scarlet: we are live from bloomberg world headquarters in new york over the next hour. hero the top stories we are covering. market tension, from the commodity correction to the following yuan to trump's criticism of the fed, top strategists weigh in. commodities under pressure again in the face of lingering global of theisputes with some pain reflected in earnings from america's top aluminum maker, alcoa. tesla tumbles. it gets hit with a downgrade on model three concerns. we will speak with the analyst behind that call. u.s. markets closing in two time.time -- two hours' >> stocks looking at pretty much the same thing before those remarks, modest declines at this point.

worth noting the dow is down for its first time in six sessions, confirmed by the fact we have the 10 year yield down two basis points, near lows. that brings in scarlet's comments around president trump. earlier, look at this massive leg lower. this came as president trump did tell cnbc in an interview that he is not thrilled the fed is raising rates and borrowing costs five times so far during his administration. the bloomberg dollar, reacting almost immediately, almost going even, but now up fractionally. rising rates tend to support the underlying currency. if rates go higher, the dollar should continue to go higher. those comments briefly taking the bloomberg dollar index lower. it also had an effect on the yen. take a look at the yen against the dollar. it is down 0.5%. so, a little bit of a haven play there, confirming what we are

seeing in bonds. gold, off the lows, earlier down about 0.9%, now about flat. if the fed was to stop raising rates in the gradual way it said it will, that could be supportive for gold. bitcoin up 1.2%, not really reacting, but bitcoin would be another beneficiary if the fed were to stop the path of gradual rate hikes. the market has a few more priced in for this year and next year. you can view this long-term chart, a weekly chart of gold, in the bloomberg. there is gold's nominal peak. the big crash in gold. this blue line, for a while, representing resistance. the yellow line representing support. in 2017, gold went above resistance, now going below support. this suggests we could see gold go back toward that line of resistance, what had been resistance could turn into support, somewhere around 1180.

if those levels don't hold, we likely see gold back toward 1050. this probably suggests the fed is going to stay on the path of gradual rate hikes. as for what is dragging on the s&p 500 today, ebay down. a mixed quarter, as they also reduced the full-year revenue guide. a drugmaker on a short call, a $60 price target, well below its current $90 share price. amazon.com down 0.6%, one of the bigger drags on the s&p 500 after the prime day exceeded estimates. netflix once again lower on the day, dragging on the s&p 500. lisa: thank you so much, abigail doolittle. let's go to kevin cirilli. he is standing by with a top democratic lawmaker. kevin: we are here with senator elizabeth warren, democrat from massachusetts. dizzying day on capitol hill.

the white house saying they are not going to allow a former ambassador to be interviewed. senator cornyn saying this resolution, nonbinding resolution will not get a vote, rebuking that. what's going on, senator? senator warren: i don't think anybody knows what's going on. we are clearly in a place where donald trump is in full protect donald trump mode. and whatever he has to say, do, break arms, whatever is necessary, he cares about exactly one thing and that is protecting donald trump. he has now found out that, no, it is not a great deal to offer an american ambassador to be interrogated by the russians for doing the things that america stands for, for speaking up in terms of -- to support freedom, to support transparency in government, to support accountability. no, we don't ship our ambassadors back over to russia to let them interrogate them. trump has obviously figure that

out, but that's just one piece that's melting down around here. kevin: is it [inaudible] senator warren: that's a legal term. i think the job of the united states president is to defend the united states of america, not to defend russia. what donald trump has done on a up toublic stage is suck vladimir putin while he has kicked dirt in the faces of those who serve the united states, those who are in our intelligence services, those who are in our law enforcement agencies. and that is just fundamentally wrong. and i think the american people are asking for some unknown -- some accountability. kevin: mitch mcconnell seemingly was going to allow this vote, then we hear from the white house that the president is not

going to consider that. do you think republican leadership -- many republicans spoke out against what the president did in helsinki. do you think they were trying to send some type of signal to the white house? senator warren: they have messaging. they have some, if they want to send a message. the real question is, will they do anything. this isn't about can you carefully craft an email and maybe the white house will see it, can you carefully do a tweet, can you do a little something. i want to see some real action. i want to see us increase our sanctions against russia. i want to see them push the trump administration to enforce the sanctions, that are in place right now. and i want to see us spend some real money and some real energy to protect our electoral system election.he 2018 that's the part that's most deeply disturbing. here we are with russian agents who have been inside -- invited indicted for hacking into

the american electoral system. it's a cyber attack on the united states of america. and an administration that not only is not doing enough to defend and to push back, it's basically covering its years, -- ears, saying "la, la, la," i can't year you -- hear you, it didn't happen. this is an administration not focused on the protection of the united states, but on the protection of donald trump personally. kevin: you are accusing her of being the architect of that divisive policy that separated children from immigrants. senator warren: let's be clear, that's part of her policy portfolio, part of her job description. so, let me start at this way. i think when people are looking back at what the trump administration has done over this last year and a half, this

