this is the bloomberg market day . anchor: another day, another republican throws his hat into the presidential race. thelet: and we explain legal claims behind fitbit. scarlet: good afternoon, everyone. i'm scarlet fu here with alix steel on this thursday afternoon. is off a nasdaq fraction. a pullback from those record levels. part of the reason, scarlet, transport leaving the the client. the dow jones looking at the longest losing streak since november 2012.

scarlet: industrials are the worst performers, off by half of 1%. you mentioned earlier, really seeing investors pull energyut of those shares, those producers that encompass those stocks. also looking at the 10 half and -- you did 10-year have a portfolio managers saying policye fed will halt and till 2015. percentthe yield at 2.3 by december. we are turning to a bloomberg exclusive. bloomberg radio's michael mccain and kathleen hays are talking to james bullard, the president of the st. louis fed. we want to listen to that interview, which is in progress. gdpf you take the quarterly

numbers and run them through a filter, you will get seasonal factors that should not be there. we have got to view the first-quarter numbers is a little suspect. last year, we looked through the number and we did get very strong numbers. kathleen: macro economic in st. two and atracking at quarter present, but you still do not have enough growth in the first half of the year. james bullard: i do not think the bounceback will be as germanic as last year. by the time we were done, we were talking about 4%, 5% growth for the quarter. i do not think we will quite get that this time. it is a pattern. and you are talking about original seasonality here.

if the pattern follows, as it thatast year, you expect data to accumulate as you go through june and july. confirmation. we have to see that in order to number the first-quarter is not as weak as it initially appeared. michael: we had charity own say last friday it would be appropriate to raise rates this year. should we assume that the case is for a rate increase in 2015? when you look at the economy overall, five .4% unemployment, -- 5.4% unemployment, these numbers are not very far from normal for the u.s. economy. inflation is low, but it not that low. we think a stronger cpi, core cpi just recently, so i think

inflation will move back toward target. we basically are going to be targetn our employment , butur inflation target when you look at policy itself, -- why are wen not getting back to normal. there are long lines. you cannot be saying -- we have to get all the way back to perfection the four we even start to normal. so, i think the base case is we definitely -- at least for me, we want to normalize policy, but we do have to get by this issue of first-quarter gdp. michael: is that mean june is awfully table given that we will only be getting revisions now when they are supposed to be -- we are told it is still a

possibility, but really? james: labor markets continue to be quite strong. we have another labor report here. the joy of data-dependent policy as we do not have to make a decision when we -- until we get to the meeting and have all the data. but i appreciate markets move the start date back for the normalization process, because we have said it is data-dependent. that is totally fair. kathleen: if you look at year-over-year cpi, which my colleague and i steve matthews -- he is here as well -- you have year-over-year cpi at the headline -- and you are a big proponent of 0.2. that's a long way. the headline, 0.3. of course, moving up. with inflation at this low level, is that when we are seeing jim bullard, who has

started raising interest rates -- even jim bullard can say i can win because inflation is so far from target there is no rush? james: what is going to happen, the year-over-year rate will start to move up. i expect that to happen as we move through the year. we will keep an eye on that. if you try to strip out the , thets of inflation effects of oil prices on the coaltion rate, you can use -- that is probably not the best way to do it anymore. i do not know why we do that. use the should do is dallas fed's pce, and that has been pretty stable over the last year, and i think we will start to move back to target.

