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tv   Bloomberg Markets Americas  Bloomberg  August 24, 2017 2:00pm-3:30pm EDT

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♪ we are life in bloomberg world headquarters in new york over the next hour. here is next stories we are covering. in debt ceiling blame game washington. president donald trump blamed majority mitch mcconnell and paul ryan for failing to avoid, what he calls, a miss. all street slang different hits on the federal debt. the ceos of big banks who want higher taxes to drive down debt texas arelds in bracing for landfall. some platforms in the gulf of have category three storm's, what winds of 125 miles per hour. >> u.s. markets close in two hours. let's talk with taylor riggs,
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tight range for the moment. i would note that volume is down over the last average of the 20 days. not a lot going on. snp down. nasdaq is down the most, 1/10 of 1%. it look at the nasdaq performance relative to the snp and dow. 82 massive run-up here into the early months of june. a little bit of a drop off. little gains here. look at august. a lot of clustering. not a whole lot going on. put some -- could put some of his money back to work. some of the drivers being mastec lower today. i will focus on amazon, down quite a bit. almost down to 1% today. julia chatterley in the last five minutes -- looked at it
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cutting prices. approved the merger, amazon buying whole foods for $13.7 billion. quickly you see where they and the shares -- fall target rises. down quite almost -- a bit. earners, this company up 18%. top and bottom line. they're forecasting full-year sales ahead for the rest of the year that beat analyst estimates. good news here from guest. lia: investors remain on at as donald trump to negotiate policy. as looking up a congressional requested mitch and
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paul. for the legislation to be popular, that the bill, for easy approval. they didn't do it, now we have a big deal. couldn't have been so easy, now i mess. -- more clarity on the matter later this afternoon. sarah huckabee sanders takes the podium for her daily briefing. guesses on what she has to say on that. kevin cirilli joins us. you are already laughing. the added value to the mustache funding for the war here. >> absolutely. the drama is arty starting to play out when lawmakers return from their august recess the week after next. going to be really interesting. debthave got to raise the limit to get to what republicans in congress want, tax reform. i want to put this all in the
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context of what the president is saying and how this is going to directly impact a lot of the passing aissues -- partial government funding to avoid government shutdown. --son wants to suggest that .ot having this quite frankly, you are looking at what happened in the past, the ruling party in power typically gets the blame. their people scratching their heads asking why the president is suggesting that there could be a partial government shutdown over the wall. there is -- it's ultra conservatives versus moderates. 50-75% probability here regarding a shutdown according
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from one company. goldman sachs said 50-50 last week. i spoke to the former republican republic -- presidential candidate. who is right? >> great interview, julia. -- what coming out of steven mnuchin as well as house speaker paul ryan, they are a bit more than the president. take a listen to what speaker brian such as the other day what he was out west. >> we will pass legislation to make sure we pay our debts and we will not hit the debt ceiling. there are many different options , we will achieve that. this is about paying the bill that we already racked up, making sure we pay our debt. >> speaker ryan sang a different thing than president trump.
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drama between mitch mcconnell and trump. i want to pull up a tweet from the president earlier today talk about tax reform and the debt limit. he said quote, we only problem i have with mitch mcconnell is a after hearing repeal and replace for seven years, he failed. that should never have happened. perform --nt still people want to cash in on the debt limit. >> the tweets tell the story. >> thank you kevin. g #btv 983 zero. this is something we are watching recently.
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if you look at these bills white here on the top chart, we are seeing this go higher. three-month field has not gone there. price-ine starting to the possibility that the debt ,eiling showdown will result in what, a downgrade, or a reaching of the debt ceiling default -- who knows what. dueemanding more premiums on the kind of vote, short-term think is what we are seeing. that makes sense i guess. >> one would think it does. [laughter] >> what's good first word news with mark crumpton. mark: monitoring and developing story out of charleston, south carolina. multiple media outlets report police are asking people to avoid parts of the downtown area, well they respond to what authorities are calling, an active shooter situation. the associated press sites the city's mayor boost -- says, a
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disgruntled restaurant employee has chopped one person. swat teams and heavily armed officers have cornered off an entire block nearing stretch of restaurants and shops popular with tourists who will continue to monitor this story. we will bring you updates as soon as they're available. harvey now a hurricane. gulftorm off the texas coast has strengthened to hurricane force, packing winds of 80 miles per hour. it could drop as much as 20 inches of rain on the region. it is forecast to strengthen more as it approaches the coast. the trump administration plans to impose visa restrictions on four countries that refuse to take back the parties. cambodia, north korea mckinney, and sierra leone, will soon be -- several me, and countries.
