Transcripts For BLOOMBERG Whatd You Miss 20170810

The president has created an uncertainty for outside the norm. Sleptons have been on my North Koreans and foreign entities including a stateowned Foreign Trade bank in addition to the ones only sanctions list. Recent travel they have an asset freezes were added to the north bring itctions list to in line with the Security Council resolution. The resolution was announced last week in response to response toe yongyangs ongoing threats. The gulf coast was hit last night. The argument has downgraded the storm to a tropical depression. Franklin became the first hurricane of the atlantic season on wednesday and hidden are north hit north of the city. There were no reports of deaths. Mexican Authorities Say there was less damage than feared. Global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Crumpton. This is bloomberg. Julia live from bloomberg World Headquarters in new york, i am julia chatterley. Scarlet and im scarlet fu. We are 30 minutes from the close of trading in the u. S. Julia plumber no more. Scarlet the question is whatd you miss . The state of has not markets out of their august older. Doldrum. The makers of the disappearing photo app could disappear. Tesla on a roadshow for its inaugural week, but investors may want to take a look under the hood. Exploding tensions on the Korean Peninsula have not markets out of the august doldrums. Indexoe volatility surging as American Allies warn north korea against firing missiles. Safe havenought assets. The question is where do we go from here . Show. To have you on the i love the line, everyone is expecting a correction. Do you believe that . Guest yeah. Here we are. We see a lot of action. I cannot believe you are sitting history, andmark a saying the vix is twice the 15th or the julia i qualify that normally. Note of a distributed everyone has been successful, selling it for the better part of a yearandahalf or if something works, you keep pressing the button. All of a sudden, what is going on today is not as much about korea or fundamentals to earnings, a lot of what is going hoh, ieople saying, u was having a good year, and i want to continue having a good year, and they are getting nervous about the position. Scarlet water saying it is too frothy right now, i am going to get out. Use lobby weaklings despite the overall you spot the weak links despite the overall probability. It is interesting compared to the s p 500. It is all sorts of index providers that put it in the bucket, and we look at them and say hey, lessee february. Quantitative investors and other investors would call it quality, high quality cash flow, very good extending capital, these are the stocks that until recently have been making highs. Along the way, four times this year ive counted today, it came back and they came back and they came back, and we are on the fourth time now. The question is what would happen here . This has been a crazy week. It could get crazier. The next thing you know, we will hear from pyongyang that, hey, guamlan to send it nuke to is ready, and President Trump will say, oh yeah . And we will have a schoolyard rhetoric. Julia and then what . Guest the short volatility, the dam breaks, and i was a 2420 on the s p 500 futures, we get to the point where people say we are short puts here, just to put it in laymans terms, and the downwardt it is a spiral. From donaldard trump today a doubling down on the rhetoric. He and kim jongun are similar in their levels of rhetoric at least. Michael interesting that that is what we are dealing with. I say roll with it. Somebody in the leadership of these two countries understand the Nuclear Destruction i i foundf voting myself quoting a harvard economist, thomas shelley, the other day, a nuclear cold war, and that is what is happening. Metal miners, that trade has gone well, but no one likes it. That has worked out well. Scarlet they are also long retail. Michael yes, and this is a cautionary tale. Everyone hates something, i want to look at it. Everyone has said the dollar is going to hell, it will never go up against some of the euro is so intuitively, everyone is leaving one day. To start going, and guess what, purchasing power, by the way, everyone senses the next a short, well, not quite yet is at all. That being said, you have stocks by calls and macys today, and my advice is to keep your feet moving like we say at right now. Julia is it hedged . Is the recently edge . The retail a edge . Hedge . Michael i would not say it that way. We heard from target a few weeks ago about how backtoschool is looking better than they thought. The dollar is beaten up, it gets a ride. Julia the time horizon on that that you are willing to set on it and wait for what happens. Michael if they does not working, you throw it out and try something else. The righthanded pitcher is not working, you call the bullpen and get the lefty in, and that is how you have to do it. Arm,e righty has a dead that is when someone says i believe in this guys arm, lets go by the stock. Julia the highyield, what song does it make you want to say . I was listening to led zeppelin, and this morning, hey man, take me to the gallows pole. Oh. Highyield index, the vigilante about the russell 2000, juliette will you come of the joke i made earlier about the russell 2000, julia, the russell is breaking down your highyield is a little more serious. If Everything Else holds up, i am willing to say hey, look, if anything, again, eventually, we are in harry science here. I am not saying stick your neck in or anything, but we could see new highs in the s p 500 in the next week. Scarlet at 4 00 p. M. When there is an awe will be all over it new high, we will be all over it. A look at program numbers. Does it matter to investors . It should. Today is not matter to an investor. Time to be talking the time to be talking about gold was a couple of weeks ago. For l, when it is left dead, that is when you tell investors this is where your opportunity is. In a couple of weeks, i was a you know what, if you are a longterm investor maybe it is your time to take your profits and financials. The toughest Bank Investors will tell us wells fargo will go for the next 40 years. I will say good for you. What are we even talking . They like talking to me. I am a pleasure to be with, i will have you know. He pointed, a longterm investor should be watching for opportunities like what could come later. We get more rhetoric overnight, volatility traits blowup in frankly, weaces, get the s p below 2400, and that is where we start saying where are the stoxx, can i stand firm here and say this is where i buy more of the . Tech stocks . That is what they need to be watching for. Opportunity. Michael block, chief strategist at Rhino Trading partners, thank you so much. Julia uber is going to remove former chief executive officer Travis Kalanick and his allies off the board. A lawsuit was filed today. The first calls employee, brian graves, is also stepping down. He has been the focus on his directorship. If he passes, what will be lost to say . We will keep you abreast of any headlines on uber there. From new york, this is bloomberg. Julia whatd you miss . I went to give you a the markets. With the equities weaken. The nasdaq now down to present. The 2 . The s p 500 now off by 1. 