scarlet: good afternoon. we are covering stories from san francisco, washington, and brussels at this hour. here is what we are watching. the fedittle changed as ways its moves. the job reports are alleviating concerns about the stall in the labor market. scarlet: crude oil makes a stunning reversal just two weeks ago following a talk of feeling gains. mover takes a big step ahead in the race to launch self driving cars. will it leave google, apple, and tesla in the dust? scarlet: we are halfway through the trading day were julie hyman is tracking the moves in equities even with oil.

>> i will choose the u.s. dollar, pulling back after the fed minutes yesterday and also investors pushing out the odds of the federal reserve rates. it is now done around three or sent from its most recent highs that it reached in july and yes, we are seeing the oil winning streak continue up for the sixth straight session. wti trading above $48 per barrel. opec meeting the expectations next month, also a part of it. we have been on an incredible roller coaster when it comes to oil prices. take a look at a one-year chart. chart and mapped the top and bottom changes we have seen. from october to february, 95% rebound from february to this summer, a 20% rebound most recently. we have an incredible zigzag and

you see the most recent zigzag is compressed in terms of time. on august 2 that oil reached its short-term low and reentered the bear market. are not seeing a lot of change. stocks are bouncing around a lot of tight range today. the s&p gaining a little theme, the nasdaq as well. energy shares have in supportive as well overall. i want to follow-up on breaking news a little while ago, a report on the washington post that the u.s. is talking about closing all privately run correctional facilities and transferring them to being u.s. run. we are private prison operators reacting today. you can see it is sort of a jagged line down. according to bloomberg, 51% of the revenue from the federal government. the other, the ticker on that

one, same situation here. this company gets 67% of its resident -- revenue from the u.s., though it is not clear if it is just federal or also includes state. clarification,of the justice department will stop its use of private prisons? not believe the justice department on its own has the power to close all private business because they are heavily used by the state. >> if these are private prisons with federal prisoners -- >> those would go elsewhere. scarlet: yes. but the stocks are reacting for sure as it this is a negative for them. we should get more details on what exactly this would mean for those companies or awaiting any kind of statement from. a couplealso news on of lawsuits. one of them has to do with valeant, suing the company

alleging top executives used a secret network as well as deceptive pricing to hide its drugs from generic competition. in the meantime, paying a penalty to the u.s. government which had alleged one of its products -- projects was artificially lowering emissions from its vehicles. can't thank you very much. now it's get a check of the first word news this afternoon and mark crumpton has it from our newsroom. meetingllary clinton is in new york. the meeting comes as donald trump cast himself as the law and order candidate and says clinton is against police. she's a philadelphia charles ramsey according to the associated press. hillary clinton in polls across most swings states, the nominee

says the american people will know him by a new name, mr. brexit. trump took to cook -- took to twitter and has also hired a marketing firm. she asking president obama to shorten his occasion and visit a disasteredicate -- this big base for the personal presence of the resident at ground zero according to an editorial published in the advocate today. vacationing with his family at martha's vineyard. jeh johnson visits the state today. brazilian police say the u.s. according tomer, the associated press, starting with an official with direct knowledge of the investigation. along with slammer's, in a rowdy gas station confrontation, reportedly confronted by a guard armed with a pistol that he

never took out or pointed at the swimmers. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 100 and 20 countries. back to you. scarlet: is there an economic growth crisis in europe? explained to the bloomberg surveillance team this morning why this may be the solution for european travels. >> you look as a result of the euro, the rigidity it is put in, it took away the exchange rate, for adjusting, did not put anything in its place, the out put of gdp and europe even thell below united states here we were the country from whence the crisis began and we have done a better job recovering.

basically stagnant, .3% and .4%. that is not a good performance. what you have to contrast when outcome, in that spain and greece, and an alternative, of course it will not be easy. way thatn be done in a it is better than the current system. it would still be better if they put in place institutions to make it work. the question is will it do that? let's say austerity, something happens, how many years of pain do we see?

>> from over the crisis began in 2008, 2010, 2016. the market with the euro is not adjusting well. iceland,ll in responding, one of the countries crisis, responded very quickly. i think we are not talking about -- i think we're talking about a couple of years. argentina, once it broke with the dollar, began an enormous -- beginning in 2002, it had a growth rate of 8% and put them right next to china as the fastest-growing country in the world. that continued until the global financial crisis. >> you would argue for a breakup of the euro while the same time a breaking of the union. i would argue for a stronger

banking union and doing other things to keep euro together. is, is there enough political solidarity and political will in europe to do those limited number of things that would make the euro work, make the eurozone return to the kind of growth that it had before the euro. that was joseph sticking with francine lacqua and tom crean -- tom keene. tom, full disclosure, awful tour right now because he published how the common currency threatens europe. tom: he writes a thin book about whatever the topic is in the iraq war, and every four years, he comes out with one. this is clearly one of those efforts. the thing that is interesting to

me is martin, an economist on the same page as cho, supporting secretary clinton, that is the interesting melding of the economists model. >> the euro is a failed model. right ande were europe economically speaking would be better off without a currency, what happens? the euro at the moment is the glue holding the us -- holding the experiment together. he raises the question appropriately, whether there is it in solidarity to bring for a reason. populism and nationalism. heatedly, id say, love that phrase and i will steal it from you. the glue comes undone. toward three or

four regional box with currency adjustment. it is like the game of risk that when we were kids. other thanly knows the idea that it separates obviously germany from grace as one idea. just talking here about the euro. by taking a shot at president herb and josh herbert hoover. he fails again. mosthe goes on and says , awayo private creditors from the currency, this is the idea that they were basically there to benefit german. scarlet: we are talking about

