of the new year. 17 people were killed in february when a gunman opened fire. different measures would cost more than $6 million and include upgraded monitors and video surveillance. carrying 141 migrants rescued this was last friday, delayed as european states argued over who would take the migrants. the vessel docked in the port today. males and 3497 females mostly through smalley and -- including 67 unaccompanied minors. >> thank you for your patience. we know there were many negotiations happening ok? mark: the commissioner welcomed the decision but said the situation should never have come

to this in the first place. the british foreign secretary said it would be a huge strategic mistake if no deal is struck before britain leaves the european union in march. 's beaten -- speaking alongside the country's's foreign minister, he said that would not be in the best interest of any european country. several european capitals this latest this the week p jim mattis alleging defense cooperation with argentina. speaking today, he said the military partnership between the two can be strengthened. first to is the argentina by an american secretary defense since donald rumsfeld in 2009. 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. ♪

lisa: five, and lisa abramowicz

in response to what he called in response to what he called america's attacks on the economy, turkey announced tariffs -- chronicling $1 billion worth of u.s. goods. -- chronicling $1 billion worth of u.s. goods. so far, it succeeded in lifting off of record lows. here with more insight is the senior fellow on foreign relations. thank you for joining us. it little bit of a retrieve. two days in a row of gains. to be done still to really stem the bleeding and really bring about stability?

>> one thing that will ultimately stabilize turkey is a weaker lira. in that sense, part of the adjusters needed has already taken place. other things that are needed are policy support for the needed adjustment and the needed adjustment is thatally a domestic demand can come through restricting bank lending, through higher interest rates, which would have the effect of bank lending, and fiscal policy. >> the reduction in domestic demand is all about closing the trade gap. fundamentally, turkey has a large deficit that it cannot currently fund. it can definitely >> at some point, it seems a turkey needs money. the question is who will be willing to give it to them with a $15 million promised investment today? qatar, russia, and china

and the benefactors here? european union, the u.s., and say, ok, let's work something out? >> that is the geopolitical question and the answer depends russia is willing to wrath -- risk and how much china is willing to take on a global role on its own without bringing them in for a little protection? >> any evidence that china is interested in the role? >> not really. if you want to play financial geopolitics, it is probably your time. >> read about russia? >> read about russia? >> same thing. it has a decent stock of reserves but not a ton. a major risk because turkey is not a small economy relative to russia, to pull turkey along on your own, in russia, it is possible because of the gains -- gains that

russia has but very difficult and risky. but not the on the realm of geopolitical speculation, let's say. >> how faithful is turkey to the emerging-market scripts that we have seen some eight times in the past? currency debt, plunging local currency, you expect to see a spike in the economic slowdown. is this how we will play it out? of questions lot embedded in your question. there is a more forward-looking forward.going turkey has all the classic vulnerabilities of an emerging market crises. reserves, the deficit largely driven by domestic bank lending to households. in that sense, turkey looks like

a classic emerging markets story. how does it play out? three weaker currency, to a depreciation in real terms as well. can't have inflation offset all over the fall in the currency. it plays a threat reduction in domestic lending. and perhaps through some fiscal consolidation as well although in that case, the fiscal deficit has not been the primary driver. needs funding it is dependent on whether or not the banks continue to roll over there or on currency loans, they take it on the rest of the world, or whether turkey's domestic -- in that sense, i think the magnitude of finance is still to be determined. the other important andworld, 's domestic -- very variable, between turkey and russia, is turkey needs a ton of oil. a major oil importer and the higher oil price today, making it harder to carry out necessary

adjustments. joe: how much foreign currency funding to turkish banks have to -- theen what use has odds of them being successful at that? >> a question. if you look at the external side, it is close to $100 billion. it is a big number. the little over $150 billion in domestic deposits. we not typically think of that is running but it could run in an extreme crisis. potential.e maximum it is a big number. >> do you think argentina is in a similar position to turkey and perhaps some analysts are giving credit? argentina and turkey have a lot of similarities. both are oil importers with large deficits. external debtmuch relative to reserves. argentina was a much more

classic fiscal story. government was borrowing by placing international sovereign bonds appeared in turkey's case, it is much more of a banking crisis. asia.arallels with the banks have been the big drivers of domestic credit. joe: one aspect we have not really talked about is the perception of erdogan himself, and for what many people would say would be traditional measures to stem the bleeding, whether it is massive rate hikes he does not seem to believe in that, i understand the central bank has done actions more widely than he got credit for, but how much does that play into it, perceptions of him and whether he -- whether people want to money anywhere in the country for any reason? >> i left that out. clearly there are doubts that are part of the reason why the vulnerabilities turkey has long

such strong pressure on the currency. i think the central bank is trying to play the game played in the past. tell a president of turkey they are not raising rates because he does not want to. then not make any money policyle at the official rate, and make it available at higher costs than other rates. the increase in rates so far have been pretty modest even in the at the increase nontraditional and shadow policy rates. effective could that be if they do not telegraph it to everyone? >> you are telegraphing it to the people who are paying it. to the banksde that they're not able to borrow the policy rate and are able to force closer to 20. the swaps for the rate has gone up in the sure. obviously, it is better if the andd sees it is committed