you see the data come in about as they have been, is that good enough for a rate increase, a policy move from september? or do you need to see in acceleration from where we are over the summer? james: i think our base case is we would like to normalize -- or at least i would like to know more -- normalize and that is what i will be arguing for. as long as we do not have any economy isions the slowing down, i would be supportive, because we have a long, long way down. kathleen: he market seems to be saying, -- the market seems to theaying -- november by

earliest and a lot of market watchers have the same view. you may get a raise by the end the economy ist improving, but there's not that much oomph. james: i do not think they got it right. i expect unemployment to continue to decline. i think what is going to happen in here in the next six months or so, maybe eight months, we will be down in the 4% range. it is essentially boom times for the u.s. economy. it does not get any better than that. interest rates are zero. you are running very low .nterest rate policy i am overstating this to make my case. but you know, that kind of thing is a recipe for asset price

bubbles and a lot of things to happen. you have to think ahead. over a two-year horizon. we are looking at a very strong labor market, and very low interest rates. i think that could lead to asset bubbles. i think we should be hedging our bets. let's try to get that. once the data comes in in a let's try toway -- get ahead of any asset price bubble. michael: when you say we have a long way to go -- what is the foropriate policy setting those levels and what is your neutral way -- rate? james: the appropriate setting is not zero. that is the point. exactly where we should be, i

think we can all argue about that, but if you look of the rules, definitely they would be higher than they are today. they tell us we are behind schedule relative to where we should be. you can argue about whether those are good policies or not. certainly rules of thumb have served us well in the past. was we getget going the opportunity to get going. kathleen: a lot of comment comes in from the federal reserve, and the bond market. concerns whether the bond market could spiking hills something. is that a concern of yours? is the fed too concerned about ruffling the bond market's feathers? i don't know if we are concerned about it. under the new transparency doctrine we try to be as good as we can be on this. i think when we inform markets great chair yellen does a

job with this and vice chair fisher is also great. if it that point people are still surprised when we make a move, they're going to have to suffer in the market. we're trying to be as good as we ourbe in stating what intentions are. michael: this is well advertised event? james: well advertised. i do think that there are traitors out there in global markets to say, this is never going to happen. it has been six and half years at zero and they will that on zero even further. when that moves, they will have to re-price, but what can i do. michael: [laughter] : youngsters have never gone through a cycle like this. michael: we are going to say goodbye to our viewers on bloomberg tv, but stay with us. we have almost an hour left of our interview with james bullard

of the st. louis fed. and you have been watching that interview with james bullard. we need to get going. tightening, asset bubbles. those are the key points i heard. scarlet: the interesting thing is, there is a shift in his rhetoric. he was more dovish. his view does not necessarily represent the consensus view, which is much more dovish under janet yellen. tox: they say the fed was raise rates because they want to, they just want to get off the metabolic hurdle. watchn read -- you can the rest of this on the bloomberg radio app. scarlet: running for president on the republican ticket -- we will talk about what that means for the party and its other contenders, coming up. ♪

scarlet: welcome back to the bloomberg market day. let's go to julie hyman with the latest on the markets. julie: when you look at the doubt, the smb, and the nasdaq, we see a pairing of the losses we saw earlier, which is now the a 10th of 1%. earlier it was down a half of 1%. not much of a ll -- selloff at this point. the story we have been watching all day has to do with the chipmakers. shares ofuge deal -- little changed, broadcom shares actually lowering. they are trading off the options price, spiked well above the offer price yesterday after the

report came out that we were going to potentially see a deal. now they are coming back more in line. what else could happen in the chip industry? rs have seen other chipmake gain on speculation they may be the subject of a bid. of 3%. 3% -- cavium deal, talk of potential fraud in the chip market. take a look at the philadelphia can see ther. you climb we have had for the year to date. it is now -- it has been fluctuating a lot today to your it it is up and trading at a 14 and a half year high. year to date and out performing the major averages and one of the better performing groups

really. investors are going to the cash option, 24 times even up. this is a chart -- i know it is a lot to look at -- of other recent deals in chips. if you look at the valuations and ebitda, there you have the numbers on average of about 13 and a half. uc see 24 times as a much more highly valued deal on that basis than some of the others we have seen as of late and that might he wears some of these frothy comments are coming from, guys. but essentially there is a lot of fight for scale in this business and that's my the reasons you're seeing all of these combinations. fight for scale, free cash flow. thank you so much, julie hyman. more hat in the presidential ring. former new york mayor george pataki. george pataki: it is to preserve and protect that freedom that

