trump are convicted of felonies within minutes of one another. markets shrug it off. global markets appeared to be taking the president's troubles in stride and the bull market continues its record run. the consumer points to continued economic growth. welcome to "bloomberg daybreak." alix steel is off. oh to be a fly on the wall. if you look at markets and the reaction to the headlines yesterday, we did see a dip in futures in the u.s., but they recovered a lot of their losses, so we will see how that falls as the day goes on. higher.trading

euro-area wages on the rise. the euro on the rise along with wages. the ten-year yield unchanged. we saw some buying on the back of the headlines yesterday, but since then we have seen it go back. david: the morning brief. existing home sales for july at 10:00 eastern time. 2:00 come of the fed releases minutes from its july meeting with markets looking for a hand on rate hikes in the balance sheet. we expect the u.s. to impose sanctions announced earlier

limiting exports to russia of goods and technology considered sensitive to national security. right now it is time for the bloomberg first take. we are joined by our guest. marty, we have to talk about these convictions. first, paul manafort. eight out of 18 counts. it looks like he will go to prison for a long time. >> that is what it looks like. it is a big victory for bob mueller. this is a huge boost for his efforts to get david: to the bottom of collusion. to get to the-- bottom of conclusion. david: the president said this has nothing to do with me, but the situation with michael cohen is more closely tied to the president of the u.s., and his lawyer coming out saying my

that myaid under oath crime committed the because he was asked to. >> he has a good point. what is the implication for donald trump's presidency? to me, steve bannon had the best point. this does make the midterm elections a referendum on impeachment. if democrats take the house, they will try to impeach the president. julie: how will those efforts go? are the sentences were the of removing donald trump from office. my personal view is that it is not. for michaelawyer cohen tweeted this.

fair point, but as you suggest, particularly the base, yeah, he paid off some women. is that such a big surprise? >> it isn't. normalizinganger of this kind of behavior. the point is donald trump is the president of the united states. to remove him from office, you have to convict him in the senate. david: later on, we will talk with the former whitewater counsel about how this plays out and what is likely to come next for mr. trump and his aides. julie: let's talk about the markets. we saw some reaction to the manafort and cohen headlines.

they arees yesterday, in white. the dollar index in blue. you have the 10 year yield in yellow. we did see some reaction and all three asset classes. then a flattening out and their recovery from those lows. we have seen remarkable resilience in this market. the s&p 500 yesterday touched a record high. we are now in the longest bull market? so why isn't this having more of an effect? youe got the initial affect would expect, dollar sells off, gold down, yields higher, equities come off a bit, but markets took it in stride. they are waiting for the other shoe to drop. where do we go from here? is it enough to impeach the

president? is it enough to stop the terror forward?ion from going is it enough to change the structure fundamentally in the economy? at the moment, the answer is no. on the the referendum presidency in the midterms for sure. insulted by this, you are likely to vote democrat. if you were a european politician, so what? something to vote for. i think it will come down to november. david: is this the markets not caring? made andk they have measured assessment that this will fundamentally not change the way washington works. that an this narrative action in washington is good for the markets. that is part of what is happening. david: the president has out in

fair amount accomplished already. he does not need support on tax cuts. he can deregulate on his own. how much do we need from him going forward? >> it's true. deregulation efforts and redoing trade deals have done wonderful things for the markets, so if there is gridlock in washington, so what as long as donald trump's president? julie: i want to bring up a picture of the bull run on my bloomberg that shows the climb since march 2009. if it is not politics or tariffs, what will end this thing? >> i think this makes a jerome powell's life more complicated. equity markets love this. it is an ideal situation. don't rock the boat.

may change the landscape in terms of the timing of what the fed does. probably not good for the fixed income markets, the dollar, future inflation expectations, but for the equity markets, carry on. david: let's go to our third story. we have two retail stories this morning. two different stories. we have target out. they did exceptionally well on earnings and revenue, but comparable-store sales. earnings, but not on comparable-store sales. what are we learning about the american consumer and the state of the economy? >> when you look at these two lowe'sf companies,

futureaffecting expectations. target is the place you go for everything. that speaks well for the future of the retail investor -- consumer, more so. julie: we have to talk about the tax cuts as well. end of theto get the tax cut benefit at some point. >> two years ago we talked about the retail apocalypse. we have all these companies showing real growth. about a story yesterday and demandpplies coming out of the consumer we did not realize was there, fueling

rest of the year, so the outlook is just fine. david: retail is back. thank you both for joining us. you can find all the charts we used in more with gtv on your terminal. gtv on your terminal. coming up next, the s&p hit a record, but how will politics weigh on the market. the health of the bull market next. ♪ the health of the bull market next. ♪

>> this is "bloomberg daybreak: americas." deal between two industrial gas giants may be in jeopardy. u.s.ng the merger past regulators will mean to vesting more assets than planned. identified $9 billion of disposals in europe and north america. the chinese smartphone maker xiaomi delivered 68% sales growth. overseas,d strides while fending off challenges from local rivals in china. it depends on sales to ramp up users to online services. wants bidders to make offers by the middle of next month for its indian

consumer health unit. thannit could fetch more $4 billion. nestlé, and one other company have expressed interest. that is your bloomberg business flash. david: s&p futures took a hit late yesterday on the news of two former aides to president trump. highs andt record extended its bull run and markets seemed to be shrugging off the political news. to discuss we welcome our guest sts now.ue the white number is the percentage of numbers above 70 on the rsa. the blue is below 30. it looks like it is broadening. january,mpare it to there is a big diversions. how strong is this market?