3 . Scarlet the nasdaq 216 decline 2. 6 decline is the most since may of 2015. August, so the particulars as we head into the close here, lets look at the the classictoo, safe haven assets, the dollar lower by. 8 . Sending mixed messages over concerns about the supply from opec as well. Coming on board to and increasing exten. Now 49 a barrel. We will keep you abreast of what were seeing in the market. Scarlet leaving to makers will be reporting earnings, and we see shares of nvidia down. Lets bring in Abigail Doolittle to talk a little bit about what is happening here. I guess the context is it has been going gangbusters for a while. Abigail you are right about that. The stock is at session lows right now. More that youoff guys just outlined relative to the writer. Rudder. They are pretty optimistic. It represents 51 and 38 percent yearoveryear growth respectively during good growth, but expectations. Sachs have been beating, but they also say the lack is priced in, and i could be why the stock is fluctuating. Scarlet when you look at the revenue contribution, gaining is a big part of it. When you look at gaming consoles, we know how that is going, but there is contribution from the data centers as well as central currencies. Abigail youre right about that, scarlet. Gaming has been a huge part of it, 68 of overall revenue, and ative, about 7 on those autos. That has been a surprise over the last few quarters, helping for then some big beats company, and now it is critical that the company is still into gaming. A Bloomberg Intelligence analyst with a all the focus is on data centers and whether or not gaming can perform as well as it has been is critical. Ift point, it happened we hopped into the bloomberg and take a look at this great chart this is just how much they have been beating relative to etfs over the last several quarters by 25 . This is a huge amount. 8 on revenue. Here we see the day after up about 13 . The stock really reacting quite favorably. Look at this down your. If they do for some reason, they do not surprised that site on gaining some of who knows, maybe we have another downside surprise. Options say it could move on the report. ,ulia the point you just said if they do keep the point on the gaming, do you think that is performance relative to bitcoin over the last few years . That is eyeopening. Abigail it really is oh. There is not a study on what is driving that point, but some investors want to know the outcome currencies. If we call back into the bloomberg and take a look at another chart, actually, maybe i can pull it up here, g btv 6236. This is what you are talking about, julia, and white, nvidia. In blue, we have been quite death we have bitcoin up we have bitcoin up about 500 . It is a bit arbitrary. What happens. We now have a point of 260 on year, nvidia of 55 . But they really do have to put of the high bar that everyone is looking for. Scarlet expectations present to the stock. Abigail doolittle, thank you so much. Removeuber is suing to former chief executive Travis Kalanick and his allies off the companys board. He is accused of fraud in a lawsuit filed today. Gregill bring in great stohr. When we are talking a lot of those of his on the board involved in this, what are we talking about . Of the mosts one unusual lawsuits ive seen in my time covering silicon valley. Suing the former ceo to get him off the board. Nominally, this is about three board seats. Occupied,vis kalanick to are still open, actually. Benchmark is saying they never would have given Travis Kalanick these extra or the second 2006 if they had known everything that has subsequently emerged. Really, you can take a step back and say this is a battle for control over uber. There is a ceo process ongoing. The board is unclear about what kind of ceo they should hire. Travis kalanick and his allies wanted to take a long as you and benchmark investors. Julia talk to me about the ownership here because my understanding is travis owns 10 of the outstanding shares. A smaller proportion has been benchmarked. If they succeed in kicking off the board, what happens to the Share Ownership . Brad it was not affected Share Ownership, but the numbers are in the lawsuit. These are ubers two biggest investors, both with sizable stakes and voting blocs, who interests are basically online anymore. A lot of the evidence of their interests are misaligned. Benchmark led the effort to out Travis Kalanick as ceo in now wants him off the board. There is similar stakes of stock, and part of the story of the last six months is the story of the benchmarkTravis Kalanick relationship souring. Julia we will continue to watch this, brad, great to have you want. Breast dont brad stone. Scarlet the president is speaking right now in new jersey, at the summer white house. Manafort,garding paul who was his former campaign manager, that he found him to be a decent man. He commented as well in his relationship with attorney general jeff sessions, and he made remarks on north korea, saying that he is not getting away with it, referring to kim jongun, and i feel economy would like to have the rise denuclearize the world. This is bloomberg. The scarlet moments ago, President Trump made some comments from bedminster, new jersey, saying he will not get away with it, referring to kim jongun of course, and saying the arsenal isnt it option, and until demilitarization happens, the u. S. Will be the strongest by far. He also referred to iran, saying he does not think iran is in compliance with the spirit of the nuclear deal. Marks on the compliance after the u. S. Government had certified it. In sahilts bring kapur will. He is a again, he is not getting on with it, s getting away with it, so he is continuing the rhetoric. Thread thatriginal north korea would face the fire and fury of the United States, unlike having the world had sinceeen before, and tha then, his administratin officials, including secretary of state and james mattis, say they should not be worried, and mattis had changed the parameters of the president s comments, saying they would respond to actions from north korea, not to rhetoric from the leader of north korea. There are a couple of different tones and messages coming out of the Trump Administration with regard to the Nuclear Armed country. Scarlet there are quickly on iran, no matter what the insident said, he was never favor of the nuclear deal of the Obama Administration have made with the country. Sahil that is true. He campaigned pretty vigorously against it. Is arguing against it was less archaeological. Ideological. He said he did make a better