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tv   Bloomberg Markets Americas  Bloomberg  August 9, 2017 12:00pm-1:00pm EDT

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vonnie: from bloomberg world" is in new york, here are the top stories on the bloomberg and around the world that we are following today. fire and fury. u.s. stocks are lower right now as investors pay attention to simmering tensions over north korea and president trump's rhetoric toward kym kim jong un. why are they suddenly paying attention? it has been 10 years since the onset of the financial crisis. we will take a look at the inflation targets in the future of the central bank before this week's cpi and ppi data friday. disney starts what could be a massive shift in the cable business. what bob iger told us on why does this will bypass netflix for the most part and sell its own content directly to consumers. first, julie hyman is with us.
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we are halfway through the trading day. we are a little, i was going to say blue, but it is read. julie: right for the bulls who are feeling blue today. -- red for the bulls who are feeling blue today. it went below 1400 today for the first time since june, so definitely a downdraft. the s&p in particular is coming off of the lows to some extent. vonnie with just posing the question, why now? why are stocks reacting now when they have not reacted to other political rhetoric we have heard? keep in mind the backdrop. we have everyone from howard marks warning investors right now about the sustainability of the stock rally and counseling caution. that perhaps is eating into the current sentiment and mood, and that mood is reported in this compendium of risk on an risk
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off. it is an index we use a bloomberg that looks at various stock indices and other assets around the world to be the temperature of the market. we are seeing this risk on, risk off index go lower today, showing there is less of a risk after rising for much of the last year. another way to look at his more specifically is to look at other assets outside of stocks. oil is trading a little lower. actually, it was trading lower. a drop in crude oil inventories last week, but a rise in gasoline inventory. gold is still touching a bid on the concern of the rise in global tension. the vix rising for the second straight session here. we are also seeing a bi for the bid for the end versus the u.s. dollar defense contractors. we have lockheed martin and another one both trading
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higher. capitalizing on the concerns or hopes for defense contractors that they will get a boost in if there is army of the united states. this is one group that is green on the session as a result of what is going on and coming out of president trump in terms of his commentary. vonnie: we are going today more -- to dig more into this subject right now. this for a second straight day, stocks lower. this morning, the president tweeting. how is this impacting the geopolitical landscape and the markets? i want to bring in bill. he is in washington, d.c..
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here beside me is gina. let me turn to you first, bill. obviously, the president is trying to posture and tell the world it is the most powerful nation. just how much has our nuclear arsenal been beefed up in the last six months? "the new york times" is reporting these were improvised words. bill: it is hard to imagine a lot has been done on the nuclear arsenal in six months. it is true president trump did sign in order -- an order conducting a review and has looked at continuing what was essentially an obama policy to modernize the forces, but the reality is this is a 30 year effort the analysts expect low-cost $1 trillion --
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expect it to cost $1 trillion. in terms of the president's comments, but we have seen is japan and south korea kind of tamping down concerns of whether there is some sort of imminent crisis. we heard that from secretary of state rex tillerson. it is really not clear in terms of whether this was an impromptu remark or not. it looked like when the president made these comments that he was looking down and reading so maybe something had been drafted, but how much the pentagon or the state department or the national security council was involved is still something we are trying to chase down. vonnie: bill, let me play the sound from rex tillerson. we may as well listen to it first. missile korea i's capabilities is in different directions and so long is not the only place under threat. no, i never considered rerouting the current back. i do not believe there is any imminent threat.