the imf, more upsets with inflation and containing it rather than job creation. : this is the same argument right to bear. what is more important, preserving the role it plays in keeping the economy functioning, or is it doing the right thing? tom: chairman bernanke he is heated that you have the instability of the financial system as a first order condition to help a lot greece and the rest. joe clearly tilts away from that town. scarlet: the fed has a dual mandate which wraps up in their , whereas well as prices the main goal is to maintain prices. points out not only does the fed have a dual mandate but a much more flexible mandate

than europe, went into the treaty. scarlet: clearly the conversation is only beginning. thank you so much, tom. staying late for us. thank you. --. -- erik: the justice department just confirmed that the federal government is phasing out its use of private declininghe doj cites numbers, the recommendation is fbi should decline to renew its contract with prisons. more details to come. it is clearly having a very visible impact. my goodness. ♪

erik: you are watching bloomberg markets. , getting selfrack driving cars on the road. the right sharing company will allow customers in pittsburgh to help autonomous vehicles from their smartphones. a tech reporter has the exclusive story in bloomberg businessweek. max is here now. tell us what you have learned. it is not just about uber in pittsburgh. day in the world of self driving cars. that theyted today will be opening rides up to

customers in pittsburgh and there are a bunch of huge investments. one is a deal if although to help sell a giant -- k jarvis car. truckre driving -- a driving service called auto. that makes it the biggest deal in the space today. scarlet: clearly, they embraced self-evident vehicles earlier than we had realized. timeline?t on the >> it depends on a time when you're talking about. inryone agrees google is first place in terms of technology and a fully autonomous and driverless car. everyone is trying to get to the point where you can take the steering wheel out. tesla is ahead because you have could -- cruise control more sophisticated than products like audi's and bmw's. this area of self driving car

sharing services, uber is the first to market. >> how self driving will the car be? >> for now, i took a ride in it and there is a safety driver, a guy with his hands over the wheel ready to drive it in any time. someone is taking notes at any time something weird happens, you write it down. erik: it sounds like an experiment. much.is very the other thing that is true is we drive around in traffic, pedestrians and cyclists, it was a live situation so that is cool. this is a critical point as far as uber's business is concerned. they think in the long run they will replace a large portion of the fleet with autonomous cars and that will make uber miles cheaper than car miles, which could shake up the entire auto business.

every automaker is realizing this is a potential threat to the business long-term . >> this starts in pittsburgh and what has been the response to this and what might we expect from other cities? >> it is an unusual situation. is in pittsburgh. there are no situations -- they basically let the companies test their cars and i think that is kind of the broad story nationwide. we found out they are opening a new office in palo alto and they have one in san francisco, will probably see cars as well. >> overhead the department working on self driving cars a couple of years ago? >> it depends on who you ask your carnegie mellon to back up, they hired 40 carnegie mellon them

please -- employees in one fell swoop. it is now saying we have a --duction -- production productive relationship with uber, making sure they are successful and making money. has hundreds in pittsburgh and what is crazy and has not done enough attention in is that itory includes a bunch of key employees from google. , theyself driving program just lost their director and the company has four of the key engineers, mid-level engineers that are important. also tesla and apple. erik: one thing we will not be able to talk about, perhaps another time, how they get through the pr night fit -- nightmare of creating jobs only

to then destroy them. thank you very much. you can read his story in the latest edition on newsstands now. this week's most talked about stories every saturday and sunday right here on bloomberg television. ♪

erik: when donald rearranged his campaign team, he strength and his ties with good donor robert anti-clintoniously and is an increasingly important figure in the chum campaign. here to tell us what that means about the money behind trump is zach, who covers campaign finance. it is head spinning, the relationships, the tangled web of relationships between the family and the chum campaign, in

a way that we can all understand. not mercer's choice. spent more than anyone else trying to get ted cruz the republican nominee. when that failed, he shifted his support to trump. closestbasically two political aides are essentially running the campaign. they worked on all different kinds of political projects for the family over the past few years. should we view the relationship as akin to what we saw the coke brothers do in the last election, and the support their organizations and others provided to mitt romney? >> a good parallel, people have heard of the koch brothers and the political network and what they are doing is really something we have only seen in the last few years of american politics here it donors become their own policy centers, their

own political infrastructure. their own data organization and grassroot movement. a major concern, media outlet, their own advocacy group. they have all these other things there's ending up -- spending money on that you would think of as something a campaign party would be doing. aware in a citizens united, would not know, all of this -- all of the ideas and money flow through the rnc and the dnc? think ofdifficult professionals as, that is a teddy kennedy or joe biden guy, someone who owes their career to them orton politician. you also have people who are coke guys, mercer guys, people

who own their -- oh themselves to -- bigger them checks. a conservative guy, he believes in smaller government and lower test is an let's regulation. lovely peers, he is more interested in getting in all on cultural issues. very important about the second amendment and gun rights and things like that. and he is backing trump in a big way. thank you. we will get insights on to where prices are expected to head next. this is bloomberg. ♪

avtk"0 erik: live, i'm erik schatzker. scarlet: i am scarlet fu.

mark crumpton has more from the newsroom. mark: thank you. the drought in california could cause the agricultural sector about 550 million dollars this year according to a study by researchers at the university of caliph ornette davis. will see say the state a loss of more than 1800 farm jobs and that still is over effects from agriculture and other sectors are considered. and 4700 jobs. in syria, the russian military is ready to back up a united toions call for a cease-fire allow humanitarian aid. footage on the city posse's children, a stunned and bloody little boy being rescued from a partially building. a string of bombings targeting the country posse's security

forces. liftast 11 people are dead 200 others wounded. two of the attacks hit the eastern part of the country. a military vehicle carrying soldiers in the southeast. ifis the sale of a lifetime you are a student of world war ii. normandy museum in france is selling its entire collection, used on d-dayis in 1944. the tank may bring up to 400 and $50,000. the museum opens its 2013 at has not been able to draw enough visitors to stay open. global news 24 hours a day our m1 and 2600 journalists and analysts in more than 100 and 20 countries. this is bloomberg. back to you. erik: let me bring you a check on earnings movers.

