tv Whatd You Miss Bloomberg August 1, 2018 3:30pm-5:00pm EDT
trump set the cap at 45,000, a historic low. currently being discussed, more than 25,000 refugees would allow bp to be allowed to be resettled. it would be the lowest number of ofugees, since the creation the program in 1980. president hassan, lawmakers wanted to ask questions on the -- pressure is mounting as imminent u.s. sanctions that are iran's currency. intelligence committee is considering how to respond to ongoing measures facebook announced it had uncovered sophisticated efforts possibly to link to russia to manipulate u.s. politics.
modernal media is the public form being used to divide us. this was never about elections. it is about the integrity of our society. >> russian measures have revealed a dark underbelly of the social media ecosystem. the same tools spread misinformation and can other aspectsect of our lives. mark: the senator added even after 18 months of study, the u.s.'s only scratching the surface of russia's information warfare campaign. a federal judge says a class-action lawsuit against ,ichigan and flint officials contaminated water crisis, can
contaminated water crisis, can proceed. as rick snyder and others, from the case. the judge ruled the suited not claim snyder ruled -- new of them -- new of it in .14. it caused led to leak from old plumbing. at least 12 people died. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪ julie: i am julie hyman. we are 30 minutes from the close of trading. stocks with a touch of 3% for the first time since june is the fed reinforces its attention to raise rates. a new turn with the white house holding the call right now to update on tariffs against china. the stock posing its biggest since 2017.
is just the upcoming's earnings report will be a lot more and analysts are gearing up since elon musk last out it analysts in the last earnings call. >> the federal reserve wrapped up two days of meetings by anno key interest rates ll remain unchanged. updating the view of the u.s. econo now mounting for a raise n benchmarkng costwice more this year. joining us with more ihairman dan, joining us from boston i believe. good to see you, dan. t. gose thisll us, do you think assessment look strong for the andoes provide for another rat increases this the data andng at
talking with companies, it is clear the u.s. economy is strong. the one thing that was not addressed, however, that was mentioned at least the last time this?hat could change we have a very strong economy progressing nicely. inflation is on target. the plots, when we see them, we will support, a rather steady rise in the fed funds rate, so, all sorts of things can normally go wrong. the unusual thing right now is the tariffs and trade situation. that is very serious. they did not address it and they did make mention of it the last time. they have said today, it sounds like two more hikes this year and maybe three next year. what was not said, perhaps, was it, iscussed, i doubt
would guess that they had some discussion at perhaps, we won't know that for five years until number, butxact that is the thing hanging over the head of any forecast, whether it be by the fed or private sources. if there is real escalation of the trade, how would you expect it to manifest itself in the company and how to respond to it? on the one hand, it might slow the economy and on the other hand, it might be potentially inflationary, causing supply chain disruptions, higher costs through tariffs, things that essentially raised the cost of everyone in the economic system. you expect the fed to respond to all of that? >> in the first place, both hands are right in your exhibit, in your discussion.
that is exactly what you are afraid of. called is often stagflation. , flattens inlows an extreme case or goes negative, and the inflation rates go up. we have had it before. it is a real problem for everybody. free of that to be kind of thing but that circumstance, which you said well, would trap them and they would be sitting there saying, wait a minute here at our mandate is to keep the system going, fight inflation, promote employment. ok. now we have an international situation that we are part of and others are part of. and it is acting to slow the economy on both sides of that, as well as, as well as increase
for us. >> there is a long list of things to worry about if you consider that before the end of the year before the december meeting, they have the middle actions to contend with as well. let's talk about when it comes to your investments. we had treasuries refunding announcement today it will waive the long-term amount of debt it issues, launch a new two-month bill, so what does this mean for how you allocate money to treasuries along the yield curve, how does that play out? in the second half of the year? >> well, if you are running portfolio,treasury the yield you will do a modified yield curve. you're looking at a positive curve going out. unusual by pressure at the long , so i prefer to work with 10 and under. and youand you just measure at h time right after the announcement. and you roll out a little bit and try to bring the capacity to the next meeting and bring in a little bit. you are adding something to the return that way. bad return relative to money market returns, but not a big -- big improvement either. to the degree you can spread out and use things other than just
staying within the investment-grade area, you try to take advantage to a degree of, what happens to the liquidity in the middle of the market? you go through the things and you look at the balance sheets and you say to yourself, all my god, that is as flat as they have been in my memory. that will continue. you are a little more patient buying. you probably bring your average maturity to somewhere around three or four. as opposed to three times the number, and you go with it until you see a sign that says to stop. joe: while the federal reserve to do make a lot of waves in the market, one central bank, one place where there has been a ton
of action, is in japan. the bank of japan, sending the long end on a wild ride. it seems to have reverberations into the u.s. to what extent is the long end of the u.s. curve being influenced by changes that we are seeing in other major central banks? >> the long and is influenced. it is not the dominant influence but our own liability matching in this country. that is the dominant influence. but it is clearly, what i would call a cause lockingthat is the. but it is together japan ande u.s. and not so much the euro. there is a degree of corporation and a shared fear over the last four or five years, by the reserve currency central banks, that you will have a replay of
