♪[music] news.omberg's first word british prime minister boris johnson is urging the european to show common sense on brexit. johnson wants the e.u. to says isthe deal, he unacceptable. the prime minister adds there is plenty of time to get a new before the october 31 deadline for leaving. the british parliament has deal three times. trade negotiators are currently meeting ino washington in september but recent escalations have raised the possibility that talks could break down once again. president trump spoke to reporters at the white house today. >> what is happening with china now, we have an open dialogue.

we'll see whether or not we keep our meeting in september. if we do that, fine. if we don't, that's fine. time that somebody does what we're doing. >> this comes after the said new tariffs on chinese imports will take effect september 1. shattering a truce reached with the chinese president weeks earlier. senate majority leader mitch mcconnell says gun legislation will be at the top of the agenda from theirers return august recess. in the wake of several mass shootings, mcconnell says the look at expanded background checks. also on the table, so-called red to keep guns away from dangerous people. mcconnell has opposed most gun laws in the past. a political drama is playing out in italy. the prime minister is signaling he won't leave office without a fight. his deputy is trying to bring down the country's populous a snapon and force election. they want lawmakers to vote out

to government as soon as next week. he and his league party are tired of infighting with coalition allies. global news, 24 hours a day, on air, at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪[music] >> from bloomberg world headquarters in new york, this is "bloomberg markets: the close." >> we have 30 minutes till the trading day. probably going to be a week that many are quite pleased to be behind us. seen, andence we've once again, it felt like a risky move today, but we're managing claw back our losses. the dow jones industrial, we're actually back in the green as we speak. seems as though perhaps the new

trade of fronts coming from president trump saying that maybe they won't have a deal or a meeting with china come talks,er and indeed the the administration delaying licensing decisions, to restart with huawei, now we seem to be trying to shirk it off before the weekend, although we're not searching for a haven in the same way that we were, in italy,appened political instability worldwide. instability worldwide, whether it's italy, the u.k., the pound hitting a low, 12048. at what's happening in the different sectors. half ofaq is still down one percent, even as the dow has turned to the green. the s&p is little changed. onwe had, of course, plunged monday. then we erased our losses by thursday. today really determines where we the week. lots of demand for tlt.

up for an 11th straight day, longest winning streak in three years. but a little bit of a pullback demand for tlt. >> not for the yen, though. >> that's been a consistent all day today. let's get you now our top calls. a look at some of the movers. downgraded to sell, after reporting disappointing results for the first half of the year. analysts sees more potential for bad news. the shares down by more than 5.5%. 33 to 16 fetch from dollars, after mixed second results. earnings reflect promotional margins reflect industry-wide discounts. the shares down more than 45%. finally, momentum lifted to 70 with a strong buy

rating. the huawei band had a smaller initially estimated. the shares currently down by almost 1%. your top are some of calls. we look at g.e. shares. those remain lower, even as the has made its way back into the green. the off by about 10% over past month, a steady decline over the past month, especially in august, as investors continue to digest g.e.'s second quarter results. results -- of course, one-time titan to health looks to be a difficult task. brook sutherland joins us now. results,second quarter they happened a while ago, but everyone is still shifting through them. looked ok, with g.e. now seeing a potential to billion dollars of industrial cash flow for the full year. despondent?eople so >> we've seen this pattern with g.e., so the headline looks

great and people initially get excited, and the shares actually pop on the day of earnings. but then as people parse the numbers and with g.e. in particular, there is a lot to parse. it's a complicated company. so manye always different things. people start to get a little bit more pessimistic. think that pattern is repeating itself. you talked about the free cash flow. a lot of really make sense to some people. when you talk about what's well,g that, they said, there's slightly better performance in power. they're lowering their estimate for restructuring for the year, which is confusing, and then sure where ally the rest of the optimism comes from. on the flip side, you have g.e. saying the boeing grounded 1.4issue could shave billion off of their cash flow for the year. it just doesn't all quite add up. that's why you're getting a number of questions about it. larry'sis hitting reputation at the moment?

because that's quite damning that people are feeling that guidance that it has been putting out is falsely based in some way. but in many ways, he's making real strides, turned this business around. >> sure. if i would go so far as to say it's falsely based, but there are so many questions. this has been a perpetual issue with g.e., where it's just not exactly what's happening. the fact that we're sitting here weekng about this over a later should tell g.e. thing. this is a problem the company had withnually credibility, with people being able to read the earnings for the first time and understand properly. the first go-round. transparency remains a big issue. big wake-upbe a call for the company that they need to be clear as to what is actually happening. i'vef the things that wondered is whether they're back to the old ways of g.e., playing expectations, managing earnings. when larry colt first came out and said, free cash flow could be negative $2 billion, that really surprised people.

modelingle had been positive free cash flow for the year. to walk that back just a couple ofths later, it raises a lot questions for me, if they're trying to overly micromanage the views their streak profits. >> it's all about managing expectations. talk a little bit about how connected the stock is to interest rates, because they have quite a lot of pension obligations. argue that'stually maybe one of the bigger impacts for the stock slide this week. pension,only their which is significant. i think the last time i checked, it was the largest unfunded balance on the s&p 500. they have a huge obligation there. it's also their long-term care business, the business where they took the $15 billion writedown. interest rates effect that reserve balance. if you start to see interest rates come down and obviously expectations have grown for further cuts by the federal could increase the amount that germen ultimately needs to put -- that g.e.

ultimately needs to put into that business. >> not just the banks that you on. to keep an eye brook, thank you so much. it's bloomberg's opinions. up, mattel, falling in almost six months. what's behind the toy maker's slump? this is bloomberg. is bloomberg.

