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tv   Whatd You Miss  Bloomberg  July 18, 2017 3:30pm-5:00pm EDT

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without a replacement lined up. speaking to reporters today, he admitted his process has not been easy. >> this has been a challenging experience for all of us. it is obvious we do not have 50 members that can agree on a replacement. a lot of people have been involved, a passionate discussion, but everybody has given it their best shot. >> let's be very clear about what the president is proposing and where the path will lead. the president would not be "letting obamacare collapse." he is actively trying to undermine the health care system in this country using millions of americans as political pawns in a cynical game. mark: senator schumer added that health care needs "bipartisan medicine, not a second surgery." rick perry says the trump
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administration is pushing for increased exports of natural gas and other energy sources as it seeks "energy dominance." secretary perry also praised increased coal exports to boost energy production and jobs. he said today he has not yet seen it widely expected study into the reliability of the electric grid. the united states has imposed sanctions on 16 people in organizations linked to iran. the move comes a day after the trump administration certified that they are complying with their nuclear deal. the new sanctions are for nonnuclear activity, including support for iran's revolutionary guard, and the ballistic missile program. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. ♪
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>> live from washington dc. i'm julia chatterley. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. we are 30 minutes from the close of trading in the u.s. julia: u.s. stocks going lower into the dollar sliding to an 11 month low. joe: the question is, "what'd you miss?" scarlet: mitch mcconnell repealing -- his repeal dead on arrival. where does it leave the republican agenda? barry diller says he is saddened by what has happened in washington, but he is looking for -- in the u.s. and ibm reports after the bell, can they demonstrate a shift away from the legacy businesses, clout and cybersecurity? -- cloud and cybersecurity?
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julia: looking at where the major averages stand. abigail is standing by. abigail: exciting stuff. small moves for the major averages going into the close, but for the nasdaq, moments ago it did put in an all-time high, the first time since june 9. it is on pace to finish at a record close. if it happens, the first time since june 9 as well. you will guess technology is doing pretty well today, that is the case. look at the dow down slightly, about 3/10 of 1%. s&p 500 recently went higher, also dragged down by financials. tech and consumer discretionary strength is outstanding. and the nasdaq, we did have the tech pullback starting on june 9, one point down 4%. it has been a race. the nasdaq putting in a record
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high today on page -- pace to finish at a record close. and helping with that for the nasdaq, we are looking at the stocks amazon, facebook and alphabet. this part of the tech pullback i'm a but they have rebounded. netflix come up 14%, best day of the year after the company put up a solid second quarter, especially as it relates to subscribers. they added 5.1 million subscribers, versus the estimate of 3.2 3 million. and at the forecast is solid, relative to the subscriber growth and it is coming from international. those a-shares clearly rewarded -- shares have been clearly rewarded. we will have ibm reporting, along with united airlines. ibm trading higher. they are looking for adjusted earnings of two dollars and four cents, $19.5 billion. it represents a 7% and 4%
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decline year-over-year if they do hit the estimates. margins will be front and center. also for united, continental, down 1.4% as investors worry about fuel. going greenally csx and investors want to see if the railroad company, how they will set the tone for other railroads. and how they are doing in the quarter under harrison. we will report on those shortly. julia: thank you. we will dig into the ibm numbers when we get them after the closing bell. senate majority leader mitch proposal's new to simply repeal obamacare seems to be dead in the water. looking at the fiscal policy agenda, which is now also in jeopardy, with the president lincoln health care reform with large tax cuts. we have kevin cirilli.
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great to be with you. >> welcome to washington. be deadlan c seems to in the water. talk to us about plan b. kevin: i'm not sure that they know. i just spoke with mitch mcconnell anti-democrats, nell,or schumer -- mccon top democrat, senator schumer, and they are feeling out what comes next. senator rand paul, mike kelly, who came out against this are essentially a mute issue at this point. and republicans are hoping that more moderate them across will be brought to the table. i caught up with one of the moderate democrats who will be involved in the discussions, senator jon tester who is on the banking committee. i spoke with a republican from south dakota, just about jockeying going on. he is a former governor. take a listen. >> we will start over.
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we will be reaching across the aisle to members on the other side. a group of former governors have indicated our interest in finding common ground. time really is of the essence. isthe best thing we can do start having committee meetings. sitting down with the health committee and finance committee to work on a program that will help to fix the health care bill credit >> you go to the floor and debate the issues. that is what it is all about. kevin: senator shelby is an ultraconservative. the bottom line is i spoke with sender joe manchin, a democrat with a tough reelection to fight in west virginia and he is leading the gubernatorial charge, the 11 lawmakers who are bipartisan come all former governors who are meeting behind closed doors thinking of a nupathe forward. julia: you are speaking of a conservative, one of them senator shelby, what is your sense about how many republicans would back a bipartisan fix.
