families that left out a quarter of the separated families. federal authorities say they can't be reunited because they have left the country or have the series criminal records. the environmental protection agency has reversed an order issued in the last days as the agency's administrator, which will allow manufacturers to equip semi-trucks with old super polluting diesel engines. today prewittsaid improperly issued their rule. prewitt resigns after a series of ethics scandals. sheldon similar dish sheldon silver has been sentenced to seven years in prison. ofwas initially found guilty corruption charges. his conviction and prison sentence was taken up by an appeals court but he failed. and a pre-sentence he said he

wish ashamed and feared he would die in prison. it comes 10 days after a former new arc senate leader and his son were convicted of extortion, fraud and bribery. sombra is up colombia's police s is so good at her job, one of the most powerful drug gangs once her dead or captured -- wants her dead or captured. 7000 dollars is offered to anyone who captures her. recently uncovered five tons of cocaine destined for europe, hidden in banana crates. global news 24 hours a day on air powered by more than 2700 journalists and analysts in 120 countries.

i'm mark crumpton. this is bloomberg. live in new york, i'm julie hyman. >> i'm joe weisenthal. badly for week ending the bulls. swings in tech. mosttwitter plunging the in two years on disappointing user growth as intel declines. insight from miller. where does the ceo of miller valley park see value? and growth keeps up as evidenced by gdp figures. we have the chart you can't miss and a look at how the fed will digest the data.

the path ofst says least resistance is higher. that is the case for his fund which has outpaced 98% of its peers. bill miller is known for beating the s&p 500 for 15 straight years. he now runs his own shop and he is with us now in the studio. thank you for coming in. i want to start with technology. in the seen big low ups tech industry that have taken down the nasdaq. one of them is in your portfolio. amazon is. what do you make of what we have seen? it has to lead to the rest of the market but it hasn't taken things down. >> i naturally happy about facebook's decline. it wasn't a big position.

when it was hit in the spring when zuckerberg was before congress it fell down down and we added the position significantly. then it up -- then it went up. it is above where we were. we took yesterday and today to top it off. it is 17 times next year's earnings. to have a hard time growing 6%. facebook, on conservative numbers, margins down growth rates down, they are doing that deliberately, >> the just is just that it is cheap. ,egardless of may be growth you're getting a deal. interview, the moderator said you have a project.

last year it was like learning mandarin. what is it this year? ,f we had known it was coming there have been a lot of issues and they have been struggling to keep up with things. they are going to spend on security and safety. do you think it is easier or harder to find value as the bull market ages? >> it depends. it is harder typically. ages, they market have had to pick things over. the stuff that is obviously good and growing trades at an expensive multiple. for the first several years it was a flight to safety. surrogates got way overpriced. we don't think they are attractive. and other areas that are quite attractive.

airlines are good. home builders are good. selected tech. amazon has a huge runway ahead of it. julie: interesting when you talk about the huge runway. the stock is done well already. -- in the past year it is up 74%. still trading near records. at what point does that become problematic? even with the growth rate ahead of it? they have the share of global retail. the ad business is growing rapidly. , and he just see could be as big as retail. retail is $200 billion. in 10 yearsat 30% it will be a billion-dollar

business. of dollars.lions julie: i like how casual you say i talked to jeff. i went to the same high school. not to the same time. joe: we have seen tech underperformed. we have seen these blowups. , low sinceking ugly the reason earnings. does that signal about a changing market stance? does it tell you anything about the market getting over exuberant? >> when companies decline, like facebook did, it is the market resetting expectations relative to what is going on. people make their best guess. if it turns out wrong they will adjust. scarlet: no matter where we are -- what is the

best metric to use to gauge cash flow generation? there are many ways to slice and dice that. >> we're looking at free cash flow. free cash flow is going to be on a normalized basis. sometimes it can be depressed. but that is the dominant metric. the most interesting thing to me about that, everybody who is a professional investor knows the value of any investment is the present value of the future free cash flows. only of 7% of cash flows are projected. 95% have earnings in them. earnings are not the driver. , they is the only company lead with cash flow. >> maybe that is because you have been talking to jeff.

