legal assistant that was killed last week and when a car ran into a crowd of people protesting a white nationalists rally in the city. >> she loved people. she wanted equality. of the day ofsue, her passing, she wanted to put down hate. need tomy part we just stop all this stuff and forgive each other. mark: president trump has tweeted for the first time about trulyalling her "a special young woman. he added "she will be long remembered by all>" confederate monuments quietly removed overnight just days after the violence in charlottesville that was sparked by plans to take down a statue ther.e e. the mayor told the baltimore sun

that she wants the statues to be placed in confederate cemeteries in maryland. and the chief economic advisor for donald trump said to be upset over the past events of the few days. gary: was a standing near the president when he reverted back to his original position and it said there was blame on both sides of the virginia violence. the new york times says he is upset by the president's remarks on white supremacists, but does not plan to leave the ministry should and. the manchester arena will reopen next month for the first time since a deadly attack last spring. man gallagherront will headline a concert at the september 9 we are manchester show. 22 people died, more than 200 injured when a suicide bomber detonated a backpack full of explosives after an ariana grande concert on may 22. globaglobal news 24 hours a day,

powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. ♪ scarlet: live from bloomberg world headquarters. i'm julie hyman. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. we are 30 minutes from the close of trading. >> u.s. stocks recovering. joe: the question is, what did you miss. ? scarlet: top business leaders this band, turning against the president in the wake of the controversy all remarks on charlottesville, virginia. officials split on the timing of future rate hikes and white inflation remains weak. a dive later this hour. and the world biggest retailer,

amazon, taking a trip to the debt market and is met with demand of unsecured bonds. ♪ scarlet: "what'd you miss?" president trump dissolving his economic councils today after a rash of ceos resigned in the wake of his response to a white nationalists attack in virginia. julie: we will get the latest from our senior bloomberg reporter and the executive editor for international government and economics. both the joining us from washington. margaret, there were reports that last night after president trump's comments that he was in a good mood, that he felt he had been frank at the conference and said what he thought. do we have any insight into the white house reaction today beyond just his tweet about the disbanding of the business council's? s? margaret: overnight, it a lot of soul-searching among many on the white house staff, although not

all. some have supported the president. a lot of thinking about this, but if you look now it is nearing the end of the workday on wednesday and all senior staff are still at work, trying to move forward on this. the implications for business and of the agenda are still in doubt. there is a hope at least inside the white house, that this public distancing will not reflect, at least the behind the scenes continued cooperation from business leaders that have a stake in the end ministration's policies on regulation and taxes moving forward. i think there is a broad understanding inside the white house staff that at least for now there is distancing that was inevitable. many of the ceos personal comfortable with the stance that the president took or understand customers are uncomfortable and they want to see that reflected. joe: these councils in the first

place i think we can admit are symbolic in their very nature, so i think obviously there is a lot of symbolism that these councils have collapsed. any ramifications from your perspective for business, for the agenda, or is it just another one of the series of sort of wild events that have characterized the white house? >> another one of those wild events. but there are some practical implications. i do think that donald trump was hoping that he would have the support, the visible support of the business community to advance his tax reform agenda. that may not be possible now, at least not right away. but as margaret said, i think business and donald trump's agenda do coincide. all these ceos have a vibrant lobbying efforts in washington, so to the extent that those agendas like attacks reform --

tax reform, they will support them. or behind the scenes. scarlet: a lot of people saying on twitter that the business council has broken up in the most public of ways. the question is whether republican establishment politicians follow suit in any way, or will they hold back. what are you seeing in the early days? margaret: there has been a range of condemnation about white supremacists and the criticism of the way that donald trump handle this. what we saw from the top three leaders in the house overnight was a condemnation of bigotry and white supremacy and saying there is no place for it, but not direct criticism of the president. we have seen some direct criticism of the present my lindsey graham saying he is being divisive. senator marco rubio being fairly direct.

and for the bush family, a pretty direct signaling that they do not stand by either president bush or george w. bush, saying that they would not have taken the same approach president trump did. so some real signaling. but it is a different question when the rubber meets the road, when lawmakers come back, will they go back in step with the president, are they worried that he might mount primary challenges to them if they are seen as running against him, or are they more worried about standing too closely to him as they stand in midterms in general elections? and for their own personal brand and legacy, a lot of this is uncomfortable and is still being worked out. julie: to bring it back to the voters, the folks also instrumental into whether these folks will win those primaries, etc., where does the base stand at this point, given the events of the last week? not just that, but given that

there are still a lot of outstanding promises from the president that he has not seemingly made much progress on. >> you know, i do think donald trump's base has stood with him, even though the poll numbers are at historic lows, the numbers are good among people who define themselves as republican. the key issue is in the swing states that turned the election to donald trump. he got a lot of voters voted for obama the last two cycles to turn to him. if he cannot expand or solidify the base, then he is going to have a big hill to climb in his next presidential race, if there is one. marty: and as the midterms loom, republicans have to make an assessment as to whether aligned themselves with the president and if it is good for their election campaigns. joe: speaking of the voters,

there was a primary in the alabama senate race last night, we have not talked about it a lot, trump coming out in favor of one of the candidates, strange, who came in second. does that votes tell us about his influence right now the party? marty: not really, the pre-polling on this race had a strange in second place, even before this whole controversy. makedo not think you can any message, or take any message from it, except they have work to do to get strange back into the senate. scarlet: thank you to both our guests, margaret and marty. and coming up, not the renegotiation talks kicking off today in washington. reading the discussion getting heated, but it is overshadowed by the collapse of the president's two business councils. we will bring you the latest on the renegotiation efforts.

