i am alix steel. bell sounds] by 30 sevendow off points, the s&p off six, but let's put this into perspective. at one point, the dow was off 180 points, at its session low, and then it clawed its way back to finish lower by 37 points. taking a look at the treasury markets, the 10-year yield at a high, and bonds we are seeing coming to a little bit of a pod here in the u.s.. i enjoy now by our bloomberg markets managing editor, joe weisenthal. within the s&p, you saw energy have a big run, up by half of 1%, and we saw tell a conflict into positive territory, while materials and health care really lagged. : yes, that has been the

surprise story of the last several weeks. this energy, which everyone thought was finished, and oil was going to go to a low, and here it is, once again, having a solid day. the names like health care, financials, utilities. : yes. i think that coincides with the reverse we saw in treasuries and the reversal, as you say, outside. health care is an interesting day in that respect. nothing talked about anything else, but then there is a pause today, and the question is, what is this? is this a sign we are seeing inflation in the market? pop up, ortarting to is this purely a technical trade? take of america says there is something a little bit more lying on here than this inflation on the side. -- banc of america says there is something a little bit more going on here.

the idea that germany is coming out of its inflationary period, but it does seem like it is something more, because it is so intense, and it is not just been the fixed income. it has been the reversal of energy. thing that has not had a germanic reversal so far has been the stock market. we had the new york fed president william deadly talking about the increase ushering in a regime shift that will stir financial markets, and it occurs, you do not want a fed official saying that -- new york fed president william dudley. it sort of feels that the fed is not signaling an imminent rate hike or anything like that, but it is trying to use some language that will make markets a little bit cautious. the samenically, at time we have seen this path, we have seen tremendous volatility, really to the highest level

since the last crash, and you have to wonder how that end up affecting other assets when you have a jumble of money and you have liquidity concerns. was an interesting report out today about the bond market starting to affect the currency market, people trading to currency market as a way maneuver against the bond market, but, again, i think it is really noteworthy and surprising that we have not the equity market take yet. has happened there yet despite all of this turmoil yet. alix: and we had verizon that bought aol, but we have seen a lot of chatter, as well. an analyst a look at to talked about biotech companies, saying at the, -- aetnae -- at the coming fromsome m&a

a biotech shop there. talkinghad a report about fisher scientific or another buying a company, and i bring that up because that is sort of an industrial bellwether. sort of the m&a continuing in these very big sectors. joe: yes. obviously, all year, we have been talking about health care and the pharma sector. that has been nonstop. day, somebody is making a bid for someone or being outbid, and we won't see this possibly in health care. fed raising rates, let's get the money now at lower rates, and what is the effect? be something where there is an urge to borrow now before the fed raises rates. rates ishe fed raising probably not going to be the big market event people expect. the pace of rate

increases or how far they go and what the expectations are around that. alix: more the velocity, to your point, more than anything else, but do you think that the the pe increases m&a we have been seeing is masking some sort of weakness in the stock market? you said it yourself. we have had m&a which could support this. joe: it could. there is probably the idea that so many companies are in play or so many companies have dry powder, and that could be one factor that is buoying stocks. joe, thank you, and speaking of stocks, a a well stocks jumping after news of it being acquired by verizon, closing 18% higher, and look at that. twoives verizon a own areas, including streaming. me a longong joins with bloomberg editor at large cory johnson. tim, congratulations on the deal. a very big day for you.

tim: thank you. a very exciting day, excited to partner with verizon, so a big day all around. as a well gets merged with verizon, we are getting reports it will be its own entity there. how will you run it? how is your relationship with the verizon's eeo? tim: the deal is targeted at two thanks, the $40 billion market and mobile, which will happen before 2020, and the online video, and the deal was kind of constructed around that. it started the conversations we had between the teams. we sat down last year with lowell, and we had a great discussion about where the future is going, and we started talking about operational things that lead to a deal, and really my role at the company will be to help drive the future of the businesses around advertising, digital content, and video overall inside of verizon, and i am committed to being there for years,d times, multiple

and we are together with the verizon assets, and we will be running a division of the company, which is really more in the future areas of where they are expecting to get growth from. we are a growth company and a talent.roup of i think we bring a lot of energy and focus, and the verizon people we have been very close to two are long time, we are very good partners with them, and we have been for five years, so we know their team well, and we are really excited to go over there, and we will be connecting with marty waldon, and we are looking forward to getting the deal done and finalized, and i think this fall, we will have some exciting stuff to talk about. the consumer phasing part, and everyone knows whether it is end gadget or certainly huffington post, but what is the verizon interest in that, and might we see the expression of those brands in different ways? you mentioned over the top and mobile, and so on.

