senator and vietnam war pow john mccain. it is, according to the president, the most significant andstment in our military war fighters in modern history. defense secretary james mattis has held talks in brazil with the country's foreign minister. america willouth also taken to chile and columbia. he will then travel to argentina. nominatens may have to congressman chris collins for another political office before removing his name from the political ballot. necessitated by election law after the congressman dropped his reelection bid following insider-trading charges. leastited nations says at 130 four people, including many children, were killed over the weekend in northern syria curtis

spokesman said today at least 59 civilians including 17 children a weapons in an munition depot exploded in a residential building. the syrian government has had onces, ahead of an assault the last major rebel stronghold in syria. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. i mark crumpton. this is bloomberg. i>> live, i am lisa abramowicz. we are 30 mins from the close of trading.

prices and contagion. a fresh record low against the u.s. dollar even asked -- after the nation propped up the financial system. elon musk reveals saudi arabia was interested in helping tape -- take tesla private as far back as 2016. it might because economic pain. why stock buybacks could be benefiting shareholders at the cost of long-term productivity. turkey is pushed to the brink. on friday, president trump added on with additional -- steel and aluminum. he threatened over the weekend to find new friends and allies.

-- that he doesn't see a role for interest rates, that the exchange rate in the u.s. dollar is going to go back on a level of his own, and turkey is under siege coming from abroad. turkish assets to sell off. additional liquidity, staying away from interest rates hikes. it has been interesting to watch shoppers. they are able to lock in great

deals but the fundamental question. how this will trickle through into inflation and ultimately what this means in the wider standoff between the u.s. and turkey. the question is who is really -- bloomberg news. more perspective, a professor of columbia university and the author of the new book, crashed, how a decade of financial crisis change the world. i read your book on vacation last week and it does a remark ,ob putting all of these events the eurozone crisis, u.s. banking crisis, into a cogent narrative. that in anweet earlier version that didn't make it in, i'm curious how you fit crisesey and these other

that we have seen in the decades. features idiosyncratic and is very peculiar. roaring economic success story. into the banking sector in 2009 and 2010. with assic h -- case sector dependent on dollar dominated funding. >> ok. when you say back, this is a market crisis, alarm bells are going off especially as people have said today that we not seeing that much contagion. do you expect to see contagion or is this different? >> this is a structural emerging market. it is structurally like the markets we have seen. the contagion would be through

the markets, it would be a risk off kind of move. this specific crisis in turkey's case are really peculiar politics of the regime. people have been saying turkey is in trouble for years. the question is why they haven't been doing anything about it, raising interest in credit. it is a government that does not look like it is playing along. >> is the financial crisis that did change the trajectory of turkey as well, what happened that turkey stumbled and was not able to recover? i sit is one of the hardest hit in 2008. back through a domestic credit boom. it is not a sovereign debt story. it is a relatively robust public sector and it is a private sector where we see public and private partnerships with

liabilities that we do not know about. this is a private boon that is now hitting the buffers and really should have hit it while ago. a considerable amount as a benefit of the dow for turkey. >> one of the things that gets a lot of countries into trouble is a currency liability mismatch. turface -- turkish central bank cannot print dollars, a similar situation has happened in a number of countries during the crisis and then they opened up currency swap lines so the fed could in a sense print dollars through the regional central bank. for are a playbook country still isolated politically? >> you have to be in a privileged inner circle. turkey has maneuvered itself squarely outside of that kind of group right now. the obvious place to go you theirthink would be

geopolitical antagonists of the west but neither of them have shown any appetite for this kind of bailout. they do project-based lending, not bailouts of this lending system. whether or not the regime is going to bite that bullet is a good question i think. >> if it does not, how does it play out? >> there is no easy solution. it will be a dark tunnel. in a modern day and age, it might operate through macro prudential because that is where the risk is the most immediate is i think the turkish bank will lose access to short-term funding. >> i will say the second-biggest private bank in turkey, bonds have actually plunged in the past two days. >> that is what is producing the response is the central bankers got to do something about that. that is with a fire really starts. what a lot of people said maybe there is a political resolution that will allow him to exit stage or find an elegant solution.

