scarlet: good afternoon everyone. a look atant to get the markets this hour. you are looking at a triple digit rally for the dow, up by 233 points. this is a very surprising day, because for two days and low we movingosed below the 20 average. we have to wonder why. technically, we were not looking that good. are looking past the fact that greece and china much of an impact and it is all about turning season. alix: even though earnings revisions have come down over the last few months. estimates havegs

come down way too much, and they are going to see those lowered estimates. alix: take a look at apple. we were in dangerous territory yesterday. and yet, it did not go below which. it bounced right off that level and it has been clawing its way higher. that is the idea of a big reversal in the market. scarlet: a 3%, giving a big lift to the nasdaq opposite -- composite. the euro has been moving higher, bouncing from earlier in the week because greece needs to decide on whether it is going to go forward with this proposal. alix: let's talk about the euro versus the end, because it is climbing the most against the yen in two years. the yen has been killing it over the last several weeks because of all of this uncertainty. or as aoptimism, complacency, what is driving this rise in the euro?

now we will look at headlines this hour. janet yellen says she expects to raise interest rates this year. she repeated a subsequent pace of increases will be gradual. >> the headwinds that have been holding back the recovery for a lease years, they are receding and things are getting better. conditions are improving. but that is a gradual process. right, it means that it will be appropriate to continue wanting an accommodative monetary policy and only withdrawing accommodation at a gradual pace. alix: she is moving the fed cautiously to its first increase in almost a decade as she weighs pressures from at home and abroad. while improving economic data me

push them to tighten as soon as september. scarlet: wholesale inventories rose by the largest amount in six months. this is evidence that businesses are more confident about the future. increased by justin martyr's just just a modest amount. congress haveof been calling on president obama to fire the head of the office of personnel management, but she instead. opmers breached the security as told to personal information for more than 22 million people. scarlet: talks in iran are going into overtime. they have another deadline today. this is the last chance to find an agreement that would qualify to a 30 day review in congress. the big sticking point is the

u.s. embargo on enron. differences have been decided, and negotiators will meet tomorrow as well us tonight. alix: history has been made in south carolina. those cheers tell the story. the confederate flag was removed earlier today. the state legislator voted to take down the rubble flag after nine black church members were murdered in charleston last month. the flag is been placed in a museum. meanwhile, the fbi director says dylann roof should never have been allowed to bind the gun at only got it because of paperwork delays. ai examiner conducting a background check for the handgun did not have all of the background check before the transaction went through. attended thesands

tickertape parade for the women of the world cup. they went along the canyon of heroes, the stretch of broadway where they have honored heroes in the past. is stickingld's with its many inspired happy meal even though there are complaining about a severe case of potty mouth. they say they are swearing, but mcdonald's swears they are spouting nonsense, nothing profane. month.ie opens this villain apparently the is called scarlet overkill. i would love that toy.

alix: there would be nothing more awesome then a scarlet overkill thoug. l doll. turning to new graduates for help. from the nitents of china are being required to talk up the market. they were told in a written agenda to shout loudly the the shares and benefit the people over and over again at the start of their graduation ceremony. we are joined by scott kennedy, a director at the center for strategic and international studies in washington. we also are joined by tracy. embracing socialism with chinese characteristics. are we seeing quantitative easing with chinese characteristics? >> we certainly are. i do not know what the students are going to do to help, but all of the other things that they are pulling out are having a big

difference on the stock market. how unusualbout this is that we see this much enthusiasm from the government. the pressure to support communist stock market. can i call it that? >> i think that is fair. we are seeing students commanded to stand up and rally behind the stock market. but is that entirely fair sentiment. is it unusual, not really. they have been trying to prop up the stock market for many years now. basically the number one priority has been, besides staying in power, is propping up the country's economic growth. the way they have done that, and remember they have averaged 10% growth for the last 20 years, is to get a lot of cheap debt through the stock market or through the bond market. the really encourage country's citizens to enter the market and now we are seeing a desperate attempt to maintain that. scarlet:?

