and we will have richard clarendon and hear more about what he has to say, just ahead. hallet: and jake jill and is in an upcoming movie and hear what critics have to say. a new drugseating that could change the lives of millions. ♪ good afternoon, everyone. i am scarlet fu here along with alix steel. tgif! alix: yes, and we are seeing a pretty steep selloff, i might say, the s&p is below that 50 and the 100 day moving average, it is about 16 points away from

the average. ofrlet: they get a lot momentum, we are getting towards of the end of the week. there is an unexpected drop in new home sales that certainly didn't help either. alix: it was kind of interesting to see what happened around 9:00 a.m., the fed accidentally released its rate forecast. you can kind of see a little bit of a dip, it goes back up, and then it goes a lot lower, and then it stays low towards the end of the session. scarlet: and there has been a big, big scene today, that is in regards to anthem, and people are going to look at this and regulators still have to decide whether they are going to approve this. alix: regulators have not then nice. -- been nice. take a look at the enormous volume we have seen in the second quarter. you're looking at over $1.6

trillion, about 10,000 deals announced in the third quarter. it is a slower start. an unbelievable jump in the second quarter. it kind of highlights what has been going on in the ways of the market. scarlet: and you can wonder how long this has been going on for. what the u.s. dollar is currencies.other alix: and obviously, this is a big issue. biglet: it is certainly a issue. i want to stay on the commodity team here, we have the bloomberg commodities index. alix loves this index and we cited often. down,day up, thursday friday down, yes, friday is dead, really. you can see a decline, with a

couple of attempt to come back up, but if you track the chart all the way back to 1991, we really haven't gone anywhere. we are at a 13 year low right now. the reason whyx: this is so important is that it shows the economic risk that we have been talking about. yield isar treasury below 30%, that is all part and parcel of this concern and that is why the bloomberg commodity index is so important. scarlet: we have so much more coming ahead because alix steel is your anchor, but we want to look at some of the other stories crossing the bloomberg terminal at the top our. -- at the top of the hour. that hillary clinton says raise onuld be a capital gains which would add complexity to the tax system. she also praised the dodd frank financial reform legislation.

hillary clinton: calls for new regulations regarding disclosure of executive compensation is required, and many roles as yet have to be put in place. that includes a requirement to publish the ratio between ceo pay and the paychecks of everyday employees. there is no excuse for taking five years to get this done. plan ofe capital gains mrs. clinton is the third major tax proposal of the campaign along with tax credits for apprenticeships and a profit-sharing with employees. scarlet: meanwhile, mrs. clinton was critical of a news report saying it that the justice department had opened up an investigation of her e-mails. contrary to reports, the clinton campaign says this is not a criminal matter. remember, she used a personal e-mail account while she was secretary of state. general says it contains hundreds of classified messages.

the state department is reviewing e-mails and will release them. secretary kerry announced his reaction: to this today. his reactionry -- to this today. secretary kerry: we want to get this out as fast as possible and i can't wait until that happens, i am sure hillary can't either, and i'm sure it will be cleared up with the final release as we get that done. scarlet: and of course, for what it is worth, clinton said she did not e-mail any classified material. alix: president obama is in kenya at this hour. it is his first stop in a two nation trip in africa. he is in the capital of nairobi. kenya is the birthplace of obama's father. economic policies are on the agenda. he will be the first visiting president to visit ethiopia. he is looking to expand access to electricity on the continent. square has filed

for a public offering. it is currently led by interim twitter ceo jack dorsey. you've got that? whether it is profitable. it has been expanding into other areas like business lending and payroll processing to provide other services. alix: it is official, at&t has won permission to take over satellite-tv provider directv after promising to spread broadband into mold -- more homes and businesses. earlier, the justice department said it would not challenge the deal because the transaction does not pose a risk to competition. scarlet: the senate majority leader wants more funds to the highway to kill the affordable care act. mitch mcconnell wants to fund the highways of for three years. and a deadline looms as because of the federal highway trust fund runs out of money in just seven days, but mcconnell says

