runningand i am oliver -- oliver. all three indexes finishing a new highs. about why the second inning of brexit may be worse than the first. ministerjapan's prime -- japan's emperor may want to retire. we look at how this could affect the prime minister. oliver: and we have the charts you cannot miss. scarlet: all three benchmark indexes closing at record highs yet again. another day, another record. but when you look at the volume, trading on the dow and s&p were a double digit percentages below average. it is mid-august, after all, and earnings season is a sickly

over. everyone is -- is basically over. i will point out that if you look at the value of stocks, there are a lot of ways to look at volume, and the total value is pretty high. safety arease saw of the market lag while some riskier areas are doing pretty well. ander: i'm going to jump in take a deeper dive into some market minutes. s&p is pretty interesting. we have obviously had a big shift in the past couple of weeks. doing well sectors today, materials, industrials, energy. they are on a rebound after not doing so well. strengthen oil after a bear market recently. we are looking at some sectors that have not been doing well. this is year to date for

utilities and telecom. still very far up, but hurting today, hurting recently. we will see how that changes as we go into september. out,ly, as we just pointed this is incredible, the five-year look at the nasdaq. last one to cross the all-time high recently. another day, another high. here is the u.s. 10 year yield, down a little bit today, up on the day, but low in the grand scheme of things. one market we don't talk about often is the chinese sovereign bond market. there is a new low on the 10 year bond there.

of the samea lot reasons people are talking about everywhere, slow growth, inflation, the reach for safety. scarlet: this is slow for china in terms of growth. aussieking a look at currency, rebuilding momentum after highs of last week. is at ae british pound fresh 30 year low. it has dipped below 129. 128.er, it dipped below we will get the first heard data on the economy after the brexit vote -- hard data on the economy after the brexit vote in the coming days. people are bearish. had another nice update today.

it was below $40 a barrel at the beginning of august, around august 2, and everyone was turning negative. it has come back nicely. once again, people are optimistic. has helped the commodity currencies as well. those are today's market minutes. let's take a deep five into bloomberg. investors love affair with emerging-market assets. let's focus on the top panel. line is the forward pe for emerging markets. line is the four p four developed stocks. -- forward pe for developed stocks. we have different axes. the bottom panel is a relative valuation, the spread between

the two. in other words, people are paying the most in three years to own emerging-market stocks. >> people love the emerging markets again. homebuilder confidence today. i always like looking at this report. i looking at the regional breakdown. the top two lines, blue and ,hite, the west and south homebuilders are still pretty optimistic about those areas. the line at the bottom is the northeast. happeningothing here,to build homes. it is either too hot or too cold to move here. the west is doing great, south is doing great, everything else, not so hot. oliver: interesting. i am not sure i would have expected that. i am going to play semantic games for my deep dive.

markets ing at their a bull market. we are looking at s&p -- bear markets inside bull markets. of 2015, we set the high. we set a new high in july. we tipped then went back up, kind of trended sideways, and two 10% corrections. if you try to care arise how how manyharacterize companies went into bear markets, it's a lot. these are companies that lost 20% or more and did not regain it by july. that lookede similar to that is when we did go into a bear market in 2011. scarlet: very cool. david from bank of america

joins us now. thanks for coming onto the show. it's been too long. you said the defining characteristic of the market been the has simultaneous rally of everything, stocks, bonds, it's all up. are an investor and you want a portfolio that has different parts working at different times, what do you do when everything is moving in the same direction? >> it's funny because in the last month, every client i have spoken to, except for the risk parity guys, is telling me this has been a disaster year. investors are having a very difficult year except for risk parity guys. the guys at bridgewater, the guys who are running systematic strategy based on the idea of risk parity. they are killing it this year. joe: this is a chart of bank of

america multi-asset strategy going back five years. you can see that it has been a rocket ship. >> exactly. typically, these portfolios are long treasuries, long stocks. in whichsituation stocks and bonds are going to do during a phase of monetary easing. to removes going accommodation gradually but the u.s. is going to continue to import qe from japan and europe. that is what is so striking. if you look at the basic financial index, we have seen a dramatic easing of the index since brexit. we have started to pick up data in the u.s. that the best way to the second half of the year is more monetary easing. oliver: we talk about the fed model that says that equity and bond yields should be

closer than they are right now. they could both lose value together. have exposure to both. could they get hit harder going into the second half or is there a shift? >> the last time we saw something like this was 2012. 2013, we had the whole thing that really fetching's up -- really shook things up. could sayurse, you that going into jackson hole, right now, the market is pricing in less than a 10% chance of a hike in september. we are starting to see riskier assets doing well.