if it seems like the central bank is just playing a game. >> all right. thank you. ♪

you will you

>> it is time for a look at some of the biggest business stories in the news now. , brandsc beverage extending into marijuana markets. the maker of corona beer is spending 3.8 billion dollars to in canopyts stake growth. it is the world's biggest marijuana company in the first to trade on the new york stock exchange. they already held a 10% stake in canopy. shares of chipotle have fully

recovered from a downward spiral that began last summer and bottom in february. analysts are also taking notes or the average price market has risen 46% since mid-april. if you look at chipotle shares, they are of 80% this year. that is the business flash update. to it is timeg now for the stock of the hour. i think it has been a few days since we heard any negative headlines on food and airborne issues. doubt chipotle. in august, did you know that? and it is done well. they higher ryan from taco bell back in february and the stock has doubled since then. stock this company

can get past health scares. milkshakes, avocado, tostadas. a drive-through breakfast sandwich. they percent in the most recent quarter. below the long-term average, it is a real turnaround from where it was basically going down in 2015 12016 before bill ackerman got on board. they kind of got mocked for that look, they threw a lot of stuff at the wall to see what sticks. you look at the chart, 2015 at 2016 is when the bars were down back in the e. coli and virus scares. it has started look, they threwf

remember he took a 10% stake in come back again. remember he took a 10% stake in 2016 and was really agitated for a lot of the changes. >> thank you. next, shares slide even though earnings expectations. we will talk about why. more in his -- more is ahead. this is bloomberg. ♪ is ahead. this is bloomberg. ♪

>> macy's top earnings estimates, despite the numbers, off by 15%. from investors about department stores as consumers choose online shopping instead. for more, we want to bring in our bloomberg intelligence retail analyst. the biggest slices made toys 17. fell as much as 16% today. what specifically triggered this negative reaction? said earlier, earnings were really good but i think we were -- what concern investors

was they initially said they expect two to be better than one, but then they came out with guidance that did not reflect that. they now see growth margins down slightly and expensive going up. concernwhere the probably stemmed. he see the stock running up in the last year. maybe a trade is less fundamentals and more valuation. still up 76%k is in a year. ready impressive. seen it with a lot of physical retail sales stores and maybe the theory is that it had gotten overdone. still up a lot. the declines that in physical retail is overdone, is that still intact? >> yes. physical retail is still a challenge is so that still is the thesis. in the near term with this all in place, we see a balance being backed to get foot traffic in the store. the brick-and-mortar sales performance was improving.

that is quite encouraging. i do not think that online will not continue to take share. a definitely well even with online shares up double-digit's and the mobile's on their path to reach $1 billion in sales this year. >> going forward, do you expect them to increase spending that make brick and mortar truly an experience worthy of customers shopping? will have to continue to invest in brick-and-mortar space because the customer is constantly changing and so is the technology they are using. investments in technology and mobile, wherever it may take them, they have to funnel that experience back in to the stores. investors will continue to happen. >> give us an update on properties. one fund manager was telling bloomberg that properties alone are worth more than the market cap. this seems like a rich area for macy's to exploit.

that is a was been an area for people to exploit within the company. him -- the properties are worth a lot more than the market cap would suggest. but how likely are they to monetize, that remains to be a question. we have heard them talk about it for years and have not seen any progress. >> thank you for the update. with the retail theme, u.s. retail sales rose by more than forecast in july. some consumer spending gains at the start of the third quarter. for more, let's welcome mat, who came along with charts out of his pocket. i frankly thought this was a good reading and yet it did not do anything to the market. in particular, retailers as we were talking about with macy's, stave off declines. can you tell me what was going on?

>> it kind of reinforces some of the data we were looking at yesterday, healthy consumer backdrop. they are clearly spending and the sales report was strong. it shows the most growth in retail sales since 2012, that is the white line, total sales growth. the blue line in particular looks at retail sales spending in restaurants and you can see that that has taken off and we have a story about it on the terminal at the moment. that is reinforcing the notion that apparently, consumers are getting up to go out and spend money eating out. >> i love this. we spoke about her pull a doing well. that is the blue line and we talked about macy's struggling to keep momentum and there is the light line. joe: pretty remarkable. another pisa data we have gone today has to do with proximity. -- productivity. people have talked about one productivity has gone up.