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workerachusetts hospital dollar a several million powerball jackpot prize. she was leaving work at night with a firefighter, discuss powerball, when she realized she had one. she says he followed her home to make sure she got there ok. she says she has called work to let them know she will not. it is the largest grand prize won by a single lottery ticket in u.s. history. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i mark crumpton, this is bloomberg area julia? julia: and you, mark. coming up, lady gaga and tiffany -- boosting sales. a luxury retailers still has work to do to win back people. from new york, this is bloomberg. ♪
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julia: bloomberg markets, and julia chatterley. julie: julie hyman. earlier this share gained as much as 4%, but it's now down. this luxury retailer hosting second quarter retails topping estimates in part things to lady .aga -- lady gaga tiffany's sales, the company wide, fell 1%. joining us now, senior analyst at lower equity research. she is had a hold rating on originally the shares
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went up. there was a lot of enthusiasm around the numbers. what do you think -- >> return to specifically drive the moves down. broke up their sales by category and engagement, down 8%, same as the first quarter. that is obviously the crux of the brand. people don't purchase tiffany engagement rings, doesn't speak well for the brand. part of a booster that was sales of wholesale diamonds. wholesale diamonds to other retailers/not a profitable sale. the engagement ring front, is about people don't want tiffany engagement rings as much, or they are not proposing -- as frequently? is there way to figure that out? >> it stuffed help. there are no great metrics to
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measure engagements overall. tough to tell people are choosing her options like denial -- other more european luxury brands. tough to tell if there's a problem with the market are just tiffany, i would point out that during the worst downturns for tiffany, engagement is always stronger. it is a concern. >> we saw sales falling from 1%. that's a message to a market -- luxuries -- luxury spending there is, people actually declining this. the breakdown of where jump -- revenues are generated here, it's worth -- isn't working. as you guys have said, you talk about lady gaga, but in terms of
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--duct, innovation there there can be relatively new creative string introduced here, actually do something about that. >> said to say, i was pleased with the company in america. i thought it could be worse than that. innovations on the hired a new ceo, who comes to the company on a number the second. we are all full that he can increase that, but your point murray korea fund the new creative director is given the does she isnding best known for success of coach. best known as democratizing the u.s. handbag state. that's not tiffany's story. to take their numbers higher on jewelry, where they would like to -- their prices to be more like 2000 not 304 coach. board is impatient, and have a habit of getting rid of ceos when they are not
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performing. previously -- less than two years, we have people pushing year two. this guy has got to move really swiftly. if she under quite a lot of pressure. up the pace ofed innovation, this old-school american heritage brand could be a lot of heads to roll in their design group, maybe a lot of positions. frankly we have not heard him state his strategy. we are told it will be a continuing -- a continuation of this. what heso talk about did at coach. what is tiffany -- at this point? one point you have lady gaga trying to appeal to millennials. known as delicate as the traditional tiffany image. if the engagement marketing. those two? straddle
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>> what about digital? if we keep talking about the fact that we are seeing -- what here,the digital warnings behind also there -- >> digital did drive what growth they did have. sales growth's would have been worse about digital. that's a surprise. this is one of the things we follow where we write off the commerce, because we assume women want the product in the store. my condo sales people -- this is not someone holding sweater to the gas. [laughter] of where they take this brand, i think that the dutch women would be buying engagement rings with tiffany's but didn't have the heritage positioning's. to have a if you look at their successful design path, it's ultra perretti
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-- these are not young designers. this group wants younger designers and designs to bring growth to their brand. >> great to have you on. we are learning that gmc -- has just been elected to the disney board. election brings disney's total board narratives 12. new ceo -- has an ability to debt adapt to changing tech. the makes him uniquely qualified for the board. from new york, this is bloomberg. ♪
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julie: this is bloomberg markets. --julia: whole
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foods will lower prices growth some of the competitors for monuments on. stored, the everything jeff bezos and the age of amazon. we should not be surprised by this. tell us more. >> i have been a little surprised by the speed at which they're closing the acquisition. it was only two months ago when they announced it. the fcc gave approval yesterday. theuld telegraph some of things they're going to do. make amazon prime the loyalty program for all foods customers. put those amazon workers where you can pick up the order online in some of both hundred stores,
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then at the whole foods white label products of 300 65 degree of branded products to amazon fresh. to see thenning strategy here. amazon is in new territory. it has a wired company over the , it always keeps them secretary of its record of an integrator of those companies -- has not historically been great. interesting to see how they will pull this off. >> i was talking to julie about this. on a third-party of paying withn my whole foods account. is this like apple pay, or i paypal alternative being developed? >> absolutely. amazon has not had a lot of in this payment mechanism -- not surprisingly. that amazoners say
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is there some for with whole briefing the press release in the past -- that they just put out, the point-of-sale immigrations is the first thing that will happen. going to anutely -- amazon bookstore today, the thing without -- just waving your phone and amazon app, we will see that fairly quickly and whole foods stores. about margins. in some has flexibility when it comes to margins. whole foods has been known of having relatively high margins with the grocery industry. to think those now get compressed, marked does amazon have the buying power and clout to actually negotiate lower wholesale prices on the may become a more premium organic products. it's as well? >> good question.