people are getting more confident about growth outlook. other aspect of this, probably the biggest as far as the market is concerned, is the election. way the markety can be right is if we end up with gridlock. , meaning, ifcome there is a clean sweep, we will probably see a big change in fiscal policy next year. scarlet: we love it when guests mention proprietary indexes. volatility inut the different asset classes and how it has come down quite a bit. we talked earlier about positioning. positioning right now seems to be trumping fundamentals. pronounced this

year than in past years? >> i think the main reason is investors are struggling. are you going to do the same trade as everybody else? keepe trade goes down, you your job. if you are the only person and the trade goes wrong, you will probably lose your job. redeem andave to sell whatever is overweight. whatever is overweight is underperforming. question.o it is almost at the point where investors are reconciled to the idea that fundamentals don't matter anymore. so, what specifically do you recommend they do as opposed to just chasing what is going up? since 1980you and i,

five, going into elections, people worry about uncertainty. right now, the way the market is positioned, very long risk parity, suggests the market thinks this will be a walk in the park for hillary clinton. the market is looking to play forward with that transition, regardless of what your view may be. the market is factoring in a clean sweep. underpricedare very in the market right now. scarlet: thank you. you are staying with us. careg up, does anyone about the yen? the answer coming up. ♪

mark: the mayor says a curfew goes into effect tonight in the sherman park neighborhood and will be more strictly aimed at teenagers. neighborhood that for 11 years. i know many people who live in that neighborhood. they love their neighborhood. they are proud of their neighborhood. there are families who have been , 30, 40 years. they want their neighborhood back. mark: sheriff's deputies were injured in clashes with demonstrators sunday night.

hillary clinton and vice president biden hit the campaign trail together today in the vice president's hometown of scranton, pennsylvania. biden took aim at donald trump, saying he doesn't care about the nomineelass and that no has been less prepared on national security and foreign policy van trump. biden told the crowd that clinton gets it. nationaliscussed security and set a new mindset is needed to take on what he -- donald ideology trump discussed national security and said a new mindset is needed to take on what he called the ideology of radical islam. the new york times reports at least 15 people were killed in .emen during an airstrike ajudge has settled

long-running disputes between martin luther king jr.'s children over his bible and nobel prize. king won the nobel prize in 1964. the bible was used by president obama during his second and not duration in january of 2013. global news 24 hours a day powered by more than 2600 .ournalists and analysts i am mark crumpton. back to you, scarlet. scarlet: thank you, mark. david, you have noted that investors seem to be indifferent to china's gradual young -- you devaluation. why is that? >> i think the most important reason is that china has been very successful in cracking down on capital outflows.

capital outflows are slow and they are not intervening much. i will tell you why that is important. i had lunch with my real estate agent the other day, and he was telling me that last year, 21 percent of apartments sold in new york city were sold to chinese investors. this year, it is 0%. it is impossible for the chinese to get authorization to make foreign investments. the chinese government has cracked down and closed the borders. tos is why china has not had .ell commodities or stocks depreciation has been fairly limited. right now, you would favor a long u.s. dollar versus the chinese currency. depreciation is happening at a slower rate.

>> for one thing, the less the market cares about the market , the less it going to go. that withstanding the fact that china's stock market has been struggling, they have not cut interest rates. everybody else has cut interest rates except for china. don't want more leverage. they don't want to cut interest rates because they don't want more debt. the only thing left on the table is weaker r&b. so you have to believe r&b has room to fall. let's talk about japan. after recent elections, there was a hope there would be more vigorous stimulus. visit toaid they would their monetary framework. what are the implications for japan and around the world?

>> there is nothing more important to me than japan right now, and it should be for everybody. all beencause we have going through a japanese vacation in the last couple of years. whether japan will be successful or not will tell you a lot about once in store for everybody else. at this point, the only thing left on the table as far as japan is concerned is hell a helicopter money. we are talking major fiscal stimulus. it's not enough to get them going. everybody wants to watch how bad things are going to get for japan. i don't think we're there yet. what was theme single most important day in

2016 so far, it has to be theary 29, on which day jobless rate was negative in the nikkei sold off. nobody was talking about brexit anymore. whether they are going to be able to get themselves out is going to tell you whether they -- what will happen for everybody else. youlet: coming up, a chart can't miss. this is bloomberg. ♪

scarlet: what'd you miss? home depot stands out among retailers with americans choosing to spend on their homes rather than cars or close.