♪[music] >> let's get your check on the latest business headlines. in china, the historic slump in yet.sales, not over the market resumed its downward trend last month after a brief uptick in june. months. 13th drop in 14 u.p.s. is considering a major overhaul at its investment bank. hundreds ofld mean job cuts. ubs wants to boost collaboration and itsdeal makers wealth management unit. the return on equity was roughly of other divisions.

and mattel falling the most in almost six months. maker said it would pull intod sail while it looks aan anonymous whistle-blower letter. the claims in the letter, they say, are likely material. and that is your business flash update. ,> now for more on this story the bond sale has been pulled and everyone is left wondering, how dire this particular letter this whistle-blower -- the content must be, to have to pull it. >> exactly. it's really unusual to see a pulled like this. i can think of one other that happened maybe that happee threeish years ago. the company called go-go. they lost a contract, had to pull a bond sale. certainly investors right now are treatin treating this mater. down about 15%ck today. bonds off. people are worried. it's surprising that the company

did not disclose anything else. >> that's a part of it that wondering. me if they're not going to say anything more than there's a whistle-blower letter but it's going to prompt them to take this drastic action, people are the worse.sume >> obviously you don't want to lawsuit --f up by a for a lawsuit by not disclosing. but at the same time, when you just say there is a letter out doesn't reallyet know how to treat it. that's kind of what we're seeing today, i think. has to be meaningful enough, i suppose, to affect an ability to assess merit and risk. how much, therefore, is this an in terms of itl own covering its debt going forward? market activity, the point was to be able to pay down in 2020. >> yes. mattel has had struggles over year, maybe barbies and hot wheels not being the hottest toys anymore. they were trying to reduce the

debt. they say they're going to come refinance this bond later this year. that being said, in cases like this, you normally end up having a little bit more. this is a 6% bond. maybe if they come back, they pay 6.5, 7,o something like that, a little bit extra for investors for their trouble. mentioned analysts said that jeffreys, the analyst there, saying it's possibly material. anyone else speculating anything else or giving any kind of assessment on what this could impacts mattelis down the road? >> i think people are sort of cautious, certainly saying, look, this does appear to be a big deal, because they felt the to disclose this in the first place. that being said, when it comes to refinancing your debt, it's not like you have a massive maturity wall coming. toy maker has been doing very well this year. there are signs that their is really working. maybe it's just a blip. >> claire, thank you for keeping this mattel story.

mattel shares plunging today as much as 27%. they have paired their losses to just a 15% drop. >> amazing. our attentionturn to perhaps something you caught across them or maybe social media networks. the new york sports club has to it.king the news broke that the finance chain's majority owner is fundraiser for donald trump's re-election campaign weekend. it had a media backlash. had celebrities quitting ek quitting soul cycle. i think this is so genius of the ableork competitor, to be to say -- some instagrams they say, commit to something better. not doingsay, we're anything in southampton this weekend. come join us to work out there. we're not doing anything. >> they're being very opportunistic. not're basically saying, only come join us, but come over

for free. they've also said, if you want cancel your membership and sign up for one with us, it may deal.etter >> to be fair to equinox and soul cycle, they continue to just an investment. this is bloomberg.

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mattress, then try it in your own home. order now to get big savings - but only for a limited time. just go to leesa.com ♪[music] >> this is "bloomberg markets: the close." >> joining us at this hour, on this momentous week s joe wise thal. a comeback. >> what a week! obviously we're down a little bit today. so ok, looks like we're going to end down a little bit for the week. week,ter the start of the this just feels like the bulls have to be huge, a sigh of relief, anyone owning stocks here. we're also well off the lows of off the little bit highs too, i think. still, it just feels like a lot

of people feel lucky to have made it out of this week alive. >> so many reasons to be negative today. trump escalating the trade wars, trade walks scheduled. news, italyhuawei news, the u.k., g.d.p. figure. and yet we still managed to claw our way higher. >> it's really impressive. there's not some obvious thing. whenearlier in the week, we started bouncing back, there was not some clear thing. youalked about, like, sure, can imagine a positive catalyst saying thingset are back on. but we never got something like that. optimism,d get was oh, the fix, slightly stronger than we expected. expect. you'd but then again, markets have a tendency to do that. >> also, it now feels like a friday. >> yes. >> let's remember, we're in what's comeback pretty thin trading. it's quiet overall. when i look at the sector still thisre is defensive tilt, at least when

