doesn't change how we run our company. andtalk about hb2 charlotte, we came out because it was our heart quarters and so we came out hard on that. in other jurisdictions, making sure similar laws didn't impact business. so, we come out hard on the issues but our employees know where we stand. and we drive our company along those principles. to have a courageous conversations, about what goes on. at lunchtime, i was with one of our teammates who was in charlottesville. next week, they're having a conversation where they are people from the university of virginia, to talk about what went on and what the implications are. everything starts at home. we have to make sure we run our company the right way. and when something is important to the public, we take a hard

stand. everybody is against hate. that is not a hard thing to say. the question is, how you operate this big company at the same time, so that all our team its -- our teammates can be who they are when they come through the door. i have seen examples of how transformative technologies like machine learning in artificial intelligence can be applied in retail banking. the about this business, wholesale business? how you manage the transition from people to machines on the trading floor. those trading things is tuned to that traitor, and that person. it is a huge impact, the information coming into their systems, it has changed dramatically. if you think about more broadly, all of industry, all of

businesses follows society that is affected by major trends. artificialnition, intelligence, the ability to -- thenters tribute data ability to store and distribute data. more more electronic vacation will continue -- more and more ication will continue. xyz that means is investment manager putting trades through machines, and back and forth, it is a higher and higher percentage because of their strategy. fixed income, i am behind that. platform fording loans, each one is different, for trading. that is going up. so it will be a relentless pursuit. how would you --

>> how would you characterize the trading environment, this quarter. >> solid. good, because of the lockup early on. but it is solid. mean sequential increase, decrease? >> we will figure that out. we have a way to go. >> a couple of questions about regulations. the treasury department has proposed a range of regulatory reforms for your industry, for banking. a companyhose handy without the help of congress. if secretary mnuchin were to get everything done he wants to get done outside of legislation, what would that mean for your bottom line? >> it would be good. i don't have a number for you, but it would be good.

and it will be good for society, and for america. there are three or four things important, that are going on. number one, the leadership of the agencies, they have proposed people that have to get through congress. second, rules that have been pulled back or rethought. then, there is rules that have to be changed, and tax legislation. analysts,tors, from from companies, from advocates, from press a first -- from professors, saying here is a set of principles, that we have to fix. technical rules and capital, more access to our capital account when we have $20 billion after the stress test, again. let us put some of that back out into the market for someone who needs the capital, because we don't need it, to grow. oversight? that, the volcker

rule, is too complex, by everybody's admission. can you make a straightforward execution? that's probably a good idea, because right now you have five or six different agencies working on different principles, and they all know it is too complex. he has proposed to make it simpler, and we have to try and figure out what it means, by that. but, keep the principles in place. know, there is a freak out about these new european financial rules. how big of a deal is it for bank of america? : it is a rule change, like all these are changes that go on all the time. it costs us money to implement, and things like that, but if you think about it, we have the number one research let warm in the world for the sixth year in a row. i'm sure people will pay us for that. >> $80,000 a year?

>> soon they will, because that is what they will have to pay. for a customers and clients with tens of million dollars of volume, that's not the biggest issue i am worried about. i'm worried about was going on with the hurricane. it will be fine. it is disruptive. withot sure we agree of all of it, but at the end of the day, it is the rules of the road and we adjust to it. >> scarlet, that is brian moynihan. i want to take this moment to recognize that we have been carrying this interview on bloomberg television and bloomberg radio, live around the world. scarlet: thank you so much, erik schatzker. bank, some comments from of america's ceo on the trading environment worried solid, so

far in this quarter. julia: we are ok. we are ok. [laughter] interesting, the things he had to say about regulation, as well. let's put our capital that use, particularly in light of the stress test results, and just a tie back to what he said about loan demand read the said loan a man's are strong. capitalow us to use our . that was interesting, and in line with what we just heard from president donald trump, the point you made about competitiveness. and the 12 and a half percent corporate tax rate in ireland, compared to what we have in the united states. when you make those two comparisons, and they are moving stock over the dublin, and if you want to talk about a lack of competitiveness in the united states, those country comparisons are a great one. , tolet: and its overdue move to do something with tax or from, because incomes changed

, 20 yearsars ago ago. mark: texas governor greg abbott says catastrophic range from tropical storm harvey, have moved east from the houston area, to the region around beaumont, texas. the governor warns, the worst is not yet over or the southeastern part of the state. mr. abbott added, 14 more theties have been added to federal disaster declaration, and he warned flooding could be a threat to life and property. he said the number of national guard troops aiding in the disaster, has increased from 12,000 to 14,000. speaking of the guard, they are now using helicopters to rescue residents from flooded areas of westhampton beach, texas. the rescues took place during steady rainfall. the guard and local first responders have had their hands full with harvey making landfall a second time.

