-- obsolete? they were wrong. workers million discouraged by the previous administration and other administrations have returned to the workforce. new unemployment claims are at the lowest level in almost half a century. think of that. the lowest level, unemployment claims. that is big. [applause] president trump: on of women rates for americans, for african-americans, hispanics, us,ns, americans, all of lowest ever. these are the lowest levels for african americans, hispanics, asians ever recorded. think about that. ever recorded. women unemployment recently reached the 65 year low. we think that is probably the lowest ever. but as i have been saying in two

weeks or three weeks, it will be. it will be the lowest in history. pretty bad when you say lowest in 65 years, and i think that is not as good as history. be. shortly, it will we will be saying history. manufacturing wages are expected to rise at the fastest rate in more than 17 years. manufacturers, which i love, that is what we love, manufacturers, are optimistic about the future. that is the highest level ever recorded. 95%. we have achieved together in the last 18 months something that is totally unprecedented. for decades, the united states allowed other countries to steal our jobs, close our factories, and plunder our wealth. what was happening was horrible. i used to talk about it for 20 years and the private sector. how did they let this happen? little did i know i would get my shot is what happened, and that

is what is happening to us because our leaders in washington did nothing. they did nothing. they let our factories leave. they let our people lose their jobs, given to other jobs and workers in faraway lands. that is not free trade. that is fools trade. that is stupid trade. we do not do that kind of trade anymore. the european union has been very tough on the united states, but they are coming in to see me on wednesday. we will see if we can work something out. otherwise, we will have to do something with respect to the millions of cars they send in every year, but maybe we can work something out. they are all coming in, the top people. we are talking to china, who had billion trade surplus last year. $375 billion or looking at it differently, we had a $375 billion trade deficit.

that is not good. we are talking to china very seriously. we are talking to mexico. to mexico on nafta. i think we will have something worked out. the new president, terrific person. i spoke to him at length on a call. did a great job. got a tremendous vote. they have a lot of confidence in him and mexico. that is good. but we are talking to them about doing something very dramatic, very positive for both countries. we are demanding fairness with the wto. it has been a disaster for the united states. we want fairness. we lose court cases. we always had a minority of judges. they gave us you are judges than other countries had. nobody knew why. i said i know why. because you do not have judges from this country. you have a minority 3-2 with three being on the other side. we have started to do much better in winning cases lately.

but america never waves the white flag. we only waive the red, white, and blue flag. the era of economic surrender for the united states is over. over. you people have been really leading the charge. america is fighting back, and we are winning again. you know, my story about winning. we will win so much, you will get tired of winning. i do not think you will get tired. throughout our history, our greatest leaders from washington, jefferson, hamilton, linkedin, mckinley, people do not know much about mckinley. take a look. really an incredible economic time for our country. people wanted to come in and take from our country that paid for it. they had to pay for the privilege of taking from our country. we all understood that to be strong and every one of them our ation,, we had to be

manufacturing nation. you have to be able to be a manufacturing nation. industryacy our steel desk very proud to see our steel industry is coming back at a level that we thought possible. factories are opening up all over. going, they are saying we just opened up a steel plant that was closed for five or 10 or 20 years in some cases. u.s. steel is now opening up six plants, and they are expanding and other plants -- in other plants. we are very proud of that. we were being dumped on. you know what that means. they were dumping all over this country. now our steel industry is coming back. you need a steel industry. that is not like a normal thing when you make even some of your products, which i love, but it is not steel. you need steel. we need it in case of an emergency of the ron kind. my administration is reclaiming our proud manufacturing heritage because we are finally putting,

again, america first. we are paring down barriers to our exports, protecting our intellectual property, and defending our companies from unfair foreign trade and, which there are many. she hasutting trained on notice. nobody rips off the united states of america anymore. has happened for too much for too long. to give a level playing field will be cut record number of regulations. in the history of our country, nobody has cut more regulations than me, and i have only been here for less than two years so i am talking about two years, four years, 16 years,, 8 years -- years, 8 years. we have cut more regulations than any other president, and we have been here for shorter than two years. we passed the biggest tax cut and reform in american history.

we have gotten rid of the individual mandate from health care, which was a disaster for you and your businesses. where people have to pay for the privilege of not having to pay to get that health care -- bad health care. sounds obligated what is actually pretty basic. you pay for not having to buy. a lot of people wondered about that one. that is gone.that is a big thing . that was the most unpopular element of obamacare. and obamacare is very rapidly fading away. we had it done, but we missed it by one vote. somebody changed their mind in the middle of the evening. wonder who that was. just one of those things. but we are very far progressing. and we are now opening up health care policies and making it possible for people to buy great health care at a low cost. and we are very proud of that. and it is opened. secretary of labor has done an incredible job.

the secretary is in the process of doing something that will be very big. and all of you people will be big beneficiaries of that in the business world also. since our tax cuts were passed, more than 6 million americans have received a bonus or a pay raise. in some cases, a very substantial bonus. they are really liking it. creating over $7 trillion of work for our country. we have bolted up to a strong number one position. where the largest in the world. largest economy in the world. by a lot more than when i took over the presidency. small businesses can now deduct 20% of their business income. manufacturers can now immediately deduct every penny on new equipment. you never thought you were going to see that. or if you are selling equipment, that is even better because i

know a lot of you folks make the equivalent a one-year deal. think of it. expensing. one year expensing. did you ever think you are going to see that? people are buying. they are buying in record numbers. and result of our tax cuts in the bill itself, $300 billion of foreign profits have been brought back home to america where it belongs. in the first quarter of this year alone, apple is spending $350 billion on new plants and an incredible campus. many other companies are doing the same. maryland, i think lockheed martin is doing a big investment i heard just the other day. very big investment. every time a new factory opens, every time jobs are returned to our shores, every time we buy a product made by our own american neighbors, we are renewing the bonds of love and loyalty that link us all together as americans.