their first annual report and may have been consistent. scarlet: jeff prioritizes it as well. you are going to stick with us. this is bloomberg. ♪

julie: back with bill miller of the opportunity trust. i want to dig into holdings. we talked about amazon, we talked about facebook. you alluded to other areas as well, airlines. which you have held for quite a long time. we have talked about airlines years ago. airlines have performed well over the longer term. we have seen them stall a little

bit this year. when you see in a performance that has lasted so long, in your position at what point do you decide i'm going to take my profits and move out? >> valuation is the driver for us. he talked about free cash flow. , they have three free cash flow yield. junk bonds yield 5%, 6%. delta's cash return to owners is returns don't grow. deltas will grow. they have been shrinking 50% a year for several years. the highest profit margins in the interest the -- in the industry. huge discount for the average industrial, that is what they are classified. the average cost is single digits. part of what happened is

consolidation was going to significantly improve profitability which it has done but then having gone up so much people are not going to get worried about capacity for the economic cycle. if it didn't reflect that we would move on but it does reflect that. julie: we are looking at the three here that you own. american has been the best performer this year. >> united has been the best. >> i'm getting them best -- mixed up. when you look at how they are managing through the increase in fuel costs and the challenges of having that capacity discipline you are talking about, do you think united is doing it better than the others? >> united had more improve ability. united's management is focused on that. they are increasing margins.

that is partly the reason why the stock has done better. american, doug parker has been an aggressive share repurchase or and has levered the company up more than the others. are concerned about the debt leverage compared to the others. delta is the best management. so, it is been in the middle. julie: are you standing pat on all three? >> it is a similar situation in terms of what that was good that has not been as good this year. as a group at least. we have seen a macro housing indicators not be as strong. rolling overthat is more significant? >> no. last year home builders were the single best industry group.

a lot of that due to the fact of the tax cut. the tax cut came into view. home builders were paying 38 or 39% that gave them a huge boost. now i think they are marking time until that gets worked through pre-people are concerned about interest rates. the market tends to be simplistic. home builders trade at single digit multiples. 15-20% a year. they have also been buying back stock. that is just too low. we are not close to the end of the homebuilding cycle. >> does inflation become a problem? >> it is good up to a point. >> unless people have to make the choice to not buy a home?

you mentioned banks, and another area where you have been in them for a long time. off and on. ,anks have then a tricky wicket people have liked the banks and then we had the selloff in june. we haven't seen much from them at this point. what happens for the banks if we see flattening? >> one of the things that happens with banks and all kinds of sectors is people try and surf the market. they try and figure out when they are going to work and not going to work. we take a 3-5-year look at these things. , it the next several years ended in 2016. we have a bond bear market. 1.5%, the yielded worst in history. negative returns for years to

come. the economy is going to get stronger. inflation is going to go up very the curve should shift up word. because of dodd-frank and fed armen's the giant banks are awash in look what a deep. as the fed funds rate go up that theirbillions into increase in the fed funds rate. we are looking at that. they are well capitalized. they are raising the dividends. group we are talking about, airlines and bangs, they are not going to do as well if we enter in the next recession. the 3-5 your time horizon, are we closer to the end of that cycle about performance for these companies or du think we have a few years to go? -- or do you think we have a few years to go? >> all we can do is

look at the current situation and the forward-looking indicators, stuff that has tended to be early indicators of recession. people are worried about the yield curve at areas points in time. i think the flattening is mostly done. if it isn't done the fed has signaled, that is the signal for them. byt recessions are caused that over tightening. julie: one more stock i wanted to get to, edt became public again in january. this is a security company. it has done not terribly well since that point in time. when did you decide to take a look at this and add it? was it cash flow? , they broughted it back public in february of this year. they filed a deal at 17 to 19.

they brought it at 14 and went to seven. we started buying at seven and a half. it is all about free cash flow. at that price it had a 10% free cash flow yield. this year it is $500 million. the consensus numbers are 750 million in free cash flow and 2020 3 billion. if those numbers are right 17 to 20 is the right price in a year to two years. you are one to stay with us. coming up, his take on bitcoin. this is bloomberg.

scarlet: back with legendary investor bill miller. let's head to one of the more esoteric areas. cryptocurrencies.

you call yourself a bitcoin observer. share your observations with us on where this is and where it is headed. >> i have a bitcoin partnership i run, i have a significant position individually. an average cost of $300. it is an interesting technological experiment that we don't know how it is going to 7800, it isht now, less risky than it was when it was $100. for the reason every day it doesn't low up and go to zero or get regulated out of existence, more money flows into the ecosystem. more people are looking at it. there's 23 or 25 millionaires in the world. if every millionaire said i want a bitcoin it would go higher.