what happened at southeast asia in the late 1990's. particular,japan in is caught with that. want their rates to get high. obviously not, for all sorts of reasons. but the u.s. is the one off from that and we are what, 62% of the world's reserves? so when our rates go up, it tends to pull money from other parts of the world. everything else being equal. the increased geopolitical stress in southeast asia, it is even more the case. so the bank of japan, for their own reasons, wants to keep rates down but they are also very sensitive to that part of the world. i have noticed that the governor in his speeches and commentary and pressreleases
interviews, he has been very steady, saying look, we will not do anything here. do not worry about us. far, he has been a man of his word. >> thank you so much for taking the time to speak with us today. stand joining us from boston. coming up, more threats coming in full force from the trump but china warns the u.s. to stop pressuring them over trade. the latest. this is bloomberg. ♪
this all in perspective. there was first $50 billion. a push on that went into effect already. the first part was scheduled to go into effect yesterday. >> well, the comment time ended and therefore, they are free to impose those. >> they could go ahead here >> they could go ahead. it could happen at any time. i do not think there is an expectation of it happening today. more likely is the plan to increase the 10% to 25%. >> this is on $200 billion of chinese imports. i was going to say china is not necessarily reacting well to was it called bullying? in reacting to this potential raise? >> yes. i think they're trying to figure out where they need to play this from a rhetoric standpoint, to
try and push back from a public relations standpoint, but i think it is confused about where in the white house they need to it from happening. >> bloomberg had to scoop yesterday morning, that steven mnuchin and his counterpart are trying to get talks going but as far as i understand, there is no indication that they are making any progress. >> no. there is not a clear indication that they are making progress. just talking about, where does the power reside on making these talks either happen or ds collating the rhetoric? frankly, i think it resides house inthe white donald trump's had it when he is ready to have discussions, he will give the signal and it will diffuse the situation. i think house unit -- hit the nn ahead. that is kind of what happened with the eu
president when he went to the white house, the president was ready to make a deal or at least work toward making a deal. >> to rescue a situation that he himself created, which also seems to be a pattern. out we also had a scoop that the nafta talks on autos were close to a resolution with mexico are we have the european auto issue being diffused, but there are no deals yet. there are no clear agreements. it is in the follow-up, the details, where we really see progress. no deals onave been anything. the key aspect is the art of the deal president on national security, trade, anything that would involve getting democrats votes to pass something of substance, this president has yet to really have a real deal. >> except he has got a deal on tax reform. with the party whose
entire thing is cutting taxes. >> that is right. but donald trump said to be patient and there may be some pain along the way but ultimately, everyone will be in a better place. many people think that will not happen. but he is pledging to make it all work out in the end. >> all right. thank you. i have not seen any headlines from the call yet. >> probably after the market closes. so much.you good to see you appear time now for the stock of the hour. health care is the name today, surging to a record high after what analysts are calling a blowout second-quarter report here at your to tell us more is a health-care stocks reporter for bloomberg news. and it was a blowout. you look at numbers versus estimates, it beat by pretty wide margins. >> exactly. by about two dollars there but -- the bigger surprise was guidance. they really boosted that and it was clearly double what it was.
most importantly, the guidance implies a net margin of 2.2%, just below their 2020 target. they are almost two years ahead of their plan. that is coming in know, there is , that the newism management is gaining traction. if we dive into the bloomberg, we can see the chart and we can see this stock at a record high. the blue circle is when the new management has stepped in. this is when they removed the cofounders, the brothers, and had the new ceo in control. scarlet: there is the report there on the computer. the yellow circle is where we are now. what about the president's's final rule on short-term health insurance plans today? what kind of impact does that have on a company like this question mark >> we did not see a lot of impact on the health insurers so far. we have seen an impact or a operatorstocks and
who offer the short-term plans, because we don't know what the ultimate impact on the health issuers will be. we have the secretary earlier on bloomberg tv saying she does not think the young people in the marketplace will shift into a short-term plan. it is yet to be determined. joe: what are they doing differently? >> they are really working on margins. it has been a main criticism from analyst, that the margins were lagging. they have better enrollment and better medical costs are they have been cutting jobs and also getting a boost from some obamacare patients that have been halted. those are some payments they had to pay to other insurers because of their higher costs. all in all, this is boosting the margins. >> good stuff. thank you. coming up, auto sales shrivel. why car companies are paying the price for dialing did -- dialing
>> time for a look at some of the biggest business stories in the news right now. wells fargo will pay more than $2 billion to federal a federal government investigation into the sale of mortgage-backed securities. -- states back to after missed it at the buyers income p are automakers in the u.s. dialed back on discounts for the first time in 55 months and paid the price. almost all of the major manufacturers reported falling sales. by 15% plunge on nissan. they cut back on incentives and that streak of monthly increases began 4.5 years ago. for ari are falling today. the ceo of the supercar maker they have set financial targets for the brand that were aspirational.