do you agree with the analysis that they are battling to maintain called im in the market and their power? stock market is about 3% of all raised capital this year and last year. it is still relatively small ans and the bank lo bond market. the losses that people suffered in the first few weeks and last few weeks are small compared to the rest of the financial system. but the government was pretty scared about the 30% drop and therefore they decided to intervene with everything they had. about 90 million individual investors in china. what is the issue with household well? -- wealth? >> even though a lot of this is

your average investor, the chinese are renowned for their high sitting rate. most of the money they put in is a small percent of their overall savings. they do pay for their health care, their education by themselves premier a lot of money in real estate. this is somewhat of a loss for them. but they still have a lot of if the market does not go down further, this is not going to have a dramatic effect on consumption or investments. alix: that was one of the speculations why we saw that declining commodity price. you actually have to sell to get from somewhere. that is all about liquidity. about timings all as well. the past few weeks have been debilitating for anyone long in the shares. but you are still up. >> but the chinese authorities were encouraging people to come

up until arket th few weeks ago. the flipside of that a lot of those people would have taken out loans, marginal that as we to finding about those positions. when the stock comes down, that means their pain is amplified. they have leveraged positions. even though the stock market is up for the day, a lot of people will be hurting a lot it is not just individual chinese investors, a lot of companies have taken out bank loans, secured against their own stock. that is the channel into the real economy. think the stock market collapse really does have an effect on the real economy? what do you look at to make that real determination? >> so far has been a pretty small effect china's economy is about 7%ted to grow the first half, and relatively similar the second half.

you're going to want to look at the number of new companies that are created in may and june. those numbers should be out soon. you're going to want to look at bank loans to the investment in real estate, you're going to want to look at consumption of all types of durable goods and travel in if the chinese are still traveling they have confidence in the overall economy. manyet: looking at how people are traveling and companies are formed, the circuit metrics. thank you so much. up, donald trump heads to arizona for a rally on immigration. and he is going to make some headlines. ♪

scarlet: welcome back to the bloomberg market day. alix: let's go to julie hyman with a look at the markets. debating the efficacy of a two day moving average. technical indicators, i'm a very ambivalent feelings about that. overall averages, the data is clear. we are seeing the best day for the s&p and the dow in at least a month. we're pretty much of the highs of the session. look at this stock, it is doing pretty well today. it is up about 5%. the company did a bond issue in taipei.

analysts are now surmising that perhaps it would use the proceeds from that to do some sort of age and merger and acquisitions. it is a global market share of 28%. maybe it would be looking to china. pepsi, and some of these pricing indications would be positive for other beverage makers. all of those stocks are up today. another factor that has been the arrest o -- best inform her performer has been cablevision. we have seen them look abroad for acquisitions, and they have

been inquisitive. finally i want to look at netflix which is trading at a record. looking at $.35 versus the $.26 that was the previous estimate. the new price target for morgan stanley is $7.50 area i want to look at my bloomberg terminal to look at the average price target. $6.47 this is run a ratio of buy and sell rad tings. the gold line is the target analysts. it is trading above the target price in terms of what they are anticipating. i am struck i the hat

trick of great titles. air bud, green is the new black, dough-lan. the top stories across the terminal now. northy haze is across the western united eights from wildfires in canada. in saskatchewan for more than 10,000 people have been forced from their homes. china's by committing tens of thousands of people and has canceled scores of trains as a typhoon head towards the southeastern coast. this storm has already dumped rain on the philippines and is passing by to one. scarlet: we have not heard the last from immigration from donald trump.

the number of companies have stopped doing business with him. tomorrow in phoenix the republican presidential candidate will hold a rally to discuss illegal immigration. a federal judge has ruled that the sheriff has violated the civil rights of latinos. alix: is this a good strategy? he got into a lot of hot water with his comments on mexicans. >> mr. trump has made it clear .e will not back down interesting to see the speech tomorrow, because even if he goes into those trying to do more settle down rhetoric, they claim there will be thousands of people there. and when you put donald trump in front of thousands of people, he tols them what they want hear, and what he feels. i think we will see another round of comments that is dell's

by republicans. he ist: it sounds like going rogue, because he is moving against what the republican establishment would like. >> and advisers and even he himself say they are not establishment and it is, and that is why they are threatened. i do not think it is going rogue, i think it is being donald trump. you do talking about him, and they keep being aggressive, it is actually giving credence to him? >> > without a doubt. and we are all wondering if we looking atd to be other candidates. as long as he is high in the polls, and right now he is first or second in most national key state, that means yes he has a following. as always, he knows how to get attention. scarlet: it is early days yet, of course. let's shift gears and talk about

governor scott walker. he will announce his candidacy on monday, which makes 16th.e 15th or mark: you can rounded to the nearest 15. this monday announcement is a big deal. he is one of the last people to get into the risk management people -- by must most people do in one of the most likely candidates. focusessee how much he on his biography, and international issues. aght now he has been i bag of candidate with his strong record in wisconsin for a lot of conservatives, taking on unions in trying to change the political culture. alix: looking forward to it. we will tune in tonight. big bankstill ahead, earnings. five of the biggest u.s. banks

