scarlet: we are alive and bloomberg world headquarters in new york over the next hour. here at the top stories we're covering. in markets, u.s. equities had reached new heights. a global hedgeng fund manager seeing opportunities in stretched evaluations. politics, china trying to con trade tensions with the u.s.. a diplomatic measures are not stopping the nation gearing up to fight back. closing down his main hedge fund after suffering from big losses in the first half of the year. u.s. get straight to markets that close in two hours. julie hyman building on the record high? julie: only for the dow. we see this divergence between the dow and the other major averages.

the s&p and the nasdaq are failing to re-attain their record highs. this continues to be the pattern we've been watching. the major averages have been pretty steady throughout the day. the focus is on individual stocks versus mass growth trends but that may change tomorrow with the jobs report. let's look to some of the big movers we are watching here on the earnings front. take two interactive one of the out performers today, that company gaining after profits were better than estimated because of grand theft auto, the latest iteration of the shooting and racing game that saw strong demand. 3-d systems missing estimates by four cents a share, reporting and eight cent profit for the company. analysts are concerned about increasing competition in 3-d printer markets. in those shares taken a plunge. 3-d systems like many 3-d

printing stock is quite volatile . we taking a look at a couple of reports -- and these are more uniform. cheesecake factory cutting the full-year forecast for adjusted earnings per share. wells fargo saying this may not be the last cut for the company because of wage and food inflation as well as industry oversupply. brands is a bit of divergent story as well. you have taco bell that is really the source of weakness here. pizza hut was expected to be the source of weakness. but it is taco bell sales on that basis during the quarter. it fell short of the 5.9% estimates from analysts. taco bell has been a source of strength for the company. it raises concerns. shares risingnap after business insider reported that google in early 2016 floated an offer to buy the company for at least $30

billion. one person did tell insiders that the offer continues to be on the tray table. we reached out to google but they did not immediately respond to that request for comment. we are trying to independently that an offerory is still on the table. we will see. julia? julia: thanks, julie. highs, at all-time hedge fund manager dan lois building up his sure bet. against his reform that he mentioned. they might behink playing accounting games to achieve their results. julia: where else is he looking to place those bets? we have all the details. is joining us with insight -- what else is he talking about shorting here?

talking about the accounting game since late 2015. he's continued with that and he has seen more opportunities. he's shorted companies in particular sectors. retail. we hear pressure given the amazon threat. we have heard more than 600 been that companies have worried about the amazon threat. he's made some short bets -- he did not mention it. [talking over each other] scarlet: amazon is a looming threat for everyone, right? while the s&p is rallying, we have seen the s&p energy index down more than 12% this year. those of the industry's he has focused on. not thathis view is different from other investors, if you think about the fact that he is betting against companies with low quality earnings. is he a short teller?

activist investor? hedge fund manager? he's all three, isn't he? allli: he's definitely three. in his health care portfolio, for example, he's had very profitable long bets as well. talking about nestle, for example. absolutely all three. julia: some surprises and less than surprises? >> one of his points i can very much get on board with and the other might be harder to prove. we can use the terminal if we can. the white line is the trailing 12 month earnings for the s&p extraordinary items, one-time items. yellow is looking at the real earnings per share. the story tells itself year, a 6% game of earnings -- gain of earnings per share. some wacky one-time

events and suddenly her gain is about triple that. does tell us those shares are increasing quickly. and the gap the between generally accepted earnings and earnings that, perhaps, have been massaged a little bit. to his point, i think that's true. the second point about shorting, there is a great way to figure groups of stocks work together on the terminal. taken thee done is most shorted stocks in the s&p 500. here is the average short interest over here. or is the change percent here to date. the companies with the highest short interest have not really gone anywhere. they are only about 20 basis points on the year. it is still not a negative number. you really have to pick the right sectors, pick energy, pick retail. julia: is the market cap weighted? oliver: this is basically

looking at bringing down five chunks in the s&p from most short to least short. scarlet: talk about the other macro views that dan loeb has made. you mentioned health care. anything else we should pay attention to? sonali: another important part of his portfolio is his credit portfolio. i think it's kind of interesting. for months, he has taken a much dimmer view on the credit markets. today, he was saying corporate debt and distressed debt has been less well performing. and he's reducing those allocations overall. over: he's been doing that time, hasn't he? he talked about credit and the concerns -- did he talk about the sovereign bond market? we ask whether or not it goes one direction or another. sonali: he didn't talk about it much today. he's talked about it for months, though. but today, he went into corporate credit. shared thoughts

about the overall environment including the trump trade. loeb: long-term change for u.s. health care, trade, and tax policies have dimmed. and the inflation that we expected to drive markets higher has not materialized. scarlet: but it hasn't stopped the indexes from marching to new highs. the difficulty of picking stocks in an environment where many market participants will tell you the valuations are inflated because of the institutional bottoms that exist with low interest rates, lack of alternatives. the problem is that there are companies trading at a level they shouldn't be. that it's hard when they will truly be valued to where they are. the proliferation of exchange rates makes that murky as well. at the end of the day, valuation is high. there are plenty of things to pick out, i think. julia: great to get your insights. sonali and oliver, thank you.