>> it is quite strong. we had a resetting of earnings expectations as tax reform was priced in through the sectors. we have had 80% of stocks over this year with a 10% decline or more. now they are starting to reemerge backed by strong earnings fundamentals. growthpositive earnings across all 11 sectors of the s&p. also inhe strength is the dollar, which has been interesting, perhaps. abouthave been questions the longevity and sustainability of that trend. talk to us about the u.s. dollar has to the rally we are seeing and whether it will continue. >> a lot of people focus on central banks, policy diversions come up at the big driver in fx is u.s. equities have been outperforming at a clip not seen

in a long time. capitalt mapping out flow, and what you are seeing are foreign investors are bring money into the u.s. and the u.s. repatriating money from the rest of the world. this is coming at the expense of the european market. managers are buying back into the u.s. growth story, which is part of the equity story. this is all about volatility adjusted earnings in the u.s., which makes the dollar vulnerable. david: we just happen to have a chart schoening the msci usa, the blue line, as opposed to the world excluding the usa, to illustrate what mark was saying. there is a big diversions. can that keep going? >> they will converge them a particularly as you see some of the economic surprises to europe

in the upside -- to the upside relative to the u.s. when you look at the u.s. come you have a lot of stimulus from , deregulation, repatriation of capital, corporate earnings are stronger. eventually what you will see is the weaker euro will help earnings and you will see them whether these emerging-market fears in turkey, and the ecb and fed may surprises by slowing normalization. first of all, do you agree, mark? do you think that will support further gains for the dollar? if you look at the year to date ,eturn for major currencies only the peso and yen have risen versus the dollar. you have releasing the dollar has the standout -- really seen the dollar as the standout. >> you have the short run,

, they hurting, psychology are elevated in terms of the dollar. we see the short positioning in the u.s. 10 year. it is dollar, u.s. equities, u.s. assets. to meet the story is the rest the world will start to converge with the u.s. equity market because there is too much of volatility priced into the market, a slow burning credit cycle. that will take years to work through. you have fat, geopolitical shots, trade tensions, and you have a tightening of global liquidity, but the rest of the world is still growing about trend but at a slower pace. itie: and other words, is that the rest of the world will come to meet the u.s., or money will flow out of the u.s. and we will see a turn in all of this boring into u.s. assets? possible to have

coordinated growth in markets across the world. one of the things we are attacking the most in terms of consensus thinking is that we are somehow two years away from recession and we can sit here and map that out. that is not how recessions or market downturns occur. that sentiment isn't anywhere near where we have in the marketplace today. there is money on the sidelines to support global and u.s. equity markets moving higher over the next 16-18 months. david: is that money on the sideline support him e.m.? february and has come down, but it is still at the highest level since 2016, so still a lot of bearish sentiment when it comes to emerging markets. >> it is difficult to get overly

constructive with emerging markets. the dollarwe thought was artificially weak at the beginning of the year. that is not positive. rate hikes are not positive. if we get a pause in fed tightening, that could be a reprieve for emerging markets. julie: do you see opportunities in certain emerging-market currencies? the peso has been one of the few currencies to outperform. you have political change, a potential nafta agreement. is that a place to look? >> we look at things in a weekly cycle within the longer-term outlook. e.m. is attractive because there is too much volatility in the market. that is good for emerging markets as an asset class where you are picking what are perceived to be better fundamentals. mexico has a huge nafta premium. you start to see constructive

news, especially coming up with a handshake deal, that is enough to take risk premium out of mexico, but emerging markets as an asset class will be pushed around by the end of easy money, turkey, argentina, all these countries with idiosyncratic risks, and brazil now another one. you also have funding issues. the dollar liquidity story exacerbates tensions. it will be about which currencies are not sensitive to china, and where is some of the file you. something like columbia or the russian ruble, which is an oil trade. those things look inflated. interesting. thank you so much. you are staying with us. we will continue the conversation in a bit. coming up, a tale of two retail earnings beats, but two

different reactions. surging, lowe's is lower. this is bloomberg. ♪ ♪

julie: target and lowe's reported better than estimated earnings. target surging, while lowe's is trading lower. sarah. us now is forly impressive numbers target, 6.5% gain, the best growth in 13 years. is it a one-off? >> i don't think so. we have seen it building towards this for some time. last quarter, they posted their best traffic growth in 10 years, and they surpassed it in this quarter. we are seeing strong execution.

they have been remodeling stores , better lighting, better asplays, and they are getting 2% to 4% lift in sales were they have done that. there e-commerce is improving two. julie: target versus a walmart, target is more reliant on food, and it is food that outperformed at walmart. his target competing with walmart and the department stores? >> that is a good point. target has put up a lot of turnaround effort into making strong private brands in the home and apparel spaces. at that. good job they have highly designed products and a lot of newness that has the fashion, style, and trend elements that a department store shopper might be looking for. that is targets real competition, not walmart. julie: let's talk about lowe's,

comparable sales up 5.2%, but the company cut its forecast. what is going wrong at lowe's? >> the cut to the forecast is about their choice to exit a orchard supply chain, they will pull out of that business. this is one of the first big decisions under the new ceo. i think there will be interest on the call. david: thank you so much. coming up, trump's terrible day. that is next. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. julie: this is bloomberg daybreak. let's take a look at u.s. futures. not just at the moment, but the moments that all the headlines were crossing yesterday on paul manafort and michael cohen, we

saw futures take a leg lower. they have recovered to some degree and we are not seeing much change this morning, not much of a decline. if you look the individual movers we are watching, we were just talking about target and lowes. we also have a sizable dent in the insurance in -- insurance industry. the hartford is going to be buying a provider of nautical insurance for $2.1 billion, $70 per share. look across asset, we are just mentioning the mexican which is rising as the u.s. dollar is falling against it as reportedly there is progress in the nafta negotiations. the 10 year unchanged. that has neutralized.