this morning i announce i am a candidate for the republican nomination. us from joining houston, texas, mark halperin. hey, mark. does this change the game for the gop contenders? what does it actually mean? mark: governor pataki is not the last person who is going to announce. he is one of the more experienced candidates in the race and no one would make him a favorite. he himself would not say he is a favorite, but i think his and this is on lower government and the fact that he will be a very aggressive participant in this contest means -- i like to use the roller derby metaphor -- lots of people going around that ring, pushing and shoving and he is an underrated guy who has some issues he's going to talk about. new poll shows that hillary clinton is leaving over top republicans. give us your read of those

numbers. mark: she is much better known than any of the republicans. the republican field is very fractured. that same poll shows five different guys are at 10%. republicans to her smarts know that while hillary clinton has vulnerabilities the current polls show a reality. she will be ahead unless the republican party can nominate someone strong enough to challenge her, not just in the popular vote, but in the electoral college. scoringu had clinton 53%. 34% said she was not honest or trustworthy, but 60% that you have strong leadership qualities. what ins of being most important for voters? mostat ins up being important for voters? who are these guys? mark: they are polled from likely voters. a clintony is it is

family tradition. people can think that you are not necessarily the most trustworthy person the world, but still a strong leader and able to be president. wouldin clinton land expect her numbers on trustworthiness be better. shows thatme poll voters do not necessarily thinks she understands their problems or cares about them. but she is the strongest candidate in the democratic side of the race that poll shows, and republicans need someone who can match up with her no matter what of thoses think controversies around her and what that says about her trustworthiness. polls to come. thank you, mark halperin. the sure to tune in for "with all due respect." come -- thell to most expensive weapons program may finally be ready for liftoff. that's next. ♪

alix: -- this is the bloomberg market day. america's most expensive defense program has best game major milestone. peter cook headed out to sea for a closer look at a controversial aircraft. peter: off the north carolina being put to35 is the test. >> it's like being at the kentucky derby. you can feel the course of wanting to go. it's that kind of thing. heater: it has been hailed for years as the future of american combat aviation. plans to buy 400. the navy, air force, and marines each get their own version. this bite -- despite being over budget and behind schedule, the f-35 has yet to fly.

now, they are trying to show the isure is now and the f-35 finally ready for action. >> i have watched every single takeoff and landing except the ones i have been flying and it is a great site to see. peter: with its ability to land vertically, the marine version of the f-35 is the most complicated. it is also the first to join the fight. lieutenant general john davis is in charge of aviation. general davis: i'm very confident this will be great for the united states. major stepill mark a forward for a program under intense scrutiny. last month, professional auditors concluded poor engine reliability could threaten progress. but one longtime critic says he is seeing improvement. >> if i had to do it all over

again, obviously i would not approve of that kind of weapons system in the cost associated with it, but now it is at the stage that it is, we need to go ahead and continue to acquire it. they hope to show that money is well spent. >> i am a taxpayer and i care about my taxes and i do not think my tax dollars are being wasted. scarlet: peter, i love the get up with the huge earmuffs that you had. what doeriousness -- they need before they earn combat certification. those first of all, earmuffs are very much essential because that planus allowed when it goes by you -- that plane is so loud when it goes by you. they need to go for weapons training. to show that they can deliver bombs, for example, and then they will go through a rigorous inspection by the marine corps before they can be certified.

that certification means they are ready for combat, they can go in combat. it does not mean that they will go to combat any time soon. scarlet: thank you for joining us. alix: that is better than the headset i wore last year. scarlet: i love that, too. iam saying goodbye you unfortunately. i will be back tomorrow. scarlet: coming up tomorrow -- coming up on the number market day -- wearing cords. that's up next. ♪ is there such a thing as a sure thing in business?

