is bloomberg market day. i am alix steel. you are looking at a rally underway. the dow is up 113 points. itsup by 11, closing above 100 day moving average. kind of like yesterday never actually happened. all of those vectors moving forward in the s&p. stocksmoving higher as

snapped the two-day losing streak. we look at the best in almost a week. exciting day today. one of the stocks that was interesting was changed. -- haines. it is this big-time player in natural foods. a proxy on the healthy living trend and the -- that shows the direction of the country. to a healthy. every once in a while i completely fold. was watchingck i was cody. it beats a report that

out other bidders for three procter & gamble beauty brands. piper jaffray said a buyout could he transformative. roughly double annual revenue and that jails with most of the m&a and by our taxes we have seen. every company appears to be looking at scale. it is about trimming down a big business, trying to get skinnier and focus on core consumers, sort of what we saw with target selling its -- selling to cbs. joe: things are getting interesting with the rhetoric we are seeing out of grace. the head of finland said they will need them you are cold to get a deal. and tsipras gave a speech today where he talked about imf criminality. you do not typically associate try to get a deal with calling your creditors or no. he said they were in succeeding the greek economy. really rough stuff and there is

are gettinghings bad. i have a slightly contrary in view. i think that maybe this serves a useful purpose. it reminds me of the debt ceiling fight from 2011. one at the end it seems like he got ramadi but the acrimony serves a purpose because then when they have to make their final concession, tsipras said -- can say we got something out of the creditors. greatit seems like the people want a deal. holes are showing. -- polls are showing. that strikes me as kind of odd. the grexit conversation continues and mark gilbert had i have half -- had a hypothesis. the smart way to swear allegiance to the euro in the two

atmosphere, it might just be overcoming the resistance of its objectors. interesting we are hearing plan b. joe: also interesting that we thestarting to see contagion is back. for a long time the word was you do not have to worry about greece because the eurozone has ecb, qa, it is all taken care of. we're starting to see signs that nervousness is coming back. one of the things people look for is the spread between the debt of other peripheral countries like spain and italy and portugal and germany. as you can see, there is a spain-german spread and it is rarely on the rise, hitting its highest level since last october. the fear is or what it appears to be is if something goes bad in greece will we have to start talking about what other effects we will see in other countries. alix: let's get a read on what other people think.

from newport beach, california. and also our chief u.s. economist. how much do you care about greece right now? the topic right now and it will have pretty good if locations for the market area there is clearly an opportunity to tap italy and spain government bonds. the yields are 2.3% to 2.4%. basically trading at the same level as 10 year treasuries and the economy is growing slower with inflation running at least 1% below where we think the u.s. inflation rate is. has createdtuation an interesting situation. you talked about those spreads widening. between italy and spain versus 160 basis points. the euro will be weaker. one of our teams this dollar

strength. the fed will raise rates in september and there is this global diversions between the u.s. and europe area -- and europe. greece inany wants the euro. they want a weaker player. you see this rhetoric continue. what breaks when -- brinkmanship looks like. we have to stare into the precipice to get to the point where the greeks and the rest of the european core are willing to make some sacrifices on both sides. one of the most exciting days in a while, tomorrow. the fomc decision. we have been getting some better data lately. this morning we got housing starts which were down a little bit from last month but we just had the strongest two-month period of housing starts. how is the fed looking at the

data right now and what you expect for tomorrow? guest: this was the posit refreshes. there should the sum retracement in the figures. builders toot of file for permit before the deadline passed. we can see the housing sector is on a significant upward trajectory. it will contribute more to economic output that i has in the past but it is not going to be enough to save the economy and the fed is well aware of that area as we go into the fed meeting, june is theoretically in play but the fed is not going to pull the trigger, especially not ahead of the greek resolution in europe. what the fed does is the tinker with their economic effect -- assessment. they moved in a negative direction last meeting. this time they will backtrack that somewhat. they will need to adjust their growth forecast for the year.