sent -- spinning off from fiat chrysler and doubling profits in just four years. that is your bloomberg business flash. >> providing short-term inexpensive health insurance that does not meet the requirements of the affordable care act. westin spoke with the hhs secretary about the program and what it needed to address. >> the formal care act is not working for so many people with premiums doubling and access going down. the president has been committed to morewhat it needed to addres. options available to people. we are announcing today the areoval of short-term plans these are underwritten by the insurance company. the individual applies for them and they can cover various conditions and be priced to whatever is
being covered. these have been available throughout the entirety of the administration throughout 12 months and right at the end of the obama administration, they allowing onlyown three month coverage because they wanted to force people out of chief or options into the obamacare exchanges to try to shove people in. to be restoring the plans available for up to 12 months and are now allowing them to be renewable if the insurer and the individual agree where up to three years. be 50% to 80% cheaper than an obamacare exchange plan. it is a really important to option for millions of americans. cressida is very difficult to argue with cheaper health insurance but at the same time, you get what you pay for an part of the reason it is cheaper is because they cover less things. isn't that correct? cheaperlans will be based on individual underwriting and negotiations between individual and the plan.
they may not be right for everybody. folks i think these are most likely right for our people in transition between jobs. the economy worker who is an independent contractor and does not have employer insurance, the person with three part-time jobs and no employer insurance, the kid headed to come -- from college to their first job, maybe person enrolled jeff rural america who may have access to one obamacare plan but it is not affordable or does not have the network they need. people should go in with eyes open and that is why we have put more stringent consumer protection controls and even president obama had when he had these plants. wethe market closes next and are awaiting tesla's earnings throughout in just moments after the close. from new york, this is bloomberg. ♪
yield year [indiscernible] i'm julie hyman carried scarlet: i'm scarlet fu. joe: and i'm joe weisenthal. welcome to the closing bell coverage every weekday from 4 p.m. to 5 p.m. eastern. we begin with market minutes and kick it off with stocks which we saw mixed on the session. technology helping lead the is up 3%.up -- nasdaq health-care stocks are also doing better. energy, industrials, and consumer staples are dragging down the major averages to some extent. tech stands out in part because of apple. apple, as we talked about yesterday, coming out with earnings that beat metrics and in particular coming out with a forecast above estimates for the next quarter. they are really hanging onto
gains, which is not breaking the trillion dollar market cap marker yet. haynes went down and that is partly because of target not excluding its contract and expiring at the end of january 2020. target is not going to be targeting that. haynes brands were the worst performers with at 19% to drop. late-breaking this afternoon is that carl icahn has taken a stake in cigna. it looks like that expressed are coming out slightly ahead of estimates at $2.22. estimate was for $2.20, so above estimates by a hair. the company said third-quarter will be $2.40 to $2.45.
shares fell 6% in the session. a look at thee government bond markets in the u.s.. rates are higher today and it was not about the federal reserve. the action really was in japan. let's start in the u.s. the 10 year yield is back to hitting the three handle and look at the move in the 10 year in japan. a day or two days after the bank of japan announcement that they would widen the band. it was once a few months ago where there were zero traits on the day in the market. now it is the world. it is rippling across the world. 10 year yield in japan is up 2.13 -- up to .13.
thelet: you can see bloomberg index marginally higher. it took a brief dip at 2% -- 2 p.m. when the fed announcement came up but recovered quickly. i plucked out the aussie in the kiwi to show there down by one -- a 31%. some people see the land redistribution as a positive as as it is looked as a positive. julie: window resort estimates onecoming in and they are dollar 53 cents and analysts --e looking around $1.90 $1.53 and analysts were looking $1.90. of the $.90 -- we will speak to the ceo in
caesar's in just a moment and wynn resorts is down almost to 7%. revenue overall for the company in the second quarter was $1.61 billion read the estimate $1.67 billion --. -- billion. the estimate was $1.67 billion joe: looking at commodities it was a red day across the board. gold futures are selling off a little bit. haven there. some of the -- no safe haven they are. 3% and copperwn is down 3.3%. scarlet: "what'd you miss?" let's get more insight into the markets and how global economies -- i should say the mobile has ay -- global economy
few moves. benjamin, our next guest, welcome. we're still waiting for tesla results in the next 15 or 20 minutes. give us your impression of the earnings season so far. we expected double-digit increases in eps and there have been bigger misses an even bigger outside reactions. -- isof this justified all of this justified? benjamin: i think the in doozy is him around capex, robust currency, and low tax rates are a positive. there's a little bit of a wait-and-see attitude regarding what is happening overseas for the mogul -- more global companies having challenges.
