relations. the battle over multiple -- mobile payments. how paypal paved the way to a new area of digital commerce. betty: can i be of win over investors once again? once again watching big blue into the close. -- can ibm win over investors once again? stephanie: good afternoon, everyone. i am scarlet fu. here with olivia sterns. the s&p trading around a record high. it was like a l valley. of record rally on stop. overall looking at another record with the nasdaq, the third straight day it has hit a record since we both. stockt: volume in nasdaq

five days above the 10 day average.- above the people getting a little bit more excited about the momentum name. olivia: i do want to look at an intraday chart of under armour. pretty happy -- pretty funny what happened around 2:00, the decline that went down. guess what happened? jordan spieth did not make the cut, the first time since last august a major winner would take the home. under armour one of his sponsors so they would not get the grand slam club with city. scarlet: they have done pretty well with jordan spieth already. olivia: 100%. an interesting move down. scarlet: he was in the back. i can hear him groaning. everyone in the newsroom was watching the game. golf game, golf match? do we know? to checke also have out the energy index, the worst

performing sector in the s&p. it really has to do with oil. oil turned front and center after it did a low $50. scarlet: saying with oil, you have the dollar. the stronger dollar on the back of an expected federal reserve rate increase. james fuller today saying the federal reserve should raise interest rates this year got people thinking about the diversions and monetary policy, it actually when you look at what my non-in europe and japan. -- going on in europe and japan. historyearlier today was made in washington. the cuban flag was raised as the country reopened embassy for the first time in 54 years. in the meantime, the u.s. embassy opened its own in havana. john kerry will travel there later this summer. of paypal rising today and the debut. it was spun off from ebay. ceo spoke with emily

chang earlier today. >> one of the things we have that no other player has is truly agnostic that form. in other words, we integrate for merchants, and he entered -- any type for them, not just paypal 169 across the world and will also educate -- will incorporate apple play and others as well. trading up from four times of parent company ebay. olivia: ebay being downgraded from s&p. s&p says the lower marks reflect the downward revision of the ebay's next risk profile as a result of this and off of paypal, which accounts for half of the total revenue. s&p also sees ebay with lower revenue growth and less product

diversity without revenue contributions from fast-growing paypal business. also downgrading ebay today to triple be from a minus. times": " the financial may be sold after receiving interest from potential buyers. speculation it could bring as alien dollars. it has a circulation of 720,000. 70% of subscriptions are digital. --via: toshiba will greece will correct 1.6 billion over a six-year. after an internal accounting pro that found the company measures under pressure from management. the company president is planning to hold a briefing on the matter tomorrow. to shiva has lost 3.6 alien in market value since may 8. -- toshiba. scarlet: an uncomfortable moment for seth blatter. torose from front row seat

shower him with one dollar bills. not anything new for him. last month he tried to disrupt the performance i kanye west at a performance in britain. something about these european protesters showering them with money. olivia: russian billionaire murray milner says he was to find life beyond earth and putting his money where his mouth is. he says his breakthrough listen project would be the biggest scientific search so far for signs of intelligent life elsewhere in the universe. the 53-year-old made his betting on internet companies. he was an early investor in facebook and twitter. those are some of your top stories. while we were talking, zach johnson wins the british open.

scarlet: one normal relations look like between the u.s. and cuba. olivia: the online adult three site ashley madison trying to keep bedside matters a secret. scarlet: james gorman smiling today at the bank be estimates and reports a big jump in revenue. all that and much more coming up. olivia: the debate about when and how the fed should begin raising interest rate continues. last week janet yellen testified or congress and the plane the fed faces a delicate balance of when to tighten. n: my ownle preference is to tighten in a prudent and gradual manner. there are many reasons why would like to be able to do that. there are certainly risks to the recovery into the labor markets of tightening too soon, but there are risks on the other side as well. we are trying to balance those. scarlet: earlier today erik

schatzker in any rule spoke with ed lazear to get his take on the prudent and gradual rate raising strategy. he explained to reasons why the fed would keep rates low. the first necessary condition if the economy is still struggling, but the second is that fed policy is doing something to remedy that. even if you believe the economy is still struggling, and i think the data suggests we're not recovering at a rapid case yet, so you could still make the argument we need help, has runately the fed out of gas, and janet euro -- janet knows that. their view is we need to get back in to normal times in large part because we will not have freedom in the future if we do not get rates back to normal levels there will not be the ability to cut rates when we need to do that. since it is not doing much to