you look at the best performers. are up, health care as well, up by half of 1%. banks catch up a bit. >> just barely. >> bonds are selling off, ever so slightly today. the downside, you've got chip makers. that speaks to the whole idea know whethern't they can sell to huawei or not, because the trump administration that slition. >> and energy still in the eye of the storm as well. of grim inoked kind the morning. >> off by 1.3% at one point. all back in the red for the moment, at least on a basis, in fact on a one-day basis as well. over the week, it's been kind of days.y couple of this is over three days. let's pull it back to five days and that just shows the big gap lower at the open on anded and how -- on monday how we kind of made our way back on thursday. >> exactly where we started. endes, and really how we the week is based on how we end

today. >> quite amazing. >> we're just moments away from the close. seven minutes to go. let's dive deeper into the market action. started. us >> well, amazon.com is down about 1% today. company,s such a huge that means its actually the biggest drag on the s&p 500 today. now backeans amazon is down 10% from its last high in the middle of july, even after of rebounds this week. and there's always a lot of news but one storyazon really stands out today as potentially alarming. over a a lot of scrutiny foxconn plant in china that otherles echoes and electronic devices for amazon, a group called china labor watch is scrutinizing the pay that they pay workers, especially after the tariffs really compressed margins there. the group had criticized this low wagesr the already. now saying they've been cut the tariffs.fter

they're saying foxconn had hired of school kids to work in these factories, kids as young and they quote, one student who was forced to at the hours a week factory, on top of going to school. so abigail, it's a pretty wrinkle in the fallout from the trade war with amazon and foxconn today. lower on the day but ridiculously lower, nektar plunging, down 29%, down 40%, lowest level since 2017, this after they reported their earnings. they alsogger issue, reported issues with a clinical study. thoseterestingly, all of price targets that were slashed, still above and in some cases by wherehan double, above the stocks are trading today, suggesting there's optimism for the future. this chart suggests this stock may be going back to single digits. physics, it can't

hold. take a look at the uptrend that we saw back in 2000, when the stock went from 10 to 77, all the way down to four. can't hold. 2017, a $10 stock, it was $111 at one point last year. now it's back down to $20. this chart, scarlet, probably that we could see nektar therapeutics go back down toward the single digits. pretty bearish look here, suggesting that the fundamentals could just deteriorate even more. >> abigail and mike, thank you so much for those stories. analysis, it's all about trade. like every trade headline that comes out sends markets frenzy. what's the latest that you're hearing on the trade front? >> i think actually what trump in the day with huawei is really interesting, because what i was hearing from sources is that china is very much taking a hard stance with this. will not really negotiate

properly with the united states if the huawei suspension is not lifted. >> that's a red line? >> that's a red line. all a red line is lifting tariffs. so trump's first statement today that we're not there with huawei sent the markets tanking. well,en later on, saying, that's just for government purchases. it seemed like a little bit of a theyssion to china that may be willing to meet a little bit of the way to allow huawei deal with american companies but not necessarily the government. that might be enough to get to move a little bit closer. thewhat i'm hearing from meeting from last saturday -- a conclave of all the players in china. guys. big >> and there's never or barely an announcement that follows. the sources are telling me from meeting, that they -- china does not want to make any concessions to trump. they give an inch, he

takes a mile. they just don't feel comfortable more concessions to get somewhere where he's gonna blow things up on them. beenactually said it's trump, since february of 2018, that's moved the goal post four where trump says china is moving it. definitely a difference of opinion. >> all right. into the market close, i want to bring in our equity strategist in massachusetts. matt, thank you very much for joining us. obviously ending a little bit still wayhe day, but off the lows of the week. what happened? because i think, you know, wasably tuesday everybody like, we're in for some selling for a while. was it just that people got so extremely offsides real quickly that allowed for this surprising back of the second half of the week? >> exactly, joe. you mentioned, there really catalyst, real news that changed what has been the last couple of weeks on the trade front. the thing we have to look at, market getse stock

overbought, kind of drifts lower over a period of time, but when get a new development, when president trump talked about initiating new tariffs, the stock market dropped 6%. and what usually happens is the gets very oversold on a very short-term basis. then people look around and say, wait a minute, this new development hasn't changed, it's still there. sell again.otta and the thing rolls back over and usually goes to new lows. we'rek that's something going to see going forward in the second half of august. probably see a little bit more weakness. time to get into cash, time to be going defensive? strategizing? >> well, i think raising a little bit of cash is not a bad idea. to of the things we have look for is that -- i mean, right now you're looking at a tariffs willre the continue to create slower so thingsonomically, slow down. i would say, jeez, maybe that leaves us to a 7% to 10% correction. now with high frequency trading,

all these moves get exacerbated could lead to a bigger correction. if you have cash on the sidelines, you can take advantage of the overshoot that we see, just like in the fourth quarter of last year. keep talking about these global recession fears. are we getting evidence of a global recession? look at german trade numbers, is that evidence of a recession forthcoming? when you look outside the united states, the numbers are suggesting that we may be going that way. yields, something like dollars.illion >> it would even go up. i believest week, they are now issuing 20-year mortgages at 30%. >> my favorite stat of the week. >> and what -- >> actually negative. you're paid to take a mortgage. ha this is really scary times when you think about that. onre was a big bet this week