from new york, this is bloomberg. ♪

♪ scarlet: "what'd you miss?" the collapse of business councils, including tax reform, and for searcher and antiregulation .scarlet: i'm . kevin brady prepared to deliver a speech on tax reform. kevin, give us a sense of how the mood is in california right now as people prepared to speak on tax, but obviously the headlines on what is happening with what is going on in washington and donald trump's remarks take center stage. sahil: it is supposed to be a quiet month where the

republicans look at the legislative agenda, the top of which is a piece of tax legislation, but this is not quite a goading -- quite going to plan. this has been overshadowed by president trump's uproar over his remarks in charlottesville, equating on a moral level the kkk members to the counterprotesters in the violent clashes. republicans here in the house wanted the focus to be on taxes, the 31st anniversary of when the house and the senate agreed to agreement in 1986. and this is not what was expected to be discussed. julie: what is the mood of reaction? you talked to kevin brady earlier, other lawmakers that were there, are they still determined, are they still optimistic, or are they dispirited given the event of the last few days? sahil: kevin brady is an eternal

optimist. he would like to see the president more focused on the spirit he would like to see the president use every one of his tweets to build support for tax reform, i do not think that will be honest -- i do not think i ppen to be honest with you. but there is a continued sense of hope. these and the members of the committee. the overarching goal is to get something done on taxes. they have no choice but to keep trying. joe: as you have reported many times, even if there is a lot of motivation to get it done, there is the tricky senate rules relating to deficits and reconciliation and getting the 60 votes and all of that. what is the plan to actually do it? it is great they are talking about it, but with the border adjustment tax seemingly dead, where is the reform coming in? sahil: excellent question. there is not one, the border adjustment tax was the centerpiece of the plan.

they were going to use the revenue to pay down a significant cut to the corporate tax rate. that is gone. i asked kevin brady what will be there in its place. there was not an answer. there are more questions than answers right now, but the interesting contrast is about the last big tax reform in 1986 took 2.5 years to get done. in the middle of those years, ronald reagan campaigned on a and he won a landslide victory and even then it was tough and it came down to the wire. these republicans are trying to do it anymore fraught political climate and under a year. scarlet: thank you for setting the scene. sahil joining us from santa barbara, california by phone. president trump does not want a fresh coat of paint on the american free trade agreement, he wants to strip it down to its studs. that was the takeaway on the first day of talks between canada and mexico to revise nafta. here with my what besideare looking for is bloomberg's

canadian economy and team leader who joins us from washington outside the hotel where the negotiations are taking place. what happened today was the white house, i should say the united states, came out swinging whereas canada and mexico took a different approach. set the scene in terms of the contrast between the u.s. and mexico and canada. >> i do not think anyone is surprised with the bluster and rhetoric. i think that was anticipated going into the meeting. the question really is, i mean, what is the value of bluster in washington today? i think there is some calculation, certainly within the canadian side in a possibly on the mexican side that color has will prevail -- cooler heads will prevail in the talks themselves. there was plenty of rhetoric, but plenty of work being done behind closed doors as well that

we are not hearing about. there is still a lot of optimism that things can get done. joe: we know where we have some sense of what the u.s.'s goals are, what the criticism is of the current trading regime is, what specifically is canada looking to get out of this? is it defense, trying to maintain the status quo as much as they can, or are there changes that canada also wants to see? to what extent do you think canada and mexico are on the same page, or do they have different aims of how they want to see nafta ultimately changed? theo: well, i think all three countries are in favor of modernizing the agreement. in canada's case, they like the agreement. they think the foreign minister came here talking about how had it has been successful. unlike the rhetoric we saw from the u.s. trade representative, these countries think it has

been successful. could be agreement modernized, such as labor and environmental protections. we live in a digital world today, that was not the case three decades ago. agreementse will be on all three sides. see a bithere you may of a chasm, maybe not a chasm but certainly separation between canada and mexico is around the idea of trade balance. this is an issue that the u.s. administration is bringing to the table, they want balanced trade, not just free trade. canada has a balanced, they have a balanced trade with the u.s. and mexico does not. anyhere is any division, daylight between canada and mexico it will be on that issue. julie: there has been commentary by the head of the canadian auto workers union and the canadian press that would like to see

