technology and intellectual property. the president praised the lawmakers saying that each one was instrumental in passing the foreign investment risk review modernization act. >> you have all been reading the intellectual property and all sorts of different things of that nature are being stolen from us by other countries. it will be very hard to do that. >> one senator highlighted threats from china as quote the foremost economic challenge to our country of any other country in the world. ae president agreed saying focus was on russia's saying not enough focus is on china. as a category four hurricane roars toward hawaii, fema says it is learning the lesson of last year's devastation in puerto rico and is promising a better response. him officials said today that agencyne maria letter --

better prepare for hurricane lane. it is a hurricane -- category four hurricane. the senate banking committee has approved kathy graham injured to run the consumer protection bureau. the boat was 13 to 12 along party lines. the approval comes despite protests from senate democrats who said president trump's nominee is unqualified to lead the consumer watchdog. she currently works in the white house budget office. a three-game suspension without pay. that is what ohio state university concluded the penalty should be forehead football coach urban meyer. after an investigation into the coaches handling of domestic violence allegations. it is said -- courtney smith alleged her husband was violent toward her

in 2015. he has never been criminally charged. , theg a news conference coach said he followed his heart and not his head. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 analysts and journalists in more than 120 countries. i'm mark crumpton. this is bloomberg. love from bloomberg world i'm joeters, weisenthal, i'm scarlet fu, i'm caroline hyde. the s&p 500 -- 9/11 sectors are in the red. what'd you miss?

president trump says the market will crash if he were to be impeached. crypto enthusiasts will have to wait even longer for bitcoin etf's. overec gives a red light concerns of market manipulation. >> trump tells wall street you'll miss me when i am gone. that the market would crash if he were impeached. democrats -- what an impeachment really way or would it be shut off? your piece says we are not back in the 70's. >> in the 70's, we had a number

of horrible macroeconomic events. we had the unwinding of the bretton woods agreement of fixed exchange rates hit its stride in 1974. the s&p was down 26% and 74. a very different backed up what we had today. >> on the question of impeachment specifically, setting aside whether it is going to happen or whether it is a good idea or bad idea, if suddenly democrats take the , what doesovember history tell us that would mean for the markets? >> markets care about policies are not people so much. if you have a long-running discussion in the u.s. political system about impeachment, if the american public's trust away in one way or the other and it really strangles tumor conference, then it could have an effect. in order to draw the line

between impeachment and capital markets you have to connect it was something -- it could be confidence. haveu could argue that we already gotten the benefits of the trump administration in the forms of lower taxes and deregulation. what i worry about more is what happens in 2019 in terms of the impeachment narrative in the markets. we have a very low rates. 2019 revenue growth 5% or less. then things don't look quite so robust as they do this year. about 2020king elections as well. i don't think it is an issue right now but it is an issue in 2019 area >> sentiment could be , we will not see the 26% crash that we saw back then? ofif we did get the roiling

the markets, treasury yields will have to come down. the safety net will be there. the americanto how people feel because you have been poring through different polls to see how much support there would be for an impeachment of president whether it is democrats or republicans or independence. what was the conclusion? >> there is a great hole. it asked the question if the democrats took over the house would you favor beginning the impeachment process? poll, 55% oft respondents said no. it obviously breaks down over party lines. most democrats say they would favorite. they wouldcrats say not. it is very split right now. even with all of the information that people have. >> the majority says no. do --t did the markets

[laughter] of are in the middle tremendous bull market in the 90's. >> the big picture between the 70's and the 90's is in both of those. it is the macro environment is really key. if the impeachment doesn't derail that, it is hard to see why would matter. was if thecard mueller investigation comes across with a bombshell. something that is clearly not currently known by the public, then you have to rethink the entire process. tumultuous parade of time that could affect consumer confidence. we don't see evidence of that yet. >> it is interesting where you see evidence of the volatility is emerging markets. president trump looks for another distraction either it is china or south africa. >> you have to later on top of

that the moves for the fed to keep raising interest rates which is very tough and emerging markets and vulnerable currencies like the rand and the brazilian currency or the peso. >> does the fed take that into consideration when a raises rates? it should. out, as thepoints president gets cornered he tends to look for other ways out. >> if you look at the market overall this year s&p up 7%. the money flows are very clear. that gives the fed more room to raise rates. >> overall, impeachment politics aside, we are sitting here very close to all-time highs. other indices at all-time highs. is there anything you see as warning to make u.s. focus investors nervous? >> it seems simple to say.