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hyman at the breaking news desk area julie? alie: pfizer is approaching company for a possible buyout. ucb shares on the terminal behind me -- pretty clear. -- you see the shares on the terminal behind me. pretty clear. it looks like they are trading at a 52-week high. if you're not familiar with selective -- the company produces proteins for therapeutic purposes. there was a note out this pfizer couldg that pursue a deal that could be or antive business inversion deal. most of these deals have not been in france, they have been in ireland or someplace. and by the way, it looks like for cellectis is

about 1.4 billion dollars. that is u.s. dollars. there has been a lot of talk about pfizer in particular. whether we might see dealmaking. this is the latest, the financial times saying cellectis could be a target. in a this year coming up at two point $1 trillion. thank you, julie hyman. let's look at other headlines. of thears that the head cyprus governing body will survive the election, for now. blatter -- -- sepp bringions of individuals shame and humiliation on

action andd demand change from us all. football andow fifa to be dragged through the mud any longer. alix: the head of the european federation is calling on him to quit as will as british minister david cameron. a proposal would require car services to be governed by many roles that govern taxis. it would include picking up passengers at airports. billionaire steve schwarzman said if he were 30 years younger he would be an entrepreneur in silicon valley. he is doing just fine as the cofounder of the world's largest private equity firm blackstone.

hotthose are your latest stories. coming up in the next half hour of the bloomberg market day -- pandora turning 10 years old this year. we will hear from its founder, technologies. we will take you inside the biggest technology deal ever. and gamestop is expected to announce earnings after the close. the battle for your wrist is going right to the court. awbone is suing its rival fitbit, accusing the company of plundering employees and making off with critical secrets. jawbone this left year. they took confidential

information about the business. fitbit denies the accusation and is fighting back in court. guest who has advised companies in similar situations before. he is now the founder of a company in silicon valley, a talent strategies advisory firm and our bloomberg view columnist katie -- that is very cool, katie, because i read you all the time. thanks for being here. katie: thank you. state, you have experienced these losses before. what are they really about? guest: if there is a lawsuit that his the court, it usually follows a lot of attempts for somethingies to work out. clearly there is a lot of disagreement to get to this point. jawbone to take

this action and send the message to their own employees, hey, if you go to a competitor -- is going get serious. they are not going after the individuals who are being accused of taking information. they are going after fitbit directly. alix: that's interesting. we all know that samsung in hate each other, but they were together. what about this? katie: they are p arrivals. you have android doing a lot of innovative things. but question is, will in of us be wearing fitness trackable's in the future? fitbit wants to have its ipo, out, come out strong. this could derail the ipo or delay the ipo, and then you will ,ee that company's financials

possibly that growth start to decline as people where things like the fitbit tracker or the jawbone less and less. alix: is that the goal, to derail the ipo? steve: this has happened to me twice in my career. when i was at linkedin, we hired several people from yahoo! and we got a very stern letter from their legal counsel. you, ifhink it tells you are the recipient of those letters, you can talk to your employee and say, this is a desperate move, i think from a desperate player. not necessarily saying you are taking our best employees. they are saying, you are systematically trying to take information. i do not know how they get the word plunder from six hires. if i look on linkedin, i can see that there are a lot more people leaving jawbone to go to apple and google than to go to fitbit.

it's a pretty aggressive play. alix: that's a good point. katie, what you make of that? katie: they did just seek a big blackrock, which should help them become profitable. but it was not a straight up equity investment of actually a convertible -- a straight up equity investment. it is actually a convertible loan. so blackrock had a say in how jawbone operates. one wonders if a company would take that deal if they were in a great condition, wood they take more equity? alix: that's a good point. ad jawbone is supposed to be pretty good place to work? they don't want to leave? perks,they have all the free food, a really cool office, interested and motivated