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vonnie: i mean, a lot of military personnel from the u.s. in guam. a lot of people in japan are very worried. a lot of people in south korea and so on. this really affect a whole region. down?eds to calm this china has been trying with words. so has germany, in fact. plenty of countries are trying to calm this down. yet the un's sanctions revolution and the rhetoric out of the president, does not seem it seems jong un -- as if kim jong un will have to respond. bill: trump, the ministration, and rex tillerson were praising the un security council to slap $1 billion worth of sanctions on north korea, which was really seen as putting a hamper on
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their ability to generate revenue. a lot of people would say that sanction need more time to take effect. what we hearing from diplomats at the united nations and u.s. allies and other countries in southeast asia is, let's keep pushing the diplomatic angle and try to get some results that way. get back to the negotiating table. what we have seen from north korea consistently is they do not seem to be responding at this point to the international diplomatic pressure, and secretary of state tillerson made some comments along those lines as well, saying president trump's comments were so blunt in fact because kim jong un has not understood the diplomatic language. we will see if this new verbal approach has any concrete results. vonnie: bill, thank you. gina, i want to turn to you now and ask you, why is the market suddenly, i don't is a overreacting, but it is taking these comments were seriously?
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we are seeing a biggest fight in the vix. gina: the market is set for a correction. they have been regulating this body of evidence last few weeks suggesting the market is running on fumes. s&p 500 companies massively underfunded the market cap weighted index. to us, very few names are really carrying the index higher. we saw divergences in cryolife, momentum waning across the board. this was the trigger in a market with a lot of symptoms, but it should correct anyway. i do not know that the market is paying that much attention to this as the primary risk, but was already running on some sort of fumes. vonnie: right. in 1997, one of the chart you are pointing to. yes.ina: what we .2 here is the fact that volatility is still low. we have seen as a selloff as the
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market is running on fumes.volatility is aske still actually low. maybe relieve a little of the overbought conditions. this chart shows that what you typically see is an escalation in volatility. rise pretty quickly when the market corrects, and we have not seen that. until we see a 2% day, this is a short-term correction within the scope of the longer-term. vonnie: the nasdaq is leaving things lower. the nasdaq has plenty more room to go. gina: sure. absolutely. we are so far off. above longer-term uptrend lines, and our fundamental fair value says even assuming some modest improvement in the next few months, the fair value for the market is 6% higher from these levels. probably a, this is modest correction within the scope of a longer-term uptrend. the typical aggressive
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indicators you have for a bigger longer-term correction are not there, so we are still pretty optimistic. vonnie: gina, thank you. let's check in now on the first word news. mark: thank you. the fbi has carried out a raid at the virginia home of former trump campaign manager paul manafort. according to a person familiar with the details of this search, the rate took place -- raid took place on july 25, and the collecting material doing a search that they took with them. a spokesperson says paul manafort is cooperating with the agency. fbi agents are working with a team of prosecutors led by robert mueller to investigate rushing's meddling in russia's meddling in the 2016 presidential election.
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the air operators of greatest most ambitious project yet for the defense innovation unit experimental. experts have come up with software to use against so-called pop-up targets like fueling vehicles and attempts to plant roadside bombs. israel's ruling party is organizing a rally tonight in support of prime minister benjamin helps the rally will be a show of force by the beleaguered israeli leader as he battles a series of corruption allegations. party leaders describe it as an attempt to counter a vicious campaign by a hostile media and overzealous police. it is also serving as a test of netanyahu's popularity and control over his party. opec says that three nations have reaffirmed their commitment to that agreement to cut oil production. the three are iraq, the united arab emirates, and kazakhstan . . so far, all have come up short when it comes to reducing output. 24 countries agreed last year to cutbacks to try to end the global glut.
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global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. vonnie: thanks. coming up next hour, kathleen hays-- next, our kathleen will interview james bullard. that is coming up at 1:00 p.m. eastern time. we will set the stage, next. this is bloomberg. ♪
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this is "bloomberg markets." i'm vonnie quinn. we are halfway to a great busy week for the federal reserve and the u.s. economy, of course. today at 1:00 p.m. eastern time, jim bullard will speak exclusively with bloomberg.