highs since 2015, is this the start of something real? it.t seems like certainly, retailers like macy's, restaurants like chipotle, really all sorts of places. we see the business is getting creative to respond to higher wage growth and higher labor costs in the labor market. are really looking for ways to increase productivity. the yellow line, it finally got back up to 1%. the fed blue line shows estimate of the so-called that. you know, monetary policy in a more neutral setting. can see that these lines moved together over time. productivity growth is a major input into the models trying to figure out what the interest rate is. if growth continues to go up. maybe we will hear about mutual

interest rates going up and the fed will be inclined to raise rates higher. >> this is important for people trying to handicap the number of interest rates in the next few years. if you think neutrals will stay low, maybe it will just stop but productivity picks up in the neutral rate, then maybe it will be this year or next year here at whatever it is. it is an important variable. >> absolutely. , up to levels, a year from now, the business sector picked her -- picture, what distances are look relativity, could different. we are starting to see them emerge right now and in 12 months, they can move on their way. >> one thing i love about you is you dig up great markets that tell a compelling story. that whiches just speaks to how much gas people are producing in the other areas

of the u.s. can you walk for the area. >> you can see it is still pretty low, especially relative to cycles which we have a lot of capacity that still remains intact. capacity for oil and gas in particular, you can see that has gone over 100%. speaks to how big of a boom we are seeing in the industry right now, you know, the oil and gas industry is utilizing its resources the what would be considered sustainable levels. >> one thing i want to point out is the last time close to this was the crash. you would have to wonder whether this is proceeding further let down. >> this is a similar story to what is going on in the trucking industry. a big downturn in 2016, and rebounding from that now and realizing we haven't been

investing to keep up with capacity as much as we need to that is a positive for investment outlook. the thinking about restaurant surging and sales, is this a sign that can him as a really starting to believe that is here for at while? >> or are they just hungry? surge isime we saw a when we had a big decrease in gas prices. we are going up and they are seeing a similar surgeon restaurants and other same is when we had a big decrease in gas prices. time, an increase in gas prices. that probably speaks to the health of the consumer at this point. >> think you are we will check with matt in the days ahead. university, michigan, confidence numbers.

market numbers are next. red across the street -- across the screen for u.s. stocks. the nasdaq is still the laggards off by one point 2%. this is bloomberg. ♪ retail.

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stocks off their lows but red across the major averages. the nasdaq is down more than 1%. i'm lisa abramowicz. scarlet: i'm scarlet fu. joe: and i'm joe weisenthal. welcome to the closing bell coverage every weekday from four to 5 p.m. eastern. u.s. stocks are falling and have been down all day, but they are coming off of their lows. we thought it was going to be a steep decline judging from the reaction from tencent and its first profit drop ever. right? joe: at least in 10 years. scarlet: ok. that automatically meant red arrows for the global tech names particularly facebook, netflix, a lot of those heavily owned tech names. yes, the nasdaq is down to the calls for lows.

coinstar with constellation brands boosting its stake in chemical -- canopy growth. 6% and canopy the growth -- canopy growth is getting a bit. this is a marijuana company and new york listed shares. tesla remains on our radar because the sec, according to reports, sent a subpoena to the company regarding plans to take it private and its claim that funding was secured for the deal. the drop in the stock was as much as 4.5%. we came off the lows foretells a which closed almost off by nine dollars. the price he wanted to take it private with was four dollars -- $420. macy's numbers were better than expected for the quarter that ended. the outlook was not up to par. macy's was down 16%.

nordstrom and gap, other retailers announcing in the days to come also taking a hit. joe: let's take a look at the government bond market in the u.s.. rates are lower by a meaningful amount. -- the two-year is down, the tenure is down, and this is classic risk off and people are rotating into fixed income. lisa: data crossing the terminal now saying china is holding u.s. treasury belts to $4.4 billion in the last quarter. let's take a look at currencies. it is the dollar ascended with the exception of the turkish lira which is gaining a little bit of steam. the euro gained against the dollar, and the dollar is gaining against the peso. the dollar as a whole, if you look at the broader bloomberg,

our index is at its highest level since june 21, 2017. it is still a king dollar story, joe. dollar istrengthening one factor for a brutal day for the industrial metals. it is an all metals day on the commodity section. downnum is down 4%, silver 4%, zinc down 6%, up or down 4%. -- copper down 4%. could be liquidation, strong dollar, china concerns, trade concerns, you name it. i do not think there is one catalyst. those are your markets minutes. scarlet: for more on market moves, let's bring in bloomberg chief equity strategist gina martin. check in on what there is called the king dollar. you have research on emerging markets and their currencies.

importantly, and you look at the global perspective in undeveloped markets as well. tell us about that. gina: we often think of a strong dollar as very bad for emerging markets. we have seen that play out over the last couple of weeks in particular. most of this year, the dollar has risen and emerging markets struggle. , it alsodollar rises has an impact on emerging-market equities. they normally rise. this is contrary to popular belief that a dollar gain is bad for u.s. stocks. the dollar is getting because capital is flowing into the united states and that is good for asset prices. what also happens is that other developed markets tend to outperform. if the dollar is rallying versus the euro, that tends to elevate multinational companies. multinationals make up a greater share of european earnings than they do in the u.s..

