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tv   Whatd You Miss  Bloomberg  August 17, 2018 3:30pm-5:00pm EDT

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they are participating by high dollar donors. reporters have not been invited to hear the president's remarks. turkey could be in for more term -- turmoil, refused to release american pastor andrew craig brunson who is accused of having 2016 coup.he the term administration threatened to impose more sanctions. president trump called him a great patriot hostage. emergency officials want to evacuate thousands of people stranded on rooftops following unprecedented flooding in southern india. 160 people have been killed in monsoon rains, triggering flooding and bridge collapses.
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in alaska man facing life in prison for the january 2017 florida air or shooting that left five dead and six wounded. he pleaded guilty to opening fire with a handgun and a baggage area. prosecutors wanted to pursue the death penalty. global news on-air and on tictoc on twitter powered by 2700 journalists and analysts in 100 20 countries. i'm mark crumpton. this is bloomberg. scarlet: live in new york, i'm scarlet. joe: i'm joe weisenthal scarlet: . 30 minutes from the close of trading. you are looking at gains for the
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u.s. market, heading for the sixth straight week of gains. scarlet: what you miss? lisa: the rebound not lasting. president trump lashing out at an appeals court refusing to release american pastor. the tug-of-war between transparent and the regulation. president trump looking into reporting requirements for publicly traded companies. the sec says it is continuing to consider the requirements. an elon musk's tweets saga takes another turn. he says no one reviewed his on hisnd got candid views of sleep medication. we have some breaking news on trade. the u.s. said to be dropping its demands on mexico farm exports. the u.s. and mexico have narrow differences on nafta farm trade as well. you look at the mexican peso it is strengthening to session
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highs. the u.s. dollar falling in value. per dollar. this laden's credence to the idea of the president would rather strike a bilateral deal as opposed to a nafta deal. joe: if it is going to be nafta it can't just the with nap -- with mexico. the work and done is between the u.s. and the ago. and we have been getting drips about progress. this seems like substance. scarlet: this is according to five people familiar with discussions. side drew some of the demands bringing them closer to a deal. we will continue to keep you posted. from the c-suite to the west wing president trump to twitter writing he has directed the sec to explore changing or written
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reporting requirements to buy annual. on the tweet and the origin of the idea. >> a great woman who is not retiring, she said what could we do to make it rather? she said two times a year reporting, not orderly. i thought of it and they said we are not thinking far enough out. we had been accused of that for a long time. so we are looking at that seriously. scarlet: the sec has responded think it is looking into orting were wire miss. for more now, let's bring in jesse. it is interesting. as i was looking at the writeups of this development, i look at the comments. there are different comment saying this is one thing i agree with the president on. it seems to have fans. something that different companies have spoke of in the
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past as well. iswhat is interesting there consensus among the business of administration, that this would be a good idea. the sec, they see themselves as the investor advocate. i think you will see big investors, big hedge funds in particular, short-sellers who think this is horrible. people may be saying today it makes sense, we can agree this is great. the sec is going to base -- face pressure from the other side. i don't think it is going to be as easy as some think. investor atre a home you read the quarterly data and you make your decisions. sophisticated investors have all kinds of access to data others don't have. satellite card data. goingg is the concern
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longer between official announcements would widen the gap between people who can pay for this specialized form of data most can't get. >> there is another argument why we shouldn't do this. rock, you are a massive hedge fund that hayes all sorts of analysts to tell you what they are thinking about a company. the longer-term you go out for mom-and-pop investors, smaller institutional investors, they don't have access to that data you can pay for which is obviously driving investment decisions. scarlet: one suggestion has been maybe you make semiannual reporting mandatory and quarterly optional as to split the difference to help the micro companies that want to go public. that brings me back to my question.
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jay clayton has said that it is his priority to increase the number of ipos and public companies. this will be something for him to mull over. is there any way the president could change the law by executive order? would have to be the sec? >> congress can do whatever they want congress as we like this for we are going to pass a law, the has to get on board. there have been proposals in the house passed bipartisan proposal to do this. one thing that every lawmaker, they get money from companies. companies broadly like this. it is not shock that there is bipartisan support for this. scarlet: thank you. we will check back in with you as it develops. for more on the move to abolish quarterly earnings, let's welcome will from california.
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talk to us about your take on what this would mean, a shift potentially from quarterly results to semiannual results. is this a good thing? >> i was startled at the suggestion by trump to do away with quarterly reporting. i did not expected at all. it will be demonized because it is trump suggesting it but it is brilliant. we have gone from over 7000 companies in the united states to 3500. there was an index called the 5000 was publicly traded companies. you could not create that today. that is sad area part of the problem is short-term is the enemy of long-term success. my focus is always been long-term investing. high-tech -- i pay little attention to orderly reports.
