We will have more on north korea next. Strong wind and rising temperatures are stoking wildfires in portugal after cooler weather brought a beef rest a brief respite. Some 700 firefighters are battling wildfires, located around 90 miles. The Emergency Management service said thousands of acres of portuguese woodland was charred and the days, 939,000 acres across the entire eu. Powered by 2700 journalists and estimate and analysts in over 120 countries. We need to make sure americans have the training they need for jobs in the future. I want to thank ivanka, my daughter, for her leadership and efforts. Shes been working very hard to create new Economic Opportunities for women across america. Speaking with the chancellor of germany helping women all over the world. We have made an enormous gains and americans back to work. The stock market is at record highs. Unemployment is at a 16 year low. Manufacturers have never expressed more optimism about the future. The optimism has been truly incredible. Recently, foxconn has announced it will invest 10 billion dollars to create a new factory in wisconsin. Jobwant to make sure every that comes back to our shores is filled with american workers. Have a lot of Countries Companies moving back to our country. Looking for the site and putting it out to seven or eight different states. They will be very happy building in the United States. That is why in june, weve began a Historic Initiative for workforce training programs. And apprenticeships are one of the many avenues that lead to the great jobs completely debtfree. And who knows more about the word apprentice than donald trump . You earn while you learn. So important. We love getting up in the morning and going to work and a lot of great things involved here. We are here today to discuss additional steps that we will be taking to expand apprenticeship programs. Especially for women and minorities, where women have been truly underrepresented. I guess you could say underrepresented for many decades. Technology has become a part of nearly every industry from manufacturing to retail. We want all our citizens, every single citizen including women and minorities, to have access to tech jobs and other stem related jobs. American workers and are the best there is anywhere in the world. They built the skyscrapers of our cities, the roads and bridges and will be building plenty of new roads and bridges. The technology that has revolutionized so much more, as youre well aware. Talent, and grit has always put america on top. We will remain on top at a much higher level than we are right now. Speaking of now, it is our job to make sure they have the training, immediately, to lead us in the future. We have great hope. We have a great future in this country. Been morenever optimism. And unemployment is at a 16 year low. Have all ofed to you. Mr. Secretary, thank you very much. Ivanka, congratulations on working so hard. Any questions . What do you mean by military solutions are locked and loaded . Trump were looking at it very carefully. I know they are going to fully understand the gravity of what i said. They will understand exactly what i said and the meaning of those words. Those words are very easy to understand. Any progress on the diplomatic back channel . President trump we dont want to talk about progress with the back channels, we want to talk about a country that is misbehaved for many years. Decades, actually. Through numerous administrations. They did not want to take on the issue and i have no choice but to take it on. I believe we will be very successful quickly or we will be successful in a different way quickly. There is merkel says no military solution to fight with north korea. Why is she wrong . President trump she might be speaking for germany. She is a friend of mine, a very good person. She is a friend of germany. She is not referring to the United States. What do you say to critics rhetoric isr raising tensions . President trump its because its me. That we haveou tens of millions of people in this country that are so happy with what im saying. They are saying, finally we have a president sticking up for our nation and sticking up for our friends and allies. And this man will not get away with what hes doing, believe me. Threat which he has been uttering for years, and his family has been uttering for years. If he does anything with respect to guam or any place else that is an american territory or unamerican american ally, he will truly regret it and he will regret it fast. Thank you all very much. That was President Trump speaking in new jersey, holding a discussion on workforce apprenticeship with labor secretary acosta, and education secretary betsy devos. Along with his daughter devonte the trump and her husband jared kushner. Husbanda trump and her jared kushner. Said is what i mean and he doesnt want to talk solutions. Channel that the u. S. Will be successful quickly or perhaps in a different way. He answered questions about raising the rhetoric. Critics say hes raising the rhetoric and he says it is only because hes the one saying it. If any other president said it, they would praise the statement. I was struck at the end when he issues anm jongun overt threat which he has or does anything with respect to guam more anything else that is an american territory or ally, he will regret it. Again, it raises the question of whether the u. S. Is prepared to act on a threat or on an actual action. And im going to bring in margaret who is bloombergs senior white house reporter. The president saying hes being very clear here although there is a little bit of medinas here muddiness here about what would trigger an action by the United States. We havent had a consistent message. Margaret yeah. Me you know, if you asked half an hour ago what the theme of today is, i would have said even though the president sort of seemed to be doubling down on his language, he was actually dialing it back. Secretary mattis and these other officials. Making it clear that the u. S. Would respond very swiftly if north korea actually did anything. What you heard now is actually sort of a mixed message. He seems to be poking the stick bluff,ain, calling his perhaps