what we might see going down the road, six months, 12 months from now, if the euro weakens, that is good for the european market and the stoxx there --european stocks. if the dollar strengthens versus the yen, japanese equities are highly negatively correlated to that. they want to see that weakness and that elevates the nikkei as well. joe: today was one of the worst days for emerging-market stocks and it seems i tencent was the bigger deal than turkey. toetheless, it comes back the currency question as you point out. and also the strength of em .urrencies to determine we have a chart here showing how the u.s.-based investor, for them, this is a fallback. gina: this is that yen currency index versus the em equity index. you can see how correlated these

are. --se are very coarsely closely correlated. when one deteriorates, so does the other. it is negative for em and has been for several months. it has always been a story of em weakness driven by currency weakness. it does not seem like that is letting up at all. lisa: on that note, turning to india because that has been one area analysts have been betting on, it seems like people are still holding out saying, stocks will do just fine even as the currency falls. could you give us your take on this? . in em, no country flies outside of the radar stream when it comes to currency, including india. three months ago, the most crowded trade was china and now it is india. that has deteriorated substantially with trade relationships.

now, the most crowded trade is india. investors are hanging onto this position. what you saw last time the rupee deteriorated, which is the back in 2014, it led to a deterioration in exchanges well. everyone is saying india does not have a high deficit, nor do they have very strong external funding needs, so maybe the currency is not that relevant. saysost recent experience it is still a risk, maybe less of a risk for emerging markets. picture ando big take it back to the u.s.. one of the big questions now on everyone's mind is can the decoupling continue. u.s. market has had so much thrown at it. scarlet: and it shrugged it off. joe: it's close to all-time highs. can i continue? can we have em crises, trade

whif, and tech with's -- fs, metals collapsing, and it does not matter? gina: it depends on how bad these things get. some of this is not for castable. without a doubt, when u.s. onesses the macro risks emerging markets and the like, the u.s.'s most isolated of most markets to max risk. this is something we have missed out on this year. why are stocks rising while commodity risks are rising? a lot of that is because the u.s. is isolated. a small percentage of the gdp comes from trade. commodities in firms of the equity market is less than 10% of the market cap. when you look at these things as drivers, you have to assess how bad they are. if emerging market equity weakness leads to strong

deterioration, it will not be great for u.s. stocks. it is a matter of degree. how much does this really damaged the mobile growth outlook when global growth is accelerating? right now, there is no impact on earnings extreme, they are going higher. i would watch for deterioration in the earnings estimates as an indicator that something is truly a mess in the longer term, fundamental outlook. scarlet: gina martin adams, thank you so much. let's talk about the tech sector. we have fiscal reporting results and, when it comes to the quarter that ended revenue and eps, they are coming in higher than what analysts were looking for. $.70 on the bottom line. both are higher than expected. adjusted gross margin is at 62.9%. it is not matching what analysts wanted which was 63.7%.

but, the stock is higher by better than 1.25% because the outlook for the current fiscal first-quarter is higher than what analysts were looking for. revenue in this quarter will be five to 7% higher. analysts were looking for a gain of 3%. tencent knocked off its gain. asia's most valuable tech firm delivered a drop in profit breaking a growth streak stretching back more than a decade. we will have details. this is bloomberg. ♪ ♪

mark: i am mark crumpton with first word news. theident trump revoked

former cia director's security clearance. he was a 25 year veteran of the agency before leaving the cia under barack obama -- leading the cia under barack obama. he has been a critic of mr. trump since. sarah huckabee sanders read the president statement -- president's statement. >> i've decided to revoke his security clearance. he is inconsistent with access to the nation's most closely held secrets and facilities. sanders denies the president was retaliating for mr. brennan's criticism. detectives in london searched several properties as they try to build a pro feel -- profile of a man who crashed the car outside of britain's parliament yesterday. three people were hurt in what authorities is treating as an act of terrorism. police searched several

locations including an apartment where the suspect once lived. china is taking its complaints about uf tariff hikes on solar panels to the wto. china claims 30% tariffs violated wto rules, by unfairly helping u.s. producers. the trump administration defended solar tariffs as necessary to protect american producers saying import prices had been too low. a colorado baker who insisted his religious beliefs justified his refusal to make a wedding partly supported by the u.s. supreme court is suing the state again. jack phillips, who owns masterpiece cake shop, refused to bake a cake celebrating a gender transition. he claims colorado is on what he calls a "crusade to crush him because of his religious beliefs." 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. joe: "what'd you miss?" metals are taking a hit with copper and zinc plunging to their lowest levels in over a year. gold is dropping to its lower level since january 27. here with us to walk us through this is bloomberg's intelligence commodity strategist. you brought with us -- with you some charts. what is the big story of what is going on and what are people saying? >> first of all, the dollar strength and prosperity in the u.s., which is hovering in -- is pressuring gold -- and is pressuring gold. d in terms of the turkish lira is up 80%.