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i have a privately owned business. i would not dream of going public. the distraction would be tremendous. there was an interesting anecdote. jack welch speaks of becoming physically ill when one of his unit had a problem that was going to lead to a quarterly earnings miss. ,ot because a friend was dying because of a miss. then he applauded his other unit managers for stepping in a finding earnings they could accelerate, not creating new long-term wealth. just avoiding an earnings miss area it dominates long-term thinking. joe: we have seen ceos and companies who have been successful have no problem getting away from their occasional bomb orders. amazon is the example. an don't want to build
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exception like that and make a rule out of it. could it just be done culturally where a ceo says we are not going to play the game and we will have more volatility but you will see our results over a. why does it need to be a change in transparency requirements? >> let me turn that around and point out that for a business with less than 10,000 employees quarterly reporting is an onerous heard in. it is a distraction. if you are jeff bezos you could say i don't know that i don't care what the next quarters are. i can think long-term. our interests are aligned with our bias. you have to think in terms of who benefits and who will oppose this. the accounting community, the legal community are going to oppose this.
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createy businesses that products and services that consumers can consume? not really. businesses that create services people want and are happy to pay for are going to love the lack of distraction. requiredake it annual quarterly optional? scarlet: what would we do question what we would have nothing to talk about. joe: we wouldn't have to cut into as many segments. it might be better. i want to go back to the idea that if amazon can create a narrative and tell investors these are the metrics by which we judge ourselves, you should hold ourselves accountable to it, isn't that others can do?
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he is the one who is saying we are going to and you factor 5000 model threes per week. he can make it a another number. this is my goal. this is what you should judge me by. amazon, theyook at can get away with quarterly reporting and say don't pay too much attention to this. if you get outside of the top 20 companies people don't have the attention span to treat each company's report and decide does this company, is this for eakin ignore this quarterly miss or should i pay attention? long-term investors generally should not care about quarterly
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reports because there's so much noise in the numbers and manipulation they just don't mean much. >> there aren't as many publicly traded companies as there once was. you are sticking with us. from new york, this is bloomberg.
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scarlet: a crisis for some an opportunity for others. you should ignore the headlines and noise, and open your wallet instead. they manage $200 billion in assets. he joins us now, thank you for sticking around. your take on turkey with most markets is you are contrary and.
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when others see danger you see opportunity. when you see opportunity in emerging markets are you talking turkey and russia specific way or as a whole? >> we're talking about the broad emerging markets. not just turkey, not just russia. the best opportunity, the cheapest markets generally are the ones where there is the most trouble for the most reason to shun them. when a market, any bargain is cheap. anything that is cheap is for a reason. that is things could conceivably get worse before they get that her. that creates the bargains in the first place. the challenge is simple. nobody knows what the bottom will be. if you don't know where the bottom will be you by what is cheap. if it gets cheaper you buy more.
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that means you look like an idiot until you are right. that is why most people can't invest as a contrarian. it is to psychological we challenging. joe: there is not a level? how is chuck e. cheese? >> one way to gauge markets is to look at price relative to long-term average earnings. price relative to sustainable long-term earnings. times u.s. we are 32 long-term earnings for the united states. that is a life the -- lofty earning --ngs earnings. his that because there are problems investing and risks investing in turkey or russia that you don't face elsewhere? is there a risk it could go wildly wrong because of trade wars or real wars?
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absolutely. that creates the bargains in the first place. any bargain can turn out not to be a bargain. a is less likely to have large number of value traps in it that take you down. >> you anticipated my next question about risk management. we talk about on this show mtv what to invest in, but we don't talk a lot about position sizing and how much risk you have to take on an idea like russia or turkey. when you think about there is an opportunity in turkey, in terms of overall portfolio strategy, what would one allocate to such high risk? >> how much would you allocate to tesla that moves 9% in a day? popular, beloved
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investments that are just as volatile. turkey look in russia or i am not suggesting they are going to be brilliant over the next year. i'm saying look ahead 10 years and ask are these going to be successfulomies, economies with successful economies. if so i want to own them at seven times earnings not 32 times earnings and i want to be patient through the ups and downs. talk about the other assets that have seen big drops, cryptocurrencies, gold, commodities. what is your thinking? >> we did a paper called it is a bubble, so what? the first thing we did was to define the term bubble.