are due to report next week. we will look ahead and find out which are expected to report strong trading results. ♪

scarlet: earnings season kicks off with a big bang next week when five of the u.s. thanks released their second quarter results. alix: analyst are expecting the laggards to gain some ground and we are now joined with a preview. vxk, it isook at up. what is that a product of? >> the banks have been waiting a long time on higher rates commercial banks have gotten squeezed. because of those expectations moving around, we saw the interest rates trading environment bring more activity. that may help the fixed incomes

trading side of thing because they had more activity. big trading has been choppy and it will probably remain so because of all of this uncertainty. what is the character of fixed trading now? it has strong over the last five years dramatically. everyone is fighting for that share. the question is when is it going to bounce back. the first quarter showed some progress, but the second quarter not as great. it will really come down to june. people were not sure how choppy june was. the greek drama to just wait that out. we will see how much was in june, and if that will do anything at all. alix: what banks stand to do the best, and why? so littered with

their lawsuits and finds they have to pay. what is going to be the standout? >> to be looking analyst estimates. the banks with a turnaround stories that will show progress this quarter. they are looking for organ stanley in citigroup to show year-over-year growth. they each have specific things they have been working on. whether it is cost control or margins in the brokerage business. they are things they can point to to show progress. analyst expect them to have a lower profit than a year earlier. if you're relying on just a market to drive you forward, analyst are not as bullish. scarlet: i want to go to bank two because over the past weeks we have three big banks letting go of their ceos. it says you have a dual role.

you have the regulatory compliance relationship role, and then you have the making money role. scarlet: it is not just trading anymore. >> right. it is not just about the bottom line coming up to check both of those boxes. in the wake of the financial crisis, credit squeeze and morgan stanley were both run by former consultants, that to do those things. they are trying to strike a balance. alix: thank you. earnings season is happening. scarlet, have a great vacation. much more, coming up. ♪

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the greek prime minister has package. most of the wants $59 billion. -- it seems the greek proposal will not be enough it francois hollande priest the proposal. the greeks have shown a determination to want to stay in the eurozone because the program they are presenting his serious and credible. and because they are going to submit it to parliament which shows power, commitment, and i would also say courage. alix: the greek lawmakers may not be so enthusiastic. the proposals are similar to those greek voters rejected just last weekend. reporting the is u.s. is preparing cases against former deutsche bank import --

employees for libor manipulation. charges could come before the end of the year. the department of justice is said to be investigating five warmer traders for rigging the interest rate benchmark. that would be the first against traders from the german lender in connection with the london bank offered rate. and staging the biggest two-day rally since 2008. the shanghai composite rose more than 4% after 6% gain on thursday. the index hit a three-month low. china's government has intervened with a series of unprecedented measures. state run companies were ordered to buy stocks and the public security bureau is investigating shortselling. vladimir putin is serious about taking up yoga. the russian president discussed it briefly with india's prime minister. yoga came up again today at a news conference. developmentbout

from the physical to the spiritual stage. i have started the first stage, the physical training. there is a lot to do. portrayed himself as a realist action hero. he is a black held in judo. -- belt in judo. athens parliament's vote is a few hours away as to whether the people will support what the prime minister has put forth. >> i see this as another round. the one thing that will determine the outcome is the greek people always have voted

for staying in the euro. when you want to stay in the euro as a country, you have to play by the rules of the euro and the euro is a community currency that were wires a lot of policy coordination and working toward a common task. what we see going forward is the greeks are coming around to that. the europeans are interested in theing everyone on board as currency is supposed to be irrevocable. there is give and take on both sides. there cannot be a write-down of greek debt at this point. we are negotiating in europe and not a trench to be delivered. the timing, how long there is an industry period, all of that is negotiable but a write-down is probably nonnegotiable for the european side and on the other side there has to be some reforms in greece and pension systems and these things.

europe has done that. we did it in 2002 through 2004. all of our demography's are such to beension systems have adjusted to the new aging reality and the greeks need to do that in their economy. >> are you optimistic or pessimistic about greece staying in the euro? >> it is likely this will happen. thoughts for that happening have deteriorated over time but i have been saying for many weeks, all through the entire year that i think ultimately the greek people will choose to stay in the euro because a future for greece in the euro is a better future and everyone ultimately understands that. >> sketch for me what would happen with the economic consequences if they fell out of the euro. >> if you look at what is happening, if greece cannot rely on external funding and on some credit lines or funding provided by the institutions, they are down to a hard budget constraint. and the degree of

tightening of fiscal policy will be a multiple of what we see if there is a new program being arranged. the reality will be harder without the program increased and it is with the program and the banks are now closed and they are scheduled to open it there is a new agreement and a new program. if not, the banks will remain closed and the banks will move into insolvency. there will be haircuts on depositors like we saw in cyprus and the reality will be a lot harsher than it is with the new program. the greek government and the greek people will understand that. central-- the banks are to this and it puts mario draghi in the center. is that a bad place to be? >> they have done a lot of unusual policy. interest rates down to zero, lending programs up to three years.

