From bloomberg world headquarters in new york, i am mark crumpton.
This is "bottom line," the intersection of business and economics with a mainstream -- main street perspective.
More than 400 are killed in egypt as a military crackdown continues.
Walmart cuts its forecast as shoppers cut down on spending.
An inside look at a nasa facility preserving the history of man's mission to the moon.
To our viewers here in the united states and those of you joining us from around the world, welcome.
We have full coverage of the stocks and stories making headlines tonight.
Su keenan follows a major stock selloff after a disappointing forecast from cisco and walmart.
That's begin in washington, where yang yang has laid details on the bloody crackdown and crisis in egypt.
Good evening, mark.
Unrest in egypt is taking a turn for the worse.
Assaults on protesters by security forces have killed more than 600 people.
Dozens more are wounded, and many parts of cairo are left in ashes.
The united states -- united nations is now on an all hands on deck approach.
For the united states, a different policy.
President obama announced the first concrete step, canceling the joint u.s.-egypt military exercises scheduled for next month.
Beating for the first time from his vacation rental home in martha's vineyard, mr.
Obama said he would not pick sides but knows the egyptian people deserve better.
The united states strongly condemns the steps taken by egypt's interim government and security forces.
We deplore violence against civilians.
While the president got tough on egypt, he did not call the ouster 82 --a coup.
Doing so would require $1.3 billion of military aid to egypt each year to and.
America wants to be a partner in the egyptian people's pursuit of a better future.
We are guided by our national interest in this long-standing relationship.
But our partnership must also advance the principles we believe in.
Something that lawmakers, also on vacation, seized on today from both sides of the aisle.
We heard calls to freeze aid to egypt until democracy and peace are restored.
Senator rand paul from kentucky released a statement asking president obama to "stop skirting the issue." president obama defended u.s. involvement, saying it would help transition egypt back to democracy.
The president met with his national security team and directed his staff to assess if further steps are needed.
There has been a larger economic impact.
What is it?
In egypt, the stock market remains closed and government yields went to a five-week high.
Where else are we seeing egypt's unrest leave its mark?
Globally on oil.
Brent crude rose to a five-month high on the crisis in egypt.
While egypt itself is not a big producer, nearly 3 million barrels of oil passed through the suez canal each day.
The worry is violence and unrest might spread beyond egypt, hitting big oil producers in the region.
A lot at stake.
Yang yang joining us from washington.
For more insight on the crisis in egypt, i'm joined by retired uk lieutenant michael kay.
He flew in countless missions as a helicopter pilot and worked on strategy in afghanistan.
He currently writes for the "huffington post." welcome to "bottom line." in light of the violence and political instability, there has been discussion -- should the united states cut off assistance to egypt?
Rand paul said, stop skirting the issue, cut off the aid.
What is your opinion?
It is too early to tell.
What we need to address is the interim president.
The prime minister and defense minister, we need to really look at their use of force.
At the moment it is quite clear it is not graduated, not proportional.
The unintended consequences, as we have seen in syria, could be very negative.
What about the international community?
What is their role in halting this violence?
We heard the un security council will convene a meeting because they want to discuss this as well.
Bank human has already -- ban ki-moon has already condemned this.
China and russia have been quite so far.
In the permanent -- security council, you need acquiescence of the permanent five to take international legitimate action in terms of sanctions.
I do not think we are there yet.
What we need to do, we really need to look at where we are at in terms of the political landscape.
We have got to bear in mind that mr.
Mansour is only the interim president.
There are elections forecast for 2014. we all know that by looking at iraq and syira, in order -- syria, in order for a strong security structure to exist unique fusion between the political and military levels.
At the moment there is that political fusion, but we have to look forward beyond 2014. remember that morsi received 51% of the vote.
In doing so, we have to look forward and say, what is the turnout of the elections going to look like in 2014, and what is the relationship going to be between the political level and military level?
Lexi mentioned president morsi -- you mentioned president morsi.
They secured $12 million of aid from persian gulf countries, including saudi arabia.
What about the rest of the international community?
Will they be able to help egypt, or do they want things to calm down?
A great question, mark.