jews the economy right now, her view is we should be moving back. i know her quite well. i know her quite well when she was a graduate producer -- graduate fellow. very sensible and thoughtful. what i was going to say, not only is she thoughtful, but she is prudent. see this by doing anything dramatic or radical. it is for that reason i do not think it will have much of an effect on the market. >> she was a professor of yours? >> she it actually was. >> do you remember what great she gave you? remember.lly don't i did pretty well in graduate school. what is going to happen if you are right in the fed has run out of gas and needs to raise rates to get it though some room in the event of a slowdown?

nothing coming out of congress. we all know that. does that matter who was in charge. furthermore, the rest of the developed world economy is still flatlining. unfortunately i think you have already said it will happen. the 30 year average. if you look at what the market is predicting right now for the next four quarters, the market prediction its 2.4%. that is if you look at predictions based on s&p 500. pretty much same thing. that is not bad given the numbers recently.

sales have declined. people are a little bit worried or things have worsened. it looks like the best prediction is not a whole lot worse some are pretty much the same. not great. stephanie: the labor market looks great. continued to be lousy. people say they are loudly because the weather was bad. cap prices are low. the weather is better. the labor market is better yet we still see these like us pocket. that's not make a lot of sense. >> it does actually. does not matter what i say, he says actually, stephanie, you are wrong >>. >>they labor market is good, but it is not great. a number be looking at of jobs right now that is 5 million hires than it is -- 5 million higher than it is. growthson is population

alone we are still short about 5 million. beingwe talk about growth below trend. at 2.5%, not as good as where we came from. here is one thing i have been wondering, if you somehow were able to remove or i just 2000'sc growth in because of unsustainable credit creation, is it not possible that maybe the growth for that period would not stay closer to the mid-2's? down anduld bring it that is possible but every time has boom's and bust. you do not want to eliminate the booms and say if we eliminate all of the rooms, what is the average? if you eliminate them all, the average is well. then you should eliminate the busts as well. jeb bush is pushing for percent growth. we will sleep if we can get

there. we have had it in the past. certainly possible. whether we will attain it is another issue. olivia: former white house economist at lazear earlier today. coming up, cuba raises its flag at the embassy in washington. we will discuss what normal relations will look like between the u.s. and cuba. ♪

scarlet: welcome back to betty: i am alix steel. -- welcome back to bloomberg >> right now we seeing major markets all near their highs of the day. the s&p and nasdaq locating

record highs, too. as long as the nasdaq stays in the green today, it will be a new closing record, a third straight day of record if the s&p closes above 21 30 point 22. look into the black -- magic bloomberg terminal to see how they are doing. seven of the sectors are in the green light by information to knowledge in. that sort of make sense because the big stock to watch is on paypal. it made the market debut after the spinoff from ebay. right now trading up by 6.7%. 11% had fights as much as at the open. this morning started with a market cap of 46.6 billion. turns out it is bigger than the former parent company you guys with 34 billion. ebay chairs not too shabby up by about 2.7%. -- ebay shares. lowestday hitting the

level in more than five years. down 20 nineding points, down 2.96%. investors pulling out as they head to raise interest rates. the longest economic conditions do stay on track. gold miners feeling the hit. report macquarie and down. barrett down the most. seen sinceow not 1989. cmoran.port macmurray an are expecting a global oversupply to keep going as iranian oil comes online. goldman predicts the full impact will not be felt until next year. as we can see, exxon occidental petroleum and williams down the most 3%. scarlet: thank you so much.

i work at the top stories at the top stories of this hour. evernote has a new ceo. chris o'neill with the company for almost a decade overseeing google x. he will expect filled with and who was expected to step down for several months. expect major job cuts appear to be on its way of her plays. the british bank may eliminate one out of every four jobs in the coming years. -- expect major job cuts appear to be on the way for barclays. gawkers top editors at .com have resigned. this amid controversial close. they ran and then pulled a controversial editorial. i said they could no longer guarantee the editorial integrity of the website. advertisers for pulling out our putting campaigns on hold because of the item.

