since the financial crisis. david: crude the. oil extends its losses after u.s. crude stockpiles unexpected crude declines. oil extends its losses after u.s. crude stockpiles unexpectedly grew. august 11, 2016. from august 11, 2015. david: the anniversary of the depreciation of the yuan. alix: they are trying to keep the exchange rate stable. deutsche bank warning of continued caution. forget the dollar, it is all about the yuan.

the finance minister of new zealand said no point in trend to get involved in the currency. -- trying to get involved in the currency. alix: central banks' ineffectuality. later, we will have alibaba's cofounder and chairman. first, we start with the markets. to me, it was that move in the fx market. jon: futures marginally positive in the united states. in europe come out performance in germany with the dax up .7%. the ftse down .25%. in next dividends

today. -dividends today. new zealand kiwi, even with a rate cut. the market screaming, give me some more. we got $15 billion worth of inply and auction -- auction. solid demand and a huge component of that was in direct bidders -- indirect bidders. alix: will they be selling going forward? let's check in with our bloomberg team for in-depth

coverage. and curran, guy johnson steve yaccino. want to start up with the move we saw in oil. we saw a huge move down as the iea came and went -- came out with its monthly report. enda: the report was quite mixed in its outlook. in the third quarter, they to financefinance -- a record amount of crude. it pretty neutral position. alix: one thing that stood out to me, they saw saudi production at a record 10.6 million barrels a day.

yesterday, the opec report, it was hard to discern what they were pumping at. enda: that is the big theme of the market this week. those saudi numbers were huge. to be fair, it's extremely hot in the middle east right now. that is driving energy consumption really hard. nevertheless, it is a record number. in minister came out and said we are pumping out 3.5 8 million -- the iran minister came out and said we are pumping out 3.5 8 million. that is leaving people wondering whether there will ever be a point at which we ever clear this global overhang of crude. alix: in new york, and is 90 degrees. talk about the impact of brexit. jon: we had the pmi surveys.

we got the housing market data earlier today. what is the story? guy: that headline is a bit overdone because we saw big tax changes in the u.k.. people were buying second homes or investment homes, made those purchases before the kick up in tax kicked in. you cannot ignore the brexit story, it has had an effect. we can see that clearly in the numbers. since then, we've seen the bank of england come out, we have rates coming down, we make it further rate cuts coming through. july looks a bit better in terms of the forward expectation.

it will be interesting to see how prices start to stabilize a bit. the birds have forgotten about brexit -- the brits have forgotten about brexit, they are now thinking about the summer. rateed with some interest cuts, seeing it that has a more positive effect. jon: the doomsday scenario has been painted for the housing market. are you really going to go out there and buy a big-ticket item like a house? probably not. the guilt market, it was a huge store yesterday. then we had a fully covered boe operation. maybe a fed receiving just a little bit. i don't think the story has gone away, has it? guy: the debt management office came out and sold inflation linked bonds.

-1.72, well that covered in terms of the story. that is a fresh record. somebody somewhere -- the markets believe a, they want to have these linkers out there, but somebody out there thinks inflation is going through -- much, guy you very johnson joining us in london. -- if you linkers look at the weakness in the pound, you want that protection. linkers.like the name, there was an election in the u.k. in june. we will have one here in november. hillary clinton in steve yaccino is with

us for a preview of what mrs. clinton will propose. her to say aect lot of things and she's been saying on the campaign trail so far. jobs investment, free college for the middle class, debt free college for everybody else. , distributive economic policies. spreading the wealth in a way that makes the wealthy pay more, helps the middle class and boost the economy, as she would say. david: it sounds like ratheributive agenda than progrowth, pro-business agenda. mr. trump with his plan on monday. or the parties reverting to their normal basis? steve: in some ways, yes. this election has really always been about the economy.

i bloomberg politics poor votersay said 58% of said obama is doing a good job, but two thirds and the country is headed in the wrong direction. a lot of that has to do with the economy and they blame democrats for that. you see both campaigns in zeroing in on this. seenormal policies we from both sides, which one is helping the more dutch helping them -- is helping them more? david: are we paying attention to policy or e-mails or remarks about the second amendment? time fort 1:15 eastern full coverage of hillary clinton speech that hillary clinton's speech -- full coverage of hillary clinton's speech. alix: alibaba trading at $90 in

the premarket. level, thisthis will be the highest close since june of 2015. earnings, revenue beat on estimates. 18% mobilers bought monthly active users up 39%, cloud computing up triple digits. grow,re continuing to becoming a cloud powerhouse, owning that segment in china. also looking at retail. a huge week for retail. kohl's having a very interesting morning. that stock also up in the premarket. profit up 5%, they did cut their forecast, however, growth margins did beat, as well as come sales coming in a bit light. you had a growth margin beat and profit was up. we will be speaking to the ceo at macy's.

valeang it out with nt. the wall street journal saying there is a criminal probe now by federal prosecutors -- at issue, did valiant pharmaceuticals defraud insurers by hiding its pharmacyhe mail-order philidor? that now on display in a criminal probe. for more on alibaba's earnings, definitely tune into our our cofounder at nine clint 15 eastern for more on the expanding e-commerce giant. -- at 9:15 eastern. a $12 billion loan to revise the economy. each oeach of been struggling

since 2011. -- egypt has been struggling since 2011. prosecutors from sweden will be juliannao question sanja about rape allegations -- assange about rape allegations. there has to be an easier way to meet donald trump. a man who wanted a private audience with the republican presidential candidate as climbed up trump tower that has up trump- has climbed tower. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. bloomberg. jon: coming up on the program,

it is being called the yu anniversary. later, we discuss the health of the consumer and preview a big week for retail earnings. this is bloomberg. ♪

bloomberg.s happy yuanniversary. it was august 11, 20 15. global markets world cup to this. a shock the evaluation of the chinese currency -- global woke up to this -- a

shock devaluation of the chinese currency. changed? -- almostfinitely alm in the markets these days. think about where they were one year ago, fx being burned at a record pace, confusion about , thathina's intention was come a long way since then. they are now leading the markets set the currency to some extent and they've allowed to weaken -- they have taken back control of the currency and there is not as

much fear at the was at the beginning of the year. they are in a sweet spot. of controlling the volatility in the currency and maybe that has a handle on the capital outflows in the short-term. let's go back one year. what they were focused on is the wider usage of the domestic currency. theinternationalization of yuan. currently, it is number six in terms of global currency usage. at 1.7% around about of the total market. terms of the internationalization of this currency, they are nowhere near the competition, are they? >> no, they have a long way to go. this has been one of the side casualties of what they've been tried to do with the currency over the past year. they have clamped down really hard and enforced really strong

rules on moving money in and out of china. they continue to talk about internationalizing yuan. we had a report on how they wanted to promote the yuan around the world going forward. actions will speak louder than worlds. -- louder than words. they can claim to have a desk cannot -- they cannot claim a biblea yuan seen as international currency until then. -- viable international currency until then. their communication has improved significantly.

that doesn't mean it cannot improve more from here. -- topeard key speeches government officials, including are notier that they looking for an outright competitive devaluation. the market is now generally comfortable with the new exchange rate regime they've introduced. we've come from a situation left a void of speculation and confusion to a point where the market is much more calm. compared to this time last year, he gets to go home on time . it was a different world last year. alix: i was on vacation and got that headline, oh, thank god. the bears .2 very low volume. up next, paul hickey shows us

why anemic volume doesn't always equal and unsustainable rally. to very low point volume. ♪

alix: this is "bloomberg ." all three major averages sitting near record highs with the bears saying you cannot trust a rally that has relied on very low volume. .oining us now is paul hickey he really digs into the charts, going behind the details and you've done a lot of work on what volume it means to a rally. paul: everybody is talking volumes that, you cannot have these types of scams be sustainable without volume driving the rally. we are enabled market now that is one of the longest and strongest of all time -- in a bull market. the main characteristic has been

volume has been declining throughout the entire market. we broke up the rally in the into days where volumes were above average and below average. if you were only participating when volume was below average, you would be up -- flipside, in this market on days when volumes were above average, you would be down 65%. is all ons rally nothing because it is low volume, tells you that you look back and you would have to say the whole market hasn't counted. true? why is this what is your hypothesis? paul: it stems from the fact that banking regulations,

there's less participants in this market makers out there trading. you have more activity moving out to the futures market. that is one reason for low volume. individual investors are not as excited during this bull market as they have in prior markets. rather than focus on individual stock stories, easy see more buying going into uts. -- you see more buying going into uts. -- etf's. etf'sunneling money into and going abroad. alix: you noticed a big pop in volume at the end of the day. by is that significant? paul: there is the smart money indicator that says the emotional money tends to trade at the early part of the day. the smart money trade story at the end of the day. especially in the post brexit

environment, the bank where the day has been very strong. beginning at 2:00 in the afternoon. whereas most of the day, we'd seen flat trading to modest weakness early on. this continues the trend we began to see going back to last may's peak. the intraday pattern in the market, we saw weakness during the first half of the day and towards the first half of the day, he saw buying. i want to emphasize one point you made about post brexit. to may ofgoes back last your comment shows it going off a little bit at the end there. post brexit, it keeps going up. the change in the trading pattern. buying rightare into the close.