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even if you are talking about a vote of some sort on a repeal with a delay of two years, something has to happen in those two years to support failing markets. kevin: i have to be a band-aid, not a reoperation of the whole entire health care bill. and that is devastating news to the grassroots conservatives that were hearing they were going to get something done. one thing i found interesting from inside the beltway, vice president mike pence speaking at the retailer organization about tax reform. tax reform is what they wanted to do. and the main headline of the speech was health care, so they are clearly trying to turn the page to get to a new policy argument. i spoke with a senior a public in aid last night as this was developing who said, you look at health care and divisions on that and you get to revenue neutrality and deficit spending with the debt limit, border
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adjustment tax, there is so much space between the different factions. julia: the possibility of health to reform looking slim. kevin: slim to none. when they come back from recess, and the uncertainty of that the uncertainty of janet yellen, many people bracing for the uncertainty of washington. the dollar reacted last night on what happened with health care. julia: real concerns. great to chat with you. kevin cirilli, chief correspondent in washington. scarlet: we will dig into it , the former. chan public policy and campaign advisor to mitt romney joining us from california. lonnie, quite a mess on republicans' hands. from where you sit what is the
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best case scenario for how health care reform can play out versus the most likely scenario? lonnie: the most likely scenario will be some some of paralysis. one of the things you discover through the process is just how much division there is between the republican party on policy. there were political issues, but what it came down to was policy disagreements on the medicaid program, assistance for low income americans over the extent of military reform. in the short run, i do not see a lot happening. donald trump acknowledged that today. if there is going to be a new approach, the governors led approach, i think that will be the way forward. there is a piece of legislation in the senate sponsored by susan collins of maine and lindsey graham of south carolina and bill cassidy louisiana that says, let's give states the opportunity to do health care the way they want to do it. that could be the compromise. joe: when obama was the
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president, republicans had no problem passing obamacare repeal bills. it was only when the prospect that those could actually be signed into law that they backed and went back, does that suggest a certain level of intellectual dishonesty about some of the criticism we heard from her public and politicians all those years during the obama administration? mr. chen: i think it reflects the fact that this is a live fire exercise and the politics become important. it is one thing to vote for a repeal when you know the repeal is not going anywhere. to your point. but now they know if they vote without a replacement, they are on the hook. they could be on the hook regardless. politically, donald trump said we will let it fail and we will not own it. it is not the president's decision to make, it is the voters' decision. republicansm sure
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want to move ahead with other items on the agenda. as they start to tackle tax reform, how compromised are they because of the failure of health care? mr. chen: i think tax reform can be a slightly separate exercise, in the sense they hoped to do health care reform to give them a lower baseline to meet when they do tax reform. they can move into the process, and by all accounts the white house has been working on it, senate republicans have been working on it, as well as house republicans. they will reveal something in early september, mid august. the only challenge, the only questions that remain are typical policy questions as well -- will you have immediate expansion? those questions are policy questions that will divide the republican conference and divide the congressional republicans from the president. tax policy is no easier than health care. we will see. joe: one thing that sort of
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characterizes the attempt to repeal obamacare, is while trump wanted a win it did not seem like he was advocating for any specific policy were making the case that the legislation was going to make people's lives better. how much do you think that made it difficult, the fact he stayed on the sidelines? fact theyn: broadly, the were not a lot of cheerleaders for the bill, i think it was a huge problem. could the president have played a bigger role? absolutely. there is a question about whether the president could have influenced the senate process, because the senators run their own stumps, they have their own set of issues. it is not clear that president trump could have made a huge difference in that outcome, but he could have been a more prolific tweeter in favor of the bill if it was something he believed needed to get across the finish line. julia: being cautious. great to get your perspective.
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still had, why higher rates for the fed does not automatically mean higher rates for consumers. we will explain. this is bloomberg. ♪
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♪ scarlet: "what'd you miss?" it has been nine years since the global financial crisis caused rates to plunge to record lows and now that the federal reserve is finally raising rates, you might be wondering why you do not see higher yields. joe: here to explain is our personal finance reporter, then. -- ben. all those years when the rates were at zero people said you cannot make money saving, people
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were on fixed incomes not saving, but we are starting to see raised increases but it is not translating to much. how come? ben: the many in the bank -- money in the bank, the banks just have a lot of money and they do not to compete for your cash. we have seen rates go from about very small, .1% at some banks, to .12%. but you can shop around and there are banks that are now paying 1.3%. so if it is worth moving your money, i am not sure. joe: what about the flipside? they are not translating into more money, but what about payments you make for something like auto loans? ben: every market has a different dynamic. huge come, there is position between auto loan providers. actually rates have stayed low. they are also being aggressive
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about basically repossessing the cars if you miss a payment, they get it back. that is how they keep the rates low. mortgages in the first year after the fed started raising rates those mortgage rates actually fell. but they have come back a little bit. then there are credit cards. could cards are based on the cardsrate -- the credit are based on the crime rate, so that is different from the fed rates. they are creeping up a little bit. if you have good credit, you can find lower rates. julia: what about the offset? there are some savers, so what impact do we see feeding into a savings account rates? if we look at the net effects, what is the fed watching in terms of a financial condition? they have been talking for a long time about the fact if they raise rates, conditions have not tightened. talk about the net effect. basically youates
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have a situation where we have a glut of savings, so the banks do not have the need to compete for deposits. we have seen certificates of deposit go up a little bit and those are for people who are really shopping around and looking for the best deal. but the actual rates that chaise and bank of america have you are looking at .03%. scarlet: you set the scene, how is it likely to change with the fed continuing a policy of raising rates at a very gradual pace? ben: i think it is hard to say. i think things could start to change if an american consumers really start moving money around. if they start to notice how little they are getting from the big banks and they start looking online at basically, you can increase the yield by about 10-100 times by moving money to an online account, so it is tempting, but only when the rates get high enough. joe: ok.