currently they are looking for 2.5 percent gdp growth area that requires the economy to grow 3.5% per quarter in the current quarter and following two quarters later this year. that does not seem feasible given what we are seeing in the data. they will have to scale that down. see howam excited to the adjust inflation. we're looking at the cpi versus tce. what do you think the fed will wind up saying about inflation? they keep saying it is transitory but the pce continues to be way down. this economy is strong enough and the potential growth is lower because you have got less labor supply and less productivity growth. you do not need 180,000 jobs per month to keep the unemployment rate constant today. if you produce 100,000 jobs,

that will cause the unemployment rate even to follow little bit. and limit rate today is 5.5%. it has declined two percentage points in two years. if we keep this 200,000 pace of job creation, we will start to see wage inflation. we are pretty confident it is picking up. we see it from a bottom-up perspective as we are following these companies across these industries in the u.s. the reality is we think the fed has got plenty of arguments to go in september and we are confident they will do that. joe: not a lot of people expecting any sort of high there is a lot of attention on the dot. first of all, how do you explain the dot to a 12-year-old? and what do you expect it to show tomorrow? charlie taking thes by

median dot. two rate increases by 25 basis points. whether they are willing to deliver one or two, they're going to keep that framework intact when we see the new more of. what could happen tomorrow is the cuspterm dot is on of dropping by another 24 basis points and that might not be on the radar screen. it would come as a bit of a surprise tomorrow. we do see the federal reserve dot plot remaining unchanged, what happens to the two-year and the five year? mark: we think those rates are headed higher and here is why. if you look at what the market is pricing in, it is pricing and a fed funds rate of 1.25% and a

1.75% rate in the end of december 2017. we think the market is going to normalize rates much faster. the fed could get to 2% by the end of next year simple because this unemployment rate is coming down. you have a strong labor market, strong consumer, i housing recovery and the reality is is the banking system is flush with cash and you will start to see the consumer come back and so the reality is the wages we think will start to pick up. the market is underpricing the risk that the fed may have to go a little bit faster and therefore, we think the front end of the market like you said, the two to five year art of the curve's phone about. alix: thanks so much. can't wait for tomorrow. confet yellen press rence tomorrow. mark is sticking around. much more to talk about.

we will be back. ♪

this is a confirmation that this was the succession plan for murdoch so we're not seeing a stock reaction at this point. the company is saying, yes, and eight, james murdoch will be the ceo of rocks come july 1. -- fox come july 1. meyeryahoo! ceo morrison melissa meyers spoke. changes do not apply for request for rolling. we filed for it well in advance of when these changes were communicated. the other thing that gives us some confidence as it does not seem that these proposed changes

are contemplating changing the applicable law so it is more about the processes around these types of transactions and the applicable law. alix: the plan should not be affected by potential regulatory changes. donald trump is running for the republican presidential nomination. trump launched campaign earlier today in new york. he said the u.s. has become a dumping ground for other he vowedproblems and to get tough on radical islam. mr. trump: islamic terrorism is eating up large portions of the middle east. they have become rich. i am in competition with them. they just built a hotel in syria. can you believe this? they built a hotel. when i have to build a hotel, i pay interest. they do not have to pay interest because they took the oil that when we left iraq i said, we should have taken. so now isis has the oil.

alix: trump released a one-page document detailing $9.2 billion assets and liabilities. prosecutors are looking in part e-mails from lower-level employees at the unit. the investigation is not expected to be finished until next year. citigroup says the bank is cooperating. those are the top stories at this hour. you want to get more on the markets and stocks moving in after hours, i will get back to julie hyman at the breaking news desk area -- news desk. greenberg's firm said that the firm will appeal the ruling. the government was likely too onerous in its bailout of aig