at least 18 deaths are reported, and authorities fear many more bodies may be found, when the floodwaters receded. in a letter to fbi director christopher wray, illinois democratic senator tammy duckworth writes, carl icahn's former role as a special regulatory advisor did president trump, may have violated federal conflict of interest laws, and warrants a federal investigation. -- senator duckworth says icon may have abused his role, by participating in a government matter that directly affects his own financial interests. carl icahn says he never had ,ccess to nonpublic information or profited from his position. north korean state media says kim jong-un has called for more ballistic missile launches into the pacific after this week launched of a missile designed to carry a nuclear payload, over japan. forum in disarmament

-- at a u.n. disarmament four-minute in korea, -- a north korea's not just threat to us, but a direct threat to your people, who may be staying in the vicinity of the korean peninsula. u.s. ambassador to that form says the u.s. does not seek regime change, or an excuse -- send troops north of the armistice agreed demarcation line. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪

scarlet: live from bloomberg's world headquarters in new york, i'm julia chatterley. scarlet: and scarlet fu. joe: i'm joe wiesenthal. the question is, "what'd you miss?" president trump says lawmakers have a once in a generation opportunity to reform the law -- reform the tax system. iphone and in eliminating the home button. shells rise at how will impact the rest of the world. "what'd you miss?" president trump just kick off is speech to overhaul u.s. tax policy, and pushed congress to reach a deal on taxes.

i am fullyrump: and committed to working with congress to get this job done. and i don't want to be disappointed by congress, do you understand me? [applause] do you understand? understand. julia: let's bring in laura davidson, bloomberg's tax reporter. of questions.e he made a great deal about the growthth rate and said, could be higher here. is this going to be used as some kind of offset to justify tax cuts in the future? and the other thing he mentioned corporate tax rate. i thought that was dead. >> you are right on the 50% tax rate. republicans in congress who are writing the bills are really worried about him saying that. they say 25 percent is more

reasonable. that is what they're banking on when they score this bill. cut taxes little bit more, because we will get more growth from it in the long run. other than that, did we learn anything in the speech about the direction of tax reform, or was it just a speech? >> this was just a speech. this really got the ball rolling. republicans in congress have been working on tax reform for some time. the details, though, are still really knotty. we they have this rhetoric, are going to cut taxes and it will be great, and turn that into a bill by the didier, and that is going to be difficult. scarlet: do we know about the process and getting the legislation written and passed? will it be anything like health care, where there were closed-door hearings and everything was done in secrecy? >> republican leaders have said this is going to go through regular order, so that means an

open markup in committee, it will move to a floor debate, so this is an expedited timeline. under president reagan, when the tax reform, this process took like a year and a half. we are looking at three months, basically, before the end of the year. trump did not lay out any details, and we are still early on in the process, in congress. that, is there anything we know about the bill that would allow people to fairly characterize it as populist tax reform, which bent that thehe white house is going to take. will it change distributional g the economy,i as the president likes to say? >> things will be really nebulous. a tax cut for individuals is priority number one. then, some sort attacks tax cut for corporations. and that may be where they get. sort of temporary

rate reduction, and then in 10 years, we go back to our current tax code. scarlet: laura, thank you so much. coming up, another bloomberg school on the next iphone. we will tell you what tricks ceo tim cook may have up his sleeve, when he gets on stage next month. from new york, this is bloomberg. ♪

scarlet: "what'd you miss?" eagerly anticipating the company for a lot of the next month in san francisco. includingal features, featurecial recognition to unlock your phone, with your face. the new phone will not have a

home button. so, what does this mean for investors? we are joined by michael vogelzang, of boston advisers. michael, what does this mean for investors? under what circumstances should you buy apple shares, because of this release. michael: you have to look at this through the lens that, apple is probably the most researched and well studied company on the planet. so, if you are waking up today a new report that the new iphone is not going to , that is notutton going to move the market. that is not going to be helpful to investors. i think most of the 40% gain this year is about the new iphone coming out. it has clearly led the market becauser, and done so they have new technology coming out. that is a pretty typical pattern

for the stock, as they introduce new technology over the years. so, it would not surprise us if we have some indigestion in the stock, over the course of this year. the issue but the company is, its long-term strategy and its enormous financial strength. canada execute a strategy that allows it to leverage that -- canada it execute a strategy that allows it to leverage that premium value? and can they leverage that into a broader piece of the home, or work, or corporate life, or the other areas that they are targeting? people examine this stock so thoroughly. what do you know about apple that you don't think the market appreciates? michael: i don't think we know much. it is really a matter of placing your bets. for us, it is about time frame. and if you have a three-month timeframe, i don't think there is anything to add. i think the game is whether you

believe as an investor, that this strategy that tim cook is laying out, and that they are clearly telegraphing over the last year or two, will be successful. will it be able to take on amazon, in the home? todd, as they are describing it, be able to compete with siri, or not with siri, with alexa? will that strategy get them into the corporate market, more than they have now? there is a lot of skepticism there. the interesting thing about apple is, there is a lot of skepticism about the long-term nature of capital and whether it is going to succeed beyond, another iphone cycle that you are buying when you buy this company. julia: isn't that the point, though? because all the research you

point out, is quite binary. you buy the stock that can diversify away from being a pure hardware company, to what it could be in the future. you understand that there are those who say, this could be a one trick pony, do you understand the concerns? absolutely. if you go back a little bit, before the iphone, the seller euro phone -- the cellular phone industry is littered with other companies that have been driven out of business. at the whole ecosystem apple, as they call it, keeping it at a premium level is so they can lever that to different areas of expertise and opportunity. for example, the apple services is an enormous, quick growing business.