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ben, thank you. scarlet: time for the bloomberg business flash, a look at some of the biggest business stories. chipotle suffering their worst decline in seven months after a suspected norovirus outbreak at a virginia restaurant. the chain shut it down on monday after a "small number of illnesses reported." just two years ago and e. coli outbreak at restaurants sent to the shares into a tailspin. and the two biggest e-commerce providers could merge in three weeks. that is according to people familiar with the matter. they say a revised offer was made for $950 million. snap deal rejected the $850 million initial offer. it would create a stronger homegrown competitor to amazon, which is graining -- gaining ground in india. and one company joining a global
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list of banks looking to profit from a surge and private wealth. the recruitment push coming after they created a platform to offer private banking and other related products to the saudis. they will enlist the private sector as they diverse the economy away from oil. and prosecutors considering dropping an insider probe into carson tended are. that is after he bought shares ahead of the bed of the london exchange group. the deal was blocked by regulators. the potential agreement to drop the investigation will cost the company fines that total more than $12 billion. and that is your business flash update. julia: thank you. up, emergingming markets. we show you how the developing economies are outperforming and asked the question, what happens when the yields reprice? from washington,this is bloomberg. ♪
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♪ scarlet: i'm scarlet fu. "what'd you miss?" the outperformance of emerging market stocks to develop world stocks. the white line is the emerging market index divided by the developed world index and when it goes up, as it has been since december, that means emerging markets are outperforming emerging -- developed markets. at the end, you can see they got another shot in the arm as the 10 year yields faulted. backe can go all the way to around the last october, right before the u.s. election, since then there has clearly been an inverse relationship between the treasury yields and ratio. it feels like, when we talk about the rotation of u.s. stocks and emerging-market stocks, there is more room to
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go. joe: i love how the chart is like the jaws that open up and you wonder how wide they will get before the eventual snap. i am looking at another divergence. it comes from this morning, the national association of home builders sentiment report. i love these. the white line is the price of lumber futures and they are high. they have been rallying lately. generally at their highest since around a year. the blue line is sentiment and it has been climbing, but lately it is sliding. that is the blue line fallen to its lowest level in about six months. and the home builders are complaining about the price of lumber, they say it is hurting the margins. we all know about the labor in the industry, something perhaps for the administration to think about as the issue of tariffs continue. julia: we will look at nafta negotiations as well and the
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canadian question. i want to look at 2014-2016, the atlanta gdp now and earnings per share. i have a three-part chart. now at the lowest, gdp 2014. the white line. and for 2017 is pretty much tracking that. and the next chart, earnings per share estimate in 2014. estimates of 2017 as well, which is the blue. you can see it sitting a little bit lower as of this month. go to the chart above and what you can see is the normalized version of the s&p 500. the white in 2014, the green 2017 outperforming the white, but look ahead to the dips and fallbacks from august and october of 2014. based on these estimates, gdp is in line, a reason to argue could
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we see some kind of correction next year? not the only reason, but one reason to because this. scarlet: the market close is next as julia sets the scene. nasdaq trading at a record high, up by 4/10 of 1%. this is bloomberg. ♪
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>> "what'd you miss?" all hail return to market leadership, nasdaq closing higher -- donald trump agenda. >> and julia chatterley at life from washington. scarlet: i'm scarlet fu in new york -- new york. an joe weisenthal. if you're on twitter welcome to our closing bell coverage every weekday from 4:00-5:00 p.m. eastern. >> let's begin with our market minutes. nasdaq holding at a record higher, making a record high. s&p 500 index looks like it had closed at a record high, up by almost two points. that's good enough for a new high. -- losing about 53 points, off by one quarter of 1%. >> impressive, looked like it would be a down day at the snp, but it came back. >> stocks remain buoyant. helping to lead that buoyancy and -- tech names. netflix andbout
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facebook. nicholas -- and the folks coming to a record high. we are talking about subscription additions internationally and domestically. facebook also making a new high as well. one stock that has faltered this afternoon after a suspected --break at one store shut shares tumbling. you can see that big leg lower at about 10:30 this morning. shares closing four point 4%. a quick mention here on big news of the day. republican efforts to first repeal and replace obamacare, now just repeal, both measures seem to be going nowhere. insurance declining as it looks like republicans increasingly -- will let the market collapse. you can see at them cigna, aetna, down by at least 1%. inleft leg at what happened the government bond market today. rates lower across the board.
