cracks trashed, the u.s. president outraged. we get our earnings from the banking giant today. netflix drops as much as 15%. has become investment bubble? i'm nejra cehic in london. let's check in money market. look of a stoxx 600 it was a similar picture in asia.

tech and telecoms are underperforming on the stoxx 600. the yen actually at its weakest level since january against the dollar. mrs. about yen weakness or dollar strength and where does the dollar go from here with all of the politics happening on president trump? steadying even gaining slightly. 68.16 is where we trade. onsaw some losses yesterday certain concerns about potential oversupply in the market. we are hearing tapping into emergency reserves. up on the show being joined by charles thomas. -- by charles dumas. later in the day will speak to peter fisher.

for now, let's get the first world news. in the u.s., several top republicans criticize president's comments after his meeting with vladimir putin. house speaker paul ryan said mash-up -- russia must be out accountable for meddling and john mccain called the helsinki summer tragic mistake. from question whether russia interfered in the 2016 election and suggested he trusts putin as much as his own national intelligence area -- intelligence. >> i think were doing really well with russia today. i think we were doing horrible before today. i think it was great today but it was a really bad fire is ago -- really bad five hours ago. we had a potential problem. minister's brexit strategy is under pressure. her majority was cut to just anee votes after she adopted

amendment to a key piece of customs legislation. member for government is reported to have quit in order to vote against her and she needed the backing of three rebels from the opposition labor party. has donated a huge amount of money to five charities as he makes good on a pledge to give way on his berkshire hathaway shares. it's comprised of about 17.7 million shares to charities including the bill and melinda gates foundation. buffett has now donated a total of $31 billion to the foundation. on air and at tictoc on twitter. in more than 120 countries, i'm taylor riggs. this is bloomberg. president trump is facing

heavy criticism after he appeared to side with his russian counterpart over his own intelligence agencies. his comments were made after he met president putin in helsinki. all i can do is ask the question. my people came to me. some others said they think it's russia. president putin, he just said it's not russia. i will say this, i don't see a reason why it would be. the suggestion that president trump gives equal weight to his closest intelligence aid and vladimir putin has triggered outrage amongst democrats and republicans. join us are stephanie and jordan. stephanie, we've already seen some follow-up for this.

the reaction has been overwhelmingly of one kind. stephie: it even seemed diehard trump supporters criticize him for the way candle that press conference and how he disavowed his own intelligence services. the democratic's side was widespread, the republican side was still somewhat measured. someone like newt gingrich, a longtime hardliner criticize trump's handling of that. we don't know what will happen next, whether or not congress will actually take action in the form of additional sanctions or perhaps passing a law that would protect the special counsel's investigation. what it means for sure is that mueller's investigation will go on and in the attempt to shut the dow will be pushed back. -- chuck that down will be pushed back. were the president's

words in any way treasonous? stephie: that was the former head of the cia grabbed the strongest comments. to me, it felt unpatriotic. i think we need to step back and look at this from the perspective of what happens next. at the very least he did not agree to anything specific like stopping his military exercises or recognizinges crimea as russian territory. nonetheless, there needs to be and assessment of where we there have been pressures are in top among that list is

fridayts testified on that russia is still continuing to metal in the u.s. political system in the red lights are flashing. let's bring in jordan rochester. this is have implication for the dollar? jordan: not really. you see it in other currencies in where politics doesn't always translate to trade. only short the dollar on this if you get action. if you went to the point where sanctions were taken off of russia, in extreme scenario, there's a great trade in ruble. it's possible with the eu sanctions under review. there's a good story there. and unlikely story considering all the evidence in russia. maybe you could look at room was a broad thing.

a broad dollar with dollar yen is not going to be about this whole rest, it's more about trade wars. now the dollar is outperforming. there's no signs of slowing down. , you have aeurope slowdown. your of u.s. roads outperforming and others places outperforming. new zealand is one that sticking out to me this morning. it sold selectica the china. it might have a short-term three. does u.s. growth continue to outperform, as trump's trip have any applications? >> u.s. growth will continue because of the fiscal stimulus. the risk off environment, the trade wars pushes down confidence in europe and

elsewhere but we don't see that showing up in the u.s. because of the fiscal stimulus so are year it'snow this really the u.s. is growing about potential. the big risk is we are moving away from the established order, the rules space system only consider the potential range of outcomes. we can identify with that either side of the doubt -- terrorists. it might even want to push those risks little bit. we are stage in the site were we're close to full employment and we need more investment. it weakens investment. whether any positives at all we can take from what happened yesterday? at all? he didn't do it some people feared he might which is say that sanctions should be

lifted her crimea should be recognized as russian territory. i see this is more disruptive and damaging politically in the u.s.. at how it's been record in russia, it's been regarded as a huge success. better than expected. this is seen as a victory for pretend back home -- for prudent back home -- four vladimir vlad.com and likely -- for the putin back, and democrats will likely campaign on this. affects support for brett kavanaugh, it likes -- it remains to be seen. it seems unlikely but it will certainly raise discord in congress. unansweredany questions. thank you very much.

stay with surveillance. plenty coming up. the fed chairman testifies in front of the senate today. can he avoid talking trade tensions. and we get earnings from a banking giant. can it live up from the small best strong results from citigroup and jpmorgan?

♪ economics, finance politics. i'm nejra cehic. let's get the bloomberg business flash with taylor riggs. taylor: netflix has fallen after

possible disappointment in the third quarter. new million new -- only five one million new subscribers signed up compared to the next edition of 6.3 million. think we are still on track for a stronger here this year. maybe it's going to come in a little bit differently than we expected. amazon's prime sales kicked off despite a technical glitch. shoppers spent more they first three hours of this year's event than any first three hours a year ago. undoubtedlyes will annoy jeff bezos who is now the richest person in modern history.

the company said he decide to leave after he realizing know about the confidence of major shareholders or the advisory board. his resignation as to leadership backing after the ceo unexpectedly quit earlier this month. up almost 5% from 2016. that's according to financial disclosure by the green bay packers. no president said he found for the consequences public criticism from donald trump, declining tv ratings and player protests that polarized fans across the nation. that's your bloomberg business flash. fly to all ofto

our viewers that mark carney is speaking at the moment saying that the visa and tsb issues were failures of the systems. we can expect to hear some of the headlines about financial stability and perhaps some comments around policy. if you want to follow that, go to live go and we will discuss it later this hour. tom one central bank another, investors will be looking for any worries of trade tensions and loose fiscal policy in the united states. powell has already warned that concerns about tariffs have prompted businesses to slow investment and hiring. let me turn to jordan and callum. see trade tensions impact in the u.s. economy? u.s. firms, roughly 50% of gdp comes from exports.

they need to worry mostly about the fiscal stimulus that the trade war risk materializes, that would also press prices up. mr. pounding story about the medium-term effects of the fiscal stimulus fishing up wage and price. effects ofg-term supply groups. trade wars with the u.s. and long run just as much. nejra: what are you expecting to hear them what he looking out for? jordan: over the next two years, the 75 basis points. three hikes from the fed. six -- could be four or six. these semiannual testimonies are very key to measure risk but that's changed quite a lot.

huge event risks to the market. a lot about fed policy and direction it's going. it's kind of changed a little. under powell, they have been very transparent. fed ingains from the terms of others come with medication is so transparent. nejra: the dollar and treasuries unlikely to move. moven: deal if he can anything is if he ever fight trade war concerns. i don't think they'll be any difference from a week ago. if we look at balance of risks, are you more concerned that we get further curve flattening because the fed continues on the rate hiking path or that we don't get the curve flattening because the fed starts to slow down. kallum pickering: that's a

difficult question. it really matters was driving the long end of the curve. there's a strong demand for treasuries that is risk off, that's a negative scenario because you expect once the fiscal stimulus was at 18 months, the u.s. economy will be dragged down. down thed were to slow pace of normalization are to steepen the curve in avoid the message and inverted curve could send, i don't know if it does any good whatsoever because the u.s. is a of employment. -- is at full employment. you'd be storing conflation risks down the line. the last thing we want, given how mature the u.s. cycle is, given the additional fiscal stimulus, is that some point the fed realizes we need to create some of unemployment to meet our inflation risks.

