as you mentioned, is this what the fed knew? >> i agree that they will watch puts as they come in. retail sales. at least the regional fed reports are expected to be pretty weak. caroline: we are looking at the markets as they come in. -- close up by 1.3%. whichay since august 8, tells you how volatile this market can be. pretty heavy volume. scarlet: it was below average up a.m., then it44 shut up on the announcement that the u.s. -- it shot up on the

announcement that the u.s. was delaying those tariffs. joe: hardware names, really good day. caroline: best buy, your best performer on the s&p 500. seemingly christmas is back on. abigail, what are you watching? 500 in relation to its 50 day moving average. even today, we are still below that. that is fitting. the volatility we had in the early part of last year that was induced initially by the solar panel tariffs put on by president trump against china. daying support on the 200 moving average. long-term buyers stepping up. fourth quarter, really ugly. day,in may, below that 50 then a test of the 200 day.

at this point, it looks like we still are probably going to test that 200 day moving average and you could make the case that the s&p 500 is confirmed for a bigger drop. -- didstocks did search surge today but the yield curve was moving flatter and flatter. the spread between the two-year and 10-year treasury yield, it twod lower today to roughly basis points. right there on the cusp of inversion. bank of america is saying that technical signs are showing that we could see an inversion very soon. if that happens, the s&p 500 is likely on borrowed time. the curve does have a very good

reason -- very good record of preceding recessions. it is hard to tell the time at which u.s. stocks will peak. in the past, it has been anywhere from two months to two years out. joe: still with us, laura kane of ubs, and bloomberg's mike regan. you were positioned internationally, you like em and japan. a lot of people have been wondering, when is global diversification going to pay off? what is going to change so that starts working? laura: there's a lot of uncertainty in the market and trade is obviously the top of that list. if we get some relief on the trade front, we can see those markets exposed to trade really

rally. given the high level uncertainty, we for a diversified stance. we are underweight the euro zone. economic conditions have really been quite weak and coupled with the exposure to china in trade. in addition to that, the valuations don't seem compelling. that is how we have been positioning. overweight in the u.s. but underweight on the euro zone. scarlet: you are looking particularly at a u.s. consumer in terms of strength. are we priced at a point where anything they say that doesn't match our expectations would be seen as a disappointment? in terms of a coming this this week -- of upcoming news

this week, earnings, i would look at the economic data, whether sales are any indications of hiring. within the retail space, you are going to see a lot of differentiation depending on how much exposure those retailers have, how strong their brands are, how they are playing e-commerce. i would be cautious on putting any emphasis on one specific result. caroline: this luxury company, increased 40% year over year. increased $20 million to $71 million. i think that is probably a slight beat on where expectations have been. that company has fallen quite

far on the back of far-fetched. we were just talking about consumer, retail. ineant -- i am interested what is happening with the u.s. dollar right now. mike: interestingly, the em currencies perked up a little bit. obviously not argentina. it's got its own problems. but some currencies were stronger. it gives you a sense of how much tradehere is to any differentiation and if you look at the last of the july sales, department store sales were down.

the consumer stable companies are kind of interesting to me at this point. joe: also interesting, we got that b of a fund manager survey. a lot of fear out there today. scarlet: do you see the falling --d yields and laura: we don't. certainly comedy concerns about -- certainly, the concerns about it are influencing the yield curve. scarlet: thank you so much. we have some headlines on qualcomm. the board has named mark mclaughlin as chairman of the board. i believe there was a retirement. is that right? i believe this is overall, the chair of the board, replacing jeff anderson.

ceo of anotherer company. scarlet: not much change in qualcomm's share price as a result. romaine bostick is stepping in next for "what'd you miss?" where we will be looking at the unrest in hong kong and what happens next. this is bloomberg. ♪

caroline: we are live from new york, i'm caroline hyde. romaine: i'm romaine bostick.

joe: i am joe weisenthal. caroline: stocks rally as we push back tariffs. has stepped up preparations to mobilize forces to stem the uprising in hong kong, says reports. the trump tariff delay as investors sign relief. allapore, germany, japan report data. a crisis in argentina has resurfaced. let's start with the tensions in hong kong. activists clashed with police after a standoff over a man protesters beat, alleging he was an undercover cop from the mainland. the second straight day of service disruptions. the embattled looking leader warns the city risks sliding

into an abyss. let's bring in shery ahn. talk to us about the latest. how impressive is this ramp up intentions? -- ramp up in tensions? shery: you were talking about a man who was beat for allegedly being an undercover cop. it was a couple of men. one was a reporter for the global times, a state backed newspaper in china. we have seen the fifth day of sit ins in the airport. this is much more violent than the protests we had seen during the umbrella movement. as a reason these protests are happening in strategic places, tourist areas, at the airport, because they want to bring international attention. beingong prides itself in