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>> perhaps, perhaps eventually. lower wholesale prices, but, also high prices -- high margins recently,d, also more they're losing money. amazon will come in here without the pressure of making this division, showing profit in the whole foods division. it's going -- did is known for low price -- it is loan for note -- known for low prices. it can resuscitate the brand, get people back into stores, and find the synergy between whole and its supply chain. that falls into all sorts of retail categories. >> talk to us about what this means.
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there across the board reactions for retailers, but for whole foods come up or need down prices to this extent potentially, and more to come as you really and firing line here. >> think the impact is on the turf session short-term, potentially large in the whole term. whole foods is a small player in wealthy metropolitan areas. hundreds of stores versus thousands for programmers, safeway, and walmart in particular. and to a category where it has never really succeeded. a supply chain to build around. not just whole foods. i think it will continue to build him a son stores and are obviously try to fill up that amazon fresh and prime entry subscription service. it's a building block, a small one, but amazon has been working in grocery for 10 years without a lot to show for it.
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think of these other supermarkets as down a little bit on procession in the long term, not the reality, but everyone will walk quite closely now to see what amazon does and how this is with the whole foods assets. >> amazon grocery stores. >> curb your enthusiasm on this as well. who knows if this will work. thanks so much, brad. great to get your insight. still ahead, we have commodities close coming command is hurricane harvey approaches texas, oil is now selling off. we look at how big an impact star may actually have. this is bloomberg. ♪
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julie: from bloomberg world headquarters in midtown manhattan, this is bloomberg markets. commodities markets closing in new york.
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it is going on and jackson hole are not -- let's start with gold. the conference is underway. notallen and mario grudging meeting until tomorrow. not much action right now. prosecutors winning for that commentary. volatility, the measure of priceline -- and a measure of 2005. we will see if this dynamic duo can provide fresh direction for this. oil is interesting today. of focus onot hurricane harvey, aiming for texas. the current category one storm is expected to strengthen, drop as much as 20 inches of rain on southeast texas through the storm could lead to a shutdown of multiple returning reuse in that area. looking at the gasolines read surging on this anticipated shut down. this is potentially to difference between the crude and refined products like gasoline,
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driving the most in february. this is rising as well, up by 3%. cleaning throughout the day is hurricane moves in. #btv 357 will pull this up, it shows the potential path of hurricane harvey, in which refineries may be impacted. there are number of locations in corpus christi -- corpus christi in the direct path of the storm. a look now with her companies .re preparing joe, great to have you want. give us context, what kind of supply disruptions are we potentially talking about in terms of oil and gas output? johnoe: gets really significant. right along the gulf it should be raining. that will continue through wednesday morning. talking about an enormous,
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catastrophic and out -- amount of rain, the forecast is. this is the biggest refining center in the country. we are already seeing gasoline prices shooting up around houston, western texas. that will have a ripple effect into the upper midwest. julie: do we have an idea of how many refineries are shutting ahead of this? .his is a re-ramp-up time when a story like this happens, how long does it take for refineries to get back online? joe: all for refineries are doing their assessments, making sure everything is secured. on the dominoes are starting to fall this afternoon. we are hearing more and more, people are shutting down oil drilling operations, offshore platforms. the entire industry has started racing for this. with refining, started can be tricky. it's a dangerous operation. refineryg and i don't is the most dangerous part of running one of those things.