dollar strength against the yen is something we have been talking about a little while now. moore yen weakness in this scenario. we've seen large in outflows. we are also seeing the economic data in europe and the u.k. improving as well. it's been a very nice trend. to 11350 -- 113.5 and top out. this pronounced move his room broke above a recent trend line. also, for a good long time, dollar-yen downside positioning as many good hedge. cooling-offd some in the chinese have an escalated angst.

people took their structures off nejra: -- off. nejra: is the dollar going to be deals and safe haven? kallum: against who is what matters. it's going to be higher against china is exact late higher against korea. is it hired instead yen, the less likely. trade might start moving towards the japanese angle. they're supposed to be a meeting between u.s. and japan on trade talks. that could slow down recent dollar-yen. what implications would half of the u.s. economy? and 2018,mpare 2017 there's been no major change of pace of normalization. it strengthening this year after weakening last year.

it's the disco late -- distillation of the risk on risk appetite. if it's risk on, the dollar weaken its risk off, the dollar strength in. stronger dollar boosts u.s. real incomes and that means more cash available in real terms is a number of foreign and domestic goods. anything strong will be potentially inflationary because it strengthens real household income is. nejra: what about the relationship between the dollar and rate is? are you look at the long end, the curve, the 10 year yield, what else? jordan: initially is about raising rates. it's now more front and then short end. it's been bred to be stable and it's not moving very much.

now it's more about structural flows and m&a. we've seen a huge amount of euro outflow into dollar because of that. a lot of companies have been trading on profits from abroad. him and a close payments have been more of a driver. let's turn to u.s. banks and goldman sachs reporting earnings today. they follow citigroup and jpmorgan who announced surprisingly strong revenue from m&a advisory in the second order. they name the new chief executive taken another step in the slow exit of the previous leader. joining us now is caroline. what are we expecting? citigroup ared still looking to the upside.

their peers have reported positivity on the m&a side and also on raising capital. nejra: what sort of announcement may we get? not a surprise he is the heir apparent be expect that days a formalization of that. he will be named the next ceo of goldman sachs. when that takes place is an open question. how long as the interim. , how long -- will they give us any guidance when the hanover might take place is something we will have to be watching for. in what we seen so far we've had for the biggest banks report already. how much of the boost was coming from tax cuts and have the tax cuts not happened how bad with the results look? caroline: it was deathly a

positive. it was a theme at bank of america. but that's just one piece of the overall puzzle. we've also seen some positive trading results and that's another area where people will be watching with goldman today. will they be able to continue the momentum we saw in the first quarter rebounding from some of their trading in 2017. with a profit from the volatility we see in equity markets. that's another thing the markets will be looking for. nejra: investors do tend to compare goldman and morgan stanley. caroline: what happens with goldman was did take expectations heading into tomorrow. the other couple differences are morgan stanley has little bit more emphasis on lost management. investors will be looking to hear they say around the consumer business. it's narrative and talking a bit more about.

dave solomon is a big proponent of that. will they articulate more of a vision about how that might feel their growth going forward? we will have to see. thank you so much. caroline gauge. thank you. in theup, discontent tory cap as the prime minister changes a key piece of brexit the station a week after was agreed. that next. this is bloomberg. ♪

nejra: this is bloomberg surveillance. a i am in london. let's check in with trending across the universe. the richest person

in modern history. it $150 billion yesterday. in brexit strategy is disarray. she bowed her plan. story, minneapolis fed president says he isn't buying it's different when it comes to the yield curve. glutenefusal to condemn expresses outrage. there could be a video streaming bubble. that's get a quick comment for my guests on set. this time is different for the juncker? time, it was the expression of strong demand for safe assets and the inability to transmit military policy

throughout the benchmark yield which determines far when conditions. the economy is at a stage where we need the fed to deliver it. it could lead up to a recession. we've got the atmployment rate, staying 4.2%. that is as forecast. slowing togrowth is 2.7%. higher see sterling was previously. we will come back to that conversation in just a moment. for now, let's get the news. taylor: several top republicans have criticized president trump's comments with vladimir putin. paul ryan said russia must be held accountable for russian meddling. john mccain called the summit a

tragic mistake. if they interfere with the election and suggested he trusted him as much as his own national intelligence director. >> i thought we were doing horribly before today. i think it was great today. it was really bad five hours ago. i think we had a potential problem. taylor: the electoral commission said they broke spending limits with another group. they referred the case to the metropolitan police. they have denied wrongdoing. rose, easilyrices as the government stepped up the campaign against. new home prices tracked by the

government gamed 1.1%. in may.ompared with .8% it was the fourth straight acceleration. warren buffett has contributed and donated $3.4 billion to five charities as he makes good on a pledge to give away his shares. the latest gift was 17 million shares that went to the bill and melinda gates foundation, and each of his children cost foundations. he has donated $31 billion to foundations. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. thanks so much. the brexit strategy is in disarray after she bowed to

pressure to rewrite plans. 'se u.k. prime minister majority was cut to just three votes. is jordan us rochester. let me turn to you first. does this change anything, in terms of sterling? market has a good story for u.k. growth. the message is not crazily more. we are going to have to turn this positive. that is a positive going forward. then, you've got that risk chance, that bloomberg headline saying she faces a vote of confidence. that would send cable lower 3% on the day.

theresa may might survive that vote. they would have to see what the vote was, do we have a leadership contest? she only one by three votes yesterday. she only wanted because the opposition wasn't really organized. the vote today, if the ua -- u.k. doesn't negotiate by january, the customs union moves in. they are put forward tonight. and that is more political bedlam. you've got brexit amendments yesterday. you have soft brexit, a different bill. then they have to make a party which way to go. nejra: what does that mean for

hard brexit or no deal? kallum: 20% chance of a hard brexit. we will get a vote in the final deal. it's important to look through the noise and draw a straight line to today and through march. lost its illusions about what it can achieve in negotiations. it is headed toward a trade deal on goods. the conservative party will be able to come up with a stable negotiating platform to present. they will be offered a trade deal in goods which case the irish border open. when faced with the options of a trade deal in goods is probably not a custom union in name but spirit. i think they will go for the soft version of the deal the eu will present. of all of this, jeremy corbyn and the labour party are ahead of the conservatives in the

polls. they would rather go for a customs union and have a socialist. nejra: the bank of england is he is worriedg about the lack of an eu solution so far. we are looking to the august rate hike. are there any size we could get that? we would get a repeat. the bank of england is data dependent. remember why they are tied in monetary policy. potential growth. the bank of angle and thinks they can grow 1.5%. that's the speed limit before you get to inflation. so long as the data is consistent above trend growth. in august, next

year when they avoid the hard brexit, they can speed up the normalization. probably to hikes next year and two in 2020. nejra: what about sterling volatility? think thatactually data-term, we've got the the free standard deviation. we could have a repeat of may. may was shaping up the way it is right now. there could be another span in the works. it's worth owning the short term. nejra: in terms of the impact of the dollar as well, is the bank of england through eurosterling, what would you be telling them? jordan: it's very captive. you've got a strong pulling action.

euro standing is the cleanest way. appreciationmall to get through this political mess and receive a softer brexit outcome. if you want to make big politics moves, you have. nejra: all right. thank you very much. they stay with us. common up, the biggest dilemma in the mining world. we will talk commodities next. a netflix slowdown strip craters concerns. has it become an investment bubble? this is bloomberg. it ♪

nejra: this is bloomberg surveillance. while they have been range bound for the last two months, markets have been concentrated. is rangingty index for oil and coffee. it has tumbled 9% from the year to date high. andl with us are kallum: jordan. is this what you've seen in commodities? kallum: commodities are driven by the supply dynamic. it's the pure market economy when we look at it. that is a fact you would expect commodities to soften. i think the trade war risk will fade and european growth should get back above trend. stronger growth

in asia and commodities should start to recover. the news where we had the port reopened. that led to the big selloff. then we've also had the sanctions propping things up when it comes to iran and venezuela. sanctions,ory about we had the libya thing done. futures is oil extremely long. a lot of investors have been buying into higher oil. he mentioned, you've got the supply side accelerating. have was describing, we oil prices again. we are probably at those levels already. we had a selloff again. what we need to see now is ramping up of sanctions against iran from the u.s. side.