for the moment, no. the economy continues to be strong. unemployment is still strong. the fed sees everything as green to raise rates. you have the benefit of money flowing back to the u.s.. >> if impeachment is the day and everyone is getting worked up about it, what happened to trade? we fit -- we moved from one headline to the next. are people trying to quantify with the trade discussions and trade uncertainty me because as we say we don't know how it's going to shake out and there is plenty of room for both sides to negotiate, tariffs have gone into effect. naftahad a hope for agreement to come today and clearly it is not. it seems like trading is going to be that much more of a persistent issue. clients think there will be

resolution on the trade five going into the midterm elections. be churning until november but something will happen to get resolution. >> think you so much. coming up, head-to-head tariffs. fresh nothing to stop tariffs from both countries. this is bloomberg. ♪

what'd you miss. president trump says not enough focus has been placed on china as he imposes fresh tariffs on chinese imports. doubling down on a roundtable

earlier today on his legislation to modernize the committee on foreign investment and strengthen rules to protect u.s.. economicsg in our editor. a lot of back-and-forth and rhetoric. this is president trump. investors seemed to think that for all the back-and-forth, things will get resolved. >> i don't why people think that. it is as if we are sleepwalking into a trade war here. these talks going on in washington, we have the vice commerce minister of china. wouldn't call them low-level that they are not the highest level either. they seem to be going through the motions. ok, we are meeting everybody. they're not. china is reiterating that it's idea is that they hope that by offering to buy more american

products that the u.s. will back off. the u.s. is saying no we want you to undo your made in china 2025 graham which is at the core of china's vision for its own future. they are completely diametric opposites with no signs of getting closer. the $16 billion tariffs went into effect today. each country imposed on the other. china went to the u.s. -- wto to complain about u.s. tariffs. as soon ashappen next month. that trade is not dependent as an economy. could it just be that what we are seeing in the market, the u.s. is being a reflection of that we could win a trade war. >> nobody wins a trade war. i take your point that the u.s. but just because

you get only a bloody nose and area bloody -- broken doesn't mean you want. the imposition of these tariffs, there has been evidence this week, is it just falling on deaf ears at this moment? >> we showed donald trump at the meeting to discuss the enabling act which is the rules that protect americans from a foreign investment that can be harmful to the u.s.. it is a very valuable program nonpolitical, where harm could be done. if it starts to become political. that is just another way in which trade has become basically a football for the long-running contest between the u.s. and

china. >> a political football game that does not seem to end. you wrote about game theory and how it can be applied. what did you learn from those conversations? >> we talked about it a little bit but you cannot really win. the way you win, is if you move first and the other country sees that you have the other -- upper hand and asked down. then you have got your victory. ask we have gotten past that point. >> the first move didn't do it but the second move will do it. then the third move will do it. in the meantime, a lot of harm is being done. are ana, xi jinping they proud nation. it doesn't seem like it is constitutionally capable of succumbing and saying we lost we give up. subject, i'mparate sure you are excited about jackson hole and the speeches.

what are you looking for? >> as always, what everyone wants to know is what is going to happen to interest-rate policy? even though that is not ,hat the speeches focused on does this say anything about a fourth rate hike? who knows. >> we will be delving into it more. it is always great to have you. time for the bloomberg business flash. musk has taken another step towards taking tesla private. we have learned that he has hired morgan stanley to assist him in a potential bid. he shot the financial world earlier this month when he tweeted that he wanted to take the country -- company private. another sign of the u.s. housing market may be cooling off. it dipped to the weakest place in nine months.

rates prices and mortgage are keeping potential buyers on the sidelines. bloomberg has learned the guggenheim partners talks to state -- discussions involve the mandate focusing on thursday -- that is the bloomberg business flash. shares of advanced micro devices are searching. after getting a street high price target. this is way outperforming the price targets. a five day 50%on run. if you go back to july whenever ordered earnings, it is up 38%. of gamingng a wave and cryptocurrency mining. it is outperforming the rest of the chip sector but it has

gotten a lot of attention by analysts. pricelatt raised the target to a street high of $30 per share. the average price target has gone up 20% in the past four weeks alone. that occupiespany a similar place, nvidia, fell after earnings and is basically back up new all-time highs. these fundamental drivers that you identify, graphics, gaming, crypto, that is kind of not going away. >> it is a little bit volatile but going back to amd they are doing a good job of smoothing it out. credit goes to their ceo. they brought her in in 2014. she was part of that wave of female executives who came in that year.

she has done a good job. amd was a mess and 2014. >> i thought of them is the company that always loses to intel. >> this was a four dollar stock. they were bleeding cash and had a lot of debt. she made amd into a formidable competitor to intel. >> to the point where they were saying her to a potential ceo of intel. first femalee executive of any kind of chipmaker. she has proven her worth area stocks are up over 600% since she took over. performingbest stocks in the s&p 500 year today. amd best performer of 2018 and the s&p. coming up, u.s. and international stocks keeping pace throughout 2017. what happened in 2018? we have the charts that you

can't miss. this is bloomberg. ♪

let's look at the ishares. we are talking about china today in the relationship of the u.s.. ripping up in terms of tariffs. who cares because u.s. investors are going on. we have never seen so much money pour into this etf. half $1 billion in the first five days in this particular chinese set of stocks. it is all about betting the chinese stocks will start to wrap up. earnings will improve area why, when you have tariffs imposed by the u.s.? trump's talk about

because we have a segment risker about impeachment to the market. midterms will weigh heavily on people's minds. how do people feel about trump these days? at her and better as it turns out. the line behind me is trumps net approval rating. he had been around over 20 points underwater back in december, but it is steadily climbing. since the summer it has flatlined. it has not improved lately. more. not tumbled the various revelations and mueller stuff and the helsinki conference hasn't done anything. it looks like he has stabilized. you can imagine that will be a big factor going into the midterms. >> the people who supported him continued to support him. the people who don't continue as well. he said the stock market would crash if he were to be impeached.