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people use it all the time and rarely go to the trouble is saying what they mean by it. we try to come up with a definition that would he wrote us and usable in real time. the definition was you have to use extravagant and him possible future forecast to justify today's price. second part of it, the marginal buyer has no interest in looking at valuation models. twitter qualifies. tesla wolof eyes. apple doesn't read microsoft doesn't. bitcoin qualifies. how do you value that coin. there is no metric. it is not to say they fail. they usually do. you could have said amazon was a double and it went on to great success. 99 out of 100 did fail. is awe're looking at
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simple method of gauging whether something is a bubble or not. i would not be a buyer of going just because it went down. in general bargains are things that have gone down. they have inflicted pain and loss is what makes with -- which makes it difficult to say give me more of that. it also means selling things that are newly expensive. it is psychologically painful to say i want less of that. you have to get over that hurdle. scarlet: thank you so much per nice to see you again. >> amazon working on a new devise the wards live tv. this would move in on tivo territory. this story, we were
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just joking about how it is tivo offers something of value when dvr's are everywhere. i was joking around that it even existed in the first place. i feel like i have never heard of it. >> it pioneered. it started in 1997. it has 6000 patents related to the technology. it has been the little engine that could. the walls have closed in. they now have streaming devices. they have held in because of the patents. there is still a viable company. they have run into some trouble. the idea that amazon is jumping into this business is going to shake any investor and you are that today. >> the competition may be closer
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to not just tivo but other companies. >> the recording aspect is the issue. keep in mind, not only can you record but you can route that through your smart phone. only two products do that. that is why you are seeing the reaction so much in tivo shares. there have been talks about it selling itself. there actions about its futures. your concern of why this is like this. >> i'm not dismissive unsurprised. >> don't discount those patents. that has managed to keep the big guys at bay. scarlet: from new york this is bloomberg. s
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bloomberg.
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scarlet: time for the bloomberg's nest flash. more blowback from that bridge collapse in italy. they are in talks to pay a fine to the italian government. the company would be fined $570 million. they would have to rebuild the bridge and replace apartment buildings under the span. google is trying to quell a controversy over whether it will reenter china. the ceo told workers at a staff meeting the china plans are in early stages. there are reports google is searching a censoring engine in compliance with the chinese government area the crypto cold rush is over at nvidia. upes of microchips dried faster than expected. revenue beat estimates.
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investors ditched nvidia stock, down 5% before the close. that is the bloomberg business of eight. we have the market close next. see gains all around.
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[applause] scarlet: "what'd you miss?" u.s. stocks rising into the close.
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the s&p 500 gunning for the sixth weekly gain. ensco food. joe: and i'm -- i'm scarlet fu. joe: and i'm joe weisenthal. welcome to the closing bell coverage. scarlet: let's begin with market minutes. gains in six weekly the last seven for the s&p 500. this is after they erased an earlier declined. i look at the data showing consumer confidence coming in lower-than-expected, but it did not stop anything. joe: it was not the big story. one consumer confidence number is not typically going to be that market moving. that's momentum yesterday, the confidence on trade with some of the headlines out today is ending a nice week. scarlet: reports that president trump and the chinese president will meet in november in an attempt to end the trade talk roadblock. we have all 11 groups in the s&p
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500 moving higher. there were a few laggards, but they finished in the green. let's give you some of the big movers. deere.to start with it had a big loss at the start right after it reported results. it was down almost 4% of this morning. there was a warning that farmers issues becausen of trade worries. in earnings call, the cfo said the trade valuation was getting overblown. investors seem to change the tone of the company and finished up a better than 2%. other companies also reporting earnings. nordstrom.about .nd it soared as much as 13%
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this was after the company lifted its full-year earnings forecast. this may mark say the high water mark for the year and share gains may stay later as expectations dip. we also saw zoe's kitchen up by 33%. this is beyond the 1275 group -- that, kaba group offered to buy the company for. materials, along with nvidia, getting disappointing news on the chip industry. applied materials falling as much as 10% since late 2008, it 10%he most -- as much as since 2008. joe: there has been hardly any
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movement in the u.s. government bond market, and the two-year down. two-year is buying,h all this you're not seeing much. scarlet: the dollar is down versus the 9g10 currencies. the norwegian currency is the exception. the loonie is higher than expected hitting 3% since 2011. i wanted to point out the chinese jan. commentary that china is propping up its currency as it prepares to restart trade talks. it will be an obstacle as they begin talks. what would be complete without a mention of the turkish lira rounding off its first weekly gain since july 20. and again for three straight days before today so you see the line moving up. that is the dollar strengthening versus the lira.
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it ends with a gain. the threat of u.s. sanctions remains an overhang. turkish markets close next week for public holiday. traders may have been hoping for a public response from the central bank. we see a little bit of money taken off the table. scarlet: is it -- joe: it is a good week for the lira though. commodities is not as much action as we saw earlier in the week. oil gained a little bit, gold is finally having an update, lead is down 2.5%. we are seen a little more volatility in the industrial metals. nickel is up 1.1%. crude is posting its long -- longest weekly losing streak. scarlet: seven straight weeks. . joe: those are today's market minutes. scarlet: "what'd you miss?"