on an intraday basis. that tells you there is pretty strong demand for stocks they are among investors. alix: thank you very much. paul hickey on the granular details. ramp.he 2:00, 2:30 willg up, hillary clinton layout her economic policy and strategy later today. we will have your preview, next. bloomberg. ♪ [ clock ticking ]

time. you only have so much. that's why we want to make sure you won't have to wait on hold. and you won't have to guess when we'll turn up. because after all

we should fit into your life. not the other way around. ♪ everything is cool when you're watching a screen ♪ ♪ everything is awesome, ♪ when you're sharing a meme ♪ ♪ a voice remote, "show me angry kings" ♪ ♪ you know what's awesome? everything! ♪ ♪ apps that please, more selfies, ♪ ♪ endless hours of the best tvs ♪ ♪ brand new apps, shows to go, ♪ ♪ awesome internet that's super whoa... ♪ ♪ everything is awesome xfinity. the future of awesome. alix: this is "bloomberg ." here's a look at the big movers premarket. chesapeake, and unbelievable story. the company is selling its shale assets to a private equity firm to get out of $2 billion worth

of contracts. you pay these contracts whether or not you use the product or not. chesapeake has a $1 billion in debt due next august. it's been hammered by natural gas prices. chesapeake was one of the founders of the shale revolution. now, chesapeake leaving that area with a huge transition for this company. socgen.ot an upgrade at it is one of the biggest gainers today, really helping to lead european stocks higher. shake shack on the other side here in the u.s., same-store sales gained on 4.5%. they were just up 4.5%. the court before, they were up nearly 10%. a lot of slowing for those burgers. labor expenses are 37% in the

quarter after they raised their pay to $12 an hour. we keep asking, do margins get squeezed, two companies pare back on their hiring? jon: we will break that down later in the program. futures pretty much unchanged on the session. in london, a bit of underperformance on the ftse. 20 of the listings they're going ex-dividend. up performance of the dax .7%. in the g 10kness space. no real biglar, changes in the fx market. we are up to basis points on the 10 year in the united states. on the front end of the curve, a two-year.ssure on the

the highlight of the week 24 hours away, u.s. retail sales. u.s. retail is a big thing for this program over the next two hours. president iss promising to respond to what he calls ukraine's terror attacks in crimea. once again, fighting has flared up -- putin says russia will adopt additional security measures. russia annexed crimea in 2014. after two dozen people were hurt in the large fire in an apartment building just outside of washington, d.c., firefighters in silver spring maryland had to rescue people from the upper floors. there may have been an explosion. katie ledecky has won her third gold medal.

she has one more events -- she is the defending champion. china is in second with 23 medals and japan has 18. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. today i morning must read comes from a bloomberg news piece previewing hillary clinton's economic speech coming later today in detroit. ironically, it looks like it's a democrat this time who will try to position herself as a fiscal conservative. she will use the speech at a michigan factory thursday to deregulationon the program that doesn't add up. maintaining her proposed spending increases are offset by equal sized tax hikes on the wealthy and corporations. joining us now is andy greene.

-- andrew green. tell us what you can about what mrs. clinton will lay out today in michigan. >> i think she will be talking about the themes she's been speaking about four the entire time -- for the entire time here on the campaign trail, raising wages, making sure the middle class is stronger. making sure corporations on wall street pay their fair share breaking down barriers so women can fully participate in the labor force. making sure our families are stronger. that will be the core message. it will be consistent and stable. donald trump has been regulus -- has been reckless in proposing tax loopholes that benefit the 1%.

as anybody scored this? what it would cost the government to do what she wants to do? >> the independent analyses that have looked at secretary clinton's and donald trump plans suggest her plan totally paid for, his is not. her plan will increase jobs by 10 million jobs and grow the economy. his plan is likely to cut 3.5 million jobs and send us back into recession. the choice is pretty clear on that front. jobsve created 14 million since the bottom of the recession and president obama has gotten us out of this. we are finally seeing some wage growth. we need a lot more middle-class families able to share in this prosperity the top are enjoying. jon: you said the tax cuts proposed by trump were rou recks

-- there's a huge pool of corporate cash sitting overseas that needs to come home. for a lot of people, it just makes sense to lower the corporate tax rate and get that money home. why is that policy reckless? is proposing a number of policies that are reckless. his abolition of the , billions of giveaways to his own family -- jon: the policy of lowering corporate taxes to get that money home back from overseas, why is that policy reckless? --the real question is jon: the question was why that policy was reckless. >> those are your words.

the question is who pays their fair share. when we did this in 2004, the found thatstigation more jobs were created overseas by those very companies that brought the taxes back home. it's not something that is benefiting the american worker or american businesses. have beenprofits doing very well and it's middle-class families that have been hurting. back to trickle down to regulatory economics, that is not the way to grow the economy. we have leveled out economic growth with strong middle-class families. corporate profits have been doing very well. they are not the ones hurting in this challenging economic time. inid: there is a difference the way mrs. clinton would approach this question of profits held offshore -- mr. trump would reduce the corporate tax rate for everybody and give them a 10% rate for giving money -- bringing money back.

her plan has a penalty for people moving overseas -- why is that the better approach? , oecdund the world members are looking to close tax loopholes. areurope and asia, there areions of dollars that right now stateless income that are not taxed anywhere. that is wrong. ought to make sure all the companies are paying their fair share. making sure companies that are here in the u.s. enjoying the investments american taxpayers are making inroads and bridges and research and education, that those companies are paying their , moving their profits abroad to places that paid no corporate tax. at thehaving looked

thatous, it strikes me this is largely a redistributive approach to economics. progrowthparticularly or pro-american business. why is that the right prescription for this country right now? >> if you want to grow the economy, the lessons are that trickle-down economics do not work. middle out economics to work. you have a strong middle class, you will have people who can consume and by. consumption is still the overwhelming driver of the american economy. businesses don't believe the consumer is going to be there. if we make sure the middle class have more money in their pockets and more people aspiring to be in the middle class can join it, that will be a source of growth in the future. i don't think trickle-down economics and deregulation will

get you very far. they got as 800,000 jobs a month being lost and 8% decline in gdp . i think secretary clinton's plan is one that is progrowth and donald trump is the one that is likely to throw us under recession and lead to a similar type of economic crisis that we saw in 2008. david: thank you for the spirited discussion. the center for american progress managing director for economic policy. mrs. clinton has her say today on economics. earlier this week, we heard from donald trump. compare and contrast those plans, we welcome todd buchholz. he is a prolific author. welcome to the program. >> good to be with you. what are the things that

jump out at you the most as far as fundamental differences? todd: what do these candidates diagnose as the central problem? when i look at hillary clinton's , it seems to me she thinks the central problem with the american economy is that rich people have grabbed too much money away from poor people and middle-class people. look at donald trump's plan, it seems to me he thinks the central problem for the u.s. economy is that businesses do not have an adequate incentive to invest. their entire plans on both sides derive from that supposition. we can start with the basic question. who is right about that? i tend not to be a cannot evenve -- i

pronounce it because i think the concept misunderstands how capitalism works. thatundeniably true businesses have failed to invest and it's undeniably true that u.s. corporate tax rates are not competitive, they are higher than nearly every other trading partner they do business with. a large part of the u.s. economy is consumer-based. that is driving the economy right now. if we can get more money to consumers, the middle class, that would help the economy. if you look at spending right now and the economy, recent gdp reports, you see that consumers are doing ok. the level of overall retail sales is not terrible. auto sales have been quite strong in this recovery. housing has been ok. the feeling has been either the

lack of confidence in businesses or the disincentives. the former citibank chairman years ago saying money goes where it is welcome and stays where it is well treated. business doing your work around the world, you say, where should i put my new plant? is the u.s. as welcoming a place to do business as others? the answer for the last eight years has been no, we are not so interested. we have taxi more and give it away to somewhere else. on the one hand, clinton went bernie light. on the flipside, you have donald trump. can you trust his proposal now will be his proposal in january of 2017? how do you make decisions over the next six months based on those criticisms? todd: these two candidates are

troublesome. belongs in hang seng and the other belongs in bellevue. hillary clinton as being bernie sanders. sanders.aten bernie now is the chance for her to take up the leftist cloak she was wearing and tell us what you truly believes. -- take off the leftist cloak she was wearing and tell us what she truly believes. bill clinton cut the capital gains tax rate. she wants to move it up. bill clinton signed nafta. she is against such trade agreements. bill clinton signed a welfare bill and a crime bill and she is repudiating those as

well. i think bernie sanders has allowed hillary clinton to reveal her true self. i think it's better when candidates stand up for what they truly believe and i think hillary clinton truly believes the problem in this country is that rich people pay too little in taxes and poor people need more money from them. david: two very different views of hillary clinton's and donald trump's economic policies. to tune in at 1:15 eastern time as we will be taking hillary clinton speech live. alix: a very big week for retail stocks. macy's results due at the top of the hour. kohl's surging 9% in the premarket. lehman'sr ceo of speaks about the help of u.s.