the u.s. stock market is on a terror since he was elected. the s&p made a new record this week. what you wantis to focus on. u.s. stocks. the white line is global stocks. global synchronous growth story persistent throughout 2017, it kicked in to high gear at the end of last year. there is the ramp-up. it stayed intact through the beginning of this year and in the correction in february changed everything. international has not been able to recover. the u.s. dollar is hurting emerging markets area. people taking their money out of em and putting it into u.s. stocks. to the chart for a moment. the outperformance of u.s. stocks is visible from long before president trump was elected. u.s. stocks are up 72% over the

past five years. total return which includes dividends makes it an 89% jump. global and u.s. up 10%. a big big get there. when it comes to president trump saying the market would crash, i think it goes beyond that. >> think about the people who international endeavors in their portfolio thinking they are being responsible. 10% return on international money. >> in europe, the pain they have felt. the s&p 500 making a record high this week. let's take a look at how markets are shaping up as we head toward the close. no record today. the s&p down five points at 2856. the nasdaq doing the best of the three up only by 11 points. this is bloomberg. ♪ xfinity mobile is a new wireless network

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by the gig or unlimited. saving you hundreds of dollars a year. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. [applause] scarlet: "what'd you miss?"

stocks edging lower enclosing near session lows. 10 of the 11 sectors are in the red and the tech shares are the only gains made. >> i am caroline hyde. scarlet: i'm scarlet fu. joe: and i'm joe weisenthal. welcome to the closing bell coverage every weekday from 4 p.m. to 5 p.m. eastern. let's begin with market minutes. another day of losses for the s&p 500 albeit in light trading because it is the middle of august, late august. the dow lost 70 six points, s&p 500 by almost five points, and the nasdaq is the best performer down 1/10 of 1%. technology shares were the only group to finishing green. joe, to what extent do you think this is weak economic data or not a lot of participation? bothit's maybe a little of and maybe a little nobody cares.

scarlet: everybody cares about the jay powell speak -- speech. .re-jay powell alibaba bring in more revenue from other areas. investors responded positively initially. 3%,stock is closing down perhaps broader trade concerns are a factor. , victoria's secret owner, declining more than 13%. they cut their profit forecast and said the head of the peak -- pink brand will retire. rosenblatt raised their price sayingto $30 per share there is renewed conviction that there is multi-year double-digit growth. honeywell is closing at highest level this month. just shy of $150 a share.

the 2018 forecast because of accelerating orders and robust sales. joe: let's look at government bonds starting in the u.s.. -- u.s. the two-year yield is up to 2.61, where the 10 year yield is unchanged. want to focus on the flattening yield curve. it's reasonable to expect more action tomorrow after we hear from powell. brazilian yields ended down on the day. a lot is going on there with poles and the election and anxiety across brazilian assets ahead of the election. caroline: i the similar number. the dollar was affected by the short-term yields and it is up. this is the first time after six days we saw we finally got a drive forward for the dollar. the biggest increase in almost two weeks. they were expecting the yield, but we ought -- we also got data out there in anticipation of jay

powell. on the flipside, you will see emerging-market weakness. the u.k. said and the deal brexit could we can prices. the aussie dollar is really weakening. turmoile prime minister continuing bets leadership challenge and putting pressure on the d10 -- g10 currencies. the emerging markets got hammered. why? check out this tweet. it seems donald trump is saying he is asked mike pompeo to closely study the large-scale killing of farmers. they are seizing land from the white farmers and all of this is tolly turning attention whether south africa could be the next country in terms of sanctions. joe: currency traders need to

watch fox news at night as well to anticipate the next trump tweet. let's take a look at commodities. lots of red. oil is flat, and lots of the precious metals and cause a precious industrial metals are down. gold is off about a percent. ander is down nearly 2%, platinum is down a little over 2%. those are today's market minutes. caroline: for more on today's market action, let's bring in david, the global market strategist at jpmorgan. we're putting -- we have been talking about whether impeachment would affect the markets going forward. the market's down, but it is basically shrugging it off. the market is getting better at separating the signal from the noise. they are measuring twice and cutting once. yesterday's developments don't necessarily shine favorably on