that is the converse of what we're seeing in the rest of the world where the companies -- scarlet: let me just jump in test has lie has a result. second-quarter adjusted loss per share is $3.60 which is wider what analysts had been looking for. they were looking for $2.90. in terms of the other numbers, revenue for the second quarter is $4 billion slightly above what the consensus estimate was as $3.97 billion. second-quarter adjusted automotive growth margin was 21% which is higher than the average analyst estimate of 16%. tesla is beating on the gross margin for automotive's, but it's lost with the second quarter was wider than expected in the revenue is slightly higher than what analysts were looking for. joe: the stock had initially jumped above 300 and then selling off.
i think it will be either one of these things where people will have to dive in, and then of course the conference call which, after less quarter and all the fireworks we saw, is guaranteed going to be a show here. open up the release, a couple of things stand out. the company said during the month of july they have repeated weekly production of approximately 5000 model three cars multiple times. they don't see how many. they don't say approximately how close to 5000 it is, but the dude repeat the aim to reboot -- -- repeat the aim to reproduce 6000 per week while keeping additional limited. in addition, the company is saying they should be profitable for the first time in their history. it does not say exactly when, but it says they expect to grow
further in the third quarter. repeating some of the various goals that we've heard from tesla thus far. they are making it vague at the same time. they also say they are expected than -- tomore demand.less than the scarlet: that 653 million of which in accounts receivable. production --ex projection has been less than $2.5 billion. we will look at some of the other production measures and see if they were necessary if there -- necessary.
joe: the ago of 7000 vehicles per week and we are at 350,000 per year. what would mid able to become sustainable and sustainably profitable according to the release. it feels they are setting up 7000 as a number for everyone to focus on and gauge whether they will reach profitability. we swing back into red and this is a minor move given what tesla can do in a day. this is almost stunningly flat. scarlet: we have not even gotten to the conference call where elon musk could say anything to excite or infuriate investors. let's bring in keith in destroyed -- in detroit to get more numbers. of the different numbers we , -- ed off
julie: one more number i want to mention. second quarter negative cash flow. i guess the estimate was for 950 million dollars. they are 750 million. these numbers are looking better -- are these numbers looking better? keith: i think the cash will remain an important issue in the variance in negative cash flow is not very big. what analysts are saying is that e line will need to raise more than $2 billion by the end of the year. he does not agree with that. we may hear him say so on the conference call later which should be entertaining. areother important numbers the model three productions. everyone wants to know how that is going.
they had the 5000 the week by the end of june. our bloomberg free model three tracker has suggested they are slipping back below 4000 week. going to be interesting to see what elon says. they took extraordinary measures to reach the 5000. they were firing and i sure production line in the parking extra firing up an production line in the parking lot. flow is aive cash little better compared, but that is a lot of cash. where do people assess right now the whole question of the potential need to raise more money and is the fact that cash flow is coming in, the negative cash flow coming in on the light side give credence to the idea that perhaps they won't need another raise sometime this year? keith: i don't see that as incredibly light. 750 versus 900.
that's a hundred 50 million dollars which is chump change in the auto industry. -- that's 100ve $50 million which is chump change in the auto industry -- that's $150 million which is chump change in the auto industry. heading numbers have been challenging cortez led sometimes. arelet: tesla shares bouncing around in after hours trading. one thing we can say is the stock has been down this year and it is currently up 3.5%. expectations have really shifted for this company. how is the sentiment onto has lie and elon musk in particular really changing over the last couple of months as they try to get to the 5000 vehicle a week number? >> i think it is strange because they hit the 5000 number a month ago and the stock took a dive.
it is a weird thing happening with tesla elon musk is such an open book you a sense of where the company will go even before he opens his mouth as he is tweeting all the time. erraticallyacting and people expected bad news this time around. he was more restrained as well this time around i would say. joe: max, i'm still struck by the lack of action. could it be that the conference call is a snooze to? people will be tuning into this because they want to see if it is repeat -- a repeat of last time. [laughter] investorsnk as low as are hoping he will keep it cool, -- keepstrained an it restrained and keep it as normal as possible.