policy has taken away children from their mamas and their daddies. it stands out as one of the most morally reprehensible things that has been done in the name of the people of the united states of america. this woman was the person at ob who was responsible for overseeing both the justice department and the department of homeland security that administered this. senator brown and i sent a letter a month ago, when she was first nominated, and we saw this in her job description. we said we want to see the memos, the documents, the emails. we just want to see what happened. and the answer has been no, no, no, no, no. so, today, i asked her under oath, reminding her it is a crime to lie to congress, under oath, i asked her, did you help design or execute any --

she totally dodged. she wiggled. she got in 40 different directions and never gave an answer. kevin: from your perspective procedurally, do you want her confirmed or do you want acting director mulvaney? senator warren: for me, what this was about, this woman, when we got to the end of the questions, i asked her, put all the paperwork aside and your involvement, this was morally wrong for the united states of america to follow a policy of separating children from their mothers. and i pointed out, republicans, on the other side, people sitting in the room, at all said, this is morally obnoxious, reprehensible, we should not be doing this. she couldn't have an opinion on the morality of that. my view, she is disqualified from serving. what happened at the border will be a stain on her that will

follow her forever, and if senators vote to give her a big job promotion because of what she did at the border, then it will be a stain on those senators. kevin: i know you have to catch a flight. thank you for stopping. thank you very much. back to you in new york. lisa: thank you so much, kevin cirilli of new york -- a bloomberg. let's get the first word news. mark: president trump expressing frustration with the federal reserve. in an interview with cnbc, the president said he was, quote, "not thrilled with recent interest rate hikes by the fed." he called fed chairman jerome powell a very good man, but said he is concerned the central bank could disrupt the recovery. a bipartisan investigation found that russia interfered in the 2016 election and must be accountable, it was blocked in

the senate today. jeff flake and chris coons, trying to force a vote. republican senator john cornyn, the majority whip, said he saw the resolution as just a symbolic act and that more needs to be done. the chairman of the house ways and means committee has some concerns about u.s. tariffs on china. republican kevin brady tells bloomberg television he is in talks with the trump administration to narrow the focus. >> we do think the president has tried to challenge china and unfair prayed -- trade practices. we want those to be targeted approaches. right now we think it is too broad. punishments both here in america and our allies that are unnecessary. so, we are working with the white house. mark: meantime, china's government says it filed a wto challenge to the latest u.s. safeguard theote, "

fundamental principles of the wto." the european union wants its members to prepare for all possible brexit scenarios, including one where britain leaves the bloc without a deal to outline future relations or trade arrangements. britain and the 27 eu nations are aiming for a smooth exit next march, but there have been setbacks like the sudden resignation of brexit -- chief brexit negotiator david davis. air and @tictoc on twitter. i'm mark crumpton. this is bloomberg. scarlet? scarlet: live pictures from the senate floor, where lawmakers are voting on a nonbinding resolution to review -- review president trump -- to rebuke president trump. this is a resolution that was brought by the democrats, bob

menendez and brian schatz, as well as chuck schumer. we will keep you posted. ♪

scarlet: this is "bloomberg markets." i'm scarlet fu. lisa: and i'm lisa abramowicz. china's yuan continues to decline. we are joined by leland miller, chief executive of china beige book international. leland, just a bit ago, president trump in an interview with cnbc said that the chinese currency is, quote, "dropping like a stone." chinaintentionally -- is intentionally devaluing its

currency? leland: they are not devaluing the currency, they are just not stepping up to prop it up. when they want to stop this continually weakening currency, they will have to use some major ammo, but it's not the place where the pboc wants to step in to stop this. you have some pivot points coming up, but not yet. lisa: at what point does china step in? slow,: they want it to be but i think the two critical numbers -- above 69 is where president trump inherited the yuan, and if it gets any weaker than that, it means the yuan has weakened on his watch. that is something the chinese would be prodding and poking president trump if they do that. the second is the seven handle. for all the talk about this ridiculous yuan basket the chinese market against, they don't mark it against the basket. seven is foremost among the political numbers out there. scarlet: i have a chart of the

u.n. -- yuan versus the basket. the yuan was largely stable against the basket of late. the real decline came a couple weeks ago. so, putting aside whether it's managing the currency versus the basket or the u.s. dollar, at what point would a weaker yuan prompt capital outflows out of china, because that's the real concern? leland: there's a lot of talking right now about how the chinese should just let it go and you will see 7 -- lisa: just to be clear, you're talking about seven yuan per dollar. leland: for all the talk about the fact the chinese have let it go, they have not. there is an understanding in beijing. there are people watching in washington. if you pass seven, this is not just a milepost. this is a declaration of currency war. scarlet: at what threat -- what point would it be a threat to financial stability? as long as the trajectory is

gradual, it is not really a threat. leland: if you pass seven, you are in serious trouble. the chinese have issues with ensuring financial stability. they want to make sure they are sending the right signal. that, youken past will probably hit the outflow button and start really worrying people. lisa: meanwhile, you are seeing a record number of corporate defaults in china. you are seeing china step in and ease a little bit to ease some of these defaults. is that the threat of a disorderly unwind of the incredible stimulus they have put out there? leland: i would say step back to the 30,000 foot level. this is a tiny number because it's china. it's not a problem yet. we saw this in second-quarter economic data. things are not as bad as the chinese have been talking about. the chinese don't admit weakness until they have already stepped in to remedy it. what you are seeing right now, this talk about easing rates and more lending, we are already picking that up.