let's check bloomberg first word news with mark crumpton. mark: attorney general jeff sessions can keep his job for now. has told sessions that president trump does not intend to a person familiar with the matter. the president publicly attacked sessions last month for being weak. the president is unhappy that sessions recused himself from the russia investigation. the president heads to west virginia tonight for a campaign style rally. esther trump has been holding these events to get out of washington and recharge in front of his supporters. west virginia voted overwhelmingly for mr. trump last year. venezuelan president nicolas maduro is dismissing the latest u.s. sanctions saying they won't stop him. the trump administration added president maduro to a list of high-ranking venezuelan officials targeted by financial sanctions.

a specialrying to see assembly this week to rewrite the constitution and override any branch of the than his will in government. china says it wants to maintain a good relationship with the united states when it comes to intellectual property. still the prospect of an investigation by the trump administration has raised the risk of tit-for-tat retaliation by beijing. u.s. officials are gearing up for a probe into whether china violates intellectual property laws. we will have more on this story later this hour. local news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. scarlet? musket: coming up, elon says he never felt better about his company's future. investors appear to agree. as with shares soaring today. gene munster gives us a long and short story on tesla coming up. from new york, this is

bloomberg. ♪

julia: this is bloomberg markets. i'm julia chatterley. scarlet: i'm scarlet fu. let's focus on tesla's electric future. share surging 9% over the last few days as investors fixate on what ceo elon musk said is coming next. solar roofs, semitruck's, and model three deliveries. musk: i am confident that we will be able to reach a production rate of 10,000 vehicles per week towards the end of next year. remain, we believe, on track to achieve a 5000 unit

week by the end of this year. scarlet: our next guest warns investors against disappointments in the near future. are positive on tesla over the longer term, but you say that there is room for disappointment in the near term including the need for tesla to raise cash. elon musk said tesla is considering that -- a debt offering. should he do it now since there is so much positive buzz? >> he probably should. too, that iphasize, think the tesla story has more upside versus other large-cap tech over the next five years. we are believers in this but i want to caution that it's going to be bumpy over the near term. the cash raise is typically one of those bumps in the road. they will have to raise cash

whether it is now or in a year. julia: you just mentioned about the tesla story and scarlet hinted at it. why is there this paradigm shift in terms of electric vehicles? why is tesla going to be the key against other big tex out there like a baidu or apple that is willing to chunk money at this? baton ami and affordability are the reason why we think tesla is ahead of absolutely all the big outlets in detroit yesterday. i'm surprised that the gap between detroit and tesla.

the companies that arethe compay the biggest threat from the product standpoint --the company the biggest threat from the product standpoint -- the tech companies lack the ability to manufacture. to try to scale this up not only onthe companies that are probaby the biggest threat from the product standpoint -- the tech companies lack the ability to manufacture. to try to scale this up not only on the car front but the battery front is a nexus size that can take a decade to procure the land, build the money. if you put those pieces together, tesla has a comfortable lead and are inching ahead every day. think mobile three is the affordability breakthrough here? if you want the souped-up version of this, it will be more like he nine dollars. is that really the affordability ? they will come to it, they will get to it? probably the next year to year and a half, it won't be that affordable car. how the price curves are going to come down and make more models available, there will be options available for the lower-priced car. i think they will get there. a halfs is, a year and now, it will be $42,000 versus like you said $49,000 initially. scarlet: you have made your

, modeling on xl, available to all bloomberg users. you can compare what gene is modeling compared to the main average of the analyst that we serve way -- that we survey. there is a line item here, that small crossover that elon says could arrive by 2019. we don't know very much about it. but i wonder, how do you factor that into your thinking? much of this particular model would be influenced by elon musk's ability to meet or surpass model three expectations? is coming.: model y it will be an suv version, crossover version of the model three. it will have a lot of the same characteristics. but it will approach a bigger market because more people in the u.s. tend to like those bigger cars. we thought it was appropriate to in a model.

tesla talked about the timing of that. we had that in 2019. surprisingly aggressive because that size of car will be appealing. one thought on the model that will be most different and it gets back to where we started. it will take longer than people think. in 2022a million cars and we jumped to 1.6 million in 2023. julia: talk to me about spacex. me thatrecently said to spacex is about owning the ecosystem. have to talk to each other. the ecosystem and owning that is the most important thing. that is where tesla has the edge. do you factor that in? it's not factored in, but it's an advantage for those cars to talk to each other. it would be interesting to see who comes up with an air traffic control system for cars. one of the groups i met with yesterday is a conglomerate of

the large automotive's in michigan. they're trying to figure out how connecting that will talk to each other. it is still to be determined you will win that. julia: so exciting. we will bring you back to talk about that. ene munster of loop ventures -- loup ventures. tesla -- many of the first customers are tesla employees including elon musk himself. this is another story i'm incredibly excited about. that is a solar roof. in europe, we go crazy over this. aarlet: it looks exactly like regular roof tile. in fact, it looks like a high-end one. we are guessing this is probably not elon musk. julia: but look at that.

