>> stocks dropping slightly from last week's high. the question is, "what'd you miss?" showse fed model that there maybe false signals. joe: plus the indian prime minister gets his biggest win yet. why the national goods and services tax comes at just the right time. can they offset subscriber losses that espn? we begin with our market minute. slightly lower, seven of the 10 major industry groups declining with health care the notable mover is oil.

down 13-15% from the 10 day average. another quiet day now, with a few exceptions. augusts have had slower in the past. we are in the midst of what was supposed to be a blackhole for news we've had a ton of great stories. can a look at stocks, you see exactly what scarlet said. the biggest gaining group here is energy, the biggest loser is health care. allergan came out with sales that messed at -- missed analyst estimates. last year we had bristol-myers missing by mile as well. what surprised me, of the biggest losers by index points, all health-care stocks. if you look at the big losers on the s&p 500 that are dragging , those are all in

the bottom five position helping drag the index down. joe: let's look at some notable moves, starting in the u.k., a grant you record low on five-year yields. they just keep grinding lower in the u.k. after that big move last week. u.s. 10 year yield, nothing new. lower yields on friday or higher yells on friday, but today ending up unchanged. in spain, a country without a government, they've had to elections in a row that have yet to form anything, investors don't mind if the 10 year yield falls below 1%. that probably looks juicy to investors today. that's pretty good. one of the best stories

over the weekend, japanese buyers of u.s. treasuries typically thought it was a no-brainer but now they're seeing negative yields and the euro is a better place for them to go. scarlet: let's take a look at currencies. that start with the korean won. s&p,dorsement from upgrading the credit rating to aa. tension with north korea is fairly contained. you can see the move stronger for the wand versus the dollar. the brazilian real declined after magazine report that the estate -- acting president is accused of accepting illegal campaign donations. it's the best-performing currency versus the dollar, up 25%.

spotlight that to corruption whether that's endemic in the administration. we saw oil bounce today. there was a report of an unscheduled opec meeting, perhaps an attempt to address the recent slide in oil prices. it recently when into a bear market so the attempt to do something about that for opec, getting a little bit of a lived there. and a bunch of chinese trade data over the weekend gives us a into its import volumes in various commodities. crude oil hitting an all-time high in terms of volume imports. copper rolling over, that's the blue line sliding so far in 2016.

the general trend is up for all the commodities but at the top of the chart you can see it going in different directions. scarlet: lending club reporting results. a second-quarter adjusted loss or share of nine cents. analysts were looking for loss of three cents, so it's wider than expected. higher than what analysts were looking for, analysts were looking for 1.6 million. the big line for lending club is that the cfo is stepping down. we know the ceo had already stepped down. the temporary or interim cfo will be bradley coleman. living club declining in after-hours trading. we also have results from news corp., the print media arm of rupert murdoch's empire. analyst estimates of 13 tens. revenue was 2.20 $3 billion, higher than what analysts were looking for.

news corp. reporting profit that missed analyst estimates but revenue that topped the consensus. let's get to our deep dive, you it at the bottom of your screen. when we look at all the mergers and acquisitions, a lot of people worried that the brexit vote would put a damper on dealmaking. case witht been the u.k. pharmaceuticals or tech companies. up almost 80% of that country's m&a volume in july. the brexit vote weekend the those withg intellectual assets more attractive. the green line shows the number of deals since 2011 on a monthly basis. show the volume of deals in number terms. julyals for the month of

or 32 billion dollars. on the premium basis in terms of higher versus3% premiums which were 20% in june and 15% in april. joe: it speaks to what a big discount the brexit vote created in that market and all the huge opportunities foreign buyers see in the u.k. market. scarlet: you can see the big increase right there on the far right corner for july. joe: this morning we got earnings from sotheby's, one of my favorite stocks to look at. you will see why in this chart. sotheby's, theis blue line is the msci emerging markets index. this chart goes back 10 years and they almost move in lockstep. it makes sense because luxury goods and high-end stuff you