deal. He was not specific about what the better deal would look like. Within the administration, as to whether there are people who have warned that walking away with it would not do anything big, and moving closer to the path of a nuclear weapon, it is a very difficult position. Politically, he didnt say one thing, but as we have seen, it is not quite as simple as a campaign promise. Scarlet some notable sahil kapur joining us from washington, thank you. Looking at losses from u. S. Equities, the nasdaq down, off more than 2 , the dow down more than 190 points. Whatd you miss . Ended with a on lows, with tensions over the caribbean as low knocking the market out of it still Korean Peninsula knocking the market out of its doldrums. Im julie chatterley. Scarlet and scarlet fu. Joe weisenthal has off for the week. We want to give you a look at how markets have ended the day. Juliet mentioned that the geopolitical tensions are knocking the markets out of the doldrums. Losses,e fairly steep and for the dow, this is a daydata client 3 decline. It feels like it has been long er. The yen has been strong, rmer against all the major currencies. Any temper is the asset seems to be set any type of risky asset. It is still at low levels. Julia what it is up some 43 . We have been watching headlines coming from President Donald Trump today actually continuing his fiery language as far as north korea is concerned. He says he would like to see the world can you could their lives, but until that takes place from world to nuclear nuclearized, but until that takes place he wants the u. S. To be strongest. He is trolling Mitch Mcconnell via twitter and says that he is very disappointed in mitch. Were still waiting for snap crossfitto james comey has a rating james currently has a rating on snap. Talk to us a little bit about the company as a whole. You used to work in the tech sector. You headed up several technology companies. Our assessment of snap looks at a pretty holistic view. Put uprics you just explain the longerterm and shorterterm perspective of the company. I happen to think it is an exciting company. It has a unique product, there is a lot of usage on a daily basis. But how they are going to make money over the longterm is really a challenge, and i think they are in a position where they are trying to figure out what they want to be when they grow up. If you think about the company when it was a socialmedia company, before it ipod, and then they cast themselves as a camera company, and now as a video content company. They are going through some changes and they need to figure out what they want to be. Scarlet they are evolving. Should they have waited to go public . James they absolutely should have waited. Over the next two to three years, they have intense challenges being able to survive as a company. The Financial Health rating means they have a fair amount of liquidity. What they do with the money, r they can whethe catch it up and raise that, that is the challenge they have at the moment. Something pretty challenging is going to happen for them. Julia all the exciting things theyre doing, facebook and do it and they can do it better. They have more users. I kind of wonder at the point is what the point is of signing up for snap. James youre right. It is not a defendable business model. They are the first mover in their take on it. But they are being copied and copied quickly and in a way they are not able to defend against. 90 of companies that have failed we have rated at 40 and below, and this is a company that has a core health of 16. They lose the shortterm resilience. The comment has a long way to go before it is sustainable on an organic basis. Scarlet snape does not look great when you compare it to a company like facebook. What about a company like twitter, where the user growth has stalled out . James i now twitter has a slightly higher Financial Health rating. The shorterterm oneyour perspective is stronger for twitter. Is 17. Tters core health they look similar in a lot of metrics. Julia what do we need to see from snap . They are managing to add users can even if the growth is not what we would like it to be. What would you like to see to see some improvement in the short term . James the market wants higher revenue per user. Julia you monetize better the once you have. James but if you can only have one of them, you want to make money off the once you have got. What we need to see from a Financial Health perspective is a path towards profitability, because the Financial Health rating, the core system, rapid ratings from his measuring how well public and private companies are run, how resilient they are. And that really is a function of having to grow up as a company can watch towards profitability. Higher top line and better management of costs. Julia we are to take a break on this for now. Gellert is going to be staying with us. We have other earnings. Scarlet nordstrom is reporting secondquarter earnings better than what analysts had been anticipating, higher by a penny. Alsoue 3. 79 billion, beating estimates. When it comes to total comparable sales in the Second Quarter, rising by 1. 7 . Julia all the questions on this call are going to be whether or theebody are going to suggestion had been next to that there is no interest. Scarlet good numbers may be set it up for a good sale. From new york, this is bloomberg. Mark . I am mark crumpton. President trump says that his fire warning is backed by and fire and fury when he is backed by everybody. Theydent trump i think dont mean that, and the first time they have heard it like they heard it, and the people questioning that statement that it was too tough maybe it wasnt tough enough. Mark the president went on to say that north korea better get their act together or they will be in trouble like a few nations have ever been in trouble. Days after the administration officially notified the United Nations of plans to exit the paris climate accord, a Science Agency released a report the mistreating that Global Warming is real and getting worse. Scientists 500 around the world, it showed that last years average Global Temperatures were the highest on record. There were more major tropical cyclones, longer droughts, and less snow. The president has called Climate Change a hoax. In venezuela, a fifth opposition mayor has removed from his post in a continuing crackdown on president nicolas maduros adversaries the president of the Mayors Association of venezuela attacked what he called the misguided economic and political policies of the maduro government, saying it brought cities to the breaking point. Speaking on behalf of the mayors in the association, he said none of us is afraid of persecution. Tainted eggs crisis has expanded beyond the netherlands and belgium. Luxembourg reported eggs that contain pesticide. Britains food safety watchdog reported it imported for more contaminated eggs from affected farms than previously believed. And then mark says it has seen batches of bad eggs from a local bakery authorities have arrested 2 men on suspicion of involvement. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Scarlet all right, we have got earnings out from snap, or a loss from snap. There was a lost expected, and it is slightly bigger than what analysts were looking for. Expectedighter than 181. 7 million vs. The estimate of 185. 8 million. Daily active users lighter than what had been anticipated. 163 million daily active users in the Second Quarter. Analysts were looking for 175 million. The average revenue per user this is the number that is critical, how much they can monetize these users that has gone up quite a bit. 1. 05. A year ago it was . 50, or i should say no, a year ago. It has jumped quite a bit from yearago period. Perhaps the numbers keeping it from falling further, julia. ,ulia does the saving grace isnt it that is the saving grace, isnt it . People are spending longer times on the app. Lets bring in cory johnson, bloomberg editor at large. Here. Average revenue per user is the only improvement here. Cory that is part of a trend, which says that they are turning on the advertising machine. The promise of the stock is were going to add a lot more users. The promise of the ipo is we will have been spent lots of lots of time on the app. Who can get enough of a dancing hotdog . I asked that question of all of you. They spent so much time on the app and a looking at the dancing hotdog. Scarlet we have seen a slowdown from the first Earnings Report that published last quarter, and it continues to slow to 173 million users. Does that mean snap has peaks already . Cory hard to say. Can they get Gross Margins improving . Julia looking at the hosting costs the cost are increasing and have increased quarter on quarter as well. The average revenues increasing, but the costs are, too. Scarlet james, when you listen to these results, how concerned are you about the level of spending . The last Earnings Report showed that the company was bogged down by stock awards. This will be an issue Going Forward for this young company. James it is an issue for any tech company, but the younger the company and less history in the public eye we saw this with a blue apron, where the costs were greater than expected, and there was an earnings miss, and they were down 15 on the day. I would also point out that snap has missed estimates on a number of areas. Ened down have damp over the last quarter. There is a miss on an already lower definitely cory cory there is a command called eeg. Scarlet im calling it up. Cory scarlet always thinking ahead. Initial estimates for how big the sales would be shows you that they were big estimates coming out, and they lowered the number and the wood of the number. If you are missing the lower number on sale, that is a problem for a brandnew company. Scarlet the red line is what cory was referring to. Cory what the expectations were on wall street. Wall street had this one really wrong. Julia we were talking earlier about, yes, this is an exciting product. You cannot get enough of the dancing hot dogs could unfortunately, facebook is copying the best parts cory well, but that is exactly it. Instagram has successfully copied to the stories aspect. No dancing hotdocs. I think it is interesting that snapchat has any business right now, given how popular Instagram Stories and facebook stories is. I think they have better filters than facebook and instagram. Julia apart from the dancing hotdog really . James filters have kept them alive, really. It is that augmented reality that is the listing wishing future. The distinguishing feature. Julia what is the path here . Surely that is what investors need to see. Cory they have not shown any path towards profitability. Scarlet has evan spiegel made that a priority . Cory 80 it is not appropriate for them to try to be profitable now. The markets have allowed companies to go without profits for a while. The number is a suggestion that going for growth right now is in the worst thing isnt the worst thing. But it has to be a sustainable business, and a negative Gross Margins is not sustainable. Contrasten we draw the between snap and facebook, easy to talk about who is first with what technology. But when facebook came with its ipo, it already demonstrated a private market that it could that money ande invest it to generate higher revenues and profitability. Every single time in its history it has raised money, it has translated into profitability, away. Ap so far you have facebook in the 80s and snap in the 50s cory drawn out free cash flow, and snap cannot even imagine it. James facebook wasnt cory free cash flow. Scarlet corrie, you have got to run back to radio. Can talking about snap. I wanted to ask about evan spiegel. How do your ratings for in to the ceo and his leadership capabilities . There are questions about how willing he is to show his strategy to lead the company. He is not necessarily someone who shares widely. He just seen as much more integrated and selfcontained, and that is an issue for a tech startup. James there is a qualitative and quantitative answer. Core health looks at 62 different ratios within a company. Those measures are looking at how much sales, what kind of profitability, what is it doing relative what are these metrics relative to the sale of the company, the assets, the capital employed . Management decisionmaking drives the elements that get to efficiency good qualitative is that if you are in the public market, you cannot act like a teenager who doesnt want to share anything. The bottom line is that the companies that share the markets are the companies that are most embraced for the markets. If you are going to be secretive and you are going to keep secrets from you Shareholder Base, you are not going to give shareholders a vote, then youre stickyto have a less Shareholder Base from which translates to volatility in stock. Julia if you have got a company were they are saying, look, are going to work on his and change the structure up, but actually, you have no one who can put pressure on them and go, a guys, vote with our feet here. Oldfashioned here, but historically, when you bought stock in a company, you got a vote and a seat at the table. It might be as little one, but you were there, you were a player, you have a reason to be emotionally attached to the company. If you remove that, it reduces the number of investors who want to be there other than for the momentum play of can i make money in the short term on this name. I think snap did a great to themselves and their shareholders with this position did a big disservice to themselves and their shoulders with this position. Scarlet perhaps a wrongfooted move from the getgo. James gellert, thanks for being with us. We wanted to bring you headlines from huber. We told you that cap is talented responded to Travis Kalanick responded to the closet filed by one of