even more. Interesting development is the response may be offthecuff or maybe not to the german chancellors approach to this saying that i hope she was talking about germany. Let her speak for germany. Get togethernt to at the end of this week that what you see is the cicely this question. Decided notump has not pushm jongun everyone around. They decided to call his bluff to some extent. If they go with the missile. Isplay, the planning of phases under what circumstances would the u. S. Respond and how . The president is not going to be split about that yet. Hisnd bringing up that representative is striking a different tone, traveling across california and visiting tech companies. As tillerson wrapping up well as. Wouldnt they be back in the u. S. On the east coast speaking with President Trump and Holding Meetings . The summit would suggest this is empty rhetoric. What are you hearing with regard to the president eating up with his team and discussing this in greater detail . Just today, he will be meeting with what he calls a diplomatic thing h. R. Is to thetillerson public schedule. The president has been briefed throughout the week, multiple times a day as the situation evolves from the National Security team. And we expect early next week for him to have this reef visit to the white house. Details of that still emerging. This is what the entire administration is taking seriously. And discussing with a little more deliberation then perhaps this spray here. Nonetheless, it is the sort of. One, volume, the instinct when you are asking about how calibrated the messages and what the administration has a good out, it is threshold for various responses. Coming up, there has been a growing chorus of people warning of risks in the credit market when it comes to highend yields of emerging markets. We spoke with bond experts and we will get a discussion next. From new york, this is bloomberg. Scarlet nerves gripping the market this week. One person said if youre waiting for the catalyst to show itself, you will be selling at a lower price. Its not a time where you can not worry about the risk of it. The time to do that was 18 months ago. Michael and i talked to a panel of six income guest and mike started off the conversation illustrating factors that are causing concern. I want to start with a chart that basically shows what jeff good lock is talking about. Spreads. T shows the yellow line. Average and then duration. Duration really high, spreads compressing. , iss the terror we heard that justified . Rightf wright to start to start pulling back . We dont disagree. At Goldman Sachs asset management, weve been taking risk down steadily over the last couple of months. We are targeting underweight risk assets. It is nuanced. We dont worry particularly about the current fundamentals of the market. Healthy, there leverage is high, but it is not increasing. At very low cost to debt. We dont expect it to pick up soon. Are you being adequately in theated for liquidity market . We think we are facing a time when volatility could be higher. Seasonals matter in the four months we are entering right now. Highyield tents to underperform and we see triggers for volatility to go up. For that reason you have been underweight highyield. How long have you been underweight highyield . How much performance heavy had to give up have you had to give up . Since early this year. Favoring equities for the riskbased asset. Assets. Highyield looks expensive. But everybody faces the same thing. Gdp improves. I just dont think clipping coupons is worth the risk you are taking. Scarlet what is the risk likely to be . To lighten up or to be in highyield . We have seen a little pullback but this is nothing on the broader scale. We would look to at least move back to an even wait position. What is it people are worried about when you are looking at duration . You are looking at sensitivity to rate moves. What moves at this point . I think with regard to , a gets backcerns to comments that have been made. Am i getting adequately compensated for the risks i am taking on . Those decisions oftentimes are just made blindly. Our caution tone to investors is areeally focus on what you investing in. Do you know what you are buying . Do you know your position in highyield . At the last few years, it has chased yield. Investors dont know oftentimes what their total exposure is. It is time to focus on what you own. Time to derisk. Just because of the length of the expansion . When youre talking about the normal horses of risks, they are going out of their way to say we are not going to move the markets. Were going to be very slow. We believe what the fed is telling us, that you need to listen to the fed. Aboutk despite concerns if it will move in december based on inflation, our argument is that they will. They are talking about this gradual path. Clearly, to us, what we are currently in, it has legs. It is really two years down the road at the earliest. If you look at the equity markets, there is volatility and we expect the correction there. Equity and highyield moved handinhand and there is room to run. Its time to be cautious also. That was craig bishop, rachel golder, and ryan really at the Wells Fargo Investment Institute begin earlier today. Julie and speaking of caution, it has been a big week in a bearish way for retail stocks. The biggest laggard on the week is macys. It down about 12 after reporting the tech quarter earnings. Jcpenney down 19 , 17 in a single day on it disappointing earnings report. Joining us is abigail doolittle. It has been fascinating because its not like people thought retail was doing fantastically well. But it seems to be worse than people expected. Abigail to some degree, investors are throwing in the towel. Its a good point you make that there have been huge declines and this underperforming sector. You would think investors are prepared for this. Macys and kohls earlier this week actually beat, but it came down to guidance. Investors disappointed. And jcpenney, what a mess. Was on Gross Margins miss. They did maintain the fullyear guide. That is a positive. It looks like the traffic was really the issue. And to the point of investors throwing in the