tv Bloomberg Surveillance Bloomberg August 13, 2015 6:00am-8:01am EDT
the fed's data dependent. retail sales report, news janet yellen can use. as oil crashes, american oil producers to medically cut costs. -- dramatically cut costs. good morning, this is "bloomberg surveillance." i am tom keene with brendan greeley and the surprise -- you never know, greece, positive gdp. summer'sa lot of the chaos is not included in those numbers. two looking at two things, vigorous denials, china denying managing currency. dilma rousseff denying she is considering stepping down as president of brazil. both of them are protesting too much. contemplating -- what mr. biden will do within his future. brendan: he is having conversations. tom: we're going to have a
conversation on top headlines. here's brendan greeley. brendan: china is stepping up its verbal support for the yuan stemming the currency's worst fall into decades. the central bank held a rare press briefing today. officials said there's a reason for the depreciation to persist. plus the bank said it will take action when there is excessive volatility. concerns a good cause instability in china. there is a surprise from greece this morning, the government says the economy unexpectedly in the second quarter. economists forecasted it would shrink. the economy have been crippled by months of haggling over the bailout. the greek armament is preparing to vote on the new bailout package. new spending cuts and tech hikes -- tax hikes. the rest of the euro has devote. former president jimmy carter undergoing treatment for cancer.
mr. carter's of the cancer was discovered during liver surgery and is in multiple locations. he is 90 years old. he says he will release more information as soon as next week. esther carter has an extensive family history of cancer. his father and three siblings all died of pancreatic cancer. a matter of old media reading new. comcast is boosting its stake in vox media. a $200 nbc is making million investment, valuing vox at about $1 billion. tom's head and my head are spending. nbc and vox will help the network that are connect with younger audiences. tom: let's turn to baseball. seattle, the fourth no-hitter of the season for baseball. mariners win over baltimore 3-0 last night. his first complete game in the majors.
he is been injured for 2.5 pounds. he is 34 years old. it takes you back to david cohen in 1999. this is a good thing. a good and beautiful thing. brendan: somewhere in manhattan, former groundskeeper for the baltimore orioles, noah bloomberg, weeps a silent tear. tom: i was suggest it is harder to do over a certain age for you pitch and not throw. brendan: morning brief this morning, retail sales data. also at a: 30, initial jobless claims. 9:45, bloomberg consumer comfort test. tom: the first white data check in days. futures churning, to say the least, up four. -- the first quiet data check in days. futures churning, to say the least, up four. i am looking for the next screen.
depreciating, german to your gets my attention. we will talk to jonathan ferro in a second. this is all you need to know about everybody spending. what is going on in china. here's the financial crisis of 1997, 1990 eight for asia. this is asia dxy, a bundle of their currencies without japan. here is an extremely well-managed trend. up we go. we rolled over big time. this is really unprecedented, back 20 years, how far these currencies have depreciated as a group. it is about malaysia, indonesia, the philippines. it is grim. this is important chart. brendan: the distinction among those economies is, do you make step or just supply raw materials to china? -- i have never done research or spent any time, and increasingly, if you want to understand anywhere else in the world, africa, brazil, you need to understand china.
tom: you have to go to china. starts sweating when i start talking about standard deviations. it is a managed flow. you have to manage it. in the last 48 hours, the central bank of china has managed -- we go to our beijing bureau and london. jon, what is the significance of that new lower retest of a german two-year yield? what does that signal about china and about the rest of europe? jonathan: in the last 48 hours, incredibly risk off. that is resolve the front end of the curve rally so much. the long end rallied even more. the 15, the 30 years rally. a bit of a cello. you have to draw a distinction. over to nick. go i want to bounce back and forth. what has changed the last
four hours? i don't get the spin. >> i think what you're saying, it is much more clear with the government's intention was. when the devaluation first occurred on tuesday, a lot of people thought, uh-oh, here it comes. like, well,of looks maybe they actually meant what they said when they said the yuan was a little bit out of whack with the market and now they've allow this correction. of whackrts to get out again, they're going to come right back in to come right back into defend the currency. people are a little bit soothed by the fact the government may be -- loosening its grip a bit. but not totally. brendan: we know the government's intentions are. of that group is what i'm curious about. when we say it is going to be a managed float, is a going to float both up and down in a managed way? basically, means whatever the
government wants it to mean. is never transparent about its actions, but i think what we're seeing is there really going to defend the currency once against around to the 6.4, 6.5 range to make sure it doesn't get any lower than that. at the same time, exports are quite porous, so they don't want to let it get too high, either. tom: when we see malaysia and indonesia, it is about commodities as well. what is the sweat factor in the city in this august about margin calls and busted trades? is there a lot of blood out there? jonathan: i think there will be for a lot of people invested in mining stocks. we have talked about it before. it is not crept up over the last week. this has taken place over the last 12 months, particularly in the commodity complex. this isn't some big to week thing. this is a 12 month trend. the trend is heading the same way. brendan: were european markets
as surprised as we were about the greek gdp data? jonathan: absolutely. i think that is all anyone is talking about on the trading floor, greek trading gdp. maybe we should not talk about it too much because i'm not sure anyone believes the greek economy actually grew 0.8% in the second quarter of this year. you from london and beijing. the gloom is easy to identify. your children recover from 14 weeks of camp this summer? you need to think malaysia, indonesia. it is enough to make you go to cash. the chief u.s. market strategist usdon't go to cash joins this morning. i said to somebody, could we call him down? calm the claims of our busy market all caps -- capital markets? >> if you look at the fall in
market prices, if you look at the weakness in chinese data, what really this is in the last couple of days is china finally admitting the have a growth problem that may be a band-aid getting ripped off a little bit, but in reality, this is just technology what we have are ready known. tom: the money question for our viewers and listeners, if you changed -- have you changed your outlook at all based on the last three days events? >> probably not. if the fed can go from zero interest rates to 25 basis points after six or seven years of recovery -- tom: what are we waiting for? >> the answer is, we should be waiting for nothing. if the fed does not move in september, that is bad for markets. if they move in september, they will tell markets the economy is self-sustaining and healthier. if not, i think the markets will have a harder time. if the fed gets out of the way, i think that will be a good thing. brendan: i want to share a
theory from a guest on yesterday. yeah, sure, think about china, but that is us stuck in the last five years. the real engine of growth now and in the future is u.s., canada, north america. >> yes, the united states is going to be the engine of growth. the issue that is important with china, for those that believe that china was going to magically lift the world out of a slower growth environment, with their company -- coming to grips with is china is not going to be that source. as long as that is in your you're, then i think looking at this the correct way. there are a lot of folks, going back to the spreadsheets, adjusting expectations for chinese growth. i think that is what is happening this week. brendan: look at the economies around china, malaysia, indonesia. has china become a millstone for them? >> you were talking before, as china and the only thing that matters?
