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tv   Market Makers  Bloomberg  August 17, 2015 8:00am-10:01am EDT

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it is monday, august 17. it is a monday in august. you had better be at work. i am olivia sterns, in for stephanie ruhle. cory johnson. corey: here for erik schatzker. we are 90 minutes from the open. olivia: throwing shade at the drought problem. to discuss this new innovation and growing business. that is a shade ball. sharey will take a
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buyback. 28%, lessalibaba down than one year since the company went public. uber beefing up the security team to defend against hackers. "the financial times says by the end of the year google -- uber will quadruple the security staff. if he is elected president, donald trump says he would deport all undocumented immigrants from the notice states. ." appeared on "meet the press mr. trump: we have a whole new set of standards. chuck: you will split up families, the poor children.
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mr. trump: they have to go. we will work with them. they have to go. olivia: donald trump stole the show at the iowa state fair, flying in on his helicopter. it is a tradition for candidates who like deep-fried oreos. cory: who does not like deep-fried oreos? olivia: nobody. wreckage has found the of a planet lost contract -- contact with air traffic control in cloudy weather. jason golf, australia's day set a major tournament scoring record to win the pga championship, finishing 23 under. i know you are passionate about watching golf, but this was about as exciting as golf gets.
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jason day, 20 under par. boyfriend,th, my even though he came into second place, he is now the number one golfer in the world, taking the spot from rory mcilroy. cory: what a year he had. he had a shot at every major auto into sunday. olivia: a solid guy. cory: you are so lucky. you guys are cute together. olivia: we are happy together. cory: five things you need to know. the economy is growing slower than data suggests and policymakers have stepped up stimulus. curran,let's go to enda who is in hong kong right now. talk to us about why we are suddenly recognizing the official data might not be the actual data.
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: good morning, china sets an annual growth target, a hangover from the soviet era economy, and the economy has slowed down sharply. 7%, the growth target for the year. we surveyed economists last week. they do not think the official number is picking up the level of real activity in the economy. indicators like electricity demand and imports to get a better sense of where the economy is going and they think it is much less than the six -- than the sum percent we saw. olivia: i believe chinese made -- leadership has been meeting. what else can the government due to plug the gap in the economy? they have the buildup to the plan in october will we get
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the new five-year plan and the growth target. some of the problems are cyclical. exports, solarr real estate and manufacturing, but some of them are structural as well. they have slowing population growth, an aging population, and they want to transform how the economy grows to one where consumers and services plays a bigger part. getting the overhaul right will be key for policymakers it china is to get on a sustainable growth pattern. so much, endayou curran, our man in hong kong. cory: vonnie quinn with some breaking news. nie: liberty active is buying point $4y, two billion, $18.75 a share. it is an online retailer. president and ceo of
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liberty interactive. we will bring you more on the deal as we get that. cory: not a small deal. olivia: interesting. for number two, let's head out to senior markets corresponding julie hyman. what are you watching? are watching oil, trading your a six-year low once again. iran saying once it begins punching oil -- pumping oil it expects to pump a record amount of oil and that will add to the oversupply already out there. addition, the baker hughes weekly rig count said we saw an increase to 670 two. people had been tracking a decrease and possibly taking supply off the market had fundamentals in oil not looking great this morning. look at what is going on in the dollar today. we continue to see it shake off
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the effects of the china yuan devaluation. it has been gaining more ground despite the fact that people make their calculus for what the fed is going to do with oil and deflationary aspects to contend with. finally, let's look quickly at the ms pi emerging-market index. we have seen a selloff in emerging markets and that is continuing this morning, both in emerging-market currencies and emerging-market stocks. for an outlook on what happens to these countries that depend on the commodities, and also what happens when the fed begins raising rates. olivia: we see a lot of weakness in the commodity currencies as the dollar continues to appreciate ahead of anticipated rate hike. thank you so much, julie hyman. gdp: in japan, the recent
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-- that gdp in the recent quarter fell, and in two -- ending two quarters of growth. olivia: japan is industry because they are up against some tricky comps. they had a controversial hike in the consumption tax. everyone brought forward spending. perhaps it is teetering out. japan has it worse than china. cory: the numbers are more believable out of japan. --via: samsung electronics shares slumping to a 10-month well. they unveiled two new smartphones last week to challenge the iphone but there is a sense it will not be enough to reverse the five-quarter slump. they are on track to post the third straight year of declines. from your perspective, what is the bigger threat to samsung,
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apple, or lower-cost competitors? any: samsung is in unfortunate spot where they are trying to compete against both, the valve low-end and high-end -- be told low-end and high-end. 70% to shares are down date. cory: the force is strong at announcing bob iger wars" theme"star park expansion. stock has had an incredible run. paul sweeney joining us strangely here because i saw you friday in carmel at the car show. at car show. cory: the biggest luxury car
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sale in the world. olivia: i had no idea. cory: with carol massar, we were doing bloomberg radio from there. "star wars" i have young kids and we love disney world. this is a strong commitment. paul: it shows how much confidence they have in the franchise. they've not even launched the first movie. i think they know what they have even though there has not been a movie released for many years. it is one of the best known franchises. they are ready to make north of a billion dollar commitment property.based on the break: to get the tax disney had to say they would invest at least $1 billion. expanding theme parks is a key pillar of iger's tenure.