he will introduce an amendment to the controversial bill that would amend the health care law. he will call the senate into session on sunday to vote on it. aix: and a big surprise that from the world of professional wrestling. the world -- the wwe is cutting ties with one of its the guest stars, whole cogan. the wwe won't say why, but it says that it is committed to diverse city and it heard that -- and it is stated that whole cogan made racial slayer -- racial slurs on a pornography. scarlet: was it the sex tape? alix: was that the racial slurs on the sex they? -- sex tape? rumors swirling around us. and a lot of information swirling around jake john hall's new movie -- jake jake gyllenhaal's new

movie. growingd there is a consensus that the central bank will start raising rates in september. earlier today, the team sat down with a glow drill -- global strategic advisor of pimco to -- to the trustee jake ask if the strategic ideas make sense. >> yeah, i think september would make a lot of sense. will be another one for december, or will we have to wait? richard: it is a bit of a stretch, especially since they don't plan on going to every meeting since greenspan did. they are looking at a pace of roughly four hikes every year. look back through

history, does inflation explode all of a sudden? they see no inflation right now, but is it possible they are going to have to end up changing that pace because inflation suddenly bubbles up in the next year? i think inflation is incredibly likely, but obviously, inflation is now moving up towards the 2% goal. it could overshoot that. in fact, i don't think that is necessarily unlikely. money question is, well, i will use a boston phrase, this is ugly, rich, this is ugly, and that harkens to lagarde's idea that this is mediocre. how can this pop if the rest of the world is basically imploding? richard: i would say that the rest of the world is imploding but you've got soft commodity markets. it has moved down a notch. in the u.s., the output gap is

closing by conventional measures. we are basing this on a model, a model that says the gap in closing inflation should go up. 247 --t what happens at 2:47 on the day that they raise interest rates? richard: i think we will know more at 3:30 on the day of the hike. tom: are we going to have a tantrum? i don't buy it. aboutone hand it is psychology, but on the other hand, you have the rest of the world buying into the u.s. at this point. richard: they want to boy -- avoid a temper tantrum. >> it is one thing to ask what happens to the rates, but what will happen to the u.s. dollar that day and in subsequent days? because of it weakens, that could reverse an impact on the

markets. think that is interesting, i did a chart and through the last three rate hikes, there has not been a pop in the dollar. the dollar has already moved a lot and i think it would be supportive of the dollar, but i don't either will be a big move in the dollar. alix: that is pimco's richard larida speaking to the bloomberg news team today. the "bloomberg market day," jake jill of all -- is gettinghaal talked about in the oscar buzz. scarlet: we will have more, coming up. ♪

alix: welcome back to the -- scarlet: welcome back to the "bloomberg market day," i am scarlet fu here with alix steel. alix: there is a 10 day on the average for the market today. julie: we are seeing volume in those names, much higher than it is typical. biogenic, when we checked earlier, is five times the idec-month daily -- biogen , when we checked earlier, is five times the three-month daily. are going to see a continuing slide in the commodities, but we will talk about that a little bit closer to the closing bell. i wanted to talk about one of the up stocks today and that is amazon. the shares are surging to a record of 11%.

there off their highs of the session, but nonetheless, 11 percent is nothing to sneeze at for the week. with these gains shares, the market cap of amazon is larger than that of walmart. the white line is amazon and the growth we have seen in the market cap is ticket tuning -- taking it to around $250 billion where walmart is at about $230 billion. sideways overd of the last couple of years where as amazon is in a straight up projector a pretty but then there are sales, and even though amazon is now larger than walmart in terms of market cap, it is dwarfed by walmart in terms of sales. these are the quarterly sales. too, you see growth as more of a sideways move. walmart's last quarterly report

showed $15 billion in sales and $60 billion in sales and with amazon coming you saw about $23 billion. there is a tripling of sales with amazon, so when people are buying amazon and you are seeing that explosion in the market cap, it has to do with people wanting to buy growth. speaking of growth, i do want to mention a couple of technology reports we are going to get next week, facebook and twitter. we are going to be reporting the wednesday. facebook, these are the year to date changes we have been seeing. facebook is up, but twitter has not done very well for today. generally, and this is mark sebastian pointed out to me -- what mark sebastian pointed out to me earlier today, they are doing better than the other apple, microsoft, and ibm, they have not fared as well. ibm, microsoft, they are