tremendous spirit in our country right now. sometimes you do not see it, but it is. you produce like nobody else. and the spirit is incredible. truth we declare a simple . it matters where something is made. it matters to me. the globalists talking about it orok to close a car factory a car plant in michigan, and it is ok to move that plant to mexico and hire different workers and fire of her in michigan, but it is not ok for me. to me, it is a very bad thing. that is stopping. plans are moving back to michigan and they are moving back in big numbers, and they are moving back to ohio. coming into iowa in a lot of different ways. ethanol has taken almost leaps and bounds.

pennsylvania, you see what is going on there with steel. incredible what is happening in pennsylvania. but you look at just steel, pennsylvania is doing well. car plans are moving back into our country at numbers that soon will be records like we have never said before. the more we make things in america, the stronger america becomes. that is why we will always live by two crucial rules, buy american and hire american. these principles gave rise to centuries of american prosperity -150 ford's model t to the f that i just saw, which was beautiful, from the wright brothers to the beautiful orion space capsule on the south lawn. you have the space capsule. julie: president trump remarks at the made in america event.

talking about some of the manufacturing push he has made. he also made comments on trade. he said the u.s. is talking with mexico on something dramatic on trade. also said we will see if we can work something out with europe on trade. we will see jean-claude juncker in d.c. this week, so we could get perhaps some talks on that front. our national political reporter with the latest. i am curious from the comments if anything stood out to you or if it was the trade, is perhaps in which the president was changing tone to some degree on trade. >> i do not know that it was necessarily changing tone. that was certainly the take away about this event. highlighting the positive aspects of the president's trade policies, his tariffs. mainly the fact that they are domestic industries that will be protected from the essence part of his political identity in the campaign. it helped him in the primaries and the general election.

the shuttered plants of steel and aluminum industries being held by competition. this is him trying to paint a positive picture on this trade war, which were we many of his allies on capitol hill. most notably republicans who were regularly to higher costs for consumers not in those industries and higher costs for businesses, including small businesses. >> he made a big point of mentioning the europeans were going to be coming to speak with him on wednesday. jean-claude juncker meeting at the white house. i have been reading about how he is excited to come armed with proposals, including a pluralistic trade deal including cars and car parts as well. is there an added urgency on the u.s. side after europe and japan struck a tree deal of their own? >> well, talks are essentially ongoing -- certainly ongoing. goes, thean urgency

main urgency right now for the white house is the fact that there is an election in just 3.5 months and the issues of tariffs and trade war is not playing well for republican candidates in places like tennessee and north dakota and misery -- miss ouri, where there are key senate races and republican candidates do not want to highlight the trade war because they are hearing a lot of negative concerns about it from businesses in their home states so this is something the white house would like to get sorted out before then, but it is not clear how they do that while keeping the president's promises. julie: i want to move on to something that was mentioned by sarah sanders today in a press briefing, which is the president is waiting we secured clearances of former u.s. intelligence officials, namely people like james comey at john brennan, who headed up the fbi and cia respectively. first of all, why do they keep their clearances after they leave? second of all, have we seen that

kind of revocation ever before? >> yes. let me give you the names here. sarah sanders said president trump was considering revoking security clearances and access to information that former officials get. john brennan and james clapper, james comey, michael hayden, susan rice, and andrew mccabe. these are all former obama and research officials who have been critical of president trump. his critics are calling this an inappropriate vendetta against people who are part of the in thewho have been intelligence community or overseen it in some form or fashion. as tradition goes, have access to some level of clearance after they leave. in manytop secret level of these cases. in one of the cases, andrew mccabe, before the eye official, his spokesperson said security clearance was already revoked on the date of termination. essentially accuses the white

house of not knowing what it is talking about here. scarlet: interesting development. we will continue to monitor the president's comments at the white house and keep you posted on any for the headlines. sahil reporting from capitol hill. this is bloomberg. ♪

julie: it is time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. is raisingntly salaries for more than 7000 employees to ensure equitable compensation. the wall street journal says the company is changing how it avoids bonuses. another example of how nike is reshaping the culture after complaints of inappropriate behavior in the workplace. billionaire hedge fund manager leon cooperman plans to manage his own money rather than that of outside investors. convertn will

omega into a family office. he says it is a decision that is a personal one not driven by any health concerns. cooperman is 75. that is your bloomberg business flash. scarlet: it is time for our stock of the hour, and it is paypal. shares falling as much as 1.5% before turning positive on news stake.ere is an added abigail doolittle now joins us with more. we know how big of a stake this is? abigail: we do not. the size is not disclosed. ed hammond broke this earlier today. this could be a $125 stock in 18 ofths, suggesting a 40% potential. let's put this in perspective. if this is one of the stealth winners over the last more than a year. hop intointo the -- we the bloomberg. take a look at paypal and white 122%, making most