1600 cryptocurrencies out there. i would say most are probably worthless. stable.is the most it has the greatest probability of saying successful. many others, there are some others people like. that is the only when i am focused on. joe: a lot of the case rests on arguments like you have made. there is an a semester -- asymmetric. have you thought about how one would go about forming a fair value. differentre several things valuing. do investorsd to case.

>> the best way to think of it, , morecorrelated asset easily transportable than gold. it can be used to buy things. how big is the gold market. what percentage could bitcoin reasonably get? that is one of the potential markets. very central banks think of it as another potential asset. that would open the market up extremely significantly. market,l addressable trying to give you a number

which is considerably higher. >> how do you invest it. you own it personally. >> it is something that doesn't it into the regular frame. >> it is hard to put in a mutual fund. we haven't even thought about that. , you hit anship interesting point. for something like this, is it investment worthy. here the case is proper portfolio positioning. we made it in the partnership

around 5%. that is a reasonable loss. i put 1%d it years ago of my liquid network in it. as people think about that anybody can afford to lose 1% of their money. rare you can buy something with 1% of assets and it becomes 10 or 50% in a few years. is it a lottery ticket question mark >> it is like -- likely. scarlet: take a look at how the major indexes are trading.

down arrows all around. losing a third of 1%. from new york this is bloomberg.

julie: "what'd you miss?"

stocks are lower led by declines in tech. i'm julie hyman. scarlet: i'm scarlet fu. joe: and i'm joe weisenthal. welcome to our closing bell coverage every weekday from 4 p.m. to 5 p.m. eastern. stocks for the start. spilloverhad this effect in other sessions from particular earnings. this is happening to a higher degree today. the dow is off by a 31%. even though we have a gdp print, it seems as though the market was much more focused on the earnings of story. joe: it's old news. julie: you are not wrong, joe. [laughter] julie: let's look at some of the earnings talking. twitter was the biggest mover in the s&p 500. one of the notable earning

declines with that drop. 20.5%. the monthly active users fell short of estimates causing this. intel also is down sharply. estimates appear to beat estimates. -- numbers appear to beat estimates. the dow participated in the selling as well as disappointed earnings from exxon in a way it has not in prior sessions. outside of earnings, cbs hitting taken down in the hollywood reporter reports that there will be a story of mixed conduct ceo --ions against cbs the cbs ceo. as far as i have seen, the story is not out yet. we will monitor that can keep an update. meanwhile, cbs has already said it would begin some sort of

investigation. scarlet: yeah. julie: exactly. amazon is ending in the green. that's after the company posted profits. it was even at a record. let's take a look at the government bond market starting in the u.s. today. reports, strong enough apparently for the white house to hold a rose garden ceremony to market. rates are down a little on that news. it did come in slightly below expectations. not too dramatic though. the 10 year yield ends at 2.96. this is a very big week in japan as well. let's take a longer-term look at the japanese 10 year. look at that. it was around zero and negative for a while and shot higher in the last several days amid

expectations that the bank of japan is going to change to paul rhoads -- change its approach to the yield curve. the boj saying it would buy unlimited tenure bonds a previous rates. if you look at the dollar versus the yen, for the most part, the dollar is weaker. the bloomberg index is up two point -- 2/10 of 1%. been an emerging market currency for the past five days and now it is swimming in losses read traders are waiting for signs for further escalation -- losses. the traders are waiting for signs for further escalation. on tuesday, you can see the big leg up in the dollar versus the lira in the second panel. those after the central bank of turkey left rates unchanged. this talk about the chinese yuan.

it brings its declined to 6/10 of 1%. it had the longest slide since the 2015 devaluation. drag on the gdp, that slowed gdp expectation to insulate itself against the effects of trade war. joe: let's rind it out on commodities. a quite today than we have seen. crude oil is down 1%. gold is essentially flat. those are your market minutes. scarlet: figures are boosting hopes that the economy is ready to break out of its second -- decade-long slumber. turning us now to map out the outlook is michael hansen. .hief macro strategist

the number in and of itself is more present. why are we not seeing a reaction a markets? like they were people looking for high numbers and inflation numbers. a had benchmark revisions and changed the outlook for inflation the near term. regardless, the other reason is that it is not sustainable. despite what the white house may help, -- scarlet: is this a sugar high? >> i don't think that is not inaccurate. we are likely to get decent growth this year and asked you because of the stimulus.