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paul: they have made a tremendous amount of investments. the biggest one will be shanghai disney that opens next year. it is the first one on mainland china. it will be a huge thing for disney. on par withis opening a disney world many years ago in orlando. across the border they make huge investments. it is because they have been generating solid cash flow. cory: they had really nice margins. olivia: you could charge $20 for a bottle of water. cory: yes, you can, and it gets hot there. they are facing more serious competition from universal. universal spent a lot of money in their "harry potter" development in orlando, going up against quality offerings. olivia: do you want to go to hogwarts or the millennium falcon?
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cory: have you been down there? paul: it has been huge. when you talk to the comcast cable, they thought they were buying the studio, but one of the hidden gems is the universal theme parks. great business and a double down their investment in orlando and the west coast. not only is it disney, the world leader in the themepark business, but now universal is making big investments in the business because, again, it is a solid cash flow growth business, good, solid cash flow. cory: it could be, or it could be the next six flags. paul: it could be, but they have a good track record. olivia: i have to get down to hogwarts. cory: oil trading at six-year lows. we will talk about what is driving prices. the former energy adviser to the white house joining us on the topic next. ♪
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olivia: good morning. it is time for our top stories. liberty interactive has agreed ily at online retailer zul a 49% premium to the closing price friday. shares have fallen 46% so far this year. it is a formula for disaster in the west -- drop, wind, and heat are standing more than one doesn't wildfires. california has 19 fires. fires in oregon and washington state are forcing people to flee their homes. at least one person has now been killed. technical problems at an air traffic control center near washington made life miserable
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for thousands of travelers over the weekend. almost 500 flight on the east coast were canceled. were delayed. the faa is investigating the problem. those are the top headlines at this hour. cory: the fires in northern california are clear. clear on friday where i live in san francisco. it was smoky and hazy saturday. olivia: terrible. scary stuff. cory: is it time to lift the ban on exporting crude oil? the commerce department agreed to allow american companies to trade with mexico, the first the 40-year turning ban? energy adviser to the obama administration joins us right now. this is a huge deal, it seems to me, jason. it is not a lifting of the ban, but it is moving u.s. oil where we have a lot of it, more than a
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long time, finding a place for it in mexico. jason: thanks for having me on. it is an important step that we should be clear. the administration has made clear they do not see this as a major policy change. exports, butn on they are allowed in various respects. we currently exports to canada. the regulations that have been on the books for years all-out allowwith mexico -- years swaps with mexico, but no one has asked before. deniedoteworthy they requests to do swaps with every other country other than mexico. i view this as a not changing the current policy, and if we are going to see a wholesale lifting, it most likely has to come from congress. olivia: opponents of lifting the
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ban say doing so will increase the price of gasoline. is that true? toon: there is no reason think that is true based on economic evidence and economic theory. .12, we saw a large spread having to do with exports, because of interception constraints. we did not see -- infrastructure constraints. we did not see that translate to lower gasoline prices for consumers. prices are set on the world price. there is free global trade in refined petroleum. if the u.s. price were to be higher in closer to the world price, it would help u.s. producers on the margin purges more, but there's no reason to think -- margin produce more, but there no reason -- but there is no reason to think it will lead to higher prices. to 1975e ban goes back
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come before there was deepwater drilling, deep wells, fracking. -- well simulation was stimulation was relatively primitive. we can make more oil, or at least pull up more oil. could a change in this policy change the u.s.'s role in setting global oil prices? jason: u.s. production has seen staggering growth, as you and your viewers know, over the last cointreau years, up 4 million miles a day. up 4 millionyears, barrels a day. question of how quickly it can continue to grow and pick up the pace will be set most importantly by the world's oil price, but as the price recovers and u.s. action continues to grow, the impact the current
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restrictions on a sports have on the discount in the u.s. price, which can affect u.s. production, that will get larger and larger over time, potentially. olivia: jason bordoff, founding director of columbia university's center on global energy policy. thank you so much. it really does feel like an outdated policy now that oil production is at a 40-year high, and think about why this came about -- landmark reforms in mexico's industry. the richest last year that they could start importing oil in the first place get a lot of changes on both sides. cory: largest company in the world has invested $2 billion in a single mi. ne we will head to quebec to check it out. ♪
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cory: welcome back to "market makers."julie: "market the dollar posted the list weekly drop in june with concern over the chinese devaluation overshadowed economic data, but interest rates are back in focus and the dollar is reemerging as a winner. the u.s. currency is rising against 13 of its 16 major peers. we are joined by a chief market strategist joining us from
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chicago at the cme. bob, this switch we have seen in whatollar, i am curious you are banking on in terms of the fed and how that plays into your dollars trade. morning, julie, and this is a fed conversation. we have seen the dollar index with a big swings, but virtually go sideways since may, mirroring the s&p move, and that is on the market perception of a rate hike in 20 15, whether it will be in september if it does come, or whether they will move aggressively after that. the last part is what should be an issue for currency traders and people that are bullish the dollar, such as myself. you're looking at a situation where a couple of holes talked about 82% of economists saying the fed is going in september. said speak has been going in that direction. they are never going to say and
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have not said we are going in september and they won't do that. what we are seeing is nothing seems to be scaring them out of it. we had status quo economic data last week -- a decent jobs number, decent on a put rate, top increase in wages, consumer sentiment missed slightly, personal finances got better. what i see is the fed saying the economy can withstand 25 basis point hikes, not that it needs it, but that it can withstand it. that shows the fed wants to do this and they are going to do this. --olivia: bloomberg ran julie: bloombergrg --julie: ran a story saying the rise in the dollar comes in anticipation of the rate increase. bob: i think that is true of most markets, and i do not think it is dollar specific. we have heard the cliche of buying the rumor and selling the