those are your top stories. --tory making morgan morning. flag flying over the newly opened embassy in washington for the first time in more than 50 years. this move the gulf the start of a new post war era. alix: earlier today john kerry minister -- cuban foreign minister. >> we have begun a process of full normalization that is sure to take time but will also benefit the people in cuba and the united states. discussining us now to the latest, outside the cumin industry -- cuban embassy in d.c. what does this mean on a practical level? >> as of midnight last night it transformed to the cuban embassy. it was built as the cuban and 1961-1977re -- from

for the carter administration was essentially empty. the same is going on in havana. this was essentially part of turn into abassies full embassy. on a practical level what that means is cuban diplomats in the united dates now have freedom of movement and can talk to americans around the country. u.s. diplomats can do the same. no free will to be expected by cuban citizen to go to the u.s. embassy. that has always been a problem in the past about getting an open dialogue going. diplomaticeryone has immunity sounds like. a cuban diplomat has been in the u.s. since 1968. what will be on his to do with when he is discusses with john kerry what the next steps are? >> a have been talking for the past hour or so. they have been talking about a number of issues.

some of them, the cuba and u.s. can agree on, a new list of embargo. they would like to see the trade embargo lifted. that would be up to a republican-controlled congress. there are areas of disagreement a majortanamo seems be one today. john kerry saying one thing the u.s. is not considering is handing back guantanamo, changing terms of the treaty in which the u.s. controls that corner of the island. -- the cubanys diplomat says that will be a requirement. help cooperation, telecommunications organization, but there are aching point, guantanamo one of the major ones. also, reparations for how the u.s. will pay money back to cuba for some of its act's over the past 55 years or so, and whether cuba will pay reparations to u.s. citizens whose goods and lands were confiscated during

the revolution and the years following it. idea when we may be able to visit cuba as tourists rather than the complicated wording like educational mission? far they are saying as they are apparently. john kerry will be down there below -- for the empathy. he wil raise the flag and will probably signify some sort of change in the next coming months. scarlet: thank you so much. sweating in washington. really hot there. alix: you look great. ashley madison trying to keep its bedside manners a secret. ♪

scarlet: there may be no secrets

left unturned for some users of the online cheating right .com, known for helping married people have affairs. there was a hacker attack. security was always one of the selling points. how did they manage to breach the system, and what are the implications of the company? we will turn out to a reporter. the article she wrote joined the site who had inside knowledge of how it works. what was that like? reporter: i am happily married. it was surreal. is going onnoticed there as a woman you are like a piece of fresh meat, getting thrown into a cage of lion. as soon as i would log on, i was swarmed by guys trying to talk to me, and it was a little on. scarlet: these are real e-mails

from people in gekko reporter: they seem to be real e-mails. one of the challenges of the business is a do not have trouble attracting men to use it. i think they have a harder time attracting women to the idea of having anonymous although adulterous anonymous affairs. alix: how big was the hacking issue it ran into? canada in twoo in thousand 10. they pulled out of canada because of the stigma associated. reporter: it is devastating. they have been trying for years to grain -- gain credibility on wall street. they tried to do a reverse merger that would have gotten them listed. at the last minute the bank backing it because of reporter showed the banker really embarrassing advertisements from the website.

the same thing was possibly going to happen in london. now the main asset, the promise of animal -- and amenity. charge, by they way. and apparently it does not actually do that. reporter: it is very hard to wipe it clean from the internet. that is one thing they were singing, even if you pay this all still up there. a little unclear whether the hackers are protesting the business or the particular practice they don't like. is the curious part of this, story that will not go away. saying goodbye to you. i will miss you. a lot more coming up. -- i am saying goodbye. ♪