how might that work? >> i do not think there is any prospect of regime change. how it that only know has gone. it is conceivable for some deal to be done but i think we're well past the realm it in the financial markets need to see some -- it is difficult to see where that comes from. as we saw in argentina for today, though it it ist help current much, a conventional move, a massive rate hike. far, policymakers have been antagonistic toward traditional things one might expect a country in crisis. requested developed an entire narrative and only back to 2013, he has been polishing the narrative of the interest rate can you see. as a backwards economic theory which says economic interest rates raise inflation, and furthermore, they are basically

oppressive to turkey and attempting to dominate it. he has a lot of in -- a lot invested in this. >> he specialized in financial and i have to wonder, just going back to the contagion point, you talk about the private turkish sector and people are worried about that on the books of european banks, particularly from spain and other nations. how realistic is this in terms of a concern which could potentially sink major european banks? >> cited immediately, it only looks like -- has really substantial skin in the game. generatesk bbva something like 35% of its pretax profit out of its franchise last year. so they have a lot riding on this. it is an admittedly big spanish ank, not the prospect of eurozone crisis. all of turkey passes private sector liabilities are kind of greek side or $200 billion plus,

give or take. much is not hedged. it is risky but we are talking about a greek style problem rather than an italian style problem. for turkey itself, it is a huge problem with a huge country of 18 million people. >> us the option is to just wait it out, because it is not interest rates, it is not what is the pain going to be for waiting it out? reasonably the companies that borrowed in u.s. dollars and the people suffering under revenue inflation. >> this is a bit like hungry in 2000 today. all of thoseowing, people are hit and then the inflation will hit in the second round as the foreign exchange feeds through. this is -- this is an energy dependent economy. where i think the questions of domestic stability are getting serious.

joe: you mentioned it is unlikely they would get a copper of bailout and that is not how they do. but does turkey have any geopolitical cards to play, given the access they have in terms of airspace and things like that, for some sort of help from the outside? exit is huge. wasey once upon a time considered a vital element for economics. but we are in such a broken world that it is difficult to know exactly how you cash those chips out. once upon a time, it would have sent panic to be in this kind of stand off because they are the block against russia and b, the seal between the middle east. we saw that in the refugee crisis. in europe's point of view, this is even more important than in the u.s. it is very unclear whether they betweenintain that eastern europe and the middle east. >> but nato feels a geisha elevates for the debt former self as well.

a change world. adam is economic historian and professor at columbia university. much more is coming up. this is bloomberg. ♪

been a: it has now decade since lehman brothers collapsed. a his new book, "crashed," commerce and traces the factors that led to the 2000 -- the 2008 crisis. we are back now with adam. professor, you have a counterintuitive narrative in which you talk about how there are too many technocrats and honest visionaries trying to the global economic and financial system after the financial crisis p are with that in mind, we are here today and nine medicine to the market.

how robust is the current u.s. financial system? >> i think everyone is the 18ating something in months to a year. a think that is common sense. it would be true to historical form. it has to happen. i think it will be about the flu rather than a heart attack. the cardiovascular system, pumping heart and the financial system were about to shut down. i do not see those kinds of risks in the u.s. economy as hard as we try to find it new subprime, it does not seem to add up here at we cannot fit to student loans and high-yield bonds with the leverage and short-term funding which is what gives you the 2008 picture. >> definitely trying. structurally though, the take -- allom the book is all the effort was about propping it up virtually. everywhere around the world, almost nobody had an idea of how to construct a new system.

though we may not have the same leverage or financial imbalances which is detailed, it is the same system. >> yes p are known was talking about long-term fixes for anything. it was about keeping the wheels on the bus and avoiding another lehman. it was seen as a catastrophic derailment of policy chest be prevented at any cost. and then, to prevent any destabilization, we need to take baby steps and maximize discretion. everything essentially comes down to the political complexion of the administration going forward as to whether or not they are willing to use the huge discretion provided by dodd-frank, the estimations for the regulation, and really the suspect -- substance since 2009. >> some people would argue that they should have simply set all right, collapse and we will rebuild something afterwards but that could have been potentially catastrophic and set us back for decades. now that we are not in a financial crisis and are not heading for an imminent

recession come what ought to -- but people are you doing to be better? >> speaking as a historian, the only moment in which america has gone through a transformation is mainly adam out here 1933. four years of recession and massive unemployment at a huge ine of banking crisis hit new york, which opens the door to fdr. we didn't get there, and essentially, a result in a pretend -- potential gray zone makes the reform without the fundamental energy necessary to drive us into something more radical. >> we were talking earlier about whether there was any visionary out of the financial crisis. has anyone come up to a greater solution, and you said china. ask elaine how that is and whether that would have come regardless of the financial crisis? >> beijing has to in -- improvise a solution. the scale of the decisions they make, the health insurance program, the likes of which we