consumer and the macy's strategy, next. this is bloomberg. ♪

david: this is "bloomberg ." coming up, macy's ceo terry hisgren joins us to discuss company's latest earnings report and the health of the u.s. consumer. a big day for retail earnings. kohl's beating analyst estimates, cutting its fiscal your forecast. you have stored traffic down 7.1% from a year ago as you have online demand growing. joining us now is steven newman, le former

oehmann's ceo. steven: the best practice is trying to get consumers into the store. how do you differentiate yourself? why should somebody shop in kohl's versus macy's versus nordstrom's versus all these discount stores? we have trained the customer so well for so many years to wait and get the best prices and that's what they want. great prices and great value. you look at all the off-price retailers, they are the ones that are succeeding because their message is resonating. from allomic people levels are shopping in these retailers. that is the differentiator happening out there. it also seems what is

working a specific brands are both of those things seem difficult for macy's. macy's is a whole other thing. toy's, there is no reason shop at macy's without getting some kind of discount. , iteen their one-day sales -- he a five-day sale will don't shop on a daily basis because they know if they wait two more hours, something will come up and give them a bigger discount. it is very hard to change your customer to change -- train your customer to change. maybe macy's is 5-10 years too late on that. i think it will be very difficult. look at how many stores they have. the unique that many stores with

online and people shopping online growing by billions of dollars a year? we are seeing starport push for some monetization of that real estate asset. ares like michael courts saying i don't want to discount any more because i want to preserve my margins. -- michael kors. steven: amazon is so innovative, i have to give them that. places in the marketplace -- take t.j. maxx, for instance. need all the technology than amazon might be doing because they are known for the great price and you have to go in there and find it. macy's was so great years ago because macy's had the private label that differentiated them. now, it is all the same. on top of that, you have the imports from japan and all these

companies that did not exist 5-10 years ago that people think are cooler. abercrombie is try to change. -- trying to change. what is going on right now it, it is much more difficult. alix: thank you very much. steven newman, good to have you. still ahead on "bloomberg ," we are joined by terry lundgren. this is bloomberg. ♪

alix: one year ago today, the yuan was wreaking havoc across the global markets. this is your very simple chart.u.n. julieyuan

a global selloff and markets. january andgain in february. now, we've definitely seen some stability. yes, the pboc lowering that reference rate -- it is much than it was last year in august. this is the onshore offshore yuan volatility. you see it pick up again in february and march of this year. we have been relatively calm. china has been tightening capital controls come increasing intervention, doing it at a time where global conditions are much more calm, and that has helped spread the calm in the market. this comes at a cost. the cost of reforms that have allowed the yuan to be floated

more freely and treated more freely. -- traded more freely. this is now 1.7% in june. the sixth ranked currency among those currencies traded globally. much lower than the u.s., something like 40%. there is stability, but it comes at a cost. how long will the pboc be able to keep delivering on that without that reform? jon: we will be on top of that in the next hour. york andon and new asia, this is bloomberg. ♪

♪ >> brexit hits home.

drops therty sales most with both demand and sale declining in july. jon: valiant is said to be the subject of an investigation with a mail-order pharmacy. it alix: clinton heads to michigan. use a speechd to and factory to poke holes at aggressive tax cuts. david: welcome to "bloomberg ." i'm david west along with jonathan ferro and alix steel. -- of vers jon: i remember so many people having to cancel their plans. little bit of stability, but it has come at a cost. alix: deutsche bank warning caution. you will have the pboc proceed. there is the rest -- risk of a

depreciation. they want to be a part of a global monetary system. they have 1.7% of that. they have to be able to liberalize to get higher. david: they want to be a part of a major reserve currency. also, it has continued to gone down. steady is the cause there. jon: appreciation versus devaluation. alix: that is lower. [laughter] we're going to be joined by great guests to discuss all of this. us tom z ratner will join discuss the presidential race. and all about us -- got a look at the markets. the exciting room -- the exciting move was fx. jon: the kiwi stronger in the fx

market. sterlingess on the crosses the pound. in the equity market, little bit of stability with the dax up a third, the ftse underperforming. 20 listings they're going and dividend -- going x dividend. in the commodity market, brent crude unchanged. the bloomberg commodity index unchanged. the bond market not unchanged at all. big move to talk about. tenure treasuries up to basis points. up 10 10 year treasuries basis points. we await big supply coming to the markets. also keep your eye on macy's. we had those breaking numbers coming out and moments ago. acts to someen an

of their stores. they are closing stores resulting in a $249 million charge. also, looking at options for four large flagship stores. reaffirm itsid full-year forecast. in --alks to sell men's on union square. stock is up 10%. this lack of foot traffic in malls, what do you do with the retail space? david: they are open to doing more. maybe asset sales, joint ventures, they are not done yet. jon: you know is this reminds me of? whenever i hear about macy's, it is exactly the same conversation. pare back your real estate. it is not happened quick enough.

. david: the questionnaires when you get to pare back, what do you have left? does the department store continued to exist? alix: we will be having that exact question. let's go around the world and check in with our bloomberg team for in-depth coverage. week in down a big retail earnings. on valeant's newest -- we have numbers from kohl's that cut their back stock. macy's beginning -- continuing to restructure. the market has been waiting for this for so long. cold and macy's are doing things that -- kohl's and macy's are doing things that people have

been waiting for them to do, close stores. question,raises the are they too late for our investors saying? yes it is ok you are starting at this juncture? >> the shares were battered over the last year. any kind of symantec doing something right is an indication. what can we expect over the next half of the year in terms of the struggling retailer changing that business model? retail pullingng back in department stores will have to respond to this. continue tove to close, continue to give their inventory under control. what is interesting to me is that macy's did not announce something bigger with their real estate. macy's, kohl's come up over 9%. shelly banjo, thank you so much.

in jon: talking real estate, housing prices. it was a good transition. the fastest declining transactions in the month of july since the financial crisis in 2008. i'm talking about the brexit effect in the united kingdom. i want to get to guy johnson. it sounds dramatic. the takeaway is no drama yet. guy: there are number of factors that have skewed this story. this is a story of space agents of those who sell houses. what we are seeing very clearly is the post-brexit effect. we are seeing and effective q1 when the government change the tax loss surrounding by second homes, they raised both taxes. people who went out for second homes and buying investment properties. this is a combination of brexit, which slowed things down, and the effects of those tax changes coming through. it will be interesting to see

looking forward to see whether or not we're seeing the effects of low interest rates starting to have a more positive affect on the market going forward. in the price down that it is, there may be opportunity for people around the world to come in and buy u.k. property. they are hinting that that is going on already. jon: i think we have a different name for state agency in london. beginning of the july to the beginning of august, it is different for real estate. you got a government functioning in the u.k. and a rate cut from the bank of england, and you have got low, low rates. the last 24 hours, you speak to anyone in the bond market, it has been a conversation about guilt. what is the story today. ? curvehe curve has -- the is beginning to flatten. everything below that is down. you look at the long-duration

stop with the bank had the problem earlier in the week, that is still well bid. the curve continues to flatten in london in the pound continues to drift lower as well. we have seen inflation bonds and a record low level. the market continuing to pilot to the -- the market continuing to -- there is inflation coming in that would be from the lowest sterling. a flatter curve in the u.k. guy inn london, -- g u london, thank you very much. david: shares of valeant are plunging after being targeted in a criminal goal --criminal probe. what do we know about this criminal investigation involving valiant? >> this is been going on for quite some time.

back in october, we learned that valeant has been using philidor. that is totally normal in the pharmacy world. but that is -- but the problem is that they owned philidor. ongoing.e has been learned there could be potential criminal charges because they may have been doing fraudulent activity with insurers. the insurers did not know that philidor and valeant were actually the same. it could be an artificial use of some of valeant's brand of drugs -- the underlying complaint is wire fraud. david: it was a misrepresentation made to insurers. why would they have been hurt by that misrepresentation? >> valeant's drugs are very expensive.

theant is more so due to fact they have raised prices. the pharmacist should select of course the doctor said to use another brand. it looks like valeant was pushing their brand of drugs. david: a lot of companies may be thinking what are they not revealing. thank you very much. we are going to go over to alix. alix: you got it talk about retail. macy's trying to restructure their physical business. closing 100 stores. asset sales,g joint ventures, talking to other partners, may sell the men's store in san francisco. vendors, putting

money into technology, putting money into applications and aggressively trying to make the e-commerce to the mall idea, the department store idea. -- bad and good, the good, gross margins better due to inventory management. on the downside, they cut their 2017 full-year forecast. any kind of little good news is great news for retailer stocks. also want to hit on chesapeake. that stock moving big in premarket. shaleselling all of its assets to get out of a $2 billion contract. they had a lot of that coming through next year that they are trying to get free of. alibaba, theon earnings extravaganza continues. that was due to cloud any commerce. both of those businesses surging. cloud computing revenue was up

156%. slowingof any kind of in china that we had been hearing so much about. if the stock closes over 90, it will be the first time since june 2015. for more on alibaba's earnings, make sure to stay tuned and stay with us for the cofounder at 9:15 a.m. eastern. we take a look at donald trump's economic policies. we will discuss what it means for private equity. -- e ratner this is bloomberg. ♪

♪ david: this is "bloomberg ." i'm david westin.