if the aesthetics are a turnoff for you, that looks like the future. very interesting. scarlet: it rains too much in new york. still ahead, china is trying to stabilize their trade relationship with the u.s.. we have the latest on that. from new york, this is bloomberg. ♪

scarlet: this is bloomberg markets. i'm scarlet fu. julia: i'm julia chatterley. relationshipgood with the united states when it comes to intellectual property. but still an investigation has raised the risk of tit-for-tat retaliation by beijing. u.s. officials are gearing up great to have- you on the show. the message from beijing has been "not guilty."

we defend the fact that we are not intruding on intellectual property rights. retaliationrisk of at this point if the united states announces an investigation? to draw thertant distinction between retaliation and trade war. the two are not necessarily the same thing. ahead,investigation goes and if there is a negative finding, and if the decision is doesn'te tariffs -- it have to be that way. of course, china has to respond. you don't see president xi and premier li talking about it on weibo. julia: howdy respond given the timing, the committee meetings that we see? even if there is an investigation. didn't want to be reactive, but they don't want to look weak. >> they don't want to look weak,

but they don't want something to get out of hand either. the chinese economy is doing relatively well at the moment. 6.9% both quarters. let's keep it chugging along there. no thrills and spills until we get through congress. scarlet: the trump presidency has worked out pretty well for the chinese government. a lot of rhetoric about branding china a currency manipulator. he also threatened to steal sanctions. we haven't seen any of that so far. that's all gone to the back burner. happy with how things are going, isn't he? spent a couple weeks in asia and the view of investors and government k.ficials, so far, so o the worst-case things people talk to me about when i was there is trump dismantling the international trading system. war, there be trade

currency manipulation? the bulk of it hasn't happened. the u.s. is not a source of macroeconomic shock at the moment, just shock. julia: what could go wrong in this relationship? is there enough incentive on both sides to talk big and ask little? -- act little? >> steve roach has made the argument on bloomberg tv that they are two sides of one economy. working in the background of all this is the dirty secret that china doesn't need trade as much as it used to. is it important? sure. you don't forget that since the house wasthe white using section 301, china's economy is no longer an export dependent economy. it is a services economy. the great transition to services and consumption has happened. exports and trading are important, but not as critic the super important as they once

were. julia: who understands who better? >> the answer to that question would be yes. [laughter] julia: ok. ofrlet: executive editor bloomberg news, very politic in his response. till ahead, the commodities close and oil on a wild ride. trying to get back to the $50 a barrel level. the trader known as god promoting his main hedge funds. this is bloomberg. ♪ ♪

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your voice is awesome. the x1 voice remote. xfinity. the future of awesome. you're searching for something. whoooo. like the perfect deal... ...on the perfect hotel. so wouldn't it be perfect if... ....there was a single site... ...where you could find the... ...right hotel for you at the best price? there is. because tripadvisor now compares... ...prices from over 200 booking... ...sites ...to save you up to 30%... ...on the hotel you want. trust this bird's words. tripadvisor. the latest reviews. the lowest prices. scarlet: from bloomberg world headquarters in midtown manhattan, this is bloomberg markets. we have commodity markets closing in new york.

let's begin with soft commodities, the biggest movers of late. dropping 1.6% at the moment, trading at the lowest in over a month thanks in part to u.s. range and cooler weather all around. a trip to oil on a wild ride today making its way back to $50 a barrel. falling short of that. it was trading higher earlier in the session following the eia report showing a decline in u.s. inventories. -- a leg lower leg lower, i should say. taking a look at gold, relatively flat ahead of tomorrow's jobs report off like .33%. analysts surveyed are bullish for a seventh straight week, the longest run since early march. it julia? julia: now to a bloomberg scoop, said to be closing down his main hedge funds after losses in the first half of the year. joining us are a look at what

this is about the market -- people don't get the title of god in financial markets lightly. for anyone who knows this guy and sees him as a legend, this is a huge shock. of the hall is one biggest names in commodities trading. he's done stands as a top trader , producedbro energy mark rich. for earning $100 million in a year trading oil for citigroup back at the height of the financial crisis. it made him famous in the financial world and infamous in the wider world. the government bailout, getting $100 million to a traitor did not go over well and that's where a lot of public criticism -- home moved on to found his own firm and has done pretty well for himself until recently. framing of who

andy hall is there. he made a call that oil was headed for sustainable rallies. it did not pay off as we have seen from oil's price movement this year. what is he saying now? >> he is closing down his main fund, aston back -- astenbeck. it had $1.4 billion under management. he lost 30% through june. he bet that oil prices would go up in a sustained way and it has not worked out this year. scarlet: he's saying oil might be stuck at $50 or lower. kind of what we are seeing right now. alex, thank you so much. let's stay with commodities. the biggest iron ore minor is looking east. of valley spoke to bloomberg about if he is optimistic about demand in china. we do.