>> walmart today, the company yesterday's coming out and raising its forecast and comparable sales, 1.6%. there are still a few weeks plus. 6%, tosam's club growing 12%, so that was an increase over the prior quarter. target falling for the second straight session. also, l vance one of the best for me stocks in the s&p 500 up by 5%. they had three announced much of their support, including comparable sales in various rants. it also came out with a forecast above analyst estimates and that is what is powering the shares higher. meanwhile come on the other end of the s&p 500, you can see it is down about 4% here after it came out with a fourth-quarter forecast that was more cautious than analysts and investors had sedated.

away from earnings, a check again on the two for us and owners, the real estate investment trust we have been the new plan on from the department of justice to face out its use of private prisons. to figurell trying out exactly what it means for these countries. triggered at various points along the way, the trust necessary to hold the shares momentarily. other stock we are watching in this category, shares are down by 40. . looking up some of the numbers on what share of the prison population is tended to buy some of these countries. erik: i have dived into the security filings in the report by the corrections corporation of america, the letter --

largest private operator in the country, they manage 11 more owned i government -- governor partners, state or federal, 88,500 beds in the district of columbia, they claim to own 59% in the country. this is why the stock is taking such a hammering. 51% came from federal sources, appears to of which be, it is hard to tell that the bureau of prisons is certainly one. there are a couple of federal agents is that do business with corrections but that is only one or two we should add. interpretationl wille doj is that they lose 51% of the revenue. we cannot be certain of that

that that is why the stock is reacting this way. >> we do not know over what time that will take. >> it is being priced in right now. .> great job thank you for digging into the information,.. in the meantime, we are looking at u.s. crude and seeing the longest in a year right now. we are looking at up to $50 per barrel. stocks unexpectedly decline. with more on what we could expect in the near term or long term, let's ask the global energy economist from reddit least. again. see you what is your read on the rally this month? up 12 to 13%, entering a bull market. what is this based on? price.s a rebound we were down 10 and now we are up eight dollars.

scare has very large short positions we have got, more neutral. the big question is whether this the bullginning of market or the bear market this summer. prices will stay and arrange through the end of the year because fundamentally, we do not see much changing. you cannot hear you mention anything about opec and there has been a lot of speculation. credible given what we know has happened in the past year? there was a reduction proposed in february but the meeting in april as it up with nothing. >> the opec and talk and noise, what i keep reminding myself of

is wake me up when the saudi's begin to talk for real. what is very interesting is that last week, in saudi arabia, who also controls oil, thought it was relevant for him to mention that the july production record thought it was a seasonal thing, now looking to flood the market. to try to arrange for some kind lower production. we are far away from that inause a lot was roped april. several things would need to happen and we do not see those happening yet. we can all have stories as to why things should happen. anything happening? not really. >> we talk about the thanks living -- thanksgiving a couple

of years ago that pushed oil is to where it eventually ended, beginning to rebound that she'll push to the saudi's into that position in the first place. what about the show market? almostff of it slows i 100, nowhere near what it was a.". elasticity of show supply has to be an important factor. >> absolutely. you hit it on the head and that is why i remain frankly skeptical that the saudi's will with this market all over again. supply management from their perspective has to be a losing game. the best you can do, i think is to alert short-sellers. too much on this

stuff. that changes the risk reward. think that is more in tune with what they are doing. the best i think one can expect with the iraqis and the iranians is that maybe we should not have an open price share war and we should not push the wind market into a low. that is kind of the things. for the markets to all of a sudden begin all over again, by something called opec, what is happening in american shell, not so much. scarlet: that is the supply side of the equation. you turned cautious and the latest data out of europe shows the continent is not as affected as many had feared and the u.k. data seems to show the economy is holding up self are.

talk us through the specifics of how and where the demand will falter. >> you use the right words because we have had two solid years of oil demand growth. 1.6 million barrels per day of growth. probably goingre of brexit, exit, and political risk if you want. three things really the same. they were not already bad and they are indeed still quite ok. economy, oilopean demand, they are going to grow that a little bit less well. we think there is a lot of political risk around the refugee crisis, brexit, and the way the place is run really.

that could affect the european when the consumer has gone to recover and europe turns into -- asia would suffer to a degree, nothing crazy, and america would suffer soon after that. when the consumer has all told, you would turn things that have been tailwinds for oil demand into the tune of -5000 barrels per day in our estimate and that puts us a little below the senses. fourtht year story, the quarter this year'story, not much as you pointed out. it is really about adjusting our forecast. i would like to ask you an out of field left question. venezuela. brazilians are putting pressure on the government to hold a referendum.

there is a potential for civil unrest and chaos in venezuela. brazil might increase or decrease anytime in the near future. what are your thoughts? right, it isu are not really left field. on is production is falling faster than it has in the last five years in the troubles there has been brewing for some time. in my narrow view of macro, how much allowed to spend on the oilfield. this year, it is spending quite a bit less. downng faster than it has, july to january. that they should model it because that is what they all do should always does.

that is what you do, you forecast. the risk is that it intensifies -- thatthey are still is what is a legit worry in the market. it is a negative supply risk, a positive risk. scarlet: thank you for your time today. you very coming up, why actor, motorcycle -- motorcyclist, and canadian counter reads will build a bike just for you. scarlet: i thought he was hawaiian. ♪

are watching.t we cisco's cutting more than 60,000 jobs as it continues to make the transition to software. that is one of 5000. -- more than 5000. >> china is desperate for workers in one industry in particular. what is the nation doing to increase the number of airline pilots? >> plus, more than five years since the disaster at fukushima and more nations are expanding nuclear energy plants. we will explore in a bloomberg quick take. the biggest maker of the of itsnt -- cutting 7% workforce. about 5500 positions will be eliminated.

