this is about the competitiveness of the u.k. economy and access to their global markets and to their largest trading partners. these are all what economists call real things. help by policy can removing the temporary uncertainty getting a bridge and maybe helping the exchange rate. of monetary policy is best in responding to financial panics, acid price crashes, lack of liquidity. that is not what is going on here now. you and jonathan saying, what is next for fiscal policy? that entry policy matter more than monetary policy in this context. >> what is the right fiscal prescription to be matched with the monetary policy unveiled today? >> it is a really good question.

that if yout is want to offset the shock, it has to be on the fiscal side or on the real side. the biggest thing they could do is try to get the best possible deal on free trade with freer trade as quickly as possible. they got tohing is, do things to do with the underlying structural problems of the u.k. economy, which is the recurring will stay bubbles that occur because a have never done anything to expand real estate supply. that is the next big thing they got to do. they should have done that when there was not a crisis or brexit. in terms of fiscal policy, if you want to respond to the short term crisis, it is about getting money into individual's pockets or you can cut the tax temporarily. you can do -- you can increase the earned income tax credit

that we have in the u.s. finally, there is a huge crash in the u.k. in funding for universities because they are being cut out of the eu because the government is stupidly turning away foreign students. if you reverse pattern put government funding into r&d, that will be helpful. >> that is adam pozen at the bank of england and current president president of economics. investors have become more short-term in a focused than ever. shrinking -- this is bloomberg. ♪ . .

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♪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. angie: live from bloomberg world headquarters in new york, i am angie lau. scarlet: and i am scarlet fu.

let's begin with headlines on bloomberg's first word news. mark crumpton has more. mark: president obama goes to the pentagon today to discuss with the u.s. is doing to defeat islamic state. the u.s. and its allies have made recent gains against the group in iraq and syria. now, the u.s. has started calming islamic state targets in libya. following the meeting, the president will hold a news conference scheduled for 4:15 p.m. new york time, and we will have coverage on bloomberg. hillary clinton leading donald trump by double digits in the state of pennsylvania. 49% of likely voters percen prer mrs. clinton, compared to 38% by mr. trump. favorable byewed 37% of voters and unfavorably by 49%. trump is viewed favorably by 33% of voters and unfavorably by 62%. british prime minister theresa

may will try to reassure small and medium-size companies in the wake of the brexit vote. she is meeting with companies and trade associations today on the agenda. earl is now a tropical storm. it slammed into the coast of the caribbean nation belize with winds of 80 miles an hour, bringing with it heavy rain. landfall near belize city. earl crosses the yucatán peninsula. 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. scarlet, back to you. scarlet: thank you, mark. investors are becoming more short-term, despite the fed . joining us exclusively to discuss the challenges is co-ceo of arge,

firm that manages $450 billion in assets. michael, the environment is challenges because -- is challenging because you have low rates and low returns. what are your return objectives, and have you change them for this environment? michael: we think one of the biggest opportunities for investors in this market and what is an increasingly short-term world is the time horizon. there is a lot going on with the political election, and we think to use short-term volatility as a way to add long-term value to clients. angie: easy to say, hard to do, especially in this market environment where every time we have a central bank move or some sort of headline, it moves markets and quickly. michael: well, if you look historically and you look over there isriods of time,

very little dispersion of markets in the near time. you get much more disturbed dispersion in the long-term. ignore the noise, use the volatility, and used parts of the market that move significantly against your position. scarlet: and of course we can look at the nys average polling periods, and it has changed quite dramatically, 8.3 months. ist is interesting of course since the 1980's, since the 1970's, we have more professional investors in the market now than before. why don't they have a more long-term perspective? michael: i think it is the noise of the market. the noisy amount of people in the market makes it so much focused on the headlines of the day. we think that opportunity is to think about the signals that drive long-term value, identify companies, generate good returns in their business,

generate cash flow in their business, by those companies, and ignore the day-to-day noise. the average investor is not doing that. that creates an opportunity for investors in today's market. angie: how do you do that in this environment of cheap money where it is hard to nail down true valuations? well, it is relative valuation, so first i would say if you think about asset classes, think about in the u.s., 10 years at about 1.5%, dividend yield in the s&p is about 2% or you will earn more on stocks just by owning the dividend. an asset allocation perspective, you have to own stocks, we think, relative to the fixed income, because you will make better return spirit you have to ignore the volatility and think long-term. look at individual securities. identify those securities that you think and drive long-term value. you have to filter out the noise. it is hard to do, but ultimately that is the way asset managers

can outperform. angie: i get that, but each of the asset managers also has transparency and accountability as well, so there is a mismatch between the real mandate of investment return and the own requirements that they face and what shareholders demand, wikimedia demands when it comes what the media-- demands when it comes to a quarterly basis. it isl: well, i think incumbent upon us -- certainly with our clients -- to change the narrative. if you're using a measurement not,d, whether quarters or after a couple of quarters, you are using the wrong measurement period. the narrative we have with our client is you have to look at a full market cycle, outside the market, looking at the downside, marketng us against the cycle. we can add value over the market cycle. angie: all right, let's talk about client arbitrage and earnings. how do you create this bounce