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fact. that applies here. i think the dollar will continue to move toward 100. one of the things about this rate hike that is different than any prior in the 202-year history of the fed is that this could be the only one for a while. it will be the most anticipated rate hike by the time that it happens, anything what you're going to see is dovish comments associate with the rate hike. when you saw the chinese devaluation last week against the u.s. dollar, and that is something that maybe caught the fed by surprise, the market by surprise, and that is going to again further the idea the fed needs to a the 25 basis points with dovish comments saying we do not have to go again. quickly, bob, all of this said, are you going long the dollar? bob: yes, i am anticipating move from 99 to one hundred and i think that will happen quickly. ,ulie: thank you, bob iaccino
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talking about the dollar and the fed this morning. cory: time for some top stories -- in japan, the government says the economy shrank when gdp falling at an annual rate of 1.6%. exports falling. a setback for prime minister shinzo object. reviving the -- shinzo abbe. reviving the economy was the top priority when he took office. chinese authorities say 114 people died in explosions of the chemical storage site. another 70 are missing. there are concerns the number could be higher. the toyota factory the same region will stay closed for at least three days, the company's biggest source of cars in china. olivia: ibm is introducing two mainframe computers that use the open system. a revealing look inside amazon has created a lot of buzz. "the new york times" is the
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company is connecting an experiment in how far it can push white-collar workers, who are instructed how to send secret feedback to other employee's bosses. says theo jeff bezos story "does not describe the amazon i know." those are top stories at this hour. prices falling. gold miners scribbling to cut costs and change the way they mine for gold because they cannot afford to pull it out of the ground. more after the break. ♪
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olivia: welcome back to "market makers."
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i am olivia sterns along with my main man cory johnson. picture this.all picture that -- president obama sharing a golf cart with bill clinton. obama was spotted playing golf with bill clinton this weekend, riding around in the golf cart and chatting. pair mett day, the with -- seen,every picture i have bill clinton is talking. a soothsayer. cory: steph curry played with him friday. olivia: really? cory: yes. olivia: i am struck by how thin the president is. cory: he has changed his diet. olivia: a lot less meat. later in the day, they met up with bill clinton's wife. hillary clinton, who is running for president. cory: family good news for the 49ers.
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an impressive debut -- 53-yard run. he is a former rugby player. he said a huge weight was lifted after the game, saying i did not want to go out there and look like a rugby player. he said he felt i did that. olivia: look at the way he is squeezing the ball. cory: nice hole in the offensive line. the 49ers could use some good news after the worst off-season any team has had. olivia: as i confessed earlier, i knew nothing about sports. i could tell he was clinging onto the thing like a rugby ball. it is a different embrace. cory: and then there is the hug. it is different. olivia: it is different. our third and final video -- astronaut scott kelly is spending a year in space and he is tweeting some of his favorite views of earth. the latest photo, red and purple
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auras surrounding the earth. it is not the first time kelly and his fellow asked not have shared striking images while on the international space station. other shotsted two in june. those are some incredible pictures. cory: moore dealnews. vonnie quinn back with what the bankers have been working on all weekend. bonnie: vo --nnie: -- vonnie: we're looking at $6.7 billion of equity to fund the deal. for an investment approximate 55% stake. i want to point out the economic data. index,ire manufacturing the first of the round of factory production surveys we get and there was a huge drop tot came in at -14.92% economists were looking at positive 4.5%.
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it bounces around a little bit. you can see the reaction of the treasury, buying after that despite the low volume. you saw a negative inventories and a negative new order, so they were the main components that said that down to the lowest level since 2009. olivia: a very weak reading. thank you so much, vonnie quinn. still to come on "market have an cory and i in-depth discussion on student loan debt. student loan debt has tripled in the past 10 years. it is now expected to double in the next 10 years. is really really on the way for -- relief really on way for bor? we will break it down. ♪
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olivia: students are having a tougher time repaying college loans and now the nation is facing up to 1 point st -- $1.3 trillion in education debt.
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the number is set to double by 2025 according to the congressional budget office. jenny lauren cryer -- covers higher education and she joins us on set. -- numbers are high-watering the number is set to double over the next 10 years. how does this happen? jenna: good question -- it is all government loans and as the price continues to rise, 3% to 5% a year, students are taking out more to afford the cost. cory: a lot more than the inflation and more than wages. what is happening when people come out of school is there ending up with so much more debt that the burden that anyone that came out of school before now, it is probably hard to understand what a big deal this
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is the typical level of debt we are talking about. janet: in recent times, the amount of debt students leave college with is about $30,000. that is increased over time. keep in mind if you are going to graduate school you are likely borrowing for the cost. if you are going to a higher school, al, law business school, they are very expensive. at a private school, it right $80,000, which, includes living expenses, not just tuition, and if you are going to pay that back -- if you borrowed $100,000 or more for one of those professional programs, you have to make a nice salary to make the monthly payment. we know that president obama has been encouraging students to do something called income-based repayment. if you are struggling with federal loans and you can get a reduction in what you're monthly payment is, you can pay 10% or 15%, and eventually those loans
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will be forgiven if there is a balance after 20 or 25 years. to get it fixed to a percentage of income --olivia: to get it fixed to a percentage of income. it has become a hot campaign issue -- we heard it from senator sanders and secretary clinton growing up proposals. what are people suggesting might fix the problem? how can we plug the hole? janet: there are two problems -- the price on the front end. a lot of people are talking about finding ways to make the cost lower for students. bernie sanders is talking about a debt-free college and that is aimed at students at public universities. secretary clinton, lastly, announced a $350 billion plan over 10 years -- last week plan -- $350350 billion plan over 10 years to keep the cost low.