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it can take days to get it right. was weather -- claims more than 20 inches of rain from part overisti to this the next seven days, like you said, catastrophic. barrels per day, what kind of output we're talking about here? i look at oil markets, and barely see a reaction. i was wondering if you could give us a gas. >> it is, it's interesting. hurricanet, a major like this would have had a drastic price of crude crisis because offshore is so important. we haven't had a major hurricane hit the gulf of texas in more than 10 years. in the interim, shale has diminished the importance of a lot of the. offshore is important, but there out of shale,ing all on-land, that this price hasn't shifted much.
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>> when we talk about oil going down, perhaps as low as demand from refiners now shutting, is there -- or other places that oil can now divert to? refineries in other areas of the country you can pick up the slack? >> they can't. .he gulf is so important it's, it's a, it's an injury to the market. we will just have to endure. >> said a lot of fire for the experts. lex thank you so much. nows check the headlines this hour with mark crumpton. >> we continue to monitor an active shooter situation charleston south carolina. authorities say a disgruntled employee shot one person and has told hostages and arrest -- on the area of the city pumping an area with tourists. this person severed a news conference -- not enacting
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terrorism or -- racism. a bomb disposal unit to the area. insideare warned to stay bill -- buildings or leave. this person says despite bellenges, terrorism cannot accepted is what is called the normal. attack in barcelona, berlin, and london in historic context. and 80's,70's, -- thest groups launched ira, and the red brigades. we are responsible for more deaths. then we have seen today. thoseltenberg added challenges seemed impossible to overcome a quote, we did and we
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can again. this happens when a collision between the destroyer. people who live it -- identified remains of one victim. this occurred monday as the uss john mccain was heading for singapore for a routine port call. raising the debt ceiling could have been so easy but it's a mess. netsuite today the president asked mitch mcconnell and paul ryan to attach the measure to a recent veterans affairs bill. if they didn't do it he says, democrats are not holding them up. 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. julia: our next guest says the crisis in washington may improve the chances of tax reform. -- privatenow is cio
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mouth -- wealth management firm. director of morgan stanley. thanks for coming on. i think first of all, we are ready had it better setup for this from a policy standpoint. the treasury department had already taken a lead, whereas the health care situation, it was congress driving it. they had handicapped what hurdles were in front of them. when you get to the politics of it. republicans in the house are in desperate need of physic three. their critics that said -- you of paul ryan talking about increasing efficiency in the corporate tax system.
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it is a fight between president trump and mitch mcconnell and the confusion. >> limit go to a second one in a moment. this is the hardest part of tax reform, that's a, right now. this invites complexity of bringing out lobbyists, special interests, and complicates this. more they can tear it up in advance, it has all the indications stock through. they were going one level at a time with health care. they hadn't boxer different levels. in the sun of mature will work out politically. bring up this sort of the elephant in the room. there is clearly a breakdown in the relationship between republicans and the hill on the senate side, present -- and
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president trump. we are enforcing the need to get this done. by the way, it's not just senate and republicans. needs a president, who victory. >> needing one and getting one are very different, even if there high motivation here. there are to be for health care reform at least in theory -- doesn't mean we'll get it done. this coming together on some of these details of tax reform. when you have so many competing the onereedom caucus on hand, more moderate republicans on the other hand condemned had stashed i don't know if they have left this discussion entirely, but how do you satisfy office -- all of this? care, thereth
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really were republicans theoretically in the same uniform -- and totally different sides of the equation. house of moderates, particularly senator moderates -- new something different in the freedom caucus types. on the summerside will be rand paul, people like that. it came to tax reform, it's a completely different issue, because there's so much more consensus starting off for flatter rates and more competitive income tax. so yes, there's still the some devil in the details to work through. but foundational elements are free upon. >> clients him may have voted for the president hoping for a tax cut at some point -- maybe we haven't liked them. they have wanted that tax cut. calling up congressmen demand donated to to try to really put pressure on this issue? >> we have two types of clients,
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president -- clients who voted for president trump who want tax cuts come and those who don't want tax cuts. believers active people in this case, particularly those pointing higher, not as much as the white house. most majestic orion in the senate. the commanding victory. house here coming up in two years, they are most vulnerable. they want to get this done. but the have going this time is cooperation from the white house, not necessarily trump himself at this point, as there is tension, but secretary mnuchin, kerry come, the national economic council. lots are on the same page. >> tax reform is way in the distance compared to the other issues, which is, the debt ceiling. the threat donald trump made over while funding as well. goldman sachs said 50-50 that