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the sec sounds off. they're looking into public company reporting requirements. let's bring in bill, chief economist -- a chief economist joining us from washington. it's interesting this story came up. he knew you were coming on to talk to us about this. j claims priority when he took jayoffice of the sbc -- claims priority when he took office of the sec. will this help that? bill: you have to ask yourself why they want more ideas, it is to get the corporate finding. the research that they have been doing has been looking into what is the best way to fund companies in the united states. when you think of the most advanced cap mark in the world, you think of fancy stock markets and a whole menu of corporate offerings for the public.
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the research that jacob and i maybe suggest we need a better mix of drive it and public financing because all of the companies seem to be wanting to get out from the public eye. as president trump said this morning, maybe it is putting too much pressure on company management. done andrch we have and we gave you summarizes shows you since 1995, the number of companies listed on public exchanges has been dropping. the number of companies on private equity management have grown tremendously. now there are only 4000 companies within public exchanges and more than a dozen companies in equity management. some of the companies are small because the values of the public market are still near $35
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trillion whereas the private stuff is a little over 5 trillion. rethink, what are the capital markets and why is it that managers like elon musk are wanting to go private. there is so much pressure from the public markets and public market volatility that doerferes with trying to long-term strategies. joe: when i look at tesla, i do not see companies -- a company that the market has demanded quarterly earnings. i see a company with extraordinary losses quarter after quarter, inconsistent , and anon schedules incredible stock run. how did tesla and up being an example of a company that you cannot invest -- a company that cannot invest for the long-term because of shareholder demands? bill: elon musk a in his last
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press conference when he asked about not receiving quarterly per turns -- returns, he does not want to be held accountable for the targets people think he should have. i think, frankly, tesla has been a company that has been a hope and financed by dreams and true believers. that might not be the best example any -- example of companies that need to have cover from the pressure of stock price volatility to carry out plans. one thing we realize is that there are a lot of initiatives talked about in a few days ago in the wall street journal that say we need to have a fair share were corporate boards have to have representation of workers and to make sure companies do more than maximize profits for the shareholders.
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those are the instances where companies are starting to say that is in the best interest of what we are able to do. more and more companies are saying no, we don't want to be in the public eye. many can run their companies much better without the pressure of the markets. scarlet: i hear what you're saying. if the sec changes something and makes it biannual reporting garment -- reporting requirement, would there be demand for companies to list their shares publicly? in your notes,t there have been innovations financial intimations -- financial innovations that make it preferable for companies to stay private as opposed to listening -- listing. bill: don't let people fall you that they are not disclosing
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what the targets are and being held accountable for meeting sales targets. right, the private equity markets have developed secondary markets where if the private equity firms himself feel they cannot improve the efficiency of the firms any further, but another one feels they can, they can sell the interest to another firm. one of the things i noticed is that those market transactions are negotiated prices it will not be as efficiently priced as they would be in the marketplace. thea little skeptical of high returns being recorded in the secondary market trades, which a lot of investors are banking on like pension funds and so on because the history of returns in the private equity world is that they used to be giving 20% or 60% above market returns. now, they are barely pacing the
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market. phases of private ownership seem to be dominating. need a goodkets mixture of private and public financing complement in one another. some firms do very well in the public, some do very well in the private. it is up to the firms to decide which ones they should be. bill lee, thank you so much for joining us from washington. we want to share breaking news with you. cuttinging to -- targets credit rating with a stable outlook. this is after the markets closed for the week and after a week where the turkish lira was the best-performing currency. no reaction in the turkish lira right now to this news. joe: and the outlook is stable.
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scarlet: we should mention turkey is closed for a public holiday next week so the rating won't make that much of an impact at least in the near term. we will have to wait a little before we get to reaction. coming up, we mentioned has a and the shares are running out of gas -- tesla and the shares are running out of gas. this is bloomberg. ♪
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mark: i am mark crumpton with first word news. jurors in a fraud trial of paul manafort asked the judge for permission to end deliberations at 5 p.m. today signaling they likely will not reach a verdict before then.