in terms of the dollar, it is not doing well. scarlet: what is the positioning in gold? what has it been? $1200k so much about the level, how much were investors and speculators positioned? mike: that is the key point. let's pull up the chart. disaggregated net shorts are the shortest ever. there is reasons for that. a key factor to point out is volatility. volatility in gold is the lowest in two decades. the key thing from a traders standpoint is to make that go up, you need to change what has been making it go down. so, gold has been going down for about 60 or 90 days. that is significant. lisa: perhaps gold is largely what is happening depending on where you are. it certainly gives a hedge in turkey but not in the u.s. where you do not need it. copper is a different market. i have to wonder how much of

this is a pure reflection of downgraded expectations for global growth. said ise key thing you a beard markets. oil lastened to crude year? crude oil was down 22% picked a bottom and declared a bear market. copper is in the same position. from now, there is 23% crude oil last year and i'm worried about, if this is sustained, what does that mean for global macro? this is an area not too short copper putting a trade had on. if it drops another 10%, it means a lot. but, going back up like crude oil this means it is back into the trend. scarlet: good perspective there. michael, thank you. "what'd you miss?" the crackdown on online gaming in china is hurting tencent, as

it suffers its first drop in a decade. to suffer itsit first drop in a decade. it is monetizing some of its most popular online gaming -- games. selina wang joins us from san francisco. selena, talk about the link between china freezing the approval process or holding its approval process for games where it is right now with the results we saw. was it the reason the results disappointed and is it likely to weigh on results in the coming months and quarters? selena: we are certainly seeing this first profit drop in at least a decade send shockwaves across the investor community. there were already muted expectations for the quarter earnings giving regulatory -- given regulatory changes. all we know is that there have been bureaucratic shakeups in the top ranks of the chinese government. because of that, there has been this power vacuum on improving

things like video games and other content. for the past several months, there has been a complete freeze of these gaming licenses. because of that, we're seeing tencent suffer severely because they cannot monetize on some of their most lucrative games. is a socialncent media giant, but at its core, it is a gaming company. it has significant revenue and profit from gaming. the fact that they cannot make money off their most profitable gains, that is a problem. joe: is there change in the posture of the chinese government towards gaming? or, is this about some sort of temporary bureaucratic system that will get cleared up at some point the echo -- point? selena: there are a few issues. the chinese government has clamped down much harder on the censorship policies, and video games has been a particularly sensitive area. the chinese government is

worried about issues like addiction, gambling, violence, and very offensive content that appears in these videogames. because of that, we have seen this shift in fostering. tencent dealt with this before and the game honor of kings was looked down upon from the government from being very addictive. now, it is the most whites whipping industry to hit the gaming industry and we are seeing for the first time it hit the bottom line -- seeing you take the bottom line for the first time. they have seen billions of dollars of its market cap get wiped out. lisa: gaming aspects aside, i have to think some of tencent's disappointment stems from the fact that china's economy does appear to be losing some momentum. can you give a sense of how much is due to debt and how much could also be due to peak tech in general? selena: i think there is something about tencent that is

reminiscent to what happened with facebook which was an equally shocking report to investors. these are mega cap tech companies that are starting to reach saturation. it is harder and harder to receive -- achieve the same levels of both -- growth. we chatted slowing down partly because of increasing competition from other players. there's a news aggregation app which is good at using ai to attract users, and there are a slew of other video streaming startups that are also starting to compete for internet userss time. wet being said, tencent and chat are the dominant internet platforms in china. most chinese internet users are spending most of their time within tencent's ecosystem and they have a lot of different areas to leverage for user time and profits. they have advertising, video

units, so they have a lot of things they can leverage to try to keep people in their ecosystem, even if one area is slowing. scarlet: thank you so much, selina wang, for giving us the overview in china. we now turn to breaking news. closing arguments have wrapped up at the trial for paul manafort. harris,ing in andrew bloomberg's legal reporter outside of the courthouse in alexandria, virginia. andrew? >> 12 days, 27 witnesses, three three closing arguments and it will soon go to the jury to decide if paul manafort is guilty or not. it has been a long day. there were about two hours of closing arguments from either side. the jurors were told very conflicting accounts on how to assess the evidence and what to make of the collaborating witness, rick gates.

prosecutors conceded he had been running his own scheme in his credibility was in doubt. they urge the jury to prepare his testimony against that of other witnesses and judge is value that way. prosecutors said the jurors should follow the money and when paul manafort had it, he did not report it. when he needed it after his cash pipeline dried-up, he lied to get it. defense lawyers say the prosecution did not make its case and there was reasonable doubt, and that's rick gates was a big problem -- part of that problem. we will find out what the jurors think. scarlet: andrew harris, outside of the courthouse in alexandria, virginia, thank you much. u.s. stocks are may be off of their lows, but it is still a volatile day. what does this mean for technicals? that is the topic for this week's smart charts where we

look at charts with the top technicians. abigail? abigail: great question. during the is mark newton of newton advisors, the president and founder. it's a great day to have you. moving pieces, commodities lower, copper flirting with a bear market and copper is down. with the chinese internet stocks down, what do you make of all of this? mark: i think a lot of this is the rest of the world, and not the u.s. up until today. i don't think this will lead to a broader contagion yet. there are four things positive with markets. one is that the structure of the market is still intact with regards to equities. we're not seeing signs of high-yield duress as of yet or any struggle with regards to credit trouble. highs. line hit all-time sentiment is also starting to wane based on this one to combo of not only the tariffs but the

m stress. that combination will cause people to get more bearish more quickly. that will limit the extent -- the e.m. stress. that combination will cause people to get more bearish more quickly. here's what we have been since april. the less couple of weeks have shown negative mentum convergence. this is a temporary warning sign in the short run. with all of the selling going on overseas, however, we do not see any evidence of that happening yet in the s&p. 2800 is a bigger line in the sand and 2750. 2750 we get down near 100 -- near 2750 -- abigail: let's look at the shanghai composite. mark: it is pretty amazing. beingjanuary, the u.s.