we could see more in terms of venezuela fallout. there could be more libya news. heard,the latest that we there were reports to u.s. was considering dipping into its emergency reserve. that did move the oil price. when you look at the dynamics and once happening in the u.s., how do you way that all up? kallum: i had expected oil to come up more. for the last four years, since u.s. shale has really come in on earnings, the global oil market is more like before. when oil hits a price of $80 a barrel, it is profitable and you increase supply. nott falls below 40, it's possible. that leaves the rate in a stable range.

we saw an upside last year because opec did a good job of constraining its own supply. demand has softened a little. i haven't seen supply remote -- responding. maybe it happens later this year. we will probably get to .3% inflation in europe. it won't change the consumer story in a major way. we can live with $70 oil. if it gets to $100, there will be a panic for consumers. at $70, i am ok from an economic point of view. nejra: what opportunities will there be? we had inflation take higher. but let's passed into the curve, nothing for the next year. we are having a slowdown in china. we are extremely exposed to that. it doesn't mean issuing raising rates.

there is not much priced in. the market has been short the commodity currency thanks to china's slowdown we've been watching. oil, maybebout positioning has been too stretched. you want to avoid the dollar dynamic, it's down lower. am, because of the oil seen, i've been wanting to belong cap for long time. tohad the market trying price in a soft brexit. we had the boris johnson resignation. muchcanada, we had so pricing in the bank of canada curve, we would very cautiously on canada. much pricedave too into the canadian curve. prices of and slowing down in canada. that's the risk.

currency should outperform. especially if oil picks up again in the next couple of weeks. nejra: we do see data from a general risk off. despite what you might see, what potential impact does increased trade tensions have on the oil market? measurable now, the economic impact from what we can see in terms of the terror schedule, it is still quite small. we demonstrated the best in the u k, even though it's still inside the eu. the expectation is higher cost of trade will lower growth. we believe the trade war's could turn into brexit light for everyone. you would expect that to show up and commodities prices. nejra: a final word on your top calls. >> we had dollar strength for some time now. we could see that reverse.

timing is essential. that is not a dollar sale. i think we are starting to see that. we have some dollar weakness come through. thank you so much for joining us today. coming up, a slowdown for the largest tv pay network. as a blip, or are we looking at a level? this is bloomberg. ♪

nejra: this is bloomberg surveillance, i am nejra cehic. let's get the bloomberg business flash. taylor: warren buffett has donated $3 billion to charity. he is giving way all of his berkshire hathaway shares. this is 17 million shares. they went to the bill and melinda gates foundation, one named after his first wife, and each of his children's foundations. $31 billioned about

to the foundation. resigned chairman has in the engineering conglomerate. afterecided to leave realizing they did not have the confidence of the majority of shareholders or the supervisory board. this asked to a leadership vacuum after someone else quit earlier this month. distributed money to its teams, up 5% from 2016. best according to financial disclosure by the green bay packers. consequencesancial to the turmoil of the last season, which included public criticism from president trump. the senate polarized fans across america. that is your bloomberg business flash. netflix shares plunged

after disappointing subscriber growth for the second quarter. the largest paid online tv network added 5.2 million users. that was about one million fewer than predicted. alex joins us. what is the problem here? are people piggybacking on other accounts? is it content? alex: it has to do with the world cup. people are watching the football , rather than going for netflix. growth wouldn't be as great because the world cup, the market would have been fine with it. millionre only 5.2 users. that is something to do with expectations not being met. that is not an unusual thing for a stock to react in that way.

what challenges are they facing? onx: they are spending a lot content, $18 billion is the number i heard. that is fine if you are getting new subscribers. the headwinds they are facing is every single content maker in the u.s. is coming up with their own service. you've got discovery channel, hbo, disney, everybody is coming to the table with us. making the bet that if they spend enough on content, it will justify $10 a month. cane is a point where they do significantly. services,go to other it's a problem. anra: boeing is confirming order.

this is just breaking now. those freighters are valued at $2 billion. full go will buy them. that is valued at $9.8 billion. we will get you more details as we get them. let's turn back to alex and turn to amazon. bezosace us just jeff growth continues. of course people are continuing to look at growth potential. to theok at the ability earnings ratio. they have a razor thin margin. want to flip the switch, they could make it a lot more profitable. yesterday, we had prime day where there are huge numbers of offers available on amazon.com.

they had some problems. what raises concerns is the most profitable part of amazon is the cloud business. if that is where they have problems, that's the biggest reason for concern. nejra: we always appreciate your insight. thank you so much. surveillance continues in the next hour, tom keene is with me in london. this is bloomberg. ♪

tom: this morning, the president returns to a wash stunned.

putin,race of 100 vladimir putin denies meddling. trump rejects is intelligence community. they call it the most serious mistake of the trump presidency. respondsrand old party and a change of the guard. we will go -- we'll goldman sachs survive? good morning, everyone. this is bloomberg surveillance. francine is still in helsinki. helsinki.ulous in there is a little bit of heat here for prime minister may? nejra: she has jumped from the frying pan into the fire. she has a razor thin majority.

she has pleased the eurosceptics and angered the pro brexit members of her party. tom: what was interesting was the uproar that the president the-- didn't bring up poisoning deaths. nejra: we will talk about it through the show. briefing,eed a news here is taylor riggs. taylor: president trump's refusal to condemn russian froming -- meddling came both ends of the political spectrum. that schumer suggested vladimir putin may have damaging information about president trump. the minneapolis fed president doesn't buy the argument that this time it's different when it comes to the yield curve.

he wrote in a blog post there are few signs of overheating in the economy. he sees little reason to raise interest rates further and further. the fed chairman may given update on his thinking when he testifies before the senate today. theresa may's brexit strategy is in turmoil. now she is infuriating pro-european members of the conservative party. she agreed to rewrite her plan. the majority in parliament has been cut to three votes. her defense minister has quit the government. china, the government is trying to curb speculation in the property market. home prices increased at the highest rate in 21 months. they rose 1.1% from the previous month, the fourth straight increase. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs.

this is bloomberg. alix: thank you so much. tom: there is not all that much going on. let's get through it quickly. the dow is 25,000. the euro is 11742. oil is still light. that 25,000 dow closing, i would think that would be lower. there is the dow. foley, justor jane to dazzle her. index, i have no idea why i put that in there. nejra: there is not much going on with european equities. telecom is underperforming. the labor market data was in line.

the euro sterling is the cleaner trade when it comes to brexit. brent is trading. if you see quite a lot of losses and oil yesterday. tom: we got a really great set of guests. did this for jane so she would be dazzled. i rarely see her on set. this is trade weighted. this is one of the kind of things that charles of done in one of his 14 books. there has been a weaker dollar over the years. dollar levell right now. not the dollar hysterics you hear about all the time. nejra: let's talk about hysteria when it comes to equities. the s&p 500 are relative to the rest of the world at a record high. what does this mean? will there be a change? do we need a more meaningful

correction to push the president to pull back a bit from the brink when it comes to trade wars? tom: we will see. the news on the trade wars is going to be interesting. we have an extraordinary newsday yesterday. we had an important interview with laurence fink of black rock. he watches the yield curve. >> i think we will see the version of the yield curve this year. >> i don't believe it means we are going into recession. one of the themes out there and people are on consensus with, we are having thernational relations with helsinki summit. with us is jane foley and charles from ts lombardi.