2022, thers that in united states will be in a negative yield caroline: that is what we've been speaking to pimco about earlier in the week. .1%.ff slightly, off fivehuawei news, percentage points. scarlet: indexes as a result ending down for the week. %.p losing half of 1 so, too, does the nasdaq. the russell 2000 worst performer of the day. of a dumpof a -- bit the last two minutes. scarlet: all you, joe. joe: my b. scarlet: it might be a case where people don't want to belong going into the weekend-- be long going into the weekend,

given what happened last week at this time. caroline: caution in the weekend is never a bad idea. abigail, what are you watching? abigal: looking at the s&p 500, because you were at the beach over the weekend were back, flat over that time period. the momentum was trading activity, the uncertainty, that has put the s&p 500 back below the 50-day moving average. it was above it, now it is back below it. fitting with the volatility of last year. near-term buyers don't have a lot of conviction, sellers perhaps a bit more. in may and june, the s&p 500 breached that 50-day in a pretty bearish way. now back below it. there could be more selling next week. >> for all the talk about a

strong dollar this week, does not apply when it comes to the dollar vs. the japanese yen. the yen rising as much as sincethe strongest level january 3. up against all 24 emerging-market currencies. very much a haven story as tensions escalate this week and president trump saying that talks in china in september may not occur. talking to our guy about it, and he said it has blown through so many technical levels that he's not sure where the rally will end. 104.94, the third standard deviation from the trailing 12- month average. mike and: caroline: mj abigail, thank you. interesting that we have seen this search for a haven when it comes to the yen.

i want to get your take on whether the-- on where the havens are now. gold, yen, is that going to remain in vogue? matt: it certainly seems so. gold is a commodity. who invented technical analysis? commodities traders. gold has made a significant breakout this year. it broke through the trendline going all the way back to 2011. more recently it broke above the 1350 level. sideways a five-year trend channel it was in. this thing has really confirmed that the breakout of eight- or nine-year downward trend. gold is something people should take a look at on a longer-term basis. it will be more than a trading rally, in my opinion. joe: obviously, the last few

weeks, gold bulls finally getting some love. >> that is exactly right. yen is the story for a bit longer. it's starting to get a little heavy year. -- heavy here. i also, though, worry -- you were talking about trading positions over the weekend. if the dollar continues to hold in, i wonder what the president is going to do, if you will do anything about it. it will flush out a lot of positions. s from thethe tweet president and whatever may have it any given day, emerging- market currencies are not where you want to be. caroline: we have some breaking news -- it is a friday, so we are getting updates from the credit rating companies. fitch raising its right on russia-- its rate on russia up to triple b, outlook stable.

we've seen the dollar losing some of its value. scarlet: stay with the emerging markets for a moment. china data is going to come out over the weekend. talking about not wanting to be long over the weekend, anniversary of the chinese 2015 yuan devaluation is sunday as well. how worried are investors about what we could get out of china or hong kong and how that sets the tone for next week? matt: i think the most important thing will be hong kong, not necessarily on the data, but what happens with the sit-ins and riots. if we see a clampdown on hong kong or china getting more involved in hong kong, that will scare people in significant ways. i don't want to overstate this and say oh my gosh, run for the

hills. but if you see the situation in hong kong boy lover it if you see the situation in hong kong boil over it could affect currency markets and otherwise. joe: in any year there is always the hong kong equivalent, the thing we are watching that could spill over into something bigger. we are a little bit of the highest hill, but the s&p 500 is having a phenomenal year by any measure. is there any reason to believe that the big bull market has changed, the dynamics have prevented -- is it a buying opportunity? matt: well, i think we will get a big buying opportunity. we will see a bit more of a pullback before we get that. the one thing that worries me more than anything else is the divergence in the european banks. they have diverged tremendously

from the broad european stock market. we have heard about how weak the economy is. the stock market is doing well, but the banks are not. near multiyear lows. if the global stock market corrects a little bit, goes into a full-blown correction, post exit of things tend to expose issues that may be going on in the banking system. i'm not calling for a banking crisis or anything like that, but we have to remember that the european banks did not deleverage themselves anywhere near to the degree that the u.s. banks have over the last 10 years. that is my biggest concern. caroline: interesting. vince, you said before that one of your key concerns was brexit and whether that continues to go. you don't think the pound will begin to parity, but we have seen the euro-pound climbed to the highest since june 16. is this purely a british-european issue?