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tomorrow, we will have the new york fed president bill dudley. we will also get the u.s. july pbi. on friday, the last month's cpi data. probably the most important date of the week. for a little bit of an idea what this will mean, i want to bring in jewel cracjoel. all eyes really on the cpi data for the most part on friday, right? joel: that's right. maybe a little context or background on this. earlier this year, measures of inflation softened. we know there were factors behind that softening. unlimited data plans introduced by a major carrier, some prescription drugs coming off of a patent, and the prices being brought down by generics, but there was a softening in prices as well. why do we think inflation is likely to gravitate to 2%? the fundamentals point in that direction.
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survey-based measures and expectations still support 2% inflation projections. second, the economy is doing well. labor markets are tightening. we expect 80% handling on the unemployment rate sometime next year. third, the dollar is less valued this year so far. 5% to 7% depending what measure you look at. finally, energy prices, commodity prices are unevenly rising. all of the factors in our models point to a gradual rising inflation. once the legacy effects of the slowdown in special factors that occurred earlier this year will wear themselves out. vonnie: janet yellen's dashboard it is not where she wants it to be. of my of the issues that you mentioned that are hypotheticals, what will we see? joel: the dashboard on labor markets? vonnie: yes. joel: the overall unemployment
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rate will head down with a three handle, but we know that chair yellen let's look at other things like how widely are the benefits of unemployment enjoyed o across different groups. we are not satisfied there. the unconventional measures that are still elevated relative to the prerecession levels, so until we see all facets of labor market tighten up in a historical correlation, you have to be a little concerned that you do not see the normal relationships between them. the cpi report later this week is important. all the inflation reports between now and any of the next several meetings will be important to see whether the suggesting data inflation is re-accelerated. vonnie: they are all fascinating.
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jim bowler, what will he say today to kathleen hicks? what would your question be to him? joel: first of all, i want to say that a year ago, jim broke with orthodoxy and adopted this wait and see attitude to initial monetary tightening. ago when he broke without orthodoxy and adopted a wait-and-see attitude to monetary tightening, i really respected that decision. i think there are good reasons for doing that. so far, has approached -- his approach has been justified. i think he will be cautious about advocating for further monetary tightening. people want to see signs of signsion are back up and that growth will continue at 2% or more. vonnie: thank you. watch that exclusive interview with jim bullard at
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1:00 p.m. eastern. time for the latest bloomberg business flash, a look at some of the biggest business stories in the news right now. two copies are warning investors to scale back, according to a report. buffer.thet much money manager join several who advocate the strategy following record stock market surges. beene box has holding talks about a sale. walmart is on the list of potential acquirers. it is i'm here how far along been.have former new york yankee a-rod plans to capital on the retail price that he has a license to open ufc braided gyms in the miami area. shopping centers have been closing at a record pace, so
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rodriguez and his partner are looking for shuttered brick and stores.rick and mortar charter communications in play? the cable company is drawing interest from another buyer. this is bloomberg. ♪
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this is "bloomberg markets." i'm vonnie quinn. on the day of another potential megadeal among u.s. cable providers. one company now has its sights set on charter. alex joins us from our princeton bureau with today's deals report. i guess with a weaker dollar, this is not completely out of the question. alex: there is a blueprint for this.