it is.on't think to the extent people had expectations for that, they were out of whack. i think you have to's fears of influence. you have what is due for asian economies and the other is, what does it mean for commodity exporters? i think this is going to be a particularly rough on brazil and russia and places like that, less so the developed market commodity exporters. tom: thrilled to have you with us, jonathan golub. let's look at our twitter question of the day just put out on twitter -- good morning from new york city, we hope you're watching in jakarta. this is "bloomberg surveillance." ♪
tom: good morning, "bloomberg surveillance." futures up 5. top headlines with brendan greeley. brendan: port city in china rocked by disaster, series of explosions began that has killed at least 44 people and injured hundreds. it occurred in the chinese city of tianjin. the managers that own the warehouse have been detained. apple turning to reverse falling sales of the ipad. apple is trying to make its tablet computer a more appealing tool for work. apple is working with more than 40 technology companies. apple has never been considered a big player when it comes to workplace technology. in pro football, the federal judge in the deflategate case will still have to keep playing referee. -- excuse me,and tom brady, in court yesterday.
the judge urged them to settle the dispute over his forgetting suspension. the next hearing is wednesday. this season between the new york set of buffalo bills just got more interesting. the bills just assign -- signed the play that broke the jaw of the jets quarterback geno smith. he is now a bill. those are your top headlines. tom: this is the back story of the coach of the buffalo bills -- brendan: rex ryan. everybody assumed he would never have a job in the nfl again. it took about 25 minutes. tom: if you're watching an early morning california, we don't want to talk to about greece or china, we just want to talk about the jets. where is he when we need him? let's continue on greece. brendan: deceptions of who is watching -- the perception of who is watching. the economy unexpectedly surged.
const nichols joins us. we talked to jonathan ferro. >> he thought it was a misprint. it seems funny to me. thatf the really bad stuff happening greece happened in july after the second quarter ended. but there was a great deal of uncertainty, at least for the month of june, which would have been captured by this. 0.5 percent was for contraction. it was a 0.8% increase. easier make an agreement because when they run all of these numbers through, it changes the denominator and then you have an easier argument on the denominator. that is my argument. lies we one of those tell ourselves to get along in brussels. greece has a history of unreliable or optimistic numbers. >> a lot of the fake numbers i think they solved that. whenever there's a number to leave out of whack, i don't think you should assume there is a lie. remember the last jobs number
before 2012? they weren't cooking them, you just get funky numbers every once in a while. tom: let's remind ourselves how depressed the depression of greece is. it really upsets me when people say they are not in a depression. real gdp. this is inflation-adjusted gdp. flat on their backs. to the people in germany know that chart? >> they know it well. you have a temporary exit whether it is five years or 10 years, then you write down the debt because they are outside the eu. tom: you get currency adjustment. >> you can actually make a case the germans -- ,om: i kid about dr. el-arian but this is basically what he is saying. brendan: german politicians have the same line which is, that country has been betrayed by its leaders.
that doesn't necessarily mean they will make a deal with those leaders that betrayed the company or the country. >> they may make a deal with the country of it is outside the eu -- outside the eurozone. they can still get massive amounts of aid and have a humanitarian package, it is just that there currencies are denominated elsewhere. brendan: let's take a tour of european capitals. what does approvals look like? alexander stub, the finnish finance minister. he is been a foreign minister. think of him as a frustrated wire reporter. he is always sending out news. tom: very cool. i love that. >> very smart guy. >> he is indicating it will get passed on friday in brussels. the germans -- tom: i am dying to go. with this.
i have a 401(k), how do you play this? is there opportunity in european stocks? with all this funds nichols gloom, where is the opportunistic thought? >> i think the opportunity in this is in the united states. first of all, we are far more globally dependent in terms of our economy than anyone else by a mile. day,eece, the end of the this will prove to be a small story. the china story is a big one. we are really insulated. if you look at u.s. companies, we have businesses that are less old economy that aren't dependent on even the pace of the economy in general. we of the googles, apples. tom: come on, john, catch up with the news. alphabets. are we saying alphabets? in to be theoes best thing you can be is diversified. tom: hans nichols, that was
tom: let's get to our morning must-read from oliver chen. he wrote this up on macy's. john golub joins us from rbc. in the retail sphere, the numbers we see, it is to put a good, isn't it? thinkind of agree, but i the big issue with the consumer, what we're spending on is different. we're spending on media and cell phones, going to walmart or chipotle, but traditional retailers are under pressure. i don't think that -- tom: don't panic about retail.
just a new retail. retailers, we talk about retail only steep having this cyclical assumption that it is going to get better, going to get back again. have have it changed since the recession for a generation? >> yes. first of all, if you look at the percentage of online, it is huge. are squeezing out more in consumers, online squeezing of the higher end consumers. that shop rate macy's is much less likely -- levi'sbody is wearing because they are wearing lululemon. i read that somewhere. brendan: you read it in bloomberg businessweek. you so distracted me with the talk of jeans, i don't know where i was going with this. tom: i bought this tight two years ago. when did you buy yours? >> a week ago.
signaling support for yuan after the surprised delight wishon devaluationstors -- rattled investors. controlling large fluctuations at the speed of which the yuan phil, threatened it could hurt the stability of china. donald trump is leading by wide margin work voters will go to the polls first, i will. -- iowa. ben carson is the only other republican in double digits. scott walker from wisconsin, faded into third at 9%. the presidential caucuses in iowa are less than six months away. joe biden is reportedly using his vacation to think about his next -- tom:. big deal. brendan: "the wall street journal" saying he is talking about a white house run. it would be his third try for the democratic nomination. his associates say he will announce his decision next
month. shares of cisco are higher in premarket trading. posted quarterly revenue that beat estimates. reported strong sales in the americas and faster growth in service for data centers. chuck robbins took over last month for the ceo john chambers. tom: in golf, jordan spieth is a , the last of the majors, the pga championship. the 100th anniversary next year. they are at bathroom fixtures wisconsin. owned by the coal or copy that makes bathroom fixtures. brendan: fossett maker. tom: whatever you call them. spieth has won the masters and u.s. open this year. a victory this week and would make him the first player on the pga tour to make war than $11 million in one season -- make $11 million in one season. brendan: in july come argentina
signed an agreement with china. argentina'ster of $33.7 billion in foreign reserves is denominated -- tom: really? brendan: yes. today's understatement. he said the underlying risks are now becoming more apparent. katia just returned from buenos aires. is there anyone currently running who can fix argentina? katia there's the presidential primary, elections in october. the market would like to believe whoever comes in power in december will make the right choices and bring this country back to international capital markets, start bringing money in. the thing is, you have a person was running as the governor of buenos aires, part of cristina kirchner's party, and in the mayor who is like the market favorite.