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10 year yield down to 2.26%. would stick a good look at the one-month chart of u.s. tenure. just see if you can get a sense of the easy, easy go nature of this market. less than a month ago 2.12, got close to 2.4. now right in the middle and sliding for the last couple of weeks. whatry much filtering into we are seeing in the dollar here. an 11th month -- low, questions asked about the broader agenda here. what we did see as well, a little bit of movement going on. regaining some earlier losses that we saw in the session. that's the offset we are seeing in dollar weakness. perhaps it would have been lower without dollar weakness we were seeing. in front -- inflation raising questions. 2.9% expected. that's a reprieve for the bank of england. euro-dollar just going to keep focus on that. draghi on thursday, comments he made two weeks ago, investors
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focused on his comments. quick look at what's going on in aussie as well. outperformance session -- highest level it is seen since 2015. last meeting saying -- the rba talking about the ability of growth they're improving performance they are saying. upking about the mutual rate three .5%. we are talking two percentage points higher than current levels. investors looking like -- for yields. quick comment here. just want to mention the us. we had goldman sachs asset management saying they were pairing risk in these. cautious on the outlook, though they remain a minute -- positions in the region. just wanted to know that those -- notes that that's what they were looking at. >> let's take a quick look at commodities.
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the board today fitting with the opposite side of that weaker dollar story. intermediate crude west texas up. silver had a 15 handle last week, might move back a bit. for the precious metals on the weak dollar. those are today's market minutes. a deeper look into markets now with oliver renick. you look at what's going on in equities, the s&p 500 index melting to record highs, nasdaq has the first record and a wild. earnings driving these gains or is it something else? oliver: we definitely would like to thank its earnings. [laughter] it might be continual search for yield and the like of alternatives. at the end of the day, this is helping a lot. if you look at a few of these groups people were focusing on, whether it's trying to find the bright lights within, whatsapp and four financial results, or looking at technology companies, there are a lot of things that i think overall the positive.
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not as good as the first quarter because they have easy calm stash to the year before, but overall positive. >> i love that phrase. something that blows my mind, and you have a chart here that your have brought us. not a single 5% correction in the snp's since brexit, that kind of blows my mind. >> we jump into the terminal, that's what we're looking at. it speaks volumes. the red line there back in june was are brexit dip. from august, november, when the snp slowly stretched down. didn't break the 5% boundary. without -- couple drops on the way. there was a correction of 5%, real correction of 10% for a lot of people. that signals -- you just want to be somewhat wary. lucy davis like today where there could have easily been a trump trade. people saying look, the whole idea of all the legislation coming forward. they came to get their biggest thing done, let's selloff the
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market. that doesn't seem to be the case. those folks -- speculative about how much of the sun -- assumption was based in the market. >> we should take you chart from what we saw today in the markets. had been fixated on what they managed to pass any kind of reforms this year. stock markets at record highs. this is a great day for investors. >> that's not about point. there's of course a larger issue we have to think about what central banks, what's happening with the fact that the bond market is signaling something to for them stocks. good point. a lot of things fell to the ground here today with health care. for the rest of policy, perhaps we move past the assumption -- opposite investors are still holding on to whatever they can. that's part of financials. one of the interesting thing i know this that we have bonds coming yields moving down. we don't get a commence or it move and a lot of full array
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stocks like utilities. i think they'll be important to watch going forward. >> thank you so much, all of her. we have some earnings we want to inform you on. ibm has numbers. second-quarter operating earnings share of $2.97 tops consensus estimate of two dollars for -- $2.74. billion -- $19.29 billion, a bigger drop than expected. estimate was 19.4 7 billion. 20.2 $5go, ibm booked billion in revenue. profitability was slightly higher than what analysts had been looking for, 47.2 percent for adjusted gross margin. analyst were looking for 47%. bottom line, revenue coming in a bit later, profitability beats. let's bring in an analyst who covers software. whate, let's start with --
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we have seen in the last couple quarters. looking at ibm equity e.m. on the bloomberg here. that't find the last time ibm book to revenue gain. >> neither can i. the companies undergoing a massive valuation and two going into emerging technologies. some of those numbers are the numbers above 30%. because like -- china of legacy businesses still continuing. march inside a think is going to .e very interesting once we see where this comes from, it will be very important. as you mentioned, the gross number expectations were slightly above what this was looking for. this is where the big story is at that point. a lot of the pricing pressure. reaffirmed its forecast for the full-year as well. the drop we are seeing in the stock is not that large.