-- orepot's comparable clothing. home depot's comparable sales straighted 20 quarters of growth. they have not been negative since early 2012. these sales correlate with the remodeling marketing index. value above 50 indicates an increase, while it has been dipping, it is still holding above 50. lifted overall topline growth. revenue has climbed 20% since 2010 and may reach $101 billion by 2018. more of that is also coming from on line. e-commerce is 6% of home depot sales, up from less than 2% in 2011. growing that also by merging physical and internet businesses.

20% of online orders are picked up at home depot stores. has kept its store count flat at about 2000 plus. industry retail trends show up in stock prices. depot, and lowe's have topped gains made by macy's and sears. investors have been favoring home stores over traditional retailers. for more on home depot, i .ent to bring in cima thank you for joining us. it going to take for this company to keep it going? show --are going to have to show some acceleration from last quarter, which was slightly decelerated from the

quarter before, particularly because you heard negative commentary about how cooler weather affected their big-ticket sales. both, u.s. retail sales in building products was a bit slower. oliver: to piggyback on how this can continue, i just pulled up home depot on bloomberg and went to the relative valuation, and i am looking at an r&d of 93%, beyonds far anything in its category. howdid it get there and does it stay there? >> they continue to improve operating margin, which was expected to be flat year-over-year. overall, they just continue to drive sales. how dependent is home depot on a strong u.s. housing market? do people spend less or more on their homes?

>> home price appreciation has been driving home improvement sales. hard for people to move because they might -- so they might be spending more on their homes because they cannot switch homes. generally speaking, the age of the housing stock is over 30 years old. of the themes of earnings season has been more companies setting higher labor and improving margins. what is home depot's take on that? >> they manage their supply chain. they offset any increase in payroll and health care costs through this. scarlet: coming up, nasdaq introduces a new kind of order that allows investors to get a priority in a trading queue. we are going to discuss with the nasdaq ceo. this is bloomberg. ♪

in mark: let's get to first word news. president obama is interrupting his vacation to raise money for hillary clinton. the president is headlining eight democratic party fundraiser on martha's vineyard in massachusetts. all seeds will benefit the hillary victory fund. the democratic national committee, and state parties across the country. ukrainian anticorruption officials have confirmed that donald trump's campaign chairman's name appears in the so-called black account. he has denied any possible payments from the ukrainian

government. they reported that matt forte's t's name- manafor appeared on a series of documents. ae suspect in the shooting of georgia police officer has been his car.n the trunk of officer tim smith was responding to a suspicious person call and he encountered the suspect. smith exited his patrol call -- patrol car and was shot. abe celebrated by end of world war ii side stripping -- sidestepping going towards a traditional shrine. by more thanowered

2600 journalists and analysts in more than 120 countries -- 120 countries. joe: let's get a recap of market action. all three industries levitating again. record highs across the board. nothing that dramatic except that it is day after day after day. waylet: i like the levitate. ascent. subtle there was one thing that was interesting today. a couple of reports of bank of america. you see the stock's doing well. employees stocks not doing so well. it is getting investors bullish. quarterhroughout this they have been buying and not selling stocks. what did you miss? the nasdaq's next big move.

nasdaq is rolling out a function called extended light orders to compete with idx. the startup begins trading on friday with a 350 microsecond delay in orders. a speed bump. betty: i like how you are bored with record after record. good to see you. bob: good to be here, betty. betty: how is this different from the idx speedbump? talked tolk -- we everyone interested in one thing we heard loud and clear, especially from a technology focus, is that people like a speedbump where you are delaying the onslaught of technology as progress. whatever it is today from a technology point of view looks archaic from five years from

now. we wanted to do something that was positive and powering. if you want to put an order in od of time, weeri will give you a reward. that is large and important. betty: we are going to bump you up. bob: you will go to the front of the line. you will get earlier execution. if you are a bit slower, you could be a microsecond, a day, a week slower, that if you are willing to make a commitment you will get the reward of going to the front of the line. betty: what happened? you protested, you did not want x and wereapprove ie against the speed bumps. bob: we were against the process. carrynk the sec did not out their responsibilities. the rule of the land says your quote has to be immediately accessible without artificial delay. if the sec wants to change that, commentd have gone to