he is said he will do anything the market wants. it is very obvious right now kirchner's candidate is in the lead. the hope is their votes are so close that the message is clear that the people want change. fascinating to me. we look at argentina and say, what they're doing is crazy. nobody runs a country like that anymore. even the cristina kirchner is not running, the idea is very popular. what do we not understand about argentina? katia: in the u.s., it is easy to criticize with the fiscal situation, inflation very high, they're doing all the wrong things. in the long term, these are all the wrong things. but people enchanted town's don't really care about -- shanty towns, they don't care about long-term, they care they're getting energy subsidies. the subsidies are out of control. what i want to know, within your trip is the knockout effect
to the rest of latin america when i see the equity markets imploding almost through the lehman lows heading back toward 15 years ago. is there any angst about the commodity implosion and the knock on to equity markets? katia: in broadly latin america? absolutely. this is a region completely dependent on commodities, lots of oil exporting countries, soft .ommodity exporting countries what is happening in china definitely affects them, less so probably than what is happening in the region within asia. but if what china is doing ultimately ends up with them growing more, the reason why a lot of the devaluations, appreciations we've seen in latin america, trade growth isn't there. if this ends up making china grow, the maybe it works. brendan: moving beyond commodities for latin america,
we just got down with a decade of saying colombia is the new brazil, which has in the best job of actually diversifying its economy? katia: people really like the andes and mexico. tom: chile. columbia, peru. people love mexico right now because they are trying to diversify away from having this monopolistic energy sector. trying to open up to private investor. tom: that's go back to john golub. can rbc invest in latin america? i'm not going to speak about the bank, but our clients clearly have big investment in emerging markets. is, globalsue here growth and commodities. if you have a week commodity sector, i think it will be very hard for anybody to get this right. if china tries to devalue their way, all they're going to do is grab growth from other countries
and move it to -- tom: including brazil. critically brazil. katia: if they do end up growing as a result, that is the missing factor here for when you see the depreciation's in latin america, folks say, this isn't going to go anywhere. >> we've seen for the first time in a while the global trade is actually coming down, which is not a good thing for emerging markets. if the u.s. did a rank order, the u.s. is at the top in emerging markets probably are at the bottom. , and would be above europe that is the way he would look. marketsfrom emerging perspective, china getting back to health quickly is probably an important thing. jonathangolub is with us, katia just returned from what is eris. we will keep coming back to you. coming up, a question we have been asking all week. all year. how low can oil go?
oil, 43.44. bull market surge in oil this morning. let's go to the single best chart. ,rendan: conoco phillips cardinal, new field, whiting, exxon mobil, these are all companies that have completed wells in 2015 after the floor dropped out under oil. the reason why is today's single best chart. here's what is going on. we took data from fracking wells in north dakota. they ran a data through monte carlo simulation, a technique borrowed from physics. different scenarios. they gives you not a result, but a distribution. here's the most important take away. people are freaking out because half the wells in mckenzie generate 10% returns at, wait 29.42 ofnumber, barrel. andrew ran the simulation. $29? do we know more than we used to or have they gotten better and
cheaper at drilling? >> everything you just mentioned. techniques have gotten better, drilling sweet spots. the service costs the drilling and completion perspective have come down north of 30% to 50% in some cases. tom: is it labor? how do you bring the cost down? >> you're talking about contract costs,own, whelming as joining completion side, pressure pumping, halliburton, baker hughes, cement. on the -- tom: cement costs less? >> yes. pressure pumping costs can run 70% of your completion. tom: ever bring of our conversation to a complete halt talking about this? tom: you bring up monte carlo distribution. i figured you would appreciate that. walk us through this.