some kind of rule that would prevent more of the auto industry from migrating south of the border, as we have seen not just u.s. auto plants close, but also canadian auto plants close, it is obviously early, but is there an idea that will gain traction? with thebably not, not government. the manufacturing industry in canada suffered in a similar way as the u.s. industry has and canada, canada and the u.s. have a trade agreement and it was clearly beneficial to canada. when mexico came into the trade pact and nafta came into effect in 1994, it was a bit of a loss for canada in terms of manufacturing. unions and in the labor movement in canada has a

similar interests, but i do not think they are that influential where they could actually disrupt a three-way pact. scarlet: theo, thank you so much for giving us the latest on the nafta talks. the government team leader of canada joining us from where the talks are going on in washington. apple plans to spend about $1 billion on original programming in the next year, intensifying efforts to compete with netflix and amazon. how the move is affecting stocks. that is next. from new york, this is bloomberg. ♪

♪ scarlet: "what'd you miss?" apple shares fluctuating following news that the company plans to spend $1 billion on original content. joining us is oliver renick .scarlet: i'm scarlet fu. . for most companies that is quite

a bit, but not for apple. lover: i know that you prime tv content, so i am excited about this news. apple usually does things pretty well, so they will put $1 billion into producing original content that will launch them into the same vein as netflix and amazon prime. i think there are many people who go home and they throw on their smart tv's and if you have amazon and netflix that we must take care of it all, but if apple produces original content what they want to do is position themselves to compete with obviously those big purveyors of content. scarlet: and all three of us, we are huge "game of thrones" fans. oliver: this is going to be exciting. back to apple. i want to put this in perspective on why this is so important to them. we talked about yesterday. we jump into my terminal, i am on the financial analysis screen looking at the services elements. they have been continually growing this part of the

business, it is important for them. about $25 billion right now under, right under $25 billion. a nice-looking chart. this is where it gets interesting. the iphone, of course we $5 billion revenue is dwarfed by what they are making on the mainline products. julie: the margins on services, the margins on the iphone are enviable within the industry, but on services the margin is high, right? oliver: it depends on execution, i feel like they need to get the ball rolling. this is a new element for them. they have people that they brought over from sony, and they have jimmy i've been in the background -- ivine in the background helping with music and content on that side. i think they will be of the make it work. out of the reason why the company has been able to do so well is because of where the margins are and what they are making on the products. they want to keep that mix. joe: talk about the competition with amazon and netflix, those companies have different models.

amazon wants to sell clothes and shoes. netflix wants to sell subscriptions. apple sounds more like netflix in terms of selling it directly. oliver: i picture it from the standpoint, the anecdotal standpoint, and it comes back to buying a big smart tv, there has not been a lot of draw for the apple tv's in the past but if you will have original content through that service, somebody might be encouraged to add it on to their suite already from netflix and amazon. cannot hurt. scarlet: we are waiting for it. thank you so much. what will the first one be? time for the bloomberg business flash, a look at some of the biggest business stories right now. julie: amc is weighing legal action against movie pass over low-cost cinema subsections. they have dropped the price to $9.95 a month from $30 or more come offering consumers

admission to one movie every day. amc said the plan was setting consumers up for disappointment, if and when it can no longer be filled. bank of america plans to charge asset managers as much as $80,000 annually for their research division's full package of services. that is free analysis for clients. 22 a pricing document, the premium package includes speaking directly to analysts, attending conferences and meeting senior executives of major companies. and paul singer have caught a truce. the elliott management will suspend litigations for three-month. akzo backs the new ceo. a takeoverk -- after offer. they also have a stake in the world's largest mining companies. bey say that they appear to

heeding the calls for change. and that is your business flash. scarlet: the market closes next. we have major indexes, little changes would go toward the close. from new york, this is bloomberg. ♪

♪

scarlet: "what'd you miss?" u.s. stocks fluctuating into the close, the dollar falling after concern that inflation remains low. ♪ julie: i'm julie hyman. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. julia chatterley is off today. and if you're tuning in live on twitter, we want to welcome you to our coverage every weekday from 4:00 p.m.-5:00 p.m. eastern. scarlet: let's begin with our market minutes. u.s. stocks indian higher, barely, but a bit of a volatile they. -- day. and the dow finishing up by 27 points, the s&p 500 gaining about 1/10 of a percent. highere sectors finished to finish down, led by financials and industry -- and energy. the fed minutes came out and it was divided. joe: pretty divided, not a lot

of reaction in any market. scarlet: i should mention retailers were the second-best performers in the 24 group breakdown of the s&p 500. let's give you the individual names. target delivering another sign that the comeback is taking hold, brightening the outlook for the second quarter sales. target boosting the forecast. they are up 3.6%. urban outfitters, up 17.5%. free people and anthropology chains performing better than predicted. the flagship brand urban outfitters did not do as well. amazon down .5%. president trump calling out amazon, saying the company is hurting other retailers and implying that is killing jobs across the u.s. joe: we will take a look at the government bond market, not a ton of action, yields lower today. they were lowered going into the fed minutes. they can out at 2:00 p.m., then