an economic of, although this chart shows that the cloud of hong kong compared to other cities in china is shrinking. joe: it is shrinking but it is so big. a gigantic city comedy airports airportiant city, the are shut down for two days. how does this compare to the 2002 sars outbreak which many people thought would send the city into the abyss. shery: these protests have continued for a while and we have seen the kind of sentiment. these questions, ensco in hong of 1997.r the handover where will it go when that 50 year period ends. at the moment, those are the

existential questions that protesters are trying to get answers from the government and beijing. in the meantime, really a tricky position that the u.s. has been in. refraining from intervening. this time around, president trump has come out and said that this will work out, the situation is tough but it will get worked out. he also talked about troops coming into the border. few hours, you will be watching the latest economic data out of china. shery: another slow down. we saw this slight pickup in the month of june. tv,d asset investments, g

economists are expecting retail production to slow down again. we have seen some new channels to finance infrastructure spending in china, but there is a lot of pressure. easing, trade of tensions, backing down on those tariffs could help. for the time being, president xi jinping in a tricky position. you, shery ahn. on daybreakhery australia and daybreak asia starting at 6:00. we are joined by a senior fellow at the -- was this a blink by trump and how significant was it, the idea of pushing the tariffs back, at least toward mid-december?

>> yes, it was a blink. it is not enormously significant if it is only a three month delay. romaine: the fact that we had this delay. you had a lot of companies pushing back, saying that these tariffs would disrupt. they get a reprieve for now. when you talk about long-term planning, what are companies going to do in this environment where you don't know if trump might change his mind a month from now? >> companies have to make decisions. decision.mportant exports to china typically peak in the fourth quarter, then they fall off from that point on. our imports from china always peak in the third and fourth quarter.

particularly for electronics, the peak is in the fourth quarter. this allows companies to basically use their existing supply chains and forces them to make the hard choices next year, caroline: how much do you think this is lobbying? how much do you think he heard from other advisors? thate thing i suspect is trade representative lighthizer was not terribly enthusiastic about the 10% tariffs. that is the worst set of targets, by definition. the places where you expect to have the highest cost to yourself. i think lighthizer may have been substance respect and the -- respect in some sense, the traditional surge.

a decent sized shot even now. we're are still working through the increase to 25%. we will still have 10% tariffs on another $125 billion. that is not a small shock. joe: obviously, but -- obviously, by doing this delay, trump has conceded what he said in the past. that it does not hurt the u.s.. it clearly does. is he really going to let it go? let's say there is no deal. does this just create another situation in which domestic issues, it becomes very hard to put those tariffs on. >> i have given up trying to forecast precisely what the president is going to do. in a big, deep sense, it probably doesn't matter that

much whether we put tariffs on the last 150 billion. we will have put tariffs on $450 billion. there isn't currently a clear path to removing all the existing tariffs. at some point, is it clear that china will not buy any u.s. agricultural exports this fall, you can see these tariffs go into force or going to force with a lag. romaine: how much more aggressive can china get with regards to monetary policy, fiscal stimulus? brad: i think they have a decent amount of policy space left. the rate cuts have left interest rates above those in the u.s.. that means there is more scope traditional to use monetary tools. they have been relatively restrained in fiscal stimulus to

date. i don't attribute all of the weakness to the trade war. i think it was a slowdown that started last year before the trade war as china delivered or tried to deliver. the stimulus earlier this year hasn't been as powerful as expected. caroline: making this conversation circular, we started with sherry talking about hong kong. how much of that is a distraction for xi jinping when he's trying to fight several fronts? brad: i think it makes it much more complicated for xi to reach a deal with trump that involves significant concessions in the near term. see whetherh and the troop buildup is a precursor to a crackdown. i think that will make it harder

politically for trump to make a deal next year. joe: one story that, i outside my this was -- that caught eye outside of this, angela merkel talking about fiscal stimulus. might not be time but they will be monitoring. do you think they could make some meaningful waves in the global economy if germany were to loosen its purse strings a little bit? brad: yes. stimulusid a modest this year but it will still have a 1% of gdp fiscal surplus. when you are paid a half a percentage point a year to borrow, there is no need to run a 1% fiscal surplus. i think it would also help change the broader stance in the euro area.