it is not a stable company and it won't be for a long time. but they are getting, maybe 30% of the growth rate from a relatively small part of their business. michael, thank you so much. michael is president and chief investment officer of boston advisers. julia: would you give up your iphone? michael: no. scarlet: no. julia: not for a blackberry? coming up we look at one the economic indicator that historically does not bode well, for u.s. equities. from new york, this is bloomberg. ♪

scarlet: "what'd you miss?" -- signs ofr market a bear market in stocks abound, if you look for them. on the bloomberg, the white line tracks that correlation, but it is inverted. so when the

white line goes down, -- correlations have now come down to the levels the bear in 2007 -- market. scarlet: what about a second warning sign? what about those protecting themselves from the downside? ratio of puts to call on the s&p 500, and the dax. you can see on the right-hand side, you can see those rising. levels not seeing seen since the lake market standoff -- the lake market selloff. rise inaddition to the volume of puts, people are paying a higher premium for those puts. i am looking at the s&p 90 days q.

as you can see, there has been a jump lately. this looks at the relative premium of how much people paper puts, downside protection versus calls, sort of upside exposure. not crazy levels or anything, but we are at above-average how much terms of people are really to pay for downside protection. puts, sohose extreme if you put it all together, the market is doing quite nicely, very close to all-time highs. but some of those things seem to be building up, correlations, .ptions market all the headlines we've had, the disappointments. actually, incredibly little amounts. scarlet: and you can see right now, in today's numbers. if you look at the indexes, with less than four minutes to go before the close, the dow is up,

the s&p 500 gaining 11 points, building on yesterday's come back from that first initial loss. york, this is bloomberg. ♪

♪ >> u.s. stocks closing higher

this afternoon, rising for a fourth straight day. gasoline at the highest in two years. i'm julia chatterley. scarlet: i am scarlet fu. joe: i am joe weisenthal. we want to welcome you to the closing bell coverage every day from 4:00 to 5:00 eastern. scarlet: let's begin with market minutes. we have a fourth day of gains for the s&p 500. it is notable these are not big gains we have been seeing. nevertheless as you were saying earlier, resiliency in the equity market. joe: what a comeback from yesterday morning. around 6:00 a.m. we were seeing real losses, now two straight games. -- days of gains. scarlet: the bear market not happening. julia: with and the bounceback in europe. strength all around.

scarlet: you look at different sector groups, eight groups are rising, led by technology. let's start with a paul, up -- paypal. it is up. it is not for a long time, but paypal returning to his old classic as it tries to expand and introduce credit cards with no annual fee to give customers 2% cash back to expand market share. h&r block having the worst day this year, off 8% after the first quarter innings -- theirgs indicated that stock has been raised. there is some expectation of expectations. boosted, so that was a gain of 4%, and analog devices beat the estimate. joe: let's take a look at the government bond market.

the day, slightly higher yield, 10 year yield up to 2.14% with the risk on sentiment. look at the intraday of the 10-year yield, because we got a strong data in the morning. you see the back-and-forth, but in the market you have the jump up after the adp. there was solid gdp pushing higher. one point 10-year gilts over 2.15% before kind back -- yield over 2.15% before coming back. julia: and you see a rebound in the dollar risk sentiment. euro-dollar was above 120 now down to 118.86. positioning. the gain, resilience in emerging markets, that has been the case all along.

chart, gn interesting #btv 2695 looking at brazil. spreads are coming in, that shows the relative relationship between the spread and the currency. the spread between the two is at the lowest level since 2014. the argument is we see a cds.ening of the cdf -- pendulum reform, critical for this country, capital economics saying the likelihood of getting the pension reform done this year, the greater than 50-50. credit agricole columnists saying 2019. who is leading who here? commodities,lly on looking at oil and gold, not a ton of action, the oil continues big.

oil is getting no list whatsoever from the hurricane in part because of the damages on the refining side. oil is down 1% below $46 with west texas intermediate. gold was on quite a rally at the day, down a little less than half a percent, but over $1300 an ounce, so around the high levels of the year. those are the market minutes. revised second-quarter gdp figures dropped, beating analysts test analyst estimates. analysts' estimates. let's bring in the chief financial economist from jeffries. the first question is, is this 3% sustainable, because we see how the first quarter tends to be weak, and we get a comeback in the second quarter. what does it mean for the second half of the year?