how did you do the simulation? i am fascinated by the result. >> people are picking one andkeven price there's so much uncertainty, variability, ambiguity you look at certain data. we want to throw it out there. we took a deaf -- a couple of inputs. gellingyou looking at and completion cause, we ran them through and figured we would try to map with something that would bring us more of a statistical take away. brendan: we have jonathan golub with us. $29, do you need to make a call? >> if i look at the high-yield markets and how high the cost of capital is today, in the energy space compared to all other sectors, does the market disagree with you? sometimes the analysis is right in the market needs to catch up and sometimes it is the other way around. why is the market trading as if there is something much are breakeven? >> there's definitely
bifurcation in the markets, so high-yield guys, the cost of capital, the capital basis is much higher in some of the better operators in the space. tom: when do they restructure? >> my colleague, you had him on a number of times talking about bank to termination fees coming on in the fall, some of these more high-yield guys have layered on hedges as well. brief our audience on canadian tar sands. no, they're breakeven is not $30 a barrel. >> there was a lot of canadian -- hasent starting already been sunk already. the project just got finished. getting finished in 2014, 2015. the operating breakeven cost can be in the 20's. from an all in perspective before you start the project, north of 70, $80 a barrel. >> a lot of people in calgary are going to be happy to hear this. tom: let's make this distinction. the operating costs are 30-ish
but the all in costs -- >> before you start. tom: which is important as they compete with the saudis. >> the canadian production forecast, it will grow somewhere between 1% to 2%. tom: this is a critical point, folks. this idea of once you have a sunk cost, your operating numbers are what matter. >> right. tom: we will have continued production. on thehe exploration and land cost, if you look at it from that perspective, those are captured in our capital base. essentially, that changes the herbal rate you need when you run uncertain project. the rates are different between different companies in different operators. brendan: andrew cosgrove, thank you. we will take a look at some top photos. number three top photo, kfc china has debuted new pink
burger buns for its rose to his rested chicken leg burger and black buns for the black diamond spicy chicken leg burger. some are speculating these new buns are related to a popular japanese anime tv show whose colors are black and pink. i realize i know nothing about the world. this is amazing. tom: this is in japan. brendan: no, no, no, in honor of a japanese series. kfc is huge in china. tom: i wonder how the depreciation works out for them. if they repatriate it, it is not good. brendan: we just learned it is going to be a managed appreciation. tom: they leave the money there. >> looking at 2%. tom: i did the math on korea, 14% potential move. we can't assume a 2% devaluation. >> that is why the market is
rallying in the back half of yesterday and in the futures market because by the chinese coming in and saying, 2% or 3% and we're going to hold this thing off, it eases that concern. we can liveay, 2% with, 12% we have a problem. oops. and i usedarlet fu to play jerking game called, things only tom keene says. i did the math on korea, things only tom keene says. brady'ssketch from tom deflategate scandal has gone viral. it appears to show brady's face melting. that is funny. as expected, people took to the internet and posted court sketch memes. i don't think that is fair. that is a tough gig, began court
sketch artist. i think of those -- it is dorian gray version. tom: these are going to be collectors items in 20 years. brendan: that sketch is going for a lot. i feel better about the sketch artist because she can make a lot of money. hamptons, she the is flying in this weekend to sketch everybody at my party. furcal $10,000. just for a cool 10 grand. thedan: if you're in hamptons, the top photo, the biggest shark ever caught on film. can you believe that? look at the scale of that. deep blue, a pregnant 20 foot long great white shark estimated 50 years old. >> you can house when the shark, which i think is important. brendan: what? you know this? >> it doesn't look like it is
moving too well. brendan:, from mexico let me know how that works out. what is amazing, there's a diver on top of the cage, not in the cage. look at that shark. tom: that is amazing. we mention this in the meeting this morning in san francisco in the museum, i have to look it up, worth -- brendan: i watched this on repeat yesterday. lori fort out to finding that for us. the parlor game of september december, we need to update. it links into the markets. jonathan golub with this from rbc. futures turning up 6. this is "bloomberg surveillance." ♪
tom: good morning, "bloomberg surveillance." top headlines. brendan: for the first time american fighter jets and turkey have attacked islamic state targets in your than syria. last month, turkey agree to long-standing american request to use the base for airstrikes. intel is hiring minorities and the faster rate than it hoped for.
so far this year, more than 40% of its hires been women or underrepresented minorities. intel has been criticized for its lack of female and black employees. call it the beverage of champions. the idea isn't flaky. nice. there is no ceral. teaming up with a craft brewery. available only in minneapolis for a limited time. the cereal maker is based there. tom: i don't even know where to go with this. >> is it a breakfast beverage? brendan: of course. you make beerios with that. and that was the morning he said "berrios." the make a german wheat there. it depends on your taste. my taste run more belgian. tom: ok. brendan: you have to move on.
turn the quarter -- warner on this one. tom: let's look at the international economy. china, greece, deflation as far as the eye can see. we need to go to perpetual cash. we mentioned that earlier. from rbc is with us. you have been wonderfully steady as she goes. can janet yellen be steady as she goes? >> one of my colleagues talks about the fed as, are they a day trader? if the fed's focus on the last data item and not looking and saying, listen, the economy at 5.3 unemployment and expectations for 3% growth in the next six quarters in a row, if we can't move, then the fed -- the money answer
today raise rates in september, they surprise, raise rates later, what will your world do? what will equity markets do? >> stocks rally on it. the reason is, when rates are ultra low the fed is telling investors that the system is broken. if the fed and get out of the way in the economy can keep moving forward, which it will, you will see the multiple scale up. tom: do you overweight financials? >> i'm overweight financials. banks improve upon this. just in general, valuations -- it is not in earnings thing, it is the pe you pay on the stock in the normal world is more. brendan: the fed getting out of the way of the data is completely clear, but 5.3% unemployment doesn't mean what it used to. this is the great macro economic question of the year which is, what is the bottom? know 5.3%ecessarily is the bottom in the way we have been able to trust it in the years past. >> listen, tom has talked about
this in our economist as well, we think we're in a slower growth environment and probably closer to 2% gdp as the long-term trend than the optimistic 3% number. brendan: that is jeb bush. 3.5%d his comets about doesn't jive with the data. however, we are so far away from the emergency support that we need from the fed that the best thing they can do is basically -- tom: the stanley fischer step away from inflation the other day? like mark carney did, does he essentially voice what mark carney did? >> there is a fear because of all of this money printing that there is this inflation problem, and there isn't one. if you look at the wage data and commodity prices, we don't have an inflation issue. brendan: then why does the fed need to move? >> it is not that they need to move in order to address inflation, the question is, does -- is the policy consistent with economic reality?
the economic reality is, we are not in 2009 anymore where we need life support will stop you pull that life support and economists will do just fine anyway. tom: i would be remiss if i did not ask about the canadian housing market. you have experts in toronto and montréal, canadian-wide. the charts are stunning stop is it for real? is it a bubble? >> i've been talking to canadians about it since i've been there. consumers are more livered in an economy -- typically their more conservative. it seems to be reasonably healthy. as long as oil doesn't fall apart or the economy doesn't fall apart, and it doesn't look like it will, i think it holds up ok. tom: thank you so much, jonathan golub. i guess it is a little quieter in the last two days on the forex report.