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the government will shut down. what do you think, in light of shenanigans we've seen in the past repeating themselves this time around? how will investors such protect themselves short-term, what value will selloff? >> i don't think the dow is the question i would want to answer. they say history repeating itself, that is to meet the issue. that does not mean there will be shenanigans. they're not. time and time again -- there will not be. people here -- for the government shutdown, which could very well happen is political posture. two to three days total mom event in the market. the last time it happened markets rallied for the first day. it's a political event, not a market event. as far as the debt ceiling issue, i can't tell you how many times this would happen. this is a real story, the media should talk about it. and time again is in the best
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interest of them to get done. they get it done and then move on to another story. and newt something -- spending bill in december them -- then? >> i think they would move it further than december then work on reconciliation -- or a tax bill. >> thank you so much for joining us. coming up, a piece of hollywood history is hitting the auction block. i love this story. amendment -- if you were every day in the 70's now up for grabs. what you will have to pay for. just how much the collectible -- is ahead. this is bloomberg. ♪\ ♪
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julie: it's time for today's dr. spider reports. on this, up for the third time this week, best weekly gain since september. we're talking-- real estate investment trusts, even the fact that we have yields up to date, which typically is this -- not doing too bad, largely because of earnings. some of this week and throughout the day. --rting a positive today dancing on this one today. these prices will go down once amazon yields close. that might affect retailers in this small space as well.
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let's look at some of the companies here. we have interesting moves here. let's look at the bloomberg regional mall index. this is throughout the day, down a bit. still doing pretty well today based on those earnings. here's a couple companies come cyber property group -- this is paring from earlier games again. this is an interesting spot. one of the biggest holdings insurance. the hour.r stock of this is an interesting company that has a lot of things investors -- will recognize. to hedge fund stock in a company that otherwise had a good work this morning. it's got to remember fathers companies in the retail industry and for the mall -- the kind of good news, is not going to be -- a decent quarter
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is right for these companies. you could get a short screen as well -- you are looking at the own function. if you are at my terminal here? rightadrant in the bottom been an -- this has important companies to watch there's lots of investors who want to get those high returns of companies in this industry that might stand out among peers. however, there's still a long road ahead of them. chart, it's coming right back down. right now this is a little bit of a tricky place for them.
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it's a most four times more, exactly -- the hedge fund ownership. thehat five-year chart -- companies have a lot of different issues. there is an expose a written i believe by buzzfeed, there is diamond swapping for the things going on. fraudulently practices -- that could beat this up. >> there was a story we were talking about earlier, the net purchase that they announced today. my meal family diamonds. >> coming up, the auction block. much hollywood icon paul newman's original daytona watch went, when the bidding begins in the fall. we'll discuss that had.
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we will have fun with this one. this is bloomberg. ♪
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>> and timeless collectible is hitting the auction block. this figure it's their risk of hollywood legend paul newman. this timepiece -- watches from the late 60's to 1970. as more than $1 million. department/joins us now, great to have you on the show. >> this is in excess of $1 million. most appealing factors for the auction -- you never know what can happen.
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we believe the market will give up the price that it deserves. >> what's on the market, where did it come from? >> comes from the boyfriend. -- the boyfriend's daughter. gifted by paul newman. long-standingve a relationships with clients. after having multiple world his motivated to sell to cancel the highest price here. so the highest price here. this is an man 2017. he was ready to sell. >> how much does that go for? >> it was a relic from the 1950's. most relics of that area -- sold for over 5 million u.s. dollars. >> on the proceeds from the sale is going to go to the foundation
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that gives prominence daughters foundation, she in the boyfriend were no longer together -- that took this will go to. want to press more price. -- --s how you set these $2 million last year. have you estimate is figures? >> conservatively. we want to give everybody an opportunity to win. that's part of the fun of auctioning. if you price of two hi, you will scare off potential bidders and it might not give you the price you are hoping to achieve. who will buy this for us? excited for the sale.