and review and let the market adjust to that. did not happen. betty: you can't beat them, so join them? bob: no. we are objecting to the process. this order type we have to submit has to go through normal comment and review. in the past, we have tried to present to the commission something like a speed bump and it did not get approval. they did not want us to go through that process. we use that as a way to start thinking about how can we improve the investor experience in we have a lot of issues respect to the artificial delay being put in. what can we do? we want tors said have the ability to be rewarded by the fact that they are long-term investors that don't care about the microsecond differential. greateward as the advantage of being simple. when you think about a speed

bump, as you try to explain that to people, it is very complicated. orderlk about a limited that has a second duration to get to the front of the line. people understand that. betty: who was asking for that? bob: we have not found anybody who does not want this type of capability in the marking -- in the marketplace. the simplicity of it is what is appealing to a large number of people. adoptivethe initial will be the buy side, who does not care about the differential. i will give you two seconds to get to the front of the line. firm's think that the have engaged in high degrees of trading today and will find positive ways of using this. betty: some of the reaction to hearing about this has been, look, nasdaq, increasing it has

been focused on technology. bob: we have to be. betty: speed is everything in this market. at least, that is what it has been up to now. as technology is delivering more speed on that side of your business, why would you want to introduce a product that could slow that process down? bob: i will disagree with the comment that speed has been everything in the market. capital is a dominant factor in the market. if someone wants to commit to a buying or selling commitment, that is a difference there. we cannot be any position where we want to stop technology. technology will advance. the great part of this announcement is that in a simple way, we allow technology to continue. there is no artificial delay. -- youw have a choice now have a choice. it changes market structure where you can have the advantage by going to the front of the

line by making a commitment to the marketplace. betty: haven't you said before that introducing an order will complicate the markets even more? bob: if you have a speedbump microas 350 seconds seconds, someone will come out with 344 330. it simplifies the markets. me, iwas presented to said the genius of this is the simplicity. you make the commitment, you go to the front of the line. hard stop. the first thing we had was the market order. after that, people came up with a limit order. i submit that this advance where we have a limit order that has advantage based upon a commitment to it will represent a fundamental evolution of market structure similar to what we saw with limits coming in. betty: i can't let you go without talking about the ipo

market. we know how difficult it has been in the u.s. some companies on the pipeline are about to go public. i'm talking about asia in particular. they are looking for companies to break out into the public. we have seen asian companies want to stay there because they are getting higher valuation. how do you get them here? bob: i think the ipo market is disappointing but not dismal. betty: what is the difference? going public. are the window is not shut. we have seen a number of companies come public in the last couple of months. with respect to our attraction on a global basis, it comes down we have the depth of the quiddity, we have a strong analyst community, and to have your company fully valued over a long period of time, there is

nothing like the u.s. equity markets. betty: bob, good to see you. breaking news. scarlet: aig has agreed to sell mortgage insurance to arch capital. ceo peterrt of hancock's plan to cut assets. it is valued at $3.4 billion. donald trump laid out his plan to prevent terrorist attacks on american soil. we have the details. this is bloomberg. ♪

scarlet: donald trump laying out his plan for combating the islamic state today in a speech on force and -- on foreign policy.

for ansident is calling ideology test to screen for terrorists. overdue to is develop a screening test for the threats we face today. vetting. extreme i call it extreme -- extreme vetting. our country has enough problems. we don't need more. these are problems like we have never had before. [applause] scarlet: joining us now is white house and are alex wing. in this new proposal on donald trump's prohibition against muslim immigration, how would extreme vetting work? alex: it is not altogether clear. would be something of an ideology test. he says we only want people coming to the united states of america that embrace our culture of tolerance. how that is applied is in

question. scarlet: he did not get in detail, which is what we have come to expect. he has been criticized by some of his own party for his inexperience and perhaps ignorance of international affairs. did he help himself today? alex: i doubt it. i think folks, especially those in his own party, senior republicans who sent a letter earlier this month criticizing them and saying he would present a risk if elected, i don't think he will be -- they will be swayed by the speech, although he did correctly name the king of jordan. hillary clinton campaigned today for the first time with joe biden. what did they say about trump? they have a pretty consistent tone when it comes to donald trump. what consistently -- what specifically did they say? alex: joe biden was the more interesting of the two. he said that donald trump's recent claim that president

obama found in isis, the terrorist group, presents a -- at to troop in the mirror threat to troops in the middle east. it raised a couple of clicks. joe: let's look at the challenges facing the japanese emperor as he faces application. abdicationquire a -- . it would require a change in the law. shinzo abe's government would have to revise the peaceful constitution. what is going on? what can we expect to play out in the next couple of weeks as we find out about the intent to step down? two things are happening here. in a video, the emperor says he would rather step down before