all trying to transition to the cloud, and facebook and twitter are just trying to grow. king of the jungle, shout out to them. scarlet: let's take a look at some of the top stories right now. this is a deal that could create the nation's biggest health insurer, and some buying sigma. it is worth a deal of -- it is a deal worth 48 il you and dollars. the merger will bring huge savings. >> we remain confident in achieving the approach of $2 billion within two users -- two years after the closing transaction. if the transaction were too close, at the end of 2016, our targeted and adjusted earnings per share for 2018 rises by over 20%. scarlet: the agreement ends almost a year of contentious negotiations. it also extends a wave of

consolidations in the health insurance industry. alix: the japanese company that is buying "the financial times" is saying it will respect its culture. it has a strategy of approving -- improving its overseas coverage. the deal was for $1.3 billion. scarlet: and nearly a century after they debuted, chuck's is getting a new design. will put themtar on sale on tuesday. those are your top stories. but you know, i have to say, i love my chuck taylors, but they just don't go well with skinny jeans. they look like clown shoes. alix: really? scarlet: gigantic feet is not cool. huh! is releasing --

is being released this week and it stars jake gyllenhaal. scarlet: and we have the story from los angeles. ousha, why arean chinese company investing in hollywood? >> more chinese companies are investing in hollywood and that is because china has the world's fastest movie market did -- fastest-growing movie market. this is china's richest man, he has a huge network of theaters but he also owns amc in the u.s.. he, like many of his competitors, are trying to get into hollywood. there aren't any other chinese companies that have done this deal. he has taken more than $25

million for the production budget, which probably isn't very much for him, but it is an oscar worthy movie. jake gyllenhaal has already mentioned his role in the film and that really gives him and jianlin a leg up in this industry. do we see this as a changeover in hollywood? now, we haventil seen collaborations, like with china film group, which is a , and theyributor distribute in china where there is a limit on american films that come into the country. further takes it a step and they were fully involved in the picture and in the thatction process, and might differ from alibaba which had investment in "mission impossible five," which comes

out next week. they probably have not put as much of a commitment in. a different kind of film, and who knows, we might see more asian actors because of these kinds of films. quickly, this is about a boxer and jake gyllenhaal is a very critically acclaimed actor. state hethe rumors started talking to the weinstein's about -- weinsteins about this film and they talked about what films would work and this is a bio film, it is a very aitty, it is also sort of father-daughter story and about a man who rises up and this really resonated, and getting involved with the weinstein company and harvey weinstein, renowned fornd --

their oscar campaign. it has a very good chance of getting in there next year. alix: thank you so much, anousha. scarlet: coming up, people with mutations are helping to create the next blockbuster drugs. ♪

scarlet: it turns out, superheroes are not just for the comic books and the big screen. they walk among us mere mortals here on earth. they could have an immunity to physical pain. that these is a hope rare mutations could lead pharmaceutical companies to new drugs. it is one of the features in this week's "bloomberg business week," and author caroline chen joins us now from san francisco. caroline, what are these trying to tell us -- discoveries trying to tell us? mutations wese are

don't normally see in humans, and so when they find these things, they can learn more about how the body works and learn more about how to make new drugs. scarlet: what does this say about outlanders -- outliers? caroline: one of the people that i interviewed was stephen, he does not feel pain. he has a genetic mutation that causes him not to feel pain. people like stephen, researchers now understand a new pathway in the body and they are trying to drug it to create a new painkiller. alix: how much money are companies putting into this research? caroline: they are putting a lot of money into this research and databasesting large to get a hold of a lot of information. one company paid $450 million to buy one small, icelandic company. they are trying to get a hold of all this it genetic information

so they can look for trends or patterns in how your genes influence your body. scarlet: the difference here though, and you mentioned that you spoke with one of the people whose -- who is suffering from one of these problems is that the company is not trying to solve that ailment but the opposite of that ailment? example, exactly, for if i study how someone who doesn't feel pain feels, we can learn more about how other people suffer from pain. osteoporosising on and they study people who have to much bone. werlet: -- alix: i am sorry, are to have to leave it there. bye, scarlet! ♪