we have highlights of economic plan hillary clinton will play out in warned, michigan. it will include the largest investment in good paying jobs since world war ii, ensuring worker share in profits, and making the wealthy pair -- pay their fair share. joining us is steve ratner. welcome back steve. this is not a dramatic departure. >> from what she said before -- it is a repackaging. taking what you said before in putting it into some things and buckets. david: it is a pretty stark contrast to what we have heard from mr. trump on monday. the meritsinks about of either plan, it is fair to say that mr. trump put forward a pro-business, progrowth sort of economic plan. this feels more like directed towards redistributing, getting

more the lower class, middle class and the economy. is that fair? steve: partly fair, probably not so fair. trump says a small -- he wants to massively cut taxes even though he has not said what he wants to do on the spending side. you busy have to cut spending to get the deficit and a reasonable place. his cuts favor the rich. the one place he is not pro-business is on trade. he is basically against it. quentin is more for a robust government -- clinton is more for a robust government. tax the rich more provide more benefits for the middle and lower class. what she is really talking about is investing in america -- infrastructure, education, all the things that had been cut over the last 10 years. that is a progrowth agenda. hers a progrowth

agenda and trump not. let's go to the we hearon point because this not from just the corporations, but small corporations send the regulations become too burdensome and it is impairing their ability to employ people. is hillary clinton going to address that in any way, shape, or form? steve: i do not know if that is on the top of her list, but i hope she will. i am a clinton supporter and have been. but i think some's approach -- i think trump's approach -- by the way, he said the increase in regulation since 1880 cost the economy 25% of the growth they could've achieved. we have had more republican presidents during that period of time the democratic presidents during that period time. i think the regulatory issue is as much a bureaucracy that keeps

running rather than any particular policy. alix: it seems like a hot potato in policy. how do -- it'd be as ordinary income? should it be as capital gains? when you stand? steve: it should be taxed as ordinary income. i'm a beneficiary of carried interest. what i did in my private equity days is work. [laughter] i like work. i don't know why it should not have been taxed as work. it is a very small revenue number. it is a principal matter. both hillary clinton and donald chuck can agree on this, they are absolutely correct. i think there are broader questions if capital gains and dividend should be taxed as lower rates. that is a different question. jon: the center of this debate is wealth inequality. it has been driven by assets.

the rich have assets and the poor don't. if you want to narrow that, you are talking about taxing flow. would you have to tax stock, don't you? steve: i would respectfully disagree on your fax. the increase in income inequality was driven by income, by assets. you're talking more about wealth. if you are looking at income numbers exclude capital gains, you have much more inequality over a very long period time. the inflated asset problem is a separate problem. that is probably why i would not say i would be opposed taxing profits on those assets at higher rates. i don't think is america we want to go down the road of taxing wealth. that is a bridge too far. david: another tricky issue with taxation is offshore retention of profits. there are two very different approaches laid out by trump and clinton. -- p says let cut everyone

says is that a life people for trying to keep those profits on shore. which one is the most sensible approach? steve: first of all, mr. trump's tax plan does not work because he is proposing that as well for the so-called -- yourou need to do to cut , asrate from 39.6% to 16% mr. bloomberg to pay you as a contractor rather than an employee. he has a plan a does not work at all. the problem of the money offshore has been blown out of proportion because of the $2 trillion offshore, there is another $2 trillion sitting in for whatever reason, companies are not investing. change orlieve economic picture by 10 point bases of growth.

you go back and specifically talk about how companies can deploy that cash. steve ratner will be staying with us. and 1:15 p.m. eastern time, we will have full coverage on hillary clinton's speech on bluebird television. jon: i think i need to get steve is my agent. [laughter] , we will discuss what it means for the fed and its impact on the economy long-term of growth. this is bloomberg. ♪

♪ jon: from new york city, this is "bloomberg ." . i'm jonathan ferro. a fascinating spread in terms of economic data between payrolls and udp growth has started to widen pointing to lower productivity in the economy. steve ratner still with us. that spread of payroll growth in

gdp stocks are down here. is that how you explain that? steve: one of the things that does not get enough attention is our most seriously -- it's declining productivity. we had declined productivity for three quarters now. first time since the late 1970's. productivity is the engine for the economy. economy cannot move without productivity. gdp growth will over time, always be equal to labor force growth plus productivity growth. if you have half a percentage growth of labor force growth, 1.1% of labor growth, you get 2% growth. we are in negative territory. this is really scary and should be worried about it. jon: a damages potential output. you see that in the terminal rate going down, down, down. i would ask him how to return

this around? asyou need higher wage costs the impetus to get companies to investigate productivity up? steve: productivity is one of the most mystifying economic concepts. certainly getting companies to invest more. , they said wehis are too many robots, but we have too few robots. we don't have enough automation. your point is right. the circle would be higher wages. david: re: measuring productivity accurately in this new digital age? steve: i know there is a big debate about it and we don't have enough time to get into in a segment. there is missed measurement problems, but there has always been mismeasurement problems.

you had massive cuts. the actual price of cars fell. i was not captured in the cpi. i have no reason to think it is worse than what it has been. jon: fascinating. chairman.isors alix: coming up, we have eco-data. initial jobless claims are minutes away and we will break those numbers down. we will discuss the future of media with turner ceo john martin. this is bloomberg. ♪

♪ city, thisnew york is "bloomberg ." ro.: i'm john fer softer session on the 15 london.

20 listed companies going x dividend. that is why you see the underperforming in the london market. here is the situation in the bond market, yield unchanged at 1.5%. a stronger dollar with dollar yen. breaking data comes through there it alix: alex --jobless claims fell 1000. it is down by 1000 from the week before. still continues to tell the story of a stronger labor market despite the fact that we had those weaker gdp numbers. the labor market continues to hold up. index,e import price looking at your on year down 3.7%. that is better than estimates. lest deflationary in that sense. points.y four giving up gains in

the session. jon: what happens when you cut rates? typically the currency weakens. not in new zealand. the reserve bank in new zealand slashed rates. johnng us for more is morgan. it the world expect in the rate cut. it came. the message, i want more am i want more. what is the lesson coming from the southern hemisphere today? anunless the central bank is indication that the easing cycle could be protracted, markets 10 to trade at the end of market phenomenon. jon: governor wheeler, not enough to come into and marketed

try to hide the fx market. alix: that is the issue with all central banks. you know the doj wants a weaker yen. they just can't seem to get there. where is the risk and fx and the rate market when it comes the central banks? >> the risk at this stage of the cycle, since we are three years , theyasing for the doj have reached the limits. they don't think there is capacity in the bond market to upsize the programs. the risky to go from a period were investors are focused on easing to a period or they are focused on -- they think the next move after pause is a hike. even if that is a year from now in japan or two years from now, the tendency would be to buy the yen in anticipation of that. jon: the carry trade, what happens to the carry trade is it breaks down? >> one, you get a dick schaap

interest rates, and that shock could come from the doj if they do not ease further. if it pushes down the oil price into the 30's. there are lots of ways this could happen. i feel like the interest rate shock is more likely in the next three or four more -- three or four months. alix: 1.5% backed up to 3%. what does that ever tantrum looks like? jon: it is about 50 basis points. [laughter] the temper tantrum was led by the fed in may 2013.

what you're more likely to get or doj isfrom the ecb a reluctance a to ease further. you don't get a signal that they are ending the buying, but you're getting the indication that they are willing to ease more. when you get that rate shot, it is probably 25 to 50 basis points because you are still going to have policy rates at zero are negative for a long time. in: i don't about it, but moved to 50 basis points when yields are at zero, if you look at duration, that is a brutal, brutal move. what is the contagion that comes out of that? >> global bonds will selloff even if this was a european or japanese phenomenon. you the treasury yields the backup, too. in terms of the effect, it could push volatility up from my .5%

-- up from 9.5%. this get to involved in high-yield currency. i think it is an event for qe and something that would definitely -- alix: didn't we kind of see this when you have the doj, nonaction even a couple of weeks ago. you did see a backup in the yield. we did not see that contagion in the treasury market. >> one of the reasons you have not seen much volatility on the market is because the doj is still dangling out there and saying september is a meeting where they will be assessed policy and unveil additional measures. they dig up that meeting in a way that prevents people from selling bonds and buying began actively ahead of it. they know the doj has a tendency to surprise sometimes. if the doj does not deliver, that is when you get a repeat or extension of the moves you saw

in bonds and currencies a couple of weeks ago when they passed on a cut. -- the you think this will be the catalyst in the scenario we painted out in the last five minutes? >> it is a tiptoe down the path to easy money. eventvery likely to be an to give you 25 basis points in backup. big move wall, -- jon: fascinating discussion. he will be back. thanks, jonathan. time warner's turner invest in digital publisher -- this is turner's second that online publishers. back in march, it invested in mashable.

