scarlet: from bloomberg world headquarters in new york, good friday afternoon. i am scarlet fu. alix: i'm alix steel and here's what we are watching at this hour. the yellen countdown begins. stocks coming to a high in three weeks. in an hour, she will speak at cambridge. will she give away the timing of the next rate hike? scarlet: the need for transparency and biotech firms. we explore the issue with an extreme academic from stanford and my most published findings are false. alix: getting out of town this weekend? get ready to wait. airport are expected to spend millions the summer to avoid long security lines, but will it be enough? we will look at the tsa solution and what that means for your travel season. scarlet: you are not going away, are you? alix: i drive. going away is a different

conversation. scarlet: let's check in with julie hyman. are you going to stand in lines with the tsa? julie: i will be in traffic, but i will not be in the tsa line. at least i get to listen to my music in the car. let's look at the stocks heading into the holiday weekend. we are seeing a bit of a live we await comments from janet yellen. we are seeing a bit of optimism and stocks. health care is at the top spot at the current time followed by consumer discretionary and financials. a list for those cyclical groups after they took a positive yesterday. if you look individually at the stocks contributing the most in point terms to the games today, you have alphabet rising after google's victory in court over oracle late yesterday. it was a patent fight that had to do with the genesis of android .

it looks like european regulators are coming out with different regulations for drugs. dragging or limiting stocks gains today are apple. analysts said that despite the come for his efforts in china, things like reducing retail sales prices, increasing some of word? why can i say the in any case, despite their best efforts in china, it is not bearing. qualcomm is down as well. it will come to me. i will blame it on the friday before a holiday. alix: we are all waiting for when chair yoenis went to speak. is she going to go for a july or june rate hike? julie: he thinks she is going to be more dovish than the recent commentary would indicate. if you look at what we are

seeing heading into her comments, we have a little bit of a pump on the 10 year yield. the u.s. dollar is what we're watching as well going into her comments. we will watch that in the wake of her comments as well. finally, w.a.r. p is currently pricing in a 30% chance of an .ncrease in rates coul those have been holding pretty steady since last week plus a minus -- plus or minus a couple percentage points. we will see if we have any movement after we hear from her. alix: let's check in with bloomberg first word news. mark crumpton has more from our newsroom. mark: president obama made history today in japan. he became the first sitting president to visit hiroshima where america dropped an atomic bomb in 1945 . he said later that mankind had

the means to destroy itself. >> we have to ponder the terrible force unleashed in the not so distant past. we come to mourn the dead, including over 100,000 japanese men, women, and children. koreans, a dozen americans held prisoner. mark: it is estimated that 140,000 people were killed in the hiroshima bombing. a debate between donald trump and bernie sanders. representatives for fox news, abc news, nbc news say the networks are interested in hosting a showdown, but trump has a steep price -- a donation of $10 million to women's health causes. networks are not commenting on whether they agreed to mr. trump's terms. and official vote count by

philippine lawmakers has determined that the mayor has been elected president. beatice president nearly ,he son of ferdinand marcos ousted in 1986. they will declare them as winners on monday. they made the final round longer and the words tougher, but still for the third year in a row, the scripps national spelling bee ended in a tie. a 13-year-old and an 11-year-old with a co-winners. the two boys had to get through times as many words as the past year. they won a trophy and $40,000. global news 24 hours a day, i mark crumpton. alix: the u.s. economy is chugging along with gdp

expanding at a slightly faster pace in the first quarter than initially estimated. scarlet: the revised figure shows less damage, but it also points to weakness in other areas. of economics at renaissance macro research joins us now with more. when you took apart the gdp report, you said it was slightly negative. what was your biggest concern? >> the fact that research and development spending has declined after three consecutive quarters. to me, that signals wariness on part of the business sector. if they were optimistic about the future, they would be spending more money on r&d. research and that development spending is operating at a very high level relative to gdp, but the momentum that has slowed. all, these gdp numbers, we pretty much knew how is one to come out going into the report. do i think the underlying growth in the economy is 0.8%? no. scarlet: what do you think it

is? neil: around 2.5% is a reasonable pace. scarlet: that's a big difference. neil: the gdp numbers and they ebb and they flow. alix: as you take a look at the bloomberg here, this is the g chart 914. to your point, the atlanta fed gdp is now tracking your 3%. --. growth at the percent 3%? growth a do you see growtht neil: no, to me the most important thing is to look at the labor report. is much easier to count jobs than it is to count gdp. that is the way i'm thinking about it. i think if you are the fed, they