♪ ♪ ♪

get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. alix: welcome back to the bloomberg market day. i am alex deal. is thens zach johnson

winner of the british open. -- i am alex deal. -- alix steele. indan spieth won the masters april and the u.s. open last month giving him a chance to join ben hogan as the only golfers to win the first three majors of the year. no one has ever won all four. the federal reserve is close to setting how much extra cash the nation's top inc. must have on hand. j.p. morgan chase they think the biggest shortfall at $12.5 billion. goal is to keep the banks from threatening the financial system. a big quarter for morgan stanley trading in brokerage freeze rows in the second quarter. -- froze in the second quarter. earnings estimates and the bank reporting profit, record profit

in wealth management for the first time in five quarters. shares of morgan's family have more than doubled in 2.5 years. driverless car is going to college. testing ground for autonomous vehicles opening today. the 32 acre site is called m city designed to stimulate major urban cities. harper's newly released novel set a record. more than 1.1 million copies of " goes that a watchman." she wrote this before her 1960 classic. it was never published. those are some of your top headlines. coming out in the bloomberg market day, paypal tightly -- era ofthe way of a new digital commerce. after a year of lackluster performance, can ibm win over investors? earnings are out moments from now.

the great old debate. when will we see a turnaround after the ethic tumble we will discuss at the market close? all that and more coming up. now back to morgan stanley. closing out earnings season with a jump in revenue growth. brokerage fees. olivia sterns spoke to ubs bank analyst brendan hocking than michael moore. hawken eggs laned the performance in fixed income trading were fixed. -- hawken explained. >> more of what it is showing is fixed still has a poll. it is real. a lot of investor concern about this is a inability. the results so they can execute here. against toughup

comps. turn morean trying to toward asset management and away from the rest year's. that appears to be paying off. >> right. that is a big reason i am positive on the name. you get a firm that used to be securities and shifted over to where it is 50-50 maybe even upwards two thirds wealth and asset management, a higher asset business. we are stable. regulators like it more. -- work outrk out well for shareholders. we are starting to see that happen. what about the return on equity target? when will they hit 10%? question thisbig quarter. not quite getting there but making progress. , butshowed steady progress they will probably need interest rates to pick up or better trading environment to get there. olivia: the first call the new

ceo made. obviously went to google. call? >>ohn do on the i thought he did just fine. i met with him before the call. i think he will be a great cfo. he has big shoes to fill. capable.e seems very he has a different style. everybody will have to get used to him. i think he really is very interested in engaging with investors and clients. olivia: a little bit longer term perspective. the conventional wisdom is thanks will do well in a rising interest rate environment. like wesand 16 looks will get a rate hike. what does that mean for the 016 doeson bank?-- 2

look like we will get a rate hike. now you have deposits, alone book. about half of the loan book will be flowing. positive.l it benefits earnings pretty substantially for morgan stanley. about a 15% increase in earnings from higher rates. that is roughly in line, a little less than bank of america, the most rate sensitive of the money centers. j.p. morgan and citigroup at the bottom. morgan stanley best of the bunch? >> based on low expectations, perhaps. morgan stanley devaluation is no longer constructive. it was my top pick for over a year. i really loved the story in execution. valuation no longer is helpful.

alix: brendan hawken and michael morris speaking to olivia sterns earlier today. piper jaffray agreed to by bank of montreal minutes of both -- municipal bond business. >> it is a good fit with our growth strategy. sale to theial middle market trading business and very similar culture on the focus of the client. talk about the culture of the client. specifically, what type -- what were you looking to achieve with the deal? >> there is a long-standing franchise, in particular good coverage of banks across the country highly complementary to our current middle-market sales and trading trading platform will be industry-leading. the fact that you are buying

this business, doesn't mean you are pretty bullish on the domestic economy and growth here? i guess we don't have the same view as much of the rest of those that follow it plus or minus 2% economic growth, but our intention is to continue to gain market share and make investments of growth concurrently that. bloomberg data shows states and cities have issued 231 billion worth of debt this year, more than 50% of the same time a year ago. the fastest pace since 2003. what sparked a turnaround in your view, and d you feel states and cities are taking the lead as far as the domestic economy is concerned? >> it does look like we have the potential to have a record issuance this year. i think the prior record with 430 billion.

if you and your life the first half, we have a good shot at exceeding that. the significant part does continue to be refunding. ultimately we see that slowing down in a higher interest rate environment. also believe there is long-delayed capital expenditures that are needed in many local and state governments. do you have any regulatory concerns for this deal? >> no, we don't. alix: piper jaffray chairman and ceo. the battle over mobile payments. how paypal paved the way for a new era of digital commerce ♪.