we are still seeing a bid for gold, up half of 1% and crude continuing on a little bit of a run. industry data on stockpiles last night and a steep drop that was reported. we will see if that is confirmed by the industry data that comes out in three hours. david: it is time to find out what is going on outside the business world. we turn to taylor riggs with "first word news." president trump is shrugging off the conviction of his former campaign chair and his attorney rudy giuliani says the conviction of his former personal attorney means nothing. michael cohen implicated the president in a crime well pleading guilty to illegal finance charges and the case has to do with hush money paid to a porno actress and a former playboy model. convicted -- a jury convicted former trump campaign chairman paul manafort of bank fraud

charges. the u.s. and mexico are moving closer to an agreement on how to move forward in the north american free trade agreement. key hurdles still remain. politico reports there could be a handshake deal with mexico as soon as tomorrow. john bolton says the trump administration has not decided yet when to unleash its long-awaited middle east peace plan. tripapped up a three day where he met with benjamin that now who. palestinians should move on from president trump's decision to move the u.s. embassy from tel aviv to jerusalem. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: back to our top story. it was a historic day yesterday ofn two former aides

president trump, former campaign chairman paul manafort and former personal attorney michael cohen were convicted on felonies within minutes of each other. paul manafort was found guilty on a charges including bank fraud and tax evasion. mr. cohen pled guilty on eight counts including bank fraud, tax evasion and campaign-finance violations. here to give us a sense of what to expect next is former federal prosecutor robert ray. a sermon -- he served as a whitewater independent counsel. always good to have you here. let's take these one at a time and there is a lot of heat and light. what is there? what does this mean for the president? robert: it is a little complicated. we don't know what it means because the president is probably right to suggest where is the evidence of campaign illusion with the russian -- collusion with the russians. these are crimes related to bank

fraud and tax evasion. that is what the jury was able to agree on. obviously it is the president's former campaign manager. that is not a great day for the president. he is facing another trial and a separate proceeding in the united states district court for the district of columbia in october. if there is anything that paul manafort has that would be of 'sterest to bob mueller investigation, you would likely see some indication about whether or not paul manafort cooperates and he is going to have to make a decision and it seems to me, prior to the start of the second trial. david: and we'll know if he knows anything that would be helpful but if he did, wouldn't he have already made that deal? isn't it getting late? right, likely that is which is fair to say if he had it, where is it? that does not preclude that

under pressure of eight felony convictions, that if it is there to be gotten, you would think that now would be the time or certainly before the second trial starts in october. on the other hand, if he had it to give, it is hard to think he would not give it. michael cohen has attracted attention, largely as a result of his guilty plea to the two campaign-finance -- federal election campaign act violations which the reporting has been that he implicated the president. it is more complicated than that. while one of his lawyers suggests that if michael cohen has committed a felony, that necessarily means that the president is in the same boat. i don't know about that. that is a more complicated question. julie: let's break that down. here is the tweet you are referring to. today, cohen testified that

donald trump directed cohen to commit a crime by making to two women for the principal purposes of influencing election. if those payments were a crime for michael cohen, why wouldn't they be a crime for donald trump? why wouldn't they? robert: it is a direction to make a payment but in order to show that donald trump has criminal intent, you have to show that he willfully and knowingly directed michael cohen to commit a crime. it is unclear exactly what the director -- direction was. julie: how could he direct him to make a payment if the payment is criminal? president has the right to spend an unlimited amount of his own funds in connection with a campaign. he could get himself into trouble to the extent that he does not report an expenditure like a payment to these women. you would have to show that donald trump was knowledgeable about the fact that what his lawyer was going to be doing was

actually to commit a campaign-finance violation, meaning that it would be funneled through a corporation which is an illegal corporate and thatcontribution it exceeded the threshold that would be personal to michael cohen. it does not applied to the president unless he knows that that is what was going to be accomplished. julie: if the president, say the president, said there is no michael cohen, if the president himself went to stormy daniels, and said here is some money, don't talk, that would not be criminal? robert: no. if it is an in-kind campaign contribution, he is entitled to spend an unlimited amount of his funds and the only thing he would be required to do is report that under -- report that as a campaign expenditure. thes allowed to spend -- supreme court has held the limits don't apply to the candidate. the candidate himself is allowed

to spend an unlimited amount of his own funds to finance the campaign. he has to account for them and there are disclosure requirements, but there is no prohibition with regard to him. the problem is made the month -- the payment was made by a corporation and corporate campaign funds cannot be used to contribute to a campaign. the second problem is that for michael cohen, it exceeded the 27,000 -- the $2700 limit. elvess for some of the making a contribution to a candidate's campaign. that does not apply to donald trump. david: you have established that there was a lot of hoops you have to go through. let's make a big assumption that mr. mueller got through those and says i think i do have evidence that the president committed a crime. there was a policy that says you did not indict a president. it is not clear that legally you cannot. robert: apart from whether this person is the president, this is

a rather technical area of campaign-finance law. this has been tried before. they did something similar to did -- to this with connection to john edwards. that did not go so well. it is a rather technical thing. that is not to sanction the conduct. this should not be done and needs to be exposed. i am not condoning what was done. but that is a far cry from saying you were going to return a charge against anybody. the second problem is you are going to return a charge against the president of the united states. that raises constitutional problems and under current department of justice policy, unless that changes. it is policy that robert mueller is required to follow. where does this go? it iss into a report and for congress to decide whether or not an impeachable offense has occurred and is one of your prior guests had implied, this may be bad, but let's not

overstate the news. is it bad enough to warrant high crimes and misdemeanors? who is to say? that is a significant question and it is a question of judgment about whether or not you think it is a high crime. david: it looks like a tough class. robert: i do think, considerable wisdom has been -- this is a historical moment. we have passed through this before in connection with the clinton impeachment. lessons have been learned. even the democratic party would posit whether this is truly a -- at whether this is truly an impeachable offense. david: robert ray, former whitewater independent counsel. it seems like the verdict

is right now, it is not necessarily an impeachable offense. i want to bring back in mark mccormack and -- it does seem like the market is sort of saying this is not a big deal or at least not yet a big deal. steve: that is the right reaction. us is one of those times just like all the other concerns we have had over the course of this year where a nice breath of fresh air is a good first step. there are a lot of complications legally that the market cannot forecast. how does this impact the continuity of policy? the market has been happy with tax cuts and deregulation. does this play out in the midterms and the reelection campaign? it is unclear whether or not this news is likely to turn independents away from the president or if they knew this information already and this is likely to energize the right

with a closet coup going on. we have to let the political markets digest this and see what midtermsor polling and . there is no party in recent impeached ands has been thankful that they did it. mark, when it comes to dollar trading, is it too a lot --too early to game out the it seems like the dollar has been the most reactive. mark: it does not know what to do with political news. but what i think is going to be really interesting besides all of this is kind of how donald trump reacts on twitter and so what markets have gotten accustomed to is there is a lot