but the time we get to 2020, it will wane. for seatingvious into productivity but it will drive potential growth to move up a year. i think that is the reason why. joe: to be confident we could kick the economy into a higher gear, you would want to see it reflected in productivity data? if you look at the strongest source of growth in this quarter, which was consumption spending, that is a combination of a strong labor market positive and the tax cuts which is the proverbial sugar high. in productivity, you would want to see it in more investment spending. we saw a strong first quarter in the pullback in the second quarter. the tax program would argue is not designed to deliver a sustained so slide -- supply-side boost. it's temporary. a lot of the details i don't think lend themselves to having a big supply booze. in the administration, there is a lot of push for the view.

the evidence is not strong. julie: what about the pull forward effects of the trade back and forth? we saw agricultural buying in this quarter that we would not necessarily cfs time -- necessarily cfs time. what happened with that now? what happened if they don't or do materialize? >> we don't really know. of uncertainty around trade. now there is a possibility that the worst case scenarios might not prevail. scarlet: because of europe? >> i think that is at least the markets interpretation. maybe the white house will be willing to negotiate with our trading partners and maybe that will gang up on china. that's may not be the best outcome or short to medium-term -- in the short or medium term. we had trade basically pulling agricultural exports to get ahead of the tariffs.

that will disappear next quarter. running largery trade deficits given the combination of the fiscal policy that we have and some of the other things going on in the economy. i would not bet on us running a trade surplus for the foreseeable future. joe: one things that characterized trading this week and markets was a performance internationally. we saw emerging markets getting clobbered but they started to get a lift. and, small caps with are insulated from global trade and people have been piling into them as a safety trade, some of the steam coming out of that. is this, in your view, a reflection of what you are seeing? maybe people are seeing a different tenor to global trade or maybe this is just popular trade, and like tech and other stuff, is time for that. >> think it is both. but the trade stories matter. going back last week, it looks like things were ramping up. you had tweets, threats, the talk of 25% on autos which is a

good 10% of the global trade volume. it was a significant risk that this would unwind and sooner rather than later. at least that risk has come out of the market. joe: do you perceive there to be a stock market vigilante type thing where at some point, when you get all of these companies saying we are getting hit by materials, that they have a feedback? >> it may have impact. the republican party is even more sensitive to the business community than other politicians in the u.s.. in addition, you have farmers as an important part of the trump base start to express skepticism. on top of it, you have a number of republicans in congress talking about constraining the white house's ability to follow up on trade. you have a number of stakeholders on the administration's perspective really becoming concerned. i think they are looking for an opportunity, perhaps being

forced into an opportunity to dial down the rhetoric a little bit. julie: i want to ask you about the bond market. yields are going back toward 3% and not quite hitting it. is that a significant and sustainable rebound in yields do you think? does it matter? >> i don't pick it matters in a sense that 3% is a magical threshold hit if the economy rolls over. think given the underlying strength of the economy, i would not be surprised to see a three handle on 10 year yield. you do have other sources of constraint on how much 10 year yield you will back up. certainly the news was a very clear indication of how global that market was. with the fedeek and other central banks, do you think we get 3%? >> out expect the boj is not going to signal any kind of exit from its current policy. i think the market has gotten ahead of itself. i don't expect central banks in

general to throw up their hands and say we surrender and admit failure. it is not going to happen. i would expect them to continue to push toward trying to get inflation backup and commit themselves to the path for the long haul. in that sense, you could see the markets react bringing down yields a little bit on the longer and. julie: michael, thank you so much. head of global medical strategy -- macro strategy. -- wrap up ink up tech. this is bloomberg. ♪

mark: i'm mark crumpton with

first word news. let a mere putin says he is ready to hold a new summit with president trump in moscow or washington. putin praised president trump to stick and -- sticking to his election promises. the white house announced the next summit between the two leaders would be postponed until 2019. spain and portugal are in lisbon for an energy summit in the region. you leaders are raising the profile of the liberian peninsula for the energy market by exporting their surplus energy from renewables such as solar and wind. the french president and portuguese prime minister also on europe.n a debate the two leaders answer questions of an audience of young people. they address to some issues from

president macron on the european union elections. there was surveillance video released -- of theeo response shooting that killed seven teens was released today. they see the video could release -- could show security blind spots. americans have been saving much more than originally thought. government stats out today to the saving rate over the last two years was an average of 6.7%. that is will higher than the 4.2% reported earlier. it may quell economists concerns that consumers would have to cut back on spending to put more money aside. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg.