and try to squeeze blood from the stone right now? michael: well, the perfect way to think about it is if you look at wall street estimates of companies today, and you look out over the next few quarters, you see 30, 40, 50 estimates on most stocks. if you look forward three years, many of the stocks have zero earnings estimates on them, so our view is -- is it identifying the things that will work now? it is identifying the companies that will transform the business, that will drive the return in the next three years. if they are cheap today, you purchased them and do not worry about the short-term noise. scarlet: i wonder if the financial repression we've seen over the last eight years will now lead to a more long-term perspective. i spoke with bill gross yesterday, and he does not like stocks, he does not like sovereign bonds, but what he does like is land and equipment. assets weretangible

you cannot get things out of them quickly, so you are there for a decade or more. michael: well, i think most important way what investors need to do is lower their return expectations into the future. low,, find deals that are that is likely to mean nominal returns and riskier markets are going to be lower. i think rather than try to increase the complexity and chase parts of the market you do not understand is to lower your return objective. that may mean saving more. in an environment where people are going to pay lower fees, they should be looking to active and finding those managers who can give you an additional return and a low return environment. i would disagree with a view to go complex. keep it simple, change your return expectation come and find managers i can give you some return. how have you changed return expectations over the past eight years? michael: if you look at where interest rates are, that is going to drive future return expectations.

relative to where we were eight years ago, again, the 10-year treasury at 1.5%, the german the around 0, that is return you will make on a risk-free rate in those markets. that means the return on risky assets will be likely lower as well. what you need to do is communicate that to clients and let them know where you see opportunity in the market to add value relative to those low return expectations. angie: when the yield curve is that flat, is time your front? michael: well, what investors need to be careful, particularly in the bond market, is not chasing interest risk or duration risks. we would argue they're better off in the credit markets today. if you're looking for instrumental return, you are better buying a triple layer bond that has some additional risk but not expensive additional risk. we think that is the better place for investors to be. they could be thinning out the we docurve because oif

get a rise in the rates -- very much,ank you michael roberge, co-ceo of mfs investment. big earnings growth last quarter. we will reveal who they are coming up next. this is bloomberg. ♪

this is "bloomberg markets." i am scarlet fu. angie: i am angie lau. scarlet: let's get a look into .he earnings season

who are our big winners this quarter? julie: with the biggest percentage year-over-year, to see who it is best far, a majority of the companies in the s&p 500 having now reported, and there you have it -- you see amazon had the biggest growth. remember, that company coming out with another profitable quarter, and it was an increase in profitability year-over-year because amazon has had some losses in the past and had just eked out a profit one year earlier. you see also on the list, nucory, arcadia, and rounding that out. those are the big increases that we saw, but these companies have approached not being cyclical of the earnings season that we had seen. you can get the following stats -- we now have 413 of the 500 companies in the s&p 500 that .ave reported earnings for sure have fallen an aggregate of 5%. sales are down about .5%.

going into this earnings season, there was a lot of testament about how the numbers would look , and indeed they have been looking relatively negative. reportede companies have beat sales estimates. 78% have beat earnings estimates, but overall, we are seeing that 5% pullback. it will do with the decline in energy earnings, but none the less, we see declines in most of the other s&p companies as well in terms of earnings. if you look at the s&p 500 over the course of the earnings season best far, -- thus far, we see a gain of only 1.15% in the s&p 500. when we talk about this sideways movement in the s&p, a letter that has occurred during earnings season, which focused to the individual stocks. the lack of movement this earnings season, even though it is typical from one companies report earnings, is more acute

than we typically see at this time of year. it is a bit of a conundrum, a bit of a puzzle, if you will. angie: great. julie: a mystery to discuss. angie: julie, thanks. scarlet: it is time now for the bloomberg business flash. quarterly profit fell, and its tv business lost viewers and ads. operating incomes did 29% from a year ago, with lower ratings and higher costs. 72%om's shares have dropped in the past year through yesterday. angie: nike is getting out of the golf equipment market. nike will stop making clubs woods,ls made by tiger the former number one player.

it will still manufacture golf shoes and clothing. golf segment dropped. scarlet: this move comes him was five years after pershing square marked a turnaround at the company. the 6.7% stake is worth about $1.5 billion based on yesterday's close. and that is the bloomberg business flash. for more on ackman selling a stake in canadian pacific, let's bring in jim sturgeon, bloomberg tv's canada reporter. how much of this news is motivated by trouble the valiant? jim: the short answer is partly. analysts i have spoken with that do withartly to rebalancing its portfolio. it has taken a beating in large part because of the 6.6% drop.