demand is very strong. isple may argue that that because of stimulus or not. what we are seeing on the ground is very positive. we think infrastructure invest in -- investment is very strong. and we are positive about china. we never share the views that the country would collapse. what we saw in 2015, decline in steal production bile almost 5% 5% definitely -- by almost was definitely not a trend. we are more to the view that we have a more normalized scenario of mild demand going forward. >> you are trying to broaden your investor base a you can get more exposure to london investors, for example. not so much focused on brazil. where are you in this transition and how quickly do you expect to

make this change? >> we have people that look at mining and people that look at emerging markets. sometimes you get upset because we have a lot of coverage on the mining based in london and -- it isn't talk about something that will take time. we want to position ourselves for u.k. investors. >> the issue, still, brazil is very 10-year us -- very tenuous. there is the recession. what is the risk their? how do you operate and attract investors when you have those headwinds? >> that is a big problem because people put everything in the same basket. coming 90% of revenue from abroad so we are way more exposed to what happens on the other side of the world than brazil.

we currency depreciate and have lower cost in u.s. dollars. that is how investor relations work and that's what we need to do over and over to expand. --ia: they'll cfo earlier vale cfo earlier today. mark: republican senators today introduced a border security bill that would strengthen law enforcement that the u.s. mexico border. cornyn of texas says the bill has a three-pronged approach. strengthening the border, strengthening current immigration wall, and helping local law enforcement. requires homeland security to consult with local officials at every step of the way. the folks that live in these communities know them best and must be part of any successful border security effort. mark: the bill would also crackdown on so-called sanctuary cities.

punishssions moved to three of the cities by threatening to deny federal crime-fighting resources if they don't increase efforts to detain and deport people living in the u.s. illegally. trump headsesident off on his first vacation since the inauguration. spent 17 days at his private golf club in new jersey. everyone in the white house west wing is being forced out so the government can replace a 27-year-old heating and cooling system. and iran, the president starts his second term this week. victory has been eclipsed by a standoff with the u.s. government. the trump administration has added sanctions on iran. it may take aim at iran's compliance with the landmark nuclear agreement. the environmental protection agency is preparing to deny a programo u.s. biofuels sought by valero energy and backed by billionaire refinery owner carl icahn.

icahn want to shift the responsibility for fulfilling annual biofuel quotas away from refiners to fuel lenders or other entities. a global news 24 hours a day, than 20 700ore journalists and analysts in over 100 countries -- 2700 journalists and analysts in over 120 countries. this is bloomberg. julia: what will they do with all the new money coming in? we will discuss. from new york, this is bloomberg. ♪

julia: this is bloomberg

markets, i'm julia chatterley. scarlet: let's head to julie hyman for today's vector spider report. julie: focusing on energy today, xle the most heavily traded etf down one point 75%. most of the selling is concentrated in the exploration and production companies. as opposed to acquit meant and littles, which has change. it was higher until just a few minutes ago. selling concentrated within those e&p companies. just like yesterday when we saw piner natural resources lead the industry down, many of the shale companies are the ones underperforming today. kind of a cascade effect. resource numbers coming out for concho, shares down 10%. noble energy out with its numbers, down 10%. fallingalso reporting

with a cascade effect here. but if you look at the services companies i mentioned, the offshore drillers doing much better. oceanic just turned lawyer -- lower. diamond offshore and noble are also rising. did it one rising today is transocean, those shares spiking today after that company reported earnings. in particular, second-quarter operating revenue beat not just the average estimate but the highest estimate out there. and analysts said in a note that the company continues to minimize cost and maximize efficiency. keep in mind it is coming from a low base. we have a look at the transocean sale versus shares. talk that sales might be bottoming out. that's what one of the executives that the company said, things are starting to recover in the offshore drilling industry. you see some optimism being

baked into the shares today. if oil: what happens manages to get up to $50 a barrel and stay there? ,ulie: we spoke to terry bono senior vice president of community relations and she called it the magic level, $50 a barrel level. that is the level where we see more offshore drillers ramp-up. the issue is shale drillers might be more quick to come back online but the offshore tends to last longer once they are tapped appeared to shale wells. julia: interesting that the profits they are now generating even at these levels. largest private oil companies in the united states had $30 billion worth of off its in this earnings quarter. julie: they got a lot more lean during the downturn. are doing well, even at these levels. the latest from to report earnings, and what has been

record-breaking fund-raising in the industry. reporting lower than estimated profit, but a record $23.8 billion for the quarter. so it is the impact of all the money coming into these funds? joining us is andrea, managing director and head of global research at cambridge associates. great to have you on the show. it's as good as it gets, the environment raising cash at this moment. high water mark was in 2007. and so hearing that we are having the biggest border ever right now, it resonates and feels like what is old is new again. and what we are seeing right now is fund-raising and u.s. private equity is definitely getting choppy but not yet setting record-breaking levels. it is definitely noteworthy. scarlet: how far away are we from the 2007 levels? you have the enthusiasm, the buzz.