the same wayons, emerging markets are, plus sotheby's cells to a lot of wealthy asian buyers. they had a monster search today. day, yout look at one can see it was up massively. at one point of over 20% on the day. the surge in some of the bees is a good sign for emerging markets. -- the surge in sotheby's. modern art is probably a good bet. and to our to me next guest is probably one of the more exciting charts here. if you follow the equity market, you know there are 10 s&p 500

industry groups. i am super excited that dave wilson pointed out there are going to be 11 next month because financials is going to break out into two groups, financials in real estate. will be the real estate index is in blue. they are normalized at the beginning of the year. this shows that they outperformance relative of financials to other industry groups has been driven by gains in the real estate index. out, thebreak it financials are going to look so good year to date. it's very cool that standard & poor's is doing this. they announced last year they were going to do it. dave wilson clued me in. message the wilson at bloomberg.net, you can get on the chart of the day and find out stuff like this. to all over, you

had a big story today on a very controversial topic in financial , with the idea that you can come up with a fair value for stocks based on what treasuries are yielding. what did you discover in reporting on this? >> this is a fun topic to look into. every valuation metric across the board is elevated. we looked at 20 different valuation metrics and 12 of them are overvalued. the only one never trays stocks in a way that is somewhat valuable is when you compare them to bonds. think about it conceptually, it makes sense. people are moving into dividend replacement stocks are buying equities to be a risky place they're willing to go

because they're not getting returned elsewhere. that makes a lot of sense. but the fed bond rate is down quite a bit. both historically and mathematically. we have this chart showing what the fed model has done over time. cory: i feel like logically it doesn't make sense and i wonder how much e-mail you get when you put out a story on the fed model. you're looking at the earnings yield of stock which is optimistic, like hope is your strategy, compared to fixed income return which the coupon is guaranteed, like you know you are getting that. >> two completely different assets, of course let's start with this one. looking at the evaluation in a isric we all know which price-to-earnings. you're flipping bond yields that looking at the purple and blue line that shows you corporate and u.s. treasuries.

here is how the logic goes. saylook at the chart and which one do i want to be in? you have to operate under the assumption that at some point they will come together. the 10 year yield which is low right now and the earnings yield will come together, but that is not what is going to happen necessarily. there are two other ways this could happen. you could have earnings yield going down because as you look at prices go up, that's what the bulls hope will happen. or the interest rates could turn around. neither one is i'm likely. , and anyone who's interested in this should follow oliver on twitter and find this story. you have a firm that researched

this and said the likelihood of those converging is low and that really the fed model only accounts for 7% of increases in equities over the last 10 years. >> so that point was the bank of america report saying the predictive value of this thing has very little use. over time that has been the case. 1970-2000 stock and bond yields did -- were highly correlated. but then the ship broke down and they moved inversely. now were seeing a gap. the way the convergences point out, two out of three will not be good for stocks. we hear of the acronym for there is no alternative. there is no way he can look at history and find any conclusive

evidence that the two will have to come together, and you have to hope it is in one way. oliver.eat story, he is a stock reporter here at bloomberg. you should follow him. outlet: donald trump lays his economic plan to jumpstart america. what exactly does his vision consist of? we will break it down for you, next. and shares of lending club falling in lake -- late trading. the ceo is stepping down and also reported a loss per share that was wider than first estimated. this is bloomberg. ♪

mark: that's get to first world news. donald trump is focusing his economic message on boosting jobs in making america more competitive. , including proposals cutting business taxes, reducing regulations, and increasing energy production. >> i am proposing and abroad -- across-the-board income tax reduction for middle income americans. this will lead to millions of new and really good paying jobs. the rich will pay their fair share, but no one will pay so much that it destroys jobs or undermines our ability as a nation to compete. it --hillary clinton will will deliver an address on the economy on thursday. delta airlines has canceled around 450 flights after its computer systems crashed worldwide. thousands of passengers were stranded on a busy travel day and the number is likely to grow.