have never seen before, america is struggling over the aca, beijing puts 1800 million people under coverage. and in 2009, they make a suggestion that people think they're playing games but nevertheless, we ought to have a global currency. the chinese have a vested interest in actually shifting the parameters of the system and using moments of leverage like that to do it. they also i think have sustained intelligence in the policymaking system to concede with these plans. argument for authoritarianism, but it is a virtue of that kind of system. we get that through continuity and the continuity we got was very conservative. we may not have the same fragility in the financial arguably muchare more fragile politically. we got the vote passed in the u.s. that even that in 2008 was barely -- there were a bunch in europe, but could you imagine, you know, if we had another significant

downturn with the politics of 2018, how much more limited is our cr the global capitalism depends on the democratic party did it did in the 1930's and the 1940's and in 2008. democratic to party has repeatedly shown for better or worse, the willingness to do what is necessary to mobilize american government for the purposes of ensuring financial stability. it was on their vote that -- tarp was carried. that fannie mae and freddie mac were stabilized. no middle class american owns that house and refocus couldn't -- so it into -- to's really does crucially depend on the one party and its capacity to build coalitions that are necessary. that is fragile and they face for ocean opposition from republicans who are nothing if ready -- come with

-- political combatants. >> they no longer resemble what they once did. >> one of the great legacies of 2008, between the globalist elite and the republican party, it snapped over fannie mae and freddie mac and they never got it together again. the chamber of commerce is out against a republican candidate. >> wonderful insight. thank you for being with us. author of the new book "crashed." thank you for joining us. time now for the stock of the hour. following the most since itsuary after spinoff of wrangler jeans business p are joining us with more is remain. so why are jeans out and at leisure in? because the company wants to

focus on some of its higher growth bands -- brands. the jeans business frankly was not growing to the level the company wanted to grow. but investors are not thrilled about this. shares are down to date partly because there are still two iconic brands that made up about 20% of the company'sales. a lot of investors are asking, what revenue will fill that hole now that you are getting rid of these two brands? >> i cannot remember the last time i were these genes over. >> i like wrangler. i guess i'm in the minority. >> you have to get up on the newer brands. they have been buying and replacing a lot of brands. joe: they have incredibly hot brands. i see people wearing vans shoes all over the place. >> the growth is doing well. we just bought the workwear brand. it has become some kind of a fashion brand as well.

joe: worth putting outcome of this is done fantastically well. it is now 92. >> and keep in mind, a lot of the changes they make, while it has confused investors, a lot of analysts are saying in terms of long-term growth prospects, that this is actually good for them and that is reflected partly in what you have seen with this stock. scarlet: down 3.5% why? >> again, people want to know how they will feel that just fill the hole. to5 billion is nothing sneeze at. analysts are asking if they will fill it with another brand. right now, we have not heard anything as to how they will do that. until then, folks will have to think about whether the stock is removeensive once they those brands? scarlet: details matter. coming up, either on edge, concern is growing that initial coin offerings are cashing out there tomorrow, cofounder joseph

, 3:00 p.m. eastern time. from new york, this is bloomberg. ♪ . .

scarlet: it is time for the bloomberg business flash. there has been a shakeup at citigroup's consumer banking operation. it includes the departure of the credit card chief. it has struggled to meet targets for the branded card is this -- business, one of his former responsibilities. the c.e.o. of netflix is stepping down after overseeing the expansion that turns the company into arrival for hollywood studios. he will help choose his successor and stay on until they take over. it has pumped billions into original content but also raised concerns about its financial health. in argentina, the central bank has raised the highest interest rates to 45%.

policymakers pledged to keep it at that level until october. it marks the fourth surprise rate hike this year. inflation in argentina has refused to slow down. that does it for your business flash.

♪

"what'd you miss?" stocks edging lower. financials leading the way further into red. all eyes remain on emerging markets. i am lisa abramowicz. scarlet: i am scarlet fu. joe: and i am joe weisenthal. if you are tuning in on twitter, we want to welcome you to our closing bell coverage every weekday from 4:00 to 5:00 eastern. scarlet: we begin with market minutes. it is a monday. there was the specter of turkey that hung over global markets and it continues into the u.s. as well. 9-11 industry groups in the s&p 500 lower. indices tried to mount a recovery in the afternoon. we are closing around the lows of the session. joe: not a horrible day, not a crisis, but not that great. scarlet: extending the weekly