draws a line in the thin as market participants test the bank. this morning, continued depreciation of the renminbi. areal markets, however, quiet. the retail sales report is news janet yellen can use. and while we are going to the movies, it is dead coming done, it is over, do not tell it to scarlet overkill. good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york. it is thursday, august 13. i am tom keene. i paid for "minions" tickets. brendan greeley, he paid for "jurassic world" tickets. let's get to top headlines. brendan: bull market study after china said its currency is nothing to worry about. the central bank said it supports a strong and stable currency in the long run, and the policymakers said they take
steps to stop while the fluctuation. statements slowed the yuan's worst fall into decades. the trouble started tuesday when things started cutting the reference rates for current security country looking for ways to kickstart the economy. bloomberg exclusive this morning greek endgame of the debt crisis. alexander stubb said negotiators have two ways to make it work. : there are two options here, one that we fully support a program today, and the other one is that we go for some sort of bridge financing so that we can in the euro group meeting on friday, so these two options exist. both options entail that a payment will be made at the end of the day. ancourse, there can be unforeseen crisis, but i do not see that looming right now. brendan: greece needs $95 billion and rescue money desperately and soon. it must turn around to make a
big payment to the european central bank just days from now. doctors say jimmy carter's age and family history will complicate planning his cancer treatment. the cancer spread from his liver to other parts of his body. he is 90 years old. his father and siblings all died of angry at. he will be treated in atlanta. universal media unit is increasing its stake in vox media. the evaluation has been pushed to about $1 trillion. tom: really important. here is something really wonderful. in seattle with the mariners, how about a picture -- a pitcher who never tossed a complete game? he did it last night. tossed a no-hitter,
going back, 34 years old. the last time was 1999 for a fossil. brendan: how about them o's? drunken sorrow in baltimore. 8:30 a.m. we get retail sales. also 8:30 a.m., initial jobless claims. 9:45, we get the bloomberg consumer comfort index. tom: a turn to it all, futures call it up 5, up6. euro-dollar turns as well, nymex crude with an ever so slightly bit. jon ferro is with us. script, and the talk about emerging markets. what is the signal to london traders when we see malaysia and indonesia in freefall? jon: when you look at the , it has brought back the echoes of 1998, but i like the chart he brought up yesterday, tom, because it shows
people it is not 1998 by any stretch of the imagination. it is certainly a concern. the dollar strength this time around is on the corporate side of things, and we do not know when that is going to buy. tom: the other difference here within global deflation is negative interest rates. why are rates driving lower in europe? in the last 48 hour's, what you sell with a severe round of golf -- of risk off, touching an all-time low in the last 24 hours. not even a greek crisis could start that. a lot of talk also about deflation risk, and that has come up again in the last 24 hours when you're talking about x orting deflation -- about exporting deflation. that gets people nervous and drives people back to call bonds, and that is what you have yields rallying yesterday, tom. brendan: jon, a little earlier,
you gave that the stink eye, then we talked to want to nichols and he said that is one of the gentle lies that european-style each other to get along. how is the city trading that number? jon: the market is not trading on a greek gdp number. it would not matter if it is -1%. it is something economies did expect. there is a nuanced somewhere that explains it appeared at the end of the quarter, that is where the introduced capital control. put all of that to one side, bottom line is the greek economy is not doing well, no matter whether gdp report says. tom: i agree with that wholeheartedly. jon ferro, thank you for your ross asset -- cross-asset analysis this morning. he has been sharp on america standing alone amid global crisis. neil dutta is from renaissance
macro research, and he has written brilliant notes. would everybody calm down? if you are speaking to your biggest client and they are all lathered up about janet yellen, why would you tell them that janet will not to blink and will act in september? neil: in terms of their response ranks first and second is the labor market, and too some extent -- and then some extent inflation. develops, the expense of longer-term thinking. tom: can you flip and then go inflation is a more important issue than labor? neil: weak inflation and weak wage growth -- i think that will probably affect the pace of rate hikes. i do not necessarily think it affects the timing. the data is coming and better at the end of the day if you look at auto sales, strong number, core retail sales appears to be
picking up. we will probably get an ok number today. and employment growth. 200 25,000 with the unemployment rate gradually coming down -- 22 with the unemployment rate gradually coming down to 5%. wasdan: jonathan golub sitting in that share a moment ago, and he said janet yellen is looking like a day trader. data part of the fed's dependent strategy is designed to get -- it is the optics. the fed does not want to raise rates in an environment where the high-frequency numbers are coming in very soft, but one of the costs of that is a gets people to focus on every little wiggle in the data. macroeconomic forecasting is about extracting signals from a lot of different noisy variables. what i see is really steady growth. i think underlying economic activity is still around 2.5%,
3%. that is born out of the employment data, jobless claims, and we are seeing that also in consumers ending. if all this data points toward a move, what is the harm in waiting until next year? neil: well, i think the harm in waiting is -- we mentioned 1998 recently, right? if you go back to that period, then like now, unemployment was wasand falling, inflation low, and firecrackers were going off all over the world. the fed cut rates three times in 1998, and they had to raise rates 175 basis points starting in may of 1999, so there is a risk in waiting too long. tom: let me give you a t leaf -- tea leaf right now. dana kelsey goes in neil dutta's direction. she just raises her price target on williams-sonoma, which is
speaks to bennie highs in the headlines and the gloom, there are some good things happening, even a smaller companies. neil: i think that is right. i am looking at the macroeconomy. i see real disposable income growing above 3%. consumer spending growing above 3%. that is healthy. moreover, we see a pickup in new home sales, people are buying homes, cars. i think it makes sense that people are buying housing-related goods. the risk in the economy has been on the investment side. , thatthe flattening out drag is unlikely to repeat itself in the second half of the year, so i think the quickly, between now and the end of the year, the risks are probably to the upside. brendan: related to that question of business investment is productivity. when will we see that number improve? neil: that is really the elephant in the room because productivity growth has been weak. it is something we haven't
talking about for a while, and it is a function of the capital side growing more slowly. economists call that a lack -- i think it takes up next year. tom: neil dutta, drawing real tail with mr. dutta. of course "market makers" will have that with you on bloomberg television. how about our twitter question? what a response. thank you. we hope you can sneak in a response right now. is china fighting a currency war? we need to hear from you on the global currency war. do that out @bsurveillance. ♪
crossed below the 200-day moving average. oltz says basically they give the illusion without the substance. are you scared of the death cross? are you freaking out? work i am not, but i do for renaissance macro research, and we have the number one rate market technician on wall street. brendan: shameless plug. neil: with all deference to them, i think technical analysis works through self-fulfilling expectations, so to me a good technician is one who does not have a -- who does have a unique view on the markets but knows the price point. tom: here is the life cross. i wrote this up for joe weisenthal yesterday. i will not explain this on global television. there is a lot going on. you can go read the article. all you need to know is here what very -- barry is laughing
