it's not hard to understand why. every time the market goes up, we get a tweet from the white house escalating things. have the same power that they used to? >> they did this month. it's hard to argue that they don't. --a lack of tweets although he was angry about it was about german debt. he had a go at the fed at one point. the s&p 500 managed to round of the day at a tense of a percent. >> a lot of the key technical levels that we have been watching on the s&p and the russell 2000 as well, the retailers both on all of those indexes helping to keep us high. >> we keep about the fair values.

certainly all of those round numbers which doesn't leave a ton of room to go from here. >> let's die deeper into the market action with abigail. >> thinking about the -- what you were talking about for the s&p 500 in the month of august, truly in the third quarter as well the s&p stuck between 50 and 200 day moving averages. the long-term buyers have more conviction. let's look past the last year. during the volatility ofarly went belowthe s&p the 50 day moving average, it couldn't get out of the way. testing the 200 day several times then finally during the summer taking the stairs higher. once below that. the floor fell out below the 200 day moving average. an interesting case back in may, the choppiness around the trade, we see the 50 day moving average did not hold. the 200 day moving average briefly slides in between the two averages area this chart

just shows more choppy trading ahead. at least a test of some sort of the 200 day moving average. thanks abigail. i am looking at the british sterling versus the u.s. dollar which is falling versus the u.s. dollar. after angela merkel said the germany perforce and orderly brexit but it is prepared for a no deal brexit. france says a no deal brexit is the most likely outcome. the british pound has been on a steady decline for's the u.s. dollar for much of the year. tom thorton said early today on charting teachers that the british pound may be bottoming out. >> thank you. our other guests are still with us. is going ont what in the treasury market, some look at equities saying the drop

in yields is to a certain way underpinning the strength we have seen in equities area there is still a fear that we could see a reversal in the treasury market area if that happens, can equities go higher on their own? >> your first point is a valid one. attends to be a medically inverse relationship tween treasury yields and tees on stocks. this is just multiple stocks could be substantially higher. with inflation running very benign, 1.6 percent year-over-year, certainly we can justify something in the 18.5 multiple neighborhood. we are in the 16 times right now. in terms of what's going on in the treasury market, you had a significant rally. you look at the technicals, they would suggest that you could travel -- triple bottom down

around the 1.4% neighborhood in the near term. the fundamentals are telling you that we don't think there is a near-term recession area our proprietary recession model is suggesting that a increased risk soon it'son is not the first have of 2021. what is driving the treasury yields more than anything is the global sovereign bond yields in germany and japan in negative territory. all of the dying pressure coming to the u.s. is forcing our yields lower. >> you have your eye on jay powell coming up. how does he told the line between getting the markets out of the cycle said dictating what the fed does? how do you separate that we are not in this endless cycle we have been in? >> i don't know is the short answer.

the easiest way for the fed to extricate itself would be to significantly increase its forward guidance. millstone around the fed. it gives the market a target to shoot at it to overshoot at. it is tough because there is an established pattern of behavior. criticism from the white house doesn't help. encourages financial markets to lose a bit of confidence and encourages the mainstream economy to lose confidence. the minutes from the fed today, they note that business investment -- is this is don't like the uncertainty engendered by the trade war when it comes to making decisions in terms of capital expenditure. it has a massively deleterious impact so far but it is a big

indeeding forward as is the strength of the dollar which should provide a significant headwind to s&p earnings over the next several quarters. at that is the big risk from my perspective and the equity market is that you get a combination of an organic deceleration in u.s. growth and at the same time, the lagged impact is hitting foreign revenues and you end up with an earnings -- yes equities look cheap to bonds that that is kind of like saying that you're going to order picks be on the menu because the only other alternative is monkey brains. neither is a palatable options. [laughter] i'm executor. >> let's look at earnings. also coming out with second quarter revenue in line with at 3.8 7, coming in billion just slightly above the estimate. we saw a gross margin at 44.5%.

again in line with their expectations. once again, doing well in terms of e-commerce area >> cameron was talking about the impacts of a strong dollar on the bottom line. how translating the foreign currency into a --lar does >> how international is nordstrom? >> i don't know. again have the impact of the income statement is -- let's talk about international expectations and analysis area our guests yesterday was talking about how much she is going to be focusing on the european pmi's. how much will you look at foreign headwinds considering how much we are seeing the dead time and time again?