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the jury asked for the early dismissal because one panelist had an event this evening. the judge says he will not release the names of jurors at the end of the trial because he fears for their safety. the judge also says he personally received death threats and is under the protection of federal marshals. before leaving for a fundraiser in the hamptons, president trump was asked by reporters at the white house if you -- if he would pardon him if he is convicted. >> i don't talk about that now. i think the whole metaphor trial is said when you look at what is going on. i think it is a sad day for our country. he worked for me for very short. of time, but he happens to be a very good person. mark: people who asked not to be bloomberg that the u.s. and mexico are resolving their differences on products after the trump administration withdrew some of its demand
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bringing the nations closer to earn overall deal. countries may narrow restrictions on mexican produce such as tomatoes. --ece officially merges emerges from its bailout program on monday. this is after eight years of comebacks for massive loans. greece still has a huge debt that could take years to settle. it will have to meet targets for public finances until the last bailout loan is repaid in 2060. 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. joe: "what'd you miss?" ceo gave a lengthy interview to the new york times highlighting the demands of running the company and shedding a light on circumstances surrounding his tweet last week. he is announcing taking tesla
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private. since their stocks -- the stocks went spiraling. bring in -- we bring in david welsh to talk about this. what about this interview alarmed investors so much? >> when a company is in crisis and they have been since he put out this tweet, the ceo usually does a big interview with bloomberg or somebody like that to clear the air. they have to say they have the hands -- their hands on the problem and will get things fixed. this did the opposite. he tweeted he wanted to take the company private on the way to the airport. not a lot of thought and communication which sheds light on that the funding is not set in stone. he does not have the money lined up as he indicated when he tweeted that out. problems to -- problem number he said he needs is someone
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else to help him run the company because the whole process of getting the model crew production up and running and dealing with analysts and short-sellers is wearing him down. it is really emotionally taxing for him. another thing investors look at is respect. maybe he will have to reduce his involvement in the company or there's a possibility where he could even step away. i doubt that, but if he has to pull back, when you buy into tesla, you have to buy into elon. he may have to pull back because it is wearing him down too much. scarlet: elaborate on that meaning -- a leverage on that. -- meanl back meaning he steps back from the company help ease thes to
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stresses? david: he would probably hire a coo. chief product officer and he likes playing with the cars and the technology. he does not want to run the day-to-day or it is difficult for him to do that while he is running spacex, his "boring" company. that should be big news for investors because that is something that is a dire need for elon musk and his company for a few years. he has too many things going on. he needs someone to come in and gets manufacturing going. they have problems with the model x and the model three has been what he calls "production hell." did a tearmonroe down of the model three, he said the car is engineered well, but they have manufacturing problems .
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he said his firm or 100 other firms could help get that going. it's not that hard to get manufacturing up and running. companies do it all the time. elon should guided expertise to get this done -- gotten expertise to get this done. that is given -- has given the short-sellers the fuel. scarlet: absolutely. with breaking in news. this is a bloomberg scoop. cosmetics asking its suppliers to source goods in countries outside of china, one of the first signs walmart hopes to dilute the impact of the tariffs. inmart shares are unchanged after-hours trading. from new york, this is bloomberg. ♪
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joe: "what'd you miss?" google's ceo said the plans to enter china with their dragonfly search engines are exploratory and an early stages. is this the base between google executives and employees? , our nextn the story guest joins us from san francisco. not excitedmployees about the idea of reentering the chinese market? them fort -- about 1400 of signed this letter protesting it. to put that in context, when google employees freaked out about a pentagon contract earlier in the year, more than 4000 employees signed that one. in that case, google did back
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down and they're are letting the contract expire in about a year. with this one, i suspect google will press forward and try to get back to china with a sense and search engine. scarlet: you mentioned in petition and unhappy employees out of 85 thousand employees -- 85,000 employees. but, tech companies live and die by the talent. to a large extent they need to listen to their employees in a way that may be manufacturing companies or other companies do not need to. >> that is right. google has a pretty open culture and a thursday meeting every week which is where you can make these comments. they make sure their employees are very happy. the problem is, the search engine is by far the biggest
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profit generator for the company. if you look at hindsight, when they left china in 2010, they were leaving a lot of potential business. billions of dollars in business on the table. it was a sensible move at the time. the new person running the company is more pragmatic. i imagine he is eyeing even a small sliver of the chinese search market would bring in a -- and that would bring in a lot of money. joe: i want to come back to the employees having a lot of power in the company. thatis a growing threat all of the big companies are getting anxious about? the idea that employees who have political beliefs can dictate to accompany that they can and cannot do based on the fact that they could walk away and join a competitor? alistair: amazon was the
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noticeable one. they are a little different from google and facebook in that it has a reputation for not paying as well or not coddling employees quite as much based on being based not in silicon valley. even the company got a backlash from some of its ai software being used by police departments. it is a risk. not publiclys have voiced concern about this type of thing, but it is a huge balancing act. it is really a new thing that has happened in the past year that has come to the fore where where these companies are so influential that they affect more things other than what goes on online. these employees are really having a lot more sway. scarlet: this is something that was written about in the new york times saying these
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employees have a lot of leverage, joe. it is even more important that the government does not seem to know how to regulate or chime in, or control the tech companies in any way. joe: real quickly, we know amazon's defense contract, cloud stuff, is this going to be an issue with government sourcing? alistair: certainly. in the case of google, we know pentagon officials, some of them, were upset by google backing out of that contract. it won't help when bidding for a much bigger contract. joe: thank you to our bloomberg tech editor joining us from san francisco. people on low income need bank accounts in the u.s. postal service might have the answer. we will talk to the author of a report that says public banking is a win-win situation. this is bloomberg. ♪ this isn't just any moving day.