julie: it has been an unpredictable week for tech with earnings results at historic highs and record-breaking lows. romaine bloomberg's bostick. that is some unexpected and unpredictable reaction to some of the earnings this week. romaine: we were looking for a lift out of tech and we had issues. we are ending this week with the nasdaq 100 down about .7% on the week. the nasdaq composite is down 1% despite the s&p and dow being higher. if you look at action today, think about the reversal. tech is at the top of the leaderboard at some point or another. if you take all of the stocks

that moved today, it is over 5 billion. there is not a single tech name until you get down to the 25, 30 range. that is basically a couple of nxp semiconductors. joe: are people impressed by the degree to which the s&p and other non-tech heavy areas -- the thing is, the s&p is tech heavy, but tech did not blow up and the rest of the market did not worry about it too much. >> you did see rotation today. what the best-performing sector was this week, if i had to ask, what would it be? transport. they did quite well. you so rotation from transportation into materials and some of the industrial companies. there is always that money flow. you know that. this week was a week where a lot of folks are taking a second look at their tech shares and making a decision. picking ands

choosing and looking only at the glass half-empty applying to more than tech results. we were talking about the gdp was 4.1% and pretty solid but did not inspire optimism either. >> it did not. one thing i took notice of was what what they did today. it dropped 1.6% today and this is sort of generally being one of the markers for growth sentiment. it has been relatively resilient. that's in the face of all the drama we have had. today it really broke down earlier this week as well. -- today, and it really broke down earlier this week as well. does the market see this as a 4.1% economy? i don't think the price action today told us that. scarlet: earnings season is just getting started and maybe a big that's a lot of the big tech names are gone, what you looking for next week to set the tone? romaine: apple is sort of a mix. your the stock trading near the

all-time high, it hit an all-time closing high early and entered a high today. the market expectations are fairly reasonable. as we have seen, being reasonable and hitting the marks -- scarlet: not enough. yeah. romaine bostick, think you very much. the man behind the big short thinks has life is headed for slowdown. meantime, he is bullish on gm. we will hear from him next. this is bloomberg. ♪

scarlet: "what'd you miss?" steve eisman, the money manager who predicted the collapse of subprime mortgages before the financial crisis in 2008 is picking winners and losers in the auto business. he spoke to "bloomberg surveillance" today.

>> if you were to look at my portfolio, there are things that are singles and doubles, potential home runs, and for example, the one stock in my portfolio that has not worked yet but has the potential for a big home run is general motors. >> in what way? >> on the long side. look, the stocks are having issues and that is well known, but general motors and google are the leaders and autonomous driving. if autonomous driving takes off, it is possible that the economist driving division of general motors will be worth more than the whole company. >> tell me about profitability. we were just looking at amazon and four cents on the dollar -- at four cents on the dollar. gm is not comparable to amazon but i have a margin of 19 and i cannot get it down to the net

income line. seven cents on the dollar is ok. but it is huge capital commitment by an auto manufacturer. >> that is true, but let's have history here. general motors is a fairly well-run company. it is a shocking statement for those following it for a long time because, precrisis, it was a horribly run company. it throws off cash, it is a better company and it has a shot at doing something fantastic in autonomous driving. >> any other bets in autonomous driving, steve, other than gm? >> actives and obviously google. those are our three. betterare saying it is than talking about value, momentum, to look at the economy . lombard on the

show earlier this week. one of the things he was talking about what was something leading to the crisis which was saving imbalance in the world. is that something that causes you concern now? >> he is probably referring to what is commonly called the debt super cycle which is fueled global economy -- which has fueled global economy for a long time. there is a very macro call to be made and that the super cycle will end. call such a huge macro that, who knows when it will happen. >> i want to go back to general motors. there is a huge focus on mr. musk and spaceflight and such. then you have the oddity of an auto manufacturing operation in california. value ande tesla stock value.

>> i don't see the value in tesla. we are short tesla. elon musk is a very smart man, but there are a lot of smart people in the world, and being smart is not necessarily good enough. you have to execute. we will see how is quarter goes, but he is negative cash flow. he is building cars in a tent as you said. he is nowhere in autonomous driving if i can tell -- as i can tell. the competition is coming into the space next year. >> described pay take the cash flow analysis from revenue. your partial differentials of unit dynamics, a huge dynamic about how he will deliver dynamics. but, also price. you have to bring that down. both of those for tesla is a mystery. >> there are a lot of mysteries in tesla. one thing interesting about tesla from the negative perspective is that the company

has lost an enormous number of executives over the last couple years. maybe he will pull a rabbit out of the how to -- out of the hat. >> has he spoken to you the way he has gone after analysts? >> maybe after today. [laughter] >> we won't give out his he mill or phone number here, that is a state secret. julie: that was steve eisman, sorry for the technical difficulty. he was speaking with bloomberg earlier today. up, why one man says investors can profit off it what he causes the fourth industrial revolution. also, taking a look at markets closing for the session, there are declined across the board.