>> we could probably spend an hour on this topic. concerned about what is going on in received area we took our allocations for emerging markets and the u.k. and the eurozone and japan out of the overweight column into the neutral of the underway column area i touched upon the reasons for that. concern about a harder brexit. how is this transition at the ecb going to go? clouds of all of those that are hanging over those markets, we are concerned that germany could be going into a recession so could japan. the emerging markets, china is a very important part of that. as long as we have the ongoing traded tariffs that with the chinese, that is going to create some pressure on the emerging markets. for those

decidedly pro-american if you will area we like domestic large-cap growth as we think as a result of the re-patient -- repatriation we're undergoing one of the strongest replacement cycles we have seen since y2k. we like small-cap domestic. the u.s. economy is doing better than anyone else. small-cap will do 80% of their business here. the dollar is strong. you have a strong m&a market. positive for small-cap companies and the -- the tone of the week i keep hearing is optimistic but cautiously optimistic. a bit of a defensive tone. that does it for the closing bell. what'd you miss is up next. retail look at

resistance. this is bloomberg. ♪

>> live from new york i'm caroline hyde. >> i'm romaine bostick. >> u.s. stocks in rally mode. >> what'd you miss? >> the target rising to walmart's challenge. the resilience of discounters. arecipal bond fund desperate and risky buyers are catching -- catching in.

target hitting the mark reporting better-than-expected earnings driven by clicks online. the retailer reaching a record high. we want to welcome our guests to discuss this. let's set the scene. first, we just had nordstrom coming out. generally it is the big box companies that are doing well. what does that say about the u.s. consumer? >> it says that despite these fears, the consumer is alive and well. the consumers are getting choosier these days so that's why perhaps the discounters are doing better but it's not just low prices, and ripped it

retailers you have to have the right assortment and convenience as well. removingalks about friction for consumers and they are doing this online and in the stores. the stores are cleaner and nicer. target has nearly two dozen private brands that they have launched. it's not just about the lowest prices. you have to have more than that to deliver for a choosier consumer. >> when we talk about lower prices, you can argue that walmart is using their scale to pressure suppliers to keep the prices low even in the midst of tariffs. so many don't have to push the costs on higher to the consumer. do you see these companies doing that? are they so big that they can force the hand and withhold the terror of price pressures that we are seeing? >> i think you will see a walmart always invest in price. with any tariffs scenario they will make a huge effort to make sure they are the lowest priced place to get those goods.

did see an inflationary environment related to tariffs, that generally and historically has benefited walmart. sharen see them pick up if you saw continued pressure from tariffs play out next year area >> what we saw from walmart was the cost of expanding online or expanding the online offering and delivery offering and in-store pickup. we also heard that from target. are they still having to spend that much on in order to compete with amazon or has that subsided? what i saw today out of target is a great example. their cost is going down for delivery. if you look at their year-over-year cost of fulfillment, it is going down because it is shifting towards pickup in-store in-store fulfillment. also their productivity is getting better. they are getting more efficient

areas the number they gave was 30 percent more efficient on executing these productivity initiatives. allowing them to get goods bought online to their customers cheaper than i have before. that helps the gross margin this quarter. saying choosier you have to get the formula right. walmart and target are both able to use scale to their advantage. target address that just today. we got a bit of a reprieve with the tariffs pushing some back to december but target's ceo said tariffs are going to be a 2020 issue for them. the impact you're going to see which hits everything target and walmart sells is going to be felt in the first quarter certainly. they are pulling all of the levers that they can using their cloud seeing if manufacturers and vendors can shift