of the gains in 2018 and holding onto them. joe: one of interesting things in his note is a lot of people covering the stock come from the banking analysts side and that it properly should be like a netflix and an amazon and should perhaps have a valuation and more appreciation like them. abigail: you're right about that. it has a decent valuation right now. that is not quite a netflix, which is some crazy multiple of 97 times or something along those lines, but he is making that case, saying there could be upside to consensus earnings estimates. venmo could be a $1 billion business within three years. costine payments plus discipline. if we go back to the bloomberg and take a look at what is happening earnings wise, some quick math. $2.35 per share is a contest this -- a consensus estimate this year. that equals $118 stocks. $3 if they really just knock the

cover off the ball. it could be a $141 stock. interesting call. scarlet: you mentioned competition. when you talk about competition, lots of different players involved, including apple. abigail: apple pay. scarlet: how is that checking out? i know apple pay is nowhere near the size of paypal. abigail: that is a great question because it turns out they are winning the online payment space. other companies instead of trying to be them are joining them. they have a partnership with apple, facebook, lisa, and andercard -- visa, mastercard permits things like they are doing all things right. you can see the stock price going up in the last two years. some investors have been on to this. scarlet: good stuff with thank you so much. coming up, a busy week for tech begins without hope and earnings m. 4:02 p. we have the chart you cannot miss. this is bloomberg. ♪

julie: i'm julie hyman.

"what'd you miss?" we are minutes away from apple's second quarter results so he is a look for of all and what analysts estimating from the company. we have a gap earnings-per-share estimate of $9.51. the acquisition cost estimate is the number we will be watching for revenue. about 25 point $5 billion the estimate there. operating income about $10.3 billion. and paid clicks according to at least one analyst or an analyst on average is looking for a gain of 42% in that paid click number. i want to pick up on that because google, alphabet have seen big growth in paid clicks. remember for perspective that about 86% of the company's revenue last year was from advertising, so that is still the biggest part of their business has of the migration to mobile. that fueled a 55% growth in paid clicks last quarter. 18%, isr click was down

also a positive for the company. here is the momentum going into this quarter's report and just one of the numbers we will be watching from alphabet. joe: as we get all of the earnings over the coming days, let's put in perspective alphabet or google's control over the online ad market. here is a chart with projections from the marketer. google,2016, alphabet, the yellow line had over 40% of the share of the online ad market. go to 2018. facebook is now over 20%. an alphabet is below 40%. you see it expected to hold well through 2020. two things to watch for. a, the continued strength of facebook, and the blue line of amazon. we do not talk about the amazon ad business, but it is coming on. potentially another huge cash flow gusher for the company that already has a lot of them. scarlet: perhaps people need to rethink this is a duopoly

because it may not is the alphabet and facebook. a third player like amazon could come in. here is another chart i want to highlight. we talk about the summer doldrums. august is approaching. august actually tends to be the most volatile month. over the past two decades, the pixies the biggest increase in august. it tends to rise just over two points on average. that is the blue bar. the next is september with an points.gain of 1.7 july has an average gain of 0.9 points. january is slightly positive. the outside moves during the three-month period, july august september, links to summer trading. trading exaggerates price swings. if you think back to some of the events we have seen in the month of august, china's surprise evaluation of the u.n. in 2015. downgrade, and a triple-a credit rating as well. joe: what will this year bring? scarlet: there is a lot on the table. joe: a lot going on.

scarlet: the market close is next. take a look at the major indexes. nasdaq leading the way up by pretense of 1%. the dow off by 16 points. this is bloomberg. ♪ retail.

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dowwhat'd i miss?," the falling back, the s&p 500 led by financials. the biggest today movement in-year-old treasuries since february -- the biggest two day movement in 10-year treasuries since february. joe: we want to welcome you to our closing bell coverage every day from 4:00 to 5:00 eastern. julie: let's take a look at how markets are closing. mixed picture as julie mentioned for the s&p, a higher move here, up by .02%. we are looking as well as the russell moving marginally, had been doing that are then large caps, but given that we are entering earnings season, the big tech names are reporting and the nasdaq leading the way, up by 3/10 of 1%.

julie you were just noticing the move, in treasuries on a two day basis. julie: that helping to gain some of the -- fueling some of the gains we saw. the interest rate driving trading. gaining seveneld, basis points on the session. seeingof course, we are a higher dollar as well, stronger dollar. scarlet: that stronger dollar is pulling oil and some other commodities. nymex crude down by 6/10 by 1%. julie: i just wanted to mention as they look back over today's session, we had a lot of earnings movers. hasbro the best performer on the back of its better than estimated earnings. halliburton, the worst performer on the back of its earnings. , wee set up for alphabet did not have any large tech reporting today but those were a

couple of the notable losers. scarlet: as we await alphabet's results, due out in moments, let's bring in paul sweeney, intelligence director of north american research to give us more context. we were just noticing in the blog that alphabet has been, seeing declines after its last two earnings report because of concerns regarding its spending. why is it that investors are punishing a company like alphabet for spending when they have, the question of profitability is not an issue for them? company, thes spending as a couple of areas that investors are focusing on. acquisitionriber costs, the cost to get subscribers on to google. that number has been increasing is increasing, driven by the fact that more traffic is going to mobile, so google has to share more revenue