their slow down from earnings for him companies like -- companies from the likes of intel. slow down a little. scarlet: telecom is up by almost 2% on the week read -- week. --on't like to say joe: i think there are two things that stood out for me. one is, the s&p is higher on the weekend pretty impressive resilience if you knew in advance. scarlet: it is only three sectors gaining. joe: and some of the industrial getting hit by the raw material costs with exposure to housing is very interesting as an area to watch. julie: and transports are higher in the week. we will find a what happens with the cap report -- with the caterpillar reporting.

julie: yes we will. this is bloomberg. ♪

mark: i'm mark renton -- crumpton with first word news. president trump is thrilled with the latest gdp report showing the economy expanding in the second quarter at the fastest rate in four years and predicting the numbers will continue to get better. >> we are on track to hit the highest annual average growth rate in over 13 years. i will say this right now, and i will say it strongly, as the trade deals come in one by one, we're going to go a lot higher than these numbers. those are great numbers. mark: the president said the pace of growth was very sustainable and could create as many as 12 million jobs over the

next decade. the united nations announced that, the following -- following weeks of escalating hostilities, or than 180 thousand people are in urgent need of humanitarian assistance in southwest syria. the humanitarians cross-border are highly restricted. it has been a month since they have been having a cross-border conway. mark: he adds there are particular concerns for civilians whose movement has been restricted by an extremist group affiliated with the islamic state. in greece, more bodies have been recovered bringing the death six -- this wildfire to 286. the government is facing mounting criticisms over handling -- handling of the fire.

when countries election commission rejected allegations of fraud without conducting a formal probe. mostmal cricket star one seats in pakistan's election. the party did not win an outright majority so he will have to form a coalition. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. scarlet: let's get a recap of today's market action. we're looking at losses here for the three major indexes. lost 1.5%. twitter's numbers are disappointing and it cap to the week when a lot of the big tech names did not impress investors who had to price the stoxx to perfection. the dow was off 76 points. it was a shrugging off of the gdp print at a 4.1% growth rate

for the economy in the second quarter. you would think that would be enough to get things going. julie: as they put it, that is old news. and it got a boost from the pull forward of the agricultural points exports. scarlet: "what'd you miss?" a next guess -- julie: "what'd you miss?" our next guest says we are on the midst of the fourth industrial revolution and we should invest. j bowen is president and ceo of boeing and joining us here. to make clear here what is unique, first of all, what is unique of what the fund does is it only puts its money with you all and you all have an interesting approach. investors, long-term right? >> right.

it is top-down, long-term approach. we typically cold -- hold anywhere from 16 and 16 stocks. the stocks are used for capital appreciation. the fixed-income side is used for income and stability. we love the 20 year read there had not been a 20 year. includedng -- that had the market in a bubble. it is a great time frame to measure. joe: this idea of fourth industrial revolution, what does that mean and what are the stoxx that represent that -- stocks that represent that. >> we are believers in the fourth investor level -- fourth industrial level. of touch is a whole variety areas in industries including 5g

and artificial intelligence, and robotics, and biomedical engineering and blockchain, nanotechnology, industrial automation. there are a whole variety of ways to play it. to give you an example in the news this week, 5g will be the next generation wireless buildout and it is a wireless buildout, but is not really that wireless. you need a fiber backbone and there are leaders that have good earnings reports in that field. a stock like cisco is also involved in 5g. industrial automation would be another example. you would have stocks in the last week with earnings. they are firmly involved with that arena. abb, which is a swiss power company is very involved in industrial automation.