s&p here has moved straight higher since the april lows. europe has been a much different story. maynything, europe he did and over the last couple of weeks moved straight down starting in the latter part of july. the chart below is the shanghai composite. that had peaked in may and has had a big run as well. you see a big spread and emergence. this does not mean the u.s. has to fall. and join the others it is important to note this is where we are. back in these days, things were normal. recently, there has been a huge divergence were the u.s. has been the best lace to be. abigail: it'll be interesting to see if it lasts. let's take a look at high-yield credit indexes to tyler dalton -- two tight all in -- to tie it all it. the credit spread has gone down over the last couple of years. mark: that's interesting. people think this is the j and k of the hyg.

evidence ofeen that any high-yield widening out that would be problematic. right now, we are at about 400 basis points or so. 340 i believe is what treasuries on high-yield market is, over five-year treasuries. it would have to get above 380 two think it is problematic. so, very little evidence of high-yield stress. for me, that is one thing that typically leads equities lower. when you see the spreads diverge , high-yield issues, the e.m. in regards toig argentina and turkey, but there is no evidence that is leading anything to the u.s. abigail: mark dayton -- mark newton, we have to wrap at their. think you so much -- it there. think you so much. -- thank you so much. lisa: you on musk says complicated secured is more

difficult than it seems. this is bloomberg. ♪ this isn't just any moving day.

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mark: i am mark crumpton with first word news. closing arguments have been concluded and the bank fraud trial of paul manafort, president trump's former campaign chairman. ripped thes lawyer credibility of the government's most high-profile witness, manafort's former top deputy, rick gates. in their closing arguments, federal prosecutors accused defense attorneys of violating several of the judges orders and closing. students at marjory stoneman douglas high school return to a more secure campus today as they begin the first new school year since the gunmen killed 17 people last february. one of the returning students is

charlie, who began his junior year today. he says school safety and gun control need to stay in the national conversation. >> i don't want to be forgotten. i feel like that is a very common theme when it comes to these kinds of things is moving on to the next one i guess because it is so common. mark: students at the parkland florida school returned to an increased security presence including 18 safety monitors, new classroom blocks, and upgraded video surveillance. turkey takes his boldest steps to ward off the financial crisis. regulators have made it harder for traders to bet against the lira. plus, rules have been eased on restructuring troubled loans that have already chopped $20 billion. in the meantime, president orogan on stepped up his --

one -- president erdogan stepped up his case. been filed papers urging the constitutional court to throw out a challenge to an election. the main opposition party alleged "gross grammatical errors." and they called for a new vote or declaration that to their candidate was the winner. the president's lawyers dismissed the challenges as political. 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 am mark crumpton. this is bloomberg. scarlet: let's get agree cap of today's market action. for the s&p, it was a big drop in six days. it was the worst day in seven weeks overall. technology is certainly the big loser with the nasdaq off by

1.2%. we saw materials and energy companies lead the way down. good copper entering a bear market, crude oil slipping below $65 a barrel. lisa: "what'd you miss?" the legal road ahead for tesla hinges on two words, funding secured. the sec has said to send it subpoena over elon musk's plan to take the company private. an investigation is going to set this whole fog and motion with the tweet. tesla spokesman declined to comment. i next guest joins us from newton, massachusetts. your view on this is incredibly -- our next guest joins us from newton, massachusetts. is incredibly interesting. if you are at the sec reviewing this case, would you think elon

musk broke the law when he wrote "funding secured" on twitter? >> thanks first for being here. it would all depend on what the facts would show. we certainly know the words, funding secured, were in the tweet. , we learnedlater that when he posted the statement on the website what exactly he meant by that. it is going to be up to the commission and staff to take a look at what is behind that. i understand they issued a subpoena to the company and will talk to company officials and probably people from the saudi sovereign wealth fund mentioned there. most cautious people would say funding secured is probably a little overly optimistic. on the other hand, all sorts of commitment letters have conditions and conditionality to them. it will depend on the facts. let's say they look into it

and they are like, under no reasonable interpretation could we see that funding was actually secured, but is there a range of option to then say you're not supposed to do that versus efforts to manipulate the stock? keith: exactly. if there has shown that he intended to manipulate the stock, that there was something that showed he intended to do this for the purpose of getting after the short-sellers, that would be very problematic. there's also the content of recklessness. if it was determined he was reckless in issuing this tweet and saying funding secured, that would also say be enough to sustain a prosecution if in fact it was misleading to say that. scarlet: i'm intrigued you brought up the recklessness part. elon musk is known to be somewhat willing when he is on social media likes to say he tends to tweet what is ever on

his mind. to what extent will that be taken into consideration by the sec when they determine whether he went too far in his tweets? it kind of just things allowed and types it up as he thinks it. recklessness is an objective standard. it will not be contingent on what his acceptance of reckless behavior. it would be rather on a reasonable person's interpretation. lisa: you have been advising companies on security advisers -- advising's for decades. from your perspective, how has your view changed? keith: this tweet is a classic example of how her character limited form of communication does not always do the job it needs to do to clarify what exactly is being meant and said.

said i'mweet had considering taking tesla private at four dollars -- $420 a share, see my website for more details and had on the website the full-page or page and a half that he put up a couple of days ago explaining exactly what he meant, that would be fine. but, it demonstrates the perils of social media when trying to convey complex information in a character limited format. joe: twitter is 280 characters now, so he definitely had the space. i don't think that is going to fly as a potential excuse. talk to us about the timeframe the sec operates year. social media the moment, what is the next right, what is the next story, where is the whatever, from the sec's perspective, how fast can act? keith: i'm sure they're moving quickly. if the subpoena went out, that is quick for an investigation of this type.

i suspect they are getting cooperating for mr. musk and the company and they will move quickly. it does not appear, or i would not have thought there would be a documentary diligence. they probably want to ce mel's going back-and-forth on possible sources of funding and discussions that happened. it is not going to be a complex investigation. i think it would be in the sec's interest to wrapped up quickly as well as mr. musk. lisa: what could be potential consequences for elon musk as well as tesla's board if the sec comes down hard in this circumstance? generally speaking, what you would expect in a situation like this, if they found he had violated the law, you expect some sort of a fine and in an amount that would send a message that this is conduct that should not be sanctions. you would expect some sort of seas and desist order saying he would not -- cease and desist

order saying he would not violate this again. face, as i understand, shareholder lawsuits of attacking the tweet as misleading. that could be another fight he has to front. lisa: that is a whole different issue there. scarlet: keith, how would you advise elon musk if you were advising him now? keith: if i were advising him now, he has obviously done the right thing by hiring first-class advisors, at least by what i read. he has hired people to bring guidance and advice to the process. he came out with a statement saying what he actually meant. i would urge him to settle this thing quickly. the last thing he wants to have hanging over him, if he wants to take has a private, is an sec investigation. he does not want people to posing potential funding sources

from the sec and getting in the way of what could be a transformative transaction. even though i'm sure he would hate to admit he was wrong, and i suspect he would never admit in a settlement he was wrong, i still think if he can get a settlement where he neither admits nor denies he violated the law, then he ought to move forward and do that. scarlet: go back to that old neither admit nor deny. ,eith higgins from rope & gray thank you. a $3.8 billion bet on the marijuana industry. the upping of stake in canopy growth. we will be hearing from the ceo next. this is bloomberg. ♪

scarlet: "what'd you miss?" canopy growth is on a tear. they are up in almost four and a one consolation brand increased its stake with a $3.8 billion bet. canopy growth's ceo spoke earlier with julie hyman. >> everyone wants to approach it, but we are not sure how. that is why these puns come out. i probably did not help things much because when i began the business, i bought the chocolate factory for all of canada. i can tell you you should not explain the reason you got on the platform is because you wanted to know why the bloomberg were so happy. if i open with that line, you relax and ask me questions. this business is about taking people on a fact-based journey and not selling bud. when i talk about medicinal marijuana, i want to know what ailments you have, what indication you think you have, and what medicines you use, and which medicines we can disrupt.

that is the medical side on the recreational beverage and adult access. the recently -- the reason we like working with consolation is that we look at players and we went to to see who saw the future. it was them. one we make a beverage that has no alcohol and no calories, causes friday night to be uplifting, positive. you don't get sleepy, you get happy. if i can make it with them and make it consistent and deliver it to you for the type of purchase you want and the demographics within, that is the future. the reason i like consolation is that they saw that way before anyone else. juile: where are you in that process in terms of the beverages? bruce: we have been in canada where it is federally legal producing in several million square feet and have labs that have been making and testing and a stabilizing this beverage platform for several years. we cannot yet sell it in canada. that is in the last half of next

year with expectation. as you know, we probably have a medical market, and october 17, you can go to sites and byproducts from the federal and state governments legally because you are over 19. tot system will allow us bring more products feature in the future and that is where consolation in the second half of 2019 should see their expertise go. juile: is that also whether capital -- where the capital will be deployed? will it be on production, perhaps poised to extend more in united states if we see more legal movements here as well? how are you going to spend the money? bruce: there have been certain buckets if you well. there is the vertical expansion in canada just like a sandbox. if something works there and i aid that worksng on canadians, i bet it works on germans. are 29ond market, there countries that have a federal

system to govern this now. in many of them, it is a socialized medicine model. last quarter, we saw continued growth of our sales in germany. what i would expect is that comes through the second bucket. the third is, if and when it becomes federally legal in america, we have a whole bunch of products prepared in optionality -- and optionality to come in and be dominant. canopy growth chief executive bruce, speaking with our own julie hyman. we've also been speaking with the chief executive consolation and we discuss his reasons for increasing his stake in canopy. take a listen. >> all the statistics, especially in the united states and states where cannabis is legal, basically, don't show any degradation in the beverage alcohol business as a consequence of cannabis being legal. our view is the worst you