,f the version and distraction so the way i'm looking at markets now is if it is good for risk or bad for risk. let's look like we have made some progress and wind down the nafta thing and show that we can make some progress on some of these issues. that could show a temporary pause. this is where the rest of the world starts to look attractive is where emerging markets look attractive and this is where the dollar looks a little overbought and you have the growth element which is a list for the dollar right now that you have the market kind of sitting in a one-sided trade and so the other side of this is if we go any other direction were now we have negotiations with china and trade. if we go to a much more than of rhetoric on trade wars and us versus them, we're going to go back to u.s. equity outperformance, dollar

outperformance, stressing the global system. there is not a clear path but we are going to have to react to whatever comes from this new cycle. julie: it is an interesting cycle. will the legal headlines be a motivator for the president to come out with a different narrative? thank you so much for hanging around. mark mccormack of td securities and steve chiavarone of federated. also going to be -- we did not talk much about the fed but we are going to talk about the fed. later this week, special coverage from jackson hole. we are speaking with the kansas city fed president. coming up, musk tweets. the sec investigates -- the sec investigates. we will find out who comes out on top on wall street beat. ♪

this is- taylor: bloomberg daybreak. coming up in the next hour, thomas shapiro of gtis. david: we turn now to wall street beat. first of all, xiaomi delivers. the chinese phone maker reports after its highly anticipated ipo. catch musk if you can.

the sec investigation into musk it comes to public to keep private but they may have a hard time tracking him down in belfast. there is a third story. over -- took off for spain and belfast. julie: the company survive without him briefly. this is jason kelly. we will get to musk any moment. what wall street is talking about -- in a moment. jason: that is what wall street is talking about. as thexiaomi was seen spoiler in china for apple and here it is actually doing well in this report, post-ipo. jason: to call it a highly anticipated ipo is an understatement. this was the most-watched ipo in part because of its size and in part because of its importance to the chinese market because of it being a l weather for the broader market.

bellwether for the broader market. big names behind it. it is now owing to these quarterly results, treating just above -- treating just above that ipo price. -- trading just above that ipo price. david: didn't they stumble out of the gate? look at where they ended up. sometimes those early returns are not accurate. jason: we will keep an eye on this. this is a reminder if you dig into the numbers of just how massive the chinese phone market is and the ambitions of this company specifically because one of the big questions here is will they be able to extend into other big markets whether that is india, europe. in europe, they are facing off against an emboldened huawei.

less good news. julie: for elon musk and the securities and exchange commission. i want to go with that angle first. the sec was apparently already looking into musk and his various tweets and the way he comes out with information and then with the funding secured tweet, all of that was brought into the light and this is something the sec is not accustomed to. jason: this is not the playbook for the sec. this is a situation where they like to go about their business, they don't say anything to the public and they usually don't say a lot to the people they are investigating. it is very quiet and that funding secured tweet will go as the tweetry that forced their hand and forced them to sort of show a little bit of the work they are doing so far. david: it is reminiscent of mueller. part of the job of prosecutors is to decide not to prosecute.

they could be in the hot seat if they don't do something. jason: apparently what they are looking at based on a lot of reporting is this idea of in getting people hyped up about production goals in order to push the staff and get people excited about these cars, did the company go a little bit too sayingoverpromising or its production goals? this is a legendary story. david: enough about making cars and the sec. let's go to elon musk's personal travel plans. off, he wentays over to spain, belfast. julie: the game of thrones set with his kids. jason: he should do those things. it is notable in part because he got into this on twitter, a

little spat with arianna said youn where they should take some time off and he said i am too busy, this is not an option. and he did and he says in this interview, tearfully, i'll most missed my brother's wedding, i got there two hours before and yet that does not seem to be totally true. it is a worthwhile piece on the bloomberg because it goes into thatanalysis that maybe -- may be obvious, but an interesting contrast between elon musk and steve jobs and the relationship of the ceo and his board. julie: and what a ceo can learn of -- learn from making certain mistakes. david: i am glad elon musk got a vacation. we can agree on that. many thanks to bloomberg's jason kelly. be sure to catch jason kelly on bloomberg radio. could you do brexit better?

here is your chance to see if you could do better than theresa may. more what i am watching next. ♪

david: this is what i am watching. wish me luck. if you go on the bloomberg, there is a brexit game. we have it here. you can play the game. it basically takes you through the options for england in brexit. julie: see if you can brexit better than theresa may. david: get a new leader is almost always one of the options. go to conference. get a new leader or talk to the eu? talk to the eu? do you cave in or do more? the eu says no.

do you give the eu more or do you walk out? julie: you make that call. david: walkout. i played this game and it never ends. you keep going back and forth. it seems like real life. it may help theresa may but i don't think it is going to help her. julie: do you think she is going to play? david: somebody has gone through a lot of options -- a lot of trouble to make all of the options. coming up in the next hour, we will be joined by peter borish, quad capital's chief strategist. live from new york, this is bloomberg. ♪

david: what a difference an hour makes.

two close advisers to president trump, his former campaign chairman and former lawyer convicted of felonies within minutes of each other. markets shrug it off. global markets appear to be taking the president's trophy in stride as the bull market continues -- president's troubles in stride as the bull market continues. we come up on a shot of the white house now. welcome to bloomberg daybreak. alix steel is off today. julie: is this the live shot from the white house yet? tweets yet seen any this morning. david: welcome to quiet august. julie: s&p futures still off a little bit. they recovered a little bit.

still indicating a decline. crude prices are higher. reportseeing an industry and a steep drop in u.s. crude stockpiles. at 10:30 this morning, we will see if that is confirmed. the euro rallying, collective wages in the eurozone up 2.2% in the second quarter. the 10 year yield, we have seen a little bit of buying in the wake of those headlines last night. it is time for the morning brief. numbers for existing home sales out for the month of july at and :00 this morning, eastern time. at 2:00 this afternoon, the federal reserve minutes from the july meeting with markets looking for future rate hikes as well as what they plan to do with them balance sheet.