>> i don't think we will get 3%, but we will get something between 2.5% and 3%. , there have cycle been exceptions, and going back to 1991, q1 has been the we quarter, and you see a nice rebound in q3 and q4. consumer spending revised up, investment sending revised, so those are very encouraging details of this number. julia: they are encouraging, then look at the rate market. if we look at the levels year-round, it is the lowest since that scare in 2016. not sure whether the market is kind of behind the data given this backward look. may be think the market behind the data, but i think the fed is behind the data. looking earlier this year, they

were finally making its move to rate normalization on a consistent basis and getting off with balance sheet normalization as well? but the fed is in a mode where it does not know what to do or when to do it. so the market is basically saying it does not expect the fed to do anything. julia: the fed is behind the data and the market is behind the fed behind the data. joe: i am looking up the wirp function on the terminal right now. the market to find the odds of a a little you can see over one third of a chance, ois. with does that seem right to you with reporta today, the jobs friday? is it possible the market could be underestimating the odds of a hike? ward: i think it is, and there have been fed officials who have

tried to put a december rate hike back on the table. phil dudley, loretta as well. i think it is conceivable that we have to see if there is better inflation numbers. the fed also has to get out the onption to pull the trigger the balance sheet normalization because that will have to happen before the fed makes the next hike in interest rates. scarlet: do you worry for the data dependent fed that we might not get the best read of the economy, given harvey and texas and louisiana? typically these kinds of disasters create a little bit of habit for a. -- for a time. we know they will have to be a lot of construction spending to repair that region. there will be a lot of automobiles that have to be replaced. so it will make the picture

murky for a time, and it could take out of q3 growth, though i think that looks solid. on the longer term, three to six months time rising, and the economy will be back on track. julia: i want to ask about the impact of what has been negotiated. we have the financing efforts. you think these make it less we see some kind of standoff on the debt ceiling and spending bill that has to happen when congress returns next week? more or less likely? if congress is looking for an opportunity to show it has some common sense, this is a good catalyst for them to do so. it should lower the prospects of there being a major debt limit crisis, but the political environment in washington is pretty difficult to make sense out of.

the answer is it should make the debt limit passage easier, but i don't know. joe: not very optimistic statement. the catalyst for a deal. with,t: i want to end jeffries is helping victims of the hurricane. tell us about this move by jeffries to donate trading. ward: jeffries is doing a few things. it is donating trade things,on's to help people down in texas. are alsoemployees making donations and we have a sizable number as of earlier this afternoon. it is the responsible thing to i very pleased to be a company that recognizes this is a situation where we can help the leaders.

so great to see you making a contribution. thank you for joining us. ward mccarthy from jeffries. now let's move on. talking hurricane harvey, some of the most productive oil ports affected. crude is actually falling since it first made landfall. what is behind this counterintuitive move. he has a lot to do with the u.s. as an energy exporter. this is bloomberg. ♪

♪ mark: it is time for first word

news. president trump was in springfield, missouri to push his ideas for tax reform before getting to his remarks on taxes, he discussed tropical storm harvey and said all of america is grieving and said he would help citizens affected. donald trump: our first responders have been doing absolutely heroic work to shepherd people out of harm's way, and their courage and devotion has saved countless lives. they represent the very best of america. mark: the president added those impacted by the storm are not alone, saying we are here with you today, tomorrow, and we will be with you every single day after to restore, recover, and rebuild. officials say it is too soon to know if the thousands of used in area homes flooded can be

rebuilt. some have been flooded with as much as six feet of water. some officials said it could be flooded again after the water releases from resident dams. oil companies are benefiting from supply gaps in europe after harvey devastated the oil refineries on the gulf coast. we spoke to a reporter today. nearly a quarter of u.s. fuel output has been knocked out since harvey made landfall. port arthur, the largest recovery -- refinery in the united states, is shut down. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪ emily chang had an exclusive interview with michael world conference

in las vegas. she asked him what went through his mind as harvey ripped through texas. dell is headquartered in the lone star state. >> a lot of thoughts went through my mind. this is a national disaster. it could have happened at any time. think about the people there. have lost all of their possessions, small businesses, completely wiped out. we are certainly thinking as a company and family foundation what can we do to help. because we have already done some things. emily: what have you done? donatingmpany is hundreds of thousands of dollars. we are what -- matching donations, contacting customers, 300,000 customers. the affected area is enormous. i think you will see that we will do a lot more.