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they are also talking about things on the back end when you talk about repayment. secretary clinton has also talked about the idea of income-based repayment. both she and bernie sanders have talked about the idea of refinancing student loans. say you went to graduate school 5, 6, seven years ago, you might have an interest rate of 8.5%, and they are trying to allow you to lower the rate my refinancing like you would your mortgage, however was that one has introduced it a couple of times and congress has turned it down twice. -- elizabeth warren has introduced it a couple of times and congress has turned it down twice. cory: what do we see in terms of default? janet: the government comes out with a default rate went to your. it was around 13%, 14%. keep in mind it is not a precise way of measuring it. it looks at how you are doing three years after graduation, and keep in mind if you are in one of those income-based
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repayment programs, you might still be struggling, but you are currently we had fresh data from the new york fed that shows fresh delinquencies and defaults were up slightly to 11.5% from the previous quarter. keeps track of private loans, not just the government-originated loans. long, short of it -- people are not having an easy time of it. olivia: underwater, and the languages are rising with student debt where they are starting with credit cards. janet: and way down in mortgages. olivia: i did go to grad school abroad in london and one of the reasons was it was half the price than it would have been at columbia. janet lauren, thank you. cory: coming up next, tesla, jcpenney, lumbar liquidators -- just a few names you need to watch before the open today. ♪
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you are mark josh julie: -- julie: you are watching "market makers." i am julie hyman. mulligan, who has been with target since 1996, will assume a new role. he is known for being an integral part of the search for brian cornell, who became the ceo of the company. in addition, kathy smith coming over from express scripts. she will take on the chief financial officer role. she was executive vice president at express scripts. similar role, different industry. olivia: thank you so much, julie hyman. cory: gold prices have been falling, down about 40% in the last four years. gold miners are scrabbling to cut costs. quebec, -- in northern quebec, the largest
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gold company the world, goldcorp has a $2 billion mine. danielle reports. daniel: 10 years ago this sub arctic landscape bore no signs of human presence at least from the air -- no roads, no airstrips, no mines. >> you start off with a little camp and a few trailers, and as the exploration continues, you need more people and more equipment, and it is a continuing challenge. danielle: it takes a lot to build in canada. so on the rights of first natives. >> most are not anti-development. they just won a state. danielle: matthew is a powerful figure. leading anknown for
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international effort to stop a massive hydroelectric project in quebec in the 1990's, but today he is staying the -- taking the cut the ribbonto with goldcorp's newest mine. the profit will benefit the locals and when the mine is exhausted beyond 2030, goldcorp has promised to remove virtually every trace. this kind of development does not come cheap. goldcorp has developed more than $2 billion in l.a. in order. the expectation is over the life of the mind and will get the money back and more, but right now it costs more than twice as much to produce an ounce of gold here as in the rest of the country, and gold prices keep falling. be -- we will be producing gold well below any reasonable price in the future. we have margins.
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we will make cash to pay back the investment. at this point it is all about the numbers. $1100 an ounce is roughly where gold is trading today. four years ago it was as high as $1900. once the mine hits full capacity in 2013, the cost could be less than $800. that gives goldcorp quite a bit of wiggle room, but any veteran of the gold industry knows it is not a slamdunk. remember specifically seen $254 an ounce, but i also know how much value we have created since the time as the market moved and i expect we will do that again. danielle: if they are right, asonore will hit its stride gold prices started bouncing back, making it one of the strongest, lowest-cost mind in goldcorp's portfolio. if they are wrong, it might be cheaper to leave the gold a
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kilometer underground. cory: daniel joins us from toronto. it is interesting -- there was speculation that there would be acquisitions, that companies would choose to use capx spending to buy other miners that have projects. this is a big bat. danielle: absolutely, and if you talk to the chairman of gold corp., the intel for, he will tell you he is looking --ian t elfer, he will tell you that they believe greenfield projects are necessary for development. they are less common when you build the mind from scratch as opposed to buying something that has been shuttered for a while but is an existing mine the you feel you can get value out of. it is a little bit unusual, and it is also a little unusual that goldcorp has done not one, but two of these $2 billion projects. five years ago they did one in mexico. it is very much the company's
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strategy, and makes for quite a compelling story. plus, of course, the issues with developing a mine in the north, which i explain in the package are fairly daunting. olivia: before we get to the land issues, it is more about the timing -- gold prices are at multi-year lows. i am thinking of colleagues in canada trading near record lows. is this not terrible timing to be opening a gold mine? danielle: i think it really is a game of numbers at this point. if gold keeps dipping below $1100 an ounce, the way it has been lately, if you look at goldcorp compared to some of its peers, it has a strong balance sheet, relatively low debt levels. you have sure themselves up to withstand quite a lot. the thing that is interesting when you talk to mining ceos is one of them addressed is the fact that in 1980 we saw gold prices drop below $300 an ounce and it took 30 years to recover.