vincent: i think it is a british-european issue and i think it stays there. this is why the brits are playing hardball. it goes back to the financial crisis. leave the eu and several the consequences. brexit is probably going to happen. if the u.k. visa nothing happens -- the u.k. leaves and nothing happens, what other peripheral nations going to do, especially the one sets of greatly in 2011 and were basically told if you don't stay with them, your economy is going to fall apart. if the u.k. leaves and, frankly, not a lot happens, the fragility of the unit is in question. that is the black swan we may be looking for either this year or into 2020. scarlet: big pile of black swans. [laughter] caroline: many in europe. scarlet: some in asia as well. have a great weekend, gentlemen.

that does it for the closing bell and for me. romaine bostick is stepping index for "what'd you miss." this is bloomberg. ♪

♪ caroline: live from bloomberg world headquarters in new york, and caroline hyde. romaine: i'm romaine bostick. joe: i'm joe weisenthal. caroline: significant selloffs earlier in the trading day. joe: the question is, "what'd you miss?" caroline: president trump's trade war flames and you.

german exports plunge. primaries on sunday may offer investors a stark reality check. but first, president trump and china sending of flames of a trade war--fanning the flames of a trade war. "bloomberg businessweek" peter coy. today are rather busy day. on the dow. peter, your perspective on the , thet salvo from trump latest knowledge meant that a meeting in september may not happen at all. something be considered, but is it a reality? peter: pretty predictable. the way things are going, hard to imagine they could have had a productive eating. august waseting in not very productive and i was

before trump and us the higher tariffs. it would have been a waste of time. just as well that he put it out there. by the way, he hasn't said it won't happen. as iall week everyone gather around, what is it, 9:15 every night, is that what it is going to be like next week and the foreseeable future? >> i think so. i was talking to bought analysts about what you are watching in the week ahead. they said we will be watching the yuan fix and the currency's report. i love to hear that. trade has been in the driver see all week. in make sense that it will be top of the priority list. romaine: are you hearing from anyone who is putting credence to the idea of devaluation of the dollar? katherine: it was interesting to hear trump come out today and said they will not do it, but he kind of punted it back to the

federal reserve. know he he has not been happy with the pace of fed easing. you have to take that with a grain of salt. caroline: there is a chicken and egg situation which i'm intrigued by. i love all the conspiracy theories that the entire trade debacle is being manifested because trump has a real issue with effect, -- with the fed, or is the fed a savior to a trade issue that he can then insert his authority or power? where do you sit? peter: i am more in the latter camp. it is not like he engineered the trade problems, but more than that, he believes he can afford to push -- what he said today about china, once again he said of thousands of companies are leaving china and china is in the worst shape it has been in and many, many years, and all of

that is about saying that we are stronger than china and we can withstand a trade war more than china cancelcan. if things get really bad, the fed will bail me out. joe: the theory that lower rates will weaken the dollar but accelerate the was economy at a time that the rest of the world is sluggish, couldn't it be that it doesn't do anything for the dollar? peter: right. on the other hand, if they really did strengthen the u.s. economy, problem solved. you don't need a weaker dollar. going back to the idea of devaluation, a country cannot devalue its currency. that is what you do in a closed economy. have the value of the dollar set in the open market. true, things can affect it. fed rate cut 10 affected. trumpise it is not like can say i will devalue the

dollar. when i: off that point, was speaking to traders this week and last week, they talk about the idea that the white house is speaking in absolute terms but everyone is trading off differentials. you have the german government expected to show that they are in recession, or that is what the general sentiment is. when you have other economies moving downward, even if the u.s. is moving downward, the differential is going to be about the same. peter: we have data from germany today that was weak. we see italy having problems with its coalition government falling apart. britain heading for the possible no-deal with it. there are other parts of the world, china of course, looking weak. it puts upward pressure on the dollar, which is not entirely bad. if it is a sign of economic

strength, what do we have to complain about? the sterling16 at at this level and we are seeing further weakness in the united kingdom as well. you are beingairs directed to the most of the moment feeling the must pressure from june political risk? katherine: everyone is paying attention to the pound today. even against the dollar it had its weakest level since january 2017. if we cross below that 120 threshold on that care, we are looking at the lowest level since 1985, which is pretty breathtaking. joe: we talk about the dollar strength, but when things get bad, the two currencies people like even more than the dollar, the swiss franc and the japanese yen, do you hear people talking about how they might have further outside? katherine: it's interesting, we had the ftc data come out come and speculative are bullish on

yen for the first time since 2018. i wrote the story so i should know. [laughter] katherine: it speaks to how much anxiety that is in the market and the haven bid is set to continue. romaine: as you are speaking, there are headlines with the article for report on china, and they are talking with china's gdp growth dropping a 4% by 2030. there talking about the risk to the downside, and they are talking about the yuan value still broadly in line with fundamentals. imf isn't the greatest forecaster. they can to be a little behind the-- they tend to be behind the curve, but they do seem to be reflecting sentiment in the markets, that there is stability will expect going forward. katherine: of course, china is a managed currency still, so a large part of that is the central bank's decision about where it goes. peter coy and's

catherine by felt, thank you both very much. coming up, all living former fed chairs hit back at presidential, providing cover for chairman powell in escalating trade war. this is bloomberg. ♪