trying to recast itself as a provider of software based services. ceo chuck robbins says the company is shifting its focus. a tighterfocused on coupling of security into the core of your it we are focused on policy and work as a nation and cloud-based managed and across the entire or folio. there is a significant amount of innovation the teams are working on there, over the next several orders as well. that we are ignoring one in favor of another. we want to make sure investments are commensurate with growth responsibility. corporateore of it customers rely on remote data centers instead of on my networks maintained on their own premises. >> sales grew at the first half of the year at the slowest pace since 2009.

food company reported a 3.5% increase in revenue that was slightly less than estimated. there is very little inflation in europe. >> retail sales in the u.k. unexpectedly rose in july and month after they especially voted to leave the european union. british shoppers bought clothing and shoes and the weaker pound lead tourist to buy watches and jewelry. finally, airlines and china are desperate for pilots they need to hire, almost 100 per week to demand.rocketing offering pay packages of more than $300,000 per year. chinese airlines off to -- offer to pay as well. time enough for the bloomberg quick takes, where we provide background on issues of interest. half the world thinks the planet needs nuclear power more than

ever and the other half seems just as sure that now is the time to get rid of it forever. there are currently 400 and 46 operating nuclear reactors around the world. 63 more are under construction. whilere pushing ahead germany's angela merkel wants to close all the plants by 2011. there are ambitious expansion goals out of asia and china, players to expand nuclear operations and construction by 2020. india aims to supply 25% of its electricity from nuclear power by 2050. after world war ii envisioned an abundance of clean energy at low cost and then came the reality of the energy,of nook we're released radiation in 1979, and in recent years, nuclear power, which produces no greenhouse gas emissions, seems poised for a

renaissance based on worries about climate change. anxieties were heightened after a -- three reactor meltdowns in northern japan in march of 2011. proponents of nuclear energy say accidents like that meltdown are rare and that reactors are getting safe to her -- safer and fossil fuels are responsible for more deaths. there are objections like environmental risks involved in disposing with nuclear waste. whethertion is renewables like wind and solar energy will be enough to head off extreme global warning or whether new we are energy is no longer an option but a necessity. you can read more about nuclear energy in all of our takes on the bloomberg. that is your global business report. head over to bloomberg.com. ♪

erik: this is bloomberg markets. life on two wheels is more than a hobby for some people here it is a way of life. this type of passion led counter reads to production when he -- with notable designer. they went from an idea back in 2007 to a prototype three years later to the production model and for 78 grand, one could be custom-built for you. >> the idea of an experience that validates what you do, i think that happens for me every, wrote -- ride a motorcycle. really tontroduced his taste of machines he makes and i asked if he wanted to

start a motorcycle business and he said no. i was like ok, the reason we should not do this -- we should do this is because the machine is amazing and we will die and eventually, you said yes. >> i cannot argue with that one. >> yes. it took three years and we have been selling for a about a year and a half. our motorcycle has a lot of made with high-end technology and machinery and at the same time, also these beautiful wells are done by hand. >> the first time we got to get it outside for a ride, it was an amazing experience to ride those spikes 100 miles an hour, 55 miles an hour.

♪ our home ride, pacific coast highway, the bike was going in red there. ♪ >> it has to make you giggle to ride it. ♪ >> feeling that it worked, and also looking at you. >> a beautiful machine. look at that.

+++

it is 1:00 in new york, 6:00 in london, and 1:00 in hong kong. erik: welcome to "bloomberg markets."

from bloomberg world headquarters in new york city, good afternoon, i'm erik shatzker. scarlet: i'm scarlet fu. we are cover stories from new york to london to rio de janeiro. stocks fluctuated close to even halfway through the trading day. oil extending its winning streak to six days. erik: is it time to end the two and 20 structure of hedge funds? returnsmany lackluster and withdrawals, we discuss the controversial issue. will be andrew left joining us to talk about his latest short. why he is betting against the japanese maker cyberdyne. to the markets where julie hyman has the latest moves. julie: lack of moves as well. volume is something that we

monitor frequently. about or percent below the 30-day average. is the range on the s&p 500 the second smallest range we have seen all year long. right now, the s&p is unchanged in percentage terms. the dow is down 21. it another way, to monitor something else we have been watching frequently, how many sessions since the s&p 500 had a move of 1%? 28. this is what we are working on right now. the last 1% move was july 8. since then, we have had these small moves, and today in particular, a very small range. as always, below the surface we have some bigger movers. earnings winners and losers today, even within technology, netapp and cisco. netapp on top of the s&p 500

after they beat estimates. cisco is lower after there numbers -- after their numbers. i think i'm tossing to you guys. erik: this is really interesting stuff. those of you who had hoped the apple watch would be a big thing . we know that it was not we know that they were potentially working on new versions of the watch, allowing you to effectively walk around with the watch and not relying on your phone. scarlet: so you would not have to carry it with the phone. erik: this is why we are paying attention to the stock. inle has hit some roadblocks its effort to make these major changes to the watch. as a result, will not be able to outg a wireless apple watch as it had hoped in the current refresh cycle, which we expect

in the next eight weeks or so. scarlet: the company plans to announce new models of the apple watch this fall which will include improvements, it just independente this operability. wanted to put cellular capability in the watch so you did not need your phone in your back pocket or briefcase. that will be a game changer when it happens. theoretically, drive a lot of people to buy the watch , because they could be owners of an android phone and have the apple watch, if they chose. scarlet: apple warranty, even on an aggressive schedule, the earliest to admit -- shipment for the cellular models would have been this december. erik: apple is not commenting officially. a spokeswoman declined to