decline last week. let's highlight individual names. nielsen rallying 12%, the biggest gain ever. by a triggered the biggest stock rally since the company went public. twitter rose as much as 3.9%. tweet heid in a recommends a long position. he says the stock will hit $52 in 52 weeks. lisa and i were talking to him earlier in the program. he was saying because it is relevant, the dollars will follow. citigroup closing down 1.6%. the bank is restructuring the consumer banking operation. is leaving the farm as the bank merges that business with the wealth retail

unit. joe: let's look at the government gone -- bond market. the u.s. unchanged on the day. that is interesting with all of the stuff going on around the world. not much effect on u.s. rates. but all the action in emerging-market government bonds. lots of red on the board as rates move higher. the turkish two-year yield is surging short-term. it looks like argentina's five-year ended lower. and of course, they had the emergency rate hike today. other emerging markets selling off. south africa under five-year. and a selloff in brazil on the 10-year. a rough day given the anxiety out of turkey, a lot of people selling off. lisa: let's get to where the action was. currencies. the dollar strengthening

dramatically against the turkish lira. the turkish lira falling to an all-time low versus the greenback. also seeing weakness in the south african rand with that currency the weakest since 2016 versus the dollar. we are seeing dollar strength versus the euro, the euro its weakest in a year against the dollar index unchanged. a lot of action under the surface. let's look at the three-month action of the dollar versus three currencies. you can see dramatic gains in the left three months led by turkey. more than 60% gain in the dollar versus the turkish lira. that is a financial crisis spillover from the south african rand and the ruble responding to sanctions and tariffs trump has put on that. joe: let's look at commodities. oil and gold more red across the

board. will down .4%. gold futures were earlier -- lower earlier in the day. let's look at a one-year chart on gold. not a chart. it has been very ugly the last year. it has provided no respite for people worried about emerging-market crises. no safeatus for gold -- haven status for gold. scarlet: you can see there is a drop-off today to $1200 an ounce. joe: brutal. scarlet: for more on today's market action, let's bring in ed keon. on when there might be a next recession in the u.s. how long can the bull market last? ant is the likelihood exogenous shock will tip us into

a downturn? >> they say you don't hear the bullet that gets you. is possible something happening now will be the key even that drives the market lower. we don't think so. you have to be alert to the possibility. joe: when i look at this year, there have been so many different risks to the market stuffr it is the em everyone is focused on now, trade stuff, check concerns with facebook and all of that. the one thing that shook the market clearly was the concerns about inflation in february and march when we got the cpi back to back and it rocked all the assets. how big of a concern is that for you? that seems to be the one thing lethal to all asset classes. >> we published a piece today taking a detailed look at the labor force and people outside the labor force and look at the history to find the likelihood

of folks to come in at large numbers. outillion people have gone and 64 million have come in in the last year. it is dynamic. most of the people out of the labor force say they do not want a job for whatever reason. of the group that says they are not looking good available to work, that is only 1.5 million people now. you add that to the 6.5 million unemployed, the pool of available labor out of 60 million people in the labor force is starting to shrink at a rapid rate. lisa: why are we not seeing faster wage growth? this is the perennial conundrum underlying the markets. you can see inflation is rising faster than wages. real wages have stayed stagnant or declined. why? >> we have been worried about that and so have many other people. i think partially, if you look

at the 1960's, the closest example i can think of to where we are now, we had a fiscal boost late in the economic cycle. the unemployment rate when it gets down to 3% or so is when you saw a sudden jump in wages on inflationary pressures. the labor market looks tight. it may have to get another percent lower before you see the jump in wages. scarlet: what is your thinking on how the trade war and tariffs on metals play into inflation? some say it is deflationary. commodity prices are going down, some because of the stronger dollar. some say the price increases will filter through the economy and hit everyone at the same time later this year. >> i think it is more likely to be inflationary in the long run. at the same time, it cuts both ways to some degree. remarkableing

looking around the world is the u.s. stands alone. the u.s. market has been impressive. outside, just not many gains. is there a point where the rest of the world or e.m. looks attractive? is it the conditions that have allowed the u.s. to outperform are still in place? >> eventually, things get cheap enough. butn't think quite yet, eventually things will get so cheap they will become attractive. the u.s. has the advantage of two things going for it. we had something no one else had, the huge tax cut and increased spending so we get a big fiscal push. the other thing we have is our safe haven status. world, people look for u.s. treasury bonds and notes when they are worried. stocksobal basis, u.s. -- scarlet: serve the same purpose? >> they look safer than the rest