manufacturing two different countries. they have a lot of tools in their arsenal. the bottom line is it still going to hit them. ask let's talk about the grocery business. target they are the two companies who can take on amazon. a wholezon bought foods, you can see them get nervous. how much de facto -- do you see that affecting their growth going forward? see it in their.com growth. they indicated last week that a lot of their.com growth was from grocery pickup. that isn't just because you can get it it's because they have spent the last few years drastically improving the grocery assortment. the execution of fresh and it is executing well for them. grocery being

driven. a lot of their pickup is not fresh in fact that they don't even do freshman for pickup right now. the same thing, they are driving their digital growth with by online pickup in-store. >> this discount versus luxury conversation will always continue. thank you to our guest. coming up, high yield municipal bonds reaching record lows. banks rush to cut interest rates. what this means for investors looking to take on risk year deals. this is bloomberg. ♪

>> it's time for a look at trending stories.

terminal users are reading about how hedge fund traders performed better in existential panic's according to a study at the university of manchester. highly paid traders exhibit above average stockpicking skills. it's hard to say why but it may have to do with reputational risk since going under looks bad on the resume. bloomberg has an amazon story opening its largest campus yet in india. they already have 52,000 full-time employees in the country. amazon is making an ambitious push into india as it prepares for an expansion battle with walmart. tictoc on twitter is reporting on the release of american factories. this is a first documentary released by the obamas. it's about a chinese company factory in company

ohio. yields have reached record lows and that means investors are pushing increasingly into risky deals. many of the high risk deals are rated and could leave investors exposed to potential losses if the economy starts to roll over. joining us is danielle of bloomberg news. tell me about these high risk issuers that are flooding the market. it really are poised. high-yield bonds of come to the market of the fastest rate. we are seeing deals from shopping malls, recycling facilities, a train. issuancecrazy large and it was oversubscribed. andre we seeing alarm bells

investors getting nervous by the quantity of high-yield in the market? right now some investors are getting nervous because high-yield bonds perform well when the economy is good and not great when it's not. in 2008, 2000 8 -- high yields dropped in a year. worrieds are getting that in his late cycle environment, something could pivot and that might happen again. >> i am fascinated because usually will we talk about muni investors the to note it's been produces revenue to pay back the bonds. in this story all things say things that have no revenue now and we don't know if going to have revenue. >> that is a very good point. muni bonds are said to be one of the haven assets.

then normally issued by state and local governments and taxed -- backed by taxes they are safe. this is different. we are seeing they are coming in a covenant like away. that is something mentioned earlier today that sometimes they don't have a mortgage backing or a debt service fund or if they do it's very low. what it they are concerned about these bonds being issued is that they might not create problems for investors for another two to three years when the construction finishes and they have to stand on their own two legs. helping to bring some of these deals to market and really highlighting -- noticing they are relatively covenant like. >> are they getting weighted? >> some of them are some of them are not. unrated deals are hard to track have been seeing is that not only are they not getting rated, the sheer size of them are egg.

so you have a couple hundred million dollars being issued for a proton cancer facility treatment bond which is kind of bizarre when you think about it but it is unrated and it usually does pretty well. >> we hope that the protons work -- a great story. a quick check on the latest business flash headlines erie it jpmorgan chase is looking to shut down its chase payout. they started telling customers today that they will no longer be able to pay with their smart phone. has reached acing three year high. rates have dropped. the falling rates may be increasing home sales because purchases of previously owned homes jumped in july. deutsche bank is making it tougher to sell vacancies.

they now require division heads who want to fill open jobs to get approval from the ceo. is in the midst of a giant restructuring program that involves cutting 18,000 jobs. that is a business flash update. >> sticking with banks and a sign of where gold -- wall street is headed, goldman sachs -- only coders need apply. we talked about this a little bit earlier. we saw this tread -- trend with other banks are moving away from the traditional finance and business candidates and they are looking for people who really understand computers, coding, whatms react cracks >> caught my eye attention was the people they are looking to hire are in the trading division. we have talked about the structural decline and equity and trading in revenue there and some of the concerns.