comment what they will bring out , it has a gps system which will allow the watch to be more competitive with fitness tracking devices, like the one that garmin makes, for example. will be speaking to mark gurman, who broke the news. in the meantime, some other headlines this afternoon with mark crumpton. battling a raging wildfire in san bernardino, california. that has forced massive evacuations and destroyed homes and businesses as it spreads across 40 square miles of mountain and desert east of los angeles. still unknown, how many homes have been affected. firefighters are still trying to tally the damage. chicago police superintendent recommends firing seven officers linked to the death of laquan mcdonald, the black teenager who was shot 16 times at close range. to showotage appeared

mcdonald was not a threat of the time of the shooting. the inspector general recently determined the officers filed false reports. the recommendation will be forwarded to the police board for a final decision. the justice department plans to end its use of private prisons. -- officials say facilities are neither saved or effective compared to those operated by the government, and do not save cost. all contracts will be up forward to over the next five years. the clinton foundation is denying a report that its computer systems were breached by russian hackers. an official with the foundation says the organization has no evidence its systems were breached and have not been notified by law enforcement of an issue, according to a report in politico. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg.

scarlet: thank you. short seller andrew left is looking for opportunities to profit off of what he calls japan's inefficient market. this week, he reported robotics maker cyberdyne was overvalued, leading the stock to drop 11% in tokyo trading. the company says his report is wrong. andrew says he is simply trying to offer an alternative to positive views on companies. he joins us now by phone from los angeles. thanks for speaking with us today. tell us more about how you found this name, what was your process , as you targeted japan as an inefficient market? andrew: i admit, i found the name initially by listening to some of the presentations at the zone conference. i saw oasis management when they put out cyberdyne.

i saw its financials, and i did a very minor research in the company. i could not believe what i was seeing. hallmark of complete inefficiency and open information in the market. in my report, i took it a step further, in the valuation, but how we got here, how we got to this valuation, and what the company is doing to promote wrong information. there is no other word i can say but promote. a step further and published my findings. i think it is interesting. , translated it into japanese so the local retail investors have the opportunity, if you cannot go to a conference, to see the other side of the story. to what extent have you been contacted by japanese investors for more information on this? i wonder what kind of response there has been. investors have said

that they have sold the stock, thank you for telling us this side of the story. of course, you have people who say they do not want to hear it, who are you to say this? but that is par for the course. scarlet: cyberdyne says that they are considering legal action and says the use of provocative language may mislead investors. has the company contacted you directly? have not contacted me, and as far as misleading isormation, the information there. their financials is the most damning of anything. as for provocative language, for anyone that knows me, i'm sorry. it just goes with the course. scarlet: were you able to speak with cyberdyne before you publish your report? scarlet: why would i want to speak to them? find shouldything i

be public information. if anything, i will go to the fda website, i will look at their competitors, i will look at their claims, their filings over the past four years, seeing if they delivered on anything, or if it was empty. that is what i want to do. i don't want to speak to the company. scarlet: what should be the response of a company that is perhaps accused of taking advantage of this information, or to is not presenting the full story to investors? we talk about japan being an inefficient market. if the country needs short-sellers, how should management react to the arrival of american short-sellers? andrew: you have to execute on your business and there will be accountability. before you make promises, you have to ask yourself, can we deliver? when you tell something to the public, make sure it is true. there is nothing you can can do in response. when you can do to prevent it is

just be more transparent. last on when you were bloomberg, we talked about how lonely it is to be a short seller in his record-setting equity market. talk about the risks and rewards of shorting in japan. it is notrst of all, japan, let me make something clear. we live in a global investment community. if i came on with a wonderful stock to buy in brazil, they might buy it. god, there is no racism in money. it is what it is. this particular stock happen to be in japan. it does not mean i'm going after japanese companies, there is no of japan. this particular stock is trading in japan. i am currently working on a company that operates in the u.s. that does not mean i am anti-american. anyone who buys or sells stocks and who wants to make money in the financial markets is foolish

not to look globally. scarlet: having said that, there are inefficiencies that you spot in the japanese market. i wonder what those are that would allow you to profit off of it? the inefficiency in this case was the lack of information on both sides. i will give you an example. in the u.s., we have seeking alpha, which has been a wonderful addition to the markets, which has allowed individual investors to offer an opinion beyond the investment banks. that open information exchange that we have had has changed everything. that is what they will need in japan. scarlet: andrew left, thank you for joining us. joining us by phone from los angeles on his new short from cyberdyne. erik: up next, more highlights with our sin done with joseph stiglitz, the nobel winning prize economist. his advice for donald trump to give up. this is bloomberg. ♪

erik: you are watching "bloomberg markets." i'm erik shatzker. scarlet: i'm scarlet fu. joe stiglitz, the columbia university economics professor, discussed lessons he learned from past economic policy, and gave some advice to donald trump . he spoke this morning on "surveillance." that prevailedas in the 1990's on both sides of the atlantic prove not to work, that you could deregulate the banking system, that you would have self-regulation.