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they could come from an art collector, a museum, could be an important watch collector. >> to people by watches for this kind of price -- and they put it in a system where they admire customer >> that's the fun. these are all born and enjoyed. for the most part, they wear and enjoy them, they you can enjoyed anytime. >> you are new on the scene here -- watches had here. this is over the last 12 months. what is the secret to your success -- this is a well-established business to break into. >> is where the new kids on the block, we started in november of -- to design this from the ground up.
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this is providing scholarship, transparency. clients in the community really appreciated that. -- thank you so much. coming up, whether we will see another rate hike this year. more projects taxable coming up. this is bloomberg. ♪
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julia: 3 p.m. in new york. i am julia chatterly. julie: i am julie hyman. welcome to "bloomberg markets."
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julia: we are live in bloomberg world headquarters in new york over the next hour. here other top stories were covering. inflation hanging over jackson hole. the kansas city fed president sees another rate hike in 2000 17. in markets, mortgage bonds are getting a second win as junk bonds lose with investors. pay-tv is getting ready to pack a punch this weekend. the showdown between mayweather and mcgregor may bring in up to $475 million in paper view. per view. we will monitor the briefings in up inadlines as it heats
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washington. you are looking at sarah huckabee sanders. if you want to watch this, you on continue in full bloomberg at tv . why would you go? you wouldn't. we're just one hour from the close of trading. tell them to stay here and watch the market. you can see slight downturns here in red, not a big eel. we had a mix picture earlier. read on the screen. 0.1yes are on the s&p, down %. consumer staples. later on i will look at walmart and costco. in the last hour, julie broke breaking news on amazon and whole foods. let me recap some of those headlines. we had amazon down around 0.3%. certainl cut food on
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whole foods locations. they're working on the echo device. working on the integration between amazon and whole foods. would approvehey the deal. good news here. there are things there is not a whole lot of competition for other grocers. i think some of the other pressures would disagree. if you come into my terminal, you can see the share price. what it is doing. we normalize this back to june 15 right before that merger was announced. look at the massive underperformance here of whole foods. of days, yououple have seen a little of an uptrend here in the white line. look at some of the competitors thomas routes, walmart, kroger. something i am keeping my eye out for. i talked about those packaged foods. money and on that note. uckers.looking at smok
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percent as they missed on earnings today. costs. marketing proc they are cutting the price target to 116. julie: fascinating story will keep monitoring today on amazon, told foods, and the fallout. i want to bring you one headline from the sarah sanders press briefing. she is saying president trump's relationship with congressional leaders are "fine." we had back-and-forth reports about mitch mcconnell and the president not being in regular contact, although mcconnell did contest that. you can continue to watch the conference in full at tv . you can keep us on your actual tv and you watch tv go your
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terminal. everybody wins. the big guns are gathering for the tracks and whole summits -- jackson hole summit. asked george if more rate hikes would be premature with inflation below the fed's target. >> i think about our mandate, which is price stability. relative to an economy growing at 2% and adding jobs, i think we are in a pretty good place. we still have accommodative monetary policies. that tells me we should begin to gradually be removing that accommodation. as long as the outlook supports that we are moving in the right direction. i think we are. michael: that suggests you are in favor of another rate move?
