pimm: welcome to the bloomberg market day. a global selloff has turned into a rally in just the past couple of hours. we will look at what is behind the bond market volatility. rate why the imminent fed hike is bad news for utility is imminent at all. not if christine lagarde has her way. these are still the worst industry performers. there were 10. rick perry entering the presidential primary contest for the 2016 elections. hillary clinton faces another challenge -- challenger for the democrats. ♪ "market makers."

.ood morning i am matt miller. pimm: i am pimm fox. are seeing a global selloff in the bond market. that has reversed. taking a look there. the yield on the german .83.nment, the greek bond also falling in yield. that means prices are moving higher. france, 1.13. listening on surveillance this morning, tom keene saying inching closer closer to 1%. a real turnaround in the yield. >> taking a look at that equity market. a decline in the dow jones industrial average, off more than half a percent, lower by almost 100 points. s&p 500 at 2103. .4%.asdaq down about .

of the federal reserve should hold off on interest rate .ncreases until 2016 that is the message today from international monetary fund. peter cook has more on the pressure coming from christine lagarde, the managing director, to delay lift off. how surprising is it probably a better question? eter: not a big surprise. the fact that this was voice ,irectly by janet yellen's christine lagarde, the biggest surprise. the imf urging them to be cautious for quite some time. in part because of financial stability concerns. the annual assessment of the u.s. economy release today. growth forecast for the second time to 2.5% from 3.1%. christine lagarde says the imf has reason. we believe the

trade-off between starting to early and risking disinflation and having to return to lower rates is higher than the risk of slightly above 2% inflation going forward. just last month janet yellen said she still expects to raise rates this year. members have raised -- open the door to a rate hike. going to be really interesting how the imf advice plays at the fed. the central bank does not take too kindly to outside pressure. we will see if this has a difference. pimm: thank you, peter cook, our chief washington correspondent. i sawi was shocked when the headline roll across. a massive surprise. pimm: more on what treasuries are doing, rising for the first time in four days investors may be reevaluating whether. it has gone too far. -- thepoint the yields

yield on the 10 year german almost half a percentage point to the highest level since october. pimco's chief investment officer for global fixed income explained what is driving the market earlier on "market makers." >> you have the ecb and qe, which tends to push yields down, and then you have fundamentals and value. value the fundamentals have been reasserting themselves. yesterday ecb president, mario draghi, warned that market should be prepared for higher volatility. figures of the economic came out today before the may jobs report tomorrow. last week you were americans applied for unemployment benefits. the total number of getting jobless insurance payments was a small list in more than 14 years. meanwhile, the bloomberg consumer comfort index fell last

week to a six-month low. higher gasoline prices may be blamed. the average price of regular gasoline the highest since december 1. matt: we are waiting to see who will make the next move in the greece price -- crisis. the greek prime minister plans to summit with his inner circle. that is after they fail the bailout fund. greece needs the money to avoid a default. the grist is rejecting proposals that call for tax hikes and pension cuts. -- cipris. shares of dish and t-mobile rising. there is talks in the wall street journal they are in merger talks. a number of things have been resolved, but not the price. according to the report, the t-mobile ceo would run the companies are buying -- combined. charlie ergen would be the chairman. he is said he would like an acquisition to put up $50 billion stockpiled airwaves to

work. southwest airlines knows has to draw a crowd area there was so much demand for airfare as low as $49 one-way, southwest's website was overwhelmed, and many people could not book any trips at all. those are your top stories this morning. there is one that really sticks out here yet i think it is the day. pimm: the international monetary fund, christine lagarde's comments. coming up next hour, dish network and t-mobile. dish network said to be in talks to a higher t-mobile. can dish actually do this deal? looking at utility stocks. down about 7% so far this year. the time to buy utility stocks? how about clouds in your coffee? usinge coffeemaker is technology to turn around its business. , the story we are just

speaking about, the international monetary fund urging the federal reserve to postpone liftoff until the first half of 2016 as it cut its u.s. roads were cast for the second time this year. matt: christine lagarde talking about how a u.s. rate hike could impact the global economy. higher policy rates could result in financial stability consequences that go well beyond the u.s. borders. in waiting these risks, we think there is a case or waiting to raise rates until there are more or pricesigns of wage inflation than are currently evident. words, we believe that a rate hike would be better off in early 2016. matt: joining us now to discuss his bloomberg bond reporter lisa romowitz.and eric crane.

