We will have their ceo with us just before he goes on a conference call. Happened withat the failed coup on friday we want to see what the central bank ones are doing. They left their benchmark rate unchanged at seven and a half percent and cut their overnight lending rate about 25 basis points. We do have the lira depreciating slightly against the dollar. The Turkish Central Bank said it took measured steps for simplification simplification. The lira on the move to the downside. Lets get a check in on the rest of the market. Record highe fifth on the s p 500 in just under a week over a week. Future softer. The dax down by one full percentage point. All 19 Industry Groups on the stoxx 600 have been in the red so far. The ftse 500 down one third of 1 . Germany Investor Confidence absolutely plunging. The fx market, the aussie dollar getting absolutely whack. We have some minutes from the australia centralbank, very dovish minutes potentially setting us up for a rate cut. The dollar is up about a third of 1 . The action in the bond market, fiveyear yields coming in three basis point down 1. 1 . Hours, a huge call for Morgan Stanley that we will discuss, 1 on a u. S. 10 year has got tongues wagging in the city of london and beyond in the commodity market, two days of losses, brent crude down. 46. 26. Alix lets go around the world and check in with our Bloomberg Team for indepth coverage of all of our top stories. Keller, andm. R. I. , and michael mckee, as well as megan murphy. Accusations of plagiarism at the Republican Convention. The big mover in the free market is netflix. What happened to subscriber growth domestically . Tech, just a day for to give you the big picture. It has been a tough start to the year for tech companies. Fleeinghad investors toward utilities and safer assets. People are looking to netflix saying, can you guarantee me solid growth in the slow growth environment we for we find ourselves in . Comforteddid not feel so netflix has been changing at subscriber model. They have been upping the price for new customers and slowly doing it for existing, and that has irked a lot of people and slowed down there estimates. They have had a hard time getting subscribers overseas and that is a pretty significant chunk of their business. A lot of analysts are saying that programming is not robust enough overseas so there is a lot to worry about. 2011minds people a lot of when they broke out there dvd portion from their streaming portion. That concerned a lot of people and so investors are seeing echoes of that, and sold off the shares to a significant amount, down about 12. 5 . Alix is this a second and Third Quarter blip or a loyalty issue with netflix customers . Thank you. Take a look at this, this is what netflix does the day after earnings. These green lines are standard deviation lines to the upside. What this shows you is we have a lot of big moves in netflix. These are the three biggest. We had another big downside surprise but we had the stock go down. Nonetheless, expect a lot of volatility and movement in the stock. This is five or six standard deviations to the upside so keep your eye on this. Banks,from tech to Goldman Sachs is going to be bringing out their earnings and about 30 minutes from now. Laura keller is with us. Of two a tale situations. Their q1 numbers were not good but we have banks reporting above investment analysts. Laura they are looking for a lot of good things out of goldman. They are the only bank that is expected to have profit rise this quarter. Unfortunately only because they had a lot of legal issues last year at this time. If you look quarter over quarter, last quarter we had this terrible time for trading. This quarter we are actually ecting to see a lot better on the back of those fixed income trading results. That the key question, is fixed income trading . Jpmorgan was way up. Laura goldman historically has relied a lot on debt trading specifically. Talking a little bit about how they pulled back on some of their market share but it is still a very important part of their business. Investment banking is a large area for goldman and we may see cost come down as well. David that is laura keller. Jonathan lets bring in michael mckee, Bloomberg Economics editor. Comes forne call Morgan Stanley, a forecast of 1 on a u. S. 10 year by q1 2017. Where do we begin . Michael nobodys model is working today so a wide dispersion of use, and Morgan Stanley really contributing to that. The u. S. Economy is going to slow Going Forward and they have taken off all of their rate calls through 2018, and see a 40 chance of recession. Their bond strategist have now cut their forecast for the 10 year note yield to this year to one and a quarter percent and next year to 1 . The yield on the 10 year is the sum of all the yields along the yield curve. They are basically saying we are going to see a rate cut from the fed. Yield,n u. S. 10 year 1. 5526 . We surveyed the analysts. 2. 