consider, the best you can say right now is that it appears to become planetary to the beverage come out of business. we have a very strong beverage, alcohol business. probably the strongest in the world for that matter. a lagaid, this has been to the stool that is very couple mentoring to what we do. >> you now on 38% of canopy growth. when will you decide whether you will buy the entire company? that is not a decision we expect to make in the short-term. we are our interest up to 38%. as part of the deal, we also have warrants that enable us to take the interest up to 55%. , given thet prospects here of that, that is a very large ownership interest in what we expect to become the global leader in cannabis.

obviously, we bought the shares the 4 billionny, dollars u.s. investment we are making goes into the company and creates a war chest that can be used to greatly accelerate cannabis ability to become the dominant global player in cannabis. at the same time, you look at elation,tion -- cast -- constellation, we have some of the strongest brands in the world. we can bring that expertise to canopy in particular because, in the end, just like every other category, the real value is going to be in the creation of the brand. so that is a very important element of this. lisa: thousand -- that was the chief executive of constellations brand speaking earlier. let's check on shares after they

beat earnings in after-hours shading -- trading. it is climbing after the bullish forecast for the current quarter saying sales in the fiscal first quarter will grow five to 7% in the same. a year earlier. they said their profits were boosted by profit spending on upgrades to computer networks. scarlet: we have been following the news a story regarding john brennan. he is speaking out after president trump revoked his security clearance. this is his latest tweet. "this action is part of a broader effort by mr. trump to suppress freedom of speech and punish critics." it "should greatly worry all americans including intelligence professionals about the cost of speaking out. my principles are worth far more than clearances. i will not relent." he was a 25 year veteran of the intelligence agency and he led under barack obama. we will bring you more updates

as we get them. from new york, this is bloomberg. ♪ bloomberg. ♪

lisa: "what'd you miss?" a few lucky people in the world do not need to worry about weight. there's a rare genetic mutation that changes how people metabolize sugar and has no effect on their weight. this could be the answer to help drugmakers battle diseases linked to obesity. more on this fascinating story is timothy net. thank you for being here. we will all be able to take a drug and never gain weight -- gain weight soon, right? >> know, the drug is very -- i shouldpeople say it is initially targeted to people that have a certain n the causes ad

lot ofa problems including scarrings of the liver and metabolic changes in the bodyh causes a nash, that lot of problems including scarring of the liver and metabolic changes in the body. the people working on this drug and others working on it outside of the company, they would like to see it as a drug that could potentially be used to prevent diabetes, prevent obesity and other diseases going people's way. joe: to clarify, there are people in the world right now, one out of every 130,000 people who have this genetic mutation that allows them to eat whatever junk food they want and not gain weight. this drug is based on the condition that those people have? >> that's right. this drug is maced on that -- modeled on that anomaly. people have been studying this

in mice. also developing a drug of their own separate from this. this geneticg abnormality could be replicated in people who did not have it in order to prevent weight gain. not havesomeone does this enzyme needed to metabolize sugar, they will never gain weight. timothy: basically. lisa: so it's that simple? timothy: yeah. joe: i will be a little cynical here. do drug developers attend it is about liver disease in all of these other things in order, as a trojan horse, to get the drug onto the market that is about any junk food you want to not get fat? >> i don't think that is it. they see this as having a direct application on a certain disease first, right? they see it as more directly correlated to the effects caused by nash.

their hope is that over time, as the use the drug more and understand its effects more, and they see it working people, that they could then extended benefits to people who have these more common diseases. scarlet: what struck me while reading the story is that there was a drug that kind of came close in doing what this drug does which is topamax, and antiepileptic treatment -- and antiepileptic -- an antiepileptic treatment. thathy: the tyne cysts worked on topamax also worked on a similar drug for johnson & johnson. did not feelohnson it would be commercially viable and they're not certainly certainly -- currently working on a drug like this. in addition to the research done by the scientist in denver and others, they said we can take this and do better with it. that is what they are trying to do it. scarlet: i bring that up because

topamax is widely used as anti-epilepsy treatments. is awaree side effects talking about. for thet bloomberg.com financial forces behind all of this. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪ this is bloomberg. ♪

scarlet: "what'd you miss?" the s&p 500 fifth drop in six days. technology led the way down on tencent's results. walmart reports second quarter earnings wou -- earnings tomorrow. joe: and i will have reports out at 8:30 a.m. eastern. scarlet: that does it for "what'd you miss?" lisa: "bloomberg technology" is next. joe: have a great evening. this is bloomberg. ♪

emily: i emily chang in san francisco. this is boomer technology. in the next hour, tencent has suffered its worst first profit drop in over a decade as the chinese government cracked down on new gain releases -- game releases. can they recover? andto volatility continues so do opportunities for investors hoping to buy in. we break down the short and long-term outlooks. goldman sachs confirmed