but awarding no damages to revert and the other plaintiffs because as the court ruled, it is likely that aig holders would perhaps not have gotten anything if the bailout had not happened. again, saying that they will appeal the ruling that there is no remedy for the government's illegal conduct and asked the court of appeals to confirm the government is not entitled to citizensions of dollars in their pocket. appeal thecan different parts of the ruling. alix: thanks so much. it is called the canary in a coal mine for banks. a decline in bond trading last quarter. grexitty fares and a loom large. is this forecasting really weak bond volatility, bond revenue for the banks, how are you

dealing with that? >> it turns out regulation of the banking sector can be good for investors. regulatorsppened is are requiring banks to hold more capital as well as improve their liquidity. so instead of increasing share buybacks are paying dividends, regulators are forcing the banks soretain that capital, and they are organically building capital every year. in fact, over the last five years, u.s. banking industry has one capital.ier the returns on equity have declined but actually, you have delivered the bank, and so from a bondholder perspective, you made these banks safer and less risky. as bondholders we have benefited through tighter credit spread. alix: is pimco doing something similar? mark: we look at a lot of different risks. the macro risk, interest rate curve, sector volatility, currency, we also look at

concentration risk and that we stress test our portfolios under numerous different scenarios so obviously there is numerous risks out there and we're trying to prepare for those. alix: lots of risk out there. such a pleasure. oomberg market day" will be right back. ♪

"ix: welcome back to the bloomberg market day." rallied composite has 134% in the past year, sucking and investors who are looking for return. china is one of the biggest ayers of gold in the world, importing 750 metric tons just last year. chinese stocks rally, gold imports wind up sinking. is the stoxx fervor a knife in the heart? i have not talked to for months. good to see you.

is this it, is the shanghai composite killing gold demand in china? jim: gold has to compete with other investment tickles as well as equities not only in china but across the world. certainly the popularity of paper assets versus hard assets is an old trade off. not only for china but anywhere where you have strong equity market gains. that tends to detract from gold prices. one of the reasons to have gold is in case those investments take a turn for the worse. the distinction you make is we're seeing a change from investment demand driving gold prices to the physical demand in india and china are driving gold prices. if we lose demand, what happens to the gold price? good point and that is the major theme of our outlook is how much influential emerging market demand has been.

not only for the gold market but for the price in the range of the price. that is largely why we have a a $1200 bottom and a $1300 top. that is where we see demand coming on in the gold market. there is a level of price sensitivity. what we found is what we found in 2013. when you get a sharp drop in gold below around the 1150 level, anywhere near 1100, you generally get a recovery in emerging market demand. it does not necessarily have to related to the investment cycle. it could be very will separate. that is what we would anticipate. elephant in the room comes from the fed. we have seen gold prices skyrocket. it was almost going to hit $2000. what happens when the rate hiking cycle begins? a lot will depend on the

currency. the dollar bill market may be in its final phase according to our foreign exchange reserves. if you look at some of the historical data pointed out i when the fed gets round to increasing rates, the dollar tends to pull back. if that happens again it might be a big if but if it does happen again that is likely to support gold. at least in the gold market like hike other market, the fed whenever it does come has been priced into the markets. i do not suspect it will be a great blow. still negative and that happens when there is still an alternative investment. is no means just a u.s.-centric aim. alix: u.s. coin buyers dropped

off the earth. mint sales fell 39% last year. we continue to see a decline. it seems to be hard to find a gold bull anymore. how long does that last year what changes it? market is betrayal -- retail driven. there is going to be a price sensitivity there agiain. that is why we think we will have that question something above $1100 an ounce. alix: i love talking gold and i love talking to you. the new price was $1234. good to see you. pleasure to chat. watching.

i am alix steel. have a wonderful afternoon. we will see you back here tomorrow. ♪

announcer: from our studios in new york, this is "charlie rose." hillary clinton announced over the weekend and today, jeb bush announced his run for the presidency. always feel welcome at miami-dade college. for all of us, it is just a place to be in the campaign that begins today. it is an attempt to follow his father and brother into the highest office in the land. we will take command of our future once again, he told an audience at miami-dade university. he instantly