alix: welcome back to bloomberg ixarket day." i am ale steele. going to julie hyman. clear on record watch for the s&p 500. we will see if we close at those levels. what is not to be excited about echo except right now we're not there. a closing record for the s&p 500. unless they gain steam going into the close, we will not make it into the nasdaq. stocks lose a little bit of steam into the close. consistent isty technology. not just record shows that two of the biggest tech stocks as well. raisedk price target was to 117 by rich greenfield.

he talked about the video advertising opportunity among other reasons. amazon got to upgrades today. both of them to outperform. wen cow when commentary -- co saying they will be the number one apparel retailer by 2017. would overtake macy's to get that title. , sharesatching micron going down sharply more than 6%. there was a recent report that a group associated with china maybet university interested in buying micron. they do not see that deal possible because of security concerns. that was something that was brought up initially, would congress approved a cost -- cross-border deal with china? now we see the shares pull back on that. we have been talking about ebay and paypal. we are seeing the established payment players trading at

records, mastercard and visa at records. going into the earnings report oppenheimer raised earnings targets on both of the company saying that currency wins have abated. i do want to talk about ibm. the company still in the midst of a turnaround here. some analysts say the earnings will show signs of progress. not much change going into the earnings report. the implied one day share move in the options target 3.2%. shares have fallen after the past eight of the 12 earnings report. the you take a look at bloomberg terminal, you can see what ibm is up against. a five-year chart. the company at a record march 2013. has not been able to regain that. down 20% since. even as we look at the amazon and facebook of the world.

ibm struggling with the transition to the cloud to try to capture some of the hotter revenue if you will. the shares have not performed very well since they hit the record. alix: just moments away from the earnings. we will bring them to you. a look at the top stories at this hour. here in new york workers at past restaurants may be in line for a raise. an advisory panel won't recommend tested minimum wage raised to $15 per hour and the labor commission likely to approve. a major victory for fast food workers let been campaigning for a pay. the will raise -- rise to nine dollars at the end of the year. an unprecedented apology from a japanese company. mitsubishi says it regrets combatng company -- since world war ii. about 12,000 u.s. soldiers were forced to work in japan under brutal conditions.

former president george h.w. bush has been released from the hospital. last week he felt that his summer home in maine and broke a bone in his neck. doctors say he will fully recover and 3-4 months. he is now 91 years old. is the indisputable leader in online payments and paid the way to a new era and digital commerce. -- as the bottle battle heats up, the company's past with the biggest balance gets, figuring out how the company will spend money in the future. emily chang has the story. these 20-some things may look like they are just texting, but they are actually taking each other back for lunch using a mobile app owned by paypal that allows users to transfer money from one bank account to another. no longerhecks

necessary. the expansion of global technology has analysts calling for growth in mobile payment a massive opportunity and challenge for payment giant like paypal. of the biggest hurdles paypal will face going forward is reinventing the brand in themselves as a company at the forefront of the payment base. idc said it predicts $4 trillion by 20 20. mobile purchases will make up 7% of transactions. >> i think the runway is extremely long and wide or mobile payments over the next 10-20 years. c breaks it into four categories, peer-to-peer payments, mobile commerce or finding goods online using your mobile device, nfc payments for buying things in stores like apple pay and barcode payments where a barcode is scanned at the point of sale. to postcts all four

double-digit in will grow 2020. paypal has in this heavily in mobile, bindings artists and building out products that facilitate transactions in all four categories and competition is heating up. >> i think investors are looking for this business to get more competitive as we have apple and google coming into the marketplace him and there is always other smaller companies like square. >> we are working with merchants like subway and burger king where a consumer can use there mobile phone to order ahead to skip the line, to get loyalty. it is not just cap and hey, it is a value proposition change. paypal role rely on young developers to create fresh uses for payment technology. >> i know it is one of those