his death, allowing succession that is smooth and steady and would not affect the daily lives of the japanese. onhe pointed out, this comes the backdrop of a fairly healthy japanese debate over whether or not to begin talks about whether to revise the constitution. thate at the moment thinks the request will require touching article two of the constitution, which refers to the role of emperor. scarlet: shinzo abe did well in recent elections and he has been in his opposition. sheila: there's an election in july in the upper house. her the first time in the pro-war period, people who were

open to talking about constitutional revision managed to win. coalition, his own beky and smaller part, will guiding the conversation. ome -- be guiding the conversation. about it.t excited the larger question is abe's judged on whether he manages to stimulate growth in the japanese economy. wages remain low. inre has not been change ordinary japanese families. he is trying to manage his conversation with japanese companies to see if they will let go of some of the profits and invest in the japanese labor force. >> what are the chances on that?

he has been in power for years. there have been attempts at fiscal stimulus. the attempts of the boj have been mixed at best. see any real prospect for turning a corner in a positive way and is there anything he can do specifically? sheila: we were watching japanese policymakers moved back to a more traditional approach to stimulate growth. he has a huge stimulus in the works which includes infrastructure building to r ural locales. he has tapped a couple of senior ldp people to think about ways to bring more of the population concentrated in tokyo out to rural areas. he is using this vision of a japan to speak to

problems and needs rural. the boj is limited. he continues to advocate that he has influence at his disposal. able be part of the mix, obviously. cap that isabe falling back on older patterns back fromave walked0 the consumption tax that was about to be imposed on the japanese consumer. they have pushed that off for a couple of years. scarlet: shinzo abe has famously push for womenomics. what are the odds that in the century japan will have an empress instead of an emperor as the symbolic head of state? sheila: that is behind the of then of how the law secession pronk -- succession

process is debated on the floor. in 2005 we had a similar situation. princess prince and have a daughter. they were advised on a succession process, how to advance a steady power. they recommended female succession. a few months later, the crown prince and his wife gave birth to a son. it was tabled and put off for another day. there is a lot of speculation that there will be not just a response to emperor akihito's request to step down, but a broader look at succession it self and i think the female scarlet:n question will come up. scarlet:-- question will come up. talks about barrett

gridlock on washington. ♪

scarlet: donald trump's economic plan has not mentioned in title and. senior economic adviser tom is a reason there for it. he explained to eric shatzer in an exclusive video. entitlements are 67% of the budget. interested a on our deficit is another 7%. is 30% or 14%. there is very little left. you look at entitlements, that is 67%. you have got to move it.

why does nobody talk about it? the american public does not want to reduce entitlements. the american public still wants more for less. it is not the american way. it is not the system that is failing, it is us that is failing. why? we have built a prison in which we are the prisoners. we talk about the department of interior, department of energy, none of us have any idea what they do. the allocation of revenues to all of these massive departments across government are humongous. it is not just a distribution to us of what we see. somebody has to take accountability. what is that budget? where's the revenues going? eric: which is precisely why i asked. isn't this a clarion call or donald trump to take leadership on entitlement reform? yet there is not a word in his plan about entitlement reform. tom: not yes.

what you will see is a rolling out of the p -- not yet. what you see is a rolling out of the pieces. it is a wonderfully politically excepted act. aic: if you are going to be disruptor -- pardon me again for interrupting you -- what if you are going to be a disruptor, which is how you described the donald trump candidacy, shouldn't you willing to be embracing admittedly untitled -- admittedly unpopular platforms like entitlement reform? tom: i agree. it is about dismantling bureaucracies that are in place and it has taken some time to announce it. you will see it and you are absolutely right. it is almost 70% of the budget. joe: that was tom barrick. scarlet: coming up on bloomberg

television, we have sam selleck, .eo of bulletin adds coming up next, what you need to know to gear up for tomorrow's trading day. ♪

scarlet: don't miss paul krugman tomorrow where we will be discussing the presidential election. tomorrow morning u.k. cpi, 4:30 a.m. we get the hard data on what happened to the u.k. economy after brexit. joe: a half hour later, home depot earnings. joe: at 8:30, we get the u.s. .pi

energy expected to rise 2.3% from last year. scarlet: thanks so much for watching. joe: have a great evening. this is bloomberg. ♪

mark: with all due respect to he is back, baby. >> nobody doubts that i mean what i say. that -- they doubt all that it say think. let's state the obvious. just listen. that boy, he married up. sorry, guys. [laughter] >> i became the obama