what did you think when we saw the news come across the bloomberg terminal this morning? were you surprised? assertiveurprised how and explicit she was. stand really you depends on where you sit. the imf has a different role. they are looking at different issues. i think that really shows. they are looking at the downside risk. that is what they have to emphasize. it is not the first time they have done that, even this year. matt: you used to work with the good people at the federal reserve. i think it is always frustrating when you find yourself in the public eye and feel yourself being criticized even when you feel you are doing your best. >> in the public eye, that is what they do. >> that is what they do, but it is a tough job. what you don't see is how

they're working hard behind the scenes. plus the new mandate for financial stability and how complicated that makes the work. i want to ask you what in heaven's name did anyone think would be accomplished by having the imf a sickly tell the federal reserve and all of u.s. policymakers that they should not raise rates until 2016? >> politically looks good for them, looking out for the little guy. olivia: why don't they spend their time on brief-- pimm: why don't they spend their time on greece? very colleague made this astute point, the imf does this all the time. this is what they do. the u.s. is not accustomed to it because we are the behemoth. this is what they do. they go out and tell people and countries, this is what you should do and this is what the growth outlook should be. we are not used to them doing it to us. pimm: eric green, if you were

short bonds, this is not a good day for you, right? >> not at all. i think the big turn in the bond market has very little to do with what came out of the imf. they got to 1%. in and sawyers came that as an attractive opportunity. my own view on the imf is i am not all that surprised. i think josh made of the -- great point that the imf has a very different mandate, a global mandate. the u.s. has much more of the domestic mandate. the reality is i am sympathetic to the argument you do not to raise rates this year. her comments missed the joke in terms of what is going on at the fed and why they want to raise rates in the first place. pimm: i actually thought there is a conspiracy theorists working inside of me.

maybe because janet yellen and christine lagarde our friends is giving yourde lend the out she needs. she has been promising to raise rates this year, but nobody believes her. the market does not price it in, right? maybe not out that she needs. >> i do not think she was looking for an out. the -- they should not even if they are not raising rates, they should be looking at raising rates. she is concerned the market will not be prepared for this. this is what she was talking about in april. but has to prepare the market for fed hikes. been planningas to raise rates and step away from -- from the monetary stimulus for years. how is it ever going to move past this? will inflation suddenly start picking up enough in the first quarter 2016 to make everything

seem copacetic? right now people have been pushed into crowded possessions. you have certain types of behavior and bond funds. if the answer to prolong the environment forever? a quickt me ask you question. we were talking to giulia ball who said janet yellen may raise 10 basis points. -- gee lebae. >> i think the author very low. i think they're going 25. that was a good point that was just made. when the fed is trying -- the fed knows one thing, when they raise rates they do not know what is going to happen. ms. lagarde made a good point that there is stability. that will be prevalent matter when they raise rates. the point they have been rateing the markets for a increase for one year, this is heavily socialized. i think when the fed is looking notll of this, they are

thinking, what are the economic conditions for the first half of the year or even the third quarter? they are benchmarking where inflation and growth will be 6-12 months from now. even imf says it will be 6% growth. i can tell you with near certainty we will have headline inflation in january, maybe 3.5%. think quite contrary to the tone of the discussion this morning, when we come out of the meeting in june, i think the bond market will have a massive wake-up call, because i do not think the dots will be shifting lower. i think the prevailing bias will be to rate hikes. in june, only six months left after such week growth, that is something the market cannot dismiss. matt: eric green from td securities and josh wright, thank you to you as well. ahead on the

bloomberg market day, we will hear from mohamed el-erian hear what he thinks the christine lagarde's comments. that is next. ♪

matt: welcome back to bloomberg market day. i am matt miller. i am pimm fox. right to julie hyman with a look at what is moving the markets right now. julie: i wanted to focus on commodities. i also want to point out one of the biggest decliners in the s&p 500 has to do with energy, chesapeake energy. have an analyst saying that it should be a short, the company could become severely distressed over the next 2-4 years and calls that it has any

equity value at all. the shares down more than 3% right now. if you look at the bloomberg terminal, you can see the already existing short interest. already a very heavily shorted stock. that short interest now at 24.5% , the third most shorted in the s&p 500. broadly, take a look at crude prices today, because the .ove we are seeing is notable this week crude on pace to snap a record 11-week winning streak, the longest we have ever seen. down today by 2.5%. interesting commentary for the -- from the former head of research at opec, saying brent will trade between 40 and $50 per barrel in the fourth quarter. he does not think fundamentals look good for oil prices. it is not just crude. take a look at material stocks in the s&p 500.