the major investors in the company, alleging that he duped them into filling two of the board seats. Caps talented cast responded, saying that the lawsuit is without merit, and it is travis talented has is funded, saying that the lawsuit is without merit did he is no longer the ceo, he is the founder. He is still on the board. Benchmark, excuse me julia real battle of the shareholders. Scarlet from new york, this is bloomberg. Carlet whatd you miss . For the first time tesla is offering billions of dollars of corporate debt. Not everyone is convinced it is worth the risk. If you want exposure to tesla, by the equity. I think it is a great capitalization move for them to add to the high having your the debt, but no, we would not be buying it. Scarlet he is not the only one taking a cautious view of the offering. Moodys is out with a report analyzing the credit risks. The author of the report, bruce clark, joins us with the details. Summarize the risks with tesla. Bruce three risks. The company is looking to bring out and make her great product, wrapping up reduction in an extraordinarily aggressive manner. Scarlet model three. Bruce model three, yes. If you look at a historic performance, not making a lot of money, burning through a lot of cash, and that will continue into 2018. Julia they are set to raise 1. 5 billion. Urn the last few months is 1 billion. That is pretty tight. We did a pretty thorough liquidity analysis coming up with our rating on that issue. Our views they have adequate liquidity running through 2018. 2019, they may need to raise additional money. Julia do think, as you have said, the model 3, a gross margin of 25 year. Lets say they do that. Then what . Bruce if they do that, that will be an important sign that number one, it is really pretty good, and number two, they are ate to produce the vehicles reasonable rates. Double be an important indication of market acceptance, and the companys manufacturing and production capabilities. Julia what about Rating Action at that point . Is that enough to bump them up . Bruce it would be a positive sign. But that is what we are expecting them to do. That kind of improved performance is already incorporated in the rating. Julia what else would they need to do in order to achieve a higher rating . What would you need to see from them at that point . Bruce if they exceed 300,000 units of the model, going into the 25 gross margin, i think that would be a pretty good sign. We dont expect to see evidence of that. Really until we get into midtolate 2018. Scarlet how quickly do you think they will need to raise more money again . Bruce i think the earliest would be early 2019, perhaps late 2018. That is when they have a relatively large convertible due and they might need to do refinancing. Julia that is the current rate cash, accelerating for production reasons or whatever it was, you would have to reassess. Bruce our expectation is they have adequate liquidity to get through 2018. Scarlet im looking at the debt distribution of tesla. Not a lot to do with 2017 and 2018. You are mentioning 2019, 2020, 2021, 2022. Julia do you have a sense of pricing . Is Something Like this is priced 5. 25 , does that sound aggressive do you . Bruce i would not get into the pricing. Our assessment is fundamental credit quality. Talking to al you, lot of investors, and a lot of them are on board in terms of our view. Pretty important Credit Associated with the company. Bruceris clark clark camacho auto analyst at moodys. Scarlet coming up, why money is pouring into malls. We check our phones 85 times a day. So it only made sense to create a network that keeps up. Introducing Xfinity Mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Mark i am mark crumpton. Time for first word news. John mccain says america is adrift in afghanistan. The arizona senator said this today as he unveiled a war strategy that includes more comment forces and increased counterterrorism efforts. Mccain complained that seven months into the new presidency, the Trump Administration did not have a game plan on afghanistan. He says with thousands of u. S. Soldiers putting themselves on the line, they deserve better. The Defense Department says that fighters from the Syrian Democratic forces fighting the Islamic State have cleared more than 50 of raqqa from i. S. Fighters. Raqqa is a key Islamic State stronghold in syria. Colonel line dylan says the Islamic State is under pressure because the coalition is targeting its revenue streams, including oil. Cuthey had been forced to it in half, they have lost mosul. Isis has lost much of its revenue base. They are becoming increasingly desperate and resorting to more arbitrary extortion. Also saysnel dillon that the Islamic State is fighting a losing battle in iraq. Deposed by minister criticized its Supreme Court judges today fortis klein for disqualifying him from office. Sharif says he was voted into office, and his removal was an insult to millions of people. Sharif embarked on a rally from islamabad to his hometown of lahore to get support get the caravan of democracy initially drew tens of thousands, but has since dwindled. Police in london have made an arrest in the case of a jogger who pushed a woman into the path of a bus. The incident was caught on the surveillance camera. The video shows the jogger hacking into a pedestrian knocking into a pedestrian. The bus stopped before hitting her. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Scarlet lets get a recap of todays market action. A big decline, relatively speaking, for the nasdaq, off by 2 . Stocks are pretty much closing near their lows. Attention over north korea is certainly one factor, rattling investors and the markets. Vix at it was at 15. It was at 11. A little bit of volatility returns. Surprise reported sales growth, providing reassurance to investors. Stock up by 2. 3 . Snap also reporting. Julia different story, as you say. Secondquarter daily active users from 173 million. We were watching to see whether they can continue to add users. That is growth, lets not do right lets not deride it. But if you look at the previous , you see that this is a downward trend. On the bright side, they are monetizing more. The average earnings per user for the Second Quarter . 90 the prior quarter. That is going higher. Revenues,intment on to put quick look at video as well. Secondquarter adjusted eps beating estimates. Stocks rising in afterhours trade. Revenues better than expected. Scarlet stock is down about 5. 