joining us is john martin. welcome, mr. martin. let's start with this investment in 29. you are leading $45 million. it's going to us why you're making this investment? >> as you said a little bit in terms of the portfolio, the brands we run and operate on a day-to-day basis, more and more, we are focusing on where consumers are going, and where consumers are spending an engagement time. so a big part of our strategy is to make, either through organic investments, or flat-out acquisitions, or strategic investments, which is like refinery 29, you want to expand the reach of our ability to reach consumers where they are, and be able to monetize them. refinery 29 represents a really

terrific company with a great brand. really focused primarily on millennial-minded females, 27 million loyal monthly users. they come with us, working together, we believe will be able to collaborate on new content creation at -- content creation and invent marketing. --even to marketing. looking towards were different genres of consumers are spending their time because our brand need to be where consumers are. that is part of a big transmit -- that is part of a big transformation happening in our company right now. david: largely female oriented fashion blog with substantial traffic already. i understand what they may bring to you in terms of audience. what does turner bring to them that they otherwise would not have? look in their compass returner that they would not be able to about the strategic investment? >> we have to unique

capabilities we can bring to them to supercharge your business. first, we have scaled audiences ourselves. we have very strong team abilities in terms of monetizing those audiences, and we can help cross promote refinery 29 across our own branded environments. we have three of the five top networks among millennials with tbs, tnt and adult swim. scale, weincremental can supercharge the ability to monetize, which will benefit both sides. david: media company such as turner not limiting themselves to traditional content. your investing interest is in -- investing in distributional technology. you have a similar investment in eyestrain. this into what yet to say. this is bob. >> this is a whole new world where traditional distributive have gone to the content space. comcast is a great example of that with their purchase of nbc

universal. distribute is going into the content space and content owners are going into the distributors space. we are looking at a marketplace that is so dynamic. david: as i said, you have ice stram. how does that work into your strategy? >> our investment or m&a strategy is in digital and when you're content. and -- it is in digital and linear content and our ability to monetize those audience better. more --we more and immediate content providers and content creators, we believe we are going to need to take our own destiny into our own hands to make sure that our video can get to consumers in more places, and in more ways, and in better ways in terms of user

experiences than what they have been used to experiencing through traditional cable, satellite, telecom providers. that is not to say that those players and a strong partners for us. they will be. we want to make sure we retain possibility and the ability to reach consumers and actually control with that experience looks like. plan little bit about her -- -- >> it has been a mature business for years. if i tell you now it is going down little bit. the biggest single reason it is going down is because they're just a many networks in the united states. there are a lot of households that just can't simply afford to uber video a big bundle and pay for the networks they don't care about.

what we with our traditional partners and distributors -- we are in discussions with new partners and new potential distributors, the idea of smaller packages of bundles that will have more highly rated networks that could possibly be offered to consumers at lower price points. that offers the opportunity for some households who have dropped out of the multi channel universe to come back in because i do think people like to still watch tv and video consumption has never been higher than it is today. david: that make sense for some of your consumers who want fewer channels. how does that work for your more traditional cable providers? do they get shutout? >> we would love to work with them in the same way as potential new entrants. there is nothing that we would not potentially do with a new entrant as we would do on the same terms and conditions of the traditional players as well. we would like to continue to see

innovation because innovation is going to spur better consumer experiences, which we think will ultimately going to drive usage and monetization. david: don, thanks so much for being with us today. that is john turner. jon: breaking news. when he ran the legg mason value trust now buying legg mason stake in lmn, the fund company that he now runs. living after 35 years. alix: it has been a really rough eight years. he was betting on stocks in 2008 when the financial crisis hit. he has been shy in the media and hard to get a hold of them get his ideas. this is the next to dr. in his career.

much more on this story later on in the program. >> the white house isn't commentating on donald trump's latest accusations. republican presidential candidate says you can give president obama to blame for the islamic state group wreaking havoc in the middle east. mr. trump: isis is honoring president obama. he is the founder of isis. he's the founder of isis. he's the founder. >> trump has long blamed the president and hillary clinton for creating a power vacuum in iraq and was excited by islamic state. ukraine is warning that russia is trying to escalate primerica. has -- vladimir putin accused ukraine to engage in terror tactics.

prosecutors from sweden will be allowed to julian assange about rape allegations. the interview will take place in london where julian assange has been held up since 2012. wikileaks released e-mail stolen from the democratic national committee. globaglobal news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. this is bloomberg. alix: it is being called the yuanniversary. shotear, the yuan devaluation. this is bloomberg. ♪

♪ david: this is "bloomberg ."

i'm david westin in the hewlett-packard enterprise greenroom. coming up, we will speak to joe sigh about his company's earnings. >> here's your bloomberg business flash. obama -- alibaba posted quarterly earnings that beat estimates. computingom cloud services soared. alibaba is positioning cloud computing as one of its fasting growing businesses. there is a report that valeant from the city goals is the subject of a criminal investigation by u.s. prosecutors. it is a question of whether the drugmaker defrauded insurance by hiding its ties to a mill order pharmacy. valeant says he are cooperating with the investigation, but not confirming details. they've made not be that bad for wall street traders.

according to a compensation consultant. they said talks fixing sales and trading could fall 50%. that is your bloomberg business flash. wmmin much andra -- i am chandra. jon: terminal users are waiting on the bloomberg. out what theecking low yield environment -- we had a little bit of color here. data pension fund has found a way to help boost returns and cutting out the middleman like hedge fund managers like asset managers. there going to do it themselves and not rely on that third party. in fact, they are saying that traditional investment costs will take 66% less than using

fund manager. what is aiming for the hedge fund guys and asset managers? the hedge fund guys are struggling as it is. now what? jon: the story is the outsourcing of the hedge manager away from pension funds for one big reason --they don't have the talent or infrastructure anymore to do it themselves. they did it so they could cut costs and outsource the fund management to other people. for it to become a model and really take off, they got to perform. david: the performance is how much do you make and how much to you pay? there are two things involved. they price himself out of the market. alix: it show the distention of a low yield market making the decisions for these guys. jon: bonus cuts for traders and jill makers seeing easing slightly. this is of course according to johnson association.

it called for made ill makers may not shrink as severely as expected. maybe starting to form a bond. printr it is tv radio, or on bloomberg news, costs, costs, costs. it is a buzzword right now still. david: why do we think that is read so much on the bloomberg? [laughter] alix: to be fair, we saw revenue , and banks really killing it. the big question is will that be sustainable? jon: they night -- they now see the incentive pay forfeit going down. that is still brutal. david: no question. , yesterday's u.s. treasury auction was offered at the lowest yield since 2012, but how much demand was it for the debt? we will show you in battle of the charts, next. and this is bloomberg. ♪

♪ david: this is "bloomberg ." i'm david westin and it is time for battle of the charts. , you are going to leave it off, the home team. alix: we have a very strong treasury demand yesterday for 10 year treasuries. these are foreign and central banks and mutual funds. issuanceht 72% of the became a yesterday. the month before, they bought 54%. the primary dealers, the guys that are obligated to buy, had 20% that they were able to get their hands on. the reason why this is important is if central banks are buying up the treasuries, it does not make them liquid assets. central bank, the fed, has control over raising interest rates. foreign buyers are in there and not going to let us treasuries

go. can the fed push the yield up at any point? david: or are more bond strikes coming down the road? to buy them, you have to pay them, and that is at a lower yield. lisa: i find this one of the most import charts of the year. yearis the gap between 10 japanese bonds. the gilt cap has shrunk to the narrowest ever on record. what they showed is that bond investors are betting that more carney of the bank of england has more ammunition to suppress feels further, while the bank of japan is running out of gas. it shows that people believe that the british growth rate is going to stay low for a long time, even with the stimulus and more carney has recently announced. jon: this and be the same chart of the same person. [laughter] look at what it is having with the big bids.

foreign demand for treasuries have the yield backed up last week and the fact that it was the lowest yield in four years. goes to show that foreign demand, we talked about currency hedging, that would take away the guilt advantage is still there. people are still buying. asid: i want to go with alix well because it surprised me. about the demand would go down for treasuries. alix: i could be hedge funds, too. jon: very good point. coming up, we will have tsai and cofounder joe terry lundgren, both coming up. this is bloomberg. ♪\

♪ >> this is "bloomberg go."

thursday if you are macy's or kohl's. killer numbers from those stores. they blew away estimates. macy's finally closing those storms that stores. >> maybe expectations have gotten some of the are coming back up. jon: we fast-forward to the big data point in the united states went tomorrow we get u.s. retail sales. we continue to see that rebuff in the consumer in the data. alix: and what will be there to support it. >> we have a big 'r.' two big names and retail with us. macy's chairman terry lundgren and alibaba cofounder and executive vice chairman joe side. of thee's well, head extent coming goldman sachs. --: we are about 20 minutes

29 minutes with the opening in new york. down by one quarter of 1%. 20 of the listings on the ex dividend today on the performance and london. outperformance of the germany's dax. sterling weakness. that is what you can see. down in almost every currency. capturing index e -- -- u.k.-u.s. payrolls. the long end of the guild yield curve rallying. yields coming in for basis points. another record low potentially. 1.213.ed we cannot -- kind of fast-forward to another auction today. 30 years, alex. the demand of the long gain.