the administration, i think the market is waiting until they understand a little more, if any connection between what happened and potential for impeachment before it moves decisively in one direction or another. joe: scarlet was showing charts and the dominant theme of the last several year is the extraordinary outperformance of u.s. equities versus the rest of the world. chartier showing the jaws formation forming. what's, if anything, closes that cap? --id: that is a great chart what if anything closes that gap? david: that is a great chart. we have that. in order toching see that gap close, the potential for to close in its entirety for the end of -- before the end of the cycle is perhaps an aggressive forecast, but if we can see the wind come out of the sales of the u.s. dollar, that will alleviate pressure not only on emerging markets, but the rest of the

developed world. in 2017, international outperformed the u.s. quite handily. joe: what takes the wind out of the sails of the dollar? david: it is somewhat about the fed. we also need to see a revival in global growth. the pmi numbers showed signs of stabilization, but everyone has been expecting a bit of a pickup , particularly out of europe. if that happens, that could be a good first step. in addition, understanding what the fed is thinking next year and holding that against what the ecb and bank of england is doing, you can't think about central banks in isolation necessarily. it's a much more relative place. if we see the fed hinting at a pause next year at the same time the ecb is talking about hiking rates, in the bank of england hikes, i think that could further take wind out of the dollar sales and allow the global economy to resynchronize.

it's not that growth is bad, it is just very disoriented with the u.s. leading the charge. joe: when you look -- scarlet: when you look at currencies really getting hammered, i put this up on the bloomberg and this is emerging-market currencies versus the dollar. no gainers today. if you go back to the start of the quarter, it is pretty dismal as well. are these lagging indicators or leading indicators? david: while currency tends to be the ultimate leading indicator of the global economy, what you are seeing from e.m. is a lot of angst. there's angst about turkey, angst about the trade tensions and how those are going forward and the angst about the economic growth that has been tepid relative to what we saw in 2017. what we're seeing in currencies is a continuation of the status quo. they are not suggesting there is room for improvement, but to the

conversation earlier, if the u.s. stay strong, and japan continues to push forward at a moderate pace, that represents a revival in the global consumer for the most part. that could provide a nice lift to em and bring this negative feedback loop out that the markets seem to be stuck in. caroline: looking at europe, they keep getting hit after hit in terms of the banks with turkey, and italy continuing. what gets europe back online? david: part of it is about the ecb and perhaps they are sending a signal things in europe from growth standpoint may be better than they appear. if you separate europe into the two pieces, and you factoring has been disappointing. on the other hand, the labor market continues to tighten, unemployment is falling, confident is -- confidence is high, so this could be a consumer led rebound in the eurozone. that is more of a late third quarter, early fourth quarter story, but the consumer and

consumption should lift europe out of its current place. joe: why are people worried about trade? there are new tariffs going into place and a bunch more potentially. no real promise and bloomberg reported today there is no real new idea or anything like that to break the impasse. david: i think the tariffs that went two place today, that had been well telegraphed. people knew it was coming. joe: i remember the 24 hours before other ones went in, they expected a last-minute save. david: i think it will continue to be an event going forward. was 16cally because this million of the original 50 billion we had already done 34. i think 200 billion is more significant. when trade tensions really felt like they were escalating and you saw markets price in that worst-case scenario where

economic growth would slow and inflation would pick up, i think that would cause a bit of market volatility. back to what i was saying earlier, the market wants to measure twice and cut once. it is not seen interested in prematurely laying out its own views on trade policy. i think it will take more concrete cues from the administration. scarlet: what your clients worry about the most? david: we have been having lots of conversation around trade and politics which are challenging since those tend to be more and more nebulous and fluctuating concepts. the biggest portfolio question we have been getting as of late is, what do i do if the stocks and bonds selloff at the same time? how do i think about correlation risk? while we think certain parts of the alternative universe perhaps has gained too much capital flow their way and they don't have anything to do with that skeptical, --hat that capital, and in a lot of

cases they enhance the stream of income your portfolio is picking up, the big question is what is the fed going to do? comedy hikes in the next all months and is it a pause or do they keep going? given that outlook, is there still room for capital appreciation or are we getting to a point where we rotate toward other assets. scarlet: david lebovitz at janus henderson asset management -- at jpmorgan asset management. we of earnings crossing now an hp is reporting results. their fiscal third-quarter just ending coming in with profits and revenues better than what analysts had anticipated. for this quarter, it sees adjusted eps of 52 to $.55. analysts were looking at $.53. the stock is down 9/10 of 1%. perhaps there was expectation that it would raise something higher than the consensus, but it does not seem to be

happening. caroline: earnings and leadership changes in after hours trading as well. a california-based company said the ceo stepped out. 2016s been the ceo since the new ceo -- the leadership plans in particular, the adjusted -- thes estimate earnings was way higher than the estimate. in well aheadmes bigger than the $950 million expected. yorkis a big mess from new -- this is a big mess -- miss.