more than 1000 flights were .elayed about 11 hours into the outage, some flights resumed but widespread delays and cancellations were ongoing. mexico has revised the death toll for mudslides triggered by hurricane earl last weekend. recovery work continues as tropical storm javier are pushes toward the resort city of cabo san lucas, where least 10 storm shelters are being prepared. tropical storm warning is in effect for the southern part of baja california. the entire russian team has been banned from competing at the upcoming paralympic, punishment for the countries state-sponsored doping organization. of blaminghort russian president vladimir putin. day,l news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries.

i'm mark crumpton, this is bloomberg. joe: here with more details on donald trump's economic land is our reporter from washington. he gave this speech in detroit today and people commented that it was mostly a repackaging of a lot of conservative republican ideas that we have heard for a while. how did the speech square with the populist rhetoric that has been the bread-and-butter of donald trump's campaign so far? >> it's kind of a mixed bag. he emphasized his policy, the kind of things that speak paul ryan and mitch mcconnell can get heind and like you emphasized his tax plan to reduce taxes across the board on incomes and business taxes. moved his top rate up to 33% as opposed to 25%.

populist message he emphasized his trade deals and talked about nafta being a disaster as he always does. clinton ofhillary not being trustworthy and what .he says so it was a mix of both things. aim was to stop the bleeding among republican officials and donors who have been criticizing him sharply after the self-inflicted wounds of the last week or two. scarlet: and he tends to pull better than hillary clinton when frommes to the reception the traditional republican donors, the kinds of people he wants to impress with his latest economic plan? good from the standpoint of that constituency. the speech did what it needed to

do. i spoke to his top financier in florida. he said it would give donors some relief and give them something to rally around and get behind. speaker paul ryan's office told agenda that he lays out largely reflects what speaker ryan has put out in terms of the health republican agenda. his house office person tweeted some praised for trump when he called for repealing the estate tax, a long conservative goal. from that standpoint he's achieving what he needs to do and giving the republican elites a little something to placate them at this rough moment when he is sliding in the polls. as someone who reads the teleprompter, i noticed this is not one of his strengths. he seemed to stick to the teleprompter a lot and i've not seen that before. from what i could see following it on twitter, that seemed to

disappoint his hard-core followers. they felt he was sticking to message too much, not giving us what he was really feeling and thinking. it looked like the hecklers were throwing him off his game as well. >> you are right he doesn't use the prompter very much. i doubt that his loyal supporters will bolt over that. but it was interesting to see donald trump get heckled eight or nine times. each time he didn't take the bait. usually he says something snarky that mightthe crowd come across as strange or bizarre to the ordinary person watching, but this time he didn't do that. he seemed to be exercising some self-control. it's whether he can exercise discipline over the course of time, something he's been called

to do and has made some attempts to do but not something he's been able to consistently do over time. that's the thing to watch for as to whether he can actually execute and not mess it up. scarlet: coming up, more audience participation. this is bloomberg. ♪

matt: i'm matt miller. "what'd you miss?" ,'m going to kick it off

consumers racking up debt. bloomberg go customers? that's a nervous tic that i have. i have a great chart that was made for me. on consumer credit. he sent me this chart when we were talking on friday. i think it is incredibly interesting. this is a look at consumer credit in white. that is the overall consumer credit, since the internet bubble burst. ist you have in blue non-revolving loans like student debt and auto loans. in purple you have basically credit card debt and home-equity loans. you can see that after the financial crisis which was about the middle of this tart, your consumer started to play down the revolving debt or they were not able to access it.

but that is made a massive recovery and has overtaken non-revolving debt. this tells you that consumers are using more credit cards or home equity. i think they are tapping back into home-equity loans. the question is, is that good or bad? this chart was sent in on friday. it shows the monetary velocity versus employment to population ratio. ,ou can see going back to 1960 starting at the end of the crisis, monetary velocity just stopped eating a useful measure to judge the state of the economy. about it veryhear much in this chart shows why. economic activity is not associated with it anymore. up, will talkg

about the prime minister. this is bloomberg. ♪ [ hip hop beat throughout ] [ fans cheering ]