probably want to see some of that rebounded in the second quarter extend into the third because you want to make sure that the first quarter was not a fluke. that is why i think they will raise in june or july for that matter. scarlet: trade was a smaller drag. u.s.ow that the stronger dollar has an impact on trade, but more portly, the stronger dollar has an impact on corporate profitability among the big nationals. neil: corporate profits have been improving fairly steadily. we have stronger real growth in the u.s. and core inflation is sticking up, meaning corporations have more pressing power. we learned that corporate profits from abroad have declined pretty significantly. that was really what drove the weakness and corporate profit. that is likely to be less of an issue going forward as the global economy stabilizes. seeing dollar dragon higher oil prices. a lot of the companies on the

s&p 500 are in the business of selling commodities. and so, i think the outlook for corporate earnings is picking up. corporate earnings will rebound as we go through the second half of the year and it will drive u.s. equities to new cycle highs in the second half. alix: look at this chart here -- 1475. looking at corporate profits and business spending, but to your point, corporate profits have moved higher, but they are not that great. what is to prevent companies from w rewinding hiring? neil: corporate profits have been declining after several quarters in a row, so you have to ask yourself on the statue of limitations on the argument that you are making. i think a lot of companies see the weakness in their profitability as temporary.

it's a function of what is going on globally. it's not going to continue forever, so that is why they are continuing with their hiring plans. at some point that may change, but that does not seem likely at the moment. the outlook for the global economy is improved somewhat since the start of the year. that will bring relief to the business investment outlook. the real reason why it is week is because companies are worried about the global growth outlook. when that changes, you will see an accelerator in business investment. alix: can it change if you have diverging monetary policy? how do you have a more constructive view on global growth? neil: remember the has been a significant monetary policy stimulus put in place that will have some impact this year. at the same time, the european economy looks to be growing a trend. the japanese are canceling their conception tax hike, which

should bring relief to the japanese outlook. china, even though it has real ever, that will account for something this year. i think the global economy is growing slightly at strength right now based on what we have seen so far. the global economy is sort of muddling along here. scarlet: how does this fit into what janet yellen may or may not say in about an hour's time? neil: i do not think she will say much of anything because this is a venue where they are salivating her achievements. maybe they will ask a question about what are you going to do the summer? scarlet: will see dodge that? neil: these are not the venues where the chair makes a big splash in terms of news. she will reiterate her expectation that the recovery remains ongoing and that rate movements are appropriate. means june, july,

or september, i think she will be very cautious in sending a signal one way or another. scarlet: she is also speaking at june 6 before the fed meeting. will that be the venue? neil: that will probably be more of a venue for her to make a splash. remember that janet yellen was fairly dovish the last time she spoke publicly. i do not think much has changed in terms of her calculus. caution is especially warranted. does that mean they go at the earliest opportunity for rate hikes or later? i think later. i think they go in september or december. you can make a strong case against both june and july. alix: basically we should all take a day off because he's not want to say anything. [laughter] neil, thank you so much. scarlet: still ahead, if you're traveling for the long holiday weekend, get ready to wait maybe as much as three hours for domestic flight. we will look at how ou

airports are looking to fix that problem next. ♪

alix: you are watching "bloomberg markets." scarlet: let's check in with abigail doolittle live at the nasdaq with a look at airline stocks. abigail: relatives of the nasdaq overall, looking at a modest rally. on the year though, the index is still down, especially relative to the dow and s&p 500 both up, but underperforming severely is the airline sector. jetblue and american airlines trading higher today, but on the

year, they are down 20% and 25% respectively. relative to make an airlines, the company is facing a number of challenges that includes pressure in the company's key markets here in the u.s. and also latin america. as fares are falling amid pressures of wages to increase, these may be some of the factors pressuring both of these airline stocks, but especially american airlines this year. alix: thanks so much, abigail, joining us from the nasdaq. memorial day is upon us yet again and this year to bring more frustration than fun for travelers. lines topping longer than three hours at a number of major airports trying attention to the already beleaguered transportation security and min administration. scarlet: some airports are higher private screeners instead. justin joins us now from dallas.