we picked it up two months ago. the economy is not as weak as people think it is. there's more lending and spending going on. there is less retail weakness. things are not great, and there is a trade war looming ahead, but this is not an economy on the tilt. scarlet: 7 is the pivot point. how quickly can we get there, do you think? leland: i don't think they get there anytime soon. i think the chinese understand the closer they get to that, the more they are stealing their fate on a trade negotiation before the midterms. scarlet: cleveland -- leland, thanks so much. let's get more on the markets. vix closing up on wednesday. you could argue, for the most part, markets shrugging it off in different crosscurrents, especially when it comes to a prospective trade war. our next guest says earning season might do the trick. joining us is amy wu silverman, rbc capital markets equity

derivatives strategist. look, seasonally, this is a low volatility time of the year, july and august, but we have unprecedented levels of headlines on things like what trump is saying on the fed, what's going on with china. one thing i thought was interesting from leland's comments, you don't see any of this bleeding into the equity volatility markets at all. at all. it's remarkably complacent. lisa: one area where you have seen a pretty steady game in the russell 2000 and small-cap stocks. investors are turning to these companies as a haven from trade tension, but you are saying there are certain small caps where that doesn't work. can you explain? russell domestic, has remarkably outperformed s&p and, on the volatility basis, that's true as well, because it's a safe haven.

once you hear tariffs and international revenue, where do you turn? we broke down the constituents. if you look at it, it's not like no exposurees have internationally. many of them do. many of them have 100% exposure. we break down the levels and say, look, for the ones where there is high revenue exposure and liquid options, that's an opportunity to own volatility where i think people are not thinking about it because they are currently taking the 30,000 foot view of iwm versus s&p and not digging into the companies now. lisa: did you identifie certain nam -- did you identif certainy -- identify certain names of the basket? amy: there are certain health-care names, medical devices, a number of names where you really look at theb reak-- the breakdown. retail names like jcpenney have

no international exposure. but exgen has more of the international exposure people aren't looking at. lisa: jcpenney has other issues. let's talk about energy. you say energy is in the middle innings of a rotation. to what extent are they exposed at all to the different headlines that are out there, or are they moving more on their own fundamentals? amy: this is more our equity beingegist's view of it fundamentally in the middle innings. from an options perspective, the cheapness is middle of the pack, given how much of an inflection point we think there will be. tech is going to lose in the next six months to one year outlook, in terms of where people are rotating to. people are really going overweight into energy. they are going overweight into -- scarlet: you are saying they are going overweight into energy in the future or they are now? amy: in terms of faang, people have already sort of started to move out.

to some degree, that's happening a little. our portfolio strategist outlook is that this is going to be fore even more in the next six to 12 months. we look at how that overlaps with what the equity options market is saying. if that's the case, fundamentally, we are still relatively cheap in terms of buying upside from a leverage perspective. that's not something you see happening, and it's a good value right now. lisa: you are seeing the rotation out of faang and into energy. amy: into some parts of health care, moving away from consumer staples. lisa: what kind of oil price is that predicated on? amy: i don't know. we were just talking about what the earnings yield looks like on different scenario shots. in terms of what the volatility looks like, it is not pricing much of a move from here. scarlet: we began with vix futures let's come back and and on -- and end on vix.

equity markets, are markedly complicit -- remarkably complacent. amy: it's one of the most difficult things in derivatives. no one is expecting a february spike, for example, then when it happens, everyone is like, of course. it's the same problem. there is very high uncertainty, very low volatility. i'm not good at the timing of it. that's why everything i own is -- i don't know. some tangible catalysts. september could be a tangible catalyst. but right now the tangible catalyst i see is something like earnings, where the commentary there could drive an event. actualctual numbers, company feedback. thanks to amy wu silverman. scarlet: let's get you now to the bloomberg business flash, a snapshot of some of the biggest business stories in the news today. more trouble for the embattled founder of the papa john's pizza chain.