this is bloomberg. ♪

mark: i am mark crumpton with first word news. jeff sessions is firing back after president trump said in a tv interview that he "never took control of the justice department." sessions released a statement saying he "took control of the department of justice the day i was sworn in which is why we have had unprecedented success at effectuating the president's agenda." will not be " improperly influenced by political considerations." the president has railed the attorneye general recused himself from the russian investigation. cohen's -- michael

father told him not to protect president trump. the journal also reports federal prosecutors granted immunity to david packer in the -- pecker. he is the publisher of the national enquirer they say he offered to help deal with -- inquirer. betsy devos reportedly is considering allowing states to use federal grant money to buy guns for schools that would reverse a long-standing position by the federal government and would clash with efforts in congress to restrict the use of federal -- on guns. was allocatedyear --high school units but for

but expressly prohibited the use of the money for firearms. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: "what'd you miss?" bitcoin etf's getting a red light from the fcc -- sec. they rejected another attempt to list their shares. >> we were applying for one using futures not the physical bitcoin. this is a clear delineation between the two. bitcoin fuchsias -- futures are no different than any other futures etf that either we provide or others provide. it is a regulated futures contract and for us, it feels exactly the same. we are disappointed that the application was rejected in its current form. scarlet: rejected in its current form. rachel evans is joining us now

and rejected in its current form means they can rework something or make tweaks and resubmit it again? >> i have a feeling that is what they will be talking about now. earlier today, they were explaining they want to add -- want to digest this and have another crack at it. the question is, will they be able to do anything different that delays the sec fears. joe: the concern for the sec is not even the structure of the etf, it is fundamental that coin market itself -- fundamentally, the bitcoin market itself. prone tot is manipulation or not, and that is not something in the ability of them to control. rachel: this should not be a surprise. the sec has been incredibly consistent on what they need to see answered before they will be comfortable with an etf. one of the five key concerns was manipulation. -- denied anight

etf last month, the reason was manipulation. they talk a lot about whether the exchange has the ability to adequately survey the market and has enough agreement to survey will market. they concluded there is not suspicions -- sufficient market in bitcoin futures to allow for that. caroline: bitcoin is trading up 1.5% and they expected to be rejected. rise on the cdf because it is exciting institutional investors. rachel: not only are we talking about whether bitcoin needs more regulated, which is hugely ironic, but we are talking about an etf for interstitial -- institutional investors. i want to go back to whether an etf could be approved.

the next deadline is the end of september when we should get a preliminary word from the sec whether they need more time already to make a decision. they could push this to february i believe. ed: what is a surveillance agreement -- joe: what is a surveillance agreement? rachel: when you have the exchange rate of products lifted and has an agreement with the market which is underlying. this would be the sec to be see that -- to see that features are being traded. there was good research on bloomberg intelligence earlier this month that showed the volume of contracts is lower in the second quarter than the first quarter even though the number of contracts had gone up. that's market is small. then you get into if you can survey of the underlying of the underlying. you get to pretty tricky territory there. scarlet: that is why the sec is so cautious. rachel evans, thank you so much. don't forget to watch bloomberg etf iq on bloomberg every

wednesday at 1 p.m. new york time. rachel is often a featured guest. gap is coming out with comparable sales for the second quarter. cap global, which is the main brand if you will saw comparable sales drop 5%. that was a bigger loss and decline than expected. at banana republic and old navy, the numbers were meeting or beating estimates. old navy sales rose 5% and one percentage point higher than what analysts were looking for. banana republic was right in line. overall sales for the second quarter are up 2% versus a consensus estimate of 1.5%. the stock is plunging down by 6% in after-hours trade. caroline: coming up, working for a silicon valley tech firm is great if you are on staff. we are looking at the big tech contracted labor. this is bloomberg. ♪

caroline: "what'd you miss?" silicon valley, tech companies are known for the big salaries and generous perks for their employees. but, they have increasingly turned to contractors were not entitled to the pay or benefits as salary -- that salaried workers have. assign joins us from washington -- hassan joins us from washington. talk about the convoluted way they seem to unionize and in the long-term they lost. >> thanks for joining me. i would not say if they lost in the long-term. our reporting was based on freedom of information act request and it documents received that illuminated the back story of what happened. the company called line bridge, a group of workers there -- lion

bridge, a group of workers there formed the union and after that, the workers were bug testing microsoft apps. lionbridge informs them that they would be layoffs. microsoft said they had less need for this service and they would be moving into a different office location. the union filed a labor report complaint on the national relations board filing against microsoft based on an obama era law allowing some companies to be tagged as a joint employee of their contractor workers. essentially alleged it is illegal under federal law to fire them because of their union activity. they alleged there was not less of a need for their services and that is what the documents showed. the emails they submitted as evidence appeared that the were -- these were daily or weekly