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>> i was just going to point to that. it looks like the stock has turned green after hours. what is the things that investors are most keying in on? is a cloud revenue, the pace of which they are transitioning? everyone goes to legacy is huge. what do investors want to see most? -- cloud are insistent transition will be 2019. gross margin -- that was a big surprise last quarter. in a most every segment we saw profitability decline. there are certain structural issues. scarlet: something else ibm is focusing on is the mainframe capable of bringing in 12 billion and encrypted transactions today. this is an effort to address cybersecurity and regain market share in that business. how does it stand versus
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competitors? anurag: this is a decent business for ibm. last few quarters it is to client, but the new cycle will come out in the second half of this year when we see the new product launch. we feel that this is going to be a product with security features embedded in it -- a common theme across all hardware providers. this is something that clients are asking for. >> as you look at profitability tricks better than expected, how much more cost savings can -- bring out of ibm? >> that remains the biggest question. if gross margin decline doesn't stop in the next couple of quarters, will it have to take more restructuring in order to have pretax income, again next year, because that something that they focus on? that's an area of focus for investors. >> thank you so much for your wisdom there. coming up, the bloomberg
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intelligence team looks at short-term options -- about what markets to expect here at this month's meeting. will discuss next. this is bloomberg. ♪
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mark: majority leader mitch mcconnell says the senate will vote, sometime in the near future, on repealing the obamacare -- health care law. he spoke to reporters after the collapse of the gop land to rewrite much of the 2010 law. >> this has been a very very challenging experience for all of us. it's pretty obvious that we who canve 50 members agree on our replacement. a lot of people have been involved in very passionate
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discussions. everybody has given it their best shot. >> in remarks that the white ,ouse -- president trump said should that obamacare fail, adding "in, i am not willing to own it. >> he met with service members today to bring it is to end the war in afghanistan. with administration administration looking to get the afghan government to appoint -- to append -- defend itself, the president wants to get answers from people on the ground. defense secretary james mattis is excited to attend nearly 4000 more troops there this summer. more americans are choosing work -- further families according to atlanta federal reserve banks. dolts continue to look for work for the cursed -- first quarter of 2016 and 2017. this trend also marks a change for a long-running decline in u.s. labor force participation rate.
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hundreds graduate theater program assists is pending emissions for next three years, after getting a grade from the u.s. department of education for merging its graduates for an -- average of $78,000 in debt. the program houses the american repertory theatre but to sell developed productions such as the tony award-winning revival pivot and waitress. 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. joe: breaking news. we have earnings out from cfx -- a company beating by five cents on the bottom line. of of $.64 coming in ahead 59 -- estimate. volumes up to -- 2%. i'm not sure but this number. you see the market reaction gaining 2%. the company is on track to --ieve its efficiency gains
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this stock has done well. it is a double in the last year. investors are liking these earnings. >> of ua -- we have united continental. this is a bit of revenue and earnings per share. revenue $10 billion, i have higher than the consensus estimate of 9.9 9 billion. when you look at the adjusted earnings per share, two dollars $.75 versus the average investment of $2.72. to 70-280.as before this is smack in the middle of the expected range. we have another number everyone pays attention to. here is the consolidated unit revenue, up about 2% with what analysts were looking for. the we get a 2.1% print for second quarter. ul up by almost 1%. >> "what'd you miss?" till date --n paul
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volatility has a low likelihood that federal interest rates will gain. while the environment -- there's no near-term risk. to explain bloomberg intelligence -- i were jersey. great to have you on. janet yellen is so passe. what about mario draghi now? that's right. especially long-term rates. what mario draghi and ecb could do is say -- we are not going to buy as many 10 year, 30 year bonds in europe. that could really impact long-term u.s. rates. fed is willing to influence short-term rates. >> we have that chart you brought us out of the money -- i know we have the smartest viewers in the world, but in case some people don't know what swaptions volatility is, explain what that is and what we're
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looking at. this has several components, one is interest-rate swaps -- these are fixed rate versus swap rate. this options on those. all this is, it is like an option on the s&p 500 index, except in this case we are looking at two-year rates. similar to what two-year treasuries would be. we see people hedging for -- out of money options. the idea that interest rates might go up 50 basis points over the next six months has come down dramatically. it's the lowest level it is been since 2013. that's just telling you that the chances of interest rate hike this year are exceptionally low. >> what does this mean for how the fed might proceed? does it have its plans said arguello depend on how the ecb manages its meeting? >> they will be less dependent on what the ecb does. the next announcement, and what we think of bloomberg intelligence, the federal reserve could say next week, we will start running up our balance sheet. when we do that, it's on what is
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the treasury department due to issue those new bonds. the feds not selling -- this idea that the federal is selling bonds, they are not. someone has to issue them, that's the government. if the government issues two-year or three or note, ultimately that could push things higher, which is why there is a risk care of the market isn't appreciating. there's that, what happened when there's an extra $140 billion a year of two year three are not that there? has to affect the market somewhat. of city --es disappointing on that interest with jpmorgan concerns about the outlook for net interest income. here's a look at what we're saying for 10 year. here's another chart you're talking to. the important levels we need to watch here. what are some of the cards for 10 year? >> we will remain here for the remainder of the year.