6 in afterhours trading. Julia we also were talking about nordstrom earlier. Nordstrom. Story inre an exciting retail, kind of a bright spot in the world of department stores, which has been pretty bleak. Today wasnt a terrible day if you are a department store. Scarlet it wasnt terrible in that it could have been worse. That is the theme i got from everyone. That is not a great story for investors, it couldve been worse. Sey no, it is not. It is a pretty low bar for the permits rose right now. Nordstrom actually came in with a positive figure, which was surprised, and it which was a surprise, and an exciting one. Nordstrom is thinking of going private. Maybe a buyout with the private equity firm. That would allow them to make these big changes. Retail is in massive upheaval right now. Julia what is nordstrom actually saying at this point . Lindsey i dont expect them to say very much on the call. The family is pretty guarded generally good it is still a family that has a big interest in the company and they want to do what is best for it. This is one of the more healthy ones. It is more appealing. Julia brilliant. Upp, thank you for that. The death knell of the american mall has been ringing ever louder, yet Construction Spending in june alone was the largest amount since 2008 and the great recession. Here to talk about what is going on is cap bernstein, president and chief executive officer of a Real Estate Investment trust specializing in openair retail properties. Great to have you on the show. Explain what is going on. The addictions of doom and gloom are precipitous. Eth in the real estate industry, talking about inflation and deflation, 10 we are stuck in an era of conflation. The community is conflating and confusing. Always a darwinian business we are used to seeing retailers, and go. But they are confusing that with the relatively stable, relatively solid performance of real estate, where we are connected to the retailers, but not day in, day out. Scarlet ok, i hear what youre saying. At the same time, if you go to city streets, they are vacant. Excuse me, i have to interrupt, because the president is speaking. President trump we discussed many things. One of them, obviously, was north korea. We discussed venezuela. We discussed afghanistan and the middle east generally. We had some very good meetings, very good ideas, very good thoughts, and a lot of decisions were made. This is a very important day, actually. A lot of decisions. If you have any questions yes . Make any decision on afghanistan areident trump yeah, we close in getting very close. Everything decision for me. Theyre going to make it a lot less messy we are going to make it a lot less messy. 17 years, one of our longest wars i read in one of your columns. Frankly, it is a decision that will be made soon. Indo you have confidence National Security yes, i do. Rump gentleman master, he is my friend, very talented man. Are you betraying our community that you pledged to support President Trump no, i have Great Respect for the community. I have had great support from the community. I got a lot of votes. Transgender the military is working on it now. It has been very difficult situation, and i think im doing a lot of people a favor by coming out and just saying it. As you know, it has been a very complicated issue for the military, very confusing issue for the military. And i think im doing the military a great favor. Mr. President , do you have response [indiscernible] 755 workers from the embassy . President trump no, i want to thank him, because we are trying to cut down on payroll, and im thankful he let go of a large number of people, so now we have a smaller payroll. No real reason for them to go back. I greatly appreciate the fact that they were able to cut the payroll for the United States. We will save a lot of money. Mr. President , was it appropriate for the fbi to raid the home of Paul Manafort President Trump i thought it was a very, very strong signal or whatever. Anafort i havent spoken to him for a long time. He was with the campaign for a short period of time. I thought it was a very they do that very seldom. So i was surprised to see it. I was very, very surprised to see it. We have not been involved its usually excuse me . Have you spoken to the fbi director about it . President trump no, i have not doing it in the early in the morning, whether it was appropriate, you will have to speak with them. Ive found Paul Manafort to be a decent man. He makes consulting fees from all over the place. It was tough. , his familye him up was there, that is tough stuff. How would you categorize your relationship with attorney general sessions . President trump its fine. It is what it is. He is working hard on the border. Im proud of what we have done on the border. Im proud of what general kelly has done on the border. One of the reasons she is my chief of staff now is he did such an outstanding job on the border. 70 in the old days with other administrations, if you were down 1 can it was a big thing. We had down 78 percent at the border and nobody thought that was possible. Im very proud of general kelly. He is now chief of staff. At the same time, very proud of what we have done over the last six months, between the Supreme Court and tremendous amount of legislation passed. We had 42 to 48 bills passed. Not just talking about executive orders. Im talking about bills passed. We had massive executive orders. Got rid of recordsetting amounts of regulations. A lot of it is statutory, where it is a 90date period you have to wait, and then another 90date period you have to wait to i believe in regulation. You have to have some regulation. But we will have a small percentage of recordation compared to what we have. Highest in the csm is the best business enthusiasm is the highest investment in 18 years business enthusiasm is the highest it has been in 18 years. Said, you have Companies Moving into the United States, whether it is foxconn, the 2 large Auto Companies coming back hopefully they will go to michigan but negotiating with other states. We have done a lot in a short period of time. Im very proud of it. I think general kelly is going to be a fantastic chief of staff, however. [indiscernible] President Trump we are going to look at what is happening in asia. We are looking at it right now. We are constantly looking at it. I dont like to signal what we are going to be doing, but we are constantly looking at it. Were spending a lot of time looking at in particular north korea. We are preparing for many different alternative events with north korea. He has disrespected our country greatly. He has said things that are horrific. And with me, he is not getting away with it. He got away with it for a long time, between him and his family. He is not getting away with it. Whole new ballgame. He is not going to be saying those things, and he certainly is not going to be doing those things. August 15. T guam by lets see what he does with guam. If you does something with guam, it will be an event the likes of which nobody has seen before, what will happen with north korea. [indiscernible] President Trump youll see, and he will see. Nota dare. Its a statement. It has nothing to do with dare. That statement. He is not going to go around threatening kuan, threatening the United States, he is not going to threaten japan, not going to threaten south korea. That is not a dare, as you say. That