taking a dip a little lower. 2.32% and they have really been stuck in a range, not much action in the u.s. rates market as of late. julie: we will see what happen if we get the announcement in september for the balance sheet. early this morning, there was a report by reuters that mario draghi does not plan on making any kind of policy commentary when he is at the jackson hole meeting. so we saw the euro go lower and having a choppy session, as did the u.s. dollar broadly. then it moved up as the u.s. dollar moved down after we got the fed minutes. a little bit more of a move when you are looking at the u.s. dollar. and after nafta talks that we have been discussing, i want to look at the peso for context. you can see the dollar, initially getting a boost following the election and since then giving of gains and then some of the peso around 5% versus the dollar since the election.

and the canadian dollar as well, we did not see the same type of reaction their postelection and it has been pretty uniformly strong since then, especially going into the past couple of months. joe: finally, a look at commodities starting with oil and gold. oil selling off again, down below $47 a barrel. west texas intermediate, all about the supply concerns, concerns about u.s. production continuing to way down. gold getting a little bit today. and take a look the industrial metals, they had really big dave, zinc over 5%. lead gaining over 5%. copper, aluminum, having good days. combination of news out of china, increased demand and also talk about limiting supply to deal with the glut of some of the commodities, as well as trying to reduce emissions. so very nice day for some of these industrial metals, particularly think. -- zinc.

those in the market minutes. scarlet: president trump disbanding to councils of business leaders, after a number of ceos resigned in the wake of his controversial remarks on virginia. admit the chaos, the next initiative facing congress is tax reform. well the republicans learned from their failed health-care effort? we will bring in the head of research and a strategy for -- capital who wrote about the effort to reform tax. stephen, you asked a rhetorical question, is tax reform less controversial than health care overhaul? you say it is still plenty toxic. stephen: i think it is. obviously health was super toxic. divergent opinions among the republicans, never mind the democrats. republicans who think that you have to balance the budget, republicans who think that you

have to cut taxes as far as you can and forget about the rest -- boardting them all on will be hard. you do not care with the media republican congressman thinks, you worry about what the tail thinks and it is a major problem. joe: what are the odds? this sounds like the way you characterize it is there is a chance they can get it done, but they having euro path -- have a narrow path. steven: i think they can get it done. as we have seen repeatedly, nothing is breaking. the two ways i see that they can do it, and this is a big tax reform, one is displayed it up into components that are temporary and permanent. if you listen to what kevin brady and republicans have been saying, they wanted to be permanent because it is the

most effective type of reform. it can be done and they want to cut taxes as deeply as they want. if they say we will sunset some of these after 10 years to keep within the requirements, we will make some of these permanent. as we have seen in the past, sunset causes do not often apply. there are more democrats up for reelection, and even in the current political environment many are in states where they traditionally do not vote democrat, so it may be possible to target some of those so that 52, you know, the majority they have is not quite as tight if you can get some democrats on board. julie: the strategy, when it came to health care, ultimately the strategy did not end up being successful. do you see signs there is a more strategic approach this time around when it comes to tax reform, that they could be looking at the things you are talking about?

and there is openness to negotiation. ieve: i think they -- steven: think they are going about it any more organized way. they meet regularly, they talk about what they want to do. kevin brady and ryan are willing to ditch the adjustment tax. they were not willing to sacrifice the entire plan for it. so i think the answer is yes, this is much more organized. with respect to getting democrats on board, they think the democrats smell blood and there are minimal conditions that will be way beyond anything the republicans are willing to admit. admit as a group. but isolated democrats, maybe they can pick them off. scarlet: we want to take a listen to what kevin brady told sahil about tax reform. kevin: tax reform is about helping every american. of every income size, of every size of business, in a major

way. letting them keep more of what they earn, letting them pursue their american dream. i think this is the right issue for the right time in this country. scarlet: how do you pay for it? the border adjustment taxes off of the table now, so there can be a lot of discussion on how you get this done and scoring along with it. think they are using aggressive dynamics, the idea that if you improve the incentives there will be so much growth that will be paid largely by itself. it could be 75% if you are a supply scientist. joe: bring it around the market point of view, because in the beginning of the trump administration there was a big equity rally, we had higher rates, and people included the possibility of tax reform is one of the reasons to be bullish on the dollar. how, is the market pricing in

anything at this point. ? you wrote you are with a group of investors and you said none of them thought anything would happen. steven: with the minutes today, you cannot go below zero so there is residual probability that there is always, something could happen. but it is hard to meet people who will say that we will get big tax reform. could happen,orm but it will not have anywhere near the effects promised. joe: so expectations are pretty low. steven: yes. julie: you are sticking with us. we will continue the discussion. scarlet: we will give you highlights from the result of cisco, reporting fourth-quarter numbers, adjustment earnings at $.61. that is in line with what was estimated. and for $.1 billion for the quarter. as for the first quarter, this current quarter, cisco sell

revenue down from 1%, down 3%, and the estimate was for 2.5%. and pretty much in line with what the analysts were anticipating. the stock is trading lower by 9/10 of 1%. enclosed higher during the regular session -- it closed higher during the rigler session. julie: and there was apparently a gross margin decrease. primarily due to pricing, potentially something that is weighing on the shares initially after the report. coming up, fed officials engaged in a debate about inflation, according to minutes from the july policy meeting. we will take a look at their next steps. from new york, this is bloomberg. ♪