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esther: it shall we put that together is a new opportunity to look at the data. i will look at it in the next excess we get ready for the september meeting and see if it still makes sense. i think there is still opportunity to do that. end of the year, not necessarily in september? er: no, i think it is a general sense of where we should go. michael: to what extent is inflation a lagging indicator? it develops curve broken -- is the phillips curve broken? what happened to inflation? many people are setting that issue. when i look at inflation, the price of goods, that has been falling. maybe due to technology. there are a number of factors pressing down. when you look at services, the those rates are
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staying at 2% and higher. in the context of the economy we have today, that is why i think you have to be careful getting too focused on a point estimate opposed to the broader trends you see in the expectations out there. michael: speaking of expectations, with inflation not rising, market expectations are following. is that a problem for a fed that has always said expectations are key to keeping prices stable? esther: i think you have to pay very close attention to that. you have to know what drives those expectations. that is the challenge, constantly looking at what is going on in the account -- economy and what might be reflected in those numbers as opposed to overreacting to some specific point estimate you see. julia: esther george speaking with michael mckee. from jacksonive hole. investors are waiting for
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speeches tomorrow from janet yellen. when we heard there from mr. g s. george is -- m she expects rates to rise again. michael: levy notes for the -- let me note for the record, for me i will stick with you two. tomorrow, everyone will be listening and we can't televise the speeches of janet yellen and mario draghi to see if they give hints to what future policy would be. generally, that has not been the way the conference is structured. it changed in 2010. we expect janet yellen and probably draghi will stick the academic and theoretical side of this. they will be in favor of
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stability and withdrawing stimulus without saying how or when. i would be surprised if yellen gave hints to another rate increase. she could, especially if she suggested there was something wrong when she speaks about financial stability with a level isasset prices, even if it just an oblique reference. wall street might take that as an implicit suggestion that the fed is considering another move this year. julie: she said in june, prices had become somewhat rich. investorsminent expressing concern about the political environment. i am curious if she will comment on that. yellen in the past has talked about the need for fiscal policy. is this something that may also be discussed? michael: you have to bet against of that, julie. given that her job is at stake, forwill not be campaigning
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another term as fed chair, not overtly, but she will not do something that is immediately crossed off of donald trump's list. julia: would offer mario draghi? -- what about mario draghi? global impact from bond prices. do you think you think he will be very much on his guard at this meeting? so.ael: i would suspect we saw that yesterday when he did not go into great detail with what the ecb will do. to be fair, the governing council hasn't discussed with the removal be. anything he would say what essentially fronts run that. politically, that is not a good move or him -- for him. they may not have decided on the mechanics, and that is something to talk about as well. some appointed out to me it is still an open question whether they stock qe.
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might announce the small that they will end at this year. but was inflation, maybe they don't want to and maybe he's something to balance out what he -- and maybe he says something to balance out what he said earlier. that could be the hints markets react to. julia: such a great point. with a euro strength, this is an added indication of inflation. mike mckee. let us get a check on the headlines on the bloomberg first word news. mark: we continue to monitor an active shooter situation in charleston, south carolina. authorities say a disgruntled employee shot one person and is holding hostages in a restaurant in an area of the city popular with tourists. ae charleston mayor said in news conference the shooting was not an act of terrorism or racism.
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charleston police sent swat teams and a bomb disposal unit insideedpeople to say -- warned people to stay inside or leave. arvey is now a hurricane backing winds of 80 miles per hour. it could drop as much as 20 inches of rain. the last time it hit the region was in 2008. paul ryan is optimistic it will get a deal done in time to raise the debt ceiling. saiding today, the speaker the united states always pays its debts. >> will pass legislation to make sure we pay our debts and do not hit the debt ceiling. there are many different options. we will achieve that because this is about paying the bill we already racked up. ryan also said the corporate tax rate puts the u.s. businesses at a significant competitive disadvantage.
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hugealled regulations a "u hidden cost for the u.s. economy." rivals outnumbered departures -- arrivals outnumbered departures by 2000. that is down 81,000 from a year earlier. global news 24 hours a day. powered by more than 2,700 journalists and analysts in more than 120 countries. crumpton, this is bloomberg. julie? julie: coming up, we will look at why big investors are looking at once unloved mortgage bonds. from new york, this is bloomberg. ♪
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julie: this is "bloomberg markets." let us turn to the bond markets. big investors are starting to get antsy about debt. there are buying mortgage bonds as a result of this. they are safe in comparison. for aed janice henderson take on high-yield. ofwe still like some areas the high-yield market, but we have short maturities rid their is not a lot of low hanging fruit. reach farl have to higher branches to get returns of yesteryear. you can say this tongue-in-cheek, but fixed incomes no longer fix or provide income. people need to look for alternative ways to get that return. lisa whoining us is covers the bond markets. are they really more safe in
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comparison versus historically or versus some of these other vehicles? lisa:lisa: let us look at the logic. bondsve subprime mortgage and some backsliding on the loans that would not qualify for the government insuring agencies. and have been bundled already withstood the financial crisis. for the most part, these are bonds that originated in the run up to the financial crisis. these are words that have continued to make good on their payments. aeir seasons and you have sense of their creditworthiness. they are typically shorter duration because they have been a while ago so they have fewer years before they will be paid down. julia: when we saw the likes of morgan stanley and other analysts coming out saying they
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simply do not have the risk reward we are looking at, they did not suggest it was a default. they were saying they are too pricey at this stage. just to be clear, i think part of the calculus is here we are -- is where we are at the credit cycle. orbotech, that recovered much debtquickly -- corporate recovered much more quickly. this is all part of the effect of central bank stimulus programs. mortgage debt, you did not see recovered the same degree. it took longer for the housing market to recover and there was less debt issued. are youow much healed giving up if you compare what you see and high-yield versus mortgage bonds for the relative risk? you lose 1% in terms of yields if you swap the product and night your move higher up a perceived quality curve. is that the point?
