children at the border. >> we need to ask. to this is the week when i think hopefully all of us can come together and fix the problem. >> mcconnell said he is reaching democrats for approval in the senate. the united nations says it illegal israeli settlements are spreading and further eroding prospects for peace. he told the security council -- they are failing to >> please note that all

developments are taking place in the broader complex of the territory. >> it has escalated in recent months near the border. palestinians have been killed. canadafriedman says won't escalate or back down on .rade issues canada will modify its tariffs based on feedback. believes a win-win deal on nafta it is possible.

twitterws on tictoc on powered by more than 2700 journalists and analysts in over 100 countries. >> we are 30 minutes from the trading here in the u.s.. major averages following the most in three months -- three weeks. >> the question is, what you miss? would -- what did you miss? goldman sachs chairman and

policy andonetary rates. why he says it is not -- argues that a study price isitcoins underwhelming. trump doubling down fronts.ple trade it ordered additional tariffs on chinese imports. we responded swiftly and valued .o retaliate

concerned.e be by marty- we're joined schenker. what are the chances at this the deadline is here? >> that is when the first wave happens. some time to come back from the brink, but donald trump seems no reason not to impose these tariffs. are there really signs discussions going on? is therersonal feeling

has to be more pain in the marketplace. >> some days you have the markets down and some days it doesn't seem to care at all. when you look at the headlines markets takingay this a little more seriously? wei would have thought when -- ied at one point, the fact that small caps are outperforming, you could argue .n the trade issue

i think it will be interesting what china does not only a , they importariffs over $200 billion per year of u.s. goods. they could use administrative or bureaucratic measures. a nuclear option would be to look at u.s. firms in china. i tend to think they won't do that.

waitnk they will try to this out. the pouha over the , you want to boost export share, it is actually well-behaved. it is sort of a two-year high. >> we have a chart if you want to pull it up. this is a reference index that i have talked related on a daily basis. as you can see, it is quite a bit higher. that reverberated throughout the

markets, so certainly they could use to produce the president. actually in a trade war? i also they china is the number one purchaser of u.s. that's. in these times, you never know. you have to watch the options and make sure there is not any sign of diminished demand. do we know what happens when

china engages in something like a trade war? how do they get results? make the point that the chinese timeframe is not weeks or months, it is centuries. they play along game and they will wait it out. lots of different things going on. how much of that trade is just anxiety? little i think. obviously, e.m. is prone to global growth. the u.s. is one of the primary engines of the economy. we have seen tightening in the united states and over the last few years in the zero interest

rate era, what you saw is born companies taking on tremendous amounts of dollar-denominated debt issued by non-us actors. as u.s. rates go up, that isomes problematic, which really the ultimate driver behind the argentina's and turkeys of the world. back and askedrn an academic question. what are tariffs for? oft if everyone got rid tariffs? are they just for protectionism at this stage. >> it is sort of like taxes used

to fund the government and create behavior. taxes, ite eliminated would kind of be a free-for-all in trade and it would be a very interesting experience. that is never going to happen. >> you can check out his work on mliv . coming up, where is the pay raise we have been looking for? this is bloomberg.

behind.ross is lagging wages are rising at a slower rate than 2016. joining us now is no smith. you cite a number of different actors on why wages are falling behind. of all the different explanations, which one sounds the truest for you? i think we'll need a few more long-term, iof the would say the most convincing is what they call market power. more more employers are able to

.et wages to employers it is really hard to switch. else at thatbody point. . that is also bad for the economy . structural change that they take away from the wage growth signal? these are numbers that the federal reserve look for to estimate when rates should start rising, but if they can change over labor market power come up with does it say about the weight we have put on the numbers? a turnout --

internal problem. when they look at inflation, there is cost put inflation as well and that is a problem as well. it makes it hard. you have to wait a number of years before you can tell something going on. on a there any policy municipal and state level, especially when you're talking localizedtony on a level. is there a potential that it could be addressed? is vanfirst thing to do noncompete agreements that says if you leave the company, you cannot go work for any similar company for number of years.