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than dsl from the phone company. call 800-501-6000 to switch today. perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. scarlet: welcome back to -- alix: welcome back to the "bloomberg market day," i am alix steel.

john kerry is taking his iran nuclear pitch to the media. he spoke about the benefits of the deal on a council of foreign relation. thebenefits is that agreement is the only way to offer true security to israel. in may thee morning morning talkshow circuit. this is notrry: based on trust, that is what you need to understand. everything in this agreement is verifiable. carry -- keal that erry helped workout would review iran's progress on nuclear weapons. government wants to know if airlines took advantage of that fatal amtrak crash near philadelphia. faa is wondering if the -- is investigating whether the five major airlines took advantage, including united,

delta, american, southwest, and jetblue. another investigation to tell you about. thatberg news found out the department of justice is looking into customers illegally moving money through citibank's mexico unit called that a max -- called banamex. be a cold, recalling the manufacturer says no problems have been noted in the radio, but they want to avoid hacking. durango suvs dodge as well as cheap -- jeep grand cherokee. and "jurassic park" will get a sequel in the next -- "jurassic

world" will receive a sequel in the next three years. we do have some breaking news we want to get to right now. julie hyman is that are breaking news desk. julie, what do you have to tell us? julie: gold is at the first ever net short position. net short and that long position in various commodities, so gold is holding its first ever net short position to it this is interesting, as it happens, i am watching gold futures rise, it hugebounding, after a decline we have seen, not just for gold, of course, but across the commodities complex. are people i guess, alix, looking for a sign of the bottom, and we have a number of banks cutting out and gold was the latest to do so today. morgan stanley said the

worst-case scenario would be gold, so clearly a lot more speculation there. thank you so much, julie hyman. well, coming up in the "bloomberg market day," the worst may be yet to come in latin america. it is hard to say anything positive. google has been pushing u.s. to allow drones, and now the company is teaming up with amazon and other providers. and why we should care about the chinese market slowdown. big stories,f the and some is buying cigna for about $50 billion. it is the third major merger between health insurance companies this month. e and --ith ana gupt a senior analyst in biomedical engineer. ana: i personally think that the

deal has a decent shot, i would say it has a 50%-60% handicap of success. because of obamacare, there have been a lot of profitability gaps. margins and the return on capital that the companies can enjoy. there are also very stringent review processes that are run by medicare services, by hhs, on exchanges. however, weide, have an election looming, clearly, and as we head into campaign season, i do think the regulatory process will be more onerous than typical. it could run from 12 months at the very least to 18 months, i expect there will be a lot of pricing concessions that the regulators will ask for for the consumers and for clearance and most likely devasting -- di

vestures as well. scarlet: there is a limitation, so how does this play into that? blue bylaws,e some i think one is on a national level, two thirds of the combined company has to be blue-branded. we have the estimate of safety plus seemsof 65% doable, but at the local level, i believe it is about an 80% threshold, that seems very doable. so at least as far as the limitations of the blue cross and blue shield association's, they are in fact quite global. there are other concerns, however, which i am not sure we have only heard from the management team, and that is just the relationship that is betweenthe relationship

the places where they do not have the blue licensing. do you think there is a first mover advantage here? does this have any impact on the humana-aetna deal? the deals, i think at this point, will happen simultaneously. as far as the window within 90 days, there will be federal regulators looking at this and state regulators looking at this. if i had to pick if there was only one deal that had to be approved, i think it would be clearly at no-humana. olivia: but given the situation, do you think that regulators will only have the appetite for one deal versus two? so, i don'tink think there has been a situation where regulators have said there

is only one deal and the other deal is off the table. the remedies may or may not be palatable to the companies, so we will have to see. what happens to unh, united health, which is currently the biggest health insurer and only -- and the only one of the five largest insurers not hooking about -- hooking up right now? there always has to be one left out of the dance, and united has an extremely large scale, they are extremely diverse of fied -- diversified, and they have very strong growth from their unregulated health services. just very quickly, will all of this cost savings get passed on to customers? ana: i wouldn't think that the up,iew -- premiums will go so there will be a piece of this that will be passed on to the consumer, passed on particularly

to small employers, but i am sure they will enjoy some of the margin upside as well. alix: that was ana gupte speaking with olivia sterns and scarlet fu earlier today. $5.3 trillion foreign exchange of market is losing confident in latin america's economic turnaround. nowhere is that more evident than the brazilian riyal. thes down 20% versus dollar. -- brazilian real. it is down 20% versus the dollar. is this all about lack of confidence in the economy is or is there something else going on here? >> it is mixed, sometimes this is about what is happening with but withdities, others, this is with politicians, corruptions, and -- corruption, and other issues. with others, it is completely idiosyncratic within itself, like argentina.