The international community is all for democracy.
Morsi was the first democratically elected president in many years in egypt.
That has gone slightly wrong.
Imposing a template of democracy in egypt is not easy, as we have seen.
So i think we need to be very careful about how democracy post-2014 will look like.
If it is going to be an islamist party trying to impose sharia law.
That is not really what the international community once.
There is a paradox between wanting democracy, wanting the right to protest, wanting freedom of enterprise and freedom of speech, but also understanding, how do they go along with what the future political outlook looks like?
Is the underpinning of this violence social economic -- socio-economic?
The underpinning of the violence is complex.
We have to look at what the objectives are of the muslim brotherhood.
They are to achieve an islamic state and impose sharia law.
How that fits into the socio- economic climate will be an interesting question.
You have a lot of disenfranchised young people, angry young people who feel they are not getting a chance to fulfill what they consider to be their destiny, whether it is under a government that is run by the muslim brotherhood or whether it is something more secular.
There are a lot of angry young people.
This happens a lot in areas of the world, particularly the middle east, where they take to the streets.
The way they vent this frustration is through the scenes we are seeing right now.
I could not agree more.
The way the economy looks after the election in 2014 will be very interesting.
The economy will either expand or contract in accordance with the way the next elected prime minister -- and i have a feeling it will be of an islamist nature -- it will be how they let the economy grow.
To be honest with you, the way it has contracted, we see what the indices are doing at the moment, hopefully the only way they can go now is upward.
Oil is on everybody's mind.
We saw the prices today hit the highest level since april.
Egypt is home to the suez canal, also home to the suez- mediterranean pipeline.
Any concerns about disruptions because of violence?
The suez canal is one of the primary lines of communication for all maritime transit.
Whenever anything like this players up, it is always going to impact the price of oil.
Looking at renewable energy and america's ability to reproduce its own oil and become economically independent, if you like, will ameliorate that problem slightly.
Joining us on set to talk about the situation in egypt.
A pleasure to have you on.
Let's show you how equity markets finished the session.
Thursday, august 15, 2013. stocks fell the most since june as forecast from cisco and walmart slipped.
The dow industrial average down to 225 points, just under 1.5%. the s&p 500 index was down 1.4%. nasdaq composite was down 1.7%. let's get you the story behind the numbers.
Su keenan is standing by with the details.
As you mentioned, walmart earnings, uncertainty about the fat, and violence in egypt push most stocks lower despite better than forecast data.
General motors joined other international companies closing operations in egypt indefinitely due to violence in the country.
Gm said it closed a plant in cairo where it makes cars, trucks, and minibuses.
The company has 1400 workers in the city.
Their chief concern is security.
Investors reacted to weaker earnings.
Cisco's announcement of layoffs last night and walmart's reduced profit added to a bearish sentiment.
The lower end consumer really getting hurt, and that is hurting walmart.
Down as much as 3%, nordstrom, as they cut full-year earnings despite courtly profit rising 18%. they say the short down is a -- slowdown is a short-term blip any long-term cycle.
If an story for kohl's , which saw profit drop but still beat estimates.
They rallied more than 5% on a strong outlook.
We saw stocks moving on other news today as well.
We have on x -- onyx pharmaceuticals, shares following 7%. bloomberg has learned amgen's talks over buying the cancer drugmaker have stalled.
A deutsche bank analyst says the drop is an overreaction and a deal is still likely to happen.
Now, move over, hewlett-packard.
There is a new leader in town.
Hp shares fell more than 4% after its archrival lenovo reported first-quarter profit that beat estimates.
The novo edged past hp to become the worlds biggest pc seller for the first time.
The profit is just salt in the wound.
More on the overall retail picture coming up later.
Joe feldman, a retail analyst, will offer his thoughts on the retail giant.
That is at 7:45 p.m. right here on "bottom line." coming up, dell the -- beat estimates, but the feud between michael dell and carl icahn continues.
? pc maker dell beat analyst estimates when the company posted results after the bell today.
For more, let's bring in cory johnson, "bloomberg west" editor at large.
How will these numbers affect silver lake's buyout offer?