she has got three phones on her ear, trying not to lose money. let me bring up your right now. economics, the film rights have been sold. get to this in just a moment. let's get to larry fink. how do you yield curve analysis into the foreign-exchange analysis? jane: i think over the last couple of years, it's been confusing with respect to the dollar. , spreadshe yield curve were in favor of the dollar and the dollar didn't move. why is it happening this year? there are a couple of factors there. was in emerging markets. that has reversed. people are coming out of

emerging markets, they could go to the swiss bank or the dollar. you've got rising interest rates and the economy is doing well. i think that is why the dollar is doing so well. tom: the research was out of the deutsche bank shop. it was looking at the yield curve, folded into this new thing going over to qt. is the balance twisting the bond market so much that the yield curve analysis is conventional now? charles: there are always draghi factors, the policy of maintaining his rates , that means the incentive for people to go into the dollar securities is very

strong. a lot of those still want to hedge back. they don't want currency exposure. they are borrowing short-term dollars to hedge back. there is a very specific pressure arising from the savings countries. of highern favor short-term rates and that affects the two-year much more than the 10 year. they are squeezed event. i have got to say if you look at the history, the last time we came to this level on a down downswing, it came down over two years before the recession. frankly, if we get through the 2020, i would to be quite pleased if there wasn't a recession. tom: they are not buying this

time it's different. nejra: is it different this time? charles: i think it is different this time. as far as i am concerned, the fed has to run the policies that suit the u.s. economy. there are certainly two more hikes this year. the rates are low the -- below the core rate of inflation. thated is facing the fact core inflation could easily go from 2% where it is right now up to 2.5% quite quickly. it is slightly overheated. the fed is bound to tighten up in if the dollars really strong and continues to be strong, you've got a lot of factors like the draghi factor that locks in cheap rates this side of the pond.

of've got this repatriation u.s. corporate cash, which is squeezing the liquidity in the non-u.s. markets. all of these factors are pushing up the dollar slightly. people are frightened about what it does to germany. spread tightening, how much does that matter? think there are a number of factors. tom: did they serve that on the airplane? stop right now. what is the what? nejra: interest on excess reserve. it was brought up in the last fed minutes. this is what think individual investors are thinking about. i think it's far more simplistic.

we have at reference to the ecb. japanese interest rates are extremely low. there was a matter of opinion in the market that this was the year central banks would be more hawkish. havewe have seen as many pushed back against that. the fed is the standout at a the risk appetite is at low levels. we've seen a big reversal. the money is going to the dollar. there are a number of reasons. they come back to this simplistic reason, the dollar is still the standard currency in terms of return. tom: let's come back to this. book.t to get to his new please stay with us. we've got so much more to talk about, on the events in helsinki.

the president is back in washington. maybe he will be watching today. chairman powell testifies to the senate banking committee. today, we are world cup free. this is bloomberg. ♪

taylor: let's get the bloomberg business flash. shares of netflix or falling sharply in premarket trading. by havingall street fewer subscribers in expected last quarter. the outlook for the current quarter is a slowdown. the largest paid online tv network had fewer customers the

year before. amazon sales rose in the opening hour of its rhyme day sales of that. there were technical glitches. more in thet 54% first three hours the year ago. the shop of fund will generate $3.4 billion of spending. some shoppers were unable to check out or search for products. boeing has announced another big sale at the air show outside london. 29 777ve agreed to buy freighters valued at $9.8 billion. boeing and airbus tallied more than $55 billion in jetliner sales. business was dominated by the newest version of the airbus and the 737. that is your bloomberg business flash. paul manafort is in jail,

stephanie baker is not. the 47o to one of fallouts we have seen in the last 24 hours. air force one takeoff. it was amazing, what donald trump was going back to. really goes after the president. ussident trump has informed that we are a stupid country. he is a very stable genius. milbank among others fired up as well. what will be the ramifications? feasible we could get senate censure?

>> i was heartened to see some republicans criticize them. the criticism was measured. i thought the most notable critique came from newt gingrich most serious the mistake of his presidency and he must immediately corrected. thatours later, he said trump is been cutting regulation. that encapsulates the attitude and the dilemma of them in congress. our people outraged and that outrage passes quickly and we get back to status quo? do they actually take action? i don't think any real action will be taken. tom: what is fascinating about this, people come up to me and say one of the republicans doing? in watergate, they didn't do much until the end of the moment. -- what can change this

dialogue for donald trump? stephanie: you have seen calls for members of his administration to step down in protest. seen, what dobe you do in this situation? many people felt reassured by jim mattis, possibly being a moderating force. those people are not pulling him back and restraining him. you have to ask the question, why didn't they make sure there was someone else in the room during that to our meeting? we will never know what really happened. would it have even made any difference? what could happen to the president himself beyond how he has been impacted in the midterms? stephanie: his attempt to change the conversation has been dealt a serious setback.

his resistance to sitting down with an interview with robert mueller, that has been undermined by this. any attempt to shut down the mueller investigation will be challenged by congress. tom: mr. manafort is in jail. is that change him? stephanie: we had reports overnight that his trial in virginia has been delayed for a week. that is unusual. there had been some speculation that he may be negotiating a plea deal. that might he one of the reasons for it. we don't know. tom: stephanie, thank you so much. stephanie baker with great expertise. this is where the money flows. charles,ontinue with he is out with a timely new book.

we will talk about populism and economics. bloomberg daybreak: asia new a critic in been new york. the technologist mark warner, look for that it 8:30 a.m. new york time. stay with us. this is bloomberg. ♪

nejra: the rise in populism over the last few years has swept across the globe, events like

the election of trump and brexit being key barometers. this is a look at how does can stand has affected economics and reality. tom lent me the book briefly. i know he is happy to share it with me. you do not get more zeitgeist than this. we are really excited to talk to about it. charles: it's not just inequality, it's lack of income growth. inequality is a big american thing. if you look at american incomes the top fifth,ll it's relative to where we were at the turn of the century. up, the second fifth is 4% up.

is a percentfth down. 60% of thely, households have not had a pay raise the century. in fact, a lot of them are worse off. tom: this is airplane ready. it's gorgeous, a lot of history in it. you go back to the luddites in the fear of technology. the technology is evil, is technology evil and is that part of our populism today? technology is an evil. things have consequences. the original luddites were put out of work and there was no compensation in those days. people damaged by technology, they have the vote

and they use the vote. we are in a different world. charles, he stays with us. david riley will join us later. coming up, we will be discussing goldman looking ahead with caroline gauge. i am with tom keene here in london's. tom: it's great to be back. after helsinki, it's a joy to be here. the ramifications are still substantial. from ourgorgeous view headquarters in london, this is bloomberg. stay with us. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. tom: "bloomberg surveillance" from our studios in london. nejra cehic in for francine lacqua. on tom keene. let's look at the global reaction to mr. trump and mr.

putin. i think it was a summit. maybe it was a meeting. i will let you decide. the new york daily news, open treason. they don't mince words. there are a lot of others with them. putin overacking mr. the u.s. intelligence community. guardian, leftist rag that it is in the u k, they are more subtle about it, treasonous, the accused over putin talks. a little dramatic take as well. take as well, we will go over to frankfurt, global reaction to this new

story. everything changed yesterday for the president. nejra: it certainly felt that way. it is amazing how many people from the republican side you would have expected to come out forcefully against the president did, everything from shameful to disgraceful to treasonous. tom: to drive this forward, we are going to have to see what the follow on reaction is from individuals within the administration. we will do that across bloomberg today with our washington team in print, radio, and television. looking down west avenue in new york city. goldman sachs, changing of the guard, earnings out at 7:30, and maybe executive announcement as well. carolyn gage who does terrific work on our financial reserve system. i will to start with the core issue. is goldman sachs a bank?