this,her part of according to analysts, is how far cp rail can go. the stock has tripled. islooks like crude by rail poised to rise again in canada. they had a sharp to client in seven quarter profit and revenue. analysts are saying earnings growth potential has run up against the wall. quoted as saying it is a miss transformation, which i think the operative word is "completed." scarlet: he sits on the board. could we see him rested up pressure for faster jet cleaning in order to boost sales? jamie: that is a good question. pershing had a nominal return

last year. whether he uses that for something related to valiant is unknown. ackman has been very active and has been for some time. he push for a separate internal committee to view the former ceo's practices. before that, he had a direct impact on hiring at pearson. alreadyas probably provided sufficient direction, but no one has actually's regulate on exactly what is investment decisions are today. angie: here's the thing, jamie, valeant reports next week. what are analysts expecting? jamie: it will be another challenging quarter.

dropping prices to gain traction with companies such as walgreens in the united states. it reports august 9. there are liquidity concerns. there are mandatory payments for the remainder of the year, and there is a $30 billion debt that ant has not done much to trim down. perhaps this is where we see ackman make a more aggressive push. angie: all right, jamie surgeon, bloomberg tv's canada report. thank you so much. coming up on "bloomberg markets ," the presidential election. this is bloomberg. ♪

angie: this is "bloomberg markets." i am angie lau. scarlet: and i am scarlet fu.

angie: a major shift is taking place, and it could be the data point to determine who wins this year's presidential election. with peterpoke atwater. peter: that is what the latest figures from gallup confirm, that 2. /3 of democrats are optimistic, and over 70% of republicans are not. so it is a two-tiered situation in confidence. it appears to be bifurcating dramatically by political party. because republicans are an angry or group of people in this survey, or have they missed out on the recovery that we have seen since 2009? peter: there is no question that if you look at the makeup of those who are reporting as republican or are leaning republican -- they are suffering under confidence.

the recovery, particularly for white middle-aged males, has been really debilitating. section is definitely a of america for whom this has been a recovery. matt: we talk a lot often, and i notice especially those who are running the country currently, talk about the jobless claims being so low, and gdp growth coming back, but it is really -- i mean, it is like looking at the entire country as one real estate market. isn't it better to look at it in regional waste? -- ways? peter: we do look at it regionally, the coasts are doing better than the heartland. white,create black and binary views, and they are not. the data agrees with you that you have to look on a more segmented basis. republican, democrat, wealthy, non-wealthy. matt: if you do look regionally,

are the democrats and hillary -- obviously they are doing better on the coast if you have got new york and california. in the middle of the country -- the swing states will be what are most important. atyou break it down and look ohio -- peter: or pennsylvania, which is a battleground for both. joe: something i want to ask about is this idea that the heartland in the u.s. is not doing well. that is hardly a new phenomenon. arguably, you could say this has been going on for decades. it seems to have gotten a lot of attention this year because of the trump popularity in certain parts of the country. do people -- let's say trump were to win. would people see someone who they feel represent them in the white house? peter: absolutely. joe: even without any underlying economic change? [speaking foreign language] if you look back and look -- peter: if you go back and look at the presidency, we flip flap. -- we flip flop. if my presidential candidate

wins, i and a happier person than the person whose candidate lost. scarlet: that is peter atwater. angie: let's bring in joe weisenthal. everyone will be focused on what happens with hourly earnings or earnings specifically. scarlet: hourly earnings is the number we get. obviously, every month, there is a lot of noise in the data. we had a couple of weird months in a row. the may report -- scarlet: devastating the world over. joe: right. the june report was really good, and now we see the july report. important, given that we have hit the target on the employment side of the mandate third what is going on with the inflation side? the other data is certainly showing that wages are doing pretty well. for example, if you look at the atlanta fed employment tracker -- scarlet: it is on my bloomberg.

let's pull it up. joe: i think 3%. scarlet: yes, whereas the average hourly earnings is 2.6% on a year-over-year basis. joe: the atlanta fed tries to strip out demographic changes. benefitx includes costs. if you have to look at the whole range of wage data, but if that number continues to accelerate, like other data has, that should give the fed confidence that we are really reaching the, you know -- very little slack. because we did not really see it as a factor in personal spending. people are spending more, but it is not that they are making more money. how sustainable is it? joe: that is a great question. people are spending as an economic standpoint, but as incomes are not accelerating with it, people will not have very much confidence that is

durable. so i think that is probably one of the key questions. scarlet: how much weight growth -- i love that chart, if we can pull it up again. it shows that the number of people who are seeing zero wage growth has dropped dramatically. joe: it is another sort of -- making the same point, which is you can look in a lot of different places to find evidence of more weight growth. scarlet: all right, joe, thank you so much for joining us. "oming up on "what'd you miss? at 4:00 p.m. eastern. this is bloomberg. ♪

>> it is to look human new york. i am -- david: it is 2:00 p.m. in new york. i am david gura. vonnie: and i am vonnie quinn.

welcome to "bloomberg markets." ♪ vonnie: we are live at bloomberg world headquarters in new york for the next hour. david: san francisco, washington, blue zheng. -- beijing. thank america ceo brian moynihan tells us about the challenges of running a bank in uncertain times. vonnie: then, oil rising for the second straight day. is the bear market for crude already over? we speak with mike wittner who says it still has time to unfold. david: and profitability forecasts disappoint analysts. at the same time, nike makes the decision to sell its golf division. will adidas sell its own golf division?