it is a short lending program. they are buying government debt, gdp-weighted or balance sheet, -weighted. i have always been skeptical of such a policy. europeanooks at the decision where the fate of grace will not be determined by the central bank. the central bank has its role in -- to play. it is looking to the leaders to take the decision and they will behave accordingly. made bade ecb decisions or has it been dragged along? >> they are filling a gap that was needed to be filled. if you look at the first program in may 2010, buying greek debt without any conditions attached

in my view was a mistake. i voiced that at the time but life moves on. we are in a world where week debt and the program has in there for five years. the cd is part of the troika or the institutions that determine conditionality. it would have been wiser the time to have the imf deal with the greek issue like with any country that has a payment problem. the imf would have looked into that sustainability analysis and they would have done a harsh analysis of that. they would have erred on the conservative side and there would have been a private sector involvement and a program that would have been highly conditioned lending and monitoring of the greek economy by the imf. without the involvement of the eu institutions, both the eu, the commission, and the european central bank, it would have been a much more rational program. there is much less political back-and-forth on the european side it -- and it might have

been a better program in my view. up, the fourth awakens. why they cannot get enough of flick. "star wars" i would be there if i was not here.

alix: welcome back to the bloomberg market day. julie hyman has all the action on this rally day. julie: the biggest we have seen

in a while depending on the moment that you check. the dow the highest since may 8 and we might see some fluctuation in the next several minutes as we have seen actuation throughout the day. it looks like we will close at the highest and -- in at least a month or the averages. we are relatively safe in saying that. we have been talking about the 200 day moving average. we have seen a bounce above that level after following -- falling below. i want to bring this to a one-year chart. you can see back in october we moved more substantially below that 200 day moving average. look at anif you intraday basis and how the stocks traded over the course of these intervening days before popping back up. it has made a much more rapid round-trip. we will see what next week brings.

a lot of this hinges not just on the charts but on the vote in greece and the votes around the eurozone and approval for the great proposal. we will be waiting on that. i want to talk about what is going on in the bond market. yields moving higher today pretty much across the yield what we areis looking at for the 10 year. janet had a leg up with yellen reiterating her position that rates will go up. this is a reminder of it. we're -- the 30 year has been pretty substantial. the two day move higher has been the most since 2013. here you see the one day. 3.2% is what we're looking at. notable today and contribute in two the day, the rebound we have seen an apple shares. they have fallen for the prior five sessions and more than 2%

back to back, the one that we saw. 200 day are walking moving averages, let's look at that. also the near correction we saw for apple. high that we saw was back in february. then we saw the choppy, long decline of 9.7%. 10% is what we call a correction. here is the 200 day moving average. was happening, the average price over the past 200 days, we were saying that, too meet the line. touch it, and did not bounced above it. narrowly missing a correction and hitting that 200 day moving average travel. earnings are coming up not just for apple but for a lot of companies so it will be interesting to see how stocks trade.

good perspective. now a look at top stories. novak djokovic is back in the wimbledon final for the fourth time. he defeated richard -- richard gasquet. he will play roger federer on sunday. federal beat andy murray to become the oldest man to reach the finals and's 1974. in london today, a time when england stood alone against nazi germany. world war ii planes the bias the royal family marked the start of the battle of britain. the royal air force turned back german attackers, handing the not to ease their first real defeat. climbers are reached the summit of mount fuji can share their achievement via free wi-fi. a phone networks it will begin offering the service at eight

hotspots today. it is part of the effort to expand free wi-fi ahead of the year 2020 tokyo olympics. answer a need to password that would be distributed along the trail. that is a look at the top stories at this hour. 130,000 geeks and comic lovers are in san diego for the annual comic-con conference. it is a place to meet fans and launch new products. this year the theme is disney's new "star wars" flick. are you a star wars fan? emily: i have to admit i am not the biggest star wars fan. i am definitely interested. i know that our audience is interested. are super fans. we literally are coming to you from a galaxy not so far away. this is like another planet. -- yoda hat. a hat

yoda.channeling my inner all kinds of merchandise. storm trooper backpacks, darth vader skateboards, ewok skateboards. this is where the movies and tv shows that these fans love come to life in the -- and they can experience these things and meet the -- actors and get autographs. temporaryurned into a music park. we caught up with the mayor who is just as excited as everyone else. >> i am fired up for the new movie coming out in december. we will open the convention in a little bit and has some -- have some characters behind us.

anyone who grew up with "star wars" as i did will be excited. emily: the main connection is a "star wars close quote panel. there will be some special guests. we assume some of the actors. everyone is looking for any shred of new information they can get. they are not releasing a new trailer because they know the buzz is already out there but we are expecting some behind the scenes from mr. abrams. alix: virtual reality is a big thing. can i be in the same room with consolo because that would be awesome. emily: this is sony's virtual reality headset. super cool. it left me feeling kind of breathless. another big scene's virtual --

scene is virtual reality. we talked to the creator of "the walking dead or co-there are a lot of zombies here. "warcraft" movie and they are making a virtual reality experience. we are seeing hollywood embrace virtual reality here at comic-con and we will have to see if it takes off. alix: do you feel like the big -- like the business is backing up the hype here? biggesthis could be the movie that disney has ever done. they are expecting $2 billion in global box office. conservative estimate coming from morgan stanley. the trilogy and the three spinoffs, bob iger is talking about integrating star wars into the theme park, hasbro's

expecting $455 million in toys. it is the same kind of merchandise you can buy in there. we will be speaking with the people who run lego. they are making "star wars" legos. the worst thing that can happen is if the movie is a flop and fans do not embrace it. it is difficult to imagine with a guy like jj abrams behind it but that is the biggest question. --x: it will not be as hopefully it will not be as bad as the three that came out. you a fan? alix: yeah. across in theome interview? i am totally a fan. i will take the f2 go to the midnight -- the day off to go to the midnight show.

getting a rate hike this year. what does that mean for the u.s. treasury market? ♪

alix: janet yellen remained positive on future economic growth and its impact on the labor market. yellen: many of the factors underlying u.s. act to be our solid -- activity are solid. i anticipate that employment will continue to expand and the unemployment rate will decline further. .lix: joining us for more your biggest takeaway. i am trying to determine if she is [inaudible] and her speech held to the point

notaising rates but it was leaning toward september more so than december. janet yellen is still in the one hike cap. are the hurt close allies now in the two-hike camp. we will have to see with -- what happens. marketoes the treasury reflect a one and done sarah -- scenario? lisa: what she said was more hawkish than what they were expecting. you saw 30 year treasury yields rise. of two day rise through most 2011 last i checked, the two-year has increased the yield of the past two days the most since february. you are looking at a market that is rising in a greater chance of potential rate hike at and perhaps greater growth.

biggest takeaway was she said the macro economic developments over the past few weeks did not materially change their economic outlook for the u.s. since their june meeting. >> the general tone of her speech i interpreted to be relatively dovish. maybe lisa is onto something here that she was dismissive of developments in china and greece, that this was not furthered deteriorating her outlook for the second half. she mentioned inflation was still uncertain. what is the buildup risk of higher inflation then we expect? >> the risk is low until we see faster economic growth. we're not going to generate a separate -- significant inflation pressures. once we cross through 5% on the

unemployment rate, the possibility is higher but we're not there yet. lisa: we talked about the idea of her concern that they would stability akinal to what we saw in 2008 and today alan greenspan came out and said there was a bubble in the bond market and this had to unravel at some point. what she was talking about today was that rates could remain low and slow and steady and her biggest fear, the biggest risk to the economy is another financial disruption. that is very interesting to me. case is hard to make the that there is a bubble if growth isas slow as the imf projecting. there is capacity especially if china is slowing down. you [indiscernible]

lisa: the biggest banks, the primary dealers that do is this with the fed reduced their holdings of treasury's by about $20 billion in a week ending july 1. they pulled their treasury down -- holdings down below it. this exacerbates the move in treasuries. alix: thank you. up, we start the countdown. greek proposal happening in a matter of hours. stay tuned for full coverage. ♪

alix: we are moments away from the closing bell. am joe weisenthal. ♪

alix: u.s. stocks rallying along with european markets as great contagion subsides. joe: the question is, "what'd you miss?" a wild week, chinese stocks posted the biggest today gains since 2008. joe: the world is swimming in oil. parses -- prices may fall further. alix: it has been an intense and crazy week. the stock market was all over the place. hold that level, rose above it. we have seen the best day gain in two months for the s&p but the nasdaq is looking at a weekly loss on the week. we're looking at