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if you look at the market caps on these companies, you think this is your craziness. they just let public in the u.s. so they have a currency. they bought cablevision and another company, but compared to charter, which is a $120 billion market cap company, but you don't have to look back many years ago. charter bought time warner cable in similar circumstances when charter was a much smaller company that time warner cable. this would just be, let's do the playbook again. ltice being the buyer. softbank is also looking at charter. softbank has not decided whether or not it will actually bid on charter. .ame for altice they have hired banks and lawyers to contemplate the idea of biting charter rather than allow it theoretically to go to softbank. there is an outstanding question
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whether one verizon will get into this. remember, verizon looked at charter back in january. at that point, they decided, you know, we do not think this is the right fit. whether or not they come back to charter still an open question. patrick is in this game. he is one of these cable cowboys, isn't he? alex: john malone, the original cable cowboy, or what he is known as, is the largest shareholder in charter at 35%. any deal for charter would have to get john malone's blessing. he controls three board members on charter's board. he would have to be game for this idea for selling charter at all. we know they were hesitant on doing a deal with softbank. whether or not they would turn --und and sell to altice
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look, malone has hitched his wagon to rutledge. whether or not he is ok with us which remains to be seen. also, what price would altice put out there to buy charter? you would have to think $450 a share or more. certainly, we do not know if altice can get the money to do this would require huge financing . charter already has $60 billion of debt on it. that is a problem with softbank being interested in it as well. a lot an outstanding questions that raise the level of skepticism about whether this will happen. vonnie: it is another option, i suppose. we are talking about all consolidations seem to be more everything. would it be a better option for charter than other options? alex: well, charter will make the case, i believe, that the best option is to stand alone and keep running the course, probably doing some more
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smaller acquisitions. that would be the argument. there is always a high that price is, i don't know . they will have to get feedback from the addition to that, softbank , which may or may not go after charter, is also having discussions to try to merge sprint and t-mobile. vonnie: yeah. alex: those discussions are ongoing as well now, so it is possible that deal gets done instead of a charter deal. we will see. vonnie: charter from our princeton bureau, thank you. always fascinating. coming up, we will have some of bloomberg -- coming up, we will have some of bloomberg 's interview with disney ceo bob iger. this is bloomberg. ♪
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got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here.
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find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. >> that you beautiful shot of son in midtown manhattan. i'm vonnie quinn. this is "bloomberg markets."
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the majora quick of averages, we've been lower for a second session but really where talking about fraction of a percent here, the dow down 56 points, 1/4 of 1%. draghi lower by disney. the s&p 500 down more than 1/10 of 1%. let's get to the first word news this afternoon tried mark crumpton is here with mark. mark: the british ambassador to the united nations says the u.k. stance, quote, shoulder to shoulder with the united states in tackling the nuclear threat from north korea. he said both countries have been clear in demands to pyongyang to halt its nuclear and icbm programs. korea holdst north the key to sanctions being lifted. u.s. secretary of state rex doesn'tn said he believe there's any imminent threat from north korea. the secretary also told
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reporters he thinks president trump's warning that north korea would face, quote, fury and fire was appropriate. north korea has had its considering missile attacks on the u.s. based on guam. officials say french police are searching a building at a suburb west of paris believed to be linked to the chief suspect in a car attack that injured six soldiers. two officials say the search is part of the investigation into today's attack. information about the suspect's identity is being verified. police shot and wounded the suspect on a highway in northern france after he fled the scene of the attack on those soldiers. month's second round of discussions on britain's exit from the european union produced a quote, significant step forward on the issue of citizen's righs, according to a letter to the house of lords from the brexit secretary david davis strait in the july talks in brussels, the good uterus discussing the rights of citizens in britain and those of
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britain's and other eu nations after the divorce rate davis said the dialect produced four days of difficult but ultimately productive discussions. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton/. this is bloomberg. vonnie? breaking news now, the president is said to be favoring a man called joseph simons to lead the federal trade commission, according to three people familiar with the matter speaking with bloomberg. president donald trump poised to nominate a long time antitrust attorney as chairman of the ftc. this is fascinating because it will come right after the initial review of the amazon takeover, the proposed takeover of whole foods, but also the lawsuit against qualcomm for allegedly abusing its monopoly in the market for smartphones.