>> you have seen an extraordinary decline. , doou look at industries you see any other different trends? thatere is some evidence unionization counteracts the market power so when you have employees that are very powerful and you have unions, they can fight back against that. we don't know why unions declined the private sector. it could be because of global

competition. weakening union protections. making a probably try more union friendly regulatory environment to counteract some of the employee power. >> what i find interesting is something you point out in your column. slow wage growth is not limited to the united states. we also see it in japan which has a lower wage growth been here in the u -- the united states. are we seeing something else in japan back and help us figure out what is going on in the u.s. question mark >> it may be getting more of a problem. hard to tell you after it japan has this other problem which pay raise is entirely based on age.

now you have high paid baby boomers are retiring and not being replaced. , ite you see wages going up is overwhelmed by the effect of these baby boomers. we probably have a bit of that. --have somewhat age-based age-based salaries. >> you mentioned that some of the answers to these puzzles would not be answered for long time. the discussion we are having about wages could be inflation in general. what is the fed to do overall with so much ambiguity about

what the data is telling us? cautious. don't make any big sudden moves. i don't think any big, sudden moves. also we don't know how much the interest rate can really affect , so i like inflation think the fed is doing the right don't raised deftly interest rates for quickly. >> thank you. to us aboutalking the persistently slow wage growth. >> wall street's believe in netflix is not wavering. shares crossed the $400 mark for the first time day-to-day.

high $500was a street after goldman set a previous high of 490. british airways owner already .ad two bids rejected the beuerlein -- the airline is light at about $24 billion. that is your bloomberg business flash. pace fort, apple on its worst day in two months. what that could mean for apple's revenue.

apple shares on pace for the worst day since late april. they are the biggest point drag on the s&p and the nasdaq.

gap in thatty big investors not expecting that. usually when we see big selling shares, it comes on the iphone demand weakening. today it is action on the trade war fears. if we hop quickly into the bloomberg and take a look at the a couldtion, we see really hurt the numbers overall. >> the other big tech companies, they have been shut out in the market for so long and that has been a source of frustration. >> a company that has made their inroads into china which is -- is the one that could get hit here. >> the question around apple and china is could apple ever

slapped tariffs -- china ever slapped tariffs on apple #>> they received revenue out of china last year and another chart we had it is pretty amazing. are thewhite, these u.s. exports to china. 30% of the imports going into china from the u.s. is apple. isn't it assembled in foxconn? wrecks a few weeks ago, president trump said apple would be exempt from tariffs rob back into the u.s.. whammyould be a double in terms of a turf situation on apple.

ultimate emblem of globalization. >> the market closes next. 290 point decline here.

scarlet: "what'd you miss?" stocks in the red, but well off their lows. andion between the u.s. china in particular dragging down the dow. joe: if you are tuning in live on twitter, we want to welcome you to our closing bell coverage every weekday from 4:00 to 5:00 p.m. eastern. scarlet: we begin with market minutes and start with stocks as we see the selloff pretty steady in the dow throughout the session. we talk about stocks bouncing off the lows. the dow to some extent but not as much as the other major averages. the s&p and nasdaq managing to be once again somewhat resilient .o trade concerns apple was down, facebook was down, but netflix, amazon were some of the stocks gaining.

split and a of a divergence once again. we've been talking about the world cup and if that is going on, the's lack of volume, s&p 500 volume is still about a percent above the moving average. while the games were on, more than made up for when the games were not on. in terms of individual stocks hit by trade concerns, a lot of the agriculture stocks selling off. equipment makers as well as fertilizer companies, general motors down among the many companies that either sell cars in china or have relationships with suppliers, etc.. just a lot of supply chain complications we've been talking about. one stock that was bucking the downtrend confirming it is holding deal talks with a

potential suitor following on the heels of a report in reuters that signaled partners might be interested. yesterday, it was a very heavily shorted stock as well, something to keep in mind as we see that pop. joe: let's look at the government bond market. with the moves we saw in equities, not surprisingly, people buying u.s. bonds. long and falling a little bit more. we were down earlier in the day, of course, as the selling was more intense. i think the 10-year yield was around 2.85% at one point today, worked up inss, we the middle of that fed meeting last week, so coming up quite a bit already. in currenciesent as well.