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mark: i am mark crumpton with first word news. president trump is taking steps to end u.s. involvement in syria. that is according to the associated press who reports the administration is ending funding for syria stabilization projects. officials say the earmark for that will be shifted elsewhere. excavators -- started working on the collapsed bridge today. workers are searching for as many as 20 people who went missing after this week's deadly accident leaving 38 people dead. an investigation into the collapse is underway. . in india, thousands of mortars -- mourners said farewell to the
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man who turned the country into a nuclear power. the former prime minister died at 93 this week. he led a right-wing coalition government from 1998 to 2004. in 98, he tried to fight a global outcry to prevent a series of underground nuclear tests. barcelona marked the first anniversary of terror attacks today that killed 16 people. including --tions --luded one van killed 14 and another victim was fatally stabbed in this incident. another one dabbed -- died the next day and a stab one. -- stab wound. spanish authorities say they dismantled a cell with members killed in the operation or arrested. global news, 24 hours a day on air and on tictoc on twitter,
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powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: let's get a recap of today's market action. the s&p 500 rose for the week for the sixth time in the last seven weeks. we have gains in the dow up by 100 temperaments -- 110 points. nordstrom continue the good news coming out of the retail sector. we also had encouraging developments on the trade front with reports that china and the u.s. will meet in november. , in ane presidents attempt to road -- and the roadblock. joe: "what'd you miss?" it's estimated one in four american households are excluded from mainstream financial services. that means they are either under a tour under banked and rely on credit tori financial services
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creditory tori -- financial services. is here toest explain and he is the co-author of a new paper on why the government should get into retail financial services. tom, thank you for joining us. during the health care debate, people said there should be in public -- a public option and health care what would a public option in retail financial services look like? thomas: thanks for having me on. what we proposed in the paper was for the u.s. postal service to offer basic transactions and deposit services like a checking account and ways to pay bills like that. in addition, we proposed they provide small dollar loans that would replace things like payday fullng as well as the suite of auto loans and mortgages.
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following fhase templates that the u.s. government has guaranteed for a long time. theydition, we proposed manage an online financial services marketplace. of thek the combination brick-and-mortar post offices as well as the online financial services marketplace would create the infrastructure for universal access. idea is not necessarily that existing retail banking would disappear per se, that they would have to compete. and, if the government did a good job and offered a more compelling product, that would be bad for the institutions. if it was a garbage product than the existing institutions should not have anything to worry about. thomas: that is the basic idea. we want the government to provide very basic, affordable staple services that shield households from risk. in doing so, these plain-vanilla
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services the cfpb talked about -- with the services the cfpb about, some- talk services would not be competitive. one thing we saw with the financial crisis was that the mortgages he distributed risk back towards household. if you look at the difference between a fixed rate and adjustable-rate mortgage, a fixed rate interest rate will not change. the financial institution is responsible for managing that risk. new adjustable rate mortgages redistributing the risk towards households, wech we propose is that provide a lot of basic staples services that shield household from risk so that we do not see problems like the 2007, 2008 era again. joe: let's walk through predictable objections. . one would be the government is
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not good typically or we don't think of the government good at providing retail type services. websitesof government typically not being very good compared to private ones. i would you address that concern? lot of -- ae's a lot of those concerns, they have to do more with culture or the current political moment. a deep look at the historical record as well. one of the reasons we wrote the paper was because one of the big lessons of the new deal was that public options are very powerful regulatory tools. that of people do not know the stable structure for mortgages, the 30 year --ed-rate mortgage that was fixed-rate mortgage was created by the government and was done to address the problem because there were all these risky riskages concentrating on mortgages.