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it is not something you can think about if you are a gold ceo. cory: they all think about it. is the find that good -- is there that much goal in this find that they felt they have to develop this mine? danielle: they say they have not found the bottom of it yet. the mind is expected to last about 15 years, but it could be longer. the all-in sustaining costs, the cost -- cost per ounce are supposed to be below $800 an asce, which is quite good, long as gold is above $800 an ounce, and they are being held at the week canadian dollar right now because labor costs are a big part of any mining operations. so, you know, they see this as one of the song's minds in their -- strongest mines in their platform going forward. we will have to see. cory: a lot of people in the company look at the strong allergies and seat as one of the strongest companies in the gold haver, but the miners
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been trading at such a strong discount going back a couple of years, are they cognizant of that? are they focused on the share price, or just trying to get the gold out of the ground and figure out what it will be worth? danielle: i think they are strategically oriented. that is it weston you would have to ask them, of whether -- that is a question you would have to them, whether they would be focused on their share price. they sold their remaining stake in tahoe resources. they have a lot of cash and very little debt. they make it pretty clear they think they can withstand a lot and that they are looking for opportunities. one of the most interesting companies in the sector. i follow it, but not like danielle. olivia: have you ever been to a gold mine? i have been. deep south. south africa. it was hot, very hot.
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cory: i'm sorry. olivia: not cool. ♪
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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. olivia: good morning, everybody, and welcome back to the second hour. i'm olivia sterns. and i'm not going to throw a shame ball at my colleague over here. cory: who is cory johnson. erike here all week for and stephanie. --via: if you measure factory output fell to the lowest level in almost six years. to a negative reading
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after declines of new orders and shipments. and there are some changes at target. john bolton will become chief operating officer. -- john mulligan will become chief operating officer. the new cfo will be county smith. she has been the executive vice president at express scripts. scripps.s liberty north will pay $2.4 billion in cash and stock to buy to lily. it is a lot less than what the ipo went out for in november of 2013 will stop aren't those cute kids? olivia: very cute. cory: americans are waiting longer than ever to buy their
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first homes. it difficult first-ever rents for six years before buying a house, twice as long as in the early 1970's. timers are having a tough with the down payment. waitingamericans are longer and longer to buy homes. i got into the market. my mother is probably watching and she is wondering when our kids next, because she would like to be shopping onto lily. cory: white house is enough for now. olivia: definitely enough -- cory: buying a house is enough for now. olivia: definitely enough. let's change the subject. 3% last week and down about 1.5% this morning. what is driving this leg lower? >> u.s. production continues to be resilient. the output companies are
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saying that guidance will be marginally higher. the real answer to why production remains resilient is that a year ago, what people didn't anticipate is that efficiency would be as good as it is a, and the cost would be as low. cory: what do you mean efficiency? >> literally the time to drill a hole as well as to complete it. a company can do more with fewer rigs. months?w many >> it can be>> weeks. we are not talking month anymore. cory: for horizontal wells? when they launch this stuff five years ago, it was stupid get up and running by the end of the year. production time has been reduced dramatically. some places can even drill in a matter of weeks. cory: what is going on with
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these? companies are these guys in saying? --insane? what are they thinking adding rigs with prices where they are? it will is a time when prices were more like $60. at that time, it looked like prices would continue on an upward trajectory, and that has not happened. these decisions were made at a time of higher oil prices. cory: not much higher. it has been down for a while now. >> i agree. the game has changed in terms of well economics. olivia: there you go. he is talking about the little bump on the right side of the screen. i'm talking about the bigger picture, the giant drop off. cory: are they making decisions about what kinds of oils to drought -- to drill? peter: they are going to longer
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lateral. blowing my mind right now. peter: essentially, they're going to a multiple of the previous pages they had full -- stages they had. they can go as high as 30 to 40. cory: this is me pertaining to know about drilling oil. angel down and they drill horizontally. they would have different stages that they would frack. initially was one, then five, then 10. you are saying they are doing 30 now? peter: and it could be even more than 30. the lateral links are getting longer. and the completion techniques are getting more robust. they are pumping more sand down the wells and getting more output. for the same well, they are getting more production. olivia: what about the demand side of things? in particular, china, how much pressure is that putting on the price of oil? peter: china is not going to bailout, is doesn't seem to me.