with the traffic acquisition folks at apple and android and others. that is a big issue for margins in the near term. the fact the top line continues to grow so dramatically guess -- julie: i'm going to interrupt you. scarlet: second-quarter revenue. let's go to eps, $4.54 for alphabet. $26.24ond number was billion. analysts were looking for $25.6 billion. this looks to be a better than expected number on that top line when you back out the traffic acquisition costs. other revenue, the category that includes cloud and app sales, billion, expected to rise 40% versus last year. .09 billion.-- $280 that gives you a sense of how much alphabet is an advertising

advertising it's ever no is -- $5.8 billion. we are looking at alphabet a-share up by 2.5%> . joe: not a dramatic move but really study. although alphabet has not been one of the huge lights out gainers compared to netflix it has been incredibly steady. julie: julie:so i'm looking fore paid clicks her. paid clicks on google properties are rising 58% year-over-year. if i'm reading that correctly. and i think that would be a record increase, 55% last quarter which was a record increase. increase in paid clicks on google properties. the cost per paid click declined 22%. so, that looks like it is an acceleration in the decline of quarter forick on a

quarter basis that outpaced what we saw last quarter. this is what paul was talking about, decline in costs, the company has seen an increased in costs. it is adjusting this was a decline. scarlet: one of our tech reporters writing, if you take out the traffic acquisition costs, alphabet beat every single analysts estimate. paul, does a company like alphabet have any wiggle room, any negotiating room on traffic acquisition costs or is that a fixed cost? have they certainly leverage. this is a function of where their business is going. more consumers are starting their search queries on mobile devices. we saw that clicks were up 58%. the downside of the mobile business is that pricing is lower -- that is a 22% decline. what's happening here is clearly, and you take a look at the top line growing more than

20% again, it shows they are making up, believe it or not, which we hate to talk about, they are making up lower pricing on higher volume. that simply reflects the migration of the user activity on search and on the internet. so, when you take a look at google's topline results, which once again very strong here, really driven by mobile, number one. driven by youtube, number two. you mentioned the other bets. they will spend some time on the earning call talking about the other bets. talking about the cloud. those are some of the longer-term bets. employees at,000 alphabet versus 75,000 last year. a pretty big jump in a still rapidly growing company. this is a costly continued you surge. where are they investing right now? paul: they continue invest in the search business, as you

would imagine. they are also investing in some of these other bets. i think they are investing a lot of r&d and people in the clo ud. we hear that from microsoft, from amazon. talk about some of these large tech companies, they are really investing significantly in the cloud business because it continues to be one of the best growing areas across technology. google has a very competitive suite of products and that is where we will see stepped up spending. werlet: i went to mention as watch the share action in the after hours, that if alphabet hangs onto this gain, it will be a record stock price for the company. $1213.08,d close was just back on july 17th. then it touch the intraday high the following session. julie: it looks like it could hit a record if it remains, if

it holds onto this again we are seeing right now. i wanted to ask you about the fine from the european union. it is not mentioned in here aside from a footnote to say the fines are included in reconciling items for the three months ended june 30, 2017 and june 30, 2018. not quite sure what to make of .at undoubtedly they will be asking about it and they will be discussing it in the call for. what do you want to know from alphabet on that front? paul: it seems like the market as discounted the fines that we have seen over the last several months. has performed pretty well. i think that is because investors are pretty comfortable with the regulatory oversight which is a relatively heavy-handed coming out of europe in particular and the impact it had on the u.s. technology companies overtime. u.s. tech investors are pretty comfortable with the non- u.s. pregnant or environment. what is different and what i think management will have to

talk to is what -- could be the regulatory oversight coming from the u.s. congress? we saw mark zuckerberg. if we ever see the u.s. congress it really step up its regulatory oversight of the u.s. technology businesses, that would be a game changer. i think investors are going to want to get a sense of how alphabet views the regulatory environment and i think that -- they will present on that in a call today. joe: bloomberg analysts are saying "this is pretty much a home run quarter for go ogle." what are you going to be listening to most closely on the call? paul: clearly, i think the issue for google and alphabet in coreal is trends in the business, traffic acquisition costs, when will they moderate, and secondarily, investors will try to get a sense of some of cloudher bets, the

business. that is going to read next big driver most investors feel that google results over the next couple of years will be the cloud. what are some of the investments they see going for that business and potentially the timing of the returns on some of those investments? the core business is clearly performing very well. and, even in a world where there is concerned about privacy, what we're actually seeing is that place to the strength of the two main players, facebook and google. we have seen share increases of ad spends recently coming out of europe which has had to deal with gdpr going to the more established platforms. scarlet: i'm glad you brought up the fine. for any other company would be devastating that this is alphabet. if you factor out that fine, the $11.75 for the quarter versus an estimate of $9.51. almost a two dollar beat. julie: even so.