success inve some life, that comes with some responsibility. scarlet: that was emily chang with michael dell, chairman and ceo of dell technologies. julia: the largest u.s. refinery is shutting down in the wake of the second landfall. conventional wisdom would say oil prices would surge. that is not happening in the post shale boom world. crude has dropped since harvey hit texas. the economic effects are so different from previous storms. let's bring in the colonists from bloomberg. he has a piece on harvey and energy markets. pointe been making the this is a gasoline story rather than an oil story, but when you look at either of these two brady -- it is a pretty subdued response because we are at a turning point for

the disruption is more of the demand side with activity cuts and things than the supply side. >> but is the way we thought of it. if you go back to 2005 with katrina and rita, a large portion of oil and gas production came from the gulf. in agets shut down hurricane. we have had a few things happen. we have had the shale boom, so that moved inland, away from hurricanes. we have seen flooding in south texas that has affected things. proportionately it is smaller. demand stopped growing as much for oil and gas. isthat kind of gap to fill less pressing. and we have been building shale up. scarlet: and the bgi prices have been falling. the gap between wti and brent is widening. what does that mean? how is the change the -- how

does it change the behavior of liam: refineries? liam:it is falling because refineries have shut down and they are producing crude. brent has been doing better because you have got fewer barrels flowing out of the u.s. with the port shutdown. you have had disruptions in places like libya, so that is keeping isis up. that they take -- prices up. you have this ongoing disaster in the gulf and the market is shrugging added. joe: who are the refiners whose infrastructure has not been hit? opportunity is this? liam: if you have a refinery that is up and running with oil and gasoline, you are going to be making more money. we have seen the margin spike over the last week. oryou say you are pbs

hollyfrontier corporation you make money. but stocks have rallied very hard. we can see disruptions last .onger we did not see that during the treat and regret -- trina -- katrina and rita. julia: this is not the same kind of demand, supply response we see in the united states. online --systems go offline and they are not providing the gas resources they , the have in the past probably would have seen in the u.s., it has pushed out other countries like europe to get these resources. liam: absolutely. over time, what we are going to it on the natural gas side, is a big gas exporter if we have another harvey, five or seven

years down the road. what you will see is gas prices will stay flat or go down, but they will rise in asia because people are defending -- depending on u.s. gas. scarlet: if this is the way energy markets react there is an event like this, -- the next time there is an event like this, how will that change market behavior? liam: it is a very different world from what it was 12 years ago. i think you simply have to bank onhat you used to is not going to happen anymore. go back to katrina and rita, when that happened gas prices did not just spike. they spiced in future terms -- terms in future several years out. people saw the production being

shut down, don't know what to do, have to find cargo from somewhere else. what we know now is it will not affect market in the same way. scarlet: the bloomberg gadfly columnist, thank you. you can read that at gatt ago on bloomberg. warren buffett. find out what he says about is $11.5 million investment game in bank of america. this is bloomberg. ♪

scarlet: warren buffett is now bank of america biggest shareholder after by 7 million common shares. he spoke -- our reporter spoke with warren buffett earlier. >> we exercised because the dividend we will get now that bank of america has increased

their common stock dividend, now we will get $280 million in $30t, we will be getting million plus more annually more than preferred. and we announced if the dividend and common got to where it exceeded, we would exercise our warrants. it was fairly automatic. now we will hold the comment. reporter: does this go with your philosophy of holding a good business over a time, then investing in it, or is this a deal? i follow the bank of america since i read a book on it 25 or 60 years ago. it has got an amazing history. they got in trouble. they made acquisitions and it cost them a lot of trouble. insignificant trouble,

but that -- in significant trouble, but that is like an athlete. you get in trouble, you get back in shape. i came in at a time when people were critical of the institution and to some extent the management. i believe they were wrong, so i got the idea in the back of my mind a couple days ago. i called brian and ceo and we made a deal. david: bank of america is dependent upon the rates. they are really in the retail consumer banking business. do you know what is going? warren: i know what you say, but not really. they are doing fine currently. they had a lot of trouble in the past. those one byrough one. some were expensive to solve, some were time-consuming, but a new they would get the job -- i

knew they would get the job done. compareda retail bank to a jpmorgan or something like that. it is quite an institution. it will do better earnings wise if rates move up, but is doing pretty well now. david: you earn something like 7% from common stock. take it out in three years, five years, is a 10%? or is it 3%? warren: it is likely -- may have had a history of repurchasing shares, so 7% or whatever the upber might be, it will go if they repurchase more shares than the issue which i think be the case. i think our percentage will be higher three years from now, but that will be because of repurchases. david: let the spend a similar

data to interject capital in a home in lynn -- canada, a home lender. and now you are administering the second -- is that discouraging? warren: we knew it would be subject to the shareholders. if they voted, we biased, if they don't, we don't buy it. -- we buy it. if they don't, we don't buy it. there is a loan backstop that was cheaper than the one they had. so we like the stock, but if they vote it down, it will be fine. scarlet: that was warren buffett of berkshire hathaway. mark: looking really healthy. it has been a few weeks since we saw a record highs in u.s. equities. we have a chart to explain why.