78 . Ian forecast, the events of the last month or so, i wonder how much of an outlier a 1 yield is on the 10 year. Michael they are always bullish, they are always going to go up. It is not out of the realm of possibility but the data around the world has been coming in better than expected but what has not has been inflation. The bond market telling the central bank, forget about it. Bond yields are trading below their average for the year and at this point it is possible we are hanging in the range around one and a half percent. Jonathan we will continue to talk about this throughout the program. David very important potentially. Beginning ofs the the Republican Convention in cleveland and the headliner was Donald Trumps wife. Rememberh made people some things for Michelle Obama speech years ago. We are raised with so many of the same values. My parents impressed on me the values. You work hard for what you want in life. You work hard for what you want in life. Your word is your bond. Your word is your bond. That you do what you are going to say. That you do what youre going to say. That you treat people with dignity and respect. That you treat people with respect. We want our children and all children in this nation. We want our children in this nation to know. The only limit to your height of your achievement. Is the strength of your dreams. And your willingness to work hard for them. And your willingness to work for them. David joining us is megan murphy. Youve predicted that she would be the headline coming up but i am not sure you anticipated why. Megan i do not think anyone would have predicted that she would have been the headline because of a plagiarism scandal which is what we are waking up to in cleveland. He has begun his convention with a fight on the floor we have not seen in decades and now his wife accused of ripping off chunks of paragraphs for Michelle Obamas 2008 convention speech. It was noticed on social media first last night after her speech was concluded within about an hour. There is no question when you hear it there that they are almost verbatim in large sections and sentences. The campaign has come out and denied it and said that she composed the speech almost on her own. There is no real explanation for only that ipened, am sure there is a speech writer in some very hot water. David it is a fun story and the media will play with it, but i wonder if there is an underlying theme which is the discipline and organization of the campaign. Are they disciplined and organized . What does it mean when you are running the country if you cannot be . Megan if you cannot even get this kind of thing right on your head by night, a night that she had to have a breakthrough moment, that he had to have a breakthrough moment. If they cannot even do this right, how are they going to get the rest of this campaign right . Those are the questions people are asking. We turned toward much more establishment speakers this evening, Chris Christie, mitch mcconnell, some forces that were resistant to trump. Can they turned the corner . I am not so sure. Last night was a spectacle. , he isoing for spectacle going for glitz and glamour, but if you cannot deliver on the goods and content you will never make it out of cleveland with the kind of bump he needs to close the gap on Hillary Clinton. David megan murphy reporting from cleveland. Jonathan do we get to play that again . It is convenient that we are talking about that. Coming up, the health of jackson and jet Johnson Johnson, shares moving higher. We will break the numbers down and here what is in the pipeline with the ceo dominic caruso. Jonathan david this is bloomberg , im david westin. In free johnson is up trading after reporting earnings that the estimates. The Quarterly Sales were up 3. 9 . Caruso, ceoominic and Vice President. We see the reactions of the stock. Why dont you give us your headlines . Dominic we are very pleased with strong secondquarter results that have been driven by the improvements we continue to see across all three of our businesses. Business withical the successful launch of new products as well as robust pipelines being built for the future. Our Consumer Goods Division is making important strategic choices. The medical device business is gaining momentum. We are undergoing a restructuring but are improving growth and are going to market in a new way which is important. We are confident about the future. We raised our Sales Guidance and adjusted earnings per share guidance as well. David lets start with pharmaceuticals and the pipeline. What do you have coming down the pipeline. I know you cannot give us specific numbers, but what are you most hopeful about . Dominic we have a very strong pipeline of pharmaceuticals. We have 10 new products we are going to file between now and 2019. The first was filed and improved approved, and is off to a great start. A robust pipeline across 10 new entities plus 25 line extensions of successful products that are in the market today. That business is doing well and has the momentum for continued strength Going Forward. David what is the competitive situation . How much of a threat is that . Dominic there is a little bit is ampetition because it complex disease but we believe be medication will probably back bone therapy across multiple Therapeutic Options for people. The important thing to note is there is improvement for a very devastating disease and we think we will be back bone therapy in the future. David where are you with respect to possible bio similars . How long can your position in remicade continue . Dominic remicade is our number one product and we believe in the strength of our patent which we intend to defend rigorously through september 2018. Bias simulators are a potential entry into the market. Even when bio simulators do enter the market we believe they are not generics, they are a different class of medicine. We think the market will behave differently. 