>> the animal spirit? the buzz? did,ke a look at what we plus or minus a little bit. at 2016 fund-raising, it was around $200 billion. if we think we will go past that in 2017, we are on the way to the top of her roller coaster hill. if you add investment activity on top of that which is an unreported activity number. $250uld be approaching billion in 2017. julia: if you look at the prices and valuations, it's not so great for finding opportunities. compare what we were looking at back then in terms of the amount they had. we know they had record levels of dry powder versus the opportunities out there. >> it is a very high valuation

environment for private equity. we are actually seeing the highest average purchase price multiple we've ever been at. to your point, it's a great time to sell, not a great time to buy. so you really have to be looking under rocs and stones, thinking about what the investment angle is going to be. if you're going to pay this price, if you buy high, you have to sell for higher which is not a good outcome. we have great charts that really give you a sense of that. become, this is 1985 to 2005. give you a sense of what the private equity market looked like. it is now forward to 2015 and beyond. sense of subsectors in

private equity. talk us through what is going on here and what the opportunities are today. >> an interesting illustration. the private equity and the institutionalization of private equity, 30 something years into that process. still young. watching is a splintering of strategies as there are within the growth buyout the growth equity space. an entire ecosystem of managers whose sole focus is to just do growth equity. you see the options around that chart cousin it's all in surging the compelling return. 20%, youo be in that could clockwork the liver that return. today, it's 11%. scarlet: and at the far end of

that curve there was vc, venture capital. it is your view on the japanese telecom company turned startup investor? a have invested tens of billions of dollars in late stage tech startups including here in the united states. >> we were talking about fundraising for u.s. private equity. example of how much capital is facing the venture industry today. the announcement of large groups is thattbank, where capital truly going to be put to work? venture capital fundraising has generally been around 20 billion dollars to $30 billion. adding a significant chunk on top of thatventure can add a lie challenge for those that are seeking venture capital level returns. scarlet: $93 billion from the vision fund itself. that is more than what the

industry raises in a full year. i want to talk about infrastructure investment but we will come back at a later date. thanks for your time. for the bloomberg time business flash, a look at some of the biggest stories in the news right now. japan is buying san francisco-based anchor brewing to expand into the u.s.. 85transaction will cost million dollars. anchor pioneered the craft beer sales slow in its home country. the deal is expected to close at the end of the month. guggenheim partners in talks with invesco to sell mutual and exchange traded funds according to people familiar with the matter. investment unit could cost as much as $2 billion. the sale does not include institutional funds which make funds funds $203 billion in assets.

that is our business flash update. julia: coming up, and exquisite interview with greco founder jack dorsey. find out why he's not worried about being first in the market. from new york, this is bloomberg. ♪

julia: this is bloomberg markets, i'm julia chatterley with scarlet fu. square on ares of tear. the payment company led by twitter cofounder jack dorsey sees the stock almost doubled this year on optimism in its all-in-one offering for merchants. emily chang sat down with jack dorsey following the company's second-quarter earnings and asked him what he thinks of sky high tech valuations. mr. dorsey: i'm not an economist so i don't know how to answer that question. we live in the market and the market has decided to evaluate this particular thing. there will always be evidence of -- ebbs and flows.

our job is to make sure that that answer is yes. they want to use it so much that they can't help but talk about it with people that ask for recommendations about what tool should i use? get out of this nasty contract, where should i go? that is the thing we control and that is the thing that we focus on. keen insightave a into the health of the u.s. and global consumer. did you see people spending and not spending? what is your confidence? mr. dorsey: we see people going to our sellers, and we see people purchasing. those trends continue to be positive. think the great thing about square's business is it is nondiscretionary. everything else can fade away but you have to be able to make the sale. if you are good about what we are seeing in the economy and how we will continue to thrive and support them.

emily: there have been a number of reports about sexual harassment in the tech industry. theas renewed concern about lack of women in tech. what are your thoughts on that? mr. dorsey: it is a situation we absolutely have to bring a lot more attention to. our focus has been on inclusion first. making sure that we are building an organization and environment and a company that people feel like they belong. people feel like they can contribute to. and they feel part of. but we alsothat, need to make sure it's not just peopleronment that belong, but they can actually help contribute to decision-making. theyeally make sure that continue to help owner outcome.

emily: the gap between silicon valley and president trump still seems quite large. what role do companies play and leaders like you, play in closing that gap? mr. dorsey: i don't think is any difference in the role that tech companies play or individuals like me play. we have to have an open conversation and speak up. if we can't be open and transparent about how we feel about policy shift. that is my role. it that is our company's role, our industry's role. and every citizen in this country's role. and myng to use my role experience to inform what i believe is right. that runs aebody company that moves a lot of money around, how concerned are you about economics and political uncertainty right now? mr. dorsey: every

entrepreneurial leader has to deal with uncertainty. we have to be comfortable with that. the economic uncertainty that, you know, people talk about is not something i necessarily feel on a daily basis to affect my decision-making. what i am concerned with is the economic disparity we are seeing not just in this country but around the world. , weour goal, as a company will have a very small part. at its apart nonetheless. to provide tools for people to engage in the economy and participate in the economy. we will do our best to do that. that is what we're focused on trying to help fix. we will not do it alone. emily: how does that impact where square goes next? you have been expanding abroad. where to next? mr. dorsey: we want to go everywhere. you want to be a tool that is accessible to everyone in the

world. have a lot more friction in our industry because we have to work with banking partners, and every local market has its own rules and regulations. so we're going to take our time. do it right. we don't need to be first to market. we just need to be the best option out there. julia: don't need to be first, just need to be the best. that is part of emily chang's interview with square founder and ceo jack dorsey. bulldogp, the trump internet had world. any idea what i'm talking about? just picture goldman plaza gary cohen at the fed. we will discuss next. this is bloomberg. ♪

julia cheverly: it is 3:00 p.m. in new york. i am julia chatterley. scarlet fu: and i am scarlet fu. welcome to bloomberg market.