what will it be like on the 30 year treasury? about $15 billion worth. alix: the demand is who in their doing the binding -- buying as well. got to focus on valeant. a report coming up the company could be facing a criminal probe over philidor. is it actually defrauding insurers by hiding its ties to philidor. and that defrauded insurers? that is what is under question right now. there is some potential damage of this probe at $1 billion. on the upside we have retail and naff get. it's going to give up its holdings in the barnett shale to get out of $2 billion worth of pipeline contracts. no payments for the barnett. barnett shale is really u.s. shield revolution started. found itse chesapeake

home and expanded into the biggest natural gas producer in the u.s. a huge transformation for this company. we were just talking about the extraordinary quarter for kohl's and macy's. kohl's blowing away estimates. margins were better. that is the good point. the negative was it cut its 2017 forecast. comp sales were lower than estimates. in terms of getting macy's, earnings above estimates but it's about managing their store inventory. closing 14% of its stores and planning to shrink further it store portfolio. looking at joint ventures and partnerships and asset sales. a big transition for macy's. for how it's happening in the markets, we have abigail doolittle at the nasdaq looking at everything tech. abigail, let's start with you. you are checking out yahoo!. abigail: getting a very nice tailwind from the big alibaba

first quarter report. yahoo! has a 15.4% stake in alibaba. at stake in alibaba along with the stake in yahoo! japan will remain a part of the "remain co." once the operating assets go to the first quarter of next year. turning to a stock faring less well, and warren shares. it is punting on the announcement of its secondary offering of an undisclosed buy. investors may be hearing dilution, and they are raising cash to find a cardiovascular drug study. investors may have questions around that. it always seems to come back to biotech for the nasdaq. alix: peggy so much. -- thank you so much. nira, you are looking at the euro stoxx 600. nira: absolutely. stoxx 600 at a seven-week high. it is close to recovering its

brexit losses. not quite there be getting close to it. 1% can see up almost 4/10 of intraday. and some of the best and worst performance, i want to highlight -- it had better than estimated profits and it improved if margin outlook to 16.5% goal. maybe expectations in all business units. you can see the shares of 4.5%, one of the best performers on the stoxx 600. takes pressure off the ceo, who is fairly new and the role. looking at old mutual, one of the worst performers. the london-based insurer planning to split into separate businesses. it dropped the most in more than six weeks today. first-half profit missed estimates. the rest of the year will be followed challenges. shares down 5.4% in intraday trade. this has been tracking down the ftse 100 which snapped five days

of gains, its longest stretch since the rally meeting up to the u.k. referendum. they are looking at another big benchmark, the dax. it is headed into a bull market territory. it is holding there and we are holding its extensive 1%. if you look at the relative strength index, there is some suggestion this week the dax has been overbought. back to the big question, has this rally got much further to go? alix: keeps going and everyone questions it. thank you so much. one big u.s. stock we are watching is macy's. the company's second-quarter earnings topping estimates and announcing to close 14% of its stores. let's look at the task on hand. let's start with macy's stock prices. terry lundgren was named ceo in february 2013. there has been a steady decline that we've seen since july.

the stock lost about half of its value since that peak. the main challenge for macy's and for all department stores can be seen in this chart. people just aren't buying stuff in malls. they are spending their money on internet sales, which is this orange line and eating out which is the white line. not visiting department stores. it has been relatively flat for a long time. relatively flat since 2007. it's not clear what would change that trend. to combat these challenges macy's is closing underperforming stores. this equals 100 full-line stores out of 728 locations. you have slowing sales and profits that have attracted activist investors who are pushing macy's to monetize the company's store portfolio. hedge fund star board values it billion, which is double the market cap right now.

a lot of pressure to change how they deal with their real estate. david? david: we will stay with macy's and bring in the company's ceo terry lundgren on the telephone. i use much for joining us today. we have your earnings. we want to hear it from the horses mouth. tell us how you see the quarter's earnings? terry: we are encouraged and apparently the market is as well by our announcement. i think most important is is not just a quarter. it is that every single month was better than the prior month. we are seeing continuous improvement. it is directly in response to the initiatives we took starting in january this past year to get us position for a comeback. david: take us through those initiatives. which paid off the most in this quarter? investone of -- terry: an additional staffing and selling and selling support and management and our stores in advance of the actual sales

coming into the stores. we did that for the top 150 locations and work beautifully. we are clearly seen not just a sales improvement, but an improvement in customer service scores month after month. that was the first big, large bet. that is the biggest expense base of any retailer with bricks and mortar. placing that that was significant. there were initiatives into various categories we saw working for us. we placed another bet on the denim business. denim has been a soft category for a while. when it is hot and works, it benefits companies like macy's with a giant assortment of that category. back-to-school is off to a very strong start. it is because of the dinner-based business -- denim business. startingese things are to happen with her directly responsive to the initiatives we've taken. david: you mentioned the top performing stores were focusing on. closing 100ill be

stores. how did you come up with that number? how long will it take to get those off your books? terry: we have about 730 macy's stores. this would bring his back to 630 buildings, 575 full-line stores because some are furniture stores. a map ofid was we took the united states and basically looked at populations. we looked at growth. we looked at the shopping mall density. recognized that are 7.3 feet per human being in united states. other countries have 1.3 to 1.7. the reality is the united states is over stored. we are getting in front of what we know is a trend that is in a current. that is customers are balancing their spending with online as well as in stores. your commentary earlier failed

to mention we are the third largest internet company in america. we will benefit from this move towards more online sales. be itcategory we sell, apparel or assessor's or home furniture he -- accessories or home furniture, we are the third largest retailer and the third-largest seller of online products. this is a strength of hours. we believe benefiting the customers that shop online and in stores is the answer for our company as well as the way customers. in the future. david: talk about the internet component. you are having troubles. how did you do this quarter? how much steady growth of internet sales? how can you compete with an amazon with hundreds of thousands of products from all over? ry: we have the same systems for processing fulfillment. we're the only two i'm aware of in terms of having that

high-speed technology and are filled with centers. we can compete favorably. same-day delivery, next they delivery, those are available in our stores as they are with amazon. there is really no difference. we have been recognized as being the on the channel leader in our space. more important is our advantage of having stores. that is the way customers shop. 90%, including amazon numbers, 90% of the goods sold in our categories were sold in a brick-and-mortar environment 2015. that may go to 89%, but is not immediately going to 40% or 50%. that is the reality many do not understand. while our businesses online are going quickly, it is the large majority still sold in bricks and mortar. david: fair enough. at the same time amazon is going to dramatically. macy's is basically having slowing down of losses. do you think you can figure up

the pace of growth? terry: no question about it. our online business is growing at a rapid pace and has been growing for several years that we given at this. the challenge is not the online business. it is in the store business. that is why we are taking this initiative to recognize by closing 100 stores we can take the capital, the inventory, the people that count in the stores and put those into the remaining 570 54 macy's stores and 38 bloomingdale's and 100 lead mercury stores and reinvest capital there that will increase our capital and returns for the future. david: talk about your real estate. a lot of people are giving you advice. where are you in that process and what is the timeline for when you will know what to do if anything with your real estate? terry: we have been positive about this -- this is never been a friction point. forad a broken transaction

$270 million done before any other investors started talking about our real estate strategy. this has never been an issue we have been concerned about. we are doing it in a way that does not increase leverage of our company. that may take a little bit longer but we are aggressively pursuing the real estate strategy and have some exciting things that will be announced a minute they are live deals. we have got a lot of things in motion right now. you will definitely see things before the end of the year and you will clearly recognize this subject is an opportunity for us to monetize our real estate and reinvest and have reinvestment opportunities in our business. david: thank you so much are being here today. terry lundgren, macy's ceo and chairman. up about 15 percentage points. clinton's campaign

launched an initiative to recruit endorsements from top republican. it is called together for america. 50 republicans have announced their support on the first day, including george w. bush's former director of national intelligence. more than 30 people hurt in an explosion in an apartment building just outside washington, d.c. firefighters in silver spring, maryland had to rescue people from the upper floors. some residents through their children for the windows. several people are missing. rescue teams are now searching for the rubble. forces in libya say they're closer retaking islamic state strongholds. troops have taken over a huge convention hall that was used by the militants. it would deprive the islamic state of its only base outside syria and iraq. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. is emmett chandra, this --jon: despite china's slowing economy, alibaba holds up.

the cofounder anything vice-chairman joins us next. and the corporate credit boom. our investors getting compensated for the risk? goal to -- goldman sachs asset management will join us. 14 minutes away from the cache open in new york. futures positive from across the board. this is bloomberg. ♪

♪ alix: alibaba shares popping in the market after investing heavily in the cloud and media. we know that this inference is go to emily chang it was speaking with the cofounder anything that vice-chairman. emily: joe, thank you so much for joining us.