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demand will be robust years from now. plus, supply coming online from iran. peter: that is additional pressure in the market that people in your ago were not even thinking of. olivia: they say they can put half $1 million -- half a million barrels per day on the market. peter: and the speed at which they can do that will make a difference. olivia: thank you for joining us. areing on china, we discussing the currency crisis, if you can call it a crisis. our next guest says he has pretty bad news for the rest of asia. ♪
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olivia: china's currency crisis may be the tipping point of -- in problem
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here to explain why it should ahraab you have been short copper and short iron and have hit those of those out of the park. what is it like that you got both of those right? can you repeat you wereion again .hort copper and short iron ore what did you see that the market missed? basic has been that there has been a cyclical market
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slowdown. will holdhere -- they a lot less infrastructure over the next few years. you look at what the miners have done in the past few years, they have spent massive to ramp up for chinese growth that was supposed to continue at the same rate as has been happening over the last two or three years. if you take the slowing growth in china, it takes out a lot of the future demand and that has a huge impact on the forward prices of these commodities. cory: why those commodities more than others? of course, copper is always supposed to lead the way, but if you look at the way that other prices tend to react, but the the biggest have slowdown in china. shahraab: can you repeat that? cory: yet, of all of the metals,
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why copper instead of iron? supplies opposed to grow something like 10% to 20% over the next five years. it is a low-cost supply. a lot of the low-cost suppliers have very high margins even with the current prices. 20%can take up -- take out to 30% and still have a high cost business. my view with regard to commodities is, you need to figure out where the cast cost curves are -- the cash cost curves are. and then we will trade down to where the cash cost curves are. 4-iron and for proper, the cash cost curves are very -- four both iron and for copper, the cash cost curves are lower. not -- i'm not sure
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if you can hear me. i'm just trying to ask how you figure out whether you should sure the producer, glencore, or just the commodity. let's has been fixed the audio issues and get back to this, because it's a fascinating conversation. olivia: you cannot wait to hear what he has to say about u.s. equities. ♪
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cory: over the weekend, disney used the force. newcreating a jaw-dropping world that represent our largest single theme land expansion
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ever. [cheers] dry: that is bob iger at the 23 expo in anaheim. planswhere he announced to expand the star wars universe at disneyland in california and disney world in florida. star wars is set to take over the box office this holiday season. is there a dark side? us --paul mary joins l.a. palmeri joins us from this is fascinating to me because this is such a big expansion. before we know it, this movie will be a hit, let alone the franchise. are nothing if not patient. it could be 2020 before this star wars in land opens --
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themeland opens. wars atwill star disneyland and disney world be able to compete with harry potter hogwarts? it will definitely be able to compete whether you are a star wars fans or disney fan or just want to hang out. competitively interesting, too, because they crushed six flags when that expansion failed. but now they have a new competitor in comcast universal spin -- theytter harry's -- harry potter spin on things parks. they harry potter attraction opening 2010 and blew the whole themepark industry away. you really immersed in the world of harry potter. right down to drinking butter
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beer. cory: have you had butter beer? chris: i'm not a huge fan. cory: it wasn't good, but it was a good way to cool down in a july evening in orlando. you will need something to do that. this is a huge expansion and everyone has upped their game because of that. what will this expansion do for bob iger's legacy? chris: this is big. bob has said that theme parks are the heart and soul of disney and where people get to really connect with disney employees. it is that magical moment that they carry with them for their whole lives. andpent a lot of money turned around the california venture. they are spending $5.5 billion in shanghai. this is important to them. big: the cars edition is a
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part of the venture. disney hollywood that is part of the legacy of michael eisner is pretty poorly received. are those actually live shot of disneyland? i kind of doubt it, because it is dark there. i wonder if that place in particular needs some salvation from disney. chris: they have four theme , so they arendo investing in a second tier of properties. they have one coming out next year in the animal kingdom park. and now hollywood studios, which they will regain, is getting not wars land, but was story land. cory: thank you very much. olivia: i want to get back to
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shahraab ahmad. think you like in equities in the u.s.? raab: i think we have two worlds, domestic abuse that are powering along just fine and then you have commodity producers a lot of exporting to china think have some real issues. but i do think the fed will have a very dovish hike in september. you want to use any weakness from here too late september going into the fed meeting in order to be positioning aggressively long for the fed hike. it is theounds like micro play on the equity short in the u.s. as opposed to finding the crummy company play. had happened a lot in the past couple of years.
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the commodity prices are there began the futures prices are there everyday, so you can use those prices to value a company. but as commodity prices have come down in the last six did notanalysts necessarily take down their own numbers because they are using their own projections. you've got this huge disconnect between the underlying commodity price and the price of actual stock. the course of july you had a huge correction in those stocks as it reverted to the fundamentals of the underlying commodities. that has been the much easier play in the last few weeks rather than trying to find companies with the long-term issues. cory: you are still looking for those companies with analysts that reflect those crummy estimates. shahraab: exactly, or companies that come out with crummy numbers, but high projections for the past -- the back half of
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the year. we are looking, for example, for a company that is looking at 100 year, butitda for the they came in early and are looking at numbers that are improbable. should energy stocks -- have energy stocks hit bottom? theraab: of all of commodity stocks, the one i'm most bullish on his oil. we are close to where a large number of producers are going to break even. olivia: forgive me, we are to have to cut you off again. corey and i will be right back. ♪
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♪ ♪ ♪ get excited for the 1989 world tour
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with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. olivia: welcome back. we are just a few minutes away from the opening bell. joe weisenthal is here with the three things you need to be looking at today.
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also with us, bloomberg stocks editor mike regan. joe, what do you know? the first is gdp last night. it came down 1.6% quarter over quarter, but still down. it feels like every quarter, oh, wait until next quarter. and now here we are. olivia: we are waiting for reform. there is been this stimulus and ongoing disappointment. olivia: how much distortion was there because of the hike in the consumption tax? that the firste quarter was very strong. they did not have to hike taxes, so it was these self-inflicted wounds, you know, shooting
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themselves in the foot here. olivia: but they did have to raise taxes. joe: but they chose to. olivia: the last time they hiked bac, it also knocks the recovery off course. not why not not hike and knock the recovery off course? mike: i want to how much of this is just contagions in japan. japanif anything, it is undermining china because the link in currency. all of the neighboring currencies that we can so much. -- have been weakened so much. and they are still not back to where they were. michael and nowhere near where they were, and meanwhile all of the neighboring economies have seen their currencies weakening. olivia: never too.