2008 crisis show that is not true. then we had the idea that if you just liberalize trade, close your eyes, a rising tide will lift all boats. that is also wrong. what we are seeing in this thation is a recognition americans, a large fraction of americans, have not benefited from all those changes that they were promised. in fact, if you look at the numbers, the bottom 90% of americans over the last quarter-century have had basically stagnant income. gdp has gone up but it has all gone to the top 10%, mostly to the top 1%. if you were an advisor to donald trump -- i know you are not --but if you were, what would you tell him? joseph: give up. the second thing i would say, get your math to work.

even liberals say, in a recession, you need to stimulate youeconomy, also believe have to have a kind of basic fiscal responsibility. cutting taxes for the rich increases inequality, does not stimulate the economy very much because those at the time do not spend as much money at those at the bottom, and leaves a huge fiscal deficit, which constrain government spending in the future when we need it. erik: that was joe stiglitz, the professor atinner, columbia university. for another view, i want to turn a memo from poetry capital. this time, he turned his spotlight on brexit, the rise of

populism, and the u.s. election. i want to draw your attention fromfically to one quote the memo, which is kind of a response to what you heard. international specialization, rising productivity, job losses, the need for education and a feeling of hopelessness are real and powerfully influential. there he agrees with stiglitz. whether we like them or not, they are economic reality and cannot be ignored or refuted. scarlet: so he is saying there is a new normal, this belief that so many americans have that your children's generation will have a better future than we did , we cannot take that for granted anymore. although he does not go into it specifically, he helps to give voice to this idea that you cannot just direct trade barriers and hope to return the theomy to where it was in 1980's, 1950's -- i don't really

know where those people want to return the u.s. economy to, but there are other forces that cannot be ignored. ist is unavoidable as well that it may lead to the rise of populism. he draws a connection between brexit and what is happening here in the u.s. election. not a straight line, but the rise of trump and sanders are fueled by the same populism. recent trends in income, wealth, and trade, are causing andatisfaction in the u.s. i expect them to have impacts on politics for years to come. he goes on to say -- scarlet: so let me guess, he is not a donald trump fan. did he spent a lot of his memo debunking what donald trump opposed? erik: he did not go as far as to say that he did not like donald trump, but he does raise big

questions about the claims that he makes, and also points out that while there are many things to criticize hillary clinton , thethe soundness foundations of her economic plan do not invite the same degree of skepticism and doubt as trump. they follow the formula that we have been using. erik: four howard marks, for most observers, he actually comes up with a list of recommendations, prescriptions on how to fix the broken system. what we can do to prevent the system from going awry. he says stop gerrymandering. drawing political districts -- redrawing them with politics as your foundation. toper two, make primaries two races. this is happening already in some places. in other words, let the two

leading candidates, regardless of party, live for the election. he believes you will get more moderate candidates as a result, as opposed to playing to the extremes. get money out of politics, that is an easy one. that maybe should have been number one. and with brexit in the rearview, avoid referendums. a simpleespecially majority. it was 51% that plunge the country into that direction, leaving the eu. perhaps in other places there are super majority rules for things that some may call a big deal. marks sounding off in his latest investment letter. news on the latest generation of the apple watch that some investors were not hoping for. this is bloomberg. ♪

scarlet: more on that breaking news regarding apple. they say they are hitting snags in making the apple watch independent from the iphone, according to people familiar with the matter. let's bring in mark from san francisco who broke the story. talk us through what we know so far. had planned to release a new version of the watch this fall which included cellular connectivity. that means people would be able to take their watch and leave their phones behind. they could get e-mail, text messages, make some phone calls through the main phone number. but that plan hit some engineer roadblocks. this year, apple and characters around the world determine the battery life took too much of a substantial hit, due to the high power of the chips available this year. the way you describe it, wereunds like if there

significant advances to be made in battery technology in the future, that could resolve these problems. absolutely, battery technology and those powering the chips. if they can make them smaller in physical size, they could cram in a bigger battery, but also if they make the chips more power efficient, then battery life is not so much an issue. scarlet: what about discussions with network carriers? this would be an independent watch, independent of the cell phone. what kind of discussions have there been between apple and let's say at&t and verizon? mark: they had been discussing it since earlier this year. discussions hit a roadblock in the middle of the year about the battery life concerns. apple told carrier partners around april, may, june, that it would not be able to ship such a

model with cellular even on an aggressive timeline pass the holiday season at the earliest. so the decision was made not to announce this year, even though they are still planning to release an apple watch without that functionality this fall. erik: i wonder if there will ever be a very, would or the watch that takes it from being a niche product to something that is truly mass-market and everybody gets excited about. this would appear to have the potential to do that, if it ever happens. have you seen any estimates, ideas to how big the watch might be in terms of units shipped, if it could do these things? mark: even if apple grabs a small proportion -- proportion, 5% of iphone sales, that is still substantial. if they sell 50 million iphones in a corner and on top of that 5 million watches, that is pretty good. like you said, the cellular data

would spur sales because a lot of people are looking to replace the phone and not have to worry about it. but just because cellular is not working out this year does not mean that there will not be improvements. according to people we spoke with, apple is looking to chip inside the new version, which would allow people to run and walk and get better tracking for health applications. thank you very much p rejoining us from san francisco. he broke the news that apple was hitting some roadblocks, cutting its ties to the watch. up next, is the end of the traditional hedge fund fees structure coming to an end? this is bloomberg. ♪

erik: from bloomberg world headquarters in new york city, i'm erik shatzker. scarlet: i'm scarlet fu. .et's begin with the headlines

mark crumpton has more from the newsroom. in southern louisiana, the death toll from the flooding has risen to 13. floodwaters have damaged tens of thousands of homes and businesses with thousands of people still living in shelters. president obama is set to become the first u.s. president to visit laos. the white house announced the ,resident will visit next month including china. in china, he will participate in a summit with the leaders of the top 20 industrialized and develop nations. a plan separate talks with chinese president she jinping. the u.s. government says the was a leader of a southeastern asia-based extremist group. he is also linked to al qaeda.