emails with lionbridge communicating with microsoft management on how much work was in the queue and so on. they said the showed microsoft exerted enough control over the day-to-day activity of work and that was enough to show microsoft is a joint employer and if the labor board were to find that, microsoft should be held responsible for that. scarlet: here's a question. instance, these contractors were working for lionbridge, but all worked for microsoft. how prevalent is this across silicon valley? do you see this and other companies in the valley? hassan: it is quite common to subcontract or contract out. was thateported today there was 50 million temporary employees in the company right now. 2 million are in the i.t. sector which is roughly equal to the broad category of managerial and

broad category employees as well. this is a strategy that big businesses use to sort of reduce their costs. scarlet: it all fits into the bigger puzzle as to why it is not growing as well. you can reach that article in the latest edition of bloomberg businessweek available on newsstands now. we have breaking news when it comes to the irs. this is fascinating because it is something the state of new york, new jersey, connecticut, have been following. what the irs has done has blocked -- moving to block the state taxrt cap. they were offered away to pay into -- joe: i wonder if this is a lot of bloomberg readers. scarlet: we will have this story

in just a moment. this is bloomberg. ♪ is bloomberg. ♪

mark: i am mark crumpton with first word news. cautionsnistrators there is a lot of uncertainty with forecast regarding hurricane lane. the storm is expected to have a major impact on the hawaiian islands. the winds are now clocked at 130 miles per hour. >> i watched a lot of forecasts in my life and anytime you see a 90 degree turn to the west over the next 48 to 72 hours, there is a lot of uncertainty. what is for sure is that hawaii will be impacted by hurricane lane. the question is how bad. right now, the system is setting up to be a significant rain event. mark: officials say more than 30

inches of rain are possible in some areas which could mean flooding, dangerous surf of 20 feet, and a storm surge of up to four feet above normal levels. the european union is offering financial support to iran to increase their fighting economy. it is part of -- there lagging economy. this is part of the agreement after president trump withdrew from the accords in may. funds will be used for environmental problems and to battle drug abuse. the uk's warning that a no deal brings it would raise prices for european goods and make life , dominic for retirees technical notes on how the country should prepare for talks with the eu collapsing. one problem is that british retirees living in eu countries could lose access to their u.k.

bank accounts. is posting 10en years of her tax returns on line . releases came a day after the democrat calls for sweeping anticorruption laws in washington. it is also another possible signal that she may be laying the groundwork for run for president in 2020. a bill crafted by her would require the internal revenue service to release tax returns for congressional candidates from the previous two years, and during each year in office. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: let's get a recap of today's market action. stocks are closing down and they are near the session lows. the nasdaq is performing a little better with tech stocks

as the only group to gain. the dow is losing 77 points and s&p is losing five points. let's return to the breaking news we were telling you about. the irs is moving to block efforts by new york and new jersey to skirt the cap on state and local tax reductions. let's bring in laura davidson from d.c.. laura, explain what the states are proposing to the taxpayers to get around a federal government change in the tax law laura: remember back -- law. you canemember burbach only deduct and thousand dollars off of your tax bill -- remember back, you can only deduct $10,000 off of your tax bill. you could have a textile incredibly higher. what they said it's you can take your first $10,000 at the federal deduction, and for any to at over, you can pay it fund in the state and we will consider that a charitable contribution.

remember charitable donations are deductible on your tax return. so you can basically pay your taxes with the state and get a deduction from the federal government. sort of a win-win situation. the way they did that, they would give taxpayers a credit for incentives to make the payments. the irs said these are not real charitable the elections and we will give you a small fraction of that. basically only the portion we consider a charitable the duction if it is no good otherwise. caroline: are the states going to challenge this? >> states are already challenging the tax law change. jersey, telephone, and other states have banded together. this is likely to play out over several years. this is not the end of it. this is just the first proposal. you will see a couple more drafts on this. scarlet: on what basis with a challenge this? laura: there's a couple of ways

they could do this. the concern that blue states have is treasury is targeting states in democratic states and not democratic -- republican states. states of mississippi and alabama have had these tax credit programs that work similarly. if you make a charitable contribution you get the credit and federal deduction to fund religious education, education vouchers for private schools. democrats are saying look, you are threading this careful needle to keep your voters happy and you're looking at the northeast and saying -- finding a legal argument to invalidate those. if the states cannot get this through the courts, do they have any other tricks up their sleeve? are there other structures they could theoretically undertake to get a workaround? laura: there are two things you can do. new york state has a way an

employer could pay their employees tax rates. that seemed to be ok under these rules. the other thing is, congress can change laws. if the balance of power in congress changes, then things change. the way this works could totally be upended. joe: how old fashion, change the law. scarlet: i know, right? the companies paying taxes for you is intriguing. companies have to be on board, and i do not know if they want to do that. issue to sayrny the least. caroline: it seems a fascinating story. laura davidson, thank you for breaking it down in d.c. coming up, the fed is in focus. jay powell is said to speak tomorrow and we break down what policies. joe: and, get involved in the conversation.