romaine: president trump has been it also months now with fed chair jay powell over the direction of monetary policy, continuing to take aim on and off of twitter and persistently calling for additional rate cuts. all living former chairs in an op-ed defending the central bank's independence, writing "the federal reserve must act independently and in the best interest of the economy free of short-term political pressures and in particular without the ofeat of removal or demotion

leaders for political reasons." let's bring in a bloomberg political economist who joins us from washington, d.c. there seems to be a growing chorus in washington right now that monetary policy should be much different from public policy, the idea that you lock 12 people in a room and let the make huge, fundamental economic decisions without any input from the rest of the government, that that is somehow antiquated. can you explain why this idea is trading so much traction? >> monetary policy has not performed over time as we would have hoped. we have had pretty tight monetary policy overall. i think that is caused which growth to be week and there is a growing sense of upset is about that. the worst predictions that people had of runaway inflation after the fed did qe, none of

those things happen. notome sense, the chorus to make the fed lyrical has gone down, and that -- not make the fed political has gone down. and of course the president doesn't have a strong attachment to norms, and so he is willing -- romaine: we've noticed. karl: he is moving the culture in washington. he is out there saying things and other people feel like they can say more, too. both of those things are wider is more sense that the fed should be controlled by congress or the president or something like that. joe: let's talk about jerome powell's situation, because obviously he has to fulfill the fed's mandate and focus on price stability and full of women and cannot let the economy going to recession. --full employment and not let the economy go to recession for

. nonetheless, it has to be independent. what is the best way to handle it when the president is making decisions that might in the short term at least hurt the u.s. economy and he and his surrogates are demanding that cuts of 50 basis points, 100 hundred basis points. how does the thread the needle? karl: from my perspective, powell has to make the economy be first. yes not be afraid -- he has to not be afraid to make big moves. the danger that he will look like he is spending to trump -- is bending to trump has to be taken care of other ways.what his press conference , but other is stuff like the former heads writing about the fed's independence. i took that to be giving powell some room to operate. everybody believes the fed

should be independent. all that is saying is that, look, everybody believes in fed independence. caroline: does he need to see data to back that up? they are so-called data-dependent. if they are high by 50 basis points, does that make a market freak out more of there was more we are not seeing? karl: if you look back to the fed's minutes and how the fed has conducted itself, it has long been afraid of that. i don't know if that is as serious of a concern as they make it out to be. for one thing, if the market freaks out for a couple of weeks, that is not the fed's problem. they should not be worried about that. they should be worried about overall financial conditions. is it possible that by doing a big move they could tighten conditions? it is theoretically possible but not likely. if they talk to, look, we

believe this is for insurance and the long-term prospects are good, they can do that. they also have a problem more fundamentally, which is that the philosophy of the fed is changing. they don't exactly know how to communicate that. data-dependent, but the data they looking for has change. romaine: we only have a little bit of time left and i want to move to another topic you, this trend to negative yields around the world. i sort of wonder, when you think about why yields are going negative, it appears to be tied to the fact that economies are going negative. can negative yields coexist with an actual healthy economy? karl: in theory there is no reason why that can't be the case. there is some problem that people could if they are massive negative yields even in good ands take out there cash no longer use banks. at some point that is an issue

and it has to be dealt with. i know the fed is looking at ways to reduce the usage of cash in the economy so it is less of a problem. but fundamentally i don't think it is. it is just that whenever the global economy is weak, yields go down, and when yields are close to zero, the global economy gets weaker until they go negative. but there's nothing fundamentally different about negative yields except for potential of a cash issue. caroline: the debate continues and it will be borne out on twitter mainly by joe weisenthal, i'm pretty sure command karl smith jumping on board as well. great to get so many of your thoughts as you have been putting out so many great articles on bloomberg. coming up, we will be delving into another economy and another set of geopolitical risks, this time in latin america. argentina heading to the polls on sunday for its presidential primary. will the country take a face market friendly? this is bloomberg. ♪ ♪

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mark: i'm mark crumpton with the first news. strongest the typhoon of the year, expected to ake landfall saturday south of shanghai. it could bring wind speeds up to hour.iles per more than 500 flights have been cancelled and high speed rail have ions in the region been suspended. federal investigators in the u.s. have discovered that six of chicken mississippi processing plants raiding willfully e quote, and unlawfully employing people who were not authorized to work in the united states. 300 of the 680 workers

have now been released from custody. the united nations refugee agency said today that over half muslims who fled myanmar violence in have received identity cards for the first time. number of e a agreements that have been signed tray ilaterally and relation to the repatriotati repatriotation, we have made needs to be y voluntary. fled to er 700,000 refugee camps in neighboring bangladesh and elsewhere in 2017 myanmar's had a campaign n response to a attack by insurgent groups. upcoming muslim