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somebody from the george w. bush administration taking over as head of the ftc. -- ftc if this all happened but it is said to be trump's. -- trump's choice. starting next year, disney will begin distributing a new espn service directly to new customers brady will follow that with a video streaming service ending the deal at that point with netflix. shares of disney and netflix move lower on the news. bloomberg press reporter spoke to bob iger right after the earnings call. eiger explained the profound shift in the media landscape that trigger disney's new move. >> we are going to continue to distribute the espn linear channels through the cable distributors. they been good partners of ours over the years and together we managed to create a highly profitable business. the distributors and programmers alike have been experiencing the disruption of the whole market is seeing and multiple
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businesses are seeing from advances in technology and changes in consumer behavior because of that. my guess is distributors will look at this probably more as a threat than anything else. what we're doing is we're reacting to marketplace conditions and taking advantage of the quality of our brand, the passion and product we create and the technology that enables us to reach consumers directly. >> is this the beginning of the end for the bundle, do you think? i think that's maybe a little bit too strong. i don't think it's the beginning of the end it all. we've seen erosion of the bundle is new entrance to the marketplace of her consumers options. highly profitable. secondly i think it's a very good consumer proposition. there had been incursions on the bundle, whether from new over-the-top providers, youtube, hulu being a couple of them.
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more competition to reach consumers with multichannel services. i don't think this is necessarily the beginning of the end but it represents a continued shift in consumer behavior, and the opportunity that technology provides us. ceo like you makes a major strategic decision like this, they inevitably have to ask themselves, do i build it or do i buy it? did you consider buying something, for example, like a netflix? why did you decide to build it rather than buy it? >> in a way, this is a buy as well. we are buying a technology platform that is enabling us to create these businesses and go into this space much faster than we would have had, had we built it. i'm not going to comment on whether we look to netflix or what our acquisition opportunities we looked at or have had. we have the financial wherewithal to do a number of things, but this seemed to be the best app for not only the
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walt disney company but our shareholders, in terms of creating our growth strategy, really growing the company long-term, taking a long-term view which is really important, but also addressing the near-term issues we are seeing, which is all about the disruption created by digital technology. vonnie: i was bob iger, the chairman and ceo of disney joining us. -- that was bob iger, the chairman and ceo of disney joining us. quarter afterying quarter, there has to be something about the idea now. if you are not a sports fanatic or you don't have young children, the you need an ott service from disney? >> is not just children's movies. there's a lot of disney movies for adults as well. but as we move away from this bundle, because bob admitted there is an erosion going on, it's going to be more a la cart and you will decide what you need from your particular purposes, and they are particularly targeting sports
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because they have espn brand, which for the premiere television sports brand in the world. and they have disney, which has high-quality family movies. vonnie: he made mention of the fact that the bamtech stake acquisition means they can even do this for older people. apart from team parks, they are struggling for growth in other areas. >> you saw that in the reaction of the markets to the disney earnings announcement for the third quarter. they actually did reports of disappointing earnings, particularly on the cable. they did better in theme parks and other places, not so well on cable. there is a defensive and offensive part to this announcement. they see their business is eroding along with basic cable. if they just remain on basic cable, they will go out of business over a long period of time. then there's the part of having direct consumer relationships they never had through cable. now they will have a direct
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relationship with you if you want to sign up for one of the services. did you get the sense from talking to iger and all of your research before and your digestion of this interview that this is a big enough tilt for a company the size of disney? is this a big enough acquisition? >> we are speculating at this point. i worked for many years and i know him pretty well. i know him well enough to know that you will make this big enough. this is the beginning, and you refer the nba, nfl. i asked about that. he essentially said, stya tuned. this is the beginning. is a platform they establish an able expand off of it. vonnie: who will have the leverage now? it used to be the distributors had the leverage. networks had a lot of leverage at one point. it's busy positioning itself to be a very strongly positioned player in pre-negotiations with
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an -- anybody. >> disney believes it has a lot of leverage. ofy believe the strength their brands, the walt disney brand, the pixar brand, as well they have abrand, relationship already direct with the consumer. they believe that will give them the power or authority. let's be clear, when it comes to entertainment, to sports, the leverage ultimately belongs with the talent, whether it's an all-star third baseman or the amazing star of a movie. ultimately, the power remains with the creative people. vonnie: they basically have to hire a lot of acting talents, right? >> they will be investing in an original series. it's going to be like bilions. vonnie: can't wait to see it. david westin, great interview and great perspective. thanks for joining us to read coming up, the manifesto that created an uproar in silicon valley.