banks typically get a lot of money from the division. automating some of those around the risk and the trading really caught my attention. >> goldman is starting to see their bang for the buck if you're able to service more clients, their able to bring in more revenue. i love that they call it a shark tank-esque plan. don't take bloomberg. >> we are still hiring here. withg up, we will talk marianne williamson. she has announced she has made the funding threshold to meet the next debate. .hat's coming up next this is bloomberg. ♪ from the couldn't be prouders

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>> i'm mark crumpton with first word news. president trump backed tighter background checks for gun purchases but he wants to be careful by closing loopholes doesn't clear the way for more gun control. as it was leaving the white house for events in kentucky, he told reporters i have an appetite for background checks we are going to be doing background checks. the president continued quoting at the same time i don't want to take away people's second amendment rights. i don't want to take away the constitution having to do with gun ownership. he added he considers gun violence a public health issue and is considering ways to make

background checks more strict. in thent to guns to be hands of people that are mentally stable. those people i want them to easily be able to get a gun. people that are insane, people that are sick up here i don't what them to be able to get a gun. tolde president also reporters he spoke tuesday with the chief executive of the nra about what he described as concepts. he said he agreed that things have to be done. the trump administration is moving to end a federal agreement that limits how long immigrant children can be kept in detention. the current agreement now requires the government to keep children in the least restrictive setting and to release them as quickly as possible. generally after 20 days in detention. the agreement which in part governs how long children can be held in detention has been in effect since 1997. there is no intent to hold

families for a long time. the average is under 50 days. that is the intent for a fair immigration proceeding. migrant families coming into the country have been released into the u.s. while their asylum requests are pending. angela merkel says she is still holding out for an amicable and frictionless departure of britain from the eu. she met with boris johnson in berlin as he began a tour to press his case for reopening negotiations on brexit. she made it clear she will tell the eu line that the brexit deal should not be revisited. the mayor of philadelphia says he accepted the police commissioners resignation on tuesday and that they both agreed that would be the best course of action or the department at this time. the resignation follows a sexual

harassment lawsuit by two female officers who say their complaints of being physically and verbally harassed by supervisors and colleagues were ignored by the department last erie it one accuses him of failing to address the behavior because she broke off a two-year affair with him in 2011. >> we've instituted an expansive directive on how these complaints should be handled. we are moving forward from there. some of the past allegations took place outside of this administration and we are moving forward. >> the philadelphia police commissioner will service acting commissioner during a search for the replacement. 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'm mark crumpton. this is bloomberg.

breaking news on l brands. it looks like they beat second-quarter adjusted eps. they missed on sales but they are sticking by their full your forecast for the year looking for eps of 232 to 60 pressure. that is their guidance standing by that right now. we will keep an eye on that. let's talk politics. democratic presidential hopefuls have one more week to make a cut or the last round of debates. the dnc has upped requirements for making the stage. 10 candidates say they have qualified. >> we are here with marianne williamson. you make the threshold for donors to qualify for the debate

. it can you make the polling threshold? >> we will know when the polling results come out. >> do you have any sense of where you will stand? >> i might not make it but i'm still in the race or not. >> people say if you don't qualify for the debate maybe it's time to get out. >> i say this train is on a roll. there hasng gears, been a lot of talk on wall street as well as main street and all throughout the world about whether or not the u.s. economy is headed towards a recession. what would you do as president to avert another financial crisis? >> we have to look at why we are that we are in. we have to not only be reactive, we have to look about the whole picture and why we are in this chaos. we are here because we have a lack of stability in the way we see the economy. in the way we hold it in

general. fundamental need a pattern disruption and where we see money. what we see money is and where it comes from. this president has had a chaotic policy as we know. the tariffs have helped create this and the investors and citizens want to know that somebody -- the ship is stable and we can exist within that. i feel that our economic policy needs to shift strongly toward education and the young. money comes from the productivity and creativity of the american people. not a few job creators to trickle down. ort is not my view of money a righteous or moral economy. my view of a righteous and moral economy is where we unleash the dreams of the american people, uncap them, allow people through education and access to health care and capital to live their dreams. that is the kind of fundamental shift that needs to occur and