[laughter] >> yes. a consumer lending bank. tom: he really walked around the idea of are they a bank or different. are they truly different from the other too big to fails? >> they certainly have a different business model. it is interesting to see their business model pivot to get into a more traditional banking space, with market lending. tom: is mr. solomon going to give out toasters? >> we will see. tom: you look at the weinberg family, mr. rubin, solomon is a major cultural change. what is that? >> as you pointed out, lloyd blankfein came up through the trading business. if you look at what has happened 2015,ly for goldman in

trading was not a high point. one of the things people are looking for is on the investment banking side. we have seen jpmorgan, citigroup post very good results on the advisory side, on m&a, and also helping companies raise capital. expectations are very high. that is where solomon has grown up at goldman. you jumped about goldman looking more like a bank in terms of this consumer business, that is another area he has been pushing. nejra: how much in the earnings so far we have heard from the four biggest banks already have to do with tax cuts? >> that is an ongoing story this year. there was a lot of bullishness in the markets for the outlook for banks, both from the impacts to their own balance sheets and what that meant for consumer sentiments. bank stocks this year have been suffering. there has been anxiety about how long this party will continue

for banking. there is worry about trade. how long will these things permit them to keep posting these amazing numbers? nejra: in terms of what we get out of goldman, how will that set expectations for morgan stanley? >> expectations are high for morgan stanley as well on the advisory front. depending on what we see from goldman sachs today, morgan stanley may have a very high hurdle. tom: i know you are encyclopedic and 1880arcus goldman samuel sachs, so we are not going to do that here. we are going to the bodies in the room when solomon takes over who are saying maybe not. is there any pushback? >> what do you mean? partnersrnal pushback, who are saying why are we doing this guy? >> anyone wants to see their

guy. since solomon has become the heir apparent, there has been some changes beneath them. as this next ceo title becomes more formal, there is expectation that would embolden him to make even more changes in terms of putting the people he wants in place as part of goldman's future. thank you so much. we note is good to be mr. solomon, right? [laughter] we will have all on goldman sachs earnings. stay with us through those important announcements today. right now, first word news. taylor: both democrats and republicans have condemned president trump's remarks with vladimir putin about the helsinki summit. called theicans

president's performance shameful, disgraceful, and weak. u.s. authorities have charged a russian national with trying to establish a back channel with american politicians during the last election cycle. prosecutors accused her of with the nraotiate on behalf of the russian government. they say she tried to create a quiet line of litigation between the u.s. and russian officials. the ceo of the world's largest asset manager says a trade war could lead to a market downturn. tockrock's larry fink spoke erik schatzker. >> if we have a true trade war, we will see the markets down 10% to 15%. erik: you would not call this a trade war? >> we will see what happens in the next $200 billion proposal that the u.s. does with china. taylor: warren buffett keeps making good on his promise

to give away all of his shares in berkshire hathaway. he just donated to five cherries, among them the bill and melinda gates foundation. so far, he has given voice stocks valued at $31 billion. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. nejra: thank you so much. now to the u.k., where the only governor mark carney has reiterated he is concerned about a lack of solution surrounding brexit. theresa may's brexit strategy is in disarray after she vowed to rewrite plans from just over a week ago. -- and stillw is with us is charles dumas. david, great to have you with us. let me start with brexit.

theresa may going from the frying pan into the fire. how would you invest around this now? david: with considerable difficulty. i would rather have a short bias on sterling. i have been surprised how low implied volatility is for sterling given that we are approaching a crunch point for the u.k. in terms of whether they're going to secure an agreement and avoid hard brexit. i think sterling can be pretty volatile. beingave a bias toward short gilt because i do think if we get a so-called soft brexit, then i think the banks will push ahead with some of the rate hikes. if we don't, then i think we are probably looking at a general wouldon, which economists then price into sterling assets. nejra: tom, you know how mark

carney comes under fire for his communications, the audio was so bad that it shut down completely. just a little color on what we had for mark carney. in terms of the august deal the meeting, the markets pricing in that rate hike. is there anything that could change that picture the way it did in may? i don't think so because we have had u.k. data in terms of employment. that has been consistent enough with the bank of england doing a hike in august. i am skeptical that these rate hikes are warranted. spoiledsee a range developing in the united kingdom. unlike the u.s., the u.k. health sector is not delivered anywhere as much. i think it has pretty much maxed out on his credit card. i think it will be kind of one

and done. tom: you are too modest about your incredible work at fitch for over a decade. global sovereign and financialnal divisions group. you ran the thing for a decade. how did we get into financial instability? what are the things that get us into trouble? david: coming from a ratings agency background, i have to show some humility and say one of the things we learned was the mispricing of some risk. tom: were you too slow? david: when you have a situation when there is a lot of buildup of leverage in the system, and we saw that with subprime mortgages within the united states distributive globally that there was a misunderstanding and miss appreciation of what the risks. now, i think we certainly

have some imbalances or mispricing, but i don't think we have the same level of leverage. tom: this is critical, are the ratings agencies more supple, more adaptable now, and can they be quicker than the train wreck we saw 10 years ago? david: i certainly hope so. i think lessons have been learned by the ratings agencies. if you look at something like clo's, you now have much more robust structures in the greater equity built into these structures so they are less levered. i think that has got to be a positive development. i think agencies have responded in that way. nejra: away from the day-to-day turbulence in theresa may's government, are there any straight lines we can draw from here to march 2019 and beyond? actually aere is

majority in the comments for a soft -- commons for a soft brexit, and we will probably get it. there is been to be a lot of turbulence on the way and a lot of upsets. the big risk is an election being precipitated by party divisions that are not congruent with the division over brexit. us: david riley here with talking on ratings agencies. onrles dumas with us as well populism and economics. i cannot say enough about the readability of this. this is airplane ready. smart, smart. he really blends in the history as well. goldman sachs. we are thrilled to bring you gerard cassidy of rbc capital markets in the next hour. gerard cassidy on this important day in new york city.

please stay with us. worldwide, this is bloomberg. ♪ mberg. ♪

e.t. phone home tomorrow. finally, new york trade the first thing i'm going to do is i will have the beverage of my choice in new york. the best thing in america is immigration at jfk. it is wonderful to come back. jfk. we will be with you tomorrow morning. we are going to look at china. the china equity markets are up. it speaks to the instability of their tri-lemma.

david riley looking at the financial aspects of it. charles dumas has spent a life looking at trilemma as well. book on china today, what would be the lead? thehave president xi with economy who says it is a third revolution. is it? charles: no. i think the chinese have taken them off the stage effectively. remainedh rate has reasonably high. they accelerated for the official numbers they published yesterday. 6% rate remains close to after we do our calculation. they are shifting away from the successive rate of investment and saving toward consumer spending, services, and high-tech.

it seems to me they have a strategy. ,tarting from where they are and this is a poor country with lots of catch up potential, is not all that difficult. we have a permanent leader in china that wants to project. thank you for this. feedback on the special we did the other day on the south china sea. this is a nation that wants to project. charles: of course it is. the real issue is if we are in a not trade war, at least some breakdown of the globalization aspect of things, then we are interregional blocs. it is going to be a tough time for japan, not china. nejra: how much is there a risk that the trade war starts to affect china that they focus on growth at all costs and let

reform slide? charles: i don't think that is too bad of an issue. what we are seeing at the moment is they are letting the exchange rate is down and take some of the strain -- ease down and take some of the strain. trump could turn around and say i told you they were cheating us because the moment we try to do something about the trade imbalance, the exchange rate goes down. it is pretty close to balanced. there is very little surplus. the real imbalance is in germany and countries around germany. it is no surprise to me that the big guns from the united states have swung around in that direction. nejra: david riley, when you allocate across the end, how much of it is dictated by your view on china? david: it is more concentrated than that. one has to take into account

china, the world's second-largest economy. inasmuch as we have seen concerns around global growth, chinese growth spilling over into commodity prices and some of the commodities appended emerging markets, i think there are other ways in which you could express your views in terms of portfolios. at the moment, as part of china's you leveraging process, -- de-leveraging process, we have been wary. there is some leveraging as well because you have local banks who have leverage in their positioning. what we have learned from the markets this year more broadly is that where you have some it canual positioning, be a pretty painful flash. i think you need to pick your

spot. not really worried that china is going to have a hard landing, but to tom's point, china is in a difficult situation because you have trade tensions and tariffs from the u.s., the fed hiking rates, and they are trying to deleverage. tom: the important thing i heard was charles dumas with a sustained better gdp than many of the other interviews where taking this july. david riley, we will drive forward this conversation. much more to talk about this money. you need a morning briefing coast-to-coast across america, captive in your car, captive on your way to heathrow tonight, you can look at radio london. first, bloomberg daybreak, bob moon, karen moskow. this is bloomberg. ♪

nejra: japan and the eu signing a trade agreement in tokyo today. let's talk trade with charles dumas and david riley. what a great day to have you with us, gentlemen.