of the world. others have rolled over a little bit. i think it is those two things. the one-time boost from the tax cut and the safe haven status that means they have outperformed dramatically this year. most recentas the item you decided to sell and buy? >> i cannot be too specific but we have been turning some stock positions when they run. we rebalance when the stock market makes a good move up. we still did not like bonds. we have been underweight all year. we are holding more cash. scarlet: and you get a return for the cash. >> 2% does not look bad if you think inflationary pressures may push bond yields up. we are barely bullish we say. we are overweight all u.s. stocks not as aggressively as in the past. scarlet: what is the next move

you want to make when conditions are right? >> i would love to have a chance to buy assets at low prices and see them run up. at the same time, i think there is a decent chance we will see a big drawdown before we see a big run up. as part of the reason we are holding cash. it gives us a little return and dry powder if an opportunity arises. lisa: thank you for being with us, ed keon from qma. coming up, shakeup at netflix. david wells plans to step down after 14 years at the company. we will have the details next. from new york, this is bloomberg. ♪

mark: i am mark crumpton with first word news.

president trump has signed a $716 billion defense policy bill named for john mccain after delivering remarks that failed to mention the ailing senator. the measures the president signed today will boost military pay by 2.6%, that is the largest hike in nine years. turkey's president says his country is under and economic siege. speaking to turkish ambassadors today, the president said he expects the attacks to continue. he spoke hours after the central bankers took steps aimed at stopping the lira's record slide. process, weis whole as a country have never and would never compromise the rules of the free market economy. nobody should take contrary assertions here. mark: turkey was hit by financial shockwave last week as the lira nosedived over concerns about the government's economic

policies and a trade and diplomatic dispute with the united states. fema is denying claims it did not handle housing vouchers for displaced residents of puerto rico any differently from those of displaced texans and floridians after last year's hurricanes. the federal disaster agency is fighting a lawsuit brought by puerto rican evacuees asking the judge to extend vouchers allowing them to live in hotels until they find permanent housing. more than one million people have been impacted by monsoon rains in the philippines. at least six are dead. hundreds of thousands were forced from their homes due to flooding in and around the capital. president was scheduled to take an aerial inspection of flooded areas today, but officials say it had to be canceled because of the severe weather. global news 24 hours a day on powered bytwitter, more than 2700 journalists and

analysts in over 120 countries. i am mark crumpton. this is bloomberg. lisa: "what'd you miss?" netflix has transformed itself to a content powerhouse big enough to rival hollywood. overseeing the transformation was c.f.o. david wells, but he plans to step down after eight years. here with more from princeton is paul sweeney. give us a sense of how big of a deal this is. does this material affect netflix's outlook going forward? >> i don't think so. the stock price is not really moving today. often when you have a c.f.o. announce they are leaving the country -- company, that is typically a negative for a company. it suggests there may be something wrong in the accounting. there is none of that in this case. this appears to be an orderly transition for the company. david is going to stay around until they find the replacement.

i am very confident they will have no problem finding and a-list quality c.f.o. joe: nonetheless, netflix has a very aggressive financial strategy. there is a lot of netflix debt, that.of concerns about watching the debt is one proxy on the company. tell us about the financial approach he constructed at netflix. >> the financial model of netflix is one they described as a virtuous circle, which is invest heavily in programming, that will drive subscriber growth. increasing subscribers will drive revenue and ultimately cash flow which will allow for greater funding in programming. that is the circle the company has been on. the number one metric for the company and investors has been subscriber growth. as long as subscribers continue

to grow on the global scale, investors feel comfortable that will be cash flow to pay for the program investments. we are not quite there yet. the company is still significantly free cash flow negative to the tune of $3 billion. that is due largely to increasing programming spending that this year will amount to $8 billion. the new c.f.o. will have to get a new handle on the new model and get a sense of when the company will become self-funding in terms of positive cash flow. scarlet: there is the temptation to link netflix's disappointing second-quarter earnings with the departure of david wells. should we read into anything like that? >> i don't think so. i think they were unrelated. the number one metric investors focus on is subscriber growth. they came in light versus expectations, and that is what impacted the stock.

that happens every four or five quarters for netflix, yet the trend remains intact. the big issue for investors is negative free cash flow, the need to fund all the programming investments in the debt markets, how long can the company continue to do that? when you look at the financial model, it does not have it free cash positive until 2021 possibly. there is a runway, but it is a long way away. the new c.f.o. will have to keep a close eye on the free cash flow of the company. joe: is obvious from the market standpoint, netflix has something to prove. while we have seen a lot of tech stocks bounce back or hit all-time highs, netflix had the big plunge after earnings and it has not crawled back at all. >> one of the new narratives coming into the netflix story is there is likely to be greater competition going forward. people are starting to recognize the combination of disney and