if he does go off or bring in youtube colors or do something callerse unexpected -- or do something otherwise unexpected. julie: what's a typical tesla conference call look like? max: elon musk has always been kind of a character. it is only now that tesla is worth about the same amount as bdm and people are starting to know that. if you're just coming to this or had not been following his career, phone call was a big thing -- the phone call was a big thing. i think it was poorly executed. scarlet: keith, back to you in detroit. he company tends to be profitable in the third quarter and fourth quarter, how realistic is that based on analysts and with the more saying?l analysts are keith: analysts do not see them
being profitable in the second half of the year. elon believes that once your -- once you reach a certain level of production, you will get there. elon lives out loud on twitter and elsewhere. he will have a lot to say on this conference call including how we will achieve this profitability. joe: how can analyst -- the analyst community and the company be so far apart in expectations in profitability? have you ever seen anything like it? keith: no. the analysts have spreadsheets, math, andeets -- use the math does not add up. julie: how does them -- how much does it matter in the case of tesla? they want people to buy the
stock but it also seems a little unique. there are a handful of companies that, as long as they keep making cool cars, i do not know. keith: the bulls are saying long reinvent the auto industry so give or take 2 billion, it does not matter. tesla had never -- tesla never had a problem raising money. wasof elon's superpowers that he can get people to give him millions of dollars based on him inventing new and interesting things. people are just now doubting to if he can. keith: elon and tesla is a movement. people buy into the movement. .t is not a typical stock buy
julie: it's a movement. i love that. , and i want to mention as well we got metlife earnings to go to the other end of the spectrum. the second adjusted earnings were $1.30. one dollar 17 was the estimates. return on equity is six and a half percent -- 6.5%. they don't tend to be that volatile on the back of earnings and we will see if that changes. let's get outside of business and your first word news this afternoon. mark: the federal judge in paul manafort's fraud trial warned prosecutors today against using the word oligarchs to describe wealthy ukrainians. lawyersge warned spending time -- on spending time trumps extravagant lifestyle.
the judge said repeatedly let's move it along. the trial is the first courtroom test for special counsel mullet -- robert mueller. presidenthouse says trump's criticism of mueller's probe are not obstruction. sarah huckabee sanders said today the tweets this morning on the president "fighting back." she also offered an explanation of the tweet in which he wrote that jeff sessions "should stop this rigged witchhunt now." order, it is the president's opinion and it is ridiculous that all of the corruption and in the dishonestly going on with the launch of the witchhunt. the president wants to watch them play out, but he want to come -- to come to an end as well. out: the president sent several tweets attacking the to possible ties to trumps
campaign. jeff sessions once congress two of the just department -- justice department fight violent crime. speaking today he said the goal is not to fill up prisons. >> our goal is to reduce crime and keep every american safe. we should not key people in prison longer than necessary. proven policies and clear and certain punishment make this country safer. they just do. mark: sessions added the justice department is looking for effective and proven ways. president trump met today with intercity pastors to discuss the administration's efforts to reform the prison system among other issues. president told the group which included pastors and bishops from across the country when we say higher americans we say all americans. beenhite house has
focusing its efforts on reentry, rehabilitation, and work or's training programs instead of sentencing reform. the administration is pushing for passing of a bill named to the first step back -- step act. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. julie: i want to bring in more earnings news from tripadvisor. the shares were off when the company came up with earnings that largely appeared in line with an us -- with analyst estimates. this was just shy of 435 million analyst estimated. $.41 a share in earnings and $.40 was what was anticipated. the company also makes comments about the full-year saying it is adjusted growth in hotels and non-hotels and it will still see growth, but for the year, it's
hotel revenue will fall versus 2017. scarlet: we also have breaking news on turkey. before mr. commented they will respond in kind to u.s. sanctions after the u.s. prepared a list of turkish entities to target should it decide to impose sanctions after the government imprisoned u.s. citizens. to negotiateinuing the release of one of those prisoners. in terms of other earnings, we were talking about wins. with theres were low company reporting net revenue missing the lowest analyst estimate. the stock is falling. some tough times there in the casino and gaming industry. julie: caesars entertainment is also seeing its biggest drop in the regular session as the company warned about a tough quarter ahead.