the bloomberg dollar index at its highest since last july, and 11-month high. pretty rapid move. there's weakness across the emerging markets after president trump about to impose tariffs on yet another $200 billion of chinese imports. alsoaiwanese dollar trading for the first time after a three-day weekend. you can see it there off by .6%, .7%. the turkish lira at a new record low, and the south african rand, of course, down by .9%. a quick check on european currencies. mario draghi said the central bank will be patient raising rates. later on, another ecb officials said he expects the central bank to start raising rates after summer 2019, and a quick mention of the pound falling to a seven-month low ursus the u.s. dollar after theresa may lost a

vote on her brexit legislation in the house of lords. the next vote is tomorrow in the house of commons over an amendment that would give parliament to stop a messy, no-deal brexit. joe: let's look at the commodities world where it was not a very pretty day. it was basically read all across the board. soybeans getting slammed down over 2%, of course. that is potentially a commodity that could get hit very hard in a trade war if china were to slap tariffs or reduce its imports of u.s. soybeans. not good for u.s. farmers. seen as aen bellwether for the global economy concerning its displeasure at the news. julie: at one point, soybeans ite down as much as 5%, so is interesting they have that steep decline. they are down about 10% just in june, but still, they bounce back a little bit. joe: and those are today's

market minutes. scarlet: for more on today's market action, let's bring in at a downing's chief executive officer. nice to see you. had --hat downing -- abbot downing's chief executive officer. >> i think you've seen the level where the little bit rhetoric is up, the noise is up, but in the action, we have not seen anything come through, and it's difficult for investors to parse. they hate the unknown, but the fact that tech and some of the other industries have held, seems to indicate maybe there's that intention on being gross bias. joe: that's been the launch word for years. this is nothing new for them. does that suggest sort of

staying the course and not getting worked up for these headlines for investors? >> it's hard for anyone to get worked up about the headlines from the aspect a global supply chains are so intricately interwoven. technically foreign manufacturers any factoring cars in the u.s., u.s. people sending parts abroad and bringing them back and bringing them back in, so understanding the implications, too soon to try to trade on those implications, and i think the feeling is cooler heads should prevail, that this is just another negotiating tactic to try to get some action on the other side. scholar: i like what you said about how the bull market is not very old at all. people take about it starting in march of 1929, but you point out it started in 2016 just before the election. explain how you came up with it, howif that is the case, long it has to go. >> we do think this cycle is long, but cycles do not die

because they have been going on for a long period of time. if you think about what a bull market feels like, the economy did not start to turn measurably when uttered happen, employment started to turn, employment was down, balance sheets starting to rebuild. forad just been rebuilding long enough things were in decent shape and you had the ability to uptick that rate of growth after the election was peeled back, and again uptick a little more with the peel back of tax. scarlet: you noted how the optimistic data turned to hard data. do you see any evidence of the optimism turning south? what usually sours first? think the confidence is one of the things we are watching closely and one of the things you can tell the fed is watching closely as well. in hisn powell mentioned press conference last week that

a lot of the individual fed governors were talking about the fact that businesses were thinking about delaying decisions, but they had not seen it come through in the data yet, so we watch both the business optimism and consumer optimism, and they're still running declines, but we are watching, talking to companies talking to lots of different entities trying to figure out and does that change. scarlet: there is a potential for the turn. thank you so much. some breaking news crossing the bloomberg, a couple of earnings. let me start with oracle, the business management software company. revenue higher than what analysts were looking for. if you look at eps, $.99 .djusted eps for the corner in terms of what analysts were looking for, i do not have a comparable number for that so far.

in terms of the outlook, oracle sees double-digit eps growth in 2019. right now, investors seeing that as good news, and you can see the stock up by 4% in after-hours trading. julie: we also have breaking news on starbucks. the company doing some restructuring, announcing some strategic priorities. the company also saying third-quarter same-store sales 1%. rise the estimate was for a gain of 2.9%. this was mark the worst performance in about nine years for the company in terms of its comps. in addition to that, it is making changes. it will close about 100 50 company-operated stores in densely penetrated u.s. markets next fiscal year. leslie patent spoke exclusively to starbucks' ceo and she joins us from chicago. give us more details on the

plans and what you talked about. >> closing stores here in the u.s., it's about three times what they normally do, so it is significant for them, and johnson told me they are focused the most probably penetrated markets, so we are thinking major metro urban areas, and shifting focus a little bit to some areas where they have not in the past. more rural areas, more suburban. specifically, he mentioned the midwest and even the south a little bit, too. joe: you mentioned this is more than they usually do. does that mean starbucks has a policy of regularly doing annual store closures, looking for opportunities to eliminate underperforming locations? >> that's right. every restaurant chain really does this. think of it as pruning the edges. they get rid of those stores that are unprofitable or