, witht you are seeing is places like mexico, they just opened up the oil sector, and they just got hit with that luck. they are having a really hard luring inng in -- foreign investment. you have the drop in oil and it is already created a lot of weaknesses and that is just exacerbating that. but in brazil, you have all of these domestic issues, right? everything that is happening with the carwash scandal is of course reducing confidence as well. for: there have been calls the leaders to resign. popularity is falling for a lot of these leaders, so at a time when you need a politician that is bringing you forward, you have a lot of places where they are actually pulling you back. between athey stock

rock and a hard place, because you want to pump more money into the system because you want to support the economy, but the currency you're using is not a good idea. it is very complicated and you are right, it is creating inflation in a lot of places, but there are some areas where this is creating some opportunity. for example, in brazil, the slowdown had been so harsh and inflation had been so high and the central bank had been raising interest rates that eventually, they are going to have to start cutting them. maybe the market is not taking that into account yet. so there may be an opportunity there on a local curve. alix: so you are looking at latin america, what ranks the least bad? >> what ranks the least bad? that is a great question. maybe laces like chilling -- chile, they are having their own issues, as well.

baby inflation has already reached its max, there is a lot of debate about that, and it depends on where we go from here with global growth and global trade, and china. that is what we need to sina. it is tough because they had this wonderful boom during the economy super cycle and now they are really feeling the under -- the other end of that. alix: thank you so much for looking at the least bad. coming up on the "bloomberg market day," google and amazon sights set on the skies. ♪

alix: welcome back to the "bloomberg market day." i am alix steel. time now to look at the markets and we are 15 minutes from the closing bell. let's get right to julie hyman. julie: people really do not to -- really do not want to be alone going into the weekend. weird definitely taking a little bit of a leg lower as we are going -- we are definitely taking a little bit of a leg lower as we are going into the closing bell. we got the now at a two week low and that the s&p and the nasdaq having their worst single session in more than two weeks. -- and of course, we have been talking about a lot of earnings driven, but i want to look at the average is on the week, because we have been having a pretty terrible week. it is the fourth down weaken the

past five, right now, down about 2.25%. as we look at the dow, it is down on the week as well, and this is its worst week since january, and for the nasdaq, it looks like we are setting up there for the worst week since march, at 2.5%. and then of course, there is gold. this is the worst week here since march as well. it is at 2.9% and the worst streak of losses since october. we just told you a few moments ago that for the first time, hedge funds are at a net short goal. actually, we are actually getting a little bit of a rebound here to end the week. definitely not enough to salvage the week. gold remains very, very bearish. we are not looking at oil prices right now, but just a quick mention of oil prices, they are

down for the fourth week as well. this terrible, horrible, no good week will hopefully and and hopefully we will have a debtor balance for next week. it.: i like how you phrase thank you so much, julie hyman. here is a look at the top areies during the hour, we one step closer to be able to visit cuba whenever we want. a senate committee voted to lift the ban on travel to the island. a committee also voted to block the enforcement of u.s. banks and other businesses of financing the sales of u.s. agricultural exports to cuba. and this formally ended the and of more than a half-century of estrangement since the end of the cold war. as the prices drop in new home sales, economists had predicted they would rise. just two days ago, the national association of realtors said the

home sales have rise by more -- risen to an all-time high in more than eight years. hisjeff bezos added more to personal fortunes today, the online retailer had a surprise profit, and bezos's wor -- bezos is worth about $50 billion. it easierts to make for drones to navigate the skies. they are teaming forth with amazon, verizon, and nasa to make it easier to approve unmanned aircraft. they have not said who will run it and how it will work, but there is a conference next week to discuss the ideas. could this new system cause an explosion of commercial drone use? matt miller, who is anchoring "bloomberg west" for us today joins us. ifs andere are so many