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the government created a new mortgage structure and the institutions in the secondary market supported it. we created a stable mortgage finance -- market through the government which underpinned the financial stability of the middle class in the postwar. -- postwar period. as soon as they began deregulation -- deregulating, he saw financial exclusion come back. another thing i would mention is that we are the outlier in the international experience. most companies have postal banks that work well. if you go to the u.k. postal bank website, you can get the full suite of consumer finance from them. joe: we have a couple of seconds left. the other obvious objection next is that public companies will not be good at judging risk enable see pressure under politicians to allocate mortgages and loans for
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political reasons as opposed to sell underwriting and that will be a source of corruption. what you say to that? thomas: those are two separate things. as we say in the paper, it is very important that we need to accurately price risk and credit policy cannot substitute for income policy. in terms of risk management, i think the argument is an ironic one considering the last decade of experience. private mortgage securitization dramatically underpriced risk. the channel has not recovered since then. the government has essentially guaranteed 80% of the u.s. mortgage market since the financial crisis. if the public sector did not do the risk management, we were not have a market right now. if we look at historic record, the government is much better at risk management, at least in the
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20th century mortgages. thank you very much. scarlet: more breaking news to tell you about. turkey has been downgraded to be a three from a ba2 with a negative outlook. just about a half-hour ago, turkey's credit rating was cut which saidthe s&p the extreme volatility of the lira and projected short balance of payments would undermine their economy -- the economy. this is late coming given that the lira tumbled in previous weeks and rebounded this week. social mediaw disinformation campaigns could tank a stock price in how companies are trying to fight back. this is bloomberg. ♪
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scarlet: "what'd you miss?" the battle against bots. -- socialia campaigns media disinformation campaigns upended -- one lab is trying to help companies fight back. we are joined by the cofounder. josh, thank you for coming in. how prevalent is this. company puts out something on twitter. how often does it get amplified and in the wrong way? josh: it can be quite common, particularly in situations where earnings days have been. we can see the amplification up as high as 60% of the overall conversation. you can imagine it has a big impact on the company and their bottom line.
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joe: in politics, you can see why some people might have a bot army to a dance an agenda. what about the corporate side? who is behind that area spots? josh: we've narrowed down for different categories. financial gain, what is a way -- can put out number two is hitting corporate reputations and hitting the corporate rand. if you are on the other side of a corporate brand for whatever reason. number three is cultural webin ization. we see a huge amount of bot activity around that. number four is the political space. is it better to schedule something and he's ahead or drop it on the market like a surprise in order to get away from these bot armies? or, is there no way of doing
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this once it is out on social media? once it is out there, it is out there. that is a challenge the company has to do. allowingve technology a story to spread, who is taking hold of the story, that is important. one of the biggest issues is that companies have no idea that an attack is happening. there is an awareness issue that needs to occur. joe: what is the response looking like? josh: the response of a company? joe: yeah. you go to accompany getting hit by a bot attack, then what? josh: number one, they are usually quite surprised it is happening. we say you have to have a different type of communication. let's say it is impacting the stock price, you cannot have the same type of communication strategy. you need to have a playbook where the co goes up and says
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there is something happening. those proactive actions are important. alsoet: media platforms are getting sucked into this. you had a great case study about the bloomberg story on nestle and bubbling water it does not pay for. bot -- bustling walter it does bottling water it does not pay for. perpetuating. josh: that story continually, want to month, will get amplified by bots. bloomberg sought in said this is really resonating and really a big story to the point where they retweeted it more than six months later. they put it back out there. what we are able to see on those , there is environmental interest behind
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that bots network. theynestle's perspective, are getting hit with the story months away. they are scrambling with resources to answer to those stories. understanding why you are getting hit with those things is so important in this environment. joe: so activists or some sort of cause, these are the types of groups that would be inclined to amplify stories? josh: yeah. you can even take it further. there are other groups that might want to have financial gain or international relations -- for international relations purposes. one of the most important things right now is that people are aware it is happening. that is important. it needs to be talked about more in the corporate space. it is a big problem for companies. scarlet: clearly this is happening on twitter and a lot of companies and consumers prefer to go to instagram are things cannot go viral in quite
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the same way. do you see this amplification, negative amplification on platforms like instagram? josh: that is one of the biggest problems. it is not just a twitter or instagram problem. it is across all platforms down and comments section. bots are feeding off of one another there. not as straightforward as take down all the bots in one single or platform. it is much broader. that makes it challenging for companies as well as consumers. scarlet: if you had to guesstimate how much of the negativity and the trolling out there is box generated, what would it be -- bots generated, what would it be? josh: it could be upwards of 60% in given instances. company isny -- if a getting attacked, it's important to see if this is being perpetuated by bots or humans. scarlet: josh ginsberg, thank