an outside firm retained to oversee an audit an investigation of the culture of the company. forbes reported problems at the company, ranging from the founder allegedly spying on employees to sexually inappropriate conduct. .ank of new york mellon they're looking for a quick improvement in the bank's performance, but they need to be patient. sharp has been under pressure to boostthe bank's organic growth -- boost the bank's organic growth. pressing for information about whether the bank turned a blind eye to the investment fund. sources say he could become a key witness against his superiors at the bank. more than $4 billion was said to be looted from one development. that is your business flash update. lisa? lisa: i will check out the gdb

function. catch up on key analysis and save charts for future reference. we will speak about commodities. you can check out this chart, for example, where it shows you the correlation has been increasing. others show the decline in copper. lots of great stuff. check it out. from new york, this is bloomberg. ♪

>> from bloomberg world headquarters, i'm lisa abramowicz. wordet: let's get to first

news. mark: president trump is rejecting an offer from vladimir putin to allow the u.s. access to russians accused of interfering in the 2016 election. president putin said he wanted russia to be allowed to them in the kremlin. madeid the proposal was insincerity by president putin the president trump disagrees with it. which democrat with the president most like to run against? he said it is joe biden. mr. trump tells cbs news i dream about biden. mr. biden sought the nomination twice that dropped out of each -- but dropped out of each race. he also considered running in 2016. -- will intensify negotiations

with the european union. he calls the meeting with michelle barnier constructive anh brexit negotiations at impasse, there is concerned the country could end up leaving the eu with a deal. montenegro's prime minister has shrugged off comments by president trump who suggested an interview the tiny balkan country could start world war iii. he suffered the indignity of being shoved out of the way by president trump, who appeared to a groupn front for photo. in comets mr. trump questioned whether nato's defense pact might let montenegro start the next global conflict. in a statement montenegro's government reaffirmed its permanent and ship with the united states -- friendship with united states. i would like to remind all

, it isns, public opinion aligned towards the americans in the first world war and the second world war. [indiscernible] montenegro is now on the side of peace. was bombed byro nato forces in 1999 before it split from serbia in 2006. global news on air and on tictoc on twitter powered by 2700 journalists and analysts in 120 countries. i'm mark crumpton. this is bloomberg. lisa: shares of tesla lower after the electric car company was cut from hold to underperform. stock is still undervalued following 16% since june of

2017. thank you for being here. we are looking at shares below $321. where do you see them going? >> ultimately shares could get to $200. currently the stock is pricing at 140 times next year's earnings, twice the valuation multiple of amazon, netflix, aidia, companies generating lot of free cash flow, or have a huge base of customers pretty -- customers. senseluation doesn't make . if you compare it to automotive's it is not even on the same spectrum. our numbers are more conservative than the street. we are at $.80. impliesoyees -- that 400 times earnings. you have to get to 2020 for a

more reasonable file your nation -- valuation. scarlet: you either love it or you hate it. you were at a hold. turned now underperforming. what made you more bearish? >> we hoped the stock would fall down to more appropriate levels. gross concerned about pressure overall. they have these is electric commission credits they sell to ngm -- likeies like gm. that is 18% of their gross profits. 2% of sales. down. forecasting that there is going to be excess supply of credits and demand is going to be limited. toyota has enough credit to last through 2020. .hey are not going to be buying

markets have gotten more balance. if there is more supply versus demand the credit price is going to come down. this is such a big driver of province. we are concerned about that. we are concerned about pricing pressure for the model s and model x into next year. we did a competitive analysis and looked at many different car models. 12 specific car models coming out next year to compete. seven on the suv side, five on the luxury side. that is going to create more pricing pressure and margin pressure. lisa: here is what i am struggling to understand print model x having troubles on production side. elon musk is erratic. at what point do you get bearish? at what point do you see it not having a soft landing? >> it is hard to be so bearish.

this company is like a company i have never covered before. he could tweet out something positive and the stock would go up irrespective of the fundamentals. it is hard to look at that. is $1.5 -- there billion of convertible debt due in 2019. they will burn through 2 billion in free cash flow based on our estimation. they have a debt of 11 billion. cash of 2.8 billion. one third of the cash is deposits. $1 billion, customers have given them for the model three, even models that are not going to happen for many years. with such a precarious balance sheet, we do not think this capital structure is sustainable. it has to be drilled in and focused on even more. elonet: lisa mentioned

musk being erratic. that was a polite way of putting it. question old behavior. written an open letter to mask to ask them to cool his behavior a little bit. what is your take on elon musk as a next factor? and is hard to separate the man from the company and the company from the man. >> i have no view on his personal tweets. we have to look at credibility of management teams when we analyze stocks as analysts or investors. think, they are in the penalty, so to speak. does not mean they can't get out of it. doesn't mean the technology is an innovative. continue to have credibility issues regardless of tesla or any other management team we have been managing, that can be problematic. we factor that into our