about. this is the classic death cross. i do not know a single pro who , about this.n this is what pros look at. brendan: i will put this out on twitter. this was our single best chart earlier this week. il is saying is the pros do this, but it is not just pros in the market. understanding this kind of technical analysis is a greater strategy. they are out there, and you have to know how they will behave. neil: that is right. ist it is telling you really that the momentum in the market has been soft. that is why the 50-day is under the 200-day. the bigger stories if you look at it over the last six months, the market has not done much of anything. tom: massive shout out bill howell on twitter send me great research on what this dumb death cross does, and the answer is three-month out, the dow goes up
one point something percent. thank you for making me smarter on the death cross. coming up, this is an important conversation about you in america and worldwide. neil dutta, renaissance macro, on retail. is it imploding? should you be concerned? maybe you need a new iphone. we will be back. "bloomberg surveillance." ♪
tom: good morning, everyone. from new york city, "bloomberg surveillance." brendan: the death toll is now 44 from an explosion that rocked the chinese port. were hurt.00 people a warehouse with hazardous materials erected into a fireball. managers are reportedly being held for questioning. journal" sayset
apple is trying to make the tablet more appealing as a work tool. if they're making apps for accounting and sales positions. and a judge in the deflategate case must keep playing referee. nfl commissioner roger goodell and patriots quarterback tom brady were in court. the judge urged them to settle a dispute for brady's four-game suspension. the buffalo bills just find the player of the player -- just signed the player who broke the ja of a jets player. wtom: we will see that report, the state of american consumption. neil dutta, head of u.s. economics at renaissance, consumption is enough to drive the american economy forward your what we -- forward. what we have got here is a boom. here is a great chart. i will put this out on bloomberg
radio plus to your member 2005, 2006 am a 1990 eight, and we just came down to a more subdued 1998, and we just conduct a more subdued tone. the volume, the unit town is pretty darn good. neil: it is good, i would say so. it is also about composition. is5 million unit auto sales pretty strong. it is about where consumers are ending their money. pick up, did sales they come from blue jeans sales at bloomingdale's? neil: i do not think so. durables are doing quite well. people are spending money on motor vehicles, on household furniture. people are signing contracts on new homes. tom: you have got to have bluejeans to be cool in the f-150 pickup truck. tom'sn: exactly right to
point, do we have to relearn from scratch with substitution bid is? it used to be so clear, as you moved up the income scale, you bought more things as the economy improved. is that understanding different now after the recession? neil: there are a lot of idiosyncratic factors going on in the retail sector. you have companies that cater to of age cohort. those folks are getting into work, getting older. tom: i have got to interrupt, bow ties are a substitution. [laughter] brendan: for what? tom: i do not know, they are just not a compromise, they are a substitution. brendan: as people get older, they will wear a bow tie? tom: i think that is what it is. brendan: again, looking at macy's and target, one of the things julie hyman told us, who used to be a retail reporter here, yesterday is it is difficult now to figure out what the peer group is of these
companies. it used to be macy's and upscale department stores did not compete with target and walmart, and that is not necessarily the case anymore. neil: yeah, i mean, we are getting a little bit into the micro. the way i think about it is as consumers, we have gotten very, very productive. one of the areas where productivity has been taking up, it is so much easier to consume goods now than it was -- tom: that is a great insight. amazon in the gross productivity numbers. neil: if you look at online retailing, that is growing quite strong. brendan: this was my morning must-read yesterday from the "financial times," which is that home production is incredibly productive now. the way you do things at home has been made faster by the internet, but that is by definition stuff that is not captured by the gdp numbers. tom: do you agree with alan greenstein -- alan greenspan that it is more optimistic than
what we see? of productivity, if you look at sectors of the economy where productivity should be fairly easy to measure, like manufacturing, productivity has been slowing as well. the existing of rising income inequality, low productivity but presumably a machine and technology is right around us, that is not without historical residence in the united states. tom: what does the fed actually do with the data at 8:30? does it go into one of their books? are they sitting up there bloomberg -- tat their bloomberg terminal with bated breath? neil: i'm sure they have a pocket protector in hand, updating their strategy for the third order just like the rest of us. brendan: you have a pocket protector? neil: i don't, they do. you have to be a bit nerdy to work at the fed. tom: what will it take for the fed to move in september? neil: i think a big drop in core
inflation and/or slowing as in the employment numbers. at this point, as the atlanta fed president said, is not particularly high for the fed to get off of 0. saw dudley's comments yesterday in rochester, new york. neil: he did not say much. he said "hopefully" a lot. i think the fed is walking a tightrope because they do not want to pre-commit to september. brendan: we are in the silly season of textual analysis at this point. listening to fed president after fed presidents -- neil: and it is not inappropriate that they devalue. tom: at a dinner six years or seven years ago, richard bernard at morgan stanley said to me, watch out for this over communication. he said that six years ago. he said it will be problematic, and that is what we have now. neil: i think that is right, and part of the situation is you
and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible.
because we should fit into your life. not the other way around. tom: good morning, everyone. one of the news items this morning -- tesla. we will get to that in a moment. elon musk putting money where his mouth is here to put top headlines in perspective. brendan: investors worldwide are d afterchina's wor
the central bank talked up the country's currency. they promised to step in if volatility increases. statements slowed the yuan's worst fall in two decades. the trouble started tuesday when china started cutting the currency. the government is looking for ways to kickstart the economy. donald trump is leading by a wide margin where the voters will go to the polls first -- iowa. backed by 22%. ben carsonrosurgeon is the only other republican with double digits, 14%. scott walker faded into third at 9%. iowa's presidential caucuses are less than six months away. joe biden reportedly using his vacation to think about his next job. "the wall street journal" says the vice president is talking to friends and family this morning about a white house run. it would be the third try for biden.
associate say he will announce in a decision next month. shares of cisco higher in the premarket. the maker of computer network year reported strong sales in the americas. and jordan spieth the favorite heading into golf's final tournament of the year. it starts today in wisconsin. won this year's masters. he would make more than 11 nine dollars in one season if he wins. -- more than $11 million in one season if he wins. tom: tesla offering a secondary offering, by definition a solution to shareholders. sometimes the owner will pony up, and elon musk has done that this morning. i want to go to the bloomberg terminal and take a look at the checkered story of tesla. there are arch critics as all of our viewers and listeners go. alonggo, we need angst
the way. mr. musk to put in $20 million of his own money if they go out to get new money for the factory and the rest of their projects. brendan: he has set specifically this money will be used for the good of factory -- giga factory. he does not think he can change the market until he can produce at scale. he genuinely says -- i would take them at his word that he wants to change the way people buy cars. tom: the arch critics, and there are a lot of them, say this is o-fiction wrapped around, as you say, the desire to do good and ill factories in the middle of nowhere. i'm really taken by the battery experience -- experiments. this is not apple, it is not facebook, it is an entrepreneur's publicly traded experiments with odd financials. brendan: he has been here before. he has slept on couches.