i know you are fundamentals guide more than a stock iguy. i was just doing a quick check on some of the other fangs, just as we were talking about the potential spillover effect from netflix which did not really materialized. do you think there could be some spillover effect from alphabet? it does look like the likes of facebook and amazon are up in after hours. paul: absolutely. we see this most quarter, alphabet tends to set the tone for the advertising media companies, the facebooks and the amazons. and some of the others. the twitters and snaps. what is happening, there were some near-term concerns and discussion of regulatory oversight, whether it is the european or u.s. congress and other parts of the world, that may cause advertisers to step back on some of the digital spends. it appears from alphabet's

results that is not the case did i think that gives investors more confidence as they think about it over the next couple quarters in terms of internet ad spend. julie: u.s. futures overall are taking a leg higher. paul sweeney is the bloomberg intelligence director of north american research joining us from princeton. thanks. coming up, more tech on deck. we will crunch the numbers for some of silicon valley sweethearts ahead of their earnings releases. from new york, this is bloomberg. ♪ ♪

i am mark crumpton with first word news. president trump is considering revoking the security clearances pf a half-dozen former obama administration officials. white house press secretary sarah huckabee sanders says the

president is "exploring the mechanisms to strip clearance from former cia director john brennan, former fbi director james comey, and former national intelligence director james clapper and others." they have " politicized and in some cases monetize their public service and security clearances and made baseless accusations against the president." a judge in alexandria, virginia has delayed the trial of paul manafort till july 31. manafort's defense team has asked for more time to review evidence produced by the government. manafort's accused of failing to disclose offshore accounts. he must defend charges that he lied to bank to secure $20 million. the trial was set to begin this week. one person has been injured in the collapse of a 12 story building that was scheduled to

be torn down on miami beach. police tweeted the building had "a demolition permit not an implosion permit." >> we don't believe there is anybody inside the rubble, but we have to investigate and make sure. that's going to take some time. once that's done, the rest of this will be a police investigation. mark: was supposed to be torn down for construction of a new oceanfront condominium. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 127 countries. i am mark crumpton. this is bloomberg. scarlet: "what'd i miss?." soared afteres hours. let's talk about what it can mean for the rest of the fangs. joining us now -- is our guest. there has been a lot of handwringing about the fangs,

about frothiness potentially in those stocks in particular. what do you think? ben: i would make the case that now more than ever is the time i n tech more broadly but including fangs. joe: wow, i would've rather five years ago. ben: we are in an environment where the global business cycle environment is growth, were volatility has been rising and i would argue will continue to rise. we can argue about the pace. that is tech. the shade the gets thrown at tech is that' it's expensive. scarlet: it also is defensive when things turn over. ben: as long as it keeps turning over on earnings. julie: the results that we saw from alphabet that is an example of delivering on earnings? joe: no offense, but this is all the u.s. doing better than

everybody else. tech really growing strong and fairly insulated from the trade fight. why isn't this already discounted in the markets? ben: quite a lot of it is. a lot of these risks are discounted. i would make the case that markets are shark proof. has been thrown of these markets over time, bond yields or volatility. we're up. not as up as we might like to be but we are up. i think that tells you a lot about where valuations are, strong earnings continue to be global. how relatively cautious investors are. i still think this is a relatively low return environment. tech has a lot of the characteristics you want to own now. julie: if you're looking at technology delivering on earnings, if alphabet is more characters are then netflix, what about when we go into the next recession that a lot of people have been speculating about, looking towards even if

it is not happening until 2020? are people still going to be buying iphones, are they going to be searching on their phones? is it enough to support all of this on technology? ben: i would argue yes. historically, 2/3 of tech t rades at discount to the market. what we're talking about a software. they've been cyclical overtime. i'm are great we are entering a new paradigm where the cycle is extending, there is accelerated tech adoption. i do not think people are giving up smartphones in the recession. scarlet: first-hand experience there. you may decide to make for u.s. based tech companies. how much of this applies to global tech companies, tech companies out of asia or europe? ben: they are seeing the same growth, there is a lot less of them in europe then asia.

but broadly speaking, the same trends applied. above average profitability, net cash. what happens in the next recession -- what happens is uniquelypany yo have levers to pull to keep investors engage. the companies we should be worried about are those that have already done that. a lot of buybacks, a lot of evidence, a lot of debt. joe: the balance sheet story on another huge case for tech. let's talk about the areas that have been beaten up some more. e.m. brutal year. maybe a combination of china slowdown fears, trade and the federal reserve. is there opportunity there yet? ben: more neutral, be selective. it has been all about the dollar. that is by far the biggest negative macro driver for emerging markets. if the dollar was not very strong, i think e.m. would be very strong. joe: can trump's tweets change

the direction of the dollar? ben: essentially no. scarlet: the president has tweeted about what he thinks the uld do.shol some have suggested that jay powell will not respond to that by caving. he might be more stead fact in making sure that he raises interest rate. do you see that risk playing out? ben: the fed is going to deliver another four more hikes. gdp.e about to get 4% the economy is in very rude health. reasonable people would argue that policy needs to be tightened. that fact that policy is being tightened in the u.s. and not tightened anywhere else in the world -- or it's going to be anytime soon -- that is where the dollar frankness is coming from. julie: the question about small overweight.you are

given how optimistic you sound, it is surprising to me. ben: i think small caps is good. the only surprise is it's taken so long for them to outperform. u.s. economy growing well above -- will continue to do so into next year. they are much more domestic. we don't need to worry about this nasty stuff going on in the rest of the world. sentiment -- because it took so long for small caps to outperform. overly negative. and finally, i think this was the missing ingredient, they are finally beginning to see earnings growth syndicate lee larger than large caps. scarlet: he likes big cap tech now. coming up, we have a sudden leadership change at piper. tesla tries to save face on its bottom line. we have a roundup of auto headlines. this is bloomberg. ♪

scarlet: i am scarlet fu. "what'd i miss?" trouble for automakers. shareholders learn that the company's ethnic suppliers for refund. let's bring in janie, the u.s. auto editor. mike manley takes over at fiat- chrysler. company reports results on july 25. is he a known quantity? >> he isn't usually on the conference calls. it is usually richard palmer, the cfo and sergio marchionne. that is going to be new but he is not an unknown quantity. he has been leading their most profitable, most important units for several years now. he's got a solid track record but it is a new role.