at some time today, the u.s. is good on thoseke sanctions against russia. let's turn to one of our top stories in the day, washington and the bull market. borish,ined by peter quad group chief strategist. showing how the markets have been reacting with these dual convictions of paul manafort and michael cohen. whether it is the 10 year or s&p futures, it all took a shot down and then came back some. the variation looks dramatic but is not that big a change. peter: on a percentage basis, it is an incredibly small move. but one has to look back at history. if you go back to president nixon, the dow made a new high in january of 1973 after his

reelection. if you think we are in a compression phase now in terms cycles, thise marginal new high in the s&p today, unconfirmed by the dow. it is a bit of a warning sign. julie was talking about august and quiet. we can think back on the summers of 77, 78. 88iously there was 87 and and we already know what happened in 98 and then in 2008. and the art ofk markets is not where we are, but where we are going. after the fact, everything is obvious. that is why i am a strategist, because i can predict yesterday perfectly. it is the issue of uncertainty continues to grow. buying has been low, the weakness in the rest of the world is an indicator that there

is potential trouble down the road. julie: let's take a look at the past. 500, the various recessions in red and this latest bull market that is now the longest of them all, as we watch it now enter into its phase it has been in since 2009. and at the forward potential warning signs, i would point out that as we are watching, you also have closing records for the russell 2000, the russell 3000, the s&p total , sorn, the dow transports why aren't those underlying records supportive of a market continuing to rally? peter: that is the beauty of

selective choices. the oex did not make a new high, amazon,aq did not, google and netflix did not make a new high. that is what makes the market. there is no reason to be extraordinarily bearish because the market is right and i am always wrong. of whate preponderance do i do on a risk reward basis going forward? is this a time to take risk or not. the longest bull market in history also coincides with the greatest fed balance sheet expansion in history and the fed has embarked on reducing that -- if you looknd at the balance sheet of the fed lira, and theh turkish lira has declined dramatically, it is the weaker economy.

julie: does that tell us anything? peter: emerging markets around the world are more dependent on the u.s. than the other way around, so as we reduce liquidity. julie: it is going to hurt them more than it hurts us. peter: and then it comes back and affects us. what was the theme a year ago? don't be in the u.s., be in emerging markets. that has not worked out and of our issue here and what we have been thinking at quad group is the fact that most of the policies taking place have been deflationary. even the rules changed yesterday, and i try to stay away from politics but if you are adding supply, making it ,asier for plants to produce the fact is you are adding more supply, but we are not seeing any pick up in demand, that is going to reduce prices.

there is tremendous deflationary pressure throughout the economy. look at sugar, coffee, cocoa. they affect our trading partners in the emerging markets. julie: i want to bring in another view on this. yana barton is joining us from her office. vance portfolio manager. when you are listening to some of the risks that peter is outlining, do you see the same risks? do you see other risks? yana: good morning. i think investing is all about ofsuring reward program will risk taking and we are celebrating a milestone today. this bull market, we like debate whether it is the longest but it has certainly lasted over 113 months. it has not been this strong, which puts us in the bull camp. if you think about the return we have generated since the low back in march of 2009, we have

annualized a little over 18%. the previous longest bull market of the 1990's realize a return over 21%. this has been generated without much fanfare from investors. if you look at the amount of money that has been invested in equities versus bonds, there has been three and a half times invested in bonds versus equities. that is over $1.1 trillion invested in bonds and etf's versus equities that only have $300 billion. this is on the heels of the economic expansion. there are multiple reasons why we are bullish on the market but more importantly, i agree you need to be selective now more than ever and that is why you have to be active in the stock picking that you do. david: you also make a point to the extent which retail investors have come in and they

came in relatively late. do you expect them to become increasingly participant in the equity markets? yana: we hope so. i think it is the perception of risk in various asset classes and i think we are witnessing that to date. year to date, the u.s. equity market has not been without volatility. we have seen a jump up over 30 and going back down 210. there is a lot of in-between but interestingly enough, perceived riskier areas of the market, you see tech, consumer and health care lead while the perceived safety is down by consumer staples which talks more to the devaluation you are seeing of long-term secular growth stories and opportunities we continue to see in the stories we believe have multi-decades to go, not

just another quarter. julie: peter, i know you are not convinced of the longevity of the strength of the consumer. what cracks are we looking for? peter: we have not seen wage growth. we are seeing a shift in the yield curve and i think that tells us a lot. if i want to beg to differ on some of those comments, you are saying in the 90's, it was better and then we look at our policies in the 90's, what were we running? budgets, surpluses, we had a global policy that started after -- under president reagan of the walls coming down, so we had the free flow of markets, capital, people and ideas. that is all expansionary. we have the opposite now. record deficits of crowding things out, we are building

walls which is affecting emerging markets. while she is saying that that is a sign of potential further growth, i look at that as saying that means we are weaker today. when i see the consumer and i see lows this morning and i see the reaction to home depot last week and yes, you had one balance. we were talking about walmart the other day, it is still down on the year. it had its best year in 10 years. listen to the markets. david: yana barton, you get a chance to come back with a rebuttal. thank you so much for being with us from eaton vance. peter borish of quad capital, thank you for joining us. coming up, president trump's terrible tuesday. we will look at how the federal -- felony convictions of just go

of his closest aides could impact the midterms. live from new york. this is bloomberg. ♪

historic day a yesterday when does go former aides of president trump, former campaign chair paul manafort and former personal lawyer michael cohen were both convicted of

felonies within minutes of each other. mr. manafort was found guilty by 18 countseight of the of fraud and tax evasion. pled guilty to tax evasion, campaign plan -- campaign finance violations. for more on how the convictions good effect midterms, kevin mclaughlin, a veteran republican strategist. welcome. kevin: how are you? david: let's start with the midterms. is it likely that this could have an effect because we have to put this against the backdrop -- of a couple members of congress who are under indictment for campaign violations. kevin: possible, likely. will it? to be determined. republicans have gone into the midterms with the same problems they had yesterday. one is history and the second is math. historically, the president in his first midterm loses 32 seats