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mark: there's a new poll out that shows democratic presidential nominee hillary clinton backed by 46% of registered voters versus 34% for republican nominee donald trump. a previous survey taken before the party conventions had clinton leading 43%-40%. the latest survey as libertarian gary johnson at 7% and jill stein at 29%. mrs. clinton leads in the polls in the state of georgia. she has a 51% chance of winning the state compared with donald trump's 48%, according to the

538 election forecast. aorgia has not voted for democratic presidential nominee since bill clinton in 1992. average compensation $7.2 million, 140 times the average wage of their employees in the u.k. condemnedime minister the pay gap between workers and executives. the girl from ipanema has won a gold medal in music streaming following the open ceremony of the olympics in rio. spotify said the song was streamed more than 40,000 times a day after the olympics began on friday. the grammy-winning song was released in 1964. day,l news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries.

i'm mark crumpton. this is bloomberg. scarlet: let's get a recap of today's lack of market action. it was pretty ho-hum when you look at the indexes. the s&p and nasdaq on friday closed at record highs. a little bit of action after the bell when lending club reported whiter than what analysts had anticipated. the headline was the ceo stepping down. that pushed the stocks lower in after-hours trading. news corp. which is the print media part of rupert murdoch's empire reported profit that missed analyst estimates but still topped the consensus. joe: the creation of a nationwide goods and services tax. this, -- or to discuss

passingan parliament the enabling bill. explain to us why this is so important and what it means for the indian economy. to very much for having me on. a some measures the goods and services tax has been pending for a good 10 years in india. of it happening now is really the potential economic benefit that india the line years down with full implementation. essentially many people liken it to india signing a free-trade deal with itself, illuminating a number of existing barriers in trading across state lines that are extremely inefficient. analyst estimates disagree with there's a real potential for high overall economic growth in the years to come in india from this one reform alone. this is and for modi huge victory because it signals he is able to push through difficult economic reforms. what more can we expect, what is

the doctrine of his economic policy? at eurasiaen arguing group that this is the last big economic reform we are likely to see out of this government ahead of the 2019 national election. there are 15 state elections over the next two years that will be very distracting and much of the reform agenda has been accomplished. lower barriers to fdi across sectors. you've seen bankruptcy legislation that was needed to help banks address problems with nonperforming assets. you seen other attacks in administrative reforms, but you've not seen progress in two critical areas, land acquisition and labor. we don't see any more of that going forward with the electoral distractions. cory: is that because of deals he needed to make to pass the gst?

i've heard a lot of big industrial leaders backing the gst india. surely they got something in the deal. arguably india's single biggest economic reform in its history. potential tothe gain. you have efficiency gains to growth, both in terms of trade across state lines. you have the hope of self reinforcing compliance eventually over time to increase government revenues. you only get your tax credit for your value addition when the supplier passes it up along the chain so it is self reinforcing in terms of compliance as well.

most big industries and the government stand to gain, but that is only over time. state governments were worried about losing revenue and control under the new system. that has been the real sticking point. years of compromise, or investors jumping the gun? the rupee has gained tremendously versus the dollar. the white line there is the rupee versus the dollar. we have inverted its eight can see the rupee gaining strength. it has been a pretty steady bet for foreign investors. the idea of a country essentially creating a free-trade area with itself sounds counterintuitive. are there further examples of what can be done to harmonize the different regions economically once the gst is fully established?