it is going to be a different experience for investors. joe: let's talk about tesla. how unusual is it for any auto company to go to it suppliers and try to extract concessions? >> it happens. more often with companies in trouble. i remember years and use ago when i was at the free press and chrysler went to their suppliers asking for give backs. it has happened in the past. there is always negotiation around cost and all that. but this is unusual to go back on capex, to go back so far. it is sort of unusual. it might indicate they have the strength and the leverage over them but in the end, automakers are always dependent on their suppliers and the more you abuse that relationship it comes back to you later. joe: let's talk about leverage. does tesla have a unique set of suppliers for whom that is a huge customer that is has leverage over? >> it has some unusual suppliers. a lot of the big supplies don't

really do a lot of business with tesla. they might have a lot of extra leverage on those that they are doing business with. it's sort of, it goes both ways, right? if you're down to only those guys, they have some leverage over you. quickly, one analyst surmise it could be an indication that production is ramping at tesla. what are the chances? jamie: tesla agrees with that idea. they like that idea. if it's ramping up and they are producing more than they planned that might explain some reason to readjust the capex. maybe that is what is going on. clearly production is ramping up but it has been a lot slower than they projected in 2016. sent: all of this talk does tesla shares down 3% today. up next, we head to san francisco for more on alphabet's second-quarter earnings. asb we talk about companies beating on all metrics.

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mark: i am mark crumpton with first word news. canadian officials say a man with a knife has been arrested during the changing of the guard on parliament hill in ottawa. it is unclear if the incident is related to sunday's mash shooting in toronto. two people were killed and over a dozen wounded when a man walked along the street in greek twown and began shooting inside restaurants and cafés.t the shooter described as a 29-year-old man was killed during an exchange of gunfire with police. five of the victims were taken to st. michael's hospital. >> what i am able to tell you is that three patients underwent

life-saving surgery in our operating rooms. all five of our patients remain serious. i would like to take this opportunity to thank our first responders and police for their heroic efforts as well to acknowledge the amazing work done by nurses and doctors overnight in our emergency departments. mark: authorities say the victims included 8 women and girls and 7 men. senior lawmakers from both political parties are -- complaining to mike pompeo as a -- over what they see as a lack of transparency in dealing with the public, press and congress. in a letter today, the top democrat on the senate foreign relations committee called for the state department to resume daily press briefings which have been curtailed since pomeo took over three months ago. robert menendez says lack of briefings is problematic at a

time of major foreign-policy development and the public deserves accountability. greece is asking for help from the european union to battle two major force fires that have destroyed homes and forced thousands to flee on the outskirts of athens. the request came after officials declared a state of emergency. gale force winds are making it tough for more than 200 firefighters to battle those flames. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. scarlet: we have breaking news. whirlpool coming out with results and it looks to be a miss on. whirlpool second quarter net sales, $5.1 billion. analysts were looking for $5.3 billion. set core -- second quarter was 50 cents below what analysts

were looking for in the full-year ongoing eps is $14.20. analysts were looking for $15. 62. joe: the company says it got hit on a combination of roma terrell in the higher freight costs north america. the trifecta of what we have in talking about those row material cost. julie: it's interest in, i searched for the word tariffs, and it's mentioned as an afterthought in one of the many notes in the additional information section. so, not something at leastin the release they are drawing the line to, whether it is increased while material costs, because of some of the tariffs or tariffs on washing machine specifically. we will have to wait for the call for that. to put athe ceo trying positive spin on things talking about delivering margin expansion in a very challenging cost environment. strong north american margins, global price mix improvement

during the quarter, of course, performance in overseas markets emea was below expectations. they will need to take action, according to the ceo, to improve the operation of -- execution. more jargon for what they have to do. e numbers with th coming up a few minutes ago, the stock decline has been accelerating. that's extended to more than 9%. the shares were already down 9% us far this year. under performing the market for whirlpool. and these numbers not going to change that narrative unless something different is set on the call perhaps that changes things around. scarlet: speaking of another narrative, -- julie: very different narrative. scarlet: it's alphabet. alphabet shares the most actively traded company stock in after-hours trade right now. $280 million worth of shares trading hands, up by 4%. it looks like alphabet beat

pretty much no matter how you look at it, certainly on revenues, certainly on profit as well, given that it had this $5 billion fine. joe: absolutely. and we saw the halo effect other same stocks rallying and some of the common shows the amount of stakes coming into this and the fact that they were able to basically beat on all numbers, show good revenue growth, cost containment, impressive on this tack. quite a relief for investors. julie: if it does hold on to tomorrow, it will be a record price. alphabet shares. scarlet: we'll continue to discuss alphabet and what we have learned from the results coming up. policy, chinese economic slowdown and trade protectionism hitting equity markets. or investor sentiment. we'll discuss all of that. joe: and get involved in the conversation. send me a tweet. if you want to, you know, have a

question for a guest or complain about something you like or don't like. this is bloomberg. ♪