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that's not exciting to trying to trade this stuff. there trading all over wall street, they will be like oh no that's terrible -- when we want this 25 or 30 basis point trading range. the for banks in particular problematic. you'd have to talk to my colleague -- on equity strategies. 260.nue goes back up to all of a sudden financials do much better. it's exact what you're talking about. that interest is marginally better when interest rates are just even a little bit higher. >> i'm still kind of infused about this lack of volatility, the story we're talking about -- -- not banks ready to worried about mediocre inflation. -- thec and that story questionper rates have mark >> right here we are
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talking about short-term volatility. makes sense for there may be to be a lower volatility in the front end. the question is, what happens further out and volatility service? is, you don't you have a lot of inflation. the data is very mixed. up, bank earnings, goldman sachs and bank of america a role reversal in their earnings reports. we have the three tricks you can't miss. from new york, this is bloomberg. ♪
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scarlet: on scarlet fu, --"what'd you miss?" interest dipping in the last few months. let's take a deep dive into the bloomberg. you can find all her functions using the function at the bottom of the screen. it was bank earnings day once again. a bonanza that folks -- were anticipating from bank of america for rising interest rates has not come through. among u.s. banks, what should be the case is bank of america's most to rate changes, we've seen the federal reserve raise rates. in the first quarter, inc. of america's net interest income jumped, like we expected. the second quarter, bank of america reported a surprise drop. there is that decline there. bank of america
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blamed stagnating long-term interest rates is one reason. he also talked about the sale of a u.k. credit card business. the word transit seems to come up quite a bit these days. >> we have talked about the 210 spread and other shapes of the .urve steepening dramatically the banks loved that move. since then, it hasn't done much, so not a surprise that that hasn't continue to accelerate. >> a tough -- fascinating when we talk about earnings -- we talk about the fact that expectations come back to a point where the companies -- the expectations when actually they print the results. but at this for goldman sachs earnings potential. i'm showing some of the revisions, year to date. the white line you are looking at the pf -- current quarter. they got a whopping 14%. linechon you in the blue apf estimates for the second
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half of this year. they've only come down around 3%. this is simply too optimistic for the second half of this year. even if the rest of the business is performing well -- trading, investment banking, represents 60% of these revenues. when i look at the concerns here -- concerns about goldman sachs at some point interest rates will go up. they are benefiting terms of net interest, sensitivity there. goldman sachs in issue here. this actually sticking with the current sector of the business. ,f they are sticking with it maybe those etf estimates to have to come down. >> speaking of the lack of trading revenue, you have to continue to talk about the incredible lack of volatility that we are seeing. this is a cool chart shows
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average quarterly volatility -- going back to late 1997. we are really low here. there's nothing going on in the markets, hard to generate some trading revenue. this and the left side between 1998 and mid 2000. what i think is interesting here, the was a boom time and markets. we tend to associate volatility with negative times in the market, but it was higher than the markets were streaming higher. --ust, you can have rising right now we have rising asset prices but almost no volatility to speak up. >> goes back to the idea of good and bad of volatility. everyone looking for some kind of event driven volatility this time around. when you have it like you did after concerns about china. >> not the good kind. >> exactly, after -- the financial crisis, that's a whole different ballgame. >> volatile, volatility.
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>> coming up next, we will what's behind this conundrum. ♪
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>> i'm mark crumpton, it's time for first word news. vice president pence says congress needs to step up and do their job. in the aftermath of the republican health care plans failure to win consensus in the senate. the vice president made his comments today at the national retail federation gathering in washington. collects the senate should vote to repeal now and replace later or return to the legislation carefully crafted in the senate. either way and -- in action is not an option. a lunch with service members of the white house, president trump said republicans should quote, let obamacare fail.
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the british prime minister theresa may is being encouraged to fire ministers. several top conservative party officials want the prime minister to put an end to backstabbing, according to one party official. several ministers anonymously spoke out against this chancellor. russia has issued a new warning to the united states that i might expel u.s. diplomats. in response to reports of russian meddling in last year's presidential election, the outgoing obama administration last year expelled 35 russian officials and shut down to russian estates in the country -- president obama said would need used for spy operations. has form is house speaker been released from a prison in minnesota and transfer to the chicago reentry facility, according to the federal bureau of prisons.