it is great to have you today on bloomberg. i want to start with a broad question on the overall health of the chinese economy. alibaba has remains resilient even at the economy slows. how do you explain that? emily, we are more than resilient. we set the fastest growth rate ever in terms of revenue since our ipo. we generated $4.8 billion of revenue, 59% year on year growth. if you look at our commerce business where we are facing consumers, we generated $2.5 billion of operating income. that in itself is 30% year on year growth. from our perspective, the chinese consumer is very healthy. i can understand people's concerns about the chinese economy, but the way we look at it is we don't focus on the quarter to quarter cyclicality

of the economy. what we look at is the long-term trend. in the long run, china's economy is shifting from manufacturing-driven economy to a consumption-german economy when it comes to gdp growth. that place to the strength of alibaba. that is what we are all about. in the long run you look at the chinese household, there is 4.6 trillion u.s. dollars of net cash savings on the balance sheet of chinese households. this is because over the last few years they have had real wage increases. they don't have a lot of mortgage debt on the books. this is all going to provide the foundation for very, very strong growth of consumption. emily: it is the one-year anniversary of the devaluation of the yuan and it has continued to drop. how do you see that evolving and affecting alibaba and other

chinese companies? : if you look at the yuan in the longer-term context, look back to her three years, what we have seen is that the euro and the japanese yen has depreciated even more against the u.s. dollar. this is a phenomenon that is happening all over the world. we are looking at the chinese yuan and it looks like it has stabilized over the last few months. we are very encouraged by that and we are very encouraged by the underlying consumption activity that will propel gdp growth. emily: the sec investigation has an focused on the -- alibaba's financial structure. what has been the developments of the investigation? a few months ago the the

fec sent us a letter. they said this is not an enforcement action. this is something we are asking alibaba to voluntarily provide information about a few issues. the way we reacted was we fully cooperated with the sec. we said we were going to provide all the relevant information and we did that. here is the thing. a lot of companies get letters from the sec. well we have decided to do is voluntarily disclose it to the market, not only in the fact we have this conversation with the sec, but also the specific issues that are involved. we have made very clear disclosures. we've been very transparent on this issue. regular kindin a of exchange with our regulator.

beyond that i don't have anything to update. emily: you have consolidated the finances, which did lead to a big profit drop. 76%. when d.c. that situation changing? -- when do you see that situation changing? joe: i have to the claimant 76%. iod last yearer we had an extraordinary gain related to an investment company. it was a non-cash item. it made the year on your computers and basically irrelevant. what is going on is if you look $2.5r port operations, billion of operating income and our core commerce business. that operating income is growing at 38 percent year on year. if you look at the eps, it is growing at 33%.

eps that is very robust growth. we did consolidate the yoku.ions of lozada and we take a long view and despite consolidating these losses we are generating 61% operating margin and are core commerce business. it gives us the luxury and the resources to invest very aggressively into new businesses like digital entertainment and our new innovation initiative such as internet cars and things like that. we feel very comfortable with our margins. we feel we have a lot of resources, a lot of cash flow to invest in new growth. emily: speaking of yahoo!, it's going to a sale of its core business. has yahoo! discussed with alibaba but it plans to do with the shares it hold? : what they need to do is

figure out what to do with the alibaba shares. but weuld do nothing, are going to be fairly reactive when it comes to that. we are going to leave it to the yahoo! board to decide what they want to do the alibaba shares. the important thing for your viewers to know is that if yahoo! sold alibaba's stake, they would incur a huge tax liability. that doesn't solve the problem, even if we are invited to acquire the shares of what they call the remaining co -- remainco. we would not be able to cancel the shares legally m&f inheriting that big tax liability. it will be a very difficult question for us. it -- alibabaut has more than $24 billion in

deals in the last year. massive deals in technology. microsoft, linkedin. how open is alibaba two really big deals? have 61% operating margin in your core business you have to think about how to smartly use that extra cash flow, that margin to investor future growth. when it comes to our m&a strategy we will be very disciplined. we have set ourselves several important criteria, including growth in our user base, improving our customer experience, and also expanding in our categories. if you look at the large acquisitions and investments we have made over the last year, they all fall very consistently into those principles. because he yoku

wanted to get into digital entertainment. we partnered with an invested with the largest electronics retailer in china because we want to execute with them. and on the channel strategy to on the electronics retail stage in china. these are examples of the acquisitions we have done. we are open to large deals. we are opened a small deals. the important thing is they stay consistent with our m&a principles. emily: he made a big investment in a covenant called quickfeed to be paid over to funding rounds. according to reports, alibaba stopped paying. therectually happened and how to other companies know you will not do this to them? we have fully paid our investment into it.

the fact is by far we are the largest capital provider to quickseed to the tune of $100 million and we paid on time. we fully paid up. i think what you have seen was a a contract forg there is some technology that they were supposed to develop for us. the fact of the matter is for the china market it's a very different market. and for the kind of like they were trying to develop, it was very difficult to gain traction. there was any kind of dispute. we have very good relationships with them. we are supporting the entrepreneurs running the business. that's the approach we take in the u.s. we want to back entrepreneurs. always greatia,

to have you here. but he's much for joining us. that was emily chang with alibaba cofounder and executive vice chairman joe tsai. a little bit of optimism in the market. jon: what a difference a year makes. positive numbers out of alibaba. i'm not sure many people are positive on china. we compare that with 2015, august 11. then things are looking good. david: they have gotten better about communicating what they are up to and where there are headed. that was a big problem in august. there was also the stock exchange. bank described it as fear. then attended this is now the new norm in the markets and we can adapt. jon: then we play the game in january and february all over again. when is the turn? here we are. futures positive. 59 points.

could be having a pop up around 1/10 of 1%. in london you are under performance driven by a few listings. the outperformance is in germany. we switch to new york for the opening bell. switch up the board very quickly. 1.5% is the yield on the u.s. 10-year. the dollar is softening up. a stronger yen. you see the pound weaker. back below 130. wti up. a 42 handle 25 seconds into the session. alix: i have is a prize. no record high on the nasdaq, dell or s&p. that is the headline at 9:30 the morning. we had great data coming up for the s&p. only 4% of it is actually a new 52-week highs despite the fact we have seen eight record

closures over the last four weeks. not a lot of volume in the market. individual names we are seeing a lot of action, kicking it off with shake shack. down 6%. same-store sales coming in at 4.5%, below estimates. about half of what they saw in the first quarter. we are seeing what higher wages mean for companies. they raise their starting wage of $12. they say labor wages jumped 37% in the quarter. the other company we're watching is chesapeake. they are offloading their barnett shale holdings to a private equity-backed group to get out of $2 billion worth of pipeline contracts. getting no payment for barnett. barnett shale is where shale started. chesapeake front and center, one of the pioneers of the shale revolution now leaving that behind in order to shore up the

balance sheet, get the cash flow, help to pay down debt. they have almost $9 billion in debt. up with retail, killer numbers with coal -- kohl's and macy's. nordstrom reporting after the bell jcp reporting before the bell. macy's be on the top and bottom line. we are about two minutes into the session, of about 131% of the s&p 500. creeping back towards another record high. maybe even in this session. in the credit market it's all about issue. boom inve corporate bonds. on the rise of the last few years. the next guest sees the higher leverage in sliding corporate margins. swell joins us now. great to have you with us.

yesterday, rbf goes to market. $2.65 billion. what is that tell you about the demand out there for this? guy. sorry to be the bond on people are usually estimates. to borrow a phrase from a couple of great singers, feeling a little bubble lucius. i wouldn't quite call it a bubble. if you think about your question, you have a bank in the loss absorbing securities of massive size and tons of demand for it at a time of the u.k. has exited the european union. the prospects of recession are extremely high. what does that tell you? look at the currency. the markets are telling you there is a great concern to be a

recession in the next year or so in the u.k. and within the gilt market. the same time those are happening people want more and more yield. we feel this rush in demand for yield is something that will last and will work until it doesn't work anymore. likely sell pre-financial crisis, it usually does not end very well. the shapeto begin, and frame this conversation, i need to find the credit bubble? what does that look like? the credit, the fixed income is little different. mike: 13% returns and high-yield. that tells you one thing. you look at leverage. there has been a significant increase in leverage in corporate debt. as a result that gives us a significant amount of concern. you look at flows. enormous amount of flows coming in. if defense went in the economic cycle that is happening. it is happening early, it's very possible that those flows can

lead to more and more corporate investment as a result of the ability to borrow at low cost. and taking advantage of a long cycle economy. think about where we are right now. we are in the late stages of the recovery in the u.s. that gives us concern. look at corporate margins. corporate margins, other than today'announcement have continued to impress. the margins that are still positive are the ones being generated by more leverage, by stock repurchase. those are all signs a give us a concern. the last sign is increasing news, weather it is more leverage, fraud, accounting issues. those are signs there is a lot going on on the corporate side of pushing dust companies are pushing harder and harder to generate margins when they are not naturally there. alix: you have 20% of issuance of the whole year since brexit. you have leverage piling on and

return of covenant life as well. when the credit bubble turns, who was holding the losses? mike: it is a game of musical chairs to a certain degree. whoever is caught at the end of the investment. i think in the end you have institutions like ourselves that will be dynamically managed. making -- that are searching for yields and saying i can borrow at 0% rates or rates in my market in asia are negative and i will throw all my money at the corporate market, in the end those of the investors that get stuck. that is something of concern. it is not today or tomorrow but if we think about where we are in the risks out there in terms of slower growth, this merging compression is a concern. we as bond investors think the fed will potentially raise rates in december. that increase in rates because

we are seeing wage pressure in the u.s. economy. well we talk to companies in our sector that we follow, we are seeing pressure in terms of hiring people. that is good for the consumer in the job market is healthy, but in terms of corporations that's an issue. that's usually the indicator of recession. while we don't believe is the base case for 2017, the risks are higher. when you investing credit, you want to get compensated. jon: i want to get the credit versus sovereign debt. you have made a time of money buying securities. it's been a hot potato. you buy them in hold it to maturity. then you have a capital return. the question i asked him credit, is sovereign debt going to drive credit? at the moment is the market going to come often anyway? we had 10 auctions yesterday. demand was real strong all over again. is that going to go away anytime soon?