in the house on average and they need 23, democrats to take the house. the second thing is the history. -- the math, excuse me. republicans have so many retirements, that is the biggest concern how strategists have this entire time. problem, itit is a is not helpful and it takes candidates off message. it takes oxygen out of the media air. the 50 house retirements is really a problem for house republican strategists. david: you have run some successful strategies in your time with republicans. if you were advising the himident, would you advise to pull back on the campaigning? it seems he is intending to get out there a lot. kevin: you can never abandon your president on either side of the aisle the matter what is going on. dois going to take a lot to

that, but i think you have to use him strategically. we are in a very polarized era of politics. andork with president obama it is the same with president trump and you don't want to utilize a president who is unpopular or will hurt you in a district. it is an individual campaign choice and one of the things i admire about president trump is he got that. he literally said to us, i will go where you want me to. if there is some place you don't want me to go, tell me and i won't go there. he understands that. julie: but does he listens to that -- but does he listen to that? it seems like he goes where he wants to go and does what he wants to do. he has certainly not always gone along with party choices. kevin: i can only speak from my experience and it was. on the endorsement and primaries, there has been -- on your side but i was working with the trump campaign politically

from the senatorial side. they were very open to our direction requests, whatever it might be. julie: how do you think the issue of impeachment plays? there seems to be this strategy on the part of some of the republican party to push democrats toward advocating for impeachment because they think it is a losing strategy. do you think it is or du think it energizes the liberal base -- do you think it is or do you think it energizes the liberal base? kevin: i think it is a mixed bag and i think it makes this real and tangible for the republicans on the campaign trail. it is not them being partisan or saying there is a bogeyman. them are electing socialists in their primaries. -- they areeal going to impeach president trump if they win the house, fact. there is no arguing that.

bygets down to district district and how that makeup is, is that a compelling message? -- it might make it better for republicans that it is not just them saying it. they can say look at what these other people are saying. julie: the verdicts yesterday may give them more ammunition. david: kevin mclaughlin, thank you so much for being with us. later on today, michael cohen kick a lawyer lanny davis will be joining us at the 10:00 hour. coming up here, snapping back, how the social media company behind snapchat is hoping to regain success. ♪

david: snap, the company behind snapchat is trying to rebound as the company's ceo is looking to improve. i spoke with sarah frier of bloomberg technology about her interview with the ceo and how

he runs the company. sara: when i asked him about the complaints that people make about his management style, his secrecy, his unwillingness to hear the word no, he did not quite say that he agreed with those things. he said this is a common meme you here and people are going to believe things about me that are unfavorable because i have not been sharing uim. a kind of feels like he has not been taken seriously because he has been really shy and we talked about his christian upbringing where he was taught to be in the background and not take a spotlight. understand, is that really the reason that snap is struggling right now? he still -- himself as one of those people that does not have a lot of experience running this

big of a company and that they are making it up as they go along. david: what is the success of evan spiegel? what would be success for him? sarah: his top goal for 2018 is to improve employee performance and that comes ahead of increasing the daily users, increasing the amount of time people spend on the app and his number five goal is to create a sustainable business so what we are talking about in this story, the motivation on his part to become a better manager, that is what he feels like is up a heart of snap's future success. if he can figure out how to come out of his shell and take on this company from a perspective of more maturity, then maybe snap can win or at least survive. david: when we think of brilliant inventors with new ideas, we think about elon musk. as you take a look at evan spiegel, are there parallels?

this is somebody who's company has grown up very fast and very quickly. is he overwhelmed? me he -- sarah: evan told feels like every year he has to become a different person, that this is something he has never done before. he never wanted to have a job where he is speaking to large groups of people all the time and has to be accountable for that. -- hes something that loves the fact that somebody people are using snap but he hates the idea that snap is just getting compared to facebook and that it keeps getting pulled short of what it should be, so i think there is some frustration there and there are some parallels to musk. here they are inventing these news -- these new way of -- new ways of indicating that people are loving, but they are not resonating for some reason. why don't people understand the potential here? david: that was sarah frier of bloomberg technology.

she had an exclusive interview with evan spiegel which by the way is a rare thing because he does not talk to the press. julie: she sat down on what they call the council meetings. a candle in the middle of the desk. julie: it is meant to be a safe place for sharing of ideas. david: the great irony of the piece was that they really pride themselves on intimate close communication. julie: and that is what snap is supposed to be. david: and the biggest problem they has -- they have as a company is ever but he says they don't know what is going on. julie: the other biggest problem they have is facebook because the problem is the model can be copied. david: every time somebody snapchat does something, they spoke copies it right away -- facebook copies it right away. to everybodyating in the company as the stock price has tumbled. david: they should have an

advantage because they don't have some of the fake news problems and privacy problems that other users do. julie: you can find sarah's story on evan spiegel and the council meeting she sat in on in this week's issue of bloomberg businessweek. coming up, the shift from buying to renting. how real estate investors are adjusting their strategies as more people look to rent. we take a look at the housing market as well with tom schapiro. we have housing data coming out to add to the mix.

julie: this is bloomberg daybreak. let's take a look at what is going on in the markets. we saw that tumble in s&p futures although relatively --

after we got that manafort and cohen verdict. have some movers to keep an eye on. retail earnings still coming out. same-store sales of about 5.2% but the company did cut its four-year forecast. target at the highs of the premarket session after it reported a 6.5% bump in comparable sales, it's best performance in 13 years. $70 a share is the price. the hartford down 4%. heading highero on headlines we could be making progress toward a nafta between mexico and the u.s. some buying in the treasury market.