will occur. >> you spoke about this before you came on. it your career is largely the american dream. detroitd about this in following the debate. do you consider yourself a capitalist? >> absolutely yes. i have an experience of the upside of capitalism. the problem in america is not that some people can create wealth. it's that not enough people can create wealth. it righteous people don't want to feel that they make money at the expense of other people having a chance to. that is the problem. if you are in the club in america, this is a great place to be. the problem today is that not enough people can get into the club. that is the conversation. >> why is that? >> we have transferred the availability and advocacy of wealth creation into the hands of very few people. own1% today of americans more wealth than the bottom 90%. the greatest wealth and equality

in the last hundred years. this is changing. hopefully you have the business roundtable conversation -- the idea that short-term profit maximization for huge corporate entities should begin in greater advocacy by the u.s. government than the health and well-being of the american people, that has to stop. earlier today you were at the african-american chamber of commerce talking about policy issues like reparations. what do you say to skeptics of reparations? why is it important for there to be some type of commission to discuss this nationally? in your life whether it is the economy or anything else, you have to go back to your principles. -- can't have the abundance the abundant future that you want if you're not willing to clean up the past. when it comes to the economic disparity, it came from

someplace. it came from slavery. this is all the legacy of slavery and you just clean it up. the idea of economic restitution for one people when a wrong has been done is not a notion. >> what you're advocating for is not necessarily a check to every african-american. . it you are calling for an investment. >> yes i am calling for money that would be dispersed to a commission of a reparations counsel. a are very learned on the subject. all of whom are descendents of slaves. the money would be dispersed over 20 years. it would be under the stipulation that the united states government is using this money for economic and educational renewal. then how it is applied, it could be black chambers of commerce, black colleges, wealth creating

opportunities, capital investment in neighborhoods, that would be up to this counsel. white americans should not be deciding. power of reparations is different than race-based politics. leave openpolicies the question of whose fault it is that this gap exists. you coming onte bloomberg television. you are going to stick around for bloomberg radio. the polls come out in the next week or so on whether or not you will qualify for the third democratic presidential debate. back to you in new york. >> thank you, kevin. reinventing the internet. we will speak with the founder chief scientist of divinity. this is bloomberg. ♪

>> the power of the internet is alarming for some. platform seeking to reinvent the internet. it has the backing of the titans. the president and founder of defendant the. i think there are lots of good things about the internet. we are working on the internet computer which extend its functionality. it can host a new breed of

secure hack proof systems. internetso host service to compete with the big tech and solve problems we see emerging. how to restructure that it would be just as useful as the internet today? >> the internet is created by a protocol that combines thousands of private networks. the internet computer will be created by a protocol that combines thousands of [indiscernible] data centers. it's a protocol. in the same way the internet is created by a protocol. that compares to something like amazon web services which is a proprietary structure of a closed company. take on big plan to

tech? is it through a cloud? we know amazon web services has a cloud product. how do you plan to tackle taking on big tech? computer makes it possible to build internet services in a different way. they are built using autonomous software. by an opened governance system. becausee an advantage they can provide guarantees to users and also to entrepreneurs that want to build on top of them. is something called platform risks talking in the world of tech. an early example of this would be the singer. the social games company that was very successful. they built on top of facebook and its valuation was north of $10 billion.

then facebook change the rules. what it was built on top of changed underneath it. if you months later it lost 85% of its value. more recently, a business directory provided apis that hundreds of startups used to create business profiles into their own services. and you cann imagine what happened to the startups that used business profiles very the only ones who weretheir api access salesforce and microsoft. if you build on big tech today you are building on fact. if you go and say i have an idea to create a new service and i need to build on top of big tech, you will likely get left out of the room are you even though the successful recent tech ipos, 17 or 18 of the last