♪ time for first word news. the mother of heather heyer, the woman that was killed last week and while protesting the white nationalist rally in charlottesville, virginia, today urged mourners at a memorial service to "make my daughter's death worthwhile by channeling anger into righteous action." >> we do not all have to die. we do not all have to sacrifice our lives. they tried to kill my child to shut her up. guess what, you just magnified her. trump hasident tweeted for the first time about her, calling her "beautiful and incredible and a special young woman> ." u.s. trade representative robert lighthizer called for an

overhaul of nafta, the north america free trade agreement, as talks begin on revamping the 23-year-old deal between the u.s., canada and mexico. >> for countless americans, this agreement has failed. we cannot ignore the huge trade deficits, the lost manufacturing jobs, the businesses that have closed or moved, because of incentives intended or not in the current agreement. leasthe also said that at 700,000 americans have lost their jobs due to changing trade flows. the president adding a note toward kim jong-un, tweeting he made a wise decision, apparently referring to him not watching a missile toward guam. mr. trump said the alternative strophic." been "cato and queen elizabeth has arrived

in its home port in southern england. tens of thousands of people jammed the harbor in portsmouth to welcome the ship, which has been at sea since june. the queen elizabeth cost almost $4 billion. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. ♪ thank you. "what'd you miss?" major indexes hitting record highs over the past few months and did the jobs market is tightening. why is inflation below the 2% target? and what do the meeting minutes reveal about what the fed is thinking. julie: joining us is steven englander, head of research at rafiki capital management. also, matthew basel are who covers the fed for us. it seems like the minutes reveal that the fed is grappling with this inflation question. if the fed cannot figure it out, how can anybody else -- these are the brightest economists,

how is anybody else supposed to figure this out? steven: it is a hard question. i think what is happening is the fed put it on the table that there are debates, whether it is structural or cyclical, one thing that caught my eye in the minutes where they said that they would get back to 2% in the course of the year. i checked the previous minutes and they had not used that length of time in the past. i think basically there is consensus within the fed which it said, if we see any sign things are going back to normal we will hike. it does not mean we have to get back to 2%, if we start hitting close to 2%, that is enough. joe: there was a discussion in the minutes about the very models that the fed uses to forecast inflation, the phillips curve idea of the inverse relationship between the unemployment rate, so within the minutes say there? matt: steve is right,

uncertainty has risen on the inflation outlook. we had a nice discussion in the minutes about the so-called looks curve relationship between the labor market and inflation and whether it is a useful framework anymore. and a few participants cited evidence that the framework was not potentially -- particularly useful. importantly, it said most participants still thought this was about framework. this is the interesting debate, we have low inflation, low in employment, so there are a bunch of reasons that were apparently discussed on why the relationship may not be working. basically they come down to, maybe the coefficient of the relationship between the labor market and inflation has changed. but there were some fundamental reasons that do not relate to the labor market on why those numbers are low and this decided pricing power to advances in technology. if we continue to see these in

the inflation data, where it is cell phone crisis, then hotels in a lot of data -- and the latest data, maybe we will see a wider debate on why the framework is not working. scarlet: i am glad that you brought up the one offs. when they come consistently and there seems to always be a one-off every month, doesn't that tell you something about the state of the economy? steven: i remember the 1980's when the one offs went in the opposite direction and if you look at the inflation eroding, that was a bad bet. i think it shows the issues that are really there and some of it is underlying technology. information technology, so the cost curve is falling. there should be a downward bias toward prices. and we are able to use capital better, we are using automobiles, living spaces more efficiently so there should be downward pressure on prices. the question is, are we tight enough cyclically to offset those structural shocks?