we are seeing a broad selloff there, down 1.1%. the worst day and more than two months for the index. a lot of the other metals, commodities are not doing well. copper off one point 25%. gold trading down. silver down more than 2%. we are lookingon at overall in the stock market, not dramatic action, here is some drama for you in the metals market. for: thank you very much that drama. julie hyman, chief market correspondent. a look at the other stories we're following. a sale at general electric. bloomberg news reports ge is putting all -- almost all of its commercial loan business in the u.s. on the market. the company has hired banks to sell up 20 billion in assets. -- sell off. the pinch-runf vote most of the ge capital business and refocusing on manufacturing.

in the end and flow that happens every 10 years. chipotlesfollowing lead in going all-natural. removing artificial flavors, colors and preservatives from the menu in north america. the change will be phased in over the next 18 months. this sort of eye candy guaranteed to stop pedestrians dead in their track. the 1998 mclaren and one sports car on this way in southern bees in new york. the auction house in -- indicates it may bring $12 million. buy it and you join a very exclusive club. jay leno, designer ralph lauren, bought onelon musk of these. you can see him doing that in a really cool old documentary on youtube. get one.be you will matt: i would like one.

i need a kickstart her campaign. pimm: it is all possible. what is also possible -- possible is the t-mobile merger. talks that they are in talks with dish network. while the purchase price is unresolved, the combined company would have a market value of 64 billion. here to tell us more about the latest in these talks from san francisco we are joined by alex sherman. from london we have mark each. let's begin with you alex sherman. beach. >> i think it is a board for people to relays dish and t-mobile have had talks or three years on and off. this is a deal that has been long a possibility, and one that dish definitely has interest in doing. they have had interest in doing it for several years. we don't know exactly if the

talks have really progressed to the stage that anything is significantly more serious than it ever was. the timing does make sense if you go back and look at reporting. late last year we set dish would try to buy t-mobile in the first half of this year. that is sort of what we're seeing here potentially. that said, there are so many hurdles that dish and tell -- deutsche telekom need to overcome in order for that to happen that have not -- not been overcome, and that is the price and structure of the deal. my sources have long indicated that deutsche telekom finds the stock severely overvalued. any deal that was done from a cash ends talk standpoint may need to be more heavy on the cash and less heavy on the stock . those things will need to come to agreement between dish and deutsche telekom in order for a deal to transpire.

matt: back when deutsche telekom bought this company i actually went to the purchase celebration in seattle. haseems like rigid telekom been trying to get rid of it ever since. -- it seems like deutsche telekom has been trying to get rid of it ever since. right, is completely there has been quite a change in valuation. reporting last september talking about a price of $40 per share. now obviously with the premium potentially more. it comes down to the question of leverage and how much people want to do this. -- and how much they can do it and how much is left to put on the table. pimm: who needs the deal more, t-mobile or dish? quite a strong't situation when you look at the other things apart from the strict valuation.

in the last quarter we saw a number of subscribers get to the point where it is almost over taking. sprint and some of the others. at some point it starts to look more attractive. at the same time more x and said. alex sherman, john legend, are they going to get along? >> may be. they are both outspoken. charlie probably likes his spunk to some degree. john ledger could be a better match for charlie with his current german owners who are little bit more close. that relationship seems to have grudging agreement because t-mobile has done so well. at this stage it is hard to question john ledger. pimm: want to thank you very much, gentlemen. alex sherman and mark beach london and san

francisco. more of the bloomberg market day coming up. ♪

ceo, meglett-packard's melman hinting there may be -- maybe more job cuts as the company prepares to split into two. she cited a more efficient workforce structure in a global economy. be more will restructuring costs as we continue to be effective and lane and competitive on the world stage. this is now a global economy, and we have to be competitive. we are very thoughtful about this. what i know is if we do not get the cost structure right, this the happy ending that we all know it can be. matt: hp already cutting as many as 50,000 jobs. ♪