this is bloomberg. ♪

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mark: i am mark crumpton. it is time for first word news. texas governor greg abbott says the catastrophic range from harvey have moved east from the houston area to the region around beaumont, texas. he warns that the worst is not yet over for the southeastern part of the state. withile we are dealing what is now receding waters in harris county and the ongoing evacuation as well as safety rescue process in harris county, we are now also dealing with catastrophic conditions in southeast texas. 14k: governor abbott added

more counties to the federal disaster declaration, warning that flooding could be a threat to life and property. as he welcomes his south korean counterpart to the pentagon to discuss tensions with north korea, defense secretary james mattis told reporters "we are never out of diplomatic solutions." his comments in contrast with president trump, who today tweeted that as far as dealing with pyongyang, the u.s. has been talking to north korea and paying them extortion money for 25 years, talking is not the answer. meantime, the united states and south korea today called on the international community today to work together to resolve the at as with north korea united nations disarmament forum in geneva. the american ambassador says the united states does not seek to be a threat to the kim jong-un regime. >> however, we must respond to the serious threats it makes

towards the united states and our allies. we want to be clear to north korea that the united states has the unquestionable ability and unbending will to defend itself and its allies. d addedmbassador wooo all u.n. member states have a responsibility to fully implement their un security council obligations and take additional actions to put diplomatic and economic pressure on north korea. britain's princes william and harry paid tribute to their mother today, the eve of the 20th anniversary of her death, by visiting the garden created in her memory. the princes, along with williams wife the duchess of cambridge, visited the sunken garden at london's kensington palace. the royals also met with representatives from some of the charities diana supported. powered by over 2700 journalists in 120 countries all over the world, this is bloomberg news. i mark crumpton. this is bloomberg. scarlet: thanks so much.

let's get a recap of today's market action. u.s. stocks rising for a fourth day, overcoming early weakness. there was a twitter post from the president on north korea. the previous day, a north korea scare. >> that seems ages ago. the indication that people were going to sell stocks. >> it did cap dollar gains, we saw the dollar gaining after strong u.s. economic gdp data. a prelude to payrolls. arehe technical analysts looking at the fact that the s&p 500 closed above its 50 day moving average. >> we shall continue to watch this week on "what'd you miss?" it has been about three weeks since what we were talking about their, new record highs on somewhat choppy trading. let's go to bloomberg's abigail doolittle for what this may mean next for u.s. stocks. abigail: joining me to give his view on the market actions, jonathan krinsky, chief market technician.

great to have you here. we are talking about the fact that the s&p 500 did close above its 50 day moving average, but you have been putting out adjusting modes -- notes that, tengion. bearish divergences stand up to me. what do you think is going on there and how do you relate it to this great chart of the s&p 500? >> there is a couple things different now that we have not seen over the last year. we will get to those in a second. first, we do have this trend of the s&p 500 over the last year. as a trend follower, there is really nothing to be scared of your. it is a pretty strong uptrend, above its 50 day moving average. we still have not tested the 200 day moving average since the election last year. from a bigger term perspective, there's nothing that concerns you too much there. we have been consolidating the levels to watch and the upside, the old highs around 2475. there has been some positive development the last couple of

days, but what we have been talking about the last couple weeks are negative developments that are not enough to get us to turn bearish, but are enough to say something is a little different than what we have seen in this unbiased uptrend and everything firmly to the upside of the last year. abigail: relative to this chart, that area of consolidation, that sort of a triangle, it looks like we are having a little break after the upside today. you think there's going to be followthrough? it looks as though if there was a measured move the downside, it would be a perfect test of the 200 day. >> i think you have to give the benefit of the doubt to the bulls because we are in such a strong uptrend. the issue that would cause us to say maybe the breakout won't be as powerful is because of some internal deterioration, so there is not as many stocks carrying the army, so to speak. we are a little bit less and is yesterday, but you can't fight the momentum right now. abigail: eight years now, pretty amazing.

the s&p 500 sticking with it to some degree, up about 10% this year. the msci brick index of 30%, on paper its best year since 2009. you have a great chart here. can you take us through this one? >> emerging markets, we know one of the best performing areas of the market your today. is a subset of that. the interesting thing of this chart is it is just back to this level that has been in resistance and 2012. the more times you test the level, the more times it is likely to break the upside. what gives us confirmation that is happening is the relative performance to the s&p. every time it has attempted to break out, it has been in pretty strong downtrend versus the s&p. we have now broken that downtrend and started to move to the upside relative to the s&p. we think bric is actually a decent place to be. part of that is due to the weak dollar story.

the dollar may be set up for a countertrend move. all else equal, this chart looks like it is going higher. abigail: does this talk to us about the liquidity, investors are chasing yield, jason yield? onhave emerging market index paper its best year since 2009, that huge move up and out of the financial crisis? >> that is part of it, and part of it is at some point rotations happen, and whether you see that within sectors in the united states or within countries globally, we have been in a sideways trading range, not only in emerging markets and brics, but most of the world outside the u.s. and select markets in europe. we have been in the cyber trading range for his 69 years, so it -- 46 to nine years, so i some point money starts to rotate. asx is outperforming about two times your today, up 17% versus s&p up 8%.