dragging the whole company down. scarlet: i want to talk about howard schultz, the head of the company leaving or saying he is retiring. what does his departure from the board of directors mean for the company? doesn't herald any kind of shift in strategy? so much focus has been on what he does next, but what does it mean for starbucks and starbucks shareholders? had already handed over day-to-day operations to johnson probably about a year ago, but still, him stepping away later this month, that does kind of put in question some of the more premium stuff he had been working on, so the reserve line of copies, the roaster ease -- roasteries he had been opening, the huge locations that had been romance ofthe coffee. maybe we could see some of that slow down as well. company talks

about this third-quarter comp number and the measures it has taken, do we have any further out visibility as to if the changes could give a boost to numbers and how quickly that could happen? >> it's hard to say for sure. the company has wanted to digital initiatives. they have been opening up their rewards program to non-rewards spring, so people next will be able to earn stars and get rewards at starbucks without actually fully signing up for the program. julie: thank you so much. coming up, how simmering trade tensions are boiling over in emerging markets. we talk a little bit about the currency. we will do much more of that in the next block. from the u.s., this is bloomberg. ♪

mark: i'm mark crumpton with first word news. texas republican senator ted cruz says he will introduce emergency legislation intended to keep immigrant families together. senator cruz says his proposal would double the number of federal immigration judges, authorize new temporary shelters that could accommodate families and mandate that families immigrating illegally be kept .ogether real is one of the tragedies of illegal immigration that kids are often the greatest victims. we can stop this with the legislation i'm filing this week . it would prohibit separating families and mandate that kids should stay with their parents.

mark: senator cruz also says his proposal would provide for expedited processing of asylum cases. homeland security officials say there have been 100 48 cases where someone fraudulently posed as a family member of children at the u.s. border from october through april. the homeland security secretary there has been a 314% increase in adults showing up with kids who are not family members. she says they are traffickers and smugglers. new york plans to sue the federal government, saying it is violating the constitutional rights of immigrant children and their parents. governor cuomo says more than 70 children are being held in federal shelters across the state and that the number is expected to increase. the governor calls the policy of separating families callous and inhumane. the white house trade adviser says beijing may have

underestimated the resolve of president trump by refusing to meet u.s. demands on trade and by threatening to retaliate against american tariffs. navarro told reporters today the u.s. is open to talks to resolve the dispute before invoking tariffs on up to $450 billion in chinese products. he also dismissed the notion that the tariff standoff would damage america's relationship with china, saying president trump has a great relationship with president xi jinping. i'm mark crumpton. this is bloomberg. ulie: "what'd you miss?" we've had more breaking earnings news. fedex just out, fourth-quarter adjusted earnings $5.91, above analyst estimates. it looks like revenue has also come out ahead of analyst estimates. i'm just looking to see if there

are any more details here coming from fedex. on a cat basis, $17.3 billion. scarlet: you mentioned the adjusted eps beating the consensus estimate. it's actually higher than the highest analyst estimate as well, and those have been rising a bit over the past four weeks. if you want to see fedex as a bellwether for the global economy, the u.s. economy, certainly signaling good news. thee: i should also mention company talking about contributing factors. they say there were higher base well. increased volume as interesting. also accelerated, wage increases for certain hourly employees, partially offsetting those benefits, so that is interesting as well. an outlook here as

well. full-year adjusted eps of $70 to $70.60 per share. julie: what are they also be reporting for the full-year? be fiscal year -- scarlet: it must be fiscal year. julie: another negative byproduct of the trade dispute between the united states and china is that emerging markets are also feeling the aftereffects of the tariff battle. question as to if the hangover effect of this traits that is hurting emerging markets or their own issues. is it just making a bad situation worse?