things where people are like white what i share my payments with anyone, but it is so fun to scroll through the feed and check up on people and see what they are up to? my sister and i communicate just for fun. trading a penny for your thought is a brand-new world. alix: emily chang joins us now in person in new york. good to have u.s. always. really curious about merger and acquisition opportunities for paypal. this opens up a whole new door for them. what is the likelihood? emily: if you look at the paypal pass, they have done a lot with acquisitions. they bought zoom. this is a company that has relied heavily upon acquisitions. when i asked dan shulman about fighting, he said we are 6.6 alien on the balance sheet, we are going to look for different opportunities, but he also pointed out they will work hard

do organic work. that is a criticism of paypal. that the product has not evolved and is not a long-term strategy to keep fighting thing. a evolution dealt with the social aspect of payments. mily: all of the kids out there are using venmo. apparently. it is all the rage. it is a very social and. experience.al the fact that payments have not changed all that much in the past 10 years, we all still pull out our credit card, that is a huge opportunity for somebody. it is whether any of these companies apple or google or paypal can take advantage of it. was: evercore partners concerned about paypal keeping its relevancy.

169 customers, but there are billions of people out there and apple pay is so easy and already has credit card information for all of us who ecosystem so paypal that have an uphill battle at the point in mobile will be the front line. a good stuff. good stuff. emily joining us. ibm to look for when reports. the number one number that you need to know. ♪

alix: ibm is reporting the second quarter financial results moments away amid a huge transition to stay competitive .n cloud computing joining me now to discuss is bloomberg tech reporter alex

belinda. when you look at the report, what is the primary number you want to check out? reporter: the first thing's topline revenue growth. we have seen this company tried to introduce new products and services that are really easy. you can buy them online. right now we have seen revenues come down 12 quarters in decline. analysts expecting them to come down again. some of them will be for in exchange for -- which we are seeing with the foreign national companies. i will be looking to see are the new initiatives selling faster than the older software and services declining? alix: what was that wind of meaning in terms of ibm transition? to competey are able and what oracle is new reselling and the smaller tech companies. when you look at the business, they have software about a quarter of the business, and

that is where a lot of the transition is going on. less of the licensed product you sell and pay for up front. more of a customer coming in and saying i want to get the software going up really quickly and do it online and scale later. alix: the stock has a big run-up, over 5% the big market. reporter: right now in line with estimates will continue to prop up the stock. shares came off a lot back in october and the ceo throughout the big time here profit plan. they have kind of come back since then. you want to see in line with estimates both on top line and earnings per share growth. ?lix: what about margins i asked you earlier what margins will be like and how important they are? reporter: four software, they have come down a little bit. cloud product are higher valued. when you look at the services business, 60% of the business

that is where we are seeing a real squeeze on margins. some competitors have offered technology outsourcing services for lower pricing or automating the process. that is the point where investors will pay attention to what is going on in the services business and if they can continue to sell things higher value than their peers. alix: the comment we're often is the stronger dalby -- stronger dollar. what might be the impact their? reporter: they guided 49 percentage points on declined revenue. 4% from the vested businesses. thisis 13% down on sales quarter. analysts expect to see somewhere in the range, nine percentage point drive on what will go on. for the year, anywhere between five and six percentage points is what they said three months ago, and we will continue to see if they think that is the race going forward. alix: continued initiative. what does that actually mean? were ibm security and

mobile. it is not clear what is in the bucket. basically, the new stuff and shiny stuff laying into the new era of competing they are putting a label on. will see-- maybe we questions from analysts who want to know is that hardware, soft where and what services go into that? alix: great stuff. our tech reporter alex barinka. moments ago we will be breaking those numbers for you. not only watching ibm numbers, but we are talking gold. a gold versus colbert debate going on. who is dying and why. we will be right back. -- who is buying and why. ♪

alix: we are moments away from the closing bell. i'm alix steel. joe: i am joe weisenthal.

alix: stocks closing just under a record level for the heat, barely holding on to its games -- for the s&p, barely holding on to its gains. commodities take the spotlight. joe: the question is "what'd you miss?". ken ginny remedy turnaround -- mmetty turno around big blue? we are watching apple. will it be another win or a miss ? alix: the nasdaq is the story in terms of stocks, closing at a record high. could not hold on, closing relatively flat. seven out of 10 groups in the s&p did close flat. energy was a big drag. jo