honeywell's, rockwell international, those are great examples. robotics is another great area. think my big contrary in play right now, particularly looking out over the next five years or so is ibm. they have half of the revenues coming from strategic additions right now and they are a leader in blockchain technology and artificial intelligence. also cloud. joe: that is a stock that has not responded much as these new initiatives bear fruit. >> i'll be at it is slow, and they have seen real improvements , particularly over the last couple of quarters from a revenue standpoint. half of their business is now involving these strategic imperatives. they are a leader in these areas. the earnings impact might not be that -- my not be that significant now. if you're looking at long-term approach, they are going to be

more and more dominant in the areas. they have an attractive dividend yield. julie: you would have to take a long-term view when it comes to ibm. when it spends a value trap now for the past more than a decade, i pulled up a long-term chart of ibm on the bloomberg and, going back to 1998, we have seen it in this range going back to about, what, 2011? if you look at it over 20 year, they have done well. when you figure out these twenty-year periods and you're looking at a stock like this, when does that twenty-year period start? >> it is a rolling type situation. with ibm we got interested about a year ago. when we saw where they were headed in artificial intelligence and blockchain, and cloud, itmputing, the

is not that significant now, but it is growing. they are on the verge of being successful. scarlet: ibm is a huge company in the stock price does not necessarily move on cutting-edge technology it is getting into. it tends to move on bigger things. how long do you hold each of the stocks for? to theis not responding kind of things you'd think it should be, do you hold it for less time? >> exactly. hypothetically, we would love to never have to sell any of our stuff. we would love to have in perpetuity. scarlet: what is the shortest amount of time you will hold the stock? >> it very. sometimes maybe a year or two if tofind out -- we are trying justify our holdings each day that only from a valuation standpoint but a management standpoint. we want to make sure the company

is looking at everything from a strategic international business perspective. typically, the very long holding periods, we even have stocks in the portfolio that have been there for 25, 35 years. joe: the last several decades have been characterized by opening up of new markets, globally deepening financial markets. there are some would argue the current administration and current thing in politics are really trying to redesign the global economic order and really change america's place in the world, really turn more inward. is that something you think about? do you think about the investment ideas for the next 20 years, and the idea that maybe the economy will look different structurally due to policy changes? >> absolutely. that is where we are headed. the traditional post-world war ii trading order which is focused on multilateral deals, i

think that is done and over. better -- for better or for worse. we will move into a bilateral situation where it is a completely different negotiating style. let's face it, the global world trading order is filled with problems. have intellectual property issues, currency manipulation, back taxes, there are a lot of issues needing to be addressed read is this the best way to address them? i'm not sure whether this negotiating style is what not. might --y this, and it as we saw wednesday with the eu minister, if you look at trading to 4:00,om 340 -- 3:40 all of the insurgency began to be lifted, particularly in the industrial sector. it will be a completely

different global order on a of foreign policy, on a geopolitical front come on the trade front -- front, on the trade front. i think that is where we are headed. china is probably the small. we'll see if it works and at the end of the day, i think we will end up with lower tariffs there. just a lot of drama in the meantime -- scarlet: just a lot of drama in the meantime. julie: if you look at companies like cisco that have the opportunity to sell these technologies internationally, is there risk for the disadvantage as a result of trade deals, or do you think it will rather be an advantage to own some of these companies? >> if we end up with a world with lower tariffs and lower nontariff barriers, that should equate to higher levels of global gdp growth and more

efficient economy which i think would benefit these companies. at least in terms to lower barriers to entry and particularly. and, to china, where we might have a technological advantage where we can solve some of these property issues. it could be tremendous. we are thinking really long-term. we will have to see how it plays out. julie: you can strap yourself in for the volatility. >> exactly. bowen think you for joining us. three chart you cannot miss coming up as we look ahead to the fed decision and the jobs report next week. this is bloomberg.

♪ ♪

scarlet: "what'd you miss?" the us economy may have sped up in the second quarter, assigned say that might be the best it will get. joining us now is bloomberg's map those are. are -- boser. >> the two main components we look at about is the domestic economy which is personal consumption expenditures and business investment looks good. it is an open question going forward whether this step the pace is the new normal where some of the stuff goes back down. one of the interesting things that has happened over the past few years is the oil and manufacturing downturn we had in 2015 and 2016. you can see that show up especially on the business investment side. i brought you guys a chart from today's gdp report looking at

transportation equipment in particular. everyone is focused on the surgeon freight costs that we've seen over the last year or so. what you can see on the chart is that investment in transportation equipment was chugging along through most of the expansion. you get to 2015 and 16, and it goes negative. your fewer trucking companies investing in newer trucks, that sort of thing. team --7 and 20 and 2018 and up being really strong. a lot of these companies find them underinvested and are now catching up. interestingly, transportation equipment investment went to negative again. growth went to negative again in q2. the big question is are we going to see that ramp-up again? joe: doesn't every company complained about freight crossed's -- freight costs. >> the first quarter was a