>> you have the fed finding, and i will not blame argentina on the federal reserve. i will not blame turkey on the federal reserve. i do think the ramifications of the trade war just exacerbate those countries, especially countries that should be growing like china, and many people expect that the trade war's will slowdown china. joe: this an argument by people that the actions of the trump administration alienating canada and alienating europe will have negative ramifications for the dollar and that it short of death that is sort of shrinks the u.s.'s role in the world and diminishes the role of the dollar -- that it's sort of shrinks the u.s.'s role in the world and diminishes the role of the dollar. a i don't see it so much as solution is policies as unilateralist policies, but then

you have to think about what's the alternative? i always thought they would be to do was in which the dollar could be replaced. one, there was a compelling alternative. i don't think china is a compelling alternative. the euro is not a compelling alternative. dollar to be the used like this. i think we could be moving in that direction, but we are not there yet. if you are china, you want to punish the u.s. for the trade sanctions, you sell treasuries. that is self defeating. what would you do with that money? i do not think right now there is an alternative to the dollar. when there is, i think people will jump at it. people want an alternative. joe: in theory, it would strengthen the yuan, which donald trump would love. >> yes exactly.

we have to think through how china will retaliate. there's a lot of companies that depend on activity in china, and the other thing that some people are talking about is intellectual property rights. we've been challenging china about violating our rights. submitting this patents outright to other people, i think is a lot of things china could do to hurt us, and a think that navarro saying be -- saying china is not taking the u.s. seriously enough, i don't think the u.s. is taking china seriously enough. scarlet: why does that come up time and again? it seems to convince enough people that it's always a possibility. >> i think people are looking at is an adversary to the u.s. with $1 trillion worth of our bonds. people do not really wonder about japan.

no one worries about japan anymore selling these treasuries, even though they are slowly reducing their holdings. think there is almost a consensus on china violating, somehow disrupting our trade patterns. i was looking at the wall street journal a couple of days ago. they had a chart of u.s. exports and trade imbalance. kamen square. no purpose, no relevance to the trade talk except to fill with on warty so it puts us footing, so we hate the enemy. julie: bring it back to the trade. not trade, but the trade. in other words, what do you do with all this information? dollarve a view that the is going to have a long-term uptrend that began in 2014 or little bit before that and the combination of tight monetary policy with the fed raising

interest rates, the fiscal stimulus -- i buy into that. last time the u.s. had a policy like this was back with reagan. it took the g7 to drive the dollar down because of this policy sucking in all the world savings. joe: is that going to exacerbate the trade numbers donald trump hates so much? >> that is the exact point. theoretically, i might not have a problem with what trump is doing as long as it is effective, but the result is the u.s. economy is going to grow faster than our trading partners and be adding a larger trade deficit -- we have already a larger trade deficit under trump than we did previously. trump is going to exacerbate that. scarlet: i'm glad you bring up the long-term trends. we pointed out earlier how it is actually at an 11-month high. if you widen it to five years, there is that gain that can 2014, so it has a long way to go. what is surprising is how quickly it has come over the

last tuneup months. joe: people are really writing off the dollar. you said something about the fed. is it running tight policy? is it running tight or? how would you characterize their current stance? i don't think there's any consensus. >> a think the fed is so accommodative, so by the end of next year, the fed funds target will be above what the fed thinks is the long-term equilibrium rate. i think we are moving toward tightening, and the anticipatory nature of the market, it's beginning to price that in. scarlet: special programming note, mario draghi and jerome powell of the federal reserve will be joining a panel on central bank policy in central portugal tomorrow. we will have coverage starting at 9:30 a.m. new york time. it's time for a look at some of the biggest business stories in the news right now.

pharmaceutical giant is on track to complete a two-day $21 billion fundraising drive. completed abayer deal on monday. thisthe second biggest year. wells fargo may restructure its wealth management business. the bank is looking for $4 billion in cost cuts by the end of the next year. a spokeswoman says wells fargo is reimagining the wealth management group. that could mean losing about 1000 jobs through attrition and also cutting 100 regional managers. verizon plans to stop selling data through intermediaries that pinpoint the location of mobile phones to outside companies. outsidersas allowed to track wireless devices without their owners' knowledge or consent. commercial uses for this

geolocation tracking could include tracking. the so-called launch with gf initiative looks to narrow the gender cap -- gender gap in venture funding. men reportedly make up 89% of and companies founded by men raise 36 times as much money last year as those founded by women. and that is your business flash update. julie: next, manipulation or rationalization. we will look at issue surrounding the malfeasance allegedly in crypto trading. this is bloomberg in new york. ♪ retail.