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lisa: the point is you are not giving up that much yet. the risk with losses of high-yield bonds due to a deterioration of credit worthiness boards selloff with the benchmark rates. they are more sensitive to any increases in benchmark treasury yields as the extra spread has impressed. areet away from that, you moving away from mortgages. this will give you the yield regardless. julia: what if we see a mild resection -- recession? do still get positive returns in house prices don't rise? lisa: a lot of people say yes but that is a question, obviously. julia: great to have you.
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we will be dedicating 30 minutes to the annual jackson hole economic policy symposium at 12:00 p.m. new york time. they will be speaking at a roundtable from comments by janet yellen. we will be talking about what we are seeing in the markets. that is bloomberg real yield. now it's time for the bloomberg business flash, a look at some of the biggest is this stories in the news. comcast and sunrun have agreed to a 40-month partnership after they found cable customers are interested in solar products. the cable provider is exploring new businesses as subscriptions slow. --ney's ceo
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auto industries changing technological environment. she also sits on the board of stanford university. the 12th lobby of the year related. --erry to satellites orbit it carried a satellites orbit. his first look at spacex's spacesuits. is your business flash update. that is something i will go and do. i will go watch spacex being launched. -- i thought you you were going to get one of those spacesuits. julia: trade to offset washington drama. how do trade gold in the gap donald trump.ent from new york, this is bloomberg. ♪
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julia: this is "bloomberg markets." it is now time for options insight. joining me is the chief options at strategist at interactive workers. we have been talking about the political risk in the markets right now. one of the places you have seen that to some extent is gold. you haven't been it and equities , you have seen a somewhat in the dollar. gold is one of the areas benefiting as a hedge. been creeping up. it hasn't really broken out, some can argue it is close to its. a lot of -- close to it. gold is the anti-dollar in many ways or the anti-everything. the anti-everything.
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you can buy it and hunkered down. -- hunker down. are there any catalysts? be inflation.d a lot of industrial commodities haven't been showing. maybe the labor markets are tightening, but that is not necessarily immediate the other thing with the crisis, either political, economic, etc. i think my worry here are the reasons to use gold as a hedge is we are entering uncertain political timing. julie: you are looking at the g lg, the etf that tracks gold prices. hedge and trying to thinking things may go pear shaped in washington, what are you just by that call?
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steve: absolutely. the reason i didn't call that ae today is because we are at high-end of a trading range. what i am highlighting is the changes in volatility that could happen in capturing those from a delta neutral, market neutral point of view. julie: how does one do that? you have a two-pronged approach. strangle better delta neutral ways of capturing volatility. i'mhe september options, using a wider strangle because there is an upside you. people are buying some of those calls. november,k month in the advantage to buying that is you have to fed meetings -- two over that time
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plus the government shutdown talk. whereas not a lot can happen between now in the middle of september. this way, you have a more outright catalyst. julie: in september, you are one particular range. in november, you are looking at a tighter range. steve: you are looking at a tight range but a breakout of the range. julie: got you. thank you so much. ahead,a pay-per -view knockout. for could have a pay raise cbs and showtime. from new york, this is bloomberg. ♪
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across all your locations. fast connections everywhere. that's how you outmaneuver. mark: charleston, south carolina least chief charles francis tells reporters a suspect who shot and wounded one person is holding a couple of hostages at
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a restaurant. the shooter is described as a disgruntled employee. the restaurant is located a few blocks away from a church, where nine black members of a church were killed by a white man during a june 2015 bible study. he was sentenced to death in that case. the charleston mayor said today's shooting is not an act of terrorism. anniversary of ukraine's independence from mattis metretary poroshenko. they favor providing ukraine with defensive legal weapons. russia is voicing skepticism about trump's new strategy for afghanistan, warning military force


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