that is a story that started earlier this year and continues through the end of the year. abigail: good stuff. returning to the u.s. and perhaps a little more of a bearish tinge, the russell 3000. you are talking about the fact that brent is deteriorating. >> russell 3000 is for a broad-based, represents 93,000 u.s. equities. nothing wrong with the primary trend. it still has not even tested its rising 200 day moving average. in order to reverse back, it will take a lot more deterioration, a lot more time. what you have down here is the percentage of stocks within the index above the 200 day moving average. there is no magic number, but we tend to focus on the 60% threshold because that is where we bounced after brexit, entering the election. spent a couple days below but quickly bounced up. this time we have held below 60%. we have been there about two weeks now. it is a bit longer than we like to see. that is what is getting us a bit

more concerned. 2015, go back to summer that july-early august time period before we saw the rollover in august, we had a similar situation where we held below 60% for a couple weeks. brent did not bounce. i think the trend is in a better position than it was back then, but the broad picture does concern us. we do need to see the pick up pretty quickly before we are out of the woods. abigail: it sounds like you are sticking with the bullish trend, but are a little cautious and should it reversed, you would be going perhaps that way. >> one other thing we mentioned, x u.s.. if you look at the stocks above the 200 day, outside the u.s. it is around 70%. so not only is the trend good outside the u.s., but brett is much stronger. if you are able to, i suggest sticking outside the u.s. for now and maybe we will see breadth improve. abigail: international equities outperform.

this is jonathan krinsky of them cam partners. scarlet: thank you so much. coming up, from people to machines on the trading floor, how bank of america ceo is implementing technologies like machine learning and artificial intelligence. from new york, this is bloomberg. ♪

scarlet: "what'd you miss?", from people to machines on the training floor. power banks managing this shift? in an exclusive interview, brian moynihan discussed the impact of machine learning and artificial intelligence on the bank's trading business. >> it is huge impact. people assess information coming through the systems to them from other companies. it's changes to it. more broadly -- it's changes

dramatic. more broadly, all of society is affected by three or four major trends. voice recognition, artificial intelligence, the ability to store and attribute data and distribute computing. all that allows us to have tremendous ability to make the business more efficient. five gallon equities, which was already electronic five years ago, has pain out -- has taken out 10% to 15% of people, and it will continue. more and more electronic n.cation -- electronificatio what that really means is xyz investment manager putting through trades directly through the machines through us to the market and back-and-forth. that areome, behind becoming more electronic all the time. we have a buy low and trading platform for loans, trading and showing business. it will be a relentless pursuit. >> how would you characterize

the trading environment this quarter? >> solid. last year's third quarter was the best quarter 16, very unusual because as you know first quarter, second quarter, third quarter. all last year was going to shifted a quarter out, but it is solid. sequential increase-degrees? we will figure that out. the whole quarter is made in september, so we have got a wild to go. >> so we are at where the end of august? >> we are ok. >> a couple of questions for you or by regulation. the treasury department has proposed a range of regulatory reforms for banking. a of those can be accomplished without the help of congress. if secretary mnuchin were to get everything done he wants to get done outside of legislation, what would it mean for your bottom line? >> it would be good. i don't have a number, but it would be good. good for america. if you think about, there is

three or four things important to what is going on. >> what is specifically important to you for the company? >> the leadership of the agencies. there have been proposed people, they have to get through congress. second is rules that have been pulled back or rethought. then rules that have to be changed and actually legislation. what the secretary did is get input from investors, analysts, companies, advocates, professors , and said here is a set of principles we have to fix. the key once ross would be capital, liquidity requirements, and technical rules, and allowing more access to our capital account when we have $20 billion after the stress test. let us go out and put that back in the market so somebody else can use the capital. those are the most important things for us, capital, liquidity. to other people, it might be something different. >> trading oversight? is tooer -- volcker

complex by everybody's admission. the question is can you make it a more straightforward execution? that is a good idea because right now you have five or six agencies working on different sets of principles and they know it is too complex. the question is how are we going to go about it and he has proposed to make it simpler. now we have to figure out what to mean by that. >> and keep the principles in place. we don't have proprietary trading and we are not doing that, the question is proving it. ones you probably know, side is beginning to freak out about new european financial rules. how big a deal is it for be a bad? >> it is a rule change like all rule changes. it costs us money to implement it. if you really think about it, we have the number one research platform in the world six years in a row. i am sure that people will pay us for that --

>> $80,000 a year? >> i assume they will because that is how they have to get it. i think what our customers that do tens of millions of dollars with volume, to me it is not the biggest issue i have been worried about. i am worried about what is going on with hurricane, other things. it will be fine. it is disruptive. i'm not sure we agree with all of it, but at the end of the day , rules of the road, you go on with life and people adjust. cracks that was bank of america >> that was bank of america ceo speaking exclusively with bloomberg. >> up next, italy's economic recovery is expanding as a recovers slowly from its worst crisis. that will the country's political uncertainty for a wrench in the process? >> we will discuss. this is bloomberg. ♪