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mark: i'm mark crumpton with world and national news. majority leader mitch mcconnell says senate republicans support a plan to detain immigrant families in custody together to avoid separating children from parents at the border. to fix theoing problem. the president says we need to act. the democrats say we need to act, and we say we need to act. when that happens, we act. this is a week where hopefully all of us can come together and fix the problem. mark: mcconnell says he's reaching out to democrats for bipartisan backing since the proposal would need to reach the 60-vote threshold in the senate.

the foreign relations secretary told reporters today the country does not promote illegal migration but it "cannot remain indifferent in the face of something that clearly represents a violation of human rights." learned the trump administration plans to announce its withdrawal from the united nations human rights council today. secretary of state mike pompeo and ambassador to the yuan nikki haley plan to announce the withdrawal this afternoon -- ambassador to the united nations nikki haley. the commission on human rights slammed trump's immigration policy yesterday, calling the separation of children "unconscionable." backers of the cow -- cal3

measure argue california has become ungovernable because its economic and geographic diversity as well as its population of nearly 40 million people. initiative is driven by venture capitalist tim draper, who has tried in the past to place an effort to break up california on the ballot. is powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. recap oflet's get a the day's market action. we did see selling from the outset this morning following a selloff in chinese stocks overnight as we see trade rhetoric heat up between the u.s. and china. the dow, s&p, and nasdaq bouncing off the lows of the session, although the dow is the least of the three because there's more concern about what effect tariffs could have on

industrial companies in particular. the s&p and nasdaq finishing well off the lows of the session . within the s&p in particular, we saw strength on the day. also health care and real estate . we are also watching some of the breaking earnings news we got in the after-hours session. oracle reported sales that topped estimates. the company has been trying to pivot to the cloud. that appears to be gaining some traction. company earnings beating estimates as well as those sales numbers. you can see they have given up some of that gain to some extent. starbucks, though, is going in the other direction. that company coming out and saying third-quarter same-store of 1%,ill see a rise only about a third of what analysts have been estimating. it has also announced lands to close about 150 locations in densely populated areas. the starbucks ceo spoke to our

to talk about the measures the company will be taken -- taking. .3 percent, about even after the company's earnings and revenue beat estimates. earningsn fiscal 2019, $17.60. joe: "what'd you miss?" professors at the university of texas say some cryptocurrencies show signs of manipulation, but how significant are these findings? very controversial, long simmering question in the bitcoin world, if this currency called tether that is pegged to the dollar is somehow being used to artificially inflate the price of it going. first, before we get into some of your skepticism about the

paper and some of your questions, what is the central allegation? >> most people are familiar with bitcoin. tether is completely different. it tries to keep its value equal to one u.s. dollar. aey actually have a euro and yen, but it's the dollar that people focus on. there has been a lot of skepticism in the crypto and the traditional financial community as well. tether has been controversial since 2014 when it was introduced, and one of the main allegations has always been that it is being used to manipulate bitcoin prices. joe: in theory, if they do not have one to one backing, they could print up tethers and use them to buy bitcoin. people are you this has been happening for a wild. how do they approach the

question of what they bring to the debate? has been a lot of work on this and most of it has exonerated tether. the basic thing has been there is a lot of smoke care but no fire, but they used aggregated data. this paper is what i would call the first aggregated look at the project. there is a lot of guesswork involved. there's some very sophisticated financial analysis, so this is kind of the gold standard look, and they did indeed find manipulation to the normal standards of academic significance. my personal opinion is it is probably more noise than signal. it is just there so much complexity, so much noise in the data, so much complexity in these analyses, and the amount they found was tiny. they found $1 million of manipulation raised the price of bitcoin four dollars. even if that is true, i mean, who cares? joe: when you say most of the analysis before has been

aggregate data versus rigorous statistical to terminology, what is that? >> we know the price of bitcoin, we know total bitcoin transactions or at least have some idea about that, but to really understand what is going on in the crypto market, you have to trade from exchange to exchange. there's no way you can do that directly. you cannot match them up almost by design. that is kind of the point of crypto. joe: what is some of the data they looked at in terms of periods were bitcoin had unusual price rises and where they can identify something in the creation of new tethers that sort of went beyond the traditional? >> most people have looked at

issuance. they went a step farther and looked at the tether moving from bit finance, which is the exchange control by the people who control tether to other exchanges, and they were able to do that by looking at wallets and addresses. i don't want to get too technical, but you can kind of guests from that where the tether is flowing. they say when there are big tether flows and big corn flows, they picked the 87 periods with the biggest flows and set on average bitcoin goes up 1.2% in the next hour. joe: so they look at the 87 biggest tether flows -- >> bitcoin and tether combined. add this together, it comes up to about a 250% increase in price, but that assumes the manipulation is permanent. 1.2% wasmes the entire due to tether and it never went back down when they sold the bitcoin. joe: was this over 2017?