the panel issued no decision on his status. a brazilian police officers says u.s. swimmer ryan lochte made up the story about being robbed at gunpoint. the official says what actually happened is that he and three fellow swimmers stopped at a gas station in a suburb sunday morning and broke the door to an outside bathroom while trying to push it open. a security guard confronted the men. he was armed with a pistol but authorities say he never drew it. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. the revolt against hedge fund fees and lackluster returns is hitting some of the biggest names in the business. paul tudor jones dismissed of about 15% of the workforce at his workforce following withdrawals. over the past quarter, investors

from accounts. joining me now is the chief investment officer of blueprint capital advisors. >> thanks for having me. the pressure on fees has existed for some time. resent the amount of money hedge fund managers keep, but also for a time, the system was the way it was because they were earning pretty handsome returns. that is not the case any longer. >> and that is the main reason for the result. everyone agrees we are in a low performance environment. let's take a typical hedge fund fee structure of 2 and 20 with no performance turned all and a 6% return, which has not been achieved over the last couple of years. let's assume that they do. in that environment, under those

terms, the manager keeps 47% of the return. take the same 6% return, and we have a 1 and 10 structure with a modest 2% hurdle. the manager keeps 21%. so i think there definitely needs to be an adjustment, a of feesent, in terms and basically the hedge fund structure. 2 and 20 seems to be the standard, but there are discounts along the way, early investor discounts, for example. a lot of people do not end up paying 2 and 20. >> that is correct. if you are a startup hedge fund, this is probably the most challenging business develop

environment since the global financial crisis, so they have to offer discounted fees and to get investors to invest. erik: if you can build a track record, if you can perform, deliver excess return i'll thought, what is to charge you from charging 2 and 20, or more, like tudor? steve cohen is another. right. and he will be running one again soon. yes, there are hedge fund that consistently perform at a high level, and clients are very happy, investors should keep them in the portfolio. erik: so what is the problem here? this is really a chicken and egg issue with hedge funds.

, isthere too many funds there too much money chasing too few opportunities? industrydge fund invests in every asset class under the sun, so many strategies have issues. you mentioned paul tudor jones, tudor investments, those are discretionary macro primarily. when you have central banks being so active in the markets, it's a difficult environment to outperform. and those things will happen. they happen in equity cycles, credit cycles. so the performance of strategies fence and flows -- ebbs and flows. know aboutagers that, and this is where they can be more flexible in their terms. if you are getting 20% returns on a consistent basis and you are paying 2 and 20, you are

happy. if you are getting 6%, you are not. so i just fees down. keep your willing to money in place for longer, you should be rewarded, and you should have discounted fees. if you are a large allocator, like most of the pension funds, you should be rewarded. 2008, the marginal dollar being allocated to hedge funds has been from pension funds. we know there is a significant pension fund crisis, particularly in the public sector in this country. if you believe that hedge funds and hedge fund managers are unique, and they bring diversifying strategies, which i do believe, you should keep them in your portfolio, but there

really needs to be an alignment. scarlet: one argument people make is that pension funds themselves are being far too unrealistic. they need to cut their own return targets. david hunt was saying 10% returns means everyone goes way too far out on the risk spectrum and that 6% to 7% is more realistic. if they adopt more realistic targets, presumably that would mean allocating less money to hedge funds that maybe charge a lot. >> there is a lot of politics and issues involved with changing that return rate on pension funds. you are talking about pension funds, right? it just means more contributions. , in thisrly environment, where every principality, state is challenged from a budgetary standpoint, and even the participants are challenged, they cannot make more

contributions. anybody -- it't would appear -- made the structure more dynamic? the riskwords, when rate is zero, as it is now, maybe the risks are low, and the hurdles are also low. times, the hurdles are higher but the reward to the investment manager is also higher. >> is not common and does not really exist. it is one of the reasons that we created blueprint capital, to help provide that solution. to receive longer-term capital from pension funds who really should be selling liquidity because they have very long liabilities for those discounted fees and terms, and whatnot. inrlet: keeping all this

mind, what kind of fee structure are you charging clients? charging a flat basis point fee depending on the size, anywhere from 30, 40, 75 basis points. scarlet: and that is flat regardless of the environment, returns? you are managing money or you are choosing managers? >> we are primarily choosing managers and asking them tosub advise on our manager account platform. and then asking them for significant fee breaks. the 75 basis points at you are talking about is above what the sub advisor would charge. what is the overall fee that you are looking to sign up for a client? >> if you take the smallest allocation, the 75 basis points,

and we were to achieve a 1 and 10 with a 3% hurdle, they would fees aftererformance that 3%. erik: certainly less than 2 and 20. the question then is how successful have you been in signing up hedge fund managers 10?ubadvise at 1 and >> we have been very successful on the hedge fund side. we are also focusing on let's call it midmarket, mid-level hedge funds. to $2funds that are 250 billion in assets. they are having a difficult time raising assets. their performance is not the headline performance. it is much better.

we are also not looking for startups, per se. we are looking at managers with a three-your track record. they have proved they can run a portfolio, can manage a business prove that they are breakeven, in particular. we are also looking at more diverse strategies as well. there is a lot of credit and equity beta in many institutional hedge fund portfolios, so we are looking for things that do not correlate, do not even have a return stream from those -- erik: as you should. if an investor wants equity etf. they can buy a beta,

ed, thank you for coming in. scarlet: coming up, canada is outpacing the u.s. when it comes to the percentage of women in the workforce. this is bloomberg. ♪

scarlet: this is "bloomberg markets." i'm scarlet fu. erik: i'm erik shatzker. scarlet: the u.s. and canada are more alike than night -- not. we speak the same language, depend on each other portrayed, but when it comes to women in the work horse, the countries are moving in the opposite direction. while the number of women in working in the u.s. is falling, it is going up in canada.