With the results dell was releasing, a week early, were they doing that to help the case of michael dell?
Or were they going to help carl icahn?
Really strong numbers would have helped icahn, c rummy numbers would've helped michael dell.
The numbers were in between, so they did not really help anybody.
On a year-over-year basis, revenues were flat, and that is the best the company has done in a while.
But profit was way down.
To peel back the layers a little bit, you can see there were real strength in the business.
The server business was up 24% year over year.
Last quarter was 32% year over year.
Those were really strong gains.
Here is a shocker -- the pc business, supposed to be dead, was up year over year.
13 billion dollars in pc sales in the last 12 months alone.
You can see, everything about dell, everything good and everything bad.
Why do you think michael dell changed the reporting date?
It was supposed to be next week.
I think honestly, look, i try to be the first person out there to catch companies when they do deceitful things, are trying to hide something.
I think dell just did a good thing.
He knew it was important, did not want to go to court knowing what the quarter was without telling everyone else in the world.
They decided to release it so everyone had the same information going into this court date.
Nobody can say that dell was keeping it a secret.
It was fair disclosure, honest disclosure.
As far as i'm concerned, it was good disclosure, the kind of thing more companies should do.
Cory johnson joining us from san francisco.
Coming up, u.s. consumer prices rise slightly in july, and inflation remains mild.
What does this mean for fed policy, and how will it affect consumers?
The cost of living in the united states rose in july for a third month.
The 0.2% gain match the median forecast of 82 economist surveyed by bloomberg.
It also supports the federal reserve's forecast that inflation will move closer to its target.
Chris christopher from ihs global insight joins us tonight from lexington , massachusetts.
Thanks for joining us tonight.
Pleasure being here.
Do today's numbers make it harder for the fed to start pulling back on monthly bond purchases?
Some economists expect the fed to start tapering in september.
The on employment rate is not going anywhere where chairman bernanke wanted to be.
That is one issue.
Prices are sort of sluggish.
Especially if you take out what you would call gasoline and energy and food, the core prices.
That has been hovering on a month-to-month basis at 0.1% increases, 0.2% increases.
They would like that to be a little bit higher.
In addition, many retailers do not have pricing power.
They cannot increase prices because there is sluggish demand.
It does not look like tapering will begin any time soon.
Fed policymakers have warned of risks of prolonged inflation below the 2% target.
What risk does inflation pose, particularly to this economy, which is still trying to find more momentum?
We have sluggish global demand tom and that is one thing keeping prices low.
The emerging markets are not doing as well as we originally thought, at least two years ago.
That is one reason why especially important prices are not doing so great.
Overall, consumer prices are doing very well in terms of gains for top in addition, consumer demand is sort of cautious.
That is the best way to say it.
The release of pent up demand, housing gaining traction, but people are not spending easily.
A lot of retailers and even wholesalers are having a hard time jacking up prices because they just will not sell.
We are caught between a rock and a hard place.
Until the economy grows a little stronger, it is very unlikely we will cease hunger price -- we will see stronger price increases.
You mentioned retailers.
What does this mean for them?
Macy's posted fiscal second- quarter profit that trailed analysts's mitts.
How hard will it be for retailers to increase prices?
They have to be careful.
That does not mean retailers cannot charge a premium for certain items, like the apple iphone.
Even that stuff aside, what you will see is they might try to increase prices a bit because they have to watch their margins.
Cost are running up a little bit.
They will try to increase prices and find they will have access inventory, etc.. the last thing you want in this economy.
It is basically that the consumer is too cautious.
Is there a chance online retailers will benefit from that weakness?
Online retailers are doing very well.
Numbers for the second quarter came out.
5.8% of retail trade.
People seem to be going online, buying things.
This might be something the bricks cannot really catch up with.
In general, online is doing well.
The prices online are not increasing very fast.
We saw a big jump in clothing cost, 0.6%. this was the third straight game.
If retailers are having a hard time increasing prices, will consumers benefit during the back-to-school shopping season?
Yes, they do.
One way consumers are benefiting is that even though wages are not increasing very fast, wages are anemic, the labor market is doing relatively ok but not that great, what is happening is that wage increases are surpassing price increases.