our airports without federal officers different? >> it is really the same standard and the same protocols that all corrugated how to follow and the tsa maintains authority for keeping airports just the same as all the rest of them. alix: let me do a little personal story. last time i traveled was april 2014 when i had a baby and stuff and i traveled again last month. the difference in two years was unbelievable. i'm not seeing lines that long since i was a kid. what happened? justin: the tsa lost a lot of people and lost budget. this is really a staffing and a budget issue. ass is what we are seeing the issues come home to roost for now. if airports are going around the tsa and looking to hire private screeners, what does the tsa say about this? do they support this option? justin: they've not set a lot

about this option yet, but i think over time that you will hear more talk about whether this could be part of the solution -- maybe not everywhere and maybe not the largest airports. it could potentially free up staffing and resources in some areas as a give you more people in other places. that is really what i think everybody is scribbling to see what could solve this problem. alix: some of this video is crazy with all these people. what airports have actually gone to more private contractors and what has been the result of that? justin: there are 22 and they are fairly small. san francisco and kansas city are the two ones that are largest in the program to. you don't really notice a difference. the standards of the same. what has happened is that a lot of the airports that are talking about this are saying that we may get better customer service when they get more of a response

when we keep contractors then we do the tsa, but it's still an open question. if enough airports decide to move away from the tsa and moved to the private screeners option, does that compelled the tsa to do anything? is their response to tsa needs to give? justin: they generally transition in a year and a have been approving more of these now. what you are really faced with is that it is still a budget issue. the money that would pay the private contractors is still the same money that is paying the tsa screeners. if you do not get more money, it is not clear that you are going to solve your long weight problems. it really goes to staffing. scarlet: one option that has been thrown out there is that people can sign up for tsa pre-check. yet the pay up for that around $88. alix: that has exacerbated the problem.

if i'm traveling on a plane this weekend and that airport decides to switch over to private contractors, how soon do i get relief? justin: may be in a year. scarlet: that is why you're not flying this week anend. ahead, some investors are taking this mantra a little too literally this month. we will show you an etf that was one of the biggest casualties. ♪

scarlet: we have some breaking news from bayer. it is set to meet with some banks on funding for its proposed $62 billion takeover bid from on santa, which the company had rejected. onis said to meet thanks funding, including a $40 billion bridge loan. in addition, they are set on financing banks next week.

they are moving forward with this plant takeover bid for monsanto. in addition, the funding amount for monsanto could change. monsanto put that letter out early in the week that was like, we are open to it but not at this price, but we are willing to talk to. you. scarlet: we will keep you posted on any other developments. alix: some investors have taken the sell in may mantra to whole new levels if you look at the performance of certain etf's over the past month. scarlet: eric balchunas joins us now with more. you have a couple of etf that really illustrate this. thing,he sell in may people chuckle at this. inyou sold in may and bought october, you would trail the market by 1.5% annually. there are certain cases where kind of makes sense like highflying etf's. take the market vectors steel etf up 55% until may.

it is now down 10% in may. alix: this is sl x. eric: you can see that in may it is not so good, but until then 55%. the other is ishares turkey etf. after may, it is down 10%. but is having some issues, overall a good year for turkey. we have been talking about this all year. gtx up 85% until may. it is now down 11% or 12%. the triple leveraged gold mine etf is up to 70% until may, but down 40%. scarlet: this is nothing to do with what is inside the etf's but the momentum leading up to may. what it could be at least we are seeing in these areas because they all have that commonality and having the lehigh run-up. maybe someone is looking up for

folios and saying, where can i make some profit? primen turkey, the minister was resigning. we also have the fed. any hawkish fed talk will spike gold. there also fundamentals for all three that you can make the argument. eric: all the things that you mentioned were very heads up p. one little catalyst as opposed to a bigger broader market etf. scarlet: let's look at some things that we can talk about. there are etf that you can tie into it so far as industries that would benefit or would be hurt by either of those leaders. eric: you're going to read all these articles about etf to play for trump or clinton and i would all.e the mm in the past eight years, alternative energy etf's are

down for the past eight years. where did you think it would not do well? financials and aerospace? those are up 100% under obama. i do not think there is any rhyme or reason to this. keep a low-cost diversified portfolio for whoever wins. scarlet: eric balchunas, have a great long weekend. alix: it is our mystery stock of the day. it is not game over, but it is certainly game slower as customers slip their discs while sitting on their couches. the short is playing big after some bad numbers. gamestop maybe? scarlet: i think. alix: i've a bad back, so that is where mine goes, too. ♪

alix: live from bloomberg world headquarters in new york, i am alix steel. scarlet: this is bloomberg markets. we will head to the markets desk