the caesar ceo is joining us now from las vegas. the stock really saw a big decline during the conference call when you all talked about revenue for your available room forecast. walk us through what happened and whether you think there is a correct interpretation of the comments you made on the call. >> we announced record earnings in the second quarter. we did not lower our guidance in any way, in fact we kept it which was an increase after the last quarter of what we expected to do this year. we had a surprising reaction, and on the call itself, people were asking why we did not raise it again. they were expecting it as a beaded and the raise it and there was an expectation we would raise it and we did not. we saw caution in the third
and a couple of months had less programming year-over-year. what i mean by that is less entertainment, less events if you will that drive our business model on the strip. we said the fourth quarter would be strong and we felt confident in our guidance, and good about the prospects of the company long-term and short-term. this was not a biggest issue. this was more of an event tissue. -- event tissue. -- event issue. the reaction of the market on this announcement is a surprise. we expected the stock to go up. we have a very short tenure as a public company coming out of bankruptcy. we just came out in october and most people can tell you the first year out of bankruptcy, your stock has a lot of volatility. scarlet: we certainly saw that
happen today. going back to caution on the third quarter, you mentioned programming. is there any link in terms of what you are seeing with visits to your casinos to the economy. we're have a pretty strong economy right now. 4.1% increase for the second quarter, labor market is strong. there is a lot of talk about how the economy cannot sustain this pace and things could go south in 2019, 2020. do you see any evidence of that or any starting points in that of what you actually see on the ground? just referencing the second quarter on the strip, we were up -- 7.4% and profits were up almost 70% on the strip. so, no, we do not see a slowdown in second quarter result a cup. and the back cap of the year,
looking at the fourth quarter, very strong year-over-year bookings we are seeing. in the third quarter, it is a momentary weakness due to the fact that the events schedule for las vegas was lighter than it was year-over-year. nothing that would indicate we have some sort of long-term or short-term issue. joe: one of the biggest stories in gaming in the last year has got to be the potential for legalized sports gambling, online gaming all around the country, so can you talk about what you think is the opportunity you see their? -- there? mark: there are two states that we are open and in this month. the middle of the month, we will be open in a couple of states they are. being immobilede -- being in mobile.
it will probably be 12 or 13 states over the next three to four years that will legalize fruitionthat comes to -- if that comes to fruition, we can handle it. i think it is a big upside for the business long-term. julie: do you plan on partnering with someone to facilitate your sports betting business? your competitor, mgm, just signed something on the sports betting front. is that caesars strategy -- caesar's strategy? mark: we have more of a standalone strategy because if you give up 50% or whatever the number is in your venture that is giving up future sports betting opportunities. we believe by having more of an organic strategy developing front and software, it allows us
to capture more values. everyone has their own strategy. ours is to do our own thing. if we develop in our own, we might buy software companies or engineers i can develop the software. right now there is no for -- front and lead in sports betting in the u.s.. our partnership with ny ask which is the division of --entific games divisional they have 80% of the u.k. market. we felt really good having a have fulld we availability of the technology necessary to compete. julie: mark, we have to leave it there. that's the caesars entertainment ceo joining us from las vegas. more on tesla coming up.
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scarlet: breaking news on trade. plan on tariffs on 25% chinese goods. they had originally proposed 10% tariffs and eight may lift the planned tariffs. they are not made a decision on it yet. for all this, let's put this into context read there is a lot of plans and thinking about these trade tariffs. let's bring in bloomberg's sarah mcgregor. you're just on a call with u.s. officials. what are they thinking about and where do things stand right now? theh: trump has ordered
u.s. trade representative office to consider imposing 25% tariffs on $200 billion worth of chinese goods. that is up from 10% originally on what they had been looking at. the u.s. says this is not a done deal. they will put a range into the public fear right now and they will have a hearing on august 20 and they extend the. to get public comments to september 5 from august 30. they will hear back from anyone who wants to comment on it on what they think about imposing a 25% tariff instead of 10. joe: you mentioned they want to hear from america's industry groups. so far they have been pretty loud and complaining about this. it sounds like they have been completely ignored with this. do you see any reason that would change and you said august 21 to august 23.--
sarah: we've not seen a lot of support from the american industries. it will raise their costs and they will pass that on to consumers. that is their bright light warning to the trump administration. i assume they will not support 25% tariffs if they did not want the 10% tariffs. what we heard is the motivation from this is that china has not changed its behavior. they believe what they have actually done is retaliate and they have retaliated. u.s. shares are justifying this as necessary against china is not relenting or playing ball with them on changing their trading practices. in one sense, i feel like this could be a pressure point to the trump administration putting on china. julie: are there any indications
that it is working in that sense? thead the headline about treasury secretary that they were talking about reopening talks without actually reopening the talks. about whatny signs china will respond to? sarah: when the news of the 25% tariff was broke yesterday before the official announcement today, china responded and said we will not be blackmailed. i do not think they will respond kindly to the announcement today. the shareoke with officials today, they said there are lower-level discussions that go on any given time. there is no specific engagement as they put in. president trump spoke with the chinese president, they referred back to the fact that the white house has been a call -- that the white house tells us
when there has been a call. we are heard about that lately. trump often says he has a great personal relationship with the chinese president. we have no reason to believe they have been speaking behind the scenes about the trade deal. scarlet: we will continue to monitor to see how it develops. still considering 25% tariffs and they have not done it yet. sarah mcgregor joining us from washington. let's get a recap of today's market action. u.s. stocks were mixed. nasdaq finished higher in the down s&p were lower. trade tensions were front and center in investors minds. we also have earnings and that is why the nasdaq got a boost their. apple reported a positive result . scarlet: and the 10 year yield is touching 3% for the first time since june. joe, you have mentioned the 10 year yield in japan was a big mover and perhaps maybe it changed dynamics. joe: it caused incredible scenes
in japan because a few weeks ago there were stories about how there was no trading. one of the clearinghouses last becauseded up on margin the future tied to the bonds were so volatile. scarlet: a new game in town in tokyo. julie: "what'd you miss?" as life that with the second quarter results and the shares were up. we bring in nathan which is a senior analyst joining us from east greenwich rhode island. thank you for joining us. looks like as low was burning through last -- less cash than expected. what you think? nathan: thanks for having me. we were not impressed read they were working capital pretty heavily and we sought slightly lower than expected at about 300 million. they have a lot of short-term credit levers to pull.