So they have a little bit of pricing power on the consumer side.
Of course, since wages are not increasing that fast, they are being careful.
Before i let you go, i have to ask you about between now and the end of the year.
Do you expect growth to pick up once the affects of the tax increases and sequester start to fade, finally?
We should see increased gross domestic product growth . the payroll tax expiry hit consumers pretty hard.
Sequester affects are going to taper off by the end of this year.
2014 will look much better than 2013. chris christopher, rector of consumer economics at ihs global insights.
Thanks for your time tonight.
We appreciate it.
Pleasure being here.
Coming up, a potential improvement in relations between north and south korea.
The latest on the plan to reopen a jointly operated industrial complex that was closed because of tensions on the peninsula.
The top stories in asia when "bottom line" continues in just a moment.
? welcome back to the second half-hour of "bottom line" on bloomberg television.
I am mark crumpton stopped thanks for staying with us -- i am mark crumpton.
Thanks for staying with us.
Sales forecasts from walmart and cisco and concern the fed will soon start withdrawing support for the economy pummeled the stock market today.
The dow jones industrial average falling nearly 1.5%. the s&p 500 index falling 1.4%. and the nasdaq composite index sliding as well, down nearly 1.3%. let's get a check on top stories we are following for you at this moment.
In egypt, the deaths soared past 600 following a military crackdown on supporters of ousted president mohamed morsi.
President obama canceled a joint u.s.-egyptian military maneuvers, but did not cut 1.3 billion dollars of military aid to egypt.
The un security council is holding a closed meeting tonight on the crisis.
A judge asked lawyers for american airlines why he should approve the plan for them to merge.
The justice department filed a lawsuit against the merger, saying it would hurt competition and increase prices for consumers.
At a hearing in new york, the government -- josh asked for -- josh asked for written briefs before the lawsuit is resolved.
Federal authorities found no evidence of a pre-crash fire or engine failure on a ups lane that crashed in alabama.
The two pilots were killed.
The national transportation safety board says the plane was trying to land on a shorter runway because the longer one was closed for maintenance.
This weekend, julianna goldman will interview the ntsb chairman on "capital gains -- "cap u itol gains." top stories in asia.
A new development in relations between north and south korea.
Angie lau joins us from hong kong with the very latest.
Good day to you, mark.
North and south korea coming together once again, at least at the jointly operated gaesong industrial comp in north korea.
When it was closed in april amid higher tensions after north korea fired a nuclear test and we sought tensions ramp up.
Gaesong now to open again.
There is no timetable.
Gaesong is located just north of the so-called a militarized zone in north korea.
It employs 53,000 north korean workers who actually work for more than 123 south korean companies.
The north pull them out, but today reached an agreement with the south.
The two sides had apparently gone six rounds of negotiations before this.
South korea had signaled this would be the last chance to save gaesong, so north korea heeding that signal.
South korea hopes the reset button has now been pushed.
Many hope this is a first step toward talks with the u.s.. what is the latest on the typhoon that has caused so much damage and -- in hong kong and mainland china?
Lots of rain and strong winds.
It passed through hong kong, closing trading for a day, but it wreak more havoc in southern china.
One person killed, five others missing.
The typhoon is weakening as it moves across china, but it caused widespread damage across much of the southern coast.
Forecasters say it was the most powerful storm in the world so far this year when it made landfall.
1500 homes were destroyed in guangdong alone.
Several sections of a railway line collapsed.
Civil authorities say the direct economic loss in guangxi so far is about 34.5 million yuan.
In u.s. dollars, that is $5.6 million.
Angie, thank you.
Time now for the commodities report.
Su keenan joins us with insight on today's session.
Silver jumped as much as 6.5% at one point, then roared back into a bull market.
Stocks fell and concerns renewed the precious metal's allure as a safe haven.
Up 24% from a closing low in late june.
That marks the crossover from bear market to bull market, signified by a gain of more than 20%. gold, platinum, palladium all moved higher in the regular session.
We see some follow in extended trading.
But none pulling back just a bit.
A big move in corn.
Shorting moves lower is a popular trade right now because of a record prop -- crop.