colleagues. the company overall, people say, well, it's been going since 1999, they still have not had an ipo. where is their ipo? where is their exit? why are they profitable? alix: hence the pressure. steve, what could be the backlash for a company like jawbone? there is no doubt it is a war for talent out here in the valley and it has been for the last years. it is to per white-hot. thisganization to get to point, usually you want to focus on, i want to be a great place where people want to stay. now you have taken this really aggressive position -- i think it does show a vulnerability may be feeling, because you do not want to get that point where your employees they're going to have to clamp down on what information is shared with whom and the

creative idea flow will be hampered. that is the concern i've got if i am an investor looking at jawbone. if they are worried about people leaving, they will be worried about intelligence leaking out kinds of lockdowns will start happening. that is not the kind of culture people what to work for in the valley and i think they have challenges. alix: good stuff, you guys. thanks for that very insightful conversation. digan and bloomberg view columnist katie brenner. always a pleasure to talk to you. --ing up, the pandora's ceo he slapped out 11 credit cards to find his music service and now it makes $1 billion in revenue. we hear from him next. ♪

back to thee bloomberg market day. i am alex still. just 15 minutes until the closing bell. julie hyman, of course, has more. -- i am alix steel. take a look inside my bloomberg terminal. i have the intraday chart. as you can see, it's been a pretty choppy day. yes, we are rising to the highs of the session. it does not mean we are up. we have cared the declines we have seen today. what are the best performers? abercrombie & fitch. an interesting story, really an ironic one as well. 13% up, even though abercrombie reported losses that exceeded analyst estimates. however, that fund was a little smaller than anticipated, particularly at its hollister chain. take a look again at my bloomberg terminal.

the possible sales for abercrombie, going back to 2012, that is where the declines began. right side on the here, you do see a lessening of the decline. that, too, may be behind the gains we're seeing on the stock today. is the trajectory a little bit better? are things getting a little less worse? it looks like the traders are looking at it that way. western digital, that stock was upgraded. analysts concerned over the impact of week personal computer sales, and the company's shift toward an enterprise business helping profitability. also chipotle is higher. raised into a by over millard and the stock is up nearly 3%. buy over at a

miller tate back -- tabak. that growth stock going into chipotle. thank you. appreciate your insight. now for a look at the top stories causing the bloomberg terminal. a state department spokesman says that u.s. officials believe that they can mate -- meet a june 30 deadline for a deal with iran on its nuclear program. secretary of state john kerry and iran's foreign minister will hold talks saturday in geneva. lawsuitongful death filed by the family of michael brown is moving to federal court. michael brown, and 18-year-old african-american shot and killed , touched offfficer months of unrest. deals with

constitutional issues. and billionaire david pepper is getting behind a new hedge fund, providing seed capital for the first time in his career. anis giving capital to start asset manage company's year. the new firm will invest in global credit. those are your latest top stories. turns 10 this year, at a time when competition in the streaming music business is heating up. announced it is adding video to its service and aple is anticipated to unveil streaming service next month. how does spotify -- how does pandora deal with that competition. chang ined by emily san francisco. i just joined pandora a year ago. pandora am a huge

listener. i am a lean back listener. i don't like curating. i like to press a button and go. founder out pandora on tonight's edition of studio 1.0. a really interesting time for the company, marking territory between spotify and apple. take a listen to what he had to say about the competition. the quest for the perfect play spotify,includes itunes radio, be, amazon music you think about who is my competition and who am i? guest: anybody who is a radio isduct -- broadcast radio the largest competitor. itunes radio, definitely direct competitor. when we think about our own future, it's really how do we remain the best playlist building business around? i think so far the numbers bear

it out. they kid growing. xm, is that a competitor? guest: absolutely. emily: apple buying beats? guest: never think you know what apple is doing. it's a very smart company. be retooled will the summer, maybe a new name. how worried are you about that? have not lacked for competition for a long time. one thing that i have learned this year, building a space is fantastically hard to do. we find more and more confidence in the differentiation we have. emily: did you ever meet steve jobs? guest: yes, i did. emily: did you ever talk to him about this? only said two words to each other. we have the honor of being on

stage together. tom and i spent a week together in a room rehearsing a three-minute presentation and we were kept under lock and key and escorted out of the building and we had to reverse many times for for aehearse many times successfully smaller group of executives and he did say good job after our presentation. emily: [laughter] there's always that talk about apple and pandora. try to buyapple pandora? is that true? guest: we don't comment on things like that, of course. to an extent they have radio products and think that compete with us, but stepping back they have sort of invented this field that we benefit from. raised --tify just more than twice pandora's market cap. they are more focused on subscriptions. you are more focused on ads.