he is willing to take this risk. is athey are really doing battery manufacturer that happens to make cars. that may have a bigger future than the cars. tom: an article i glance at yesterday really questioning the free cash flow generated per unit of tesla auto sales. that is fine. folks, i want to make clear i have not owned and have never owned tesla shares. i found my jim cramer. ound like jim s cramer. the idea is an interesting entrepreneurial spirit, and they have to go get money for the hopes and dreams. brendan: i think it is fascinating to watch him. first of all, he is a bond villain, obviously, that is what we will find out in 10 years. tom: that is what the critics think. you nailed it. brendan: the biggest problems with renewables as you cannot store the energy you make in good times to use and the bad
times. if they can change this, they can really change the market. to neil dutta, for those of you at central park, big grocery store downstairs, you go in, and there are all these gorgeous doors downstairs, and no one cares because there is a red tesla on the front door, and the way the kids look at the car is different than the way they look at, you know, other cars that are out there today. thisll have much more on on bloomberg radio and television. we need to do an extended data check. give me two screens if you would. tania is on vacation. futures up 5, 10-year yield, that was at $2.09 a cup of coffee ago. just momentsntil ago at a little bit of a bid. i would say this morning the number one thing i am watching is to see if oil can get a bid. move onto the next screen, if you want your the vix -- if you
would. favored,neil dutta's the renminbi even weaker, and the german two-year gets my attention at -0.28. negative yields i germany. nbrendan: this is "bloomberg surveillance." i am brendan greeley with tom keene. the equity indexes not at the lows of last march, but it is headed there. the credit rating is not yet john, but it is headed there. and brazil's president has told brazilian tv she has never considered stepping down. that is something you only say when you are being encouraged to step down. umar joins us now in l.a. good morning. have a future in politics? komal: the best thing she can
hope for is that she limps through to the 2018 election. at the same time, her party is biting at the heels, she has indicated vaguely and very he isy in some ways that ready to step in if she has to step down. the problem she faces, not only the economy, the intense amount of corruption that is being discovered a petrobras, and also the fact that the politics is very fragmented. the people who have to support her in congress are also the very same people who are being investigated. somethingrendan, unusual for a developing market -- people who are very high up in business are finding themselves in jail, and these are not countries that have jail, they are doing hard labor, and so many of them are starting to talk. so the implications are unknown.
i would still say that the probability race on the side of her completing her term, but it is getting weaker. brendan: as we get to politics and the possibility of recession in brazil, are we headed for actual credit risk as well? komal: first of all, brazil is in recession already. i see the gdp dropping by about 2.5% this year. the change in outlook, brendan, i was at meetings in brazil earlier this week, is that this is not going to be a short line recession. it will continue until 2016, probably negative 1% to 1.5%. as far as the credit risk is concerned, when i was in são paulo this week, moody's downgraded the country to the lowest level, investment grade, but they did not put on further credit watch. creditwatch.ut on both cases, they are going to
noninvestment grade. tom: it is a financial calculus away from the economy. front a mentioned up gloomy deal on the economy third what we look for in retail sales today, and can you reaffirm that this is a said that should delay? komal: first of all, i think retail sales recently, tom, have been weak. you will see a set of week numbers coming in the month to come. as far as the fed is concerned, china and third successive day yuan,of the renminbi, essentially puts because on a september rate hike. should they delay? i have been saying on your program, tom, they should have hiked interest rates two years ago. as far as what they will do, they probably will delay it. , we appreciate your parents this early from los
angeles. komal sri-kumar. this is the arch debate out kumar and you,r. don't we? neil: we do, but forecasting is about ranging the possibilities, and it is likely that the fed will raise rates this year. they have an signaling as such for the better part of a year, and the data has, by and large, ewald. tom: -- evolved. tom: what is a test the gdp call to you? is 2.6% good enough for janet yellen? is good enough to what matters is the performance of the economy, and is a strong enough to close. the answer is yes. tom: and dudley said that yesterday. neil: tom, we were going through the year with inflation risks skewed to the downside. we were talking about the dollar, import prices down, what happened? core inflation accelerating.
watching the euro, a little soggy through the morning. some of the euro gains. brendan: one of the voices alexander stubb in an interview with bloomberg. tom: finland's finance minister. brendan: yes. all right, i am right now shopping on wastyfair.com for kitchen storage. i do not like the sorrento three-piece canister set, i do like the four-piece canister set. matt miller is with us. you are talking to the cfo of wayfair? will be there with erik schatzker, and we are interviewing niraj shah. consumerease their base by 50%. this guy is a fascinating story. he and his buddy from cornell graduated, started a software
company, sold it for little money, and decided to do online retail. initially they had a site for each product that they sold, so adirondackchair.ss.com. they decided to put them all under one umbrella and take one name, i do not know why they ask up with wayfair, i will them about that, but it is a fascinating story. brendan: how do you compete with amazon? definitely the first question i will ask niraj shah. what he is saying is they also found that they sold to many products, so they are all -- also focusing on whatever three-piece set you are looking at, he said you cannot sell all of the products you all the people, and i immediately think of course you can, i go to amazon to buy all the things all the time brendan:. the description for things is not great -- all the time. brendan: the description for things is not great. there is much to be improved. matt: i have a really
interesting guests in the 9:00 hour, the ceo of waste dave steiner will be coming on. for each truck eashe move from diesel to natural gas, you save gas per truck. brendan: there is a cost-saving, too, they are not just a enough for our grandchildren. matt: they do not just garbage hall and recycle. they also have the biggest fillingof natural gas stations. he is also on the board of fedex. he will tell of how commodity prices affect recycling. most companies that do recycling on large deals now lost -- scales now lose money. what you have seen to copper
prices also happen to paper and cardboard. he said he cannot invest more in recycling because we cannot make money on it. brendan: all right, matt miller hosting "market makers" this morning with niraj shah of way fair. what i want to hear from our miller is about tesla. for ourt, it is time reporter question of the day. we are asking -- is china fighting a currency war? this is "bloomberg surveillance." we have already made our opinion clear. good morning. ♪
tom: good morning, everyone. oil is trying to find a bid. right now, top headlines at "bloomberg surveillance." brendan: a base in turkey attacked islamic state terrorists in syria for the first time. got permission to use the base last month. says its workplace diversity effort is ahead of schedule. more than 40% of this year's hires are women or minorities. fire for ame under lack of diversity. and wheaties beer. the idea is not flaky.