-- bloomberg markets. ♪ we are live in a bloomberg headquarters in new york. over the next hour. here are the top stories we're covering. u.s. labor market in focus -- the u.s. expected to have added 180,000 jobs in july, but will wage growth pick up steam? meanwhile the fed could be in store for a major change. we will tell you what to expect if president trump's bulldog gary cohn is tapped to be the next chair. and a retailer tells us how he tends -- intends to grow the company. one hour from the close of trading, let's check on markets with julie haydn. -- julie hyman. julie hyman: it is interesting today how steady it has been

through the course of the day. through the opening bell this morning, we have seen the dow little changed. slightly upward bias. if it rises committee will be a new record on a closing basis. the s&p and the nasdaq have been down between 1/5 and .25% throughout the day. we have seen steady trading as the focus continues to be on earnings. we see the divergence between the dow and the other averages. the nasdaq particularly. we have been watching this. here is the dow/nasdaq ratio. the dow gaining in strained since the election, and then losing, and it has had this sharp leg upward recently where it keeps making these new highs, where the nasdaq does not. if you are able on the market, that might give you a cause for concern. we will continue to watch this to see what it brings. in the meantime, we are watching earnings winners on the day -- some of them perhaps surprising. tesla's cash burn was smaller

than estimated. tesla has relatively high short interest. you could be seen something of a short squeeze effect as well. stamps.com -- the new -- this one came out with earnings that beat forecasts and earnings per share for the full year. fitbit as well -- that company's second quarter beating estimates. analysts remain cautious on the stock, saying the growth may not sustainable. here, too, he see a pop in the session that is healthy -- you see a pop in the session that is healthy given those numbers. there is some issues in the drug in-swerve should -- doug -- drug instrument -- drug distribution industry. rising for generic drugs -- generic drugs falling. hologic missing estimates.

with comfortable sales for july. bath and body works missing estimates. that appears to be the main source of disappointment for l. brands. scarlet: the july jobs report is the biggest item on the agenda tomorrow. economists expect an increase of 180,000 payrolls. this comes after i is him slowed in july to its worst pace in almost a year. joining us from washington, michelle, who covers the economy for bloomberg news. let's start first with the jobs report. when we look at it, everyone is saying it is more of the same, pretty much looking at what we have gotten in june and the previous month. are there quirks we need to be aware of -- seasonal factors, or will this be a clean read here? : it is expected to be on average across the board, so sometimes that means we will get

a big surprise if we expect everything to be in mind -- in line. we are past the quirks of early in the year. seasonal weather. we don't have to deal with the early-summer quirks at the end of the school year and the hiring associated with that. one thing that could have an impact, the auto retooling period is in july, where they revamped staff for the production of new models. that could have an effect on margins. overall, more the same -- 180,000, as you mentioned, is totally in line with this year and very little change from last year's monthly average. we are expecting the same. wages a, again, not so much change from what we have been saying, unfortunately. people expecting an unimpressive number there. unemployment, very good, but not much of a story anymore. of course, it is associated with all these other measures we are looking at, but that topline

figure was supposed to be in line with what we have been saying. julia: brilliant. michelle, thanks for your insights there. jamrisko.s michelle there could be a shakeup at present trump -- if president trump decides to replace janet with gary cohn. how could it shake things up? max -- yourd by with gary cohn. abel dog in an -- ahingsheadli" world."in an egg head we are talking -- >> what we are talking about is taking the helm at the fed, which is a little sleepier than a goldman sachs trading floor. scarlet: contemplative.

dakin campbell: exactly. there are 300 economists doing research, and it is the fed chair's job to read the research, digested, and come up with a consensus on where interest rates should go. scarlet: janet yellen has been everyone to an average view and presenting it to congress. gary cohn, has said chief would need -- fed chief would need to testify before congress two times a year. you spoke to people about the what did they tell you about that visual of gary cohn been in tim -- interrogated by congressman and senators? dakin: they chuckled at the idea of gary having to answer. scarlet: he has an aggressive personality. dakin: he does. he has been considered or talked about as being, sort of, rough around the edges.