>> yes, much twitter 17 to march 2017 to march 2018. joe: we know the last few months of 2017 was insane for bitcoin. >> it was exciting. joe: exciting. another highly technical way to characterize it. >> for the s&p 500, 1.2% is something we get excited about. for bitcoin, it's an ordinary hour. joe: if you want to continue to look at manipulation, does the paper give you any idea of the next test you would run? >> the most convincing part of the paper did not make most of the news report. they did point out that when bitcoin hits round figures, there seemed to be something going on. that was much more convincing statistically. that tells me someone is doing

some technical analysis, trying to set up resistance levels. that is a little bit different from gross manipulation. that means maybe they did not push bitcoin up to $20,000, but 17,500 forheld it at longer than it should have been. joe: thank you for joining us. you should check out aaron's pieces as well as all of the opinions on bloomberg go. julie: dialog semiconductors confirming talks on a potential acquisition of or potential talks to acquire sunaptic, touchpad technology maker -- to ics, the touchpad technology maker.

now dialogue semi is confirming that it is in talks, and it has decided to proceed with due diligence and detailed discussions in connection with the potential acquisition. it's not clear if a transaction will end up happening, but the board expects any transaction would be paid for in cash and primarily financed by cash from the balance sheet and debt. we will continue to follow developments on this. we would show you how synaptics was trading except the shares are halted, news pending, although it looks like the news is now out. scully: so confirmation on the deal perhaps going forward. next, we will hear from lloyd blankfein from goldman sachs. he shares his thoughts on where the next surprises could come from. from new york, this is bloomberg. ♪

scarlet: a rapid rise in rates could be more damaging to the economy than the housing bust of 2008. that's the call from the chairman and ceo of goldman sachs. he spoke with our editor in chief, john mickelthwait. blankfein: that high interest rate which usually has an effect on valuations. john: how high do you think interest rates can go? mr. blankfein: how high can they go? when i can out of school, interest rates were in the teens. unemployment was above 10%. these things can happen.

i know everybody is debating and lips are quivering -- is the fed going to raise three times this year or four times this year or next year? raising 50the fed basis points between meetings. i don't think people are braced for what the potential is. just think -- every bond that has been bought since interest rates have been low and trending low for so long, everybody wants higher interest rates so you will have a higher return, but don't forget every instrument in anybody's portfolio would then drop in value, and if you mark to market or not, it will be worth less, and just think of all the assets in the world that have priced off of a discount model. how about real estate and almost everything else? think about what happens to the finances of the world and the economies of the world when you have a dramatic and unexpected

and rapid drop in real estate prices. i would think the fall off of rapid rise in interest rates, unexpected, would have even a more dramatic effect. is this my best case? no, but i'm in the business of risk management and forced to spend 98% of my time worrying about the 2% of things that could go wrong. i could occupy more than your time here to tell you about the things i have to worry about. john: of the many areas people worry about, one is consumer -- esther blankfein: i'm optimistic. : i'm. blankfein optimistic. john: you just terrified everyone here. mr. blankfein i live in that state of terror. it's all right. john: many people would say consumer debt is one of the first things which would get hit by higher interest rates. mr. blankfein: like new york?