analysis, not the personal views. lisa: understatement of the view. when you have a lack of credible to -- cut ability that can be problematic. scarlet: diplomatic host and diplomatic guest. commodities in crisis collapsing into correction territory pretend percent down -- territory. 10% down. here to tell us how the selloff is feeding into other assets, this is where you see the effects of the trade war rhetoric taking root. >> it is. we are looking within equities and these other areas for evidence of the trade war having an impact. it is showing up in commodities. we came in with the bloomberg commodity index down 9% from its correctioning with territory. you have gold, which has been a correction since january. call for has been the story of

the day. , a lot ofres down that has to do with the outlook for global economic growth. lisa: you brought us a chart. hedge funds increase net short on copper, turning short for the first time since the end of 2016. why? a trade war effect? was there something else? >> when you look that chart you see that green. we have been long in this market for a while. they flipped to go short. there is some concern that some of this is the momentum, the general sentiment might have shifted. there is another report we have on the bloomberg terminal that is a survey of money managers, that measure sentiment. the sentiment also turned bearish as well. the most bearish it has been since march. we are asking folks how they feel about the market.

cftc data reflects the actual trades themselves. you are seeing the sentiment move towards the negative. there is concern when you look at corporate and these industrial metals, these things that are economic bellwethers command you look at china, which consumes half of the copper in , when you see china hurting, you have to be concerned there may be broader economic reverberation. scarlet: i have another chart here on my bloomberg that shows the mining companies in europe, xe white line versus the lme metals index. miners arethe concentrated overseas in asia. you are not say as much in the u.s..

it is not all gloom and doom. goldman sachs, morgan stanley had great earnings. scarlet: we will see how long that lasts if this continues. thank you. lisa: shareholders punishing bank of new york mellon. this is bloomberg. ♪

julie: time for the sector spider report. abigail: we are taking a look at the financial select sector spider etf down 1.2% near session lows, a combination of

factors causing it to have its worst day since the end of may. rates, the 10 year yield. testified before congress talking about a solid economy and the fed being on the path for rate hikes. we had rates going nowhere at this point. this is earlier a drag on the financials, taking a leg lower their on president trump's comments to cnbc earlier. the second factor we are seeing dragging, we have a series of earnings reports. starting with the travelers companies down 3.6%, the insurance companies, catastrophe such as hurricanes continue to weigh. 2.4%.own expectations high. the company not meeting expectations.

and then down 5.8%, 3% revenue miss. jeffries is saying guidance suggests there could be a third quarter miss. weakness for the financial sector on these earnings reports. theher stock, the stock of hour, that is the bank of new york mellon. near session lows. the worst day in more than two years of this point. they didn't really miss. this is -- this company has two main businesses. ,ervices such as custodian holding custody of assets, 1.8 thelion billion -- that is services at 75% of the bottom line. they are in a turnaround. the new ceo is asking investors to have patience.

one piece of weakness was the investment management. they did see some outflows. they are taking steps to improve the situation. lisa: i have to wonder, what is the growth prospect for custody businesses when things are moving towards blockchain and eliminating their business model? >> that is an interesting question. earlier this year the ceo said to investors we do not really have an exact plan to come love -- come up with organic growth. they are trying to control factors within their grasp, cutting costs. includes technology, tax cut money, investing the into technology. they have moved the headquarters . supposedly that will save $20 million per year starting in 2019. three moneymbined

management into 1. relative to investment services they have flipped them into three pieces to make the more responsive to customers. that is a matter of bringing more assets in. the big ships to turn. revenue. can't cut to scarlet: how are the competitors doing? >> their competitor, northern trust, shares responded well. we will see what they bring up. one of their top investors if we hop into the bloomberg and use berkshirenction, hathaway, second largest shareholder, 6.2% holding, we see this own function, that suggests these long-term strategies, that the ceo charlie sharp and management team are trying to put underway, have the support of firms such as berkshire hathaway.

a little bit of pain now, quite a bit of pain now. hopefully gains in the future. scarlet: abigail doolittle, thank you so much. coming up, trump's tariffs. more of our interview with the chairman of the house ways and means committee. why he is urging the president to look at the bigger picture for moving forward. this is bloomberg. ♪

>> after the backlash with his comments concerning president putin president trump met with lawmakers to discuss the meeting. one of the members in that meeting was kevin brady. >> we think the president tried to challenge china. we want those to be targeted approaches. we think it is too broad. frank wally -- frankly sweeps into much of the economy and makes punishment here in america and our allies that are unnecessary. we're working with the white

house to target -- more nearly target this issue. for the 100 house republicans have signed a letter basically telling the trump administration, look, you are asked to ask the question do we have a level playing field for automotive's and automotive products in america. isir point to the president be cautious -- this is a major part of our industry. think about the whole trading relationship, the importance of r&d.indy -- >> i was struck by that. the commerce department is undergoing the comment review. -- period. virtually every u.s. auto dealer is against it. they are saying -- forget about portfolio managers for a second have onmpact this could

folks getting a car repair, in your district for example could be negative. does that concern you? >> it concerns a number of members. is the investigation looking at the broader issues? national security does not seem to be any area where automotive and auto parts would fit. one, look at the whole picture in this issue. what is the response from the administration going to be? i think that without will more better inform us what the impacts are going to be -- i think that that will more better inform us with the impacts are going to be. perhaps the administration in their approach looking at uranium may well have picked an area that that provision was ideally suited for. that is an area may be designed to do.