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was sentenced to 15 months in prison of april of 2016 after pleading guilty to violating federal banking laws. tried to pay $3.5 million in hush money to keep allegations of sexual abuse secret. global news 24 hours a day, powered by more than 2700 journalists and analysts, in more than 120 countries. crumpton, this is bloomberg. >> what's go to recap look today. equity market action. we saw equities rallying. s&p 500 -- and cap a record close as you can see there. verily 1/10 of 1%. stocks were on fire today. that is policy coming from the ministration after the failure of the health care bill.
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>> all the stocks are in the red. it's done a little bit. -- grossstimates margins. this is ahead of expectations. here down 2%. the company did the investments by 5%. makeompany continues to progress on its cost-cutting. slightly beating estimates -- q3 capacity. hasealth care -- company -- nothing to do with health care reform. this is a rare drugmaker halted from trading. when it resumed trading, you can of tois up by 22% because
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results from the mid-stage trial. drug cut sales made by vertex helped improve reading and patients with a form of cystic fibrosis that has been fairly difficult to treat. investors like that news. >> breaking news on bp. your member rumors back in november of last year that bp was looking to sell midstream assets here. bp is evaluating information in an ipo. there talking about potential assets including crude. bp saying in a statement -- obviously they are going to be reporting results on august 1. it will be a question of what else -- >> "what'd you miss?" economists have been scratching their heads over the slow u.s. wage growth in signs of being close to employment. there's actually no mystery here
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at all. are right where they should be, and may be headed higher. >> joining us now from west chester, pennsylvania, what are we missing here, adam -- people say this doesn't make sense does it make -- explain. >> you have to be looking at the right wage growth numbers. you looking in employment cost index. wages haven't slowed. given slowly gradually excelling. there are 2.5% now. down, noping up and volatility like you see another wage measures. thing you want to make sure --
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i'm sorry go ahead. >> know now, keep going. >> the second thing you want to make sure you are looking at is the right labor slack numbers. with unemployment -- unemployment rate is the usual unemployment rate. i'd argue you should look at employment to population ratio. includes people who aren't into labor forces. >> i think we have a chart available showing that when you plot an epub employment to population ratio against wage drove -- growth, things look similar to what they had going back to 1994. >> given the amount of liquid -- labor slack we have, this modest gradual accelerating wage growth is what you would expect.
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>> unemployment -- uses view three. plex the problem with q3, if you haven't been looking for work lately, you are not counted as unemployed. beyond that, if you say i don't want a job right now, you are not counted as unemployed. as the labor market has tightened over the last few years. people who aren't even in you three are stash they are out of the labor force. this shows as the job market strengthens, people who we think of as not really relevant turnout to be relevant to labor markets. >> interesting, you say this isn't as good as it gets. it's assume we are looking at
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the right form for unemployment here. primate played rate -- where does that need to be -- how former can that come down to get the wage gains -- that we think we should be getting today and aren't question mark pond is >> if we gettomer back to 200 -- 2007 levels. we need another 1.5% to trade improvement in the -- in population rate. that can take 1-2 years. for going to go back to 2000 levels, that could take even longer. the could speed up as well. we can have job growth pick up a little bit, wage growth go with it. when it willsay stop, but it could be another year, two years, three years. what we know is that if we are going to get rate -- wage growth of 3.5-44%, we will need to get
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back to 2000 levels. >> where does that leave the fed question mark on a on this basis, therefore tightening too early. by the fed talking about this -- and the softening the's ability for an inflation. >> i would necessarily tell the fed, given certain labor market status what they should be doing what concerns me is that they -- i seem to believe wouldn't necessarily say, with the full path of interest rates are. i'd rather have the fed talk about labor market senate way that i think reflects reality. that that is lacking a
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little bit. there's some understanding of labor slack. his understanding to more than they expecting. don't think they have the right read on it now. >> very diplomatic. [laughter] >> not presuming to tell janet yellen what to do or how to do it. thank you so much. >> coming up, forget ipo's. we will speak with pacific ceo about this offering -- cryptocurrencies. this is bloomberg ♪. ♪
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>> initial offerings continue to grow, this offers companies and andnizations -- ipo
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markets. work? they actually want to bring in the ceo and cofounder of civic from san francisco. and identity protection startup $33 milliony raised and a token sale. thank you very much for joining us. why did this make sense for civic?how that benefit your company ? >> great to be here. the butchering to solve -- the problem is a big problem. how do get people to accept the product? it's a tough challenge. the traditional route that you look at to get this market -- a community of people. we decided that instead of going that route, pretty difficult, we
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would rather create a network. -- people can own a piece of the network through access -- that we have. >> what sucks specifically about this. if i would buy one of your coins say i amly -- let's very interested in an online identity. >> with a lot companies to do is exchange data with consumers. in a private way -- using smart contract. being able to hide the source of information. -- you mayredentials not shut want to show them which bank. a -- statistics here
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information. this ensures that the receiving party doesn't know necessarily who this -- was. there have each other in the day to day world. >> when you had your token sale of these are sold further cryptocurrencies bitcoin -- those have been incredibly volatile lately. you have these on your balance sheet. how do you think about the risk and you have to pay your employers -- and its currency? does that force you to liquidate make sure you have an orderly stable supply -- >> that's correct. we accepted -- a theory meant bitcoin. for here.ted them we have a balance 90% plus in cash. >> immediately the money you raise and to feel. part of the ability to succeed -- is based on this network or
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runs on top of the syrian. does the performance of them network -- i know it has slow .imes -- are you confident once the disease market for them -- >> there's two parts of the ecosystem. one part is this infrastructure come using bitcoin. in terms of this side, we had what's called the pre-token. they turn this for conducting this -- >> their huge risks with this model. there is the sack and one, coin -- and come in a change. hackers changed the receiving address and sent a syrian to the wrong address.