70 of patients on remicade are adequately treated today so we do not believe physicians will readily change patients on remicade to a bio similar. David you are just closing on folk. Explain why vogue was important. Is a veryogue Successful Company in the hair care space and beauty in particular is an area of focus for us. We have multiple products that consumers know very well like neutrogena. Vogue is a fastgrowing business, a naturals of hair care product and it moves us from number eight in hair care to number four. As partroud to have it of the Johnson Johnson family of consumer products. David Johnson Johnson has a fairly substantial portion of its revenue coming from europe. What does brexit due to you . Dominic it provides some uncertainty across markets in general but to put things in perspective, our sales in the u. K. Represent about 3 of our sales. As we all know it will take some time for this to work out so we certainly do not see any immediate impact. David medical devices is the third area. There has been a lot of restructuring in the industry. Where is that business going and how can you keep the markets margins up . Aminic we underwent restructuring last year and we are seeing improved momentum. The restructuring is allowing us to accelerate our growth and pace of innovation in that business, and change to market go models. This is all about a new go to market model in medical devices which we think is important, and we are leaders in that field. You have a fair amount of cash on your Balance Sheet and a stock buyback but what about your m a approach . What are you in the market for . Dominic we are always in the market looking and we are actively looking for businesses that have a strategic fit but also where the valuation allows us to acquire the company and create value for our shareholders. We are very active, always evaluating activities, but we will execute at the right time with the right party at the right valuation. David how sensitive are your variationsng out to in the strength of the u. S. Dollar . What kind of Foreign Exchange exposure do you have as a company . Dominic the primary exposure is with respect to the euro so as it weakens, the results would be a challenge. We did not see a significant weakening of the euro due to the brexit vote but overall, we did have about a 1 change in sales due to currency changes, overall 3. 9 growth. When you cut through acquisitions and divestitures, the underlying growth of the business is about 8 . Caruso, the cfo of Johnson Johnson. Alix coming up, aussie dollars getting hammered. The reserve bank of australia keeping its options open for a possible august rate cut. We will have the details next. This is bloomberg. Alix this is bloomberg. I am alix steel. We have some big currency moves. The bank of australias meeting shows that cap their options open for a rate cut and it is reverberating on the market. Jonathan if you woke up this morning and you are in the fx market you would have seen two significant underperformers, the kiwi and the aussie dollar. They are performing right over a 1 drop. On the aussie side, the rba minutes are very dovish. Concern about jobs growth are easing, potentially setting us up for a rate cut. The reserve bank of new zealand has been a pioneer. At a time when rates are at a record low globally, how contain does how to contain the effects. Something they are said to do now is tell Property Investors in new zealand if you want to buy property you will need to deposit 40 , up from 30 . What this is going to allow governor Graham Wheeler to do, he can cut rates again and cut them and not worry about a Property Market bubble because it has been a big concern. As soon as we learned this today, straightaway, fx market adjustment. What is interesting, while people experiment with low rates others are seeing what they can do with macro policy to contain the risks of the Housing Market and get the inflation back toward target. David where do they have the Political Support . Jonathan exactly the same as the bank of england. On the other side on the mpc they can do things with Monetary Policy they would not otherwise be able to do. Alix breaking news with lockheed martin, boosting their fullyear outlook. Net sales for the Second Quarter also beating. The stock is up 2 in premarket trading. Alix this is rumor go. I am alix steel. This is bloomberg. Steel. Lix we want to get to premarket movers during first is lucky that lockheed martin. Operating profits, sales forecast, this coming at 12. 9 billion for the Second Quarter. The big name is going to be netflix, down bay in the markets. It was worse a little earlier. A huge missed on subscribers across the board, domestic and international only added 1. 7 million subscribers this quarter. How does netlist continue to grow and deliver good operating profit margin is . That is the question going for it. A price hike of one dollar to two dollars in the last quarter. Look at ibm. Reallyhnology doing well, transforming into a cloudbased business. Its all business is still a drag on sales. Posted business actually revenues up for the first time ever. Overall for the company. We want to wrap up with yahoo , that is lower slightly in the premarket. It is less bad. Is still lost hundred 80 million in the Second Quarter. It still puts the heat on Marissa Mayer to deliver some kind of sale for the company. Downal ad revenue was 1. 5 , it was just over 2 last year. Google 31 . Putting that into perspective for you. Jonathan it is the least ugly contest on wall street as we await those earnings. Absolutely beautiful. Those numbers coming imminently. A wider market, futures are softer. Five record highs. If europe is any guideline as well. The main performers in mainland. 2 . E, the ftse. About we moved south by over 100 points on the session. Some very ugly german Investor Confidence. The expectations component is a lot worse than some people were anticipating. In the fx market, Commodity Currencies are underperforming. We talked about the kiwi and the aussie dollar. A potential rate cut coming in the coming weeks from the reserve bank of australia. Rates already at an alltime low. A big discussion in the bond market. London, wall street, asia, 1 is the call on the u. S. 10year from Morgan Stanley. An outlier call that everyone is discussing. German bond yields trading negative on a 10year at 0. 039 . For treasuries so