thank you for that one. there is no cereal and it. -- in it. craftl mills had a brewery to make the malted drink. it is available for a limited time only in minneapolis. tom: is elon musk involved in this? brendan: yes! he is driving innovation in all industries. whatever he touches turns to beautiful things. wait, sorry, i am still talking. universal studios is having a summer. "jurassic" this is how big. 26% year to six other studios are sharing the rest. and "straight outta compton" has not even opened yet. it was thead assumed piracy, the model of the summer blockbuster was over. i am clearly wrong about that. is the movie business the same as it ever was? daniel: i think it is as good as it ever has been. we are looking at a record year.
overseas, it is moving very well. rising business over the last couple of years, domestically was a question, this year answers that question. brendan: has hollywood change the formula? daniel: no, it is more about studios getting the formula right. two good movies, now we are looking at one of the biggest films of the year with "fast and the furious 7." is aight outta compton" different movie, but it looks like it will do good business. brendan: we could not figure out -- i am in the sweet spot of in wa nostalgia. -- nwa nostalgia. tom did not get it. hip-hop is part of the mainstream today, even if audiences are older. tom: can this breakthrough? daniel: i think it can. costs, like, what,
$142,000 to make? daniel: [laughs] it cost about $35 million to make. tom: i want to go to "minions," "cinderella." phil at universal decides let's agree might "minions"? somebody makes this, don't they? theyl: they make it, but see the performance of these films in various different regions and countries and how well they have been doing overtime. the idea of the cheaper summer movie, $30 million, is almost too simple because of course if you can make an amazing movie for $30 million, you will make money on it. doesn't that also change the selection process? what gets green lit? for $30 million, has have a great script, a compelling story. daniel: not every movie will be a little more affordable. you are seeing more of a balance of which types of budgets are getting green lit. brendan: so that is really changing. people are more cost conscience.
yes, diversifying your rather than putting everything in one basket like disney did three summers ago. you are looking at different movies that can breakthrough. tom: we all have a different perception of what business -- of what disney is. what is universal, what is the history of this other than it has made a ton of money for the moonshot known as comcast? daniel: universal's role in comcast? tom: yeah. daniel: comcast as an entertainment conglomerate has done a great job. universal has been able to rebrand franchises. tom: they have gone from distribution and content, and you tell me they nailed the movie contract. daniel: they are doing it with superheroes this year, with dinosaurs, with fast cars, and they are doing it with hip-hop now. brendan: real quick, how has
netflix changed with the studios do? daniel: i think there is obviously an influence of consumers for what netflix is doing. what toios, they know stick with. they know in the summer it will be the sort of big movie that you cannot enjoy -- tom: 10 seconds, does "minions" play well on netflix? daniel: i am sure for kids it will play well. brendan: i can give you an emphatic, anecdotal yes. my kids call those movies "minions." great grief.oria, first of all, retail sales out at 8:30. radio and television. of heard the difference opinion between neil dutta and komal sri-kumar as well. if you are just waking up, elon musk puts money where mouth is. he will pony up $20 million into his secondary offering of his
tesla. that will be scrutinized to say the least. and we moved to greece. brendan: the greek parliament said to vote. hans nichols is with us. this is your job. you are watching to horses. deal, no deal, what is your cap right now? hans: parliament late tonight, early tomorrow morning in athens, gdp numbers came in much better than expected. -0.5%,tion was for a they came in at a positive 18%. -- .8%. they came when consumers were bracing for capital controls. people expected -- what do you do when enough excess money? you go by something you can park in your garage. brendan: washing machines. hans: but not a drier because you hang your clothes out there. tom: the immediacy now -- is this just a ballet along three
years, or will there be an end result from adam lagarde and wolfgang schaeuble -- for madame lagarde and wolfgang schaeuble and the rest? hans: it will not end immediately. i know what you do when you wake up, get a cup of coffee and opened bill or what is the sentiment? a badyou do not want deal, you do not want to do it in haste. if a passive in brussels on friday, we just heard from a member of parliament, we will potentially have a vote tuesday, wednesday, thursday of next week, so maybe i will be live back in berlin and we can narrow things. tom: your eight-weak european vacation. hans: [laughs] tom: excuse me, nine weeks. brendan: if you are so audacious as to take five days of vacation. time to answer our reporter question of the day. is china fighting a currency war? raging, comes the
answer, they will do whatever it takes to help inspire the economic powerhouse of asia. bullish u.s. dollar. tom: neil dutta? neil: it is not a currency war as much of it is a deflation. tom: do we get a reuben dollar we saw in the 1990's, and does a net yellen have to -- does janet yellen have to adapt? neil: by the logic of some, if the dollar continues to rise, what's, the fed is never going to raise? if the dollar is rising for a function of the u.s. economy getting better at the end of the day. brendan: sumner of course the champion of nominal gdp. which is, currencies, have turned into warfare, which means the fed must not run up ag of defeat and move in september, neil dutta. neil: look, i mean, if the fed had already tightened, a lot of the currency moves we are seeing probably would not be happening. tom: david blanchflower
writing that in from dartmouth college. brendan: third answer -- nah, just a skirmish. what would you do with $3.7 trillion in currency holdings? manage it, right? tom: currency war makes great media play. this is straight out of international economics. are the dynamics now the same as we have seen in other emerging markets challenges? or is there something different this time? neil: well, i think fundamentally what happened is you had a lot of emerging much during the early phases of the economy when they did not need to. china was a good example of that. you go back to 2010, janet yellen was talking about how the sort of excessive lending and stimulative programs coming out of china could result in a lot of bad loans down the road. i think that is happened to some extent. they basically lost their cash of advantage starting from behind.
>> i'm erik schatzker. matt: i am matt miller. china central bank easing concerns. erik: this happens me a big day for retail skirt july sales come out in 30 minutes time pair will talk to a couple of top ceo's ceo's. matt: earnings up only 25%. erik: in greece, the parliament is preparing to vote on the new bailout package. the bill includes spending cuts and tax hikes or the rest of the euro zone has to improve the deal before greece can unlock more than $90 billion of aid. finance ministers may not endorse this right away. >> two options. one is tha