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how should people protect themselves? >> the fundamental problem right now is we have very immature systems for the sales and processes. that's the event cannot happen. part of this scoring quickly. >> ceo and cofounder, thank you very much. fascinating stuff. >> up next,. explain whyman -- america's or petition is taken a drubbing overseas. some's a bit like jp diamond. this is bloomberg. ♪
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>> "what'd you miss?" --organ's chairman and ceo went on a rant against washington recently, saying it was an embarrassment to travel abroad as an american citizen. he sent them berry tiller -- and he agreed with diamonds assessment. >> nerds no question that america's reputations abroad, particularly in he agreed with s assessment. western europe, the basically everywhere -- this has been integrated by your president. to --ot -- i'm not going it certainly has been around the world. parenting what
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you heard from other people, you're saying this firsthand. >> this is hardly a revelation. you go anywhere -- particularly in western europe -- they look at you and like, is that possible what you people have done? americay has -- brand this is definitely been degraded. abouth diamond is upset the number of things. gridlock, policy paralysis in washington. the country to invest in infrastructure. -- of those things -- or anything else, what upsets you the most? what upsets you the most?
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that's what he's upset about. i'm upset about the fact that we can't get a decent tax policy done. debaclet about the about this health care process. think oryou don't -- don't think about obamacare, the idea that for seven years it has been criticized by the opposition. literally never in the seven years ever announced what they wanted to do -- and then six months ago they choose the most difficult thing to do without a single plan in the rind, it is incompetence of the level -- has mitch mcconnell abandoned
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his effort -- for obamacare? is, we allreally ridiculous situations, the only way -- you can get a decent health care plan is for republicans and damage the same room, locked the door, throw them a pound of beef every three days, and a little water and say, you are not coming out until you have a plan that you will agree with. [applause] it just seems to me that we expect that, we expect this saddening., it is
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>> if that's the reason in the white house, even the white how come he and no one else around has done a single thing about it? maybe -- look. anger comes from all sorts of things. this was his perfect storm. and sure we will look back on this in history and say, as we --dy this 100 years from now with a sad think first it was an accident, next to them for perfect storm. so we do accept this dysfunction. we accept this dysfunction because it's we really resisted thise really would change process of electing our representatives. and, actually forced change so that we must collaborate together.
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it's more complicated of course but -- and i'm hopeful, we better. >> some very snappy smocks i noticed. a very punchy -- expedia chairman. >> punch is the perfect way to describe it. let us get to the bloomberg business flash right now. a look at business stories in the news. whatsapps what's -- messaging service has been partially blocked in china, after the government began crashing down the private networks, which allow users to routes data overseas. authorities have ramped up social media censorship in china. switchingstors are out of hedge funds and a 30's -- equities, the record 33% of portfolios were invested in real estate at the end of the second quarter. driven by poor returns in geopolitical risk. allocations fell to an all-time
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low for hedge funds of 4%. that's your business flash update. coming up, what you knew to know for tomorrow's trading day. this is bloomberg. ♪
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"what'd you miss?" >> s&p 500 and nasdaq at record highs. up, the girl u.s. -- economic by log. this kicks off in washington. >> don't miss this. support -- american express. going to be a did busy day. >> that does it for "what'd you miss?" joe: technology is next. >> have a wonderful evening. this is bloomberg. ♪
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alisa: i'm alisa parenti in washington. you are watching "bloomberg technology." your start with a check on first word news. president trump says the republican party shed light
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obamacare fail, after senate gop leaders failed together that votes necessary to pass the bill. trump says allowing obamacare to collapse would force democrats to the negotiating table. majority leader mitch mcconnell says the near future on repealing the health care law. that alternative plan, which could leave millions without coverage, is already seeing resistance from some within the party. is the second setback on the issue in three weeks for mcconnell. minority leader chuck schumer tos he takes acceptance accusations that democrats did not want to engage. he said mitch mcconnell decided to matter when he blocked democrats out of the decision-making. new york's senior senator says med --l needs bipartisan medicine, not a second surgery. had lunch with service members to brainstorm ideas for the war in afghanistan. he says he wants to get

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