. julie hyman has the reveal for the mystery stock. it is not game pick, but it is slower. alix: i think it is game stock. julie: you are not putting your thing in your thing anymore -- scarlet: no cartridges. alix is advanced. julie: that is what it is, .amestop this is a company in transition, transition towards the casesption model, in many , gamers playing over the mobile phone. to selling some game stuff, they will sell some of accessories. it is a rocky ride in today's

session. they came out with earnings that estimates,at however, they say that profit will be at least 30%. comparable store sales will fall . it is worse than estimated. the company is being punished for this outlook. some are saying this is all part of a transition phase, so we'll go through some choppiness as the transition occurs. the idea that these are company specific issues rather than broad game issues reflects the 5%t that the stock is down and others are higher. scarlet: thank you so much. let's start with the headlines on bloomberg first word news. mark richt and have more from the newsroom. mark c.: thank you. the government is out for the forecast on the atlantic

hurricane season. there is a chance that it will be close to normal. last year, hurricanes included joaquin. brenham hasty of been hit with almost one foot and a half of rain. forecasters says it breaks the record for the amount of rain for a day. rain washed out roads and more is expected in the area today. five people were rescued from the roof of a home by helicopter wo are missing in the austin area. residents of flight are asked to wash the pipes every day for two weeks. concerned people have not been running enough water to rid the system of lead.

nadel is, rafael an out in the french open. wrist. he injured his i am alix steel. -- global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. scarlet: thank you so much. said chair janet yellen will be speaking at harvard in just about 30 minutes from now. we will bring you there live when it begins. deutscheor shipping -- of aon the probability said hike signals a potential policy error by the fed. >> the issue is if they try to remark tightening more aggressively. if it is just one and done for

the year, that could be fine. if they say, we will go again for sure in september and try to accelerate some of the hikes ato next year, it would be policy air. it will all be about how they want to convey the tightening. alix: because financial conditions would tighten too much? is since marchws and the last tightening, it has been dropping real yield. and theome down interest rate controls for inflation. that has listed a lot of risk assets including the s&p. if you want to drive real rates up, our concern is the dollar will go up and undermine risk assets that have preferred well -- performed well recently.

>> since yields have dropped so much this year, what will happen when the fed goes? if you look at the terminal, i want to bring up something quick. you can see where we are now. basically where we were a couple weeks before the fed hike in december. you can see the two-year here. the economic surprise is it is going up. if last time the two-year only jumped two basis points, what can we expect this time? expect the really two-year to jump that much. we were thinking about maybe one and 1/8, or something. if weis an argument that think we have gotten through a slowdown phase in the u.s., and we really are accelerating, then

there is hope for the fed to .ecome more aggressive in principle, the market might be able to take it better. the big concern that we have is that -- and the fed is sort of almost ignoring this to some extent -- we know in principle the payroll numbers should slow down. people think that in some sense that is just fine. they think they can reduce the amount of accommodation even if the job numbers slowdown. if you don't see wage inflation, you will have income growth slowed down. the issue with that, and it was ,ighlighted in the last session is that interest rate is going up. we had a very weak start this

year. we had one good retail sales numbers, but that is the one issue we would have. demand.so, there is no scarlet: that is a good point. thehave been fretting over state of global profits for a .hile, particularly in the u.s. globalrscores a weak demand. isthe proper story productivity is bad. historically, the only reason that profits would save lives normally,ve is if -- .hen they should workers it would be amazing if companies

actually started raising productivity and the fed only raised rates once or twice. alix: that was the global head of rates research over at deutsche bank. something we spoke also about was the financial conditions index. the idea being that if you talk conditionse hike and tighten, does it preclude the fed from tightening. anything above the green line is looser. below the green line is tighter. we have not seen any tightening even though the expectations have increased. uberet: the fed turned dovish. d proceeds on a more hawkish course, will it make the tightening that follows even more painful for everyone else. alix: it is once they tighten,

everything gets tighter. the dollar rises, and that tightens financial conditions. scarlet: on what did you miss today, we will be talking about australia because one of our commonwealthes a thinker. he will talk about the inflation target. a lot of economic data coming up in australia in the coming days, next week. of course, that will be a full report with gdp estimates estimated to raise. alix: it will be great to get his perspective on what is weighing the country down. scarlet: why are they the exception? alix: be sure to tune into bloomberg radio today. janet yellen will be speaking at harvard in about one hour. it on theso watch

bloomberg. this is bloomberg markets. ♪

scarlet: you are watching bloomberg. i'm scarlet fu. alix: i am alix steel. this is your global business report. scarlet: low morality in italy -- why are they so gloom? alix: we will hear from the ceo of philips lighting. scarlet: need a roadmap for all of the twists and turns in debt?'s all the details in the quick take. italy's main business lobby has expressed out. gdp is set to rise just over 1% this year. alix: in brazil, the bank was forced to sell assets after the