and keep in mind, the phillips curve, the low end of it is that there is a close enough relationship between labor market tightness and inflation that you put it on a chart you can see it. if the other forces are actually strong, the phillips curve can exist in the sense that tighter labor markets often generate higher inflation, but the shocks you are getting from the other stuff are so powerful you never see the relation of manifest. julie: when you looked at the minutes today, were there any fed governors taking the other side and are concerned that there are still risks cannot really rates quickly enough? matt: there were. it goes back to these things take a long time to turn around and change minds on the subject, especially when you have the phillips curve that has dominated the economics for so many decades. there was also in interesting debate on whether, even if there is a relationship, is it linear

or nonlinear? once we get down to a certain unemployment rate, well inflation accelerates are medically? there was debate over whether it is the case. neel kashkari came out last week and said, we have been looking at this at the minneapolis fed and we do not see evidence of the linear. he calls it a ghost story. he was speaking against this. interesting. models, theyed's are specific with demand. they are looking at demand fluctuations. they are not good with respect to aggregate supply, the question of what is driving technology, what should we expect in the next two years from technology, how will those shocks affect inflation. so if you look at the demand side and think there is more investment, but they are really not that equipped to look at the supply side. joe: before we go, besides

inflation another concern for the fed and really global central bankers is asset prices and what is going on around the world. we have a chart here going back 2002, comparing the s&p versus real consumer spending change and the situation between the two. what is the zynga because of significance? of this? matt: the blue line shows the consumer spending change. you can see in previous cycles it was pretty strong. in this cycle, it has not been as strong. it is not clear that the higher equity prices are translating into higher spending, and that is the debate they were having in the minutes. that is what they will be watching out for, do the higher equity prices translate into faster spending, and if not, maybe there is no reason to raise rates. scarlet: ok, stephen englander,

head of research at rafiki capital management. and our bloomberg news fed reporter. coming up, the s&p 500 continues its ascent, but the price earnings ratio and profit margins have run out of steam. the chart you cannot miss. from new york, this is bloomberg. ♪

♪ scarlet: i'm scarlet fu. "what'd you miss?" negative bond yields. let's pull up the chart. the market value of bonds yielding less than zero has been climbing and last week it reached a .7 chilean dollars, the highest since october. -- a $.7 $8.7 billion trillion.

the highest since october. there is a huge bid for bonds right now. and what is driving it? saber rattling with north korea, also concerned politically, and market volatility that we saw last week. and we were talking about inflation, the inflation data as well. a lot of stuff has been playing out for the last couple weeks. economics --e park of harvard economics say that interest rate could be cut into deeper territory because they are not actually able to raise rates by that much, certainly the fed. that is what we were discussing. joe: i have forgotten all about the negative bond yields. it is interesting, there is still massive stock of them. and not only that, they are rising. something else rising, obviously the market, we are talking all the time about the lack of volatility and lack of drawdowns. we are at the for the longest streak for the s&p 500 without a drawdown of at least 5%.

that is the white line going to the middle of the screen. the blue line, that is the longest starting december 1994, there is 1992 and 1963. it is not unprecedented to have a streak this long without a 5% drawdown, but it is getting pretty long and pretty impressive. folks at you talk to reporto -- they wrote a called just say no. they look at cycles for earnings, for margins, for pe's in seven-year time periods. when you look at the price-to-earnings ratio of the s&p 500 and to the growth margin, that is showing both of these on the chart, that we are getting to the end of one of these seven-year cycles. and so they are sort of writing the report to a theoretical

trustee of a pension fund or hedge fund and they say from a fundamental perspective, what does the trustee believe justifies owning this market? do you need to believe the growth and earnings and dividends will be thing going higher than what we have seen historically. so they basically say it is not -- at these levels and he should be looking, as so many people have come outside the u.s. at emerging and international markets. joe: they have been skeptical for a while. that is a great no. bringing the heat at these levels. joe: -- julie: and the language at going the language that they use describing the fed and what has been feeding the market for so long. scarlet: for those of us that are children of the 1980's, just say no. come in a, leo gerard, international president of the united steelworkers reacting to the collapse of the president's business councils and what it

could mean for the investigation into the still company by china -- stelel coming by china. from new york, this is bloomberg. ♪ mark: it is time for first word

news. human secretary says tensions on the korean peninsula at the highest level in decades. it is important to, in his words, dial down the rhetoric. remind world of the suffering caused by the korean war. the civilian death rate was higher than world war ii. the korean peninsula was left in ruins and many nations were

engaged and experience heavy losses. we need to heed the lessons of history, not to repeat the mistakes. mark: secretary-general gutierrez added, this mistake political. the consequences of military action are too horrific to contemplate. iraq is asking the military council for help for islamic state extremist. the prime minister says his government and the united a draftare working on security council resolution seeking assistance. human rights attorney amal clooney as the council to set up an investigation. the british prime minister is criticized -- has criticized president trump's remarks blaming both sides for demonstrators in charlottesville, virginia. >> i appalled the racism,

hatred, and violence that are being trained by these groups. the u.k. has taken action to ban far right groups. i see no equivalent between are extremists and those who oppose them. mark: twitter says former president obama -- barack obama's tweets in response to charlottesville is the platform's most like to post ever. he tweeted a quote from nelson is bornquoting, no one hating another person because of the color of his skin, background, or religion. net post has been liked more than 3.7 million times, surpassing ariana grande's tweets. global news 24 hours a day. powered by more than 2,700