>> you think congress to act? some republicans acquitting the house financial services committee chairman. section 232 shouldn't be used so broadly. >> this sparked a debate about what the role of congress and the white house is. how to 32 should be used, and what is the role of congress there? there is a number of bills that have been introduced. members are considering that. we will weigh what the legislative strength is of a solution from that direction. in the meantime we are not waiting. we are actively engaging the president on how to target these actions and targets better, exacting our trading partners who are trading fairly with us, and those products. than what isetter currently occurring. a maysounds like there is

be. we might need congressional action on 232. >> perhaps. the best way for the white house to avoid that is to create a clear timetable for resolving the dispute with china. i think our two presidents, president trump and president xi should be meeting to lay that out. >> why haven't they met yet? of anyre not aware discussions occurring with china or any plan. we think that is a mistake, a long protracted trade dispute helps no one. i have confidence president trump and president xi can craft a new trade agreement for fair trade between our two countries. quick speaking of, nafta. -- >> speaking of, nafta. a nafta deal might be coming. have you gotten any signals bilateral talks with mexico and canada might actually be where

this is headed in the fall? what is the update? news is serious discussions are restarting after the elections in mexico and we think that is important. our u.s. trade representative believes we are closer to common ground with mexico than with canada. that is where the attention is being paid. the hope is between this summer and this fall, agreement can be reached. i am hopeful canada comes back to the table. we are encouraging our representatives to focus on a modern permanent agreement. it could be a big confidence builder. would that be helpful to the u.s. economy? my answer would be no doubt. >> you were at the white house. i know question for you. amongst this political noise -- >> this is like speed dating. you are getting a bunch of questions in.

>> rapid fire on bloomberg. let me ask you about what you make of what is happening with the president's walk back on that meeting with vladimir putin? >> i think it was right to clarify his remarks, and his beliefs. support for our u.s. intelligence community, the most important thing that he said, he is going to pursue peace through strength. others around the world, the point i make, that policy works when we have a strong economy and strong military. the president is doing very good work in both of those areas. that was -- scarlet: that was congressman kevin brady. this is bloomberg. ♪ two, down and back up.

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xfinity internet. which could save you hunreds of dollars a year. plus get $150 when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. >> it is 3:00 in new york, 8:00 in london. scarlet: welcome to bloomberg markets.

live in bloomberg world headquarters over the next hour. here at the top stories we are covering. giving up ground for the dollar falters as president trump criticizes the fed for raising rates. pressure roadblock. a nonbinding resolution to rebuke president trump for considering vladimir putin's request for questioning u.s. citizens. and clearing the path for disney to take over fox's entertainment assets. are one hour away from the close of trading. let's get a check. some moves fore the markets. major averages, declines all day. this is the first time we have seen this in six sessions. the first down day in the six

sessions. the small modest risk options we the 10 yeared by yield down 10 basis points. when you look at the sector competition, you will see that eight of the 11 sectors are lower. the three that are higher will -- well, two of those, in line with rates. it makes the high dividend yielding stocks look more attractive. following yields do not help the financials. that is the bottom sector. most of the sectors lower confirming a risk off deal. let's look at the outside movers where we are seeing more of an influence. take a look at that down 6.5%. copper has been plunging nearly in a bear market from its most recent high on trade war fears. this is one of the big hits.

we will take a look at another influence. down nearly 9/10 of 1%. investors are looking for take growth. 44% on the bottom line. 18% on the top line. it'll be interesting to see what the affect of currents he is. -- currency is. the cloud is helping ibm. investors have been waiting for that. and the top person performer for the s&p 500, they put up a decent quarter. let's take a look at what scarlet was talking about. the dollar, a big move for the dollar. we have the dollar up three days in a row. the best direction since may. take a look at the sharp legs lower after president trump said he does not like the fact the that is in this tightening cycle , that is sitting the dollar initially. the dollar is higher on the day despite that.