,carlet: "what'd i miss? emerging markets currencies hovering near a one-year" low. joining us with more is a daniel. when you look at e.m., currencies, how much of his a move by those countries versus just the strong or the weak or strongere weak dollar pushing everything along? daniel: the noise from the trade negotiations is not helpful, but if you compare the renminbi's

move, the key currency to watch, the chinese currency, with a euro on the year-to-date basis, the same depreciation. and the korean won and taiwanese currencies stable -- have also fallen. the chinese government has not weaponize the currency. for now we are talking about dollar strength and nothing more. joe: would there come a point where the weakness we get too much or they happy to see where the market takes them? daniel: well, certainly they do not want to spark concerns and spark another capital flight. i would watch very carefully what the positives do.t the vast majority of savings in chinese system is in banking, not in mutual funds. so, so long as deposits of the banking system continue to grow, which they have, then i think the depositors have confidence in their government and confidence in regulators.

julie: daniel, there has been a lot of talk about the other levers the chinese government might pull in this trade dispute with the united states. what do you think could be potentially the most damaging, not only to the u.s. but perhaps also domestically if there are some knock on effects? administrationmp is under appreciate -- the chinese authorities. . think a lot of iconic u.s multinationals have a deep presence in china. erthink maybe qualcomm -- merg may not be approved. maybe the launch of the investigation of apple or general motors, maybe they will do what they did to the japanese when there was a dispute over the islands. for nationalism say, they will have people not buy american-made products. thatg is another stock is vulnerable because of the three largest areas are state-owned and they can simply

buy airbus. so, think, yes, the chinese cannot respond tit or tat in terms of the amount of trade, the amount of trade that china says to the u.s. as much more in value than what they import. however, they can get very creative. so, i would think large u.s. multinationals are in the crosshairs here if things were to get ugly. joe: on the flipside, i am curious about the gigantic chinese tech companies to we just got alphabet earnings. prior than a few months ago, incredible rallies in the chinese stocks like tencent and so forth. now they have come down quite a bit. tencent down 20% from its high earlier this year. is the general trend still up? is this an opportunity? daniel: it is a fantastic opportunity. with all of this top down noise on trade, on the fed, on chinese slowdown, stick with the structural growers. the reason why i think stocks

have pulled back is much like u.s.,ng stocks in the they occasionally pull back when they invest heavily for the future for a quarter or two. this provides an entry point for longs terms -- long-term structural growth. in the u.s. we have capital one and citibank that will spike aggressively against encroachments in tech. the chinese do not have to. so tencent through alibaba and ali pay are going to win the fintech game. it is more than just the e-commerce story in china. it is also the fin tech which is a growth well beyond the next two years. i would say there is a great entry point for a lot of these great long-term stories. scarlet: that is an you'reting' point, looking at chinese companies that are dominant in that country. if you look at the rest of asia, i'm thinking korea and to a taiwan,sense, japan and those are all suppliers to the u.s. tech industry. how much of that is going to be hit by the trade war concerns and perhaps a downturn in the

u.s.? daniel: unfortunately, the trump trade a policies excel during the day when the chinese will be more independent. they import $200 billion of semi conductor chips. that is a vulnerability we don't want in the future. so, through industrial policy, the chinese are going to catch up. they are going to spend the money they need to to sort of and the korean and u.s. european companies less important in the food chain. yes, that is exactly a concern. the unintended consequences of the chinese today is that you make them less vulnerable in the future, because they pivot to domestic source technology. julie: we have to leave it there. thank you so much. joining us there from boston. let's get back to alphabet. bloomberg technology host emily chang wrapped up conversation with the cfo a bit ago.

she is joining us now from san francisco. what did you hear from her? emily: yes, just got off the phone with her. she would not answer the money question, which is how it are they dealing with the european commission's fine? the ceo of google will be addressing that on the call. twosaid google did release different numbers for income, one for show to impact of the fine and one without the fine. they have said they want clue that fine over the course -- they will include that fine over the course of the second quarter while they appeal. 26%rdless, revenue gfrew year-over-year. strong revenue growth from alphabet. it is comingid from mobile, telling me that we'll talk about strengths, in particular of mobile. one. we'll and enhance growth across platforms and continue to invest for growth opportunity and people have heard us. google has given search ads

more prominence fueling strong we haveowth and google, seen more spending from advertisers on those google shopping search ads. another interesting thing we discussed was gdpr. interestingly, it seems as if google has benefited more from r impacting the bottom line because smaller businesses have had a tougher time complying. they are having concern that google would see a negative impact from gdpr. but ruth porat talked about how privacy is one of google's main values. they have been working on getting compliant for a long time in continuing to add new transparency tools. another thing we need to pay attention to is capex. we saw it go up again this quarter. last quarter capex because of that big piece of property they bought in chelsea in new york city, she talked about how they are going to continue to invest

in the vig growth opportunities -- the big growth opportunities that the sea, that we should expect to see those capex numbers continue to rise over time. julie: if you look at how the shares are performing, up 4% in after hours trading. scarlet: you have been pointing out if they open at these levels, this would be a record high for alphabet shares. having said that, alphabet has trailed behind the other fangs in terms of momentum stocks, it has not kept pace. and part of that is because of the expense story, the rising cost, particular traffic acquisition costs. emily: our producer put together a great chart showing revenue growth for facebook, amazon and netflix. and alphabet trails all of them. despite the strong quarter, for alphabet, despite the 26% revenue growth, it is nothing compared to what we are seeing with facebook, even as facebook has an going to controversy after controversy over these data scandals.