record in class eight truck quarters. those trucks should start to hit the lots in the next few months or so. it has been a minor step down from the blistering pace in the first quarter. there is also an argument to be made that we should buy more trucks. julie: i also wonder how the labor shortage plays into that. why buy a truck if you don't have somebody to drive it? >> exactly. the opposite argument applies as well, why hire a driver if you don't have trucks to put them in. some of the research firms on the trucking industry in particular say truck utilization is 100%. as some of the new trucks hit driver, we will have shortages probably go out. but no get a statement

new interest-rate projections, no press conference. scarlet: that will change eventually, right? >> starting in january, yes. for now, we will have some of the quiet meetings and the theer picture is just that outlook for interest rates in 2019, i think everybody agrees they will hike rates more this year. then, the big question is, it happens next year? if you look at the interest rate curve, i brought to a chart that shows you the ratio of the amount of fed tightening is priced into markets over the next year divided by the amount of fed tightening pricing into markets over the next five years. what the chart shows you is the amount of the next five years of tightening happening over the next year. you can see, over the last several months, the search to a 100% will tighten over the next year and then stopped.

this is not really in line with what the documents are showing. the fed interest-rate projections showing there will be continued interest rates pass 2019. it remains to be seen whether or not this will be validated later in the year. scarlet: we are the jobs report on friday and we see the people who do not want a job at 16%. those who do want a job is 1.8%. there is a huge gap. >> the most interesting thing about the chart is that about 40% of the gains in employment , among the 2.5 years prime age 25 to 54-year-old group, has come from people that say do they -- they do not want a job in the previous month. this is a previous big job machine that we do not know what is going on there. julie: matt, thank you. this is bloomberg. ♪

julie: "what'd you miss?" private equity firms are sitting on a mountain of cash so why are they not doing more deals? the head of goldman sachs strategic investors group spoke to bloomberg. >> there are record amount of dry powder and we estimate over $600 billion of dry powder for private equity firms alone. that does not count all of the alternatives or emerging pools of capital, family office, sovereign wealth fund, infrastructure fund. those emerging pools of capital are becoming more and more important in transactions. in the first half of 2018, we count 10 of the top 20 deals have these emerging buyers in them. they are right and there's a tremendous amount of capital in

these deals. but there is not a growth of deals available. they're just more expensive. multiples are down 10 to 11 times which means, in order to create outside return, these buyers have to be creative. one of the trends we are seeing is a more creative structure, taking minority positions, doing equity acquisitions. in the first quarter of 2018, i heard that 70% of all private equity m&a business was on acquisitions. which was pretty incredible. portfolio companies. the third thing they are doing to be creative is the core funds. the market is not just private equity, it all these emerging buyers. somenk we discussed it at

point in the past, our group the goldman changed from being a sponsor group covering the private equity, because we cover all of the emerging buyer , and it has expanded our footprint. >> does being more creative necessarily mean being more risky? >> it doesn't necessarily mean being more risky. my view is that the future of private equity is not about lower returns. it is about this person of those -- dispersing of those returns. they are thinking about innovation, their culture, their people, and they are building -- and their building institutions. i would say it is more creative, not more risky. scarlet: does allison of goldman sachs speaking with that

hammond. it's time for the bloomberg business flash. bigs on falling short of profit and production levels in the second quarter -- bigs on -- exxon is falling short of profit and reduction levels in the second quarter. is. retailer, brookstone, preparing to close most of its stores as a bankruptcy filing. bloomberg learned that this could come this week as the retailer has 140 stores. the airport locations may remain open. hillhouse capital and kkr are among the private equity firms considering to buy young china. bloomberg learned they are talking about -- talking to banks for a possible deal. almost market value of $14 billion. that is your business flash update. joe: what you need to know for next week is coming up.

this is bloomberg. ♪

scarlet: "what'd you miss?" a decline in u.s. stocks on the day, but the s&p finished tire. does nasdaq -- the nasdaq is the big loser this week.

the boj and nonsense -- announces its rate position. joe: and i will be watching the fed decision on wednesday. no print conference this time -- press conference this time. julie: the bank of england announces its reposition on thursday. joe: and jobs report friday. scarlet: that does it for "what'd you miss?" isie: "bloomberg technology" up next. joe: have a great evening. this is bloomberg. ♪ this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. 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. emily: i'm emily chang in san francisco. this is "bloomberg technology." for the next hour, twitter user numbers declined and they warned it stagnant growth will continue into this quarter. how to the rocky result fit into the rest of the bad news from facebook and more? we talk about whether tech will fall out of favor with investors. and we hear from the ceo from nxp