>> "what'd you miss?" italy's economy is far from done with political uncertainty. after the former prime minister's richest nation -- former prime minister's resignation, the separatist movement has remained doing well in the polls. earlier i spoke with fernando juliano on the anxiety toward italian politics and what is to come for the country. >> so far, as you said, it has been quiet, partly because of the european central bank, which is still tiptoeing toward the exit from its quantitative easing program. so italian bond yields have been quiet so far. but we are entering into a very busy season. there are some regional elections in sicily coming up and the five-star movement could make gains. that is the populist eurosceptic force.

next year is the big one in the spring, the general election. most people believe there will not be a single party in charge of the next government, so that will make things a little messy with for everyone. joe: let's talk about the five-star movement. when concerns about italy were at their peak -- or their recent peak, there was a lot of talk about the five-star movement, people trying to figure out what they stood for. where did they stand in the polls right now on a national scale? >> at the moment, they are neck and neck with the democratic party led byntrist matteo renzi, the former prime minister. they are a little ahead sometimes, just because matteo renzi is losing some of his shine. the big story is the return of silvio berlusconi's central right party. everybody has forgotten silvio berlusconi. he seems to be so 2011, but now he is back and his center-right

coalition is gaining steam and could well be the winner of the next election. joe: remarkable. we have seen obviously over the last several years italian bond spreads have, in quite a bit narrower than in recent years. nonetheless, in recent days there has been a little bit of a kick up. what is going on that is renewing some of that anxiety? >> i think lots of bond traders have their eye on what the ecb is going to do. i think italy is probably one of the countries which are really in the firing line if and when the ecb decides to move. there was a little bit of an uptick, some connected it to an interview which berlusconi gave where he spoke about currency as possible arrangement for a late. having the euro alongside some domestic currency.

that created some anxiety because people are listening again to what berlusconi is saying. the big question really is what the ecb is going to do and how that will interact with the domestic politics. if we see the ecb is stepping back from reducing the pace of qe and at the same time the election not looking like there will be a clear winner him the election, that is a dangerous mix wit will get -- and that will get investors worried about italy. on the other hand, the cost of normalization for the ecb might take longer, and that will be good news, i think, for a late, the -- for italy because it would give more time to get over this messy election. joe: of course, the italian government bond market is one of the biggest in the world, so any talk of a move away from the euro or parallel currencies or anything is bound to make people nervous. how does the general public feel about the euro these days?

it seems in general across europe, there has been some momentum toward the euro with the economy having improved. what does that look like in italy? >> italy has turned into one of the least and busy after countries when it comes to -- least and is the aspect countries when it comes to the euro because the economic crisis has been profound and their recovery is not being felt. italy is recovering. the second quarter was healthy. that is pretty good by recent standards, but italy is still lagging behind other peers, many other peers in the eurozone, with the exception of greece. that means people are really not feeling this recovery yet. unemployment is still high, which growth has been very poor. combination will continue to cause some anxiety. having said that, italy is a mostly conservative country.

suddena of all of the ditching the euro to go to some sort of weird arrangement seems strange. lesser member, berlusconi has always been good at playing these games, for years talking populist but actually being quite realistic when it comes to economic policymaking. he has been talking about parallel currencies for years, has never done anything like that. , populism,kepticism but at the same time, lips in the dark not so much. joe: that was my conversation with bloomberg view columnist ferdinando giugliano. >> coming up, what you need to know for tomorrow's trading day. from your, this is bloomberg. ♪

scarlet: u.s. stocks rising for a fourth straight day, s&p 500

above its 50 day moving average. coming up, u.s. personal income and spending data. joe: we have got earnings tomorrow, dollar general and lululemon. julia: don't miss this, the ninth bric summit kicks off in china tomorrow, too. joe: i forgot about the brics. [laughter] julia: that does it for us. "bloomberg technology" is up next. joe: have a great evening. this is bloomberg. ♪

>> i'm alisa parenti in washington, you are watching bloomberg technology. let's start with a check of your first word news. harvey pushes through louisiana today, but the tropical storm

still poses a continued statewide threat of flash floods and tornadoes. schools and government buildings reopened after being shot a day before as concerns increased about potential flooding. congress returns today with lawmakers under pressure to avert a government shutdown. they are also under pressure on tax reform from president trump, who spoke today in missouri. pres. trump: i am fully committed to working with congress to get this job done, and i don't want to be disappointed by congress, do you understand me? [cheers] speaking by his south korean counterpart today, defense secretary jim mattis told reporters we are never out of diplomatic solutions on north korea. that is after president trump tweeted the u.s. has been paying extortion money for years, talking is not the answer. people against the fcc plan t