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why the story is far from over. this is bloomberg. ♪
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vonnie: disney made the decision to stream its content directly to consumers greatest part of that effort it will end the deal to offer its newest movies online through met clicks -- netflix. shares have been pretty volatile today, let's focus on their side of the story with bloomberg's abigail doolittle. bba negative for netflix. >> they do have a lot of content
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providers, including their own. down sharply been earlier about 5% in the premarket. they have the original content, house of cards, other big-name straight if we look at the start on the hanging wall, we see netflix has been planning for this beyond their own original content. we see their payments to disney are down 45% since 2015. you can see in 2015, netflix was paying disney more than $120 million, now shrinking. the tendency has gone down and netflix would make the case that what makes them great, why their subscribers are growing, is that original programming. vonnie: disney is very popular and netflix is trying to keep .way all these others now it has another one to deal with.
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race forcertainly a content. in terms of what it could mean for the stock, the stock is sky high this year. can those gains last? time will tell. if we hop into the bloomberg and look at g #btv 9117, this is a year to date chart of netflix. we see that they gain and yellows, that 200 day moving average. it's rising, it tells us buyers are in control. this is what is called a potential island reversal, basically a meaning that perhaps the shares have gone too far too fast great if it confirms, if netflix goes back low roughly we couldto $165 level, see shares drop bcack down. island reversal, it sounds so positive. thank you for that. to
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memo asserting there are biological causes behind inequality in the industry. joining us for san francisco is alan hewitt. why is he taking this approach? just attended a diversity and if he had ideas about how the company wants to be run, he didn't state to the company clearly. >> at the subject of a lot of debate, whether someone who held these views are generally not popular at google should have been fired.
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in the end google decided to fire him. it was a tough decision for google. they chose to fire him on monday. he did say and a new interview that was published late last night the one of the primary motivations for him to write this memo was that he had gone to diversity training at google and felt the things he was being told there were things he didn't agree with and also that the tone was one of shaming, you can't say these things because that's sexist. i think he had a bad reaction to that and he wanted to do research of his own and publish this memo. i think he would say he's not alone in holding his opinions. vonnie: it was a diversity training session. the teachinging were trained in this. they were just passing judgments. let's talk to a sound bite from the man himself, exactly how he
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explains it. >> a lot of it came from ec and the problems in our culture, where a lot of people who weren't in this groupthink felt totally isolated and alienated, -- and there were many people that came to me and just said, yeah, i'm thinking of leaving google because things are getting so bad. i really thought it was a problem that google itself had to fix. vonnie: yeah, i mean it's fascinating. is notway you wonder why getting any attention. he's not an expert in anything other than what he was working at. for aot like he can speak whole class of people. or is he speaking for a class of people? is there a potential class action suit? >> i don't know about a class action suit but i would say ideological, he believes he's representing a minority but a strong minority set of views at google, people who believe
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google plus efforts to diversify its workforce may be cross into illegal discrimination. i was watching a second youtube interview, another youtube personality in which he really goes into a little more detail about the google training in which he says the pressure that ooglew put on groups at g to diversify in their workforce let some groups to do illegal practices. he didn't really clarify even further what that meant but it's clear that -- he believes there was something wrong going on. i think he would say he doesn't think he's the only one. he said in the same interview earlier that he's gotten a lot of support from people within google. he's also had a lot of support outside google, in particular media lets and other personalities who tend to be associated with far right ideology. it's been interesting he chose to go to these two youtube channels, or these two youtube personalities to do his first interviews. they tend to be pretty sympathetic to his views. vonnie: all he has to do is look at the data from internal google hiring and so on to actually