you see that reflected in gold prices as well, up two thirds. crude higher off of the inventories report that comes out two hours from now. david: it is time for an update for things outside the business world. taylor riggs is here with the "first word news." taylor: president trump is shrugging off the conviction of his former campaign chair and white house lawyer woody giuliani says a guilty plea by the president take a personal attorney has nothing to do with him. it was a blast of bad news for president trump. michael cohen indicated president trump in a crime while pleading guilty to illegal campaign finance charges having paid money -- hush money to a porno actress and a former playboy model. jury convicted paul manafort of eight charges of bank fraud and tax evasion. the u.s. and mexico maybe moving closer to how to -- to forging a new north american free trade

agreement. key hurdles still remain. political has reported that there could be a handshake deal with mexico as soon as tomorrow. u.s. national security advisor john bolton says the trump administration has not decided when to release its long-awaited middle east peace plan. bolton wrapped up a three-day visit to israel where he met with benjamin yahoo! -- benjamin netanyahu. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. david: later this morning, we will get an update on the housing market with existing -- existing home sales expected to snap a streak of declines. property costs are weighing on potential buyers who are

increasingly opting to rent. , founder, tom shapiro president and cio of gtis partners. welcome back. let's talk about housing. you are interested in the rental part of that. there is a real increase in rentals. salewe are doing both for and for rent but i want to emphasize the rental part of it and there is a real demographic of shift right now. we have gotten 59% homeownership .5% --down from 63 63.5%. millennials are getting older, in their mid-30's and they are now giving up the lifestyle of living in the urban nodes and moving outside because they are starting to have families. they are making a lifestyle decision that they want to be in a house because they want to raise a family in the house -- and a house. -- in a house.

they are making that decision and now they are making the financial decision. million --e from $11 11 million rented homes in this country to 16 million rented homes in this country. it is something we have to watch carefully about what that means for us. we believe it is a whole new asset class. julie: what are the other limiting factors -- one of the limiting factors for homeownership has been rising rates. how does that affect you if you are looking at an increase in rates? doesn't that increase your cost? tom: let's start with the consumer. the consumer right now, it is cheaper to be a renter than a owner. that is different than five years ago. materialsy labor and are being issued right now for construction costs. andle are making decisions i think from an ownership perspective, one thing that is translating and helping our for

sale business is availability. it is not matter what the rates are if you cannot get a mortgage and that was the bigger issue before, that we had so many people that had incomes that they had hits on their credit and could not get a mortgage and now people can. certainly, construction costs are an issue and driving up homeownership and rental cost. david: you mentioned demographics is one of the things that is driving the rental increase. what about geography? people are more transient today. people who are born in dallas to not necessarily stay in dallas and moved to atlanta. david: is it across the country? tom: chicago versus dallas. chicago is at negative growth in and jobs are up maybe 11% in the last six or seven years. if you look at dallas, the population is up 15% and jobs are up 20%.

salt issues will accelerate some of that. new york feels a little oversupplied right now, particularly in the luxury market and we are seeing articles about that. julie: what flexibility do you have on rent? you talked about some of those higher cost. how much are you able to pass that on? tom: rental growth has been 5% or 6% now. you have to watch where people are, 30% of total income going to their housing costs. that is what you have to watch. the we are buying, it is one of the factors we are waiting, whether we are buying a multifamily project or buying homes for rent, we look at how much room there is to grow. if have to look at the point when people just cap out and outot afford it -- tap

and cannot afford it. one of the big trends we are seeing when you look at this market in general, we started off just buying homes out of foreclosure. homes that were literally auctioned off at the courthouse steps. that was in 2012 when we started buying. what has really changed is those homes have gotten more expensive and you are competing with the consumer. we have gone from going to a homebuilder and saying you have to trim a subdivision down, we are going to buy your last 40 or 50 houses, pay you $.89 on the dollar, give you the specs that we need. now we are evolving that to going to these higher communities that are all rental housing. the millennials are getting into their mid-30's and are opting not to buy and are looking to rent. that is the trend we are starting to see. david: something important in

the bloomberg about cerberus buying rental properties. who are the big players besides you in this race and what is your comparative advantage? tom: blackstone have their invitation homes which are now public. that is one of the bigger ones. colony has been out there for a while. groups.e half a dozen we have kept private and that gives us more puts ability, so we don't have to manage quarterly earnings. we stayed a look at smaller and more nimble and that has been an advantage for us. julie: how easy is it for you to raise money right now? where are we in that phase? we talked about that and market. our people throwing money at you right now? tom: one of the things you have to realize, i remember going to stanford university and we had a

whole group of lps and gps looking to get into the business. this was curious if going to be a business where people were going to be for the long-term or at was going to be a trade. i think now it has evolved and people realize it is a long-term business. you are seeing more investors in both the private and public sectors. david: one more question from a viewer. when you talk about millennials and their increasing renting or buying, is the burden of student debt a factor in that? is that weighing on their ability to buy houses? tom: absolutely. in our for-sale product, you have to sell a house two or three times. student debt, total debt is a big issue for them. student debt, total debt is a big issue for them. david: it was really great to have you. tom shapiro of gtis partners. coming up, the epa's plans to relax greenhouse gas limits may add threat -- thousands of

premature deaths by 2030. we discussed that and the future of clean energy next with john breckenridge, capital dynamics head of clean energy. ♪

taylor: this is bloomberg daybreak. coming up on bloomberg markets, wendy davis, attorney for michael -- lanny davis, attorney

for michael cohen. now let's get your bloomberg business flash. that $45 billion deal between industrial gas giant -- may be in jeopardy. linda says getting the merger pass through regulators will mean investing more assets than the two companies had planned. they have already identified about $9 billion of disposals in europe and north america. chinese smartphone maker xiaomi delivered 68 point -- 68% sales growth. xiaomi reported making big strides overseas while fending off challenges from local rivals from china. the company depends on smart phone sales from a suite of online services. shares of the world take a second largest auto part maker fell the most since 2009. germany dicky continental shocked investors with second-quarter profits warning this year.