heard stories about asking customers to pay fully for the model three before they loaded into the trucks every month. joe: nathan, they pull these lovers and nonetheless, levers are levers -- pulled these levers, and nonetheless, levers are levers, will this keep them above water long enough to get to a profitable level? nathan: i think they can generate cash in the second half largely because they run about 90 days and accounts payable and they can pull about $1 billion as theyccounts payable ramp production in the second half. that is a one-time gain to stabilize production. if that is done, accounts payable no longer grows. about tedalk a bit liz cash position in terms of whether it needs to raise funds
in the near-term versus say 2019. intends to turn profitable in the second half of the year. changed that year, but free cash flow was -$735 million. does tesla have enough to get through the rest of the year? nathan: i think they do. i believe they will generate cash in the second half. it will be entirely due to more than $1 billion taken from working capital because of the massive accounts payable balance. julie: talk to me about the margins in the first quarter. adjusted gross margin was at 21% which is above analysts expected number which was 16%. how did they achieve that? from afar, it looked like they were spending a lot of bringing in the tent and extra personnel to ramp up the production
capacity. also, do you think they can sustain that margin? nathan: i think that was a hidden bombshell. we were looking for 1.6% positive growth margins and three based on our model. it looks like we were about to write. looking at the guidance for q3, assuming they get to the 15% gross margin, which i think they can, we think the average sale prices of 3000. if you look at the incremental cost guiding two, they are guiding to costs sold per car. scarlet: we are about 50 minutes away from a conference call elon musk will be hosting with analyst. are we going to get a repeat of what we saw last quarter, and
are you rethinking the questions you ask in light of how he reacted last time? nathan: i wish i could ask a question. given what the shell holders have said, he will reign it in and be a little more mature this time. i think he will still be critical of analysts and try to prove he is not off the rails. i think it is going to be a much more responsible conference call. julie: a restrained elon musk perhaps. joe: i'm not a shareholder, i dislike the show. nathan, thank you so much. we continue to tesla and the rocket quarter. it is stuck in a range they cannot get out of? we look at it from a charts perspective. joe: and your newsfeeds can overflow with headlines that may not seem relevant to your own life?
2012. it has also lost $4.2 billion in the markets since then. scarlet: "what'd you miss?" it's time for smart charts with abigail doolittle. we look at timely topics with the top technicians. >> today my guest is the head of technical analysis at oppenheimer. thank you for taking the time. one of the big things is technology and 10 is love. you have a chart your tesla. what does it tell you? >> it does not tell me much. i get asked about the stock all the time. i don't have a very strong view because the stock is trend lists -- trendless. aboutin this range worth 300 $65 on the upside -- $365 on the upside. i'm showing the 200 day, but the show it is flat, i don't see the
set up on that long side or short side. >> what about the fact that if we connect the lower low in 2016 which had to have been the low to hundreds and -- higher low sorry, did you ever see the case of this being a larger a sending triangle producing a breakout to the outside? >> you have higher lows on this timeframe. if you were to pull back longer, there has been an uptrend broken. >> so you are on the sidelines of tesla. stock that investors love to love and analysts not quite as much. you are on the sidelines? >> on the sidelines. here's another one we get a very popular stock in view on. that is apple. is up big today on earnings. i think you stick with it, here is why. it's based on the relative ratio of the stock.