send me a tweet. page and ick out my tweet links, charts, and pictures of my food sometimes. scarlet: like the profile pic. joe: like my profile pic. this is bloomberg. ♪

joe: "what'd you miss?" central bankers are gathering in wyoming today and tomorrow to talk about all things economic policy including exploring the relationship between businesses and others. i find this topic fascinating. this will not be a market moving discussion. >> i'm so happy you find it fascinating. joe: this is like the deep stuff

that will really matter in the cycle and next. the idea that productivity growth is slow and we don't have as many new businesses as we used to, what is going on there? it feels like we talk about startups all the time. >> the data from the bureau of labor statistics shows jobs are created by expending companies and not by companies entering the market. i brought a chart with me and that data is really's fascinating -- really fascinating. it shows the jobs from opening companies are flatlining. this correlates well with productivity growth. we know productivity growth has slowed. joe: looking at the charge, up until the immediate post crisis era, there was a general trend between existing companies and new companies. now, it is all the expending companies creating jobs and there is very little job

creation of new companies. yelena: correct. it is great to companies are creating jobs and good for the economy, but what really matters for productivity growth is competition. the dominance of corporations slows down this business dynamism. why is this map matter? it matters on productivity growth and that's matters for potential gdp growth. for, it in turn, matters estimates of neutral policy rates. this is when there are too many companies and there is a buyers market. this leads to wage gains or the lack of because when you have all of these big companies out there, they don't necessarily need to raise -- yelena: they might be a contributing factor, but more on the view that companies are providing these parks like going to hawaii or something like that . not right now. instead of adding to raising

salaries and stuff. thatine: it's interesting european regulators have been focusing the on this particularly in the tech market and trying to inject competition . talk to us about where productivity growth will come from in the longer term if we don't see entrepreneurialism. will the big companies invest in their workers? yelena: i think it should come back to economics. if we start to see wage growth. there is no clear correlation on to what is leading and lagging. if you see wage growth picking up, companies will need to invest into productive things like -- they will need to start investing. that could drive productivity growth. ,oe: selecting it run hot letting the cycle run hot, could

provide structural improvement. yelena: to a certain degree. is lack of business dynamism weighing on the trend which could offset positivity's of it. caroline: such a wage conundrum. thank you so much. sticking with the fed chair, jay powell is set to speak at the annual imposing tomorrow. this comes as a central bank -- the central bank released its market minutes. more, let's welcome mark, head of u.s. short rate structure. what will the rates care about in terms of what is happening in jackson? >> they will care if there's anything market moving in his speeches. i don't think he wants to move markets. i think he is looking to reiterate that the economy is doing well and a strong labor market and inflation is pretty much where the fed wanted to be.

it will indicate it is appropriate to raise rates for some time, or at least for now. however, the things the market care about is how far the fed can go, what is the neutral rates, how concerned are they of the yield curve -- the u.s. treasury yield curve. i also focus a lot on money market and there will be questions about the fed balance sheet. how far do they believe they can reduce the balance sheet before they start to see real sign the reserved scarcity? joe: explain this. most of the time we talk about the conventional monetary policy tools and we think the balance sheet runoff at this point on -- is on autopilot. in the plumbing of the financial markets, there are serious questions. explain this tension and why they might have to halted. >> the feds told us they want the balance sheet to be watching the paint dry. so far it has been. it's been going according to schedule without surprises along the way. one of the things money markets is showing us is that there may

be some signs of scarcity brewing. we are seeing federal funds effective rate move closer to iot are -- ioer. the fed previously indicated as this arises above ioer, that could be a sign that banks are needing liquidity and willing to bid up more for it. what we don't know from the fed is how far they want to see the process unfold. they have not provided guidance on the market to this front. the market is suggesting they might be running out of time and need to provide some of that. scarlet: why do you think they have not provided guidance? mark: because they don't have any answers yet and because they might believe they have a little more time than what the market is suggesting to them. recall back in june, they abruptly reduced their interest whichn excess reserves was unexpected policy reaction up to the minutes proceeding the meeting.