journalists and analysts in more than 120 countries. m mark crumpton. this is bloomberg. the owner of victoria's secret is coming out of the earnings. an adjusted basis. $.48. a reported elementary numbers in the high and of $.50. sales down 8%. the estimate was for a drop of 7%. the company is cutting it full-year earnings forecast. came out with its july comparable sales that missed estimates. training the parade of many retailers that have been disappointing investors in one way or another. scarlet: i contrasted their to urban. another company that reported adjusted whether it is or revenue, in line with what

analysts anticipated. they are looking for a drop of about 2.5%. the adjusted gross margin for this quarter could be anywhere from 63% to 64%. analysts were looking for better than 64%. earlier we talked to leo gerard. we asked him how his members are reacting to the charlottesville controversy. leo: our members are just like the general public. we will have a lot of people that will be tremendously upset. we'll have a lot of people that will be saying this is not a we voted for because we do know candidate trump made some inroads into the industrial workforce by saying to them that he was going to repeal and replace nafta, that he was going

to take cold of china and do something about china's thatnuous illegal dumping, he would do something on south korea. our members have been waiting for that. one of the things he did early in his term was signed an executive order for an investigation into's heel and andinum -- into steel aluminum. we are anxious for the reports come out. it might demonstrate that the countries i named are cheating and dumping their products into our market and are filing our trade laws. >> i do want to dig into that a little more. i want to ask about the news today that the advisory council is being disbanded. of as a little bit different point of view versus workers when you are talking about ceos talking with the president. but do you think that will harm the progress of some of these trade initiatives that you are talking about? leo: no.

i was not part of the trade advisory committee. others that were remaining from the obama administration, but from what i hear him those who have resigned, the trade counsel appeared to be more than -- more like a photo off and there haven't been any meetings. in fact, there were some informal meetings about it and the representatives from labor were not even notified or invited from -- to those meetings. i don't think this has any bearings. bill wouldastructure have a lot of bearings, enforcing our trade laws and bringing forward the insult -- the results of the investigation done on steel and aluminum. we know the dumping from china is happening. we need these investigations

done and released as quickly as possible. problemwhat i think the is. you mentioned, the president promised a lot during the campaign. no action has been taken. we know the president has been linking china with korea. let us try to use the right language. when you talk about threatening sanctions, all we are asking for is a level playing field. they want to prevent those countries that are cheating, violating international trade arms, from using america as a dumping ground. when you talk about china and millionhina has 400 tons of steel that they cannot consume. they are prepared to dump that anywhere in the-

world because they don't care what the prices. as a result, they are not only but also steel, unemployment to america. we had 19,000 steel workers laid off because of china's actions. scarlet: i understand we were saying, but is that acceptable for him to link that to north korea? leo: no. they are not the same thing. the reality is if he is going to be the president for america, he has to defend america's jobs and economy and infrastructure. that is the most important part. stuff with china -- i am not sure of china is just playing us for suckers. i am tired of hearing people say that we could bring about a trade war. we are in a trade war. we have a $400 billion a year trade deficit with china. a $70 billion trade deficit with south korea. we are in a trade war, we just haven't been fighting back. we are asking that people play

by the rules. julie: how confident are you that the president will be to put forthble this agenda that he promised during the campaign? as you say, he has been delaying and he has not shown any legislative progress. leo: i am not in the confidence it -- game. i'm involved in convincing members of congress on both sides to convince the administration and those who have conducted the investigation to come forward and give us the results of the investigation and give us an opportunity to defend american workers, jobs on a level playing field. about tout to stop -- start nafta negotiations. there is not a trade surplus between the u.s. and canada, but there is a huge trade deficit with mexico. we need to raise mexican workers'wages. workers' wages.

that is literally social dumping. we should have provisions to prevent that. julie: that was leo gerard. coming up, amazon will have to pay $14 million. we will take what you need to know with a credit perspective. from new york, this is bloomberg. ♪

>> amazon will support financing $13 million purchase of whole foods. it is expected to raise $16

million. this comes in the wake of sales i other firms. to raise $16 billion in bond sales. this comes in the wake of sales of other firms. is it just tempting to take advantage of the low rates out there? >> i think it is an elite the company with a lot of dry powder. profitability is so choppy because of the investments. the cache is meaningful for us we look at it from a credit perspective. it is not like some of these other tech companies that are just sitting on endless of overseas cash that they can tap into. they do have cash, but what is a reasonable other company to look

at in a similar situation? i am a retail analyst. i look at retailers and not a lot of them have that level of liquidity. roscoe has partly maintained very -- costco has historically maintained very large cash balances. it has never really embraced debt bank funding and bond funding until the last two years. walmart has been active in the the 15 years ice have covered them. especially when you talk about the amazon web services, which you highlight as one of the main factors. if you compare it to tech companies, hypothetically, how does it look on a debt basis? >> i would defer to might>> tech -- techwould defer to my

team. apple sets the standard for cash of forwards. microsoft has historically had big cash towards. -- cash hoards. leasesis doing this with to support the retail business. they are active issuers, it is just the component they are using. julie: they lease warehouse space and the servers are housed? charles: yes. scarlet: let us look at the debt distribution for amazon. what you see is the black bar, which is the latest bond issue. up until now, you didn't have to go that far out. here was the big bond issue. issue.a 30 year now you have total issues of 14

with an average of 3.5%. just over average of 16 years. talkinge have been around this issue, but how do you classify amazon? it seems like it is really challenging. you have technology colleagues ite looking at from -- at from that perspective, but how you analyze it when it is doing different things and expanding? charles: we consider it a retailer. most of the lion share is from the retailer. it seems like the growth on the revenue side is still going to come from the retail business. somel still see significant growth on other sites, but we see it as a retailer. let's talk about amazon as a credit risk.