as part of my thesis that not everything is just the trade war, i think there has been some insight europe reasons for germany's slowdown, which could be addressed. romaine: brad, always great to have you here. that is brad setser of the council on foreign relations. turning to some breaking news, regarding this heat wave in texas. texas power crisis briefly surpassing $9,000 per megawatt hour. texas's grid operator has been under pressure for a while now. we have seen prices exceed close to record levels. this is bloomberg. ♪

caroline: earnings.

beatss in terms of -- it in terms of overall revenue. can ensureal, you your secondhand goods are actually gucci and the like. gaining 12 percentage points. , $.28.lost per share second-quarter revenue came in slightly ahead of forecast. romaine: we are seeing some of the cannabis companies fall. about 4.7%. evend-quarter earnings, lost -- ebta loss. did come in above estimates but a lot of people are focusing on that loss. caroline: let's get a quick check on the latest business

flash headlines. facebook has been paying hundreds of outside contractors. the social media company confirmed it has been transcribing user audio and said it will no longer do so. facebook is saying, much like apple and google, it paused human review of audio a week ago. grows, people have to pay for added costs and have data limits and added fees. some end up getting unlimited data plans that can double the $52 per month average internet bill. video sunglasses let users record with two cameras instead of one and are twice as expensive as the latest model. snap hasn't had much success with the glasses so far. it had to write down almost $40

million in inventory in 2017. i want to return to the headline that romaine brought up. texas power shooting higher. prices could hit a ceiling, we understood, $9,000 per megawatt hour. let's have a look in terms of what is happening in the overall spike. this is quite significant. romaine: this is the most expensive power right now in the u.s. on a market basis. we had some really great reporting out of our reporters in houston. this is about this transition they were making away from coal-fired plants to natural gas. you basically had always coal-fired plants go off, not enough natural gas plants, you get a heat wave, and this happens. heat.00 degree caroline: it feels like 112 apparently. romaine: coming up, inflation acceleration.

the key takeaways from the surprisingly strong july consumer price index. this is bloomberg. ♪ bloomberg. ♪

mark: i'm mark crumpton with bloomberg's word news. right police and pro-democracy protesters bought at hong kong airport today, moving into the terminal where the demonstrators had shut down operations for two straight days. officers armed with pepper spray and batons confronted the protesters who use luggage carts to barricade entrances. earlier in the day, authorities were forced to cancel all flights as adult local leader carrie lam -- as embattled local leader carrie lam said that dialogue would only begin when the violence stops. the airport was

forced to stop chickens. protesters beat a man who they allege was an undercover officer from the mainland. by man was taken away ambulance. >> hong kong had always respected rule of law and being a safe society. hong kong is an open, free city with economic stability. mark: that chaos did cause mass cancellation and disruptions at the airport. people pushing senator mitch mcconnell to take action on guns. outrage over this month's mass killings in texas and ohio. both president trump and senator mcconnell have expressed a new openness to unspecified gun

curbs. steny hoyer said the majority of americans support action. itisn't the solution -- is the solution to all this violence? it is not. believe a americans significant, important step to take. the: last week, the head of national rifle association says the group opposes any legislation that unfairly infringes on the rights of law-abiding americans. he says the legislation being discussed would not have prevented the mass shootings. william barr has reassigned the warden of the federal jail where jeffrey epstein died in an apparent suicide over the weekend, pending the outcome into investigations. two members at the correctional center who were assigned to the

area where epstein died have been placed on leave. oftein faced federal charges molesting teenage girls and sex trafficking. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. caroline: let's bring you a bit of after-hours action in terms of the stock moves. wayfarer down more than 5%. the reason, convertible debt. $750 million worth, we understand. the stock trades at $125, currently sinking. let's talk about data. hot july for inflation. one key measure of u.s. consumer prices accelerated last month, signaling that inflation may be firming. i want to welcome employee america director of research and analysis.

makes head -- make heads and tails of the data for us. cpi finally breaking above the 2%. >> thanks for having me. the cpi number we got today i think was almost little bit of validation for jay powell, saying that the slowdown earlier this year was transitory. a lot of people were saying, you weren't being critical -- weren't being credible about inflation. a lot of that was seasonal adjustment problems. when you look at that chart, it doesn't look like inflation has changed all that much in the grand scheme of things. good point.e a obviously, inflation is not dipping, but from a risk management perspective, your view, it is a declared victory. they don't see the need to cut.