pimm: imf and christine lagarde comments about a potential increase in the interest rate. looking at the top stories. the international monetary fund urging the fed to keep interest rates on hold for now. the annual report, the imf said the fed should delay rates until the first half of next year. christine lagarde said rate should stay where they are until there are more signs of inflation. we believe the trade-off between starting to early and frisking disinflation and having to return to lower ofe is higher than the risk slightly above 2% inflation going forward. u.s. the imf cut the

growth forecast from 3.1% to 2.5%. the imf said it would be harmful for the global economy or the u.s. dollar to get much stronger. talk of a merger has shares of t-mobile and dish rising. the wall street journal says the two companies are in talks. reportedly a number of issues have yet to be resolved such as price. john ledger would run the combined company and charlie ergen would be the chairman. charlie ergen has said he would like an acquisition that would help him put up $50 billion stock pile of airwaves to work. in ukraine, a new round of fighting threatening a three-month-old cease-fire. ukrainian military says pro-russian rebels have attacked the town -- a town in the eu some part of the country. at least five soldiers killed in two dozen wounded. rebels say they were responding to an assault. the new world videogame hall of

fame has its first class of inductees. tablecludes the early tennis game that introduce millions to electronic play at their favorite local bar, and five other games are being honored, doom, super mario brothers, paxman, and world of warcraft. the videogame all of located in rochester, new york. those are your top stories at the moment. markets are closing in europe. we want to go to guy johnson in london. >> good afternoon. the markets beginning to shut off in europe. it has been a pretty difficult day. most of the european indices down. the ftse down by 1.3%. the dax a little bit better done by half of 1%. it did not start off particularly well. we have been watching what has been going on with the bond market pretty carefully. you can see the gap lower first

thing this morning. we came in to trade in a fairly negative story. since then we have firmed a little bit. we are off the high. the imf made the comment. christine lagarde in the comment. we have faded a little bit since then. greece remains front and center and well. everyone watching carefully to see if we get the imf bond payment. we have had a tweet indicating he will update the greek parliament tomorrow at around 6:00 p.m. athens time, 4:00 london time. update. an all eyes definitely on greece. the bond market continues to be a factor here just stocks taking a significant hit today. tomorrow it is going to be all about greece. greece on a friday. focused on the imf and whether or not it will get its money from athens. greece and its money

tomorrow. guy johnson reporting from london. coming up on the bloomberg market day, utility stocks are rallying today, but still the 500t performer in the s&p this year. have you missed your time to buy? we will investigate. the 2016 presidential field just keeps growing. today rick perry's turn to announce. cbs will offer a standalone surface for its popular standalone network. another reason perhaps to cut that cable cord. first, the unprecedented asking the federal reserve to wait until the first half of 2016 before raising rates. joining us by the telephone to discuss this, mohamed el-erian, the former chief executive of pimco. thank you for being with us. what is your reaction to the comments by christine lagarde? >> i was as surprised as many

others, and for two reasons. one, it is very unusual or the imf to be so specific and explicit about of policy action, and it was today. it told the fed to wait until 26 teen, even though the data remains very fluid. that is the first way i was surprised. the second that something -- people are not focused on what is important, fed officials have been going out of their way to tell the market to stop obsessing about the data -- date of the first rate hike because this will be the loosest tightening in history. low.erminal point will be suddenly with the imf comment, is backtion of the date front and center. that imparts additional volatility to financial markets. pimm: what do you believe the what have been if

christine lagarde had not come out with this specific date you mentioned? expected the imf under the normal way it operates to say something along the lines that the fed should be cautious about the timing of the first rate hike, because the u.s. economy remains fragile, no inflation on the horizon, and the international situation is far from stable. by going much further and specifying the date, first, you saw the movement. as tom keene pointed out an hour ago, the 10 year moved 17 basis points in an hour. that is a huge move for a benchmark that determines pricing in so many different other markets. i think we would have gotten less volatility and less of session about the timing of the first rate hike.