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two.-- number joe: morgan stanley coming out their extraordinary notes, and today they of the target from 280 up to 460. olivia: why? new he created this whole future for the company and said it was going to dominate. -- basically, that were is going to be selling cars tesla will be dominating. it is one of the most wild upgrades of ever seen in my life. my: and tesla has said nothing about this. indications that they are going to do this.
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joe: he elon musk is shy. i'm joking. they have pushed out the delivery date for the cheaper version of the car. the $35,000, the idea that the opening of the stock market has lots of people clapping today. bell] a look at that, they clap overtime when the market opens. olivia: because it's an individual company ringing the bell. cory: i know. they want to be on the camera. but i want to duck about this, because what is interesting is what tesla that has not been blowing the doors off. somehow take ato $75,000 car and magically make it for $35,000. about --guys talking joe: and this guys talking about a self driving cougar fleet. olivia: number three.
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joe: the regional report, ugly. ,ew york area manufacturers absolute collapse. one thing that is interesting is the goal line, the futures. actually rose. optimismnderstand why about the future actually rose. mike: maybe they are optimistic about the tesla partnership. with new orders down as much as they were, i don't get this. it has been said of negative and positive all year. myself,i thought to it's not that volatile. this is the lowest it has been 2009. juggling and they are volatile because they are a small geographic area and is a monthly number. dollarwith the strong
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and week foreign demand, it looks like our manufacturers are hurting at the moment. somethingthere wasn't to easily explain it. there wasn't some factory shutdown. joe: there wasn't snow. escapedere were those prisoners. joe: and everybody stops working? olivia: is the fact the s&p is down about half of 1%. let's check in with julie hyman with the big movers of the morning. it looks likee: people are not taking the prison .xcuse seriously i do want to talk about one deal this morning, which is liberty interactive. qvca is the figure because it owns qvc.
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lily, anduying sue our -- zoo lily and are 40% higher than friday's closing, but that is not as impressive as it seems considering julie's sales are down in the past year. if you have not heard of zoo lily, you're probably not apparent. sh fail site that to parents. see, zoo lily shares are rising about which is what you would expect. also, estee lauder this morning came out with this earnings. percent after the company talked about the currency effect. sales were down 7% last order because of the drag of currencies. if you look at constant currencies, the sales were up by 7%. also hurtingast is things.
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it is below what analysts have been anticipating stop -- anticipating. and finally, lumber liquidators. shares are down by more than 3%. the rose on friday after announcement that tiger management had taken a 238,000 share stake in the company. and then last night, 60 minutes reran the story about lumber liquidators that raise a lot of quality concerns about the lumber itself. this first aired in the late winter or early spring. the stock is down about 80% since the ceo came out and said the 60 minutes report was coming. cory: the last the ceo. because the ceo is gone, the coo is gone. the people that denied the story are all gone. a significant reaction going on. julie: eighth advocate reaction is an understatement. 50 -- of 60power of
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minutes. giuliani, thank you. -- julie hyman, thank you. cory: all right, cannot help but notice something floating in the water. balls floating along the coast. behind the breakthrough of the shade ball. ♪
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shortage inwater california is a problem, a big problem. this oned balls like might be the solution. the city of los angeles is releasing these polyethylene or to reduce black algae growth. the president and founder of a
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company that manufactures these here.balls is sydney chase joins us now from los angeles in a bloomberg first interview. thank you for joining us. shaden what on earth this ball is and what it does to protect our reservoirs. sydney: it is a four inch said,hylene, as you ballasted with audible water and then hermetically sealed. inre are millions of them the reservoir at this point and in conjunction, they float together to eliminate the sunlight, or mitigate i should say because there is little bit of circulation. eliminating -- eliminating water evacuation and potential bromides. black?hy are they
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it seems that blackwood -- that attract the sunlight. ; and like you at that. i am glad you asked that. the color and the size were reasons, not the least of which would be the longevity of the product. deteriorate at a much faster rate. material decline of strength in the first eight months. where a ten-year lifespan with the black material is not uncommon, and probably on the low-end. the productpace and edgeen the ballast and the
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effects that too. olivia: these balls are made out of plastic. isn't plastic bad for the environment? sydney: polyethylene is a very safe material. the plastic that you are hearing thet are the propylenes and pet materials. polyethylene does not have any such issues with the material leaching into the water. it goes through a safety approvals process used in drinking water. there are many stringent tests and other factors that are utilized in, one, the selection thee material, and, two, safety measurement. overlappingare
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locally andrities regionally. how do you find out to sell this to and are you displacing any kinds of income is that have similar kinds of businesses? similar kindsare of businesses and our product may go in competition with some of those, but because our product rises and falls with irregular shaped areas -- cory: and the water. sydney: yes, and let's say, for instance, your area is not perfectly square, that is where our product differentiates itself. the end-users are incredibly vast. mining, agriculture, petroleum, wastewater treatment. cory: what is the sales process? do you go in and buy by the square yard?