that is like throwing a pick six in football. skanda: i go back to a quote said corewhere rich inflation is a lagging indicator by about 12-18. -- 12-18 months. we shouldn't be using that as the guide of what to do next. we have all had these debates about the phillips curve, what it means to have a -- the phillips curve, what it means to have a hot economy. right now, it is not the signal to look at. with not confuse real-time indicators that matter for the future with something that is probably telling us something further back. romaine: what about the jobless rate, if that continues to go lower. whata: i think it depends

we get out of that, what it means for wage growth were signs of inflation acceleration. it is interesting to compare jay powell talking about the market now compared to this natural view. he is talking about the fact that the labor market recovery we are seeing is helping to overcome persistent weakness in a lot of communities, so it is getting to the low end of the spectrum. caroline: jay powell seems to be fighting for taking on with monetary policy inequality in the u.s. skanda: it is part of the puzzle, trying to avoid recession is a big benefit to communities that have typically been left out of this expansion

up until this point. talking to congress, to the public, that language is really actually at odds with what the fed has traditionally said, that they can only control the labor market in the short run but long run, it is all about inflation. of running afits hot labor market, janet yellen talked a little bit about that. what does ben bernanke see about the limits of what monetary policy could do for some of the structural issues of the u.s. economy versus what jay powell did? skanda: chair bernanke, especially when he was arguing for qe, congress was pressing him on the idea, why are you doing this, it won't matter? he said, our policies make a difference only to a certain point. once you get to 5%, 6% unemployment, our role is really

to step act. what jay powell is saying is, we do have a role to play at least in terms of cutting off that tail risk and, in the process, preserve the tight labor market and the benefits that come from that. overcoming of long-run weakness in a lot of communities. people who weren't hired before are now being hired. people written off because of their criminal records are now being given a second chance. romaine: does this run the risk of getting a little bit too far out what the mandate is or trying to redefine it in a way that congress didn't intend? skanda: it is not optimal unemployment, not just the right level. it is maximum employment in the context of price stability. i don't think it is that much of a stretch to say this is consistent with that. to say that monetary policy is part of the picture, there are

other things we can do to improve on other issues. joe: we have another chart that is pretty cool, that you made. it shows the prime age employment rate versus the fomc longer run projection. what does this mean, the long run is shaped by the short run? skanda: the white line is the fomc members projections of the natural rate of unemployment, what is that just right unemployment rate below which we get inflation. that is supposed to be not determined by central banks. in reality, as conditions have members'are, the fomc own views about what happened the long run have improved. we learned there is more that can be done. short run-long run differentiation is as helpful as

some might like to presume. caroline: always great to get your perspective. skanda amarnath from employee america. coming up, argentina in an economic crisis. this is bloomberg. ♪

romaine: time now for a look at what stories are trending across the bloomberg universe. terminal uterus -- terminal users are reading about the empire broadening investments into technology. venturelomerate is a capital arm that is embracing the tech world and preparing for a knowledge-based future with charles koch saying, we either do it or we end up in the

dumpster. netflix, people realizing that watching hours of ultra hd video can run into a price tag. data caps and faster download speeds. opting for an unlimited data plan can double the average internet bill. a report that over 200 elephants are journeying from south africa to a new home just across the border in mozambique. it is the longest effort ever. it is part of a conservation project to protect the home reserve ecosystem. the elephants' new home will help ecotourism, diversify the ecosystem, and help create jobs. you can follow all the stories on your terminal come on bloomberg.com, and at tictoc on twitter. caroline: let's turn to argentina. the nation's extending its spiral after president macri was

beaten in a primary. now both men are getting blame the selloff. a ceo is sounding alarm bells. >> we were better buyers this morning given the magnitude of the move. whenever you see something like this, it is usually not a good time to stick your toe in the water. returnld get sort of a to interventionist policies of the kushner administration. caroline: let's welcome in the head of fixed-income strategies for latin america at amherst securities. been writing plenty about the panic monday. have you written off macri? is he going to lose and does alberto fernandez now have to prove he is not the worst case scenario? >> i think it is very difficult

for macri to go ahead. there's not much you can do. he is constrained by the austerity program so there is no spending. there's not much momentum that can really gap that 15, 16% differential. joe: the argentine peso got slammed again today. didn'tez came out and he say that much but he didn't go out of his way to make the markets feel-good. is there a danger between here to provide some stability? siobhan: i think mockery, as -- i think macri, as the head of state, they should manage the financial stress as well as they can. the problem with fernandez as we

are not looking to the macri administration, we are now looking at the fernandez administration he had some of his advisors have ruled out worst-case scenarios. but that is not enough. we need fiscal austerity, labor reform, pension retort -- pension reform, all the contexts. it is not sufficient to rule out these worst-case alternatives but not give a detailed plan. romaine: i do you get the market's confidence back? slumps predicting a 40% chance. you have a country with not the greatest track record in regards to creditors in the past. siobhan: worst, you have not a lot of tools to contain the stress. the central bank, around 18 billion. about 10 billion equivalent in opti -- in auctions.