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you. we will stick with social media because the investment strategy starting on twitter was born on twitter and took off to become some product. on this etf iq i spoke with one man who said he took the 40 balance idea/ and added a new trust -- twist. >> you mentioned active in this idea was done with active bondsders managing active and added an equity future on top of it. this idea is trying to bring -- bring40 two bearing beta to 60/40. for every dollar you invest you get $.90 an equity, $.60 in bond
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equities. that is a 2-for-1 combo and makes it interesting. >> was this designed for? is it targeted for someone like me? >> for anyone that says they are capital constrained and think they can get diversification on top of the equities. institutional investors, and a lot of institutional investors are to get this most efficient portfolio. these asset allocators are what is targeted after. scarlet: the sounds great if things go well. what is the worst-case scenario for the fund? what happens when stocks and treasuries fall at the same time? >> you could say the equity market sold off in 2018 as interest rates rose. to bondsyour exposure through bond futures and rising rates. you had $.90 to every dollar in equity. you are already delivering your
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equity and taking less risk. historically, bonds have had a negative correlation. over the last two decades, you have had diversification potential. that is more often in big equity selloffs. scarlet: we are counting on that relationship. andond futures were up 15% get some diversification for having bonds. scarlet: what i love about the whole story is your 90/60 fund came up. it was a twitter campaign that came up with nonrelated nonsense. here's a tweet that sparked it. ,t what point did you realize and here's the tweet, that this could be a product. >> we started by saying there's a lot of actual -- there's $30 billion of funds doing it in an active fund -- active way. we talk to clients all the time
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and you are always getting feedback from them. there was a conversation of people saying this is an interesting idea where you need a beta. there is commentary online. it was more than one source to see the online idea from. this is sort of an interesting idea that resonated. scarlet: was it a tough sell since it was born out of a twitter conversation? >> there is never one source for any idea. you have smart people online writing about it and have people, conversations that are happening all the time. the idea it had been done before in the exact format, it bring costs down and it resonated. scarlet: they give it validity as well. you mentioned feedback, not only can you crowd source ideas, but you can get endorsements as well. we pulled up a clip of approval
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for your product. is.e it they had a 22 year head start -- i had a 22 year head start and they still beat me to it. >> it is such an honor. is. cliff is a hero in asset manager and he has been a real leader. i'm glad he linked that paper. it's interesting that two people working on a similar idea could get -- a different idea could get to a similar place. he was saying instead of being 100 percent equities, lever up at 60/40. it's interesting how to people at very different kinds could come to a similar idea. scarlet: final question for you. do you see more ideas coming from twitter? eric says he sees a lot of requests for triple inverse garmin etf's. >> we have delivered -- developed over 100 etf's and we're always talking to clients.
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big role. talking to clients and getting feedback. what is different is now you could have a very public format and have very honest discussions . scarlet: that was my conversation with wisdom trees director of research. be sure to catch bloomberg etf iq every wednesday at 1 p.m. new york time. let's get back to a bloomberg exclusive we told you about on walmart. they are asking beauty suppliers to look beyond china for sourcing. matt broke this story. , every company that sources from china is going to want to make contingency plans and thinking about this. why beauty suppliers? matt: a lot of this is made in china. otherre there are categories where walmart is asking similar questions.
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let's say the bit i obtained yesterday, walmart talked about what they called mitigation strategies. ways they are looking to lessen the impact on tariffs. we knew this was happening, it was just about finding evidence. you are talking about big companies like l'oreal in france and cover girl. scarlet: is the goal to not just look beyond china but spread out your risk everywhere? matt: exactly. is walmart saying what you have going on outside of china and can you make this stuff -- scarlet: let's not just move this to bangladesh because it could be next. matt: exactly. this is just the case of walmart being very careful. when i talked to them about this they said they were looking
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at these type of strategies. this was just one of them. joe: there is a cliche about walmart that it is a place where you get cheap stuff from china. to much overall exposure china do they have? matt: they don't really disclose that. they said yesterday in their earnings that we have so much stuff made in the u.s., and since the days of sam walton, they have had a huge made in the usa push. a lot of their stuff comes from the u.s., but that is a lot on the food side. joe: so that's not the overall pie. matt: let's not point the finger at walmart. a are the biggest, so they are the proxy. every retailer gets a ton of stuff from china. another category i would love to hear about his toys. i'm sure a similar letter may have gone out to their toy suppliers as well. scarlet: great scoop. i'm sure it is just the tip of
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the iceberg. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪
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scarlet: u.s. talk sending the week on a high note. the s&p rose for the sixth week in seven. joe: a pretty nice close.
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scarlet: the greek prime minister is expected to deliver a speech marking the end bailouts on monday. it is the end of an era. joe: i will be looking at the fed measures being released on wednesday and the central bank. the event of the week will be friday with powell speaking on the economy. everybody will be trying to be tuned into that. scarlet: after that, all the economist indication. joe: exactly. scarlet: that does it for "what'd you miss?" joe: "bloomberg technology" is up next. this is bloomberg. scarlet: their ego -- there we go. ♪
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>> i'm emily chang in san francisco in this is bloomberg technology. and the next hour, elon musk tells the new york times no one reviews the infamous tweet and he does not regret it. and chips stocks on track for the longest losing streak in months. is the semiconductor downturn coming? more-- raises 216 million dollars in its latest

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