21st century fox and their streaming system and perhaps greater investment in their hulu asset might represent well-funded competitors to netflix. is what amazon and other companies think about the streaming business. while netflix is clearly the global leader in streaming, there are competitors coming. scarlet: absolutely. paul sweeney joining us from princeton. paul mentioned several times the negative free cash flow. we have a chart that highlights how it has grown the past couple of years. investors have gotten comfortable with it i guess. they know this is the model. joe: they make it up in volume. lisa: how important is the c.f.o. to this? if you have this tenuous model that depends on continued subscriber growth, how important is the important person in the c.f.o. seat? scarlet: coming up, turmoil in

turkey. we will hear from william jackson on what he thinks turkey's next step should be. this is bloomberg. ♪

lisa: "what'd you miss?" the turmoil in turkey is in full swing. many options that could help are against the erdogan on government. william jackson discusses where the bird one regime goes from here. >> it is a difficult situation. the markets want to see a large rate hike, perhaps measures to confirm the credibility of the central bank will improve. seemyou say, all of these impossible. where do we go from here?

further concerns about the banking sector are likely to develop and inflation will go higher. that will raise concerns about the health of the banking sector. we have paul krugman here with the "new york times" writing about 1998. 1998, atlike it is some point the party comes to an end. the crucial thing is foreign debt has made your economy vulnerable to a debt spiral. is there a way to short-circuit the gloom and doom? and then classic krugman on why he won the nobel prize. it is tricky but you need to reduce the cost of the crisis with credible assurances of a longer-run return to orthodoxy. on the this is brilliant

short-term and long-term and orthodox. do you see any indication of an orthodox conversation in the early one regime -- erdogan regime and government? >> we have not seen much. most apparent thing over the past few days is silence from the central bank. we have seen messages contrary to what investors want to see from the president over the weekend. it may be the finance minister has plans to outline a more orthodox policy later today. given the performance friday, i would be skeptical. here is the legendary expert on currency collapse. this is a wonderful essay on currencies. the turkish lira floats it not on a sea of tranquility. turkey should adopt a currency

board that issues notes and coins convertible on-demand into a foreign anchor currency at a fixed rate. he goes on to mention bulgaria in 1997. this seems very feasible. what is holding mr. erdogan back from emerging market crisis 101? >> i am not sure the currency board would be the best option. turkey has a very high inflation rate at the moment. it has very high inflation expectations. if you have a currency managed against the euro or dollar or a basket of currencies, the lira will likely lose competitiveness. that may be worse. i think the move to the floating exchange rate in the early 2000's was seen as a strong shift towards orthodoxy at the time and help improve policymaking and boosted investor confidence. it needs higher interest rates

and lower inflation to make it work. >> it seems this is a unique set of circumstances. is there any other precedent we can look to in turkey or other emerging markets that can show a way out of the crisis? is everyone just stabbing in the dark? >> emerging markets have been through these crises at various points. >> exactly like this? >> the difference we are seeing here is policymakers don't seem to be responding the way markets are wanting to see. hadorically when we have this, policymakers have gone to the imf for help and kept real interest rates very high. >> all of which turkey is not doing and said it will not do. >> the question is what causes things to change. some governments have managed to get through this without the i.m.f. brazil and russia had currency crises in 2014. even then, we had shifts toward reform.

higher rates, fiscal tightening. turkey does not seem to be doing that. my concern is there needs to be a deeper crisis to bang heads together. lisa: that was william jackson speaking to bloomberg earlier. robbinge stock buybacks the american worker? big companies could have given employees raises with money they spent buying back their own shares. we speak to one of the authors of the study. from new york, this is bloomberg. ♪ two, down and back up.

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crumpton with the first alert news. the fbi agent who led the investigation into the 2016 election has been fired. the fbi has ordered peter fired.

had recommended just a demotion and a suspension, but president trump tweeted, "finally fired." moscow will cut security holdings more and reduce reliance on the dire. the new sanctions and the threat of more have sent the ruble to a two-year low. republicans may have to nominate collins for another office to strip his name from the ballot because of the new york state election law after the congressman dropped his reelection bid. president moon m have agreed to hold a third meeting this year. the president will visit next

month. because of the state between the north korean leader and trump. mr. trump tweeted that he looked forward to meeting kim soon. global news on air and on twitter, powered by 2700 journalists and analysts in 120 countries. i am mark crumpton and this is bloomberg. let's get a recap of the market action. the s&p 500 declined for a fourth straight day on the longest losing streak and five months. energy, materials, and firms led the way down. as much as you see the red arrows, it was not contagion, mainly. we saw the dollar strengthened to the highest in 14 months and that, of course, means lower

commodity prices from crude oil to metals. publically traded companies could have paid workers thousands of dollars more if they had used the money they spend on stock buybacks to increase wages instead, according to a study from the roosevelt institute and the national employment law project. here to discuss the findings is of policy at the roosevelt institute. from one standpoint, you could say that the dollar that was spent on the buybacks could have went to wages, but if there would thatybacks, have gone to wages? >> this study is not about saying that is where it would end up. there has been a puzzle in the economy of rising corporate profits, a soaring stock market, and a rising gdp growth.