we are waiting to see how the first logo this evening. that is a liability in terms of deeper, or fx rate it could compromise reserve positions which hurts liquidity. it is a difficult moment. what can we hope for? if they are able to manage some of this liquidity risk over the next couple of months, we can wait to see what plans fernandez has? but he is not focused on meeting or reassuring investors. he has a 15%, 16% advantage. there is some room to moderate the message. if he is not moderating, it leaves us without an anchor. romaine: macri addressed these issues. i understand he wasn't popular politically for a number of reasons but he brought a certain

respectability back to this market whether equity market, credit, currency. siobhan: a lot of people were long argentina risk on the macri narrative. now it is fernandez. with kirchner possibly in the government, i think that is the problem, this is a track record you will not easily forget. caroline: i know the polls got it very long but should investors have built in some risk factors that macri would not be popular with his own base? siobhan: shame on all of us but we have had polls each day pointing to a deficit for macri of 3% to 6%. to have a gap of 15%. the fx was stable since may. everything pointed to a much tighter race. given that we were caught

offguard, the secondary markets do not accommodate such one-sided risk. now, investors are paralyzed waiting to see what is the clearing level. high probability of default as it stands right now. romaine: we will see whether argentina moves forwards or backwards. thanks to siobhan morden, the head of fixed-income strategies for latin america at amherst securities. turning to the u.s. bond market, treasuries whipsawwed by president trump's terrace delay pushed rates higher in hong kong helped pull them back or it -- pull them back. what is the main takeaway? is it that the market cares more about the risks from hong kong portrayed? -- hong kong or trade? >> i think it is probably trade

because that feeds back into what the fed will do going forward. the yield curve, almost inverted. the short end got a bit of a lift because there were strong inflation numbers. then you sort of had haven bids bid up the 10 year treasury. even on the good days, you don't get much treasury selling. it is like a free lunch. you don't even have to pay for it on a day like this. brian: i think alan greenspan was sort of on the tape today saying that zero is just a number and their arbitrage opportunities across global markets and treasuries are effectively the only thing into that pays close to a risk-free yield. i think there are lots of people out there who are long or want to be long. global politics, monetary easing. that is sort of the reason why

you see pullbacks when there is a selloff. caroline: the inversion, four basis points. is the fed going to be watching this? are we going to have some dramatic move? brian: the fed is pretty much going to have to cut i think 50 basis points pretty quickly if they want to keep yield curve from inverting. is,ink right now, the thing close to inverting because people think there will only be a 25 basis point cut, and that is not enough in the eyes of the market for where we are in the economy. 34aine: we are at, what, something yesterday. i don't understand exactly what the market is trying to tell us compare what happened in equity markets today in the big rally and what happened in the bond

seeet brian: you sort of inflation coming back and you have a strong labor market. it goes back to what we say all the time, that the u.s. economy is strong, but the question is whether investors believe it. romaine: all right, well, keep an eye on that curve. thanks always, appreciate your thoughts. coming up, the real real rises after losing less than expected in its earnings debut. this is bloomberg. ♪

caroline: business flash headlines now. the sec has dealt another blow to those in the crypto community. agulators again delaying decision on approving two bitcoin funds. the chairman, jay clayton, says concern over investor protection makes it unlikely it will be confirmed anytime soon.

showed faith ceo in a come back. larry bought ge shares. through yesterday, ge had fallen through eight of the last nine session. americans increased their buying by 1.4%. more americans took loans to buy houses. student debt declined slightly. that is your business flash update. a quick check on some of the earnings. all about luxury. real real spiraling higher after hours, currently up 11%. easing investor concerns. with far fetch, one of the key competitors, it seemed to diverge from its strategy and it really put pressure on a lot of its competitors. we sell revenue up 50%. romaine: did you get that time from the real real? joe: no, but what are you

wearing that you got from the real real? romaine: tilray, i haven't bought anything from them. this is the cannabis company. decent revenue, above estimates, but they reported an adjusted $17.9 million, wider than the loss they expected. they said it was due to rising operating costs due to growth initiative. joe: those are the good old days that we were talking about tilray all the time. caroline: now it is the aunt b -- now it is beyond meat. joe: i will be watching macy's. the department store reporting second-quarter earnings after the bell. romaine: hedge funds disclose second-quarter investments in 13f filings. "bloomberg technology" is next.

joe: have a great evening. this is bloomberg. ♪ ♪

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♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." the shine is back on the apple. shares in the tech giants bike after the u.s. announces -- tech giant spike after the u.s. announces it will delay tariffs. facebook has said they have been paying hundreds of outside contractors to