so many undecided factors. will it be to -- be controlled by the government, will it be controlled by companies? will it be one system or multiple systems? this conference next week is just the very beginning of what is going on here, so companies like google, amazon, obviously very heavily involved. i think there are 14 companies that are going to attend this conference next week, but there are 126 companies, nasa said, you are interested in this either to provide software or provide the hardware or trying to figure logistics. it is a very complicated thing and it is going to be a long time before you just see random drones flying around in the air. same time, whoe would operate this system and how with the execute it? google has a secretive unit called project wing that is working on this, and bloomberg

set up an interview with the guy , andruns project wing they say they want to develop a system and have complete control over it, but they want anyone to be free to contribute and contribute not only ideas but also software solutions, network solutions, so it is still very, very open. they thing that is clear now is that they are working with nasa in order to do it. i think it nasa has a organizational skills and the governmental relationships without being too close to the government without being, for example, the faa. i think of air traffic control for drones, one guy, up 24 hours dealing with it. matt: drinking tons of red bull, doing tons of speed. alix: no, that's not how it should be. with new planes flying

around, they have sensors on them, showing the radars where they are, you've got radar systems, that is the old way to do it, showing where the planes are, and you've got a guy in the cockpit and a guy in the traffic control tower. it is going to be the same except for the guy in the caucus it or the woman in the caulk -- cockpit or the woman in the cockpit. hopefully there will be a more sophisticated sense of -- system of sensors instead of just using old-fashioned radar. a tease fors "bloomberg west" and matt miller. still ahead on the "bloomberg market day," the problems with the chinese market are trickling down into the u.s. markets in small but very meaningful ways. ♪

alix: bond investors, beware.

isna's economic slowdown trickling into the u.s.'s market, and lisa abramowicz joins us now. lisa, connect the dots here. to start we going feeling the effects of the slowdown in the chinese economy here? in some places, you can see the effects more strongly than others. market analysts came out this morning with a pretty good report about how the metals in the mining injure -- mining industries have been hit hard. ofna accounts for about 40% the metals and mining demands globally, so this is a pretty big knock when you have that. alix: metal companies that sell to china, their bonds are getting totally tank. 60%, --abody is down

peabody energy is down 60%, and this is all caused by china. the question is, what happens when china slows down more, if china slows down more? could the effects triple out into a much broader swath of u.s. debt? barclays analyst didn't think that was likely unless this carried on for a longer. of time, but if analysts are unable to support this, you end up with the wealth effect, which is basically that people see their money is just a tier rating, they're losing -- deteriorating, they are just losing it, so they are not going to buy anymore. alix: there are concerns about a deepening slowdown in china. how does the falloff in these types of bonds compared to the junk-bond market in general? bond if you look at the

market in general, they are down about 13% this year and 8% this year to date compared to a gain of 1.6% in high yield bonds, so there is actually a very big bifurcation between the --modities, jump bonds, and junk bonds, and regular junk bonds. alix: are these the regulators -- regular investors who buy them or others? energy is getting affected by what is happening in china as well, china accounted for more than 50% of the conception of oil in the last 10 years. this is a huge drop in demand for right now. alix: thank you so much, lisa. we do have some breaking news right now, i want to head right

now over to julie hyman. julie: this comes from "the wall street journal" and the u.s. says prepare to release u.s. spy jonathan pollard. some officials have been pushing for his release and a matter of weeks. to be arty been scheduled paroled as soon as november. he was sentenced to life in prison in 1987 for spying on behalf of israel on the united states. gaveofficials said he document's to other countries as well. we will continue to look into the situation and bring you any developments on it. alix: all right, thank you so much, julie. keep it here. ♪

alix: we are moment away from the closing bell. i am alex deal -- alix steel. joe: and i'm joe weisenthal.

alix: global stocks having the worst week of the year. is, but the question "what'd you miss?" gold plunges, when will the markets recover? alix: weakness spreads to natural gas. it is showing in their earnings. next?hat is alix: we begin with the market. averages falling for the fourth day. the dow and s&p 500 closing at two week lows. this has continue to grind lower the 100re around