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know what's going on. thanks to bloomberg technology reporter to joining us there from san francisco. catch all the latest tech headlines on bloomberg technology with emily chang. that's at 2:00 p.m. pacific time, 5:00 p.m. eastern time, including our exclusive interview with the facebook chief operating officer, sheryl sandberg. coming up, we will hear from jeff curry, head of small claims that goldman sachs. this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i'm vonnie quinn. now to oil, which is holding two days of declines today. here's what jeff curry told "bloomberg daybreak" about the drop. >> when you look at geopolitical tensions, if there centered in the middle east and the impact
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oil supply, they will give a bit into oil. when we think about most other places in the world where you have intentions, they typically impact gold because they end up creating a basement. you look at gold, that's par for the course this year. i would say when you have zero political tensions, your trading closer to 1200, and when you have maxed lyrical tension with north korea and we had a french election earlier this year, you are close to 1300. the barometer, 1200 to 1300 -- >> it segues nicely into talking about oil and other commodities. we developeriod, this feeling that when markets and commodities are priced, they will be priced big. we think about metals as well as energy, they are playing out today fundamentally, identically the way almost ourselves and everybody would have forecasted last october. the only difference is oil is
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trading about five dollars lower than what we thought, concentrating might be copper, $500 higher. for the most part, the fundamental story has paid out. >> why was it so painful over the course of the last five months? expectations were for very large repricing straight fundamentals would appear, he would get the big repricing. oil goes to 100, or copper trades at 10,000. the reality is your talking about a move, 10% to 15% here. that i think is those perceptions left over from the previous decade. >> i have to wonder if people hit capitulation. to me, that was thursday when andy hall closed his fund. because we were expecting those big moves that didn't happen, have we finally capitulated when it comes to the underlying commodity? >> does capitulations -- those capitulations are the last strategy. in terms of thinking about, maybe it was a capitulation on this story, but i think the
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capitulation for the big $100 move two years ago. >> when you talk about the fact that there have not been the big spikes we expected, how much of it is just cyclical? how much may be structural in the sense that technology made a difference? technologies, we don't have to consume as much as we used to. >> i think technological innovation you're referring to is spot on to what's changing here. i think we learned our lesson to respect the velocity of supply right now. the macrogues into space, supply was always considered fixed. all the interesting dynamics are in demand. move faster than demand and that is what is changed here. when you look at oil, three
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important lessons in terms of trading commodities. the first one is that commodities are not anticipatory assets. they can't price the future. you look at a ten-year forward oil price, it's as much like oil price 10 years from now like a 10 year maturity on a rate curve has to do with rates 10 years from now. it's the 10 year rate. when we think about oil, it's all pricing today. the market, actor off -- after october tried to price in this production and created distortions over the curve. i responded to it, and i think that's what everybody was caught offguard how quickly it can respond. the second lesson goes to the agriculture market. think about a good agriculture trader, they don't trade next year's crop. the former is going to go out and plant a lot of soybeans and
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the story was materialized. if you think about what shale has done, you can be trading oil three to six months out because that supply cycle is three to six months. when we put those three together , it says you can't be trading long rated oil anymore. people after that opec announcement went out and traded 2017. and that had a huge impact. i think technological innovation is key. the sad conclusion from all of this, for those of us who trade the derivatives market, is the volatility-based markets will slowly disappear. vonnie: jeff curry there of goldman sachs. up next, you don't want to miss this. ♪
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david: in just a moment, an exclusive interview with the president and ceo of the bank of st. louis. my colleague will conduct that conversation.
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she's in the gateway city. we continue to pay especially close attention to geopolitical risk after some heated comments to the north korean government and from president donald trump, the retired general wesley clark, the former nato supreme allied commander will join you later this hour. let's do a quick check of the data on this wednesday afternoon, starting with major indexes right now if we could print the dow jones industrial average down 1/3 of 1%. the s&p 500 down 1/5 of 1%. the nasdaq down 4/10 of 1%. the on environment and markets, given all the news out of an involving north korea. a quick check of some other data this afternoon, looking at the yield on the 10-year. the u.s. dollar-yen 109 at 95. again, continuing to monitor what's going on in the region. secretary tillerson making a stop in kuan this morning after north korea mentioned the u.s. territory and some comments


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