fed has just york this $13.2 trillion of consumer debt, and yet, that is the field you are trying to expand, consumer debt, personal finance, that sort of area. does that make sense at this stage of the cycle? : i don't know how long this cycle will last and we intend to be good risk managers in this business. riske going to acclimate and how we land on our protocols and our profile to what we feel the market is, but let me just say, just as a predicate, you know, the predicate in your aretion is in a way, we going into the consumer business, but not so much that we are chasing the consumer .usiness really, what has happened is as

a result of movements in technology, the opportunity in the consumer space has moved to us. if you are lending to 500 people, the kind of decision-making you make in consumer lending -- it's like jimmy stewart in "it's a wonderful life." you look into someone's soul, their credit, you are a good person. i will let you this much money, -- lend you this much money, mrs. so-and-so. otherwise, it's math. if they are not your neighbors but they are coming to you online, then it's digital delivery and digital platforms, which we are kind of good at and we have done for a long time. there obviously is a good customer experience to this, and we have to import that into the firm, but a lot of the risk management decisions that are making the distribution

decisions, the algorithms that go into making these kind of decisions kind of is in our thelhouse, and one of reasons that represents a big opportunity for us is that we .on't have legacy stores we don't have thousands and thousands of branches we have to protect on the one hand, and the normal disruptors in this space, the silicon valley crowd that would normally come into the space are not licensed deposit takers and don't have balance sheets and really cannot do the kind of jerryrigged and securitize these loans and have to make them all kind of the same so they can be securitize, so there's a very good opportunity -- very rare you would get a bank like ours that does not have a legacy consumer business that needs to be protected. julie: that was lloyd blankfein, chairman and ceo goldman sachs, with our john mickelthwait. the chinese

pharmaceutical industry is ready to break out after being stifled for decades. this is bloomberg. ♪

carlet: "what'd you miss?" health care made in china. ofh the presidents overhaul the drug market, china is looking to take on the health care market -- with xi's overhaul of the drug market. years ago, it was sort of unthinkable to do big drug development or the experimental. >> for years and years and years, china had essentially raw and supplier of local ingredients for simple monitor -- simple molecules.

its chemical manufacturing. does notubject, but it bear any resemblance to the really, really fascinating, deeply technical biotech stuff going on, and they all of a sudden out of nowhere essentially are creating a biotech industry from scratch to try to serve their massive population. it's an enormous population and they are putting some real resources behind it. joe: we have talked about the across a25 initiative range of areas, health care being one. how much money is the government putting into this? >> i don't think we have exact figures, but we do know a couple of things. they built these big biotech s.rk we know a huge amount of capital is flowing in. they have a huge group of trained scientists. the other thing is they are tracking folks who have trained

over the u.s. they are a chinese national, but they trained at m.i.t. and stanford. worked in merck's labs for 20 years. these people have worked at an extremely high level in western multinationals, and the chinese government is saying, "come back. we want to have you here. we are going to pay you really well. this is the chance to start something." joe: i'm curious if china has regulatory hurdles that allow companies to experiment and try things faster than the u.s. >> one of the biggest complaints from western companies for years was that it was impossible to the chinese through version of the fda. it was a huge regulatory hurdle. it took her ever. you were not getting anything, and if you did, reimbursement soft.

there just was not a market for this really innovative medicine. that has changed. reimbursements are going up. it is easier to get regulatory approval. regulatory's -- regulatory is easier,n new r&d so all of those things in sick people to be over there. scarlet: have we seen any huge breakthrough drugs that have changed world? >> a lot of what you see right now is essentially versions of things. the interesting part is this -- one have essentially billion people. you have a very high incidence of cancer and respiratory diseases, and they are interested not in rewinding 20 years. they are really getting into things like gene therapy. they are kind of starting right at the cutting edge of where

this is. even if you have stuff that essentially is a me too drug, it's going to be at the cutting edge for a market that is going to be one billion people. you do not need to necessarily be the first in the world when your market is potentially that large. julie: thanks. bloomberg health care reporter drew armstrong. don't forget to check out our prognosis page where we report on the future of health care, the cures for tomorrow, and the financial forces the hind it all. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪

scarlet: "what'd you miss?" a down day for u.s. stocks, but coming off lows. joined a panel on central bank policy on central portugal. joe: i will be looking at economic data out at 10:00 a.m. tomorrow. julie: the house of commons votes on a brexit amendment tomorrow. scarlet: that does it for "what'd you miss?" "bloomberg technology" is up next. ♪

emily: i'm emily chang in san francisco and this is "bloomberg technology." the u.s. senate voted overwhelmingly to reinstate penalties for dte, defying president trump and potentially upending the deal the president struck with the chinese company we will hear from senator mike brown of south dakota. plus, ibm's watson has been humans on jeopardy, but what about a complex d