the sovereign drive credit in that regard? mike: in traditional cycles you don't have a situation where sovereign markets drive credit. in general if you look at credit performance over time, in general raise rise for a reason -- rates rise for a reason. credit usually performs well and an increasing rate environment. i think this time is different. things are different this time because of the impact that central-bank policy has had on markets. and -- endly to poorly. this is unprecedented global central-bank accommodation. if you look at the bank of japan they set it may be counterproductive to have negative rates in our economy. in the event they moved to or away from monetary policy, negative rates, more incentive for people to take those very low cost of financing and go on

by credit-related assets and they take that away, rates will rise in that market. so much of the demand for risk assets, whether it equities are credit or sovereign bonds is driven by negative yields across the globe. we think it getting towards the end of that cycle. we think this time the sovereign markets can't have a pretty big negative impact on the credit markets in a way they did in 2013 for a short-lived period of time. david: everything you said last few minutes estimate that the market is this pricing risk. they are not properly rewarding risk. what is the market imperfection? what is a not functioning properly? i asked that because of my indicate what would turn around if we change that. mike: it is not a liquidity issue. functionsome degree a of what central banks want people to do. they are incentivizing people to take their funds, remove them

for their domestic markets to drive down currency valuations. secondly is they are trying to do that to continue to drive rates slower to stimulate borrowing. the problem is when people have no confidence in the economy, that borrowing is not a curry and you don't have a positive effect on growth and a negative impact on savers and financial institutions. alix: taking all this into account, what is your best call for the year? mike: i would say a couple of things. first off not all risk markets are bad. it's a matter of relative value. the corporate credit markets are inflated by this demand. there are a lot of assets not a part of that. one thing in terms of the structure the market, people want yields. they are going to forward government bonds and the are going to corporate's. there are a lot of assets that are a little bit more esoteric that are not benefiting. i would say tips are one of

those securities. -- have break evens in the proving --k about and improving economy, it should benefit tips as well. you will see wages increase. these securities have done the opposite. as credit markets rally, these have done nothing or gone down. why is that? they don't give the yield today. there is such a demand for yield today. nobody is willing to make an investment for something that might give them yield tomorrow. jon: you will have to come back. of goldman sachs global portfolio management. not much fixed income around. david: please come back. coming up, we look at another set of data they could move the markets tomorrow. what to watch it tomorrow's

retail sales numbers. this is bloomberg. ♪

♪ onid: coming up later bloomberg west, frank this ignore now -- visignano. ♪ alix: we have a rally underway with u.s. equities. we are trading right around another record high. it closed right now, 2182. intraday level is 2187. nasdaq is at a record in terms of a closing high. the dax continuing to climb higher. there is concern that the dax is

an oversold territory after injury coupled market earlier in the week. dig a little deeper on the rally in the nasdaq. abigail doolittle is joining us. starting with bio pharma. it closed right now, i would be another record high. abigail: this is the fifth straight session of the nasdaq opening higher. if you can hold onto these gains, it will make a new record high. a new closing high i should say. we have a microcap company. the small-cap biotech company is expanding the enrollment in a midstate study for its tumor drug after promising clinical activity in mutant solid tumors. promising and the stock is having his best day on record. turning to a more established name, yahoo! shares are up nicely. the highest level since june 25.

a tailwind for the big alibaba first quarter report. yahoo! has a 15.4% in alibaba. that stake in alibaba and yahoo! japan remain in the remainingco -- remainco. investors like the strength and that remaining stake for alibaba. jon: about 16 minutes and an up about 131% across the board. those two stocks just moving in tandem. tomorrow it's going to be about retail sales. it has been a next back of u.s. economic data lately. a strong payroll to report. even the gdp, you have weak spending that consumption is good. this is ahead of the retail sales numbers. for what to expect is bloomberg intelligence chief c al. the strength of the consumer,

you see it everywhere. and the earnings and the data. we will see it again tomorrow? >> we will better see it in the second half over you're in deep trouble. with the economy growing just 1% over the last three quarters. we are at a dangerously slow speed. the only game in town in q2 was really consumer spending. growth they q2 composition verrilli provides the template of what we should expect over the next couple of quarters. that means we need to see strong consumer spending in the back half of the year. one of the first clues of that is going to come in tomorrow's july retail sales data. david: we have talking about macy's and kohl's. if you look year-over-year, this is still down. the total revenues and the net income and things like that. what about the online part? how much of that is driving the entire ship? carl: just as the composition of gdp is important, consumer spending is shifting. department stores have had some

real tough sledding over the last several months. really over the last several years. they are changing the habits of consumers. you will see a lot of strength in online shopping, which. we can parse out of the retail sales data alix: where is going to be the weakness? tomorrowre is a report are you have to dig beneath the surface. we saw the second strongest monthly change over the last six years. strip out auto sales. then you had a big declining gasoline prices last month. more than what normally occurs in july. strip out gas station sales as well. when you look at x gas sales, you get a better sense of underlying consumers. we have seen this phenomenon in the past couple of years where q2 was great for consumers and steadily deteriorating over the

back half of the year. that can't happen this time around for the fed is missing their target of 2% growth. gas, that is the median estimate down from 0.7%. .5% in q2.veraged alix: thank you, carl. coming up, did his bloomberg markets. vonnie, what you have on the show today? we were talking about the rally of the central banks. vonnie: we will continue with that. even stronger than the yen today. we are talking to the global head of currency strategy at ubs wells management. we will be talking about this rally in treasuries on stocks. it is a healthy rally? then mandela jpmorgan investment management will be talking to us as well. and hillary's speech at 1:00

p.m. eastern. we will be seeing whether fiscal produce will be something that will be a team of her speech. we both look at some fun resorts in cuba before all this ends. alix: vacation, what is that? thank you very much, vonnie quinn. david: we are all looking forward to hillary clinton's speech. a preview coming up next. we will talk about what she says. details next. this is bloomberg. ♪

♪ david: this is bloomberg go. iser in a factory as that it right hillary clinton will lay out plans for the economy. taking direct aim at what arrival donald trump proposed this very week. heard from what we've this will not be a radically

different from what she is talked about before. what are you going to be looking for in the speech? will talk about a lot of policies she has already talked about. what is interesting in location and the concept of the speech is the direct rebuttal the donald trump. she is in michigan. donald trump gave his in detroit. she is getting her's not too far away from flint, michigan. expectl talk about we will be dangerous to the average americans. she will frame donald trump in three ways. the first is she will remind her democratic supporters his ideas are republican ideas and they don't like those. he will also talk about something her in her allies have been doing a lot, cap donald trump's policies are unrealistic and dangerous. talkingthird one is about his policies as self-serving.

they will benefit the wealthy. how trump will benefit from his policies. how the estate tax would help his family. things like that. we will take those three lines. david: how much of this speech is going to be about what hillary clinton wants to do and how much about what she wants donald trump not to do? steve: you have to see a mix of both. she can't claim he's not providing specifics without herself. she will go into detail about a lot of the things we have discussed. wants toon campaign make this election about donald trump. the more she talks about him as a dangerous, unrealistic president the more she can keep that ball in his court. the more she winced news cycles by keeping news about donald trump. david: how much of this is theater in substance? i happen to be from fort. -- flint.

i don't think donald trump is an saying we should regulate lead in water. how much of this is just the other? steve: a lot of it is theater. poll campaign is been a lot of theater and hillary clinton is trying to play on that. i think a lot of that -- it's nothing new. it can't all the theater and i think the clinton campaign knows that. you will see them try to make sure the inject just enough policy in order for folks not to be able to sit on tv and say that was not all political theater. david: thank you so much are being with us. bloomberg markets will be covering hillary clinton's speech live at 1:00 p.m. eastern time. alix: at 1:00 p.m., the u.s. treasury will be auctioning $15 billion and 30 year bonds. after the bell we would get more regional earnings. nordstrom reporting second-quarter results.

expectations are high after macy's and kohl's. jon: in the bond market in the long enough treasury yields a little bit higher and of that supply guilty of that healed. ield.er -- guilty y they could get ugly from goldman sachs. that does it for bloomberg go. next, it is bloomberg markets. from new york city, this is bloomberg. ♪

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>> it is 10:00 a.m. in new york and 10:00 p.m. in hong kong. i am vonnie quinn. nejra: i am nejra cehic.

this is bloomberg markets on bloomberg television. vonnie: we are going to take you from washington to london and cover stories that of france and china. here is what we are watching. oil trading lower after the iaea addicts global markets will continue to rebound this year and pickup in demand from refiners as they absorb record output. howlooko -- we lookout commodity is going on global assets. nejra: strategies and paying off and investors are warding the shares. the commerce business streaming entertainment and growth in the crowd and streaming revenue at alibaba. clinton lays out her economic plan for america's future. she will have a plan to grow the labor market by highlighting content