our deals like this enough to offset u.s. protectionism? no, certainly not. it is a convenient thing for the japan and eu to have an agreement to regularize trade, but it is not as if they were not trading to start with. the problem with japanese fromts are not arising protection anywhere else. the eu is in a huge surplus. tora: when you look ahead august 30, which is when we might get the latest round of tariffs imposed, the you sit on the sidelines? do you try to act tactically? david: i think you need to have some cost you -- caution. i think the fears around trade are well-founded. i think it is more likely than not we get an additional

escalation with more tariffs imposed on china. autos, whichds to points the direction of europe, then we're looking at a potential of a global trade war. onary, pushingi prices up and lowering growth. you have to look at how you hedge yourself because i don't think traditional fixed income is going to provide you with that safe haven. tom: last thought, populism and economics. free trade in services. our our institutions ready to deal with the modern services sector, global services sector? david: certainly not. the single market everyone is so concerned about connection of brexit never really made it to services outside of the financial sector. there are so many obstructions.

the lawyers are good at looking out for themselves. the doctors are good at looking out for themselves. it is not easy to carrier qualification from one place to another. nejra: what a pleasure. thank you, gentlemen. marvin barth of and the will join us fallout from what happened in helsinki. this is bloomberg. ♪ ♪

tom: this morning, the president returns to a washington stunned. democrats and republicans

reproach trump. putin denies meddling. his intelligence community. up for ensues. -- uproar ensues. calling helsinki the most serious mistake of the trump presidency. how will the grand old party respond? 200 west street, new york, new york, 102, will goldman sachs survive? good morning. this is "bloomberg surveillance." i'm tom keene. with me, nejra cehic in for francine lacqua. i want to talk about helsinki and london. i think americans look at it, helsinki really blew me away. london is doing really well given all the brexit uproar. nejra: what surprised you most

given what happened yesterday with president trump? tom: why were we surprised? we have nato. we have checkers where no one could get out of their way. the moment of this press conference yesterday. come on, you look at the trend of these moments, brussels, london, not even scotland, why are we surprised? we had seen -- overwhelminge seen criticism coming from his own party. will that transition to the elections in november? tom: president trump's refusal criticize russia's election meddling has drawn criticism from both sides. john mccain called it one of the most disgraceful performance iny an american president memory.

minneapolis fed president neel kashkari does not buy the argument that this time is different when it comes to the yield curve. he sees little reason to raise interest rates further and trigger a recession. fed chairman jerome powell may give an update on his thinking when he testifies before the senate today. theresa may's brexit strategy is in turmoil. now she has infuriated pro-european members of her party by bowing to the eurosceptic lawmakers and a green to rewrite her plants -- agreeing to rewrite her plans. china, the government has been trying to curb speculation in the property market, but in june prices rose at the fastest pace in 21 months.

it was the fourth straight increase. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thanks so much. equities, bonds, currencies, commodities. there is not much going on in the markets, which means we can spend some time on the issues at hand. stronger euro within the range. american oil $68 a barrel, under the $70 level. oil trying to find a bid over the last three days. on the dess, down ow it's my attention. nejra: you have european equities trading pretty much sideways. mark carney's audio feed broke down. trading sideways.

brent holding above $71 a barrel. tom: we do economics, finance investment, and international relations and politics. we will full that in this morning with marvin barth of barclays, head of european fx strategy. taking a global, holistic view on the economy. joining us today on a very robust president. i think this is fascinating. withrite like hemingway next to no words. the president goes on and on. is there anyone to make him concise? >> as we know, the answer to that is no. you cannot get him to stick to talking points. you cannot get him to stick to what his own administration's position is.

getting him to write in short, concise, declarative sentences is a nonstarter. tom: i put a little bit out on twitter yesterday. his writing on bloomberg opinion, i thought this was forceful on a huge amount of writing overnight. the presidents 40 minute press conference on -- on as separate idea, he goes on to say all previous presidents have eventually come to the same conclusion -- when we try to --sheith him, putin really emphasized erdogan, there erdogan,erdogan, late and we forget the early putin.

how much different is putin? >> i would say the early putin is not even relevant to the felt at that, who time he had the weight of history against him. now he feels he has the wind at his back when he has a president, the united states, his greatest adversary, who is willing to hand him whatever he wants, whether it is fracturing the western alliance, giving him a free pass in crimea. you name it. nejra: is this going to be a moment that like so many eventually blows over? is this going to be the one where we look at six months from now and say that is it, that is when everything changed? >> that all depends on how mitch mcconnell reacts, and it depends ndersw the fox news deade

react. it looks like this is going to pass. tom: this is important. can journalism sway this debate? can journalism sway this? i go to fox, and neil caputo really went after the president last night. can there be a shift in the journalism after this event in helsinki? >> i would not call it journalism. i would color commentary. the facts are playing. -- call it commentary. the facts are plain. call ont is your dollar barclays? is that around a u.s. dollar that moves? >> we have the dollar

strengthening in our forecast. it comes down to economic performance. the u.s. is increasingly diverging from the rest of the world in economic performance. all of this with president trump is a lot of sounded. , you can finish -- sound and fury, you can finish the rest of that line. he seems to be able to create some a different controversies that you kind of get lost on any particular one. i would be skeptical if this even affects him. nejra: what could make something like this a market event? marvin: something that turns into a real geopolitical event that has consequences. i don't see anything dropping out of this that has serious geopolitical consequences that the markets would care about in the near term. nejra: we have a question coming through of whether russia and

president putin really matter to president trump's base. do they? the evidence to that is no. the base is the base. 25% to 32%. they are going to support his cause come hell or high water. what matters is the soft part of his voters, 35%, 42%. get a newspaper story, some voters still support trump. he gets tricky. tom: in our previous hour, nato surprises, checkers surprises, i don't know what happened in scotland, what he hit in golf, and huge surprises in helsinki. us a holistic for view of the trip, not just helsinki. >> it depends on your perspective.

if you are a trump supporter, you probably think it was a great success, he made the points he needed to make and wanted to make. if you are not, you are probably having stomach pains about the comments he made about the western alliance and what he said standing alongside putin yesterday. tom: i know david westin will be looking at this at the 12:00 noon hour today in new york. today inant testimony the senate. chairman powell has been around. the powell testimony at the 10:00 a.m. hour. this is bloomberg. ♪ s bloomberg. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. shares of netflix are falling sharply in premarket trade as it went up fewer subscribers than expected last quarter. their outlook for the current quarter reflects a showdown. a online tvlargest network expects at your customers-- fewer than a year ago. despite technical glitches, reports were that customers fewd 54% more tha in the first hours than a year ago on amazon prime day. some shoppers reported being unable to check out or search for products. airbus and boeing keep

racking up the sales. the airbus had signed a deal for 100 jets. has sold 29 boeing 777 freighters to a russian cargo line. nejra: thank you so much. fed chairman jerome powell delivers his semiannual monetary policy report to congress today. the 10-year treasury yields going nowhere. the bloomberg dollar index going sideways. still with us is marvin barth of barclays. the 10-year treasury yield has been in a 14 basis point range in the last month. can run house anything to move the needle? marvin: he certainly could. i doubt he will. the key point is markets are

still struggling with this economybetween the u.s. is just booming, but on the other side they are worried about the potential impact of the trade war and how that might affect the feds policy path and longer-term growth path. while they are trying to figure out between those two competing issues, that is why we are trading back and forth. i don't think he is really going to change anything on that. he will probably acknowledge that the fed is concerned about some of the increasing escalation around the potential for a trade war but express a lot of confidence in the underlying growth of the economy. nejra: while the 10-year yield has barely dodged, the front end of the curve has moved. address that? i don't think the fed really controls that. the fed controls the front end

of the curve. the market will tell them what happens on the back end of the curve. it is a useful signal, but it is .uestionable how strong that is it does not mean you should ignore it. it is not the same signal. tom: the chart now, the chart out of london. target rate, positive real yield before the crisis, down we go, and we stay underneath. real yields are still a fiction. they have a long way to go. thein: if we do think economy is going to continue, if a trade war does not disrupt that, it does not look as if financial conditions have tightened difficultly within the u.s. tom: with tightening, what are we afraid of? if we have a make america great again economy, why the

reticence? marvin: i think there is a generalized view in markets that following the crisis no economies really have the same sort of potential growth. that is what issue. the second is that there are continuing concerns that this will just be a sugar high associated with fiscal policy and tightening race too much in response to that could lead to a recession. tom: the fed funds target rate is still not as zero. marvin: i agree with you. our call at barclays is you will see two more hikes this year and watch her hikes next year -- four hikes next year. nejra: is it going to be more about what the fed is doing, the u.s. economy, or the fact everyone moves to the dollar if we get trade tension? marvin: the first is the generalized strength of the u.s. economy relative to the rest of the world.