>> this is the vast majority of it. another big step that will take longer that is not really a .eform is simply infrastructure depending where you are in the country, the connectivity to the , as thethe country infrastructure is improved in that kind of investment is a big part of the government agenda, you should see more economic integration over time. it took a while to get the gst path. what did he have to give up to get that done and will it hurt his standing in local and national elections? i would argue that gst has been running on a time different tracks. it's been less of a partisan and more about federalism issue. that's across all parties, no matter what party's ruling at

the state level. it's important to address the issue that the gst is now don, it's not -- it's not done yet. implementation itself could take quite some time. that's why economic analysts are get theabout you only economic gains after several years. the parliament has now approved the constitutional amendment and it needs to be approved by the president. the gst council needs to be formed to set crucial issues like the rate and how it is administered. pity goes back down to the states, they have to ratify the amendment in each state government has to pass its own detailed implementation legislation. then the vip network nationally needs to be rolled out. there's quite a number of steps that still need to be taken to make gst are really out -- a

reality on the ground. matt: you said universal labor laws or something you don't think he will accomplish. why is that so difficult? on the land acquisition side, you saw the government do a concerted effort to get more liberal rules passed early last year and immediately ran into the problem of getting accused --being anti-former anti-farmer. that's a big problem in india given that agriculture still accounts for 50% of employment. people within the party itself started to oppose the measure because it was no unpopular. that got dropped unceremoniously during -- near the end of last year. one of the barriers to companies scaling up in india has been restrictive labor laws meaning that companies over certain size need government permission to workers, permission that doesn't come frequently or in a

timely manner. why the changes are posed is to raise the cap. the unions have less power than but used to have in india still have a lot of power and they can bring a lot of people out in the streets and it's hard for the government to defend itself against accusations of being anti-worker when it tries to push those reforms. fascinating stuff, thank you for joining us and breaking it down. scarlet: shanghai disney opened this summer in china. into the company's numbers ahead of its earnings report on tuesday. this is bloomberg. ♪

matt: time for the bloomberg business flash. news corp., the wall street journal and the new york post, controlled by rupert murdoch, reported fiscal profits at missed analyst estimates. lending club says the cfo is stepping down. the company has appointed bradley: to be interim cfo. the company also announced the supporting second-quarter earnings. shares are down in after-hours trading. a federal appeals court has ruled that ecuadorian plaintiffs cannot collect a $9 billion judgment against chevron for rain forced damage. the ruling upholds the lower court findings that the judgment was obtained by corrupt means. the case stems from a long-running dispute from amazon

rain forest residents and the oil company. and answer bloomberg business flash. scarlet: there are three main .hings to focus on for disney let's dig into all of them. first is the theme parks. disney openedare, shanghai disney in june. adding to their already impressive arsenal of parks. that track to just under 140 visitors last year. the shanghai park is critical to disney in helping boost its international business. disney has not recorded a profit on its international park investments since it began breaking out that part of the business in 2004. as for the movie business, disney could see a record box office this year. you're looking at its film operating income which jumped 27% last quarter.

this reporting season, finding dory, captain america and jungle book all provided big boost. box office top u.s. movie this year. there is another star wars movie due for release later this year. on the small screen, espn and cable networks are big profit driver for disney. this quarter the results could be a mixed bag. cable advertising growth is expected to rise while subscriber losses that espn still way on -- weigh on them. almost 10 million fewer customers than in 2014. because of the high demand for boards programming, yes p.m. charges a high of affiliate fee, four times its nearest rival. the problem is that disney is

vulnerable to people unbundling their cable packages or cutting the cord. disney reports results after the closing bell on tuesday. joe: let's talk more about disney with paul sweeney, who follows the company. scarlet just showed subscriber losses at espn. what will investors be looking for tomorrow? paul: espn is a diverse company with lots of -- disney is a diverse company. they shocked investors last year when they reported that espn had lost subscribers. media stocks got massacred, led .y disney's exposure since then the market has repriced media stock because of concerns about cord cutting. what does it mean for all the cable networks out there?