it goes to show that google's business model, while still unassailable, you might say they do not have as much room for growth and there is all of this uncertainty about what is going on in europe. they could be forced by handset makers to pay to have those app preinstalled on phones made by for example. i try to ask her questions about how google's business model, the impacted if they are not successful with their -- but we can be looking forward to that on the alphabet conference call. julie: very quickly, i was seeing a headline that ruth porat says expenses are largely due to cloud sales. emily: we did not talk a lot about the cloud. she also directed any questions about the cloud to sundar pichai. be going in depth

about what was going on with a cloud. we saw that other revenue category start to grow again, and that is largely in part due to the cloud. and google has been fairly successful in this cloud business, but what they have not given us is really specific metrics about how we should judge how quickly the cloud business is growing. as we know, they have got competition with amazon, microsoft reports from a quarter largely as a result of microsoft cloud offerings. google has been coming from behind. scarlet: good stuff. emily chang, thank you so much. coming up next, the white house and california ready for a battle on carbon emissions. california has its own take on this low carbon diet, it has done fairly well. this is over. p--p--this is bloomberg. ♪

joe: the trump administration is looking to end california's ability to regulate its own greenhouse gases as california reduced emissions from a 2004 peak by 13%. let's bring in nathaniel bullard in washington. todayve a great piece out talking about what california has accomplished in terms of reducing its own carbon emissions, but before we talk about this, what is the white house's argument that california should not be able to -- set its own greenhouse gas emissions regulations? >> the argument the government is making is that california is ownwithin bounds to set its regulation for emissions that for almost 48 years now has been emissionsn the regulations and the rest of the

united states. these began in the days of was ageless a smoggy place and the state has set the lead for -- many other states. it has the biggest market for automobiles, 2 million automobiles sold per year. the resulting with that market, and other big states following the lead, california tends to set the national center for tailpipe emissions and especially for fuel economy. saying, basically, no. joe: that is the key thing because california so big. national standards let's talk about what california has done. you point out that, since 2004, california's own greenhouse gas emissions lower than they used to be. what is the driver of that? >> the first thing is policy. the state said we are going to set a policy to get down to 1990 emissions levels by 2020. they did it. it ashley hit that target four -- they actually hit that target four years early.

that is like a 13% reduction in total emissions. at the same time that you had a 26% increase in gdp from the year 2004. they came down 13%> . down,t: when you break it emissions from the power sector dropping 35%, emissions from transportation, however, fell only slightly. when you look at transportation more closely, what is that, what's driving some of that? how much of this is higher efficiency fuel standards versus what you call substitution, people using bicycles or electric scooters like the ones joe is fond of, versus driving individual cars? >> it is a good question. at the moment, it is almost entirely due to fuel economy and greater efficiency. there are simply too many vehicles on the road in california for any of the two big substitutions we could see in the future. the first being to go towards

electric vehicles and the second being to go towards things other than automobiles to really take shape. it is really a story of efficiency. and you can therefore see why california has such stringent policies in place, because really the emissions have not budged much for its biggest sector, transportation. if you want to move it has to go to higher efficiency. julie: so, has the state been working on doing that, and how much then does this potential ruling by the administration set this back? >> the biggest question of setting up back is what legal recourse is going to be taken place? i think we should expect quite a lot of lawsuits. i know the head of the -- resources board mary nichols has said we'll be in court. in so many words to declined to comment bloomberg. we can expect this to be wrapped up in litigation for quite some time for the other question is going to be what the manufacturers are going to do? the many fish is always lobbied

to get rid of these standards. however, they have always gone above california -- gone along with california standards because do they want to make multiple models of the same chassis in every vehicle class in the united states? really unclear. that's right. it is the biggest market. scarlet: on top of that, other places like asia and europe will be more stringent. joe: absolutely. the scooters about in my fondness for them but it brings a serious question. regulations aside, will the innovations in transportation that we are seeing where people are finding new ways to get across the city, get across town, will they start to move the dial eventually in your view in terms of meaningful change to the energy mix? nathaniel: what you're going to see first is a track -- a change to the traffic mix. take an urban commute that might only be 10 miles but it could be 90 minutes in a car. slowly navigating to traffic.

what you will see first are local air quality improvements from having clogged upthe road. in packs in terms of traffic congestion and just a general substitution of little vehicles for bigger one. there was a great research by uber who show the traffic patterns for electric bicycles versus cars. you can see there is a peaking in bike traffic during the day hours and the cars after. scarlet: thank you so much. julie: bloomberg's opinion columnist. what you need to know to get for tomorrow's trading day. this is bloomberg. ♪

julie: "what'd i miss?" alphabet reporting results beating estimates, they called it home going -- home run q uarter. at&t and verizon report second-quarter numbers drop it joe: i am at turkey rate decisions to market julie: also, earnings from eli lilly. we will talk to the chairman at 7 a.m. bloomberg tech is up next. ♪ two, down and back up.

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i've emily chang in san francisco. this is "bloomberg technology." has a up, alphabet huge win in this quarter. would break it down. plus, all the other faang stocks are up on the google earnings beat as well. how it plays into the broader tech momentum. one tech titan had a rough start