as you know, we have been building banks that are video centric and mobile centric, and verizon has a good platform, and they also have partners and distribution with other people across the internet, so i think what you will see from our brand group is more investment in the brands, more investment in the indian -- internet. verizon, if you think about what the a a well strategy is, content and platform, verizon a more same thing on larger scale, nfl content and premium type content on one side, and distribution and video content delivery networks on the other side, so our strategies are actually similar. verizon is a big believer in content. we are a big believer in content, so i think there is a bright, bright future here were business, of the aol

which is content and platforms, and it mirrors the verizon businesses, so we are excited. cory: i would not have thought of the nfl and huffington post business, whichas being good businesses, i see your point, with them together. they have an idea of an ad they want, to want to know --e the ad is going to go, where the ad is going to go, with last quarter's results, do you think that spurred this deal and the timing of this deal? tim: the deal, we were already working on it, and i think the results we showed in q1 were really strong, and verizon, i think, new where we were. i do not think this deal was predicated on individual day of trading or results. it was predicated on the strategy, and the other thing i would really .2, which i think is a big part of the deal on a go forward basis is when you , a lot ofe results them point to video, mobile, the things that we said this deal is about, so we have the points in

our business. verizon, obviously, is a much larger company with much larger success in terms of distributive content and ads and services to consumers, but you're taking one of the largest internet companies in aol and one of the largest companies in the world with verizon and putting them together, and it will create our ability to get a chair at the real big table in the industry, and aol has done a good job building our company out. this is an opportunity to do it, and that is why we are doing the deal with verizon. jim, your stock jumped after news of the deal, now over the purchase price. tim: my focus and concern right now is basically running the company day today, integrating and planning with verizon in terms of getting ready for the asl to close, and i think any company does, there is a responsibility to shareholders, that i think we have done a very good job fulfilling our responsibility to shareholders,

and our stock the last five years has beaten the s&p 500. we turn to the company around. we have got great talent. investors got really what they have paid for, and to go forward, is summit else wants to get involved, that will happen, but that is not our plan, and our plan is to make sure we are delivering what shareholders are getting. this is over the next five years, with what we are expecting. tim, thank you for joining us on this day, tim armstrong, .eo of aol, and thank you we will be right back. ♪

the: welcome back to bloomberg market day. i am alix steel, and we go to senior markets correspondent julie hyman at the news desk.

julie: coming out with a first earnings report since their ipo on march 31, looks like earnings are coming and better than estimated, losing one penny smaller than had been estimated upgo daddy, and this was above the 373 million dollars that analysts were anticipating, so revenue and earnings it looks like beating estimates. the company also talking about some forecast in the second quarter. they were saying revenue is going to be $390 million or more, and analyst estimates were on the lower end of that forecast, so go daddy, it looks like the first earnings report on a relative basis is a strong one. i also want to mention numbers coming out from a big drug distribution company, earnings also topping estimates by $.20 a share, $2.94, the earnings-per-share number, but revenue missing estimates,

almost in line, but a very little bit shy of estimates, fores their up 19% mckesson. thanks so much, julie. we are also looking for earnings from zillow, and we will bring them to you when they cross. cigna terry of the john kerry has wrapped up its press conference with his russian , anderpart sergey lavrov he also met earlier with russia up a serious vladimir putin. it is the first time they have in two years.ks john kerry posted on his twitter page after speaking with putin, saying they had frank discussions with the president and prime minister on key issues, and the transpacific radio, begin debating a bill to fast-track authority for the president to negotiate the deal. 52-45, 8 votes shy of

the 60 needed to proceed, and some said it would hurt u.s. jobs and wages. the president is allied with republicans on this issue. and the death toll from the second earthquake in less than three weeks in nepal that hit this morning near kathmandu, nearly 1000 injured. the parliament was in session, and the cameras capture the moments the earth first started to move and also captured leaders dashing to the exit as it began. there were relief and rescue efforts, and some have gone missing. a helicopter went missing. and those are your top headlines. erased.s. treasuries earlier declines, following a slide that had pushed 10-year 10-year yields to a high. let's bring in a multi-asset class chief investment officer

chiefberger berman, and a investment officer at cumberland advisors. i was speaking with joe earlier, and we were talking about how this really has not been affecting u.s. stocks. why? c: at the same time, stock markets, the volatility has been in a pretty moderate range, and i think what is happening is investors are reassessing growth prospects between the u.s., and they are moving those growth expectations downward, and they realize that that the growth has actually been translated to europe, so you are seeing the change and expectations translating to a significant change in bond prices. on in bond prices is really representing what we think our fundamental valuations that we expect in the bond market. we just did not expect them to happen in three weeks. alix: and so quickly too.