he has been trying to change that recently. from the folks we talked to you in d.c., they say he is a very good listener, and he is trying to get better and has gotten better at building consensus. chiefsut, again, the fed we have known the last few years -- janet yellen, bernanke -- they are not gary cohn-types. they are -- scarlet: academics. dakin: academics. exactly. gary, if he were to get nominated for this and approved, it would certainly be a change. julia: does the fed need a change, some punching is? he also brings market expanded we can talk about the cerebral nature, the academic nature, but he does bring other huge asset to this. the question is would he be respected in terms of his monetary policy understanding, i guess? did you get a sense there with respect there, because we have

been quite fascinated by the congressman, the senators we have spoken to, and i think every single one we have asked has said highly qualified for the job, think he would be great. quite astonishing, that actually in congress they seem to want change. dakin: it is a good question, and myquite astonishing, that ay in congress they seem feeling, e folks i have talked to, if he were to get into the job and prove himself over the finished -- first few months, he could earn people's respect. they are open to it. the idea is he is not qualified for what people typically is a job that is more suited to make phd economist. scarlet: right, he is not published on the phillips curve or the taylor rule. julia: might be in his favor. scarlet: right. anald trump, when he was candidate, laughed at janet yellen for keeping interest rates too low. changedpresident has

his turn. as the president he likes low rates. do we know where gary cohn stands when it comes to rate? dakin: as we were writing the story, we went back to look at what gary has said about interest rates over the last few years. he for he was with the white house, he was the president of goldman sachs. he was on tv several times a year talking about the economy, the industry, things like that. we have also been able to glean gary is sort of a low-rate person. he had some comments where he gave yellen a hard time about raising rates too soon because we hadn't yet seen the signs of inflation getting near the fed's target, so there is some thought that maybe gary would be even more dovish than janet yellen. if you will remember, when yellen was first appointed in 2014, everybody thought she was quite dovish. the fact that gary would be even more so than her is an interesting prospect. dakin campbell, thank

you so much. stay tuned for an interview with gary cohn tomorrow as part of our jobs day coverage. julia: we forgot a important question -- does he want the job? does he want to escape the white house? scarlet: no indication has come out that he doesn't necessarily want it. let's check the headlines with bloomberg's first word news and mark crumpton. mark crumpton: woody johnson, owner of the new york jets, has been confirmed to be ambassador to the united kingdom. lawmakers also have confirmed kay bailey hutchinson to be permanent representative to nato, and christopher g and carlo as head of the cftc. jeff sessionsal is cracking down on so-called sanctuary cities, threatening to crime-fighting resources to cities plagued by violence if they do not

cooperate with immigration authorities. the justice department has sent letters to four cities telling them they will be ineligible for an antivirus program if they do not help detain and deport people in the country illegally. commanders says u.s. in chief are responsible for the failures in afghanistan, not the commanders in the field. lack of an says the "successful policy and strategic guidance from washington over several years is to blame yen -- to blame." mccain plans to offer an amendment to the defense authorization bill in december. japanese prime minister -- september. japanese prime minister shinzo abe reshuffled his congress by putting moderates in roles, and he apologized to the japanese people adding "we will put the economy first." abe has faith criticize them for

prioritizing -- has faced criticism for prioritizing conservative issues like amending the constitution. members of his party have suffered over series of scandals on alleged cronyism and abuses. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. julia? julia: thank you, mark. coming up, meet one retailer bucking the downtrend. we will speak to the ceo of at home. the retailer is up 50% since going public. from new york, this is bloomberg. ♪

scarlet: this is bloomberg markets. i am scarlet fu. julia: i am julia chatterley.

it is time for the bloomberg business flash, a look at the stories in the business world. -- acquisition talks accord into business insiders. google floated an offer to buy snap $430 billion in early 2016. eestnet spokesperson said however, "these rumors are false." shares of -- plummeted the most. its largest shareholder says it in thell teva's stakes next month as the company searches for a new ceo. that is your business flash update. scarlet: home decor retailer at home when public a year ago and the stock has surged more than 60%. the company plans to expand its store count to 600. it is a growth story -- tori you don't hear -- story you don't hear in the industry.

--lewis l. bird iii spoke with emma chandra. have l. bird iii: we now 136 stores and we keep meeting what customers are looking for. emma: you are adding stores at quite a clip. that is something we are not seeing across the retail sector. lewis: yeah, we are. most of the time they are second-generation stores. most are closing right now. we see opportunity, we go in those markets, and we can open up a store within 90 days from the time another store closes. you are moving into stores that places like jcpenney, home depot -- other big boxes are vacated. they are not working for them. how are they working for you? lewis: it comes down to offerings. it is all private label. he consider ourselves fast

fashion of home to corporate all the styles that are out there you can find in a one-stop-shop. our customers love to shop for our items, and they find our stores refreshing and inspiring, as well as easy to navigate. how do you target the stores that have been vacated by other retailers and you see good for -- as good for you? lee: we have targeted the most vibrant retail nodes. we had done the analytics, top-down, bottoms up, of where we want to be. we have scored all 20,000 operating big boxes. when we know one is closing, we can compare it to our market plan. janice hahn we can make a quick decision on it. we know if we want it right away or not. emma: another when you are different from the rest of the retail industry is you are opening stores and what we are hearing a lot of people are closing them with a big focus on e-commerce. why do you need to bricks and mortar?