that is leading to come as i mentioned before, and increasing divergence in expected returns to capital, not just interest rates, but across the economy where you can invest. that is something in capital from around the rest of the world and propelling the dollar higher. if you have some sort of trade shop, the dollar tends to benefit from that despite the fact that the u.s. is the locus of attention. -- the tension . yena: and yet you think the is going to benefit. we will talk about that. i know your very excited about that conversation. this is bloomberg. ♪ ♪

nejra: i am nejra cehic with tom keene in london. netflix shares have slumped in free-trade. they stunned wall street by attracting fewer subscribers than expected last quarter. good to see you, ian. have investors, analysts focused too much around the eller of netflix? >> if you look at the market cap slump, it is something

like $134 billion. when you look at the potential valuation in terms of growth and revenue and profit growth in the future, there are some extremely punchy assumptions that have been going on. what has happened is people have gotten too far ahead of themselves so that when it comes to stocks like this, the longer-term message sounds alluring, but you have to get that constant very high-growth coming through. if there are any shocks like you saw last met, then the shares are vulnerable. nejra: is that growth going to come through? where does it come from? is it just the content or something else in their business model? >> they have two fundamental issues in terms of subscriber growth. if you look at the reasons why people are saying subscriber growth was slower than expected this quarter, they're talking about the lack of new programming coming through. that suggests it has to consistently spent on big

productions that cost a lot of money. there's no guarantee chance of success for those. the cash burn is a potential issue. if you look at most markets, certainly in europe, but globally, the content is very local in focus. netflix is producing more local content, but if you think about it, if you're producing content for u.k. specifically, germany specifically, italy specifically, the costs ratchet significantly. tom: claire foy can only do so many movies. the cash burn is extraordinary. what is interesting with comcast is there was a moment everyone knew it would lower capex and go cash flow positive, i see no indication that netflix has any

desire to go cash flow positive. visit out there? -- is it out there? >> you could argue this is a growth business. there is a huge amount of growth left in the market. tom: is there any tip point where they actually act like a normal company and deliver cash flow? >> we don't cover netflix. not in our particular model. we have to say at some point where people -- you see this in terms of estimates. we have consensus estimates of around $3.2 billion of free cash flow burn. that comes down rapidly over the next couple of years. there are two issues netflix has. they have to constantly spend on big value productions. these numbers suggest that the rest of their content just does not drag people in if they're not a big name.

if your subscriber growth is not there, you have to raise the prices. if you raise the prices, you get churn or lower growth. tom: thank you. in whitaker on a beleaguered netflix. we're going to can you with marvin barth of barclays foreign-exchange. without question, our interview of the day on bloomberg surveillance and radio, and yes sturdinesspodcasted, of the tufts school of economics. he was scathing about the trump administration. he said, where is there courage? this is bloomberg. ♪ is bloomberg. ♪ phones have made our lives effortless.

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a number of analysts we spoken aboutak about week yen -- weak yen, strong dollar. is it about a strong differential or a weak dollar? >> that is much more about a strong yen that a weak dollar. there's a few key points here. the yen continues to be one of the most undervalued currencies in long-term purchasing power terms. increasingly it demands a greater share of correlation benefits, not yield benefits, because it is such a great hedge on risk, particularly in the current environment. through member that while we also think about japan come on a per capita basis between one of the psalmist economies of -- economies in the

world over the last several years. nejra: why have we seen the yen dropped to its lowest in january. the yen is the most undervalued apart from the swedish krona. that?ow do you even do nejra: i will put it on the screen so everyone can have a look at how undervalued the yen is. tom: and a look at how dumb i am with my terminals. [laughter] nejra: the sports with martin was saying. why are other investors not following what you are saying, marvin, and not pushing begin lower since january against the dollar? dollar-yenou look at and u.s. yield differentials on a high-frequency basis, it looks

like they are highly correlated. look on a lower frequency basis, actually dollar-yen has been going the opposite direction to the u.s. yield differential. that is that valuation play coming through. look on a lower frequencythe second is i think a bit of momentum chasing. we had a big mergers and acquisition move come through the markets last week, popped dollar-yen higher. tom: is at the same old, same old, or is very generational shift that will change the next? guest: i think it is the same old, same old in terms of they have massive capital and need to invest abroad. the difficulty in getting that out is one of the things that will ultimately lead to yen appreciation. nejra: i heard earlier this week that part of the dollar's strength against the yen is

actually about the rotation out of em equities into u.s. equities. i showed a chart of u.s. performance of the top of the show. we are making cross asset correlations here, but stick with me. is that a part of the equation as well? guest: i would put it in the other direction. process that is exactly what we are looking at. we've done a lot of research on this -- cross asset is exactly what we are looking at. we've done a lot of research on this. for the first time since the breakdown of bretton woods, the u.s. is at the front end at the backend -- and the backend yielding more than any other currency. one of the things that causes is subtraction into the u.s. come about the same time it increases the dow of that correlation benefit from the yen. so actually, the yen benefit from this. tom: major differences here. we love this. marvin barth with barclays

looking for a stronger japanese yen. right now in new york city with your first word news, here's taylor riggs. taylor: both democrats and republicans have condemned president trump's defense of vladimir putin at the helsinki summit. the president suggested he denial ofutin's allegations that his government meddling in 2016 elections. charged arities have russian national was trying to establish a back channel to american politicians during the last election cycle. prosecutors accuse maria puti -- maria butina of trying to fund the national rifle association through the russian government. the ceo of the world's largest asset manager says chinese

tariffs could trigger a slowdown in the u.s. economy. he spoke to bloomberg. >> if we do implement this $200 billion tariff war between china, i think all bets are off. the gdp will slow down dramatically. we will have even more uncertainty about the world and how the u.s. is being portrayed. taylor: global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. nejra, tom? tom: thank you so much. we need to get perspective on goldman sachs. guardis a changing of the among their senior management. there's no one better to do that rbc then gerard cassidy of capital markets. he spent decades looking at the

banking industry. he does this from portland, come over the cheapest lobster you are going to find is $12 each, which is an outrage here in the heat of the summer. going cassidy, they are to celebrate at goldman sachs today this changing of the guard. how unified is management of their mr. solomon's ascension? guest: i think they are very unified. it is obviously somewhere from within. the changing of the guard takes place, as you of i -- as you and i know, in many places over the last couple of years. i think it will be very smooth. i think it will be a lot of support for the new leader at goldman sachs. tom: is the trading still influential, or is the new goldman sachs less ruben-like, less blankfein-like? is more electronic, so

i think the weight and power of the trading desk when ruben and others were there 20 plus years ago, trading ruled the day. i don't think that is the case at any firm, including goldman sachs. nejra: great to speak to you. since lloyd blankfein took over 2006, opened in his outperformed most of the big banks apart from jpmorgan. what does it need to do to catch up with jpmorgan shareprice gains in student six? -- since 2006? guest: i think you have to focus on what they do very well, which is investment banking or advisory, which they are the leader in in terms of mergers and acquisitions advice. they also need to keep their expenses and check. there is a question should they be diversifying into more traditional banking businesses such as consumer lending, which of course, they are using their marcus channel to do that.