holiday and the w.f.p. partially aid in june. the suspension affected 850,000 when accusations they were diverting the food from the hungaryiest people in the country. mark: they didn't disclose any it only needs to deal with the rebels in of the distribution. bloomberg news, powered by more 2,700 journalists and analysts in over 120 countries. mark crumpton. this bloomberg. you.line: mark, thank vote aheadneans will

of the elections. the bureau chief, carolina, it's between the opposition party and remind us hy the markets in particular will have jitters about the opposition having some sort of here? >> the markets will certainly be watching for sunday's response. will be signaling which candidate, the margin between the two potential will be the d this strongest signal yet of what might happen in october when decide es have to whether they continue with the even ent and his reforms though they're still in recession and living in return to they protectionist politics who is fernandez. mate of >> these market friendly reforms, have they accomplished the problem of market friendly reforms and there was a enthusiasm toward macri

since he was elected. accomplished and have argentineans seen any benefit from it? of e look at the type reforms, we separate from some of the ones at the very start of later as the hen term advanced. within his first week in office, capital control. that had an impact for to travel who wanted abroad and countries who wanted dividends. and the bond holders that were from the 2001 default. he was left with the challenges, and o deal with inflation high government spending. these were the ones that he tackled mostly through selling market, but it got to a point where markets were no longer willing to land and the world changed as well. and ppetite declined finally macri had to find for a asking the i.m.f.

record loan. romaine: i'm curious, why reform have the economic impact, particularly when he was sort of swept into that the this idea policies of his predecessor and and their protectionist policies didn't exactly have the economic impact that they promised. a little bit confused as to voting ple are actually for in this election? >> to answer your question, the macri chose to tackle reforms,he longer term he government described it as by stepgradualism, step and they would cut government spending. it got to a point where that was sustainable byas the markets. the argentines are voting for a overnment that is looking to reconstruct the relationships

with foreign leaders around the world. hosted the g-20 last year. government a slew of leaders from around the world. hey're also voting for more transparency in discussions. rgentina has been seen as very polarized and the government had dealing with n businesses and with dealing with criticism to government. had a difficult relationship with the media. been the ot really case under this government. it is certainly a different type votingntina that they're for, but certainly it will be a leap of faith for argentines, in macri that he can estore argentina to economic growth in the second term. joe: thank you.

a denim boost. this is bloomberg.

caroline: time for stories the bloomberg t univer universe. ron smith completed his sale for a cool $8 billion. three weeks later, he teamed up golfer josh peter to finished third at the pro-am and of his time bulk to his ventures. the story on u.s. consumers who re eating more beef than they have in a decade. its byproduct is piling up for

once coveted leather jackets and shoes, a growing ambivalence to this growing staple. tictoc on twitter, which cheese, sed makes and will require stry stricter labeling. will be labeled butter made of milk or cream. joe. uber continued to drop today following disappointing second-quarter results. uber now down more than 10% since its i.p.o. in may. c.e.o. tried to reassure investors during his earnings call. competitive environment continues to be stable to improve. that we will take some of improvement to continue to lead

nto our business where we see plenty of competition and significant capital investment and incredible potential. joe: bloomberg's eric newcomer joins you now. obviously the big question remains for uber, will they did the business work? did we get any answer on that view or still ur question?ch an open >> lift can say we're moving that way. massive global businesses and the food delivery business which they're efinitely signaling is really expensive. i think that almost makes it the r for them to make case, here is the path they keep tacking things on. romaine: their revenue growth secondary iderably, investors were buying into the

company and the fact they have fingers in all of their different pies, in theory that lifted revenue and given them a buffer, why isn't that happening? eric: he is talking about we're going to continue to expand. ambitious vision. there isn't a clear sense of where they go or where they tack on except getting uber eats in more markets. about japan and the east doing well, ride hailing could be doing well. it's one country. sort of see where the growth is besides some we rising new product idea haven't heard of. caroline: actually a lot upbeat than you would think. the revenue were driver in terms of the awards related with the uber i.p.o. given the share prices. is it retail investors who are $5 king out about the billion loss rather than

-- ally >> the analysts are much more excited even though there is a miss.ue uber says the revenue miss seems like analyst didn't understand $300 million that they made drivers around the i.p.o. as an affect the adjusted revenue. if you are willing to accept their numbers, their progress, about the big picture, the gap losses, the $5 yeah, there loss, is a divide between the the retail d and ever. is the canary who in the coal mine. very much.hank you let's have a check of the latest business headlines. historic slump in auto sales isn't over yet. brief-up tick in june, retail

ago, the rom a year 13th delivery in 14 months. bloomberg has learned that cbs viacom are one step closer to a merger. a y could announce transaction as soon as next week. cbs would get six out of 13 seats and viacom gets four. apple will soon start handing out special iphones to security discoverrs so they can flaws first. apple is offering up to $1 illion to find problems in its operating systems. caroline, that is your business flash update. caroline: we're going to return to one of our favorite topics on the show. it's meatless meat. newcomers like impossible foods, legacy veggie burger producers are changing the recipes and the to keep up,d trying but have lost the market share. they have r farms, seen a massive growth in sales,