the fact that they are willing to take that action indicates they might be more worried than what they have led the public to believe. caroline: how do you expect this could be communicated if they have an unexpected action before. mark: the action will likely be tee up this fall may be september or continue at the november meeting. through that, i think we will learn about the fed's preferences on what they will do with the balance sheet. i believe the rates market is sending a signals that the fed might accept a larger balance sheet than previously anticipated. if that is the case, that might be less treasury supply and an overall flatter yield curve as a result. joe: explain the mechanism between balance sheet runoff and reserved scarcity. mark: sure. as the fed reduces the funds of the balance sheet on the asset side, they decrease their holdings of treasuries and mortgages and shrink amount of reserves they have for their liability. that brings down the total

balance sheet side. to meetsire reserves regulatory minimums and to meet liquidity and living will resolution type of requirements that the fed has imposed on them. we do not know the minimum size of reserves that banks will want to hold will ultimately be, but markets are telling us we may not be that far away. joe: is the challenge or conundrum they face, the fed faces, not so much a function of the policy or monetary policy, but imposed crisis regulations that are intersecting with the desires. mark: that's exactly right. the fed has imposed a number of different regulations to make them stronger and resilient and able to withstand future financial crisis -- crazies. crisis. that intersection is basically suggesting the fed may not be

able to decrease the balance sheet by as much as they want if they choose to stick with the regulatory backdrop they have today. i personally believe the fed is likely to stick with the asulation as it exists today opposed to feeling they need to force the banking sector to hold a smaller amount of reserves than they might other might want to have. scarlet: who is the person to watch for when deciding on this policy then? mark: anything the chair says -- joe: scarlet: but is he the one influencing the -- scarlet: but is he the one influencing the thinking? mark: i think the chair will defer to the new york fed president. he is a relatively newcomer and has a long tenure in the fed, but he is sort of new to markets. we don't really know how you think about markets. watching him for any initial indication of how his thinking might be firming will be particularly instructive.

also, there is other individuals at the new york fed's head of the market group, simon potter, whose comments should be watched. he gave a speech where he said that he thought the fed had a lot of time and was not particularly worried at this stage. i think markets are sending a bit of a different signal. the folks i speak to on a daily basis do not have such an optimistic assessment as simon does. caroline: market ahead of the fed. scarlet: who would have thought. caroline: thank you. americans areome patching together their own safety net on health care coverage. spent many years on this and we will see how they are faring. this is bloomberg. ♪

caroline: "what'd you miss?"

a growing number of americans are being priced out of traditional health care coverage. these consumers are searching for alternatives and making their own safety nets. bloomberg is spending the year following people who are going uninsured. what a fascinating story. it talks about the way they are using their own net positions that reject insurance and other religious ways of means. >> we talked to some families which are, instead of traditional insurance, is combining different approaches to getting health care outside of the insurance system. a family i spent time within , was idaho -- boise, idaho joining a doctor's practice directly where they hate a monthly fee directly to the doctor for all of their care care.aid -- they paid about $130 to start.

instead of an insurance premium, this was a fee going directly to the position. joe: what are the others? that is good for the regular daily visits, but what about the catastrophic side on the things that a doctor visit cannot do? john: for the other piece of the safety net, they joined what is called a health care sharing ministry, which is a religious nonprofit group that in some ways functions as a health insurance group but is not a regulated insurance company and does not have to adhere to the same rules insurance carriers do. scarlet: and a dozen covers shouldn't things -- and it doesn't cover certain things. john: and it doesn't have the same protections additional insurance has which makes it less per -- less expensive. scarlet: but if you pay to the doctor that does not take the insurance and you go to these nonprofits, much of the fees they end up paying versus traditional health insurance

plans? john: it varies case to case. this family estimated they were paying as much, about as much as they would for an affordable care act plan, but part of their calculation was that their out-of-pocket costs, they thought would be lower under this plan. sort of the equivalent of the dockable you would have to pay. joe: the key thing is that you could say, of these religious organizations and plans, they don't cover stuff or whatever. what manye that have people consider as robust insurance end up with matted -- with massive out-of-pocket bills. john: this is an indicator of how troubled in some ways the health insurance system in the united states is that even , --le who have coverage coverage were still left with

thousands of dollars of medical debt. through of families go birthing expenses. peopleeally about how do protect themselves from these kind of costs. scarlet: how widespread is this? john: it is hard to say in terms of how reliable numbers are, but it is growing. takingr of doctors are their fees directly from fromnts and it is growing almost none in the early 2000's to about 900 practices today. it is still small, but it is a growing piece of the industry. scarlet: john, thank you so much. don't forget to check out our prognosis page on bloomberg.com/prognosis. we report on the of tomorrow and financial forces behind it all.

joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪

scarlet: "what'd you miss?" a second day of losses in u.s. stocks with the nasdaq faring little better with tech shares as the only group within the s&p 500 to gain. coming up, do not miss this as

seen a shareholders vote on the takeover of express scripts. joe: and am looking at europe -- u.s. durables orders. caroline: and don't miss the german report second quarter gdp. joe: and don't miss powell. scarlet: jackson hole begins this week. that does it for "what'd you miss?" caroline: "bloomberg technology" is up next. joe: have a great evening. this is bloomberg. ♪ ♪

emily: i am emily chang in san francisco. this is "bloomberg technology." the u.s. and china hit each other with new tariffs and both are taxing $16 billion worth of goods from one country as trade talks continue in washington. inside a tesla tear down, ubs takes apart a model three and says what is under the hood is disappointing. we bring you all of the details. alibaba's sales and gr