the wages are not budging and we are looking at the retail or and food service. this is what we hear about as "low margin sectors." we are looking at those in showing that you could and there are people who are making money and it is not going to workers. >> the other argument is that there is cash out there and investors face a range of options and, if the companies unilaterally decided to raise they or do buybacks, might say that this is not a compelling investment and invest somewhere else. >> companies that raise wages toe seen share prices go down. the shareholder primacy orthodoxy is bad for workers and productive investment in

long-term things that grow the economy and jobs. >> there has been a lot of criticism of buyback volumes, but some have taken it further aresaid that the buybacks bad and they did not exist until the 1980's. some say they should reinstate the ban. >> it is simply manipulating share price and that is the beforethat it was banned the 1980's. the sec said you cannot manipulate share prices. the other argument is structural and there is a certain amount of money going into any corporation. management can choose where it goes and we have had a crazy system accumulate more and more, like a snowball, over the last

30 years where more goes to shareholders and the ceos are forced to look at productive investments or workers as a cost center to squeeze to get more money to the shareholders and that is not good or long-term economic growth and workers. w much of this is the structure of corporations? wage increases and an investment are seen as a cost versus the affect of the slack of the economy and the growth in the demand has been mediocre and there has not been the macro stimuli to a higher labor market. >> we have a low unemployment rate and the labor market is getting tight. people say they cannot find workers for a job and what that suggested to me is that you are not paying workers enough to

do the job. in a competitive market, the to raise wages, but we have seen consolidation and you mightkets have shareholder primacy and the bit,cks curbed a little if firms had to invest or pay workers more to stay competitive, but if you have a firm with this much market power, they do not need to innovate to hold onto the market share. they do not need to pay workers more. >> why would you say dividends is another way of returning capital to shareholders? >> that is a good point. degree, the buybacks are a tax dodge around dividends and we could add in the dividends to this analysis and it would only

go further to our case and increase the number you see in the payouts. 's, homew, you see lowe hadt, and cvs, if they spent that on workers, it would be $18,000 of increase on workers. bviously, privately held companies do not do stock bu ybacks. is there any difference between investors, management, and workers in a company that does not answer to a public market? what is we only looked public companies and it is hard to have data from private companies. what you do have his anecdotes and a lot of the stories of private equity have similar characteristics, for example, toys "r" us, a firm level in the

extracting values and leaving the employees or the debtors to hold the bag. there is no public company where a stock manipulation as an issue, that is not necessarily change the distribution? >> this is really about 40 years of economic policies that benefits capital holders at the expense of everybody else and it is essentially about the idea america are no longer doing the things that we need them to do. they are not generating new wealth and new innovation. they are extracting value from the economy. obviously an area where i see a ton of debate. nell, thank you very much.

elonnding secured as musk reveals who will finances project and the structure that may take. this is bloomberg.

host: breaking news. spacexsk will be at todquarters as nasa visits discuss the dragon craft. in the meantime, from silicon hasey to saudi arabia, musk disclosed that he has been in

discussions with saudi arabia about a major investment to take the company private. for more on what the structure may look like, let's go to our personal finance reporter. david, let me start with you. log posta recent b from musk. what is this a walk back from the "funding secured" tweet? >> i would not necessarily call but it doesback," not tell us that everything is secured. i don't think he means to walk it act, but that is how people are reading it. a lot of the public shareholders and the bigger shareholders, he thinks about two thirds, would convert to private holding in the company and the saudis would have a stake in tesla and, if

they played a big role, you could see this take a bigger shape. the saudi's cash out some of the people who do not want to go private. some of the big shareholders go utivate and the need to buy o others is smaller and you could see how this is structured and how it could happen. >> okay, there are people in the market do not buy it. the shares are up. the benefit of the doubt and look at the structure of the company, if tesla follows a spacex model of going private. he did say he would not follow format.itional lbo >> you would cash out the stockholders and take the company private, but he says that he has believers and those