pie is slowly e being eroded. joe: we both grew up in vegetarian families. think about all of those fake burgers and fake hot dogs and i those es feel sad for companies because they were so early, the classic too early thing. romaine: can we admit, some weren't very good. out, my mother own.d make her it was basically borderline child abuse. they got boca burger. go into stores now, once of get past the meats, all these are there. they don't have the same marketing power. some ust need to hire this ing wizes and get out. caroline: they've been sending out hundreds of employees to see where impossible burgers are available. you got to get on to our website or that to really identify where you're finding the latest urger and where you can

actually buy it. wrangler jeans after in a top mentioned song. kol elaboration has worked well. there is a new marketing in the coming weeks. joining us is kim, bloomberg reporter.s. luxury kim, all right, i owned a pair kid, anglers when i was a they were stiff and itchy and see in of favor, you the zeitgeist. i'm surprised that one song back into his brand coolness, is that what it is? is the song of the summer. romaine: biggest hit in history. there is one line, wrangler on my booty.

ucci is doing great, wrangler doesn't get mentioned in songs like gucci does normally. at the time right now, wrangler trying to broaden their customer base because back in know, the t was, you brett favre ads with him and dale football go hardt jr., they want to global. romaine: have we seen those in ng wrangler who hasn't the past? kim: there was a collaboration c.e.o. told me it sells out immediately whenever they stock online. caroline: so apparently it's fit jeans, lim raphic t-s and jean jackets emblazoned with the song name. at some point this song will what then?mber one, how are they coming up with new ways being in the zeitgeist?

a : this couldn't come at better time for the c.e.o. it was a spinoff, a new company contour brands. they also own lee jeans. a turnaround project. it's down seven in sales. we're trying to figure out what c.e.o. is trying to figure ut what ways can turn this project around. and like he said, this was a them.surprise to his 13-year-old son walked up to him and said, dad, you're in a song. he said what? song? i'm in a song, no, wrangler is dad. song, it just took off from there. to keep this going, they have an they paign coming out, haven't revealed much about what the specifics are, but we do it wants to be more global, ore inclusive and less focused on that very specific american loves nascar.o caroline: cowboy cut slim

jeans, here we come. thanks to have your expertise, thank you. e.t.f., pegged to the future of 11 millennials. more on the quirky story on how the e.t.f. industry started out. this is bloomberg.

joe: the spy kids, the fate of the world's largest exchange on the health ts of a group of 20 somethings, hanks to a quirk in the legal structure used to set up the s&p 500e.t.f. trust known as spy, more than $250 billion rests on of 11 ordinary kids. in a -- rachel evans. omething about the early days of e.t.f.s, before the law was

very clear on how e.t.f.s work, this happen, ke they had to use this other legal structure that required its 11 random e tied to kids, what? achel: it's not about the modern era of e.t.f. old retrofitting to the law. rachel: when they were trying first out with the e.t.f.s, they were looking around for what kind of model with allow them to come up an investment product to list on the stock exchange. capabilities, unit investment trust seemed to fit quite well. they have to have a termination date. usually, this is 25 years. bit longer or shorter. this is what they set for spy. off and rted to take got interest, they wanted to make sure it could extend so close it n't have to down in 2018. they added these names extending termination date to 2118 or

0 years after the last of the 11 children died. romaine: that's kind of morbid. ift happens when they die or they die early? i mean what's the procedure? at some point they obviously to restructure this again. rachel: that's a great comment we asked for and they referred to the new york stock exchange which structure's product who declined to comment. e don't know what the plan is per se. romaine: are these kids safe? other e.t.f. managers stalking them? rachel: they should be fine. distributed around the u.s. most don't know each other. given the way this would wrap up their death, plenty of time for a to take place. they could set up a spy part 2, t was speculated in a column today, this would allow as people came out to the fund and would estors going in find the second spy fund and

gradually move the assets from other.the it's not the end of the world. aroline: the 11 millennials have no idea, their names have been used in this way. they, how are their name $250 billion based lifespan. rachel: there is a list of released asthat was part of the documentation. basically these kids, all of to did not have any idea they were used. they were babies, most of them ere related to people that worked for the american stock exchange at the time. a call went out to name the youngest people and were included in this documentation. were any of them compensated? rach no.hel:

when it comes to the trust law, no. romaine: they don't get anything? rachel: no. we didn't know how successful it would be. did they learn about it from you? rachel: yeah. romaine: a kill joy. joe: you're not going to believe this. hung up on w many you? couple one hung up, a thought they were being fished. we had to explain what an e.t.f. is and how they're involved in spy, and make sure we had the their family correc correct. caroline: read the story, it fascinating. monday, the numbers c.p.i. tuesday.ut on joe: more economic data, the and retail uction

sales are out on wednesday. announces itsco's rate decision on thursday. have a great weekend, this is bloomberg.

♪ emily: i am emily chang in san francisco and this is bloomberg technology. in the next hour, how one analyst describes the third fall.r after shares suggestsdent trump talks with china's no