some investors thinking those comments are not going to influence the fed. they will stay on this gradual path of raising rates. the rising dollar leads -- leaves behind the highest level since july. entering into a correction. almost in a bear market. let's take a look at merck. a bit of a decline starting on the open. closer to session highs. the shares lower. the company did release a statement saying they are committed to not increase the net price against -- across their portfolio than more than inflation annually. lisa: thank you. let's give the first word news with mark crumpton. mark: senate majority leader mitch mcconnell has asked to committees to hold -- 2 camesa hold sanctions to respond to

meddling by russia or others in the upcoming november midterms. u.s. intelligence agency have warned russians will strike back in 2018 after interfering in 2016. homeland security secretary kiersten nielsen says there's no weston -- no question the russians attempted to infiltrate and interfere with our electoral system. her comments came during an appearance at the aspen security forum. wechsler have the capability, they have the intent. we work to prepare on that infrastructure. that is what we have a lead on. i don't think there's any doubt they did it. we should be prepared that they will do it again. mark: secretary nielsen added it would be in her words foolish to think that the russians are not still targeting the u.s.. she continued quoting they have

the will. we have to be prepared. president trump wants another meeting with vladimir putin. he tweeted he wants a second summit so the two can begin implementing ideas they discussed in helsinki. automakers, dealers and suppliers forcing their disapproval of tariffs on imported cars, trucks and auto parts. the head of the alliance testified at a commerce department hearing today saying the opposition is widespread and deep because the consequences are alarming. president trump has asked officials to investigate whether auto imports pose a threat to national security that would justify tariffs. there has been a mass evacuation in syria involving 7000 people pro-government areas.

in exchange the syrian government is expected to release a number of detained insurgents. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. lisa: comcast gives up the fox chase, valley out of its bidding war with disney, allowing comcast to focus on the crown jewel, sky. is disney willing to let it go -- and mark our next guest says no. joining us is richard greenfield. .lso, ed hammond i want to start with this idea of are we going to see disney get what they want back to its purchase of fox, or are you went to see fox lose the bidding war with sky and disney ending up with a less attractive deal with fox?

>> disney has already had to give up on the regional sports network. all 12 regional sports networks, they agreed with the u.s. government they are going to divest those assets. that is a significant chunk of the fox asset that they are not buying. going to go through with this transaction and allow , who hand over sky. which eiger called the crown jewel. that it is more important to go direct to consumer. the biggest threat to consumer asset is sky. to give up on sky seems hard to believe that is actually going to happen. disney has been 1400

four sky. comcast is the winning vendor -- bidder. fox and disney don't need to raise their bid. they could wait before raising their bid for sky. my guess is the fox transaction, they wait for the shareholder vote. they get that down and get that fully moving forward and then come back and try to raise the bid higher on sky. >> we have seen disney up $20 billion on the fox assets. if they now get into a protracted hitting war for the sky stuff against comcast is any of this sensible? are we seeing them chronically overpay here? you already own 39% of sky. comcast would be overpaying for 100% eventually. disney would only be bidding for the other 61%. that they don't already own

buying fox. you have that aspect. at 39% you don't ask a control the cash flows. if disney wants to control the free cash flow of sky, the only way they accomplish that is buying the rest of sky. anything is possible. i find it strange, they took the maher, they kevin carved out a new division for him. division, the key asset that would go into that, what seems to be the hallmark asset of that new division seems strange. hard to believe disney goes through this effort. >> we haven't mentioned time warner and at&t is merger. do you think that announcement has anything to do with comcast

-- foxiving up the foss assets? >> the conspiracy theorist in me would be yes. it was getting a lot of traction. murdoch and the president like each other. murdoch wants to sell to disney. he has said a few times. trump wouldo which make it less likely, that makes likely, itss is a reach but it is possible. it has some credibility. comcast is keen to get a hold of sky. i would flip this back to rich. when disney does its deal it ends up earning 60% of hulu. asld disney use sky assets leverage to control all of hulu and have its own direct to consumer business? of questions and

thereby taking the last one first, the one that most investors are thinking about, is there some type of horse trading ? i think it is possible. if you are comcast, you are the country.bpd in the have 100%t disney to control of hulu? right now you have blocking rights. 60% doesn't give disney full control of hulu. it puts hulu in this limbo phase . i have a hard time understanding bestt is in comcast's interest. to give disney full control and essentially incident starting from zero, when they launch a direct to consumer program last year -- next year, to give disney a 20 million subscriber head start, it would concede to be in comcast's best long-term

interest. it would be better to remain in limbo versus being more aggressive on the core comcast ecosystem. or user base. i do not know if that is something comcast wants. disney see frustrating may be a better solution. but we will see. the key question is, on the regulatory side of this, it does feel often like it is a rupert murdoch world and we just live in it. the thing i think really scared off comcast athena the day is that i think they -- at the end of the day, they look at what they could sell the regional sports networks for. evaluations those assets are coming back at our lower than comcast had expected. more thann't sell for eight times, you're talking the fox assets being acquired.