is a statement of fact. Can you talk about the Nuclear Posture and the priorities there . President Trump Nuclear to me number one, i would like to denuke the world. I know president obama said Global Warming is the biggest threat. Not to me. Nuclear is the biggest threat. Not even a question, not even close to stop i would like to denuke the world. I would like the United States and china and pakistan and many other countries that have Nuclear Weapons to get rid of them. They dol such time as come we will be the most powerful Nuclear Nation honors by far. Good theth by far first order i give to my generals, i want to Nuclear Arsenal to be the biggest and the finest in the world. We expect a lot of money, a lifetime, and a lot of effort we have spent a lot of money, a lot of time, a lot of effort, and it is in tiptop shape and Getting Better and getting stronger. Getil such time as this scour disappears from we will be so much better and stronger than anybody else. And nobody, including north korea, is going to be threatening us with anything. What has changed with the Nuclear Arsenal . A lot of experts yesterday in response to your tweet says that modernizing the arsenal takes many years. It cannot be done in six months. President trump we have done a lot of modernization, but we have done a lot renovation, and we have it now in very, very good shape. It will be in better shape over the next six months to a year. Very important thing. Actually military is very important to me. As you know come i did extremely well with the military vote, mike and i. My first order is we have to do the military, but before we do the military per se, we have to do the nuclear. We are going to be increasing our budget by many billions of dollars because of north korea and other things having to do with the antimissile. So we are going to be increasing our budget by many billions of dollars. We will probably be able to report that over the next week. As you know, we reduced it by 5 . I decided i didnt want that. We will be increasing the antimissiles by a substantial amount of billions of dollars. Your,iran, the nuclear and whether you think they are in compliance or will be in compliance. President trump i dont think iran is in compliance. We wrote them a very tough letter, as you know, to the congress. I personally dont think they are in compliance but we have time. We are going to see. We put out a of default or potential default situations. I dont think they are living up to the spirit of the agreement. President obama in his wisdom gave them 150 billion, give them 1. 8 billion in cash that is a hard one to figure. But that was his decision. I think it is a horrible agreement. But they are not in compliance with the agreement, and theyre certainly not in the spirit of the agreement in compliance. And i think you will see some very strong things if they dont get themselves in compliance. But i do not believe they are in compliance right now. Mr. President , what is the latest on the leak investigation that the attorney general announced President Trump yeah, we are looking come we are always looking. You have the leaks coming out of intelligence having to do with syria and also the different places, having to do, frankly come with north korea. And those are very serious. And then you have the leaks where people want to love me and they are fighting for love. Those are not very important, but certainly we dont like them. Those are inner white house leaks. They are not very important. Actually come im somewhat honored by them. The important leaks to me, and the leaks that the attorney general is looking at very strongly, are the leaks coming out of intelligence, and we have to stop them for the security and the National Security of our country. Special counsel bob mueller President Trump we are working with him. We have a situation that is very unusual. Everybody said there is no collusion. You look at the councils senate hearing, judiciary, intelligence, we have a house hearing, everybody walks up to me even the enemies, saying there is no collusion. They are investigating something that never happened. There was no collision between us and russia. In fact, the opposite. Russia spent a lot of money on friday me. If you on friday me. If you think about it, im on a Strong Military. It will be hundreds of billions of dollars, our military budget. Russia doesnt like that. Hillary was going to cut the budget substantially, the military budget. Very important, martial oil, oil and gas. , and exportered of gas. That is bad for russia. Ill think russia wants me because i want a Strong Military and low Energy Prices. No Energy Prices is a disaster for russia. It seems like russia spent a lot of money on that. Port, and it was russian money, and it was democrat money, too. You could say that was collusion. Plus, the democrats colluded on the ukraine. When you get down to it, why is the fbi looking at the deal why isnt the fbi looking at the dnc server . You have a server that the democrats refused to give to the fbi. I dont know how the fbi can investigate something if the dnc refused to give the server. We have an investigation of something that never took place, and all i say his work with them, because this is an event that never took place. As far as somebody else, today filed the right papers or forget guarantee, ifr, i you went around and looked at everybody that made a speech or whatever these people did, that is up to them. Did they do something wrong because they did not file the right document or whatever . Perhaps. You would have to look at them. But a lot of people in washington did the same thing. Given your allegations about the democrats, how are you going to bring them in on infrastructure President Trump well, we will have to see. Maybe we wont bring them in. I think infrastructure will be bipartisan. I want a strong infrastructure bill. We have spent over 6 trillion on the middle east. As far as im concerned, when we say spend, we have wasted. And yet we cannot fix our roads and bridges and airports. I think that is a very sad situation. Im very strong on infrastructure, and a lot of republicans are going but i know a lot of democrats are also. I think that is going to work out very well. Mr. President , have you considered the dismissal of the special counsel . Is there anything Robert Mueller could do that would send you in that direction . President trump ive been reading about it from you people saying im going to dismiss him. No, im not dismissing anybody. I want them to get on with the task, but i also want the senate and house to come out with their findings. Judging by the people leaving the meetings, they leave the meetings all the time and say there is no collusion. You know why . I dont speak to russians. Because i suppose i was a much better candidate than her. I won because i went to wisconsin, im a to michigan, i went to pennsylvania. I did not win because of russia. Russia had