who do not want to leave. , awant something like spacex special purpose vehicle. internal stock market where employees and the shareholders can have a look witty event, bu -- a liquidity can sell or buy, if somebody wants them. exists as at that roadmap, but it is less liquid and less transparent for all the shareholders in the public target right now. now. public market right for a campaign $350 $400d share of tesla or

for a less liquid share of tesla and that doesn't seem that hard of a choice. you could go into a less-liquid vehicle and hope that it goes public someday later. >> is the funding secured? >> no, it is not. of there two thirds shareholders who have indicated that they would convert to private. if you look at the language on nowhere is he really saying -- let's put it this way, if the funding is secured, he is not saying that. they want to cash out anybody wants to leave now. there are current shareholders who are bullish and think that and is worth more than $420

may not want to go private either. i was talking about how this deal could happen, but you have to have current shareholders who are willing to sell or willing to exchange for something that is less liquid or less transparent and that is what it will come down to. how many are willing to do that? because theback theory is that they want to diversify away from oil. company for best that, given your perspective from detroit? automakerse major that are a better bet? >> well, you have to give tesla some due here. they made cool cars that people want to buy. they sell them at big premiums. by a firma tear-down

that said that the battery technology was excellent. want a company with great technology, this is a way to go. other electric cars will give tesla a run for the money. they will have good electric cars out, but it is not the line share of what they do. this is what tesla does and they are good at that. they are not good at making money, obviously. this is a technology you want and it is a good bet, from that standpoint. making money, but good at telling stories. that is what investors bought into. you talk about the model that spacex has an there is less transparency for the investors who stay in. how do they stay on top of the of element --of the developments

that tesla? -- how do they stay on top of tesla?elopments at have to going to go into a private market where valuations are less transparent and, although there the boundsany people of valuations off of, it is not a public architect comes up with the value and it is an internal market of employees and some of the shareholders. again, you could sell the bounds of valuations off of, it is not a a couple of times a year or three times a year, but you still have to have andrchaser at this price you are definitely losing transparency and liquidity. as we said, there are a lot of theyvers in elon musk and would add with him and we have seen mutual companies interested in holding driving shares of companies like spacex and uber.

what a business model, great at selling stories and not at making money! untapped wealth. aliens ofites with dollars that is only on paper. this is bloomberg.

host: at what did you miss? billionaires, the club is growing. unicorns, thee private class of companies that are valued at more than one oh yen dollars has created founders with huge stakes, with companies x.ke tesla and space

joining us with more is tom metcalf with the story on the unicorn elites on the terminal and the amazing graphic that will knock your socks off! what does this paper wealth buy you. >> it is different to say that the wealth that you see in europe is almost entirely liquid os, the richest man, has it in public stock. this is held by people like musk . it is not like they can purchase too much with it. >> all of these companies, like the people who are notionally alien errors -- notionally billionaires, they want to cash out. >> i think that is right. they're people who are trying to

cash it out and they are starting to see public companies as more trouble than they are worth. someey want to have liquidity, but they see that they have to hit the quarterly numbers and deal with the short sellers and everything. >> after going public, what is the most efficient way of monetization for your stake? >> uber, what they did was equityble, they sold and investors bought from uber. was soldf of the stake for $1 billion in cash and he is now liquid. >> if there is paper wealth, couldn't this easily get orminated or the pleaded -- depleted? you have a smaller

pool of investors and there is possible to have -- take a look at palantir, that was i at a $20 billion and it is now at its billion dollars. at $20 was valued billion and it is now at $6 billion. a 6% stakeed about and an investor could have a liquidity preference over you. in terms of the research and figuring out how many billionaires there are, how difficult is it? >> i was looking at the equities and and they helped me out with the ownership data. you valueon is what companies that and we just gave a range because it is too hard to know. and -- ok,reat story

a great story. the name of the story is -- thank you so much. thehat you need to know for trading day tomorrow. this is bloomberg.

>> a decline in u.s. stocks mirroring losses in asia and europe. you can see the dow off by 125 points. the s&p was the fourth straight day of declines. longest losing streak in five months. coming up, don't miss hedge funds close their second quarter investments and 13 filings. >> and i'll be looking at

economic data. prices for u.s. imports and exports. >> and don't miss this tomorrow. we speak with sirium co-founder at 3:00 p.m. new york time. either tumbles over concerns that i.c.o.'s are cashing out the they take -- they giveth and taketh away. >> that does it for us. "bloomberg technology" up next. ♪ retail.

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