22 mention what form risk as being existential, and as -- existential risk -- --i'm interested in the fact when you explain your peer-to-peer internet vision, how long of an investment are they looking at? when do you gain a critical mass? how do you get enough involved to make this a reality? x most are long-term investors. potential of the the internet computer and the value and impact they can produce. this,did not create somebody else would. it is a natural evolution of the internet. the internet started off providing connectivity and now it will be able to host secure software systems and open internet services also. we're extending the internet. technology is available to do

this. building on top of existing computer science. if we didn't somebody else would do it. backingre already long-term evolution of the internet. >> what makes you think that google and amazon will relinquish their grip? >> they are not. theys going to happen is will become increasingly monopolistic and we will see more consolidation. regulation will find it hard to deal with this. you never see it on facebook or google. at axingnot very good stuff. they let facebook by instagram and whatsapp. over time, it will decrease the level of real -- regulation and big tech will become

quasi-nationalized industry and then it will be a free open internet. >> this fascinating conversation could go on. thank you very much. it's time for smart charts with abigail doolittle. you are taking a deep dive into the s&p. to do that today with me is john from macro risk and visors -- advisors. bondsput stocks and together you have a great chart here that i love. >> i think this chart speaks to how equities are going to resolve themselves to the upside. week rolling correlation of the s&p 500 to interest rates. currently in the last 10 years it has been positive from the 70's until the 1990's it was negative.

as interest rates go, i believe that's how stocks should resolve themselves. if the correlation is positive and interest rates are at their second lowest oversold condition since 1962, there could be potential for capitulation in the market. >> let's look at another about capitulation. talking about the possibility of a capitulation model. it's funny to do because we are so close to the top. the selling pressure we saw in the first week of august is extreme. >> there is a lot going on. this is the s&p on top, the percentage of stocks above their 10 day moving average and the call ratio. this is a measure of short-term trends in the bottom is the measure of sentiment. if call ratios are high there's a big lot -- fear in the marketplace. what we saw is a capitulation signal. fewer than 20% of the stocks above their 10 day average. historically when this happens,

the market is higher three-month out 80% of the time. it is a very timely inner -- indicator but with these capitulation signals, they tend to occur oftentimes near the start of a bear market. that has me a bit worried. at the degreeok of capitulation we saw lester, you have a chart here similar to one we presented for a couple of months. >> what we have here is what's known as a broadening formation. you have higher highs and lower lows. it represents an extreme in sentiment. bullishness and bearishness. when i stare at this chart, i think have i seen this before? when youterrible -- think back to the 1970's, it did find the 70's and that era. how does tends to play out like it did in the 70's, this is the

peak of 1974 we could find ourselves down and undercut low in december which would be a 20% peak to trough erie and. trend is incredibly important here. this 2731 level has to hold. if not a could get ugly. >> definitely the elevator down. thank you john for joining us. from new york, this is bloomberg. ♪

down on is cracking multinational companies responding to the hong kong protests. this has global ceos toeing the party line to escape china's scrutiny. it looks like we are finally

learning what the price of access is to the chinese market very a. >> we do want access. what do they need to compromise is the big question. have comese companies out distancing themselves from the hong kong protests and the political issues that play at the moment. we have seen this huge ad on the apple daily newspaper of an anonymous group claiming to be the employees of the four big accounting firms in china. we had one coming out last week and distancing themselves from the ad. we can show you the statement they are saying in response to the advertisement in hong kong, they emphasize that the ad does not represent their position. we firmly oppose any action in statement the challenges national sovereignty.

this sent a clear message that the chinese government doesn't separate business from politics. >> yes there is another company hsbc taking a different approach. is one of those firms that could get badly hit. if they move their base to london before the 1997 handover but more than half of their revenue comes from asia including mainland china. they have tried to steer their business for the mainland to push into businesses. they have a strong headquarters one of their basis in hong kong as well. so far, they have come out and they haven't really said it much and response or distancing themselves from the protest. of the financial times has reported that hsbc managers allowed staff in hong kong to attend a midweek demonstration back in june.

>> that's hard when you have hong kong in your name. catch shery ahn daybreak australia. bloomberg technology is coming up next. >> have a good evening. this is bloomberg. ♪

in ♪ -- ♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." coming up, the power of the good old fashion telephone. will conversations help apple's case on trade? the cofounder of google the mind is placed on leave. what is next for the