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how do you even find which clients to sell to? would target, you the water municipalities where water evacuation -- evaporation is one of the primary focus is. you might go into the engineering department and start there. you might have a different process coming up for a different type of product and he would pitch your materials to the utility. it's a long process and a bit challenging for new technologies to take that path. i'm not going to say that it is easy, especially for new technologies. this may have been around for a while, but anytime you are trying to change the way things are currently done it's so long, drawnout process. we are trying to approach it from many different angles at the same time. olivia: we are still looking at these videos of the balls
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pouring into a reservoir. i like that municipal authorities and reservoirs are your biggest client. suppressse balls smell. is that an opportunity for your company? sydney: that is. it would be your wastewater treatment plants or anything of that nature where smell of the problem. it does provide potential opportunities. olivia: fascinating, and what a cool invention. cory: i'm just hoping he doesn't go into every reservoir. i just spent a couple of days at lake elmendorf. it would be ruined by that. olivia: you cannot swim in reservoirs. cory: in some, you can. olivia: i would not want to be drinking that you swim in. thank you, sydney chase. now, a look at your top stories.
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15 people dead after an explosion at a bangkok main shopping district. investors believe it was an improvised upon -- improvised bomb at the scene of some protest. plane wreckage was spotted today. it was carrying 50 people and cash, half $1 million. $500,000. billionaire jack ma will take part in alibaba's stock buyback. how much they will buy back they have not said. shares in alibaba are down 28% of this year -- 28% this year. talk about sticker shock in california, seven figures to get your dream car or more. million plus get you at
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the car auction this weekend. a beautiful place and some beautiful cars and some sick prices ♪
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olivia: coming up later today on the bloomberg market day, will olympic bid now that boston is out of the running question mark we will ask harvey schiller --out of the running? we will ask harvey schiller. not a lot of talk about golf this again. it was all about the cars. the most expensive cars in the world at pebble beach. creme ofe creme de la classic cars. and elliott joins us now. a lot of serious cars.
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was jay leno there? : yes, he was there. he is kind of the grandfather of events, the factor of course. but in past years we've had arnold schwarzenegger, ralph lauren, jerry seinfeld, of course. knownof very well collectors within the industry. cory: and a lot of sick cars. olivia: which ones were the favorite models this year? hannah: we all wonder when the ferrari craze will end. it is all the ferrari. of the top 10 sellers, seven were for murray's. ferrari.he from the 60's and 50's.
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cory: i saw a 1964 re: 250. ferrari 250. i cannot describe this event. when someone pulls up in an audi or bmw, it looks like a tiger car. you might as well have pulled up in an f1 50. hannah: it's true, you get used to seeing that lead, rolls-royce -- bentley will rolls-royce. -- bentley and rolls-royce. the others are just hold the. h --o hum. olivia: our prices for classic cars higher than ever? hannah: they are. i just talked with tag early this morning and we are just getting results from last night
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option, but preliminary results say that the total for the whole weekend is about $400 million. last your was $415 million. wass generally -- last year $415 million. it is generally in the same range. $70 million for the highest cars. it is calming down a bit. there was talk about a 500 million dollar handle on the weekend. i guess we did not get there. that is interesting to me. there is also the car show, which is a big part of this. year?re the winners this the winners cannot repeat, so it is a new car at least. 1924 model.s a it's a very rare car. it had been in france and switzerland until last year. it has had only four owners in its entire life. the owner now is jim patterson
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of louisville, kentucky. very special cap work inside, very rare and very expensive. cory: was a custom-made for its original owner? hannah: yes, and that is another reason why it is so special. that is why it is a one-of-a-kind. olivia: i love the name. hannah elliott is in pebble beach. she is actually in pebble beach. it looks like heaven because of the white background. is there a difference? not for you, cory johnson. let's go over to julie hyman. if you have one hand, you can count the big movers this morning. we are definitely in august. micron has gotten one upgrade from wells fargo, but the downgrades are running out. one from bank of america merrill
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lynch and one from what bush -- wedbush. what bush is saying they are not looking bright until 2016. the preponderance of these analyst notes is negative. positive for jcpenney this morning. it reported earnings last week .hat beat estimates shares are up another 3% this morning after the stock was initiated with the buy over eddie riley. ou can see this -- over at b. rile weird from some othery. department stores last week that did not do too well. riley. otherrd from some
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department stores that did not do too well. you didn't mention target with the new cfo. stocks are not moving. the new cfo is coming for -- s where shes scripp quarter.ery not a lot going on. it is a monday in august. but we are here. cory: yes, all week. olivia: that was not a dig at , who aresteph currently watching. bernanke will discuss the federal in the economy this morning. cory: and lindsey graham will attend i was state fair.
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olivia: urban outfitters report its results after the bell today. keep an eye out for that for this sort of latest reading on the sector. and don't forget tomorrow morning before the bell, big earnings out from walmart will stop -- from walmart. cory: i will read it over to bloomberg radio where we will do the next four hours. olivia: cory johnson, earning his monday -- money. happy monday, everybody. ♪
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olivia: good morning everybody. >> welcome to the bloomberg market day. olivia: markets are down today.
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as the bull market run its course? an faa glitch is being blamed for the cancellation of up to 6000 flights and 7000 translations over the weekend. could a software program be to blame? olivia: donald trump overshadowed literally everyone at the iowa state are including hillary clinton. he began to lay out his plans. the details which are not sitting well with some. good morning everybody. i am olivia sterns there with my buddy. wheretake a look at markets are at this hour.


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