how you think about that? guest: having been in this business for a long time, it's an exciting business. the best thing we can do is stay focused on what we do. we have figured out how to monetize internet radio, which know when i'll. we also have a sales force. they are now penetrated into local advertising. run, that kind of foundation is how you build a really big business over the years. emily: keep in mind, this is a company where 50 people worked for this company for gw's without getting paid. pandora had so many near-death experiences. estergren maxed out 11 credit cards. he calls them the little engine that could and they are not doing too badly, despite all of the top edition out there. alix: all right, thanks so much. you can catch the full interview

tonight, studio 1.0. do not miss it. 7:30 p.m. eastern and pacific. still ahead on the bloomberg market day -- it is the biggest acquisition for the tech industry ever. we will talk more about that a vago deal coming up next. ♪

will singapore's avago acquire broadcom. spoke withondents pimm fox and stephanie ruhle of about what does this merger mean for the industry. much-needed consolidation in the semiconductor space and finally we see a large deal. this will put two high-quality companies together. the sticker shock aside, it is much needed. it is a result of the merger. they have better consolidated

customer base to go after use costs and they have aligned products, on the handset side as well as on the networking and storage side. from a synergy perspective, a customer base perspective, it makes sense. we're a they getting the money to do this? jeff: they had some on hand. they will get more. is not the end of easy money coming soon, but they know you can always borrow at this low rate, so it makes sense to do that he now if you are going to do the deal. we know one of the concerns avago had was whether intel would come along, with a top this bid. our view is that intel is more focused on altera. stephanie: do you think they would come in and top this? nd: it makes a lot of sense.

they have a lot of parlor -- parallel products. you have to go with one or the other in our view. intel made an offer for all terra. if they get into broadcom, they will sort of be thwarting avago there. i think intel-all terra makes a little more sense and avago-broadcom makes a little more sense, particularly because the deal is a little further along. produceat does broadcom other than wi-fi chips? d: they make storage controllers. they make a lot of controllers for servers. telling the server where to put certain bits because you want to be able to recall them at a different pace in a different speed? be recalledto instantly -- and you know, in

technology, a little bit less than so? : they may cable modems and set-top boxes. what they do not make any more whichngular modem chips, they have divested. if you look at the smartphone for example, avago produces frequency chips. produces chips. you go to the data center, they some chips, these guys have other storage elements. you put them together, the has a better presence in the data center per rat. stephanie: what stands in the way of this deal? along, and coming any antitrust regulatory issues, look likesn't anything that will force them to divest a lot of assets. they are not becoming the number one arteaga player in the chip sector -- stefanie --

d: this produces a company that is larger than texas instruments from a revenue perspective. the scale of this is pretty massive. regarding the antitrust concerns, the one thing that might come up is china. authoritye regulatory they aree space, and suggesting looking at previous deals. the chinese regulators, chinese authorities have been looking at such deals more closely. the u.s., may not be a big issue, but china may be a sticky wicket. the closing bell is next on the bloomberg market day. you are looking at the dow off 31 points. ♪

alix: it is coming up at 4:00 in the afternoon.

francine: you are seeing the dow off by about 35 points. the dow and the s&p never traded in the green. but it was a pretty mushy day. here to talk about this is joe weisenthal. at what was weighing on markets overall was a transportation stock. you have the dow jones average sinking. like it is af feel summer day.