there's a question as to whether that will be a successful as they hope it will become a but this is a pure play the capital markets business. theyis where i think should focus their efforts to continue to be that dominant player in capital markets. nejra: the point that you make about the question over moving more to the consumer banking, is that something that david solomon is likely to push for? guest: i think they are certainly going to continue to pursue it. it is something they spent quite a bit of time and money developing, and i don't believe that will be abandoned at all. but consumer lending is extremely competitive, as we all know. it is going to be challenging to really carve yourself out a specialty niche when you've got such strong competitors out there such as bank of america, -- andn chase, and an a long line of others including capital one. tom: what have you learned about

earnings season so far? guest: it has been very good. and all the years of you and i talking and me looking at banks, this quarter was probably one of the best we have seen in quite some time. credit quality is outstanding for the industry. profitability is at record levels. when you look at the numbers come along growth -- loan -- when you look at the numbers, -- when you look at the bank of america numbers yesterday and the number of mobile users they have, is not just millennials. it is you and i using the mobile banking. , how good were the last set of earnings -- how good would the last set of earnings from all these banks look if it were not for tax cuts? guest: tax cuts clearly have impacted the bottom line

earnings. if you take those tax cuts away and just look at it from a pretax basis, you are still seeing high double-digit pretax earnings growth. i would still point out the numbers are very good without the tax cuts. of course, the tax cuts have made it much better, which has enable the banks to increase their dividends. you saw that two weeks ago with the stress tests. growth in dividends, and i think that will continue as we go forward. , as thanks gerard cassidy always, with rbc capital. last to talk about from london. coast-to-coast, your morning brief and. that's your morning briefing -- your morning briefing. good morning in helsinki, or the sun never sets. this is bloomberg.

♪ taylor: this is "bloomberg surveillance." i'm taylor riggs. the embattled founder of papa john's pizza appears to be having second bonds. schnatterider -- john regrets resigning after using a racist slur on a conference call. uber doesn't think the ride-hailing company has to be profitable before a planned ipo next year. he says he is more focused on generating positive cash flow. we were has burned through almost $11 billion since -- uber has burned through almost $11 billion since it was founded in

2009. the california public employees retirement system is looking to its ceo at the end of the years. it has $700 billion in assets. that is your bloomberg business flash. tom: taylor, thank you so much. earnings are they confusing. they've got a bang up double-digit move showing the make america great again nominal gdp story of the second q uarter. they do cut their sales you ahead -- sales view ahead. just amazing look back -- just amazing. look back 90 days to the buoyant economy that receive best that we see -- that we see. single best chart with marvin barth. we do it again. we are really remarkably on

track. i get upset when i hear that dollar hysteria because we are well within the green lines of standard deviation. the hysteria is overwrought, isn't it. -- isn't it? guest: yeah. we did get to a point where the dollar was looking overvalued last year, but we've had significant adjustment since then. to your point, we are well within the range of something you might consider fair value for the dollar. it is not like valuation is having a big effect on maturity at this point. tom: does the political ballet put at risk the dollar? guest: i don't think so at this stage. i would argue you could say the opposite. one of the things i think has assuaged a lot of people's concerns about this administration going into it u.s.november 2016 is, wow,

institutions work. in fact, they are really strong. if you think about that, you should be more confident in the dollar. aboute have some concerns specific policy issues along the way. yes, we have concerns about possible trade wars, but in the end the institutions work in this country. there is a rule of law. and that means you are going to get repaid. nejra: does that mean emfx should just get up and go home? as we discussed earlier, this is a as we discussed earli, this is a remarkable thing. u.s. treasuries that are supposed to benefit from so-called exorbitant privilege as valerie --

[indiscernible] tom: you are butchering it. guest: we are clearly not appreciating france's tremendous victory this week. but as he labeled it, the u.s. should not have the highest yields in the world as a result. this is really testament to what is going on in the u.s. economy relative to the rest of the world right now. that is really what is going to be important for the dollar. ?id you see g tv it was extraordinary. it is smarter in london the new york. nejra: marvin barth of barclays, thank you so much. great to have you with us. and remember, had brought tom to tears. g tv . you can interact with it, click on the single best chart, download it, save it, send it back to tom new and improved. this is bloomberg.

♪ tom: good morning, everyone. "bloomberg surveillance." nejra cehic in for francine lacqua, and tom keene here in london. here's the second most important interview. kevin cirilli was there in the room, our chief bloomberg washington correspondent. you took the boat from copenhagen, right? kevin, afterou, this historic moment. i want to go to sourdough rizzo -- salvador rizzo in "the washington post" today, who do the obligatory fact check. was it that often mark? was it that bizarre -- off the mark? was it that bizarre?

the fallout from capitol hill has been as italy critical, not just from democrats, republicans as well. most notably, i was struck by paul ryan. this is the first time using a very aggressive statement against this president since he announced his retirement. tom: 10 times in the last 12 hours, people have said to me, when do they act? went to the cabinet officers act? wednesday the administration officials act? windy were -- when do the cabinet officers act? when do the admin assertion officials act? kevin: i have not seen any evidence as of now. tom: why? kevin: midterm elections. you have to go into the hearts of some of these districts where their constituents are. quite frankly, the president yesterday, while receiving a lot of criticism, does speak for a contingency of voters.

tom: ok, but in a congressional district in a state that trumped percentage over secondary clinton, those people urpport what he said about ou intelligence agencies? kevin: they support what the president us. former house speaker newt gingrich called out president trump to issue a statement. former speaker gingrich is one of the most ardent supporters of this president administration. as well as conservatives yesterday in the conservative punditry class who have been very much in lockstep with this president, who criticized him. i spoke with one former cia official told me point blank this was a disaster. nejra: it was a disaster. and in the u.k., every time prime minister theresa may does something people don't like, we start to question if there will be a vote of no-confidence. what is the worst that could happen to the president?

kevin: they're very well could be some type of phot, but the democrats -- some kind of vote, but the democrats would have to take back the house of representatives. there's no talk of that as of this point, which is what i want to be careful about. the second point that is fascinating here, especially for our audience, is that this essentially forces this issue into a midterm election issue. that has severe policy applications. look no further than what the eu is doing, negotiating the biggest deal with japan in recent history. tom: you are viscerally linked into trump and all the different constituents the president has. what are you going to be looking for in the polling? just in the sunday talk shows this weekend, they were pulling into august. what were you -- what will you be trying to glean out of the polling?

kevin: whether or not independent voters in wisconsin, ohio, suburban philadelphia, whether or not those swing voters who voted for former president obama, then voted for president trump because they wanted something new, is this the something new that they wanted? we are living through the past two decades of a reckoning of trust in institutions. right now that mistrust is being, from the president's mouth, fourth on the intelligence community. how will democrats respond to rebuild trust? nejra: we've heard shameful, disgraceful, even treasonous. is there anything positive that can come out of this for the republican party? kevin: politics aside, let's focus on policy here, particularly energy policy and to some extent nato, although republicans would argue against that as well. the u.s. is still very much against the north stream to that

was proposed. putin at that press conference said in the room that the president did not say he was lifting sanctions off of crimea. those are two of the positions. tom: thank you so much. kevin cirilli, our chief washington correspondent. this has been wonderful. we need to say thank you over the last number of days to our helsinki team come our london team as well. much more coming up on bloomberg radio. we are thrilled to review the view forward for the intelligence community and washington.

♪ >> double down on russia.

president trump blames the mueller probe for driving a wedge between the two countries as the news conference show capitol hill. falls, netflixth falling lower. -- and powe ll's political minefield. welcome to "bloomberg daybreak." i'm alix steel. the markets quiet, the headlines powerful. s&p futures off by just about three points, but nasdaq futures getting hit as netflix is factored in, down over 11% in the premarket. euro-dollar little stronger, up to 1.17. i wanted to point out the two-year, unchanged. it hit 2.6 yesterday, the first time we've seen that since 2008. crude