As dry weather now threatens the crop, that push prices higher.
There was a rush to buy out some short positions.
Little or no rain is falling in parts of iowa and illinois, the biggest growers of corn in the past two weeks.
Prices moved higher on concerns the robust crop will not be so robust, given the weather.
What is ahead for friday?
Energy traders will have their eye on violence in egypt, which is said to be supportive of higher oil prices.
We have a tropical storm forming over the atlantic.
Another potential system of the coast of mexico.
Both are in the peak of hurricane season, also supportive of higher energy prices.
A lot of focus on cocoa, headed for its best quarter since 2009. a dry -- dry weather sent it to a two-year high.
Hedge fund bets on prior -- higher prices are near a five- year high.
Su keenan with the commodity report.
Up next, when you think of nasa you think of the glory days of the 1960's and 1970's. we need the man who is digitizing nasa's past so it can be seen in a way that is cutting-edge.
The right stuff.
We will be right back.
Nasa is calling off all attempts to fix its crippled kappler space telescope, but is not quite ready to call it quits on the remarkable lannett hunter.
The mission has been in trouble since may, and able to point to faraway stars in its quest for other potential earths.
Kepler has confirmed one hundred 35 planets outside of our solar system.
It has also identified more than 3500 candidates as planets.
Nasa expects to know by years and whether the mission is salvageable.
The spacecraft is 51 million miles from earth orbiting the sun.
What you think of high-tech facilities used by nasa, a few things come to mind.
Mission control centers, giant hangars, space simulators.
What about an abandoned mcdonald's? ashlee vance explains.
We are here at mcdonald's. we label this mcmoon's. the basic premise of what you guys are up to?
Our project is the lunar orbit image recovery project.
The lunar orbiter'were set to the moon -- sent to the moon by nasa to do the first reconnaissance of the moons surface.
This was in preparation for the landings of the apollo mission.
The premise of our project is to go back and get the complete historical record of the moon as it was in pristine condition, before anybody went there.
Think about how much money it would cost today for nasa to fly a mission to 1966. you sort of ease in.
Mcdonald's -- the instinctual thing, here is a fryer.
These are the cans from lunar orbiter one.
More canisters and more canisters and more canisters.
It looks really strange.
I want to bring you back here and introduce you to austin.
He does all our backend work.
Hide the porn.
[laughter] the quality of the analog process used in the 1960's , the actual images, they did not have the computer power to do this.
Right now, you can basically do what was impossible in 1964, 1965. i really love this picture because this is the north pole of the moon right here.
The north pole is incredibly important because in this area right here, it is where mankind's first outpost will be, first permanent outpost on the moon.
Right here on this ridge.
Don't you get tired of thinking about the moon?
I am a lunatic.
What are you talking about?
This is the heart and soul of our project.
Kind of a miracle of 1960's technology.
Every one of those bumps or craters, this is only 200 meters across the moon's surface.
Neil and buzz landed safely on the moon because of these images.
I really want this material to be conserved.
Part of scientific solidity is to be able to come back to the original sources.
If you cannot do that, you do not have science.
Coming up, walmart cuts its annual profit forecast.
Shoppers are reluctant to buy more than necessities.
Is this just a blip, or a trend?
We will get one view when "bottom-line" on bloomberg television continues in just a moment.
Walmart took a hit today after releasing its deking quarter earnings.
-- second-quarter earnings.
Shares of the world's largest retailer slid after the company cut its annual profit forecast because of reduced traffic.
Joe feldman of telsey advisory group joins me on the phone.
Walmart is considered an economic bellwether.
What do today's numbers say about the overall economy and how low his and -- low- income consumers are continuing to struggle?
You hit it on the head.
That is the concern we have.
It is happening at the lower- income consumer.
There has been some pressure.
Concerning, even grocery sales were slightly negative for walmart.
They talked about customers trading down to private-branded product or lesser-quality brands.
The patch excitable -- paycheck cycle remains very pronounced.
The payroll tax hike has definitely had an impact.
The good news is trans picked up as the quarter progressed.
Walmart, as you mentioned, saw a slight decline in sales of groceries.
Is lower than expected inflation to blame?
That definitely had an impact.
When you look at total grocery sales, including all stores, they actually increased by about $1 billion.
They did take some market share within the category, but on a same-store basis there was a little bit of pressure.
I think you are exactly right.
There was some pressure because of the lack of inflation.
That is impacting all the grocers out there.
You mentioned the 2% increase in social security taxes.
How much of an impact did that have on traditional walmart shoppers?
Are we talking about an extra $15 per paycheck?
You figure for a $50,000 annual income, you are probably losing around $40 every two weeks.
To your point, around $15, $20. that is a big bite for that consumer.
That impacts spending patterns.
Maybe you trade down to chicken instead of steak, or by the tribe branded goods instead of the premium -- private branded goods instead of the premium brand.
Customers are loading up on necessities.
They are not buying things like flat screen tv's. how long is this pullback in discretionary spending going to continue?
We are a little concerned that we are going to see ongoing pressure.
What is interesting, we have seen the consumer appetite for borrowing increasing.
I think that is happening more at the upper-income cohort.
So we feel good about spending levels at that end of the spectrum.
It is really the mid to lower where there will be ongoing pressure.
I think walmart is so highly relevant for that consumer and is going to use lb the -- going to still be the place where they are shopping.
There is a little pressure in terms of their spending power.
What does walmart need to do to keep people coming into the stores?
It seems there is more of an opportunity to invest in price.
As much as walmart has the lowest prices out there, you could still have slightly lower prices.
We will see wal-mart the aggressive.
Back to be -- back-to-school season will be an aggressive time in terms of price.
We will see wal-mart leading the charge.
Speaking of leading the charge, if consumers continue to struggle, the traditional walmart shopper, if they continue to struggle, what other options do they have?
That is just it.
Where else are you going to go?
Maybe the dollar stores, to some extent.
There is target, other discounters out there.
You are pressure across the board.
With a lot of earnings that have come out recently, whether it is macy's, even some of the apparel retailers, now walmart.
Next week when we hear from target we will see pressure there.
I think that consumer has been pulling back, and they are more targeted in what they're going to buy.
It is very laser-like when they go to the store.
What is walmart's strategy going forward between now and the rest of this back-to-school shopping season?
As they make the turn, as they had towards the home stretch of the shopping season, the christmas shopping season?
I think we are going to see very sharp pricing coming out of walmart.
They're going to be hyping it up and talking to the consumer about that and helping to drive traffic into the stores.
They have improved the quality, the merchandising assortment is better.
Produce is much improved.
I think they will return to the layaway programs for the holiday season.
They will do what they need to do for the customer.
Joseph feldman of telsey advisory group joining us from his office in new york.
Angst for your time tonight.
Thank you for having me.
Still ahead, not everyday history is made.
Today was the day.
Find out how.
That is a look at the futures market.
Bloomberg brings you a market check at 26 and 56 after each hour of the trading day.
Let's get you the bottom line of what is happening friday.
Yang yang in washington.
We will get to her in a moment.
The sat -- sac capital advisors redemption deadline.
Investors have until then to request to withdraw money from steven cohen's hedge fund.
The firm has been indicted for what prosecutors call an unprecedented insider trading scheme.
Ashton kutcher is playing one of the greatest innovators of our times in the new movie about steve jobs.
The movie opens in theaters friday.
Kutx cher is a serious tech investor himself, and will tell us what lessons he learned from the steve jobs legacy and how he applies them to his own investment.
Let's go to yang in washington.
We will get a slew of economic data tomorrow, starting with housing, when the commerce department releases its new residential construction report and 8:30 a.m. washington time.
A survey forecast housing starts climbed to 900,000 in july, up from 836,000 in june.
Then onto american productivity, also 88:30. the labor department releases productivity data, expected to show that u.s. employee output per hour increased at a 0.6% annual rate.
That is you look ahead to friday in washington.
It is time for hotshots, a look at some of the most compelling images of the day.
This is not for the squeamish.
Hundreds of bats burst into a residential building in a northwest province of china.
Firefighters seized the screeching creatures within 40