nothing to do with me winning. We had a great team, and i guess i did a good job. Honestly, they spent much more money than i did come by a lot, you know that. And honestly and with a did not do a good job of campaign. One more question about Senate Leader mcconnell. You talked about him outside a little bit earlier. Have you reached out to him since your phone call yesterday President Trump no. After youve given consideration to asking his wife, your transportation secretary President Trump elaine is doing a very good job. Elaine is secretary of transportation as you said, mitchs wife. Doing a very good job. Im very disappointed in mitch. Honestly, repeal and replace of obamacare should have taken place, and it should have been on my desk the first day. Ive been hearing about it for seven years. Repeal and replace should have taken place. The tax bill, tax cuts, tax reform, hopefully they get that done. I hope they get it done. The other thing would be the infrastructure bill. In addition to that, we have passed a lot of things. We passed account ability with the v. A. We are a lot of great work with the v. A. Were doing a lot of great work all over. You look at what is happening with the coal industry. I looked at West Virginia the other day i was in West Virginia making a speech, and are doing great as that state. The great governor of West Virginia, jim, who you saw, he just became a republican. First time in many, many years that has happened. He just left of the Democratic Party and became a republican, which was a great moment. Hasnt happened in many years. We are very, very happy with what has happened. It has been an incredible six months. We have done a lot of recordsetting business. It is incredible. You look at what is going on with the economy. To me, when you look at the enthusiasm of businesses, you look at Companies Moving back in 2 big Car Companies that are coming in, you saw last week foxconn, they make the apple iphones come all of it, the desktop, the biggest in the world, they are coming in to wisconsin with an unbelievable plant we have never seen before. And actually said to tim cook of tim, i said, you know, i wont consider myself successful as president until i see you building those beautiful plants you have all over china, you Start Building them in the United States. And he is going to do that. You were critical of intelligence in the runup to the iraq war. [indiscernible] President Trump well, it is different intelligence. I have mike pompeo. I have great confidence in him. That does not mean i have confidence in his predecessor. Which i didnt, although he said good things about me. He said he had no information or anything on collusion. But i have tremendous confidence in mike pompeo. Dan coats, fantastic. We have people your new head of the fbi i think ive got a Great Service for this country. I think you will do a fantastic job as the head of the fbi he will do a fantastic job as the head of the fbi. Nobody has greater respect for donald trump. Han but you have to have the right leaders. I think we have great leaders right now. You look at intelligence over the years, it was intelligence that got people to make one of the worst decisions ever made in the history of our country, going into iraq. Because there were no weapons you know come you look at it it ended up there were being no weapons of mass destruction. They said if you listen to them, weapons of mass destruction all over the place. That was intelligence. Respect for intelligence as led by the people we have in charge right now. We have great people, and i think it will lead us to tremendous victories. What is that intelligence telling you about north korea . President trump telling me a lot of things. You will probably find out about it before anybody else, with your leaks. We have got to stop the leaks. The leaks are very dangerous for our country. But i have Great Respect for the intelligence committee, and with the leadership we have right now , hopefully it will be a very, very successful eight euros for this country, and after that we will continue our work. We have a lot of things we have to straighten out. You have the middle east, you have north korea. We have a lot of places of tremendous conflict and tremendous danger for this country. I will say, getting the 150 vote at the United Nations from the Security Council the other day comes that is something that very few president s would have been able to get. And i have Great Respect for the fact that china and russia went along with it. That was a tremendous day for the United States. I think it will have a strong impact on i dont know it think ithe end, but i will be a very, very i think it will have a big impact on north korea and what they are doing. Thank you all very much. Thank you very much. Appreciate it. Julia lets bring in a national kapurcal reporter sahil in washington. We have been talking by various issues, whether it is north korea, iran, lets talk about the infrastructure bill, possible tax reform. How likely is that to get done in light of the backandforth with Mitch Mcconnell . Does that change things . Sahil it is not clear how much this changes things, if this ephemeral feared that the president has many of or if it has lasting ramifications. It is not a good sign for getting anything done legislatively. The sooner th just the soonest that qantas can get moving on anything is october the soonest that congress can get moving on anything is october. It will be very hard to get tax reform done, it will be very hard to get infrastructure done, just one of them, let alone both of them. This is not a good omen. Julia great to get your insight. That is it for whatd you miss . Is this a phone . Or a little internet machine . [ phone ringing ] hi mom. It makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. See how much you can save. Choose by the gig or unlimited. Call or go to xfinitymobile. Com introducing Xfinity Mobile. A new kind of network designed to save you money. Washington and you are watching bloomberg technology. Thinking trump is Vladimir Putin for expelling or than 700 u. S. Diplomats. Speaking in new jersey today he said the administration has been trying to cut down payroll and putin may have done them a favor. He said there is no reason for those diplomats to go back. Putin kicked them out in retaliation for u. S. Sanctions. Trump said his fire and fury warning for north korea is backed by everybody. That is after pyongyang dismissed it as nonsense. We heard trump refusing to roll out a preemptive strike. Better getth korea their act together. The president continues to express his disappointment at congress as Congress Fails to repeal obamacare. That is after criticizing Mitch Mcconnell on twitter. Trump said after hearing about replacing a house law for seven years, he just wants mcconnell to get it done. John mccain says america is addressed in afghanistan. Made thata senator declaration today as he unve