this is how the stock is performing versus the market. this is what money managers are getting paid on. are you beating the market or are you not? apple is at an important level. the strength today is a breakout above resistance dating back to 2012. this is a six year breakout in the stocks relative trend. it indicates the longer-term trend of outperformance is resuming. it looks good. >> that is certainly adding to momentum. then, health care. another breakout? >> apple has had a nice run. we see a rotation and health care underway. x lv is coming out of the five-month bottoming pattern. it is action relative to the market. here is a sector that had been an underperformer for much of 2015 and 2017. they spent the last year building a race successfully
base being successfully held. there's health care value and growth across industries. we think you would want to stick with this and health care. >> so, apple and health care. thank you so much for those ideas. julie: thank you so much. m&a meets me too. how they are responding to the wave of misconduct allegations. this is bloomberg. ♪
featuring what is called a weinstein clause. what exactly is this clause and is it new? was it ever in place before the me too movement? >> we are to see this in the past six months. it basically gives the buyer protection against any subsequent allegations of sexual misconduct that might be chairman, orr ceo, company they are buying. joe: how does it work in progress -- practice? if another executive becomes embroiled in a scandal and past misbehavior comes to life, does money change back and how does the clawback work? >> a buyer typically works it into the cost to say i want you as the seller to guarantee none of these allegations will come can you puthey do, money away in an escrow that i can then have back. in previous deals you see these escrows for financial misconduct
or fraud, or something wrong with finances. now they are putting aside money for this as well. joe: does this mean public shareholders, there is money they don't get right away? who gets this escrow money if nothing comes to light? a lot of the cases so far have been a private equity deals. there have been a couple of public deals where the causes have been put in, but not the clawback. more that they have been asking for a guarantee that none of these things have happened. >> have we also start to see due diligence practices change? did they query the hr department to see about complaints? >> yes. that is what they argue for now. alongside the let's go through your profit and loss statement, numbers, balance sheet, they are also checking with hr departments to see if any allegations have been there and any former settlements done.
they're also hiring outside firms to do their due diligence for them. what do looking at people complain about on the brand. scarlet: any idea how much this would cost the company? a couple of people we spoke to said up to 10% of the total deals value was being put into escrow accounts like that. the vicar clawback. there remains to be seen whether that number rises as we see more of the misconduct allegations. scarlet: and it is negotiated at the time. >> exactly. julie: they do so much. one activist has built a stake in cigna and plans to oppose its takeover of express scripts. let's bring in sack who covers these companies.
this deal was agreed on back in march, when are they voting on it? what window does he had to convince other shareholders? >> the vote is august 24. he does not have much time. is he isstanding talked to other shareholders and some people shared his views. the bottom line is this is an interesting bid to disrupt the steel. scarlet: what is his issue? what is he concerned about? nathan: there been investor concerns -- >> there have been investor concerns of express scripts from the start. they're sort of a middle man and the drug supply chain and businesses come under pressure from the federal government. it has come under pressure from amazon as well. you seen other companies get out of the business as many move away from where they are working. it is a lot of pressure. you're kind of overpaying for a
flattening to decline asset and you are not -- and he is not happy about that. joe: we saw express scripts down on the day. in terms of expectations and opportunity for investors in expressed scripts, what do people think? zackary: right now there's something like 20 to 25% spread. [over talk] zackary: people already had doubts about this transaction from the get-go. that's in terms of whether it made sense and regulatory issues. you're just cnet blowout now. julie: his icon pushing for -- i cahn pushing for this or is there any possibility of a renegotiated price? >> what we're hearing is that icahn is opposing the deal. joe: in the last year, there has
been a bunch of deals and health care and all of the companies are trying to gain in different areas of the supply chain and reposition their business. if the deal did not go through, to people feel cigna has to buy something or that there is pressure on them to build out? >> we're definitely seeing a lot of consolidation. the question for them is are you a buyer or seller. solved to anthem and that deal fell apart. cigna went out to get another deal and investors were not thrilled. i think there are some folks that would like to see cigna sell themselves. there has been a lot of consolidation and they can reduce the pull of potential buyers and lose outthrilled. there julie: it be interesting to see if icahn pushes to sell cigna himself -- itself. scarlet: zack, thank you so much. is time for the bloomberg business flash. fidelity is fighting the latest
shot at a price for over priced mutual fund fees. they will offer to funds with zero fees. this will be as an international benchmark. shares of cheesecake factory are following the most in 19 years. they post co- costs have cut into their margins. that is your business flash update. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪
scarlet: "what'd you miss?" a missed -- mixed day in u.s. stocks and the nasdaq rose thanks to apples record high and. starting with has a -- end. starting with has luck, -- has low -- julie: joe want anything to happen with the tesla call. caesars had disappointing numbers and wynn was down 4% and they were -- they are now down 7% more. , they're down.
earning missed by $.20. scarlet: a busy next day for investors. the bank of england has a briefing in the rate hike is expected. joe: i will be watching jobless claims at a: 30 tomorrow. julie: and cbs reports its earnings. scarlet: we will be all over it. that does it for "what'd you miss?" julie: "bloomberg technology" is next. joe: have a great evening. this is bloomberg. ♪ ♪
emily: i'm emily chang and this is "bloomberg technology." tesla says it will be sustainably profitable and cash flow positive by the end of the year. and they said the higher target for the model three aiming to make 6000 cars a week by the end of the month. still, the company managed to ban -- burn through $730 million. we will have analysis for the hour.