what is the purpose of conducting policy and public? >> drivers.nk of two one is the eye and a is bringing the global perspective to u.s. policy discussion. the imf is worried about the global economy. it is worried about europe, the emerging world, and the imf is bringing the global perspective, hoping that will be incorporated in u.s. economic policy discussions. second, we've seen the imf become more assertive. you have seen it in greece, tighter policy conditions than what the european union with like. now we're seeing it going to the other major shareholders in the united states. i think it is a combination of global perspective and the imf is trying to be more assertive. not unfold tos do

confirm the imf position, does that leave the imf as a mouse that roared? >> i would not worry too much about this, because i think most people acknowledge the data is very fluid. we are getting so many numbers.ng data i do not think anybody would hold the imf to a prediction made it today, given the situation. the what will be interesting is how does the federal reserve field, and will there be political backlash against the imf being so explicit about monetary largerin its shareholder? that is the question that should be asked. very good point. mohamed el-erian, thank you very much. still ahead on the bloomberg market day, we will talk about utility stocks, the worst performer in the s&p. we will find out, is this the time to buy the dividend paying

equities echo that is next. ♪

pimm: welcome back to the bloomberg market day. i'm pimm fox. it has been a terrible year for utilities talks. investors piled in last year, but this year they have been selling. one reason is concerns about when the federal reserve will increase interest rate. utility stocks sometimes a proxy for bonds. here to explain is michael regan and chief market strategist. start off with you, wide eu believe utility stocks have sold off a little more than as of thisr? 8%

morning. they got way overbought as rates came down. you saw that moving to the upside that ended in january. pimm: they bought the stocks because they were looking for higher-yielding instrument? >> that is exactly right. that worked tremendously well until it did not. sellingeen a nonstop fest until then. -- since then. i was looking at goldman sachs report on which sectors were overweighting. wayity stocks were overweight. if it's all interest rates or is there any psychology involved? if i am a fund manager, do i chase the stocks with sexy stories? and is it hard for portfolio -- for a portfolio manager to embrace utilities because it is a boring industry? >> it is.

they look for growth. they look for leverage to the economy. there was a lot of confidence coming in. for thed let's go growth names. you have had the bond market route, which has exacerbated moving utilities to the downside. reportou published a about this, talking about growth . you have at least three reasons why if you are looking to be bullish on utility stocks, these are the reasons. at onefirst one, we are year highs for the bond market. the bond market route seems to be reaching a crescendo. pimm: because volatility usually proceeds what echo a big move? >> exactly. when it gets to 20 or 25 or 30 or 10, that is often the side of a market low and volcano.

is it has alsot been sectors as well as dividend payers that have been our favorites. financials underperformed. industrials because of the strong dollar. consumer non-cyclicals underperformed. -- part they are barred of a bad neighborhood so to speak? >> exactly. if you really want to look at dividends but don't want u.s. stocks on the dividend payers outside the u.s. have done extremely well. you can go internationally as well. so this is a reaction to the strength in the u.s. dollar? the dollar rises and makes things more expensive in the united states. go shopping outside the u.s. and get a cheaper stock. you did the work looking at the funds that punch -- purchase stocks. you said utilities are boring. not going to be boring if you do not get any kind of

interest-rate increase until 2016. >> stocks might be expensive. maybe not boring, not the best , and iut as nick said think you alluded to, it is pretty interesting a lot of things have not followed the playbook in markets. utilities pretty much did. the other group that has really .enefited insurers are up 10% since the bond deal trough in january. utilities are down 10%. pimm: is that also because of consolidation in the insurance industry? >> could be part of it, but you look at the relationship between insurers and treasury yields, insurers take a lot of our premiums and park it in the bond market. higher yield will be better for them.

obviously the important sectors are at play with the bond market. how do you plan for volatility? you think it has reached its peak, but how do you know when it is? >> you don't ever know. top or bottom. pimm: yet you're in a -- yaya or or nay >>? >>i think you have to do your homework. pimm: coming up, presidential politics is a crowded field of presidential candidate. who has announced him and who is getting ready to announce. ♪\ pimm: the 2016 presidential

field is getting bigger and bigger by the day. --terday i -- rhode island former rhode island senator lincoln chaffee entered. he is a republican turned independent and the fourth democrat in the race. later today rick perry expected to announce his candidacy, making him the 10th officially declared candidates in the republican race. not to be outdone, jeb bush today launched jeb bushannouncement.com. let's try to make sense of all of this with phil mattingly. starting off with lincoln chaffee, what does he have to accomplish with this? that is a great question, and the big question since he launched the next or terry committee in april. he did not have fundraising network set up, no natural constituency that are for him to