david, european growth coming up? where is the best investment? david: i like the picture of european growth coming up, but i think we will see american growth come up from this week quarter, and think about in a stock market oriented world in which the united date goes a little higher towards a 3% 5%, and europet recovers to a positive number, which in itself would be a huge success, and you start to see a markets,ards emerging that is bullish worldwide for stocks if short-term interest rates stay low. they could be one. imagine the discounting. i think you can make a case for , and i think you can make a case for interest rates rising slowly. alix: we have seen a flood into the dax, right?

erik: we like risky assets relative to sovereign bonds. low we think will still be interest rates, even if they take up a little bit from here. where is the most attractive opportunities, and portions of the economy that are more tied to what we do believe will be a resurgent u.s. economy after we get through this slowed patch in the short-term, i think there are some pockets of interesting opportunities in emerging markets, as well. all right, we will have much more with both of you, so you will stick around, and much more with erik and david after the break. you are watching the bloomberg market day. ♪

bloomberg is the market day, and still with us is erik with newberger berman and

david with cumberland advisors. k make you just heard eri his case about risky assets. what is your call? picassoou have got a indicator, rising prices, low, low interest rates that persist, driving all asset prices higher, because the mechanism is a discounting mechanism of an interest rate. that is the most enduring component, and the interest rates are low, and they are and 30 basislow, points, which in the 10-year yield, is not a major trend change, especially, and i don't know. erik sees this the same way. if you have this negative interest rate in place for a trillion euro in the second-largest reserve current the of the world, it is going to be there for another year and a half. it is going to suppress yields

and bit of asset prices. alix: basically? erik: look, that is our base case of you. the central banks have their thumb on the scale globally, but during the break, we were talking about what are the risks, what are you concerned about, and our concern, our fear is 10t if the swiss yield years negative, the german yield out seven years negative, it is forecasting a technical deflationary environment, a stagnation environment as opposed to low to moderate growth. it is not our base case, but it is a concern, and we are watching it closely. this comes across in the oil chatter. does this signal new demand, or is this supply falling off? it actually makes a difference. david: it is an impossible question to answer without enough time to look cap with, and i do not know how to get up there and look backwards, but the point of interest rates, we

have central banks that can set an interest rate anywhere they want. they have unlimited capacity to do it, so if you look at the yield curve based upon the actions of the central bank, you could say i think safely that is forecast of weakness. that is a central bank policy. whether i agree with them or don't agree with them or would do it really is an issue. that is what we have to live with every day. the: so, david, what are reasons? david: major changes in central bank policies that go from leaning towards easing and very gradual exit to a hard tightening to fight and inflation which has not yet arrived. that is a huge game changer. what about emerging markets? we worry about the temper tantrum we have seen. china growth is 7%, and i say that because industrial production is reflecting back. ik: emerging markets are

facing headwinds. manufacturing, exporters, so it is fair and appropriate that emerging markets have struggled for a while. that being said, we think that china is not falling off a cliff. we think china stabilizes, maybe at 6.5% growth. that is still a lot of growth. take that risk't out of the equation when thinking about emerging markets, and given the selloff we have had, i think there are some -- i outk you can take that risk of the equation when thinking about emerging markets. david: we favor asian emerging markets heavily and other places in the world very, very carefully. : the way we have chosen to express that view is going up hardtructure, primarily currency sovereign bonds. we think that is an attractive relative position. we are more neutral on the

equity side of the equation. alix: is commodities a risk event? absolutely, almost an existential risks. when it was priced at $39, that is pricing in the secular deflation story. have you is that it was at $49 and overshot low, i think 60 may have overshot the other way, given inventories and supply and whatnot, and i think you will see some more volatility once again 890 some of these slow down fears. thank you for joining us. david, always a pleasure. bloomberg it up for market day, but tomorrow, heavy coverage of retail, retail sales out in the morning. ralph hearing from lauren, jc pennies, macy's. alix steel. have a good night. ♪

emily: rison's plan to take on google and facebook, but is there room for others? .hat is ahead welcome to bloomberg west. i am emily chang. coming up, samsung unveils its smartphones strategy, and what about a smart phone plan? i will ask the guy in charge, and is an initiative a website killer? we will look at the eye-popping numbers that show the company's global reach, and will tencent take a page out of