joining us from ottawa is greg quinn. tell us about the numbers that show this divergence. : statistics canada looked at figures going back to the 1970's on female job market participation. some good news for both countries. has the long period, there been a huge ramp up in job market participation in both countries. the bad news for those of you in the land of liberty, this has fallen off since the 1990's. canada took over around that phase and the gap has only gotten wider. for economists, this is a great mystery because we have common values, similar economies, so getting and why a get like this can open up is a richfield to get into. what exactly is going on in the land of peace, order, and good government? scarlet: are you referring to the u.s. or canada? erik: that is canada's motto,

for those that do not know. researchers broke things down by age and level of education. the biggest gain for canada was older women with less education. 85% of women in that court regarding -- category now in the job market. that is the same as in the u.s. of women with a college degree. erik: that is a striking chart. because it is also a come from behind chart. greg: it is a come from behind chart. what is happening in the u.s. is the global crisis in 2008 really took a lot of younger american women out of the job market. that could be the damage from the recession there, or if you want to look at family leave policies, there is now a gap for young women in favor of canada. canada offers a year of paid leave for parents.

the u.s. has 12 weeks of unpaid leave. that could be a major contributor. scarlet: how do educational levels or off the skate the findings -- obfuscate the findings? greg: no question in both countries as women have joined the labor force, they have taken on more education, which is great or the result -- for their results. what researchers had trouble with, for older women in canada, little of their job gains can be explained by education. researchers have said we had dig in and find out what is going on that could be allowed them to make such strong gains. however, this has not translated to a higher on a planet rate for canadians -- i'm sorry, it has translated into a higher on a planet rate. it is not as a canada has a sub-5% on a plumbing rate. true, canada has

had its own unique problems with the falling price of oil here. to take away some of our bragging rights, in both countries, when you notice, for women, there have been plateaus in labor force participation. if you look deeper, there are women could be making more strides to be getting into the job market. candidate appears to be ahead of the u.s. in terms of getting into the market. what about earnings? i don't know if they're in this study, but do women in the workforce in canada do better than women in the workforce in america on a relative basis? greg: they did not dig too deeply into that, but one thing they noticed that was very clear, for the women that did the best in the canadian market, the older bracket, their wages went up quite dramatically since the last recession. a lot of those jobs were in , so that hastries

been helpful to canadian women. it is unclear whether this can continue as it has been. erik: always great to see you, greg. my long time colleague in ottawa. scarlet: what was the motto again? erik: peace, order, and good government. all three of which are desirable, one would hope. the american motto is life, liberty, and the pursuit of happiness. scarlet: i am partial. has all the talk about the economy being the envy of the world off the mark? former hear from a minnesota fed official. this is bloomberg. ♪

erik: this is "bloomberg markets." i'm erik shatzker. scarlet: i'm scarlet fu. erik: prison rates are sinking.

of justice has decided to end its use of privately run prisons. this is affecting shares, as you , of the correction corporations of america and ngo group. with us now is joe weisenthal. on the phone is the executive director of grassroots leadership. bob, this is something you have wanted to see for some time. absolutely. in my 15 years watching the private prison industry, this is probably the single biggest day for those of us who think that corporations do not have a place in locking people up. this is huge news. explain to us how this happened. investors have been bullish on this space for a while but there has always been a risk that the public sentiment could turn, that an event like this could happen. what were the chain of events

that led up to this decision today? bob: i think this really goes back 15 years at least. thee contracts help to save private prison industry in the .990's over the last decade, the private prison industry has made its money on federal contracts. that is where the growth has been, either through immigrations and customs enforcement, or through the bureau of prisons. however, in recent years, there have been a number of protests or uprisings in these contracted facilities, facilities where immigrants are segregated into. there have been several investigative reports in "the nation" magazine, and aclu expose. last week, the oig from the department of justice issued a damning report on the condition in these facilities.

, combined with the fact that the federal prison population is down by 25,000 from its peak in 2013, created the conditions that we are seeing the announcement that we saw today. erik: i was looking at a by theies filing corrections corporation of america, the bigger of these two private prison operators. in 2015, it got 51% of its revenue from the federal government. --arly, this is an extension an existential problem. but only 11% from the bureau of prisons, to which the doj order applies. what about the other federal agencies, immigrations, customs, and enforcement, and the u.s. marshals. what will happen with those? that is the question today. while the bop will be phasing out over the next years, there is no announcement that u.s.

marshals or immigrations and customs would do the same. those of us watching this for a hopes thatave high these other agencies will follow suit. there is no reason to believe that facilities of the private operate anyrations better. movect, i think there is a away from immigration detention as well. we have seen, certainly, both democratic candidates for president have said that they would reduce immigration detention and and private prison end private prison contracts. today may well be a turning point for state and local governments to begin rethinking their contracts with these companies. tell us about the work being done on the state and local level, and where we should be watching for for further

developments on that front? bob: at state and local as well as federal levels, governments are turning to policies that luck a few are people, and that is bad for private prison corporations. i would expect there to be more contract cancellations in the future. joe: thanks very much for joining us. , director of the grassroots leadership. joe weisenthal has been looking at this for a long time. today,: coming up later the director of the earth institute at columbia university will be joining us. this is bloomberg. ♪

♪ scarlet: is 2:00 in new york and 7:00 p.m. in london. lisa: welcome to bloomberg markets. ♪

lisa: we are live over the next hour. newly covering stories at a san francisco, washington and the u.k. here is what we are watching. another bombshell. zero prices fall velocity is the company alleging top executives hid its friend of drugs and artificially inflated profits. vonnie: the trunk campaign is under new leadership. they will take you behind the scenes of team trump. lisa: apple is updating the apple watch with a new version coming out this fall. we will break down the changes coming for the gadget. lets into the markets desk for julie has the latest. julie: we are trading in a tight range today, the second tightest