the company blames disappointing sales in china and europe. that is your bloomberg business flash. david: the troubled administration yesterday unveiled a plan to weaken greenhouse gas limits on coal fired power plants by shifting regulation to the states, a decision that the epa itself says could cause more than 1600 additional premature death annually -- deaths annually. joining us now from washington -- give us a synopsis. i know it is complicated. how much would this change? >> to be clear, the obama administration proposed cutting co2 emissions in the power sector 32% by 2030 at regulation never even went into effect. this was blocked by the court. this is a new regulation that is not put as nearly as stringent a requirementrequirement and essed

the state that they can figure out how they would like to regulate their coal-fired power plants. david: regulations go to the question of efficiency. is that consistent with the statute under which these regulations -- doesn't that have to do with the cleanness of the air? there was any important supreme court decision 10 years ago that said the epa needs to look at co2 as a pollutant. it did not say much more than that. the obama plan had taken a much wider view of thinking about how you reduce co2 emissions well the trump plan looks at coal plants in certain states and how those can reduce their individual in missions by becoming more efficient -- individual emissions by becoming more efficient. julie: what will be the effect of these rule changes? ethan: not a lot in our view. we did not think this would have a major market impact because the u.s. market sector is the carbon isaac anyway. it is moving -- de-carbonizing

anyway. natural gas is simply very cheap and not likely to go up in price and that is going to continue to undercut cold, plus renewables are cheap. when you combine those factors, the general direction of travel will not change much either way. it sends a different kind of mesh and -- a message. the power sector will follow its own dynamic. julie: ethan zindler of bloomberg -- zindler of bloomberg nef. joining us now is john breckenridge, he is capital dynamics' head of clean energy. it is an opportune time to talk about these changes. what is the environment for renewables right now? you have administration that on the face is not as amenable to the industry and has made things

tougher. john: i completely agree with that. the drive that has been changing from coal to a new levels and natural gas has been driven by economics. fundamentally, it has been shale gas that has made gas cheap over the last 10 years you have seen dramatic decrease in the cost of renewable. with that has come growth of renewables and if you look at a coal plant, it is difficult to reduce cost while renewables are still on a steep cost decline. david: we still pay much more for solar than around the world. we pay around twice as much. why is that? john: a lot of different factors that are changing dramatically. if you look at the lower costs over the last five or six years, they have come down by about 70%. some of the cost you see with solar was early projects but current projects are starting to

compete without subsidies, with conventional power. weie: it used to be when were further back in the solar industry, there were public companies that own a lot of these farms and now you have private funds like yours that are doing this investment. why did that transition happen and what are the advantages you may have over a publicly traded company? john: that is a great question because we just privatized one of those public companies. to an half years ago, we look at this market and saw that the buyers of the time which were these public companies were starting to struggle and we said who are the natural owners of these assets and the owners were long-term yield-based investors. withre able to connect some of the most savvy investors in the sector and we created our first fund a year-and-a-half ago , which included total capital of about $6 billion in the sector. those investors every invested with us so the answer is the

natural owners of these assets are long-term investors like pension funds, life insurance companies. david: long-term investors. flow?es the money how does it flow back to you if you are an investor? john: it doesn't start flowing right away. at the beginning of some of these projects, you have a significant amount of debt and you have tax equity but there is yield from the beginning and there is stable yield through the life of these projects which in many cases is 30 years or more. julie: where are we in penetration in the united states in terms of solar? cap on you think the that is? it has taken a long time to ramp up to where we are now. john: people don't understand the size of the power sector. despite all the solar that has

been installed, we are still in single digit's in terms of percentage provided by solar. if you look at the forward projections, the fast majority of new generation of the next 10 years is going to be solar and wind. it is going to be driven primarily by the fact that as those costs come down, there will be broader penetration. david: thank you for being with us, john breckenridge of capital dynamics. the president is tweeting out about his former lawyer michael cohen. if anyone is looking for a good lawyer, i would strongly suggest you don't retain the services of michael cohen, the man whom he retained for quite some time. julie: that was pretty mild. david: we are going to be talking with lanny davis, mr. cohen's lawyer at 10:00 on bloomberg television. julie: breaking news from the ustr on nafta.

a representative spokesperson said major nafta issues remain outstanding and there is no deal yet on nafta. we do see a bit of a reaction here in the canadian dollar. not a huge reaction in the dollar or the mexican peso. david: there was late news yesterday that they had a deal and now there is word this morning we are about to have a deal and now the u.s. trade reserve -- u.s. trade representative says we do not have a deal. julie: coming up, the u.s. equity market and the record run we have seen. can that momentum be seen? -- be sustained? ♪

julie: here is what i am watching today. can the bull run sustain its momentum? we have this anniversary or whatever you want to call it. the longest ball run. can it keep going?

that intraday high but we did not close the deal yet. we came back down from that and we need to close above that to confirm this market and i think there is concern we could be running it a little bit out. given the highs we have seen, -- that back in january gives you an idea and you look at the chart we have, a lot of --ple say the julie: remind us what the skew index is. >> this measures interpretation of the risk to this market. basically a lot of the risk we as wellnterpret the -- as the dollar which has slid over the last couple of days. david: earnings way up and forecast earnings are pretty strong as well. unless those earnings turnaround, why with the market?

>> the market is not concerned that growth is going to continue higher than what it is. you have to ask do we stay at 20%? 10%, that is5% or still pretty good but i think the expectations are so high right now. julie: a lot of people talk about the fed as well. could we see the fed slowing down a little bit? >> the fed matters a lot. the market is pricing in two more hikes. if we get that and they pause, that could be a good marker for how the market is going to interpret it. how much further does powell want to take these hikes into 2019? david: he is the chairman but we have two that presidents in the last two days. presidents in the last two days. >> without getting technical, we are talking about this neutral rate.

what do you do next with the neutral rate? powell says we keep going and other fed presidents may think to leave it. that is going to be crazy because that is going to change the political calculus as to what type of policies get moved forward. november, we will have a better picture of where the economy is going to go and where the market is going to go. david: we can only hope. thanks so much, remain b -- romaine bostick. coming up, the biggest ball on the street. tony dwyer joins us on why this run is not ending anytime soon. ♪

jonathan: from new york city, 30 minutes until the start of trade. this is countdown to the open. ♪

jonathan: a bad day for a few the president's men, casting the smallest of shadows near market new all-time high. it is called the most hated bull market ever. looking ahead to the release of federal reserve minutes. the warm-up before jackson home. 30 minutes away from the opening bell. futures -5%. in the fx market a stronger euro. 2.82.ries stable at president trump former lawyer michael: pleading guilty of campaign-finance challenges and his former campaign chairman paul manafort convicted on eight counts of tax and bank fraud. the news leading investors unfazed as stocks covered your record highs. >> this may be bad but let's not overstate the news. >>