one of the factors is that amazon's earnings are the tories are choppy.- what about the fact that this is a changing is this model? we don't know how they will be able to integrate a physical grocery store into a web business. happy you factor in those risks when evaluating amazon -- how do you factor those risks when evaluating amazon? charles: that is the elephant in the room. where is the spending going? we know they are spending a lot on fulfillment. now, they are spending a lot and borrowing most of the money on whole foods. it is really hard to mention where the company is going to go and what it looks like. from a credit perspective, you an old business model and don't have a lot of

disclosure to the markets. that is how it is tough for us. joe: another factor with amazon is the stock is incredibly well. there is an appetite for amazon equity in the market. lately, buta little not much. does that help boost your confidence in the company that in theory you would have access to equity markets? charles: we try to divorce the stock from the credit risk. one advantage is that every other competitor does not have that. has thatcompetitor level from shareholders. when walmart makes its -- whenment in 2015 walmart made its announcement in 2015, the stock that's crushed. amazon can do that in the stock price goes up. it gives amazon an advantage. thank you so much for joining us. coming up next, alibaba is out

with earnings before thursday's u.s. opening. we will to into the numbers you need to watch. this is bloomberg. ♪

julie: alibaba out with earnings before thursday's opening bell. the company had seen its stocks soar this year gaining more than 80% and making it the biggest chinese company by market caps. let us look at the numbers. alibaba is the white wine here and it has out paste the world outpaced the- world biggest companies this year. the yellow bar is rising faster

than its earnings estimates. the same is true for its chinese counterpart. investors has given it the benefit of the doubt based on the company's track record. it could essentially signal in market pullback. alibaba's incredible revenue growth has helped it. they had sales growth's laptops every analyst estimate. thisba has maintained impressive revenue growth, thanks to its dominance online. sales from its online marketplace have been hovering around 70% of chinese national total. realized in order to maintain its growth and must find the next driver for sales. the company is making a push into southeast asia. it is putting money into its cloud and entertainment businesses.

investors will be watching the number for the cloud unit before thursday's opening bell. all coverage for you when those numbers close. time for thes bloomberg business flash. a look at some of the biggest stories in the news right now. to spend about $1 billion in a programming. according to people familiar, apple is intensifying efforts with amazon and netflix. it plans to double revenue by 2020. ackman has a stake in hilton hotels. he said his pershing square made about a third on his investments. that is your business flash update. julie: what'd you miss? the author of the black swan says it will are confirmed -- concerned with the wrong geopolitical risks. he sat down with an interview

with bloomberg in new york and shared his assessment on risk. that is not the biggest risk out there. region.is confined to a first of all, i don't think we will have a nuclear war with anyone. nuclear in the air like fukushima was bad at the water. the military and i were friends and we talk about risks. we were comparing the risks. you can kill more people by a biological agents by a bo in agent than by a bomb in new york. the biggest risk is not nuclear. nuclear is too much of a reality. the thing that will harm you is

the thing that is not a reality. >> how should people be thinking about kim jong-un and north korea? >> i don't know about this. i don't spend time on this. i don't know the details. >> but you don't think we will have nuclear war? >> what you mean nuclear war, with china? >> no, with north korea. >> how can you call that a war? war or do we have to give it another name? >> because the outcome for one-sided so catastrophic. >> exactly, and it is very small. it is so far away. we are very good at the kind of

stuff, nuclear war. we know the risk and we are very good with nuclear. it is something the military is good at. at fightingble militants, terrorists. that we are not good at. fighting isis. skilled.highly so we can't fight them. the problem is the militias, not something structured like a country or a large nationstate? >> exactly. we can conquer them, you know the limits. ♪

>> walmart earnings tomorrow. that does it for "what'd you >> you are watching "bloomberg

."chnology congressional republicans react to presidenttrump's's comments.

lindsey graham says the president took a step backwards moralgesting there is equivalency between white supremacists neo-nazis and kkk. id messagesnell sa of hate are not welcome in kentucky or anywhere in america. president trump says he is disbanding advisory groups after tos quit saying trump failed condemn white supremacists. the president made the announcement on twitter saying, rather than putting pressure on , i am endingpeople both. people around the world have tin'sconfidence in pu handling of world affairs then in president trump. in a research for, 22 of 36