why is at the strategy you are going after? the customer and the home to court factory wants to see, touch, and feel it. when we open up, it does very well -- it makes money in its first year. cash flow positive, cash flow paybacks in under two years. it funds our growth. we have opened 120 stores this year. we have open some in rhode island and massachusetts. now we are in 33 states with 136 stores. emma: are you focusing at all on e-commerce -- is that something that is going to be part of your strategy? lee: we focus in online strategy because we know half the customers out there go online to pre--shop. e-shop in the showroom. emma: but you cannot buy it. lee: you cannot bite. in the -- by it. , they arethe end

touch points and people have to match it. people come in with swaps to make sure that it pass -- matches the bedroom. millennials are among 30% of our total sales. they want an experience. our customers spend over one hour in our store. they would not do that if they did not find it was worth their time. emma: we have been talking a lot at bloomberg about the retail industry, about it going through this -- these new sets of growing pains. people are facing tough times at the moment. it doesn't seem that you are. what makes you different, and do you have any concerns about the challenges that face retail? lee: i think customers want to have a great value from the beginning and they want a great experience, so we make sure our customer and value proposition is fantastic. we want to make sure we have a business model that can afford the growth -- some people do not think about that. we also focus on making sure our employees have a great experience and want to build and grow their career with us. we take good care of our

employees. we started paying them $10 an hour a number of years ago. everyone of our employees have a bonus if our stores make the plan. we take care of them. we picture all three parts of that work. when you do that, you have a vibrant company and a great business. emma: one final question -- your background was working at nike and cap, and now you're working in the home where section. how has that -- home wares section. how does that differ? me learn the best parts of retail, how to operate efficiently and effectively, and nike is great about branding. i took those lessons, brought it to our team, and we have a great leadership team that helps us run a fantastic business. chandrahat was emma lee byrd.me ceo we will tell you how to play the markets in the options insight. from new york, this is

bloomberg. ♪

julia: this is bloomberg markets. i am julia chatterley. scarlet: and i'm scarlet fu. it is time for options insight with julie hyman. julie: joining me now is steve hoss -- steve sosnick. we have been talking about low volatility -- and how seasonally relativity tends to pick up in august, and going into september. you are looking at volatility in the qqq's in particular. we have a chart showing historical versus implied volatility, because this is something you pointed out to us here at i wanted to bring it up and have you talk us through it. to us. have it -- i wanted to point it out and have you walk us through it. here we have it. the historical is in yellow. steve sosnick: that is right. the historical is in yellow. the price that the stocks have

been trading at. the best guess at future volatility going forward. the yellow being the past, and of course, there is a third component, which is realized, whether the trade was enough, and that, of course, we can't know now. if you are buying options with a or a at a 12 implied vol 13 versus a seven historical, you are basically saying you think things will get more volatile and if a short-term option, you think go there more volatile in a hurry. the train we will highlight today is, sort of, the opposite of that, saying in the short term we can sell an option with roughly a 13 implied volatility on the assumption it will stay a little quiet the next couple of weeks. there aren't a ton of catalyst coming down the pike in the next couple of weeks, but going into september, there is a lot -- there is a long list of things that can upset the market, and

interestingly those options are also priced fairly similarly to, let's say, a 14 implied volatility. so, the trade is basically a way of saying if you think things are quiet now, but could think of in the future, this is your way to play them. julie: and the way you have it structured is fairly complex here. steve: yes. julie: you have selling a straddle to fund buying a strangle. how exactly does that work? straddle is the most basic way of selling volatility. they are directionless trade, because by going -- by buying both the put and a call or selling the put and the call they are delta neutral. which means you make or lose your money based on your volatility that. in the case of selling a strangle, you are saying is going to be less volatile over the coming period, and that would be the way of exploring relatively worthless. julie: and it will be more volatile going out to that september 22, so the strangle,

the second part of that, essentially says it is going to past 142, or at $145 and other direction. thee: we have widened bands, saying if we expect more volatility, we might as well play bigger bands. it is cheaper to buy a strangle than to buy a straddle. so, if you think things are going to get more volatile, but don't have a call on direction per se, that is why you would use a strangle in that situation. julie: all right, we will see if it finally gets more volatile. think, steve stockman -- steve sosnick of interactive voters --brokers. julia: five months ago he said the partisan divide in bc was so wide -- he said it might be unavoidable. we will discuss. ♪

mark: i am mark crumpton. it is time for first word news. secretary of state rex tillerson and russian foreign minister sergei lambro have spoken by phone ahead of their scheduled

meeting in manila this week and on the sideline of a summit of southeast asian foreign ministers. russia's foreign ministry says north korea was one of the topics discussed during the call. tensions have risen between pyongyang and the international community following the north's recent test firings of two intercontinental ballistic missiles. republican tom tillerson democrat chris coons will to protectegislation the special counsel position. the bill allows any special counsel for the department of justice to challenge their removal in court with a review by a judge panel within 14 days. it would apply retroactively to may 17, the day robert mueller was appointed. turkey's top diplomat is promising to root out militants plotting against china. the turkish prime minister spoke alongside his chinese counterpart and said