the multiple could be north of 20 times. levelwas tension of the of dilution and the cost pressure this transaction was taking on. scarlet: fantastic. this is bloomberg. ♪

scarlet: happening at the white house club president trump hosting a pledge america's workers event. sign anident is said to executive order creating a workforce training council. we will continue to monitor the event, any comments you might make about anything else. you can watch the event on live go. , at kkr,ry mcveigh

opened up his playbook. he discussed details with erik schatzker. >> the u.s. economy is 70% consumer. confidence is high. taxes are low. we have strong momentum. i was in china last week talking to business executives from the chinese companies as well as the u.s.. isoverall view is the market overly optimistic about trade. the trump administration is focused on autos and high-end technology. our base view is they will implement the 200 billion in september. i don't think that is -- billion oftional $2 tariffs. >> that is not where i think the market is. i think last time when we talked in january i said the fed -- people were behind the fed. you

push me and said that is a little crazy. i said here is my view. we think that has a longer tail than what the market things. it doesn't mean there's going to trade war. plan,ina 2025 land is -- the administration is focused on that good reason. they want more of a level line field around autos. around investments globally, that has impacts on supply chains. my team has spent time working on my deal teams, making sure we're taking her that and have my bases covered. in as simple of terms you can come up with, trump, aggressive on trade, that makes broadly speaking what a buy and what a cell? >> our message is clear. years, yout 5-10 want to get long-duration.

longer duration bonds. what we are saying now is you want to ship the port olio to have more of high-yield, assets that are more linkedin to gdp growth and you probably want to lock in your low-cost liability. we think rates have ottomans. we are not areas. i think we are pretty active. -- we think rates have bottomed. i think we are pretty active. we have tweaked the playbook, when you look from a factor perspective what is driving stocks today it is momentum. valuerket doesn't like and cash flow. , when they are underperforming on the cash flow , you can reposition the portfolio and bring it back to the market. people want to pay for growth and quality.

>> let's go through a few asset classes. >> that right couple of reasons. people, margins have hit their peaks. we're at good levels. 17, 18 times is a reasonable valuation. we think going forward we shouldn't be using higher exit multiples. that is a change for us. >> you think there is going to be a correction in tech stocks? makingre increasingly our bets in terms of equity market on tech. u.s. market is not doing that well. we look at emerging markets tech in thebiggest sector, hole e.m. universe that has never been the case before. >> why is your a guest on under on-- biggest

debt? durationnt to own long , but when the world ended it would give you some protection. you need to flip that now. if we are spending more on deficits we're making the long end or susceptible. we are not wildly bearish that the long end is going to explode, we do think rates have structurally.omed what we are doing in our private updit books, you can pick multiples of yield and the risk reward is skewed in that favor. >> some people say the next crisis is going to be emerging-market sovereign debt crisis. do you agree? >> i don't agree. certain areas, emerging markets is in much better shape. we have eight offices in asia. that is not my impression. there are specific markets such as turkey where they are borrowing to fund thereby

committed consumer goods and the government. buying consumer goods and the government. lisa: that was an exclusive interview with henry make day -- henry mcvey. confirmed ave nonbinding rebuke of president trump. from new york, this is bloomberg. ♪

lisa: this is bloomberg markets. time for options insight. julie: joining me, interactive brokers, here we are in this summer doldrums. we have a chart of the vix,

comparing it, year by year. this is a slow time of year. there have been a couple of times where we have seen spikes in volatility in august and september. i>> you see this debt. it is a busy graph. right in the middle. years -- early summer, autumn rolls around, something goes on. if i could tell you what it was, i would. there is that change in sentiment that happens more often than not. happen ings tended to autumn. that is why when you are in an apartment with the vix below the teens, you need to be thinking about opportunities where you can be buying options. they relatively inexpensive.

julie: let's get your pick of the day. related to earnings on at&t. interesting because of all that is going on with the challenge to its acquisition of time warner. >> i looked at the telephone. you see that percent yield. it is tempting as a value stock or the market is pricing in a 2% move which is about what it does on earnings. when you buy a 5% move, that is something to think about. the other worry, with the capital allocations, you could be looking at a worst-case scenario . you become capital restraint and the dividend becomes worrisome. i don't see that now but if it is in trouble you have to watch your downside in telephone.

cover yourself. it costs 1% of the stock to protect a 6% dividend. julie: thank you so much. scarlet? scarlet: you can find breaking news, live events and become part of the conversation interacting with us. and takeo back in time a look at the conversations we have had. rich greenfield and at hammond, about comcast, sky and fox. from new york, this is bloomberg. ♪

mark: i am mark i'm been with first word news. the republican-led senate has -- president trump

forest -- for considering russia's request for americans officials, giving voice to unease when the president should have policies to the country's biggest adversary, vladimir putin in a nonbinding resolution adopted 98-0 today. centers called on the u.s. who refused to make any officials available for interrogation by putin's government. president trump is sucking up to president vladimir putin, the mr. trump'sf one of fiercest critics, senator elizabeth warren. the democrat from massachusetts as the president himself preservation mode after days of criticism following days of mr. putin in helsinki. sent -- senator warren spoke with bloomberg television's kevin cirilli. elizabeth warren: we are in place where donald trump is an mode.rotect donald trump whatever is necessary, he cares about exec one thin