make any sort of move in the race. it got a little bizarre when he laid out what he wanted to do. convert the united states to the metric system thomas saying it would help with the international relations. hillary clinton is pretty strong. he is in the race, and will be somewhat tutee -- to keep an eye on. the metric system, all right. from towns to kilo, let's talk about rick terry. it is his game and does he has enough -- does he have enough money to play? >> he definitely has enough money to play. a very strong on racing network in texas from his time as governor and time as the republican governors association. the big question, can he bounceback from 2012? he got into the race with a lot of fanfare and the prohibited -- and the favorite in the early

parts of the race. opps moment loops -- on stage. fell apart after that. his ability to prove not only to donors and people in iowa and new hampshire he is as areas candidate area he is a lot of ground to make up. right now in iowa only 3%. nationally 2%. get -- to money to make a move. pimm: talking about money and jeb bush. anything to do with mating -- waiting to make your official announcement say you can amass more money in the race? >> a good bit of why he waited so long as that allowed him to ordinate with the political action committee to raise a lot of money. from what i understand, when that super pac reports a numbers next month, we're talking about $100 million in that area. he is allowed and has an allowed to specific a raise money and asked for many. once he announces next week, he

will no longer be allowed to do that. reason, he is been out of politics for eight years now. he needed time to get his beat get have a few screw up and his feet wet and really start rolling again. they feel like he has done that and now ready to go. about scheduling the debates for republicans? how will they fit all the people on the stage >>? ? of a question. fox news later you have to be in the top 10 national polls and the debate of next year. cnn looking at multiple panels on how to do it. if you only took the top 10, you are living out a state governor in bobby jindal, a senator in lindsey graham. it is not that the field is large, it is also the field is deep. one thing people kind of forgets

is money and resources will be an issue. the big question the party has to deal with. i want to thank you very much, phil mattingly, joining us from washington. julie hyman in the newsroom with breaking news. if you recall a few weeks ago there was a bogus bed filed with the fcc for avon. now the securities and exchange commission is apparently suing the firm. real or not, unclear at the time or at least the people behind it. we will bring you more details as we get them. also, a quick check on stocks. we are now seeing a sellout gaining steam as we approach the midpoint of the session. commodity-related stocks leading declines. joining me for the inside is chief kelly. volatility has been a hot topic. yesterday getaid

used to higher volatility. we have mostly seen bond volatility elevated. you actually say stock volatility might be higher than it appears. if we go back to last year, the average fixed was 14. five months this year compared to last year, we are up a point. 17.5.m 15 to about if you start looking out, everyone is anticipating volatility coming up. we can see that earlier this morning. someone took mario draghi's words literally and went out and bought 55,000 contracts on the july 26 cold. they are expecting it to go up. now the overall volume is above 107 thousand contracts. is huge on the decks and short-term side. they are expecting it to come in

in the next couple of months. this is actually a lot lower. overall, big position especially because it is kind of a decaying asset. is fluctuating so much. 55,000 is sizable. what are you doing? >> you can capture the volatility. you can sell it and bring it in on days like this, or you can go along. you can do it on a cheaper facet. do it in spreads. and short a strike about it and capture the premium. i wanted to talk about the big, rumored deal, team and -- t-mobile potentially be bought by dish or a trade that has to do with that potential field. a great way to

get into the rumored spot. you do not need to come up with a whole lot of money. a call spread like i mentioned before. a lower strike call. 41 and t-mobile. sell the 45. you $1.30.y cost you will get a great risk return ratio. the reason you want to do this is the rumor is straight into the price of the stock. it can be expensive to bite -- by outright calls. 10 times the amount of volume in t-mobile calls today alone. , do it cheaper for yourself it in the spread. this goes out to november. julie: thank you so much. kevin kelly every con. ♪

betty: welcome to the bloomberg market day. the imf puts pressure on the fed, urging to delay interest rates until next year. how unusual is this? pimm: t-mobile may have found a suitor. after a reportng dish network is in talks to acquire the fourth-largest wireless provider. latest tok perry the join the crowded gop race. he will make his announcement and just about 30 minutes. we will bring it to you live. ♪ pimm: good afternoon. i am pimm fox. betty: