alix: we are just moments away from the closing bell. this is the "bloomberg market day." i'm alix steel. ♪ [closing bell] alix: you are looking at an smp at its biggest weekly loss since the end of may. stocks relatively weak, but you are looking at a triple digit loss for the dow. the s&p looking at its biggest weekly loss since the end of may.

two words for you: inflation and fed expectations. that was three words for you, i am not going to live for you. now we had basically a risk off day because of problems across the board. treasury prices were down, the dollar was selling off, it was all across the board. >> we have a big story that combines economics and business and politics. obama got a pretty big rebuke from his own party with a failure to pass this trade legislation to expedite his ability to negotiate trade bills. it is a little complicated, people did not think it would pass. there was two bills, one needed to pass, one -- both need to do pass, one past, one didn't. someone mentioned it it was -- mentioned it was the lame duck era of the obama presidency starting today.

alix: in stocks though, there was the mention of restoration hardware. 15% comps, when have you last heard of a retailer selling at 15% comps? what was fascinating to me was that you had restoration hardware being all about the brick-and-mortar. they even have a catalog. it is 33 hundred pages, you can kill someone with it. joe: i really like stocks that tell something about the economy, and there was an under the radar market indicator which is a huge thing where the stocks have been on a tear, and there is more activity and we are seeing higher wages, so i am always on the lookout for strong signs.

this is a another piece of the puzzle -- this is another piece of the puzzle, so to speak. alix: americans were update -- upbeat on their wages. joe: of course, we can't not talk about greece. today there were not as many dramatic headlines as the rig yesterday, but i saw one this morning where the public was saying and nothing was happening in greece, but something is happening in greece. the economy is continuing to deteriorate. this ongoing uncertainty is continuing, and this shows how much the government continues to oh. it is falling behind. greece is falling into an economic hole. it mitts all of this uncertainty and declining economic activity, the unpaid bills are piling up -- admidst all of this uncertainty and declining economic activity, the unpaid bills are piling up. with us to discuss all of these

things, we have john and our own carl it all of -- we have john and carl. alix: did you guys e-mail me about my dress, saying, nice job? joe: i would say this trade bill defeat is about politics. carl: about two weeks ago, americans believe this trade bill is negative for american workers. if this can't be sold to rust held state them across in michigan and other places, then there is a real problem here, so the american people have to be sold that this is really an effective economic measure.

alix: or gdp, what matters more? will it keep jobs in the u.s.? carl: that is a very interesting question. so the focus or the bigger priority is america's middle-class and working class individuals and the income they will have it that is not saying i am anti-free trade, it certainly benefits the economy, but it has to be implemented in such a way where workers are not given the short end of the stick. one classic example is the lack of respect for international -- intellectual property rights with these pirated goods, welcome a predominately goods manufactured abroad. alix: i am curious if this really means something for exxon?

john: we go through these things every few years, i can remember nafta and other agreements prior to that. they are always stumbling blocks. they are part of a process of globalization over 60-summit years in the process. it is inevitable that many of these things will come in some formation to exist, they have to. regional agreements, even though there are challenges, but in the process of globalization and technology, everything is a transition. in 30 years in this industry, i have never seen so many transitions happening simultaneously. whether it is due to political gyrations that we see, or other elements that affect all of the

various classes, everything is in flux. the good thing is that we are in the process on a global basis of recovery in the united states, and we have been on a economic expansion, we believe since the end of 2013. although some would say it is more pronounced. joe: another story that totally astounded me was that we are seeing increases in global bonds. i believe -- seeing decreases in global bonds. sovereign bonds head for this slump, and if we continue this, the worst one since 1987. it is not just historic in size, but it is also global.

the u.s. 10 year yield has risen, the german 10 year yield. in japan, there is a pretty big rise in yields. is this the start of real change? we had this incredible bond market led by lower inflation and is this the start of a real seachange, do you think? carl: in my opinion we are in a watershed moment. we are shaking off the doldrums and the economy is getting legs of its own to such a degree that the fed is now willing to pull the trigger on a interest rates later this year. things are improving in europe, so they've got big problems with greece, yes, but in general, there is an increase in economic activity and manufacturing and tivoli -- manufacturing activity. it is on the mend. that means we will have more inflation, less quantitative

easing, and all of these factors add up to a higher interest rate. the rate is still very low in germany and very low in the u.s.. alix: for that reason, i was reading some notes from bank of america and barclays is that we are seeing a little bit, but we are seeing it as of subdued -- as a subdued trend. is this just a short-term blip then? john: the biggest thing that you have to look out for is confusing reflation compared to inflation. that is comparing to where we have been. i think the euro, i think when the euro zone interest rates start moody -- started moving up, they were up about 1000% in terms of yield at one point just

from april, but at that time i think the yield was 0.075%. alix: so put it in perspective. john: yes, so if you put it in perspective, we are coming back. and if you look at the fourth quarter of 2013, everyone thought we were going to be at 4% in 2014 on the 10 year. joe: energy prices, is it keeping it down on a slow-moving economy? carl: before we go, we have to talk about the fed next week. really quickly, what is your call? joe: the two meetings in place, currently the fed is not looking, .01%, it is off the table. carl: it is not going to happen. they are going to tweak their forecast and altering the former guidance -- forward guidance and they can't commit to anything

explicitly, but they want to keep the option for second half hikes contrary to what the world bank and imf are urging them to do. they determined that and that is that. alix: and we have seen a rally since the beginning of june. take a look at that. these are the investors of the feds. carl: they want to keep the possibility of second half rate increases in play. they will do it through their language and guidance and the market participants are getting the message. recently, economic data has been firming, and this is all consistent with a gradual liftoff. what the vet has to do -- what the fed has to do is keep that mentality in place. alix: coral, it is good having you here. joe, stick with me, john, so

good to have you. ♪

alix: welcome back to the "bloomberg market day." i'm alix steel. we want to get straight back to the top stories this afternoon. youtube is trying to woo viewers from amazon.com, and it will offer live streaming as they play games, whether they are battling aliens or playing soccer games. there will be dedicated pages alongside channels from publishers and creators. and this may be a steve jobs moment for jack dorsey. twitter announcing yesterday that ceo dick costolo will be leaving and replaced by jack dorsey.

dorsey is one of twitter's cofounders and left in 2008, that has been invited back, just as jobs returned to apple after being ousted out. we spoke with saudi arabia and prince alawaleed and he had these thoughts on twitter. alawaleed: right now we are on the stage -- at the stage where we need a greater social network, and mr.costolo would be great to focus on twitter to do its own thing, and bring it into, into, into an entity on its own. alix: he said a new twitter will be a force to be reckoned with. senator elizabeth is fighting

back from criticism from jamie dimon. dimon said "i don't know if she understands how the market works." now in a podcast interview, lauren -- warren told huffington post that she says i fully understand this system and that's what they don't like about me. she has gained prominence as one of wall street's fiercest critics. and those are your top stories. and our chief strategist from oppenheimer is back with me, and we have industrials, tech, consumer discretionary, health care, and materials. i read materials and i say, what? why? john: at the end of all of this, we are experiencing recovery in europe, we are seeing china increasing stimulus, we can expect that things will remain in the doldrums for materials,

and curiously enough, materials is the fourth best sector of this year if we go top sector is health care, second is consumer discretionary, third-best performer is technology, and the fourth is materials, and beneath that on a year to date basis, all of the other sectors are performing under the benchmark of the s&p 500. peter: we have -- alix: we have inflation that is relatively some dude and we could see a bounce back from the markets? john: we have seen some stabilization in terms of a rebound in energy, of a low of about $33 or $44. so we think as we move forward, we will get the material sector getting more orders from energy, and that impacted that first

order, and he did that similarly for industrials. when it comes to industrials, we think of industrials as the new technology. industrials in the old days was a lot of old metal, rubber tires, and other things, but now it is made up of sensors and it makes companies more efficient. so we are looking for economic expansion, especially within chemicals. alix: you also have health care, which is scary. if the fed raises ray, utilities go by the wayside, but is that a biotech play? we had the ipo yesterday, and there was a killer run, there was like 92%, is that what your bet is on? john: it is actually on the entire sector, spread across it, also large cap pharma. the global demographic, the baby boomers are finding when they were considerably younger, they

didn't have any prescription drugs in their medicine cabinet. now, every time they look, there seems to be another jar in there for something. [laughter] john: the big thing of all of this is that if you look a health care, aside from that, in emerging markets and frontier markets, there is increased usage of prescription drugs moving away as we move towards homeopathic drugs, ironically, they are moving more and more towards traditional drugs. alix: what is your favorite country that you want to invest in? john: it remains a united states, but on a regional basis, we continue to like europe. we liked europe early on, and then the dollar kind of threw us off, but we would have to think that the eurozone based on the competitiveness of the euro versus the dollar, and what we are seeing just internally in europe, there is better manufacturing numbers, i think it is a good opportunity -- alix: positive, so positive as

always, john. chief marketing strategist from oppenheimer. so good to see you. coming up on the "bloomberg market day," we will show you how an invisible computer code runs your life. ♪

alix: welcome back to the "bloomberg market day." i'm alix steel. we know when we use a computer, we enter software.

software controls the fabric of our lives, but how does it actually all happen? paul ford is the author of this week's newsweek -- this week "business week" article. paul: what is code? before we answer that, maybe we should answer the question of, what is a computer? a computer is a clock doing second grade math. tick, take a signal and put it in box one, tick, take another signal and put it in box two, tick, take those two signals and at them together. you with a pen and paper can do anything that a computer can do, what you can't do any of those things at billions of times per second. that speed is like card trips on top of card tricks.

code is a means of harnessing the computer's power, setting up all of those card tricks. it all starts with words and characters entered into a computer by a person. they are creating programming language. it tells you which words you can use to tell the computer what you need it to do. take a look at this code. it is in javascript. a very common language that turns a webpage from a document that looks like nonsense into software. many webpages, amazon for instance, are packed with software code like this. there is code all through here, code that makes the page into something dynamic. now, javascript is just one of thousands of language and they ultimately all do the same thing. they ultimately make the computer go. so why does it matter which you choose? you don't take a bicycle to buy a fridge or get a ice cream to get a neurosurgeon.

so one would be used to build a game for xbox, and another one would be used to make aliens of websites like at sea and facebook. another code is used by instagram and a lot of scientists. so if you know a computer is a clock with benefits and we know that you can use programming language to make software, but how does that actually happen? well, a computer takes the programming code and reads through it character by character and it leaves behind what the computer scientist would call tokens. once it has tokens, the computer does the digital equipment of furloughing its brow and reorganizing things that are necessary in a process known as compilation, making the code into a translated set of digital grunts known as a machine language. that is the kind of thing that computers can execute. the grunts have become a part of the furniture of your life. it is how you can watch something on tv or get money out

of an atm or how it elevator can take you up five lights of stairs it code can run as many times as you need. it is familiar and invisible, and that is the story of code. alix: awesome, and i encourage you all to read the "bloomberg businessweek" article by paul ford. it really opens the door into coding. thank you so much for watching the "bloomberg market day," i'm alix steel. thank you everybody, go out and enjoy the outdoors. we will see you back here on monday. ♪

announcer: from our studios in new york city, this is charlie rose. charlie: everybody in this country should learn how to program a computer because it teaches you to think. that is what steve jobs said in 1995. today, there is an estimated 15 million people who code professionally or as a hobby. but for the rest of us, computers are opec. even as they power everything from our cars to coffeemakers, little of us know how they work. new covermagazine y