what were going to look for is how is the espn business doing, what is disney inking about in like of raising rates they've been doing since the beginning for espn, and what is going on with the subscriber count? and do they have a plan to take the espn content, something they've been reluctant to do. obviously there are long-term risks, but over the last your, the cable companies have reported stronger video results, as we all know, people have been signing up for their individual channels. is that going to help things stabilize a little bit? paul: people started to say the cord cutting thing is real and it will be an issue for the media in general. we've seen better video

subscriber trends coming out of the cable company. what the market is digesting is that cord cutting is real, skinny bundles are real and they are here to stay. is, is thestion slope of the decline steep or maybe a little bit less so? i think it's probably a little less severe than we initially ought last summer when disney reported those numbers. we've seen a little bit of a rebound and cable stocks trading pretty well. this is a group that is still susceptible to shop this big bundle of channels and people have that in the back of their minds that it's a risk for the sector. scarlet: what has not been an overreaction is the adulation for shanghai disneyland. that opened up this past quarter and it won't generate any profit for now because it has $300 million in preopening expenses. what kind of numbers can we

expect from shanghai disney? >> it was an extraordinary opening, very high quality, premium part that they priced at a premium price relative to the other properties in the marketplace. investors will be looking for , earlynds in visitors feedback on visitor attendance will be a key driver. matt: having an orchestra is pretty good for disney. paul, thanks so much for joining sweeney talking disney. we will be watching that very closely tomorrow. up, strategy for chinese ex-pats in europe. this is bloomberg. ♪

signing dealsma with brick-and-mortar retailers in europe. ise to discuss the strategy betty liu. what is interesting is that jack ma and alibaba are not europe at all. betty: 120 million chinese tourists have gone abroad. that's an amazing number. matt: 120 million chinese left the country for a vacation. eddie: even more amazing is how much they are spending. think about how much you spend outside of food and lodging in air tickets, how much you really

spend on goods and products. the chinese apparently spend up to $900 per trip when they go abroad. isould imagine that number for the -- the number for the ultraluxury chinese tourists would be way more than that. matt: as an average, that is a high number. betty: also considering how much the average chinese worker makes there. so it is a huge number. the chinese consumer domestically issues to paying and whenle payments they go abroad they don't have that option because the rest of the world is behind china. so the idea is to get retailers in europe equipped with the technology to accept global payments from the mass of chinese consumers. eddie: that is exactly right. we said before on this show --

you guys know when you travel to asia how much they do on their phones. as much or even more in payments. it's not often you can say facebook is behind the curve on many things, but when it comes to payments, they appear to be behind the curve when it comes to using your phone to pay. play games online, they pay, they order, they do all sorts of things on their phones. this is why for alibaba and the chinese go abroad they use their phones to buy all these items. it's remarkable how far behind we are in payments. i use apple pay for almost everything. constantly.it

my it is doing is taking huntington bank debit card and pushing it through the system the same way as if i swiped my debit card. be everythingwill pay for your bank the same way it was before. betty: but it's the frictionless part of it. works,e apple pay and it it is frictionless and it's great. pleasantlyoe's, i'm surprised. the problem is, i don't find many merchants that are using it, at least at places i go. it worked at the blue sky ranch last week. you can catch betty at 7:00 p.m. new york time in 7:00 a.m. hong

kong time for bloomberg asia. scarlet: coming up, what you need to know to gear up for tomorrow's trading day. this is bloomberg. ♪

>> if you get up early or stay up late, at 2 a.m. eastern, german imports and exports out tomorrow. new factor orders have been falling. joe: i'll be looking at these small business optimism survey, always a great read on the issues facing small businesses,

taxes, employment, the strong dollar and all that stuff. forlet: that does it "what'd you miss?" joe: a

mark: "with all due respect" to donald trump, there is a new hat in town. on our show tonight, donny exclamation point, the donald and detroit. another week to kick off with another new national poll showing donald trump well behind hillary clinton. clinton leads 46-34% in a new monmouth university survey, the latest aftershock and even team trump, one of the worst stretches of