towel, lets look at the chart. Its been a longterm chart of jcpenney going all the way back. At one point, the stock had been above 70. Than five dollars, a four dollar stock and close to the levels all the way back in 1981. That is just to the degree the investors of thrown in the towel. , julia. With you theres a pretty big Short Interest on the stock of 39 . Scarlet and next week, we get the big one. Walmart. Been doingl mart has very well. Investors have been looking for 123 million in sales. Target has been lumpy year. Lumpier. I was think of these companies of being as being similar. The target is sort of a fraction relative to walmart. Its a highlight the difference that these companies, their performance on the year this is g btv 1904. We see walmart up 20 on the year and target on the lumpy performance, down about 20 . Out, by want to point the way, 120 billion or something . Amazon was 38 billion. Just for perspective. From new york, this is bloomberg. Scarlet this is bloomberg markets. I should say, this is whatd y ou miss . The dow mounting to new highs, but treasuries are barely moving as well. This chart shows the spread between the high and low yield of the day for the 10 year treasury note. If you go to the far end of this chart, it is currently stuck in the narrowest monthly range since 2006. So far, this monthly yield has been as high as 2. 3 1 and as low as 2. 18 , a spread of just under 14 basis points. We havent seen that happen since february of 2006. July is notoriously volatile for equities so you never know what is going to happen. Market, perhaps, underpricing is monetary policy. And people are reminded about geopolitical risk. Investors have been diving for cover over the last week or so. Just where are they doing it . That is the question. This chart gives you some of the answer. Enough. Interestingly bitcoin has far outperformed the u. S. Tenure treasury note. It also has outperformed gold. As well as the yen versus the u. S. Dollar. The traditional havens over the past month have not been performing as well as bitcoin. We dont know exactly why people are buying bitcoin. Are they concerned about geopolitical risk . Do they want to hide their money somewhere . Who knows. Scarlet more of a risk asset at this point that a safe haven. Market closes just minutes away. Lets take a look at how the indexes are trading. We are still higher for the day. The s p up by five points. This is bloomberg. Whatd you miss . It was the worst week for the s p since march, the biggest weekly gain for the vix since 2016, but markets are showing signs of stabilizing after days of conflict between the u. S. And north korea. I am julie hyman. Scarlet i am scarlet fu. Julie if you are tuning in live on twitter, we want to welcome you to our closing bell coverage every day from 4 00 to 5 00 p. M. Eastern. Scarlet u. S. Markets are clinging onto gains. There is a little bit of volatility. Its more like a little bit of the stumble in the last 90 minutes of trade, but we are still looking at gains for the day. Not for the week, however. We got the longawaited Inflation Report that shows generally the fed has reason to be patient in raising Interest Rates. Julie definitely so. Cpi is what scarlet is referring to. Its the fifth straightness s traight miss. Scarlet investors also reacting to earnings. Jcpenney shares, closing at their lowest level since 1982, off by 17 . The Company Reported declining posted at quarter and deeper loss than analysts expected. Graphics chip maker, having its worst day in more than two months, down by more than 5 , but this is a stock that has been on a tear as of overbecause of optimism sales of Computer Games and video games, along with a connection to bitcoin. That was a disappointment to some investors. Snap, trading at its lowest levels since its ipo. The growth, falling short of estimates. It is the user growth that is of concern. Its the same rate that investors expected. Julie lets get back to cpi and the reaction to that. I want to look at the bond market for that reaction. We saw the twoyear yield, we saw it down on the day by three basis points, reacting more than the long end of the curve. 10year fell in the immediate aftermath of cpi and then kind of bounced around. To give some details on the cpi cpi, just up 1 10 of one thing percent 1 . The fed funds futures, having an interesting reaction to that cpi data. We are looking at 25. 5 odds we are going to see a rate increase in the summer. It has been declining. The fed might be, as you said, a little more patient. Patient. A little more lets talk about how it is playing out over the currency markets. Dollaryen,at the the dollar has lost ground against the yen for the fourth straight day. Euro, veryside, the much in focus, gaining for the days, time in five holding near a 2. 5year high, all of this coming before mario draghi speaks at jackson hole in about two weeks. Theres been a shift in thinking that he might Say Something to the way for the removal of extraordinary actions. Looking at the euro chart, you have to wonder if a stronger euro will remove the necessity to Say Something. It all goes round and round. Indeed. T does i also want to look at commodities on the week. We saw another weak week for oil prices. It got to 50 a barrel yesterday and then raced back down again. This was a week in which we had an opec meeting. We also had opec raising its demand forecast, but at the same time, opec members pumping the most ever, in part because of an increase in libyan production, along with the geopolitical rhetoric. What did that do for gold prices . Gold, having its best week since asil, up by more than 2. 5 , we saw investors look for what they perceive as a safer place to be, risk aversion coming back in force. Scarlet those are todays market minutes. Lets bring in cameron christ, macro strategist at bloomberg. We are going with our inhouse people. Cameron, thanks for joining us. Vince. Lets start with the vix. Up 55 for the week. We are at a 15 handle now, so it is all relative, of course, but there is research that shows when the vix jumps this quickly, theres reason to buy the dip. Cameron the vix started in 1990. The onemonth average vix is below 119.