to sell more. founder was arrested last year and a corruption probe . telefonica is leading to hold onto their british units rather than seek another buyer. they were blocked the european union regulators. a person familiar with the matter said that while the priority is to reduce leverage, the company is better off with it in the portfolio. in its lighting that up debut in amsterdam. a hundred $40rly million. the ceo dismissed concerns of competition from low-cost producers in china and said the innovation in the firm would allow it to stay above their peers. band.have a very strong

we are connected to customers who trust us. the growth is coming from very specific competitive advantages. scarlet: time now for our bloomberg quicktake, where we provide context and background on issues of interest. greece fought austerity and .usterity won here is the situation, with the prime minister forcing through unpopular austerity measures tied to greece's third european bell, attention is turning to making the debt more sustainable. predators must bridge the selves.nces between them the prime minister has agreed to push through taxes in return for bailout funds. here is the background. for the party

happened after parties traded power. it led to a spending spree that was fin funded by international debt. they real the deficit that was four times what was allowed. youth unemployment peaked at 60%. the overall jobless rate stood at 24%. in june 2015, there was a snap referendum in which they the latest offer. janet yellen was angered by the mood. they instead of giving in. here is the argument. the bailout and the refugee crisis has lowered the temperature on greece's finances.

to richer northern companies, germany, greece remains a spend rich that will not reform unless under rusher. that is your bloomberg business report. for more stories, visit bloomberg.com. coming up come kobe will be speaking with one doctor and academic. ♪

alix: bloomberg markets. i am alix steel. scarlet: i am scarlet fu. alix: fair nooks is facing a lawsuit about the accuracy of

its lead test results and the reliability of their technology. scarlet: a dr. of stanford university was an early and vocal skeptic of the company's technology. he questioned the hype versus science. he joins us now from stanford university in california. respectedre you a authority in the field, but we should also mention that theranos tried to get you on speak to wanted you to the success of the company. can you tell us about how it transpired ? >> that was several months after i'v wrote the paper in the medicalof american association. i said i could not support the claims by the company. i had concerns about the vision about performing mastic --

massive testing in the population if it was not necessary. the general counsel reached out to me at about the same time that theranos was getting clearing the fda for one of its tests. they asked if i could write an editorial in a major journal admitting that if you can have the fda clearance for a test, this is the highest level of evidence you can get. moveught that was a great that the company was trying to get clearance by the fda. in science, we also want peer-reviewed evidence. i could not really do that. it is interesting that when they reached out to me, it happened that the phone call happened when i was in rome. in little vimplecom one of

the masterpieces of the renaissance. similarlike that was a situation. someone was making the claim that you could disrupt health the masterpiece. your big stance is that you need to have a peer-reviewed business model with a company s.ke therano inherently, do you think the company they are trying to develop has some legitimacy? >> i think any improvement in the way that we run blood tests is welcomed. i still hope they come up with some data that what they have done is an improvement over what we have done already. massivelyhe vision of

testing individuals repeatedly, multiple times, like on a daily basis perhaps, and therefore helping these people is therefore very pragmatic. we have known for years that any blood test needs to be done when .here is something to learn it is complete chaos. approved therea was no tests -- why is that without peer-reviewed evidence? >> this is the very premise to science. if you have a new use of technology, especially in biomedicine, you want to make sure that other scientists can

scrutinize your data. you want to make that visible. you want to have it peer-reviewed in a scientific journal, and then you can have 20 million scientists be able to appraise it and say that is found, or it is not, or there are problems, or they could do it better. this is a major gap. until they facility requirement, i still feel uneasy about what to believe. alix: part of the criticism or negativity about a peer-reviewed process is that it might prevent new revolutionary ideas coming to market even if they're not perfect. what is your response to something like that? >> this is true. i have been one of the critics process overeview the years. as you say, some of the most innovative ideas might have a hard time to convince peer-reviewed is. this does not mean that they can

not be published. maybe sometimes they will not appear in the very top of the top medical journals, but there are about 50,000 medical journals out there. publishing anything is currently very easy actually. if you have a brave new world idea, it will get published, and people will be able to scrutinize it. there are so many ways to do that. there's is really no alibi for just trying to hide things under the carpet or be secretive. scarlet: what do you think is the path forward for theranos? >> i think they should just release data and evidence, have it peer-reviewed and scientific journals, and convinced the scientific community. i would be the first to rejoice if that were to happen and if i saw evidence that it works. unless they do that, they will be subject to criticism. aix: when they are facing lawsuit and investigation, how

do you do that? >> actually, if anything, this is further incentive to do it. i think they went into this very weird situation, and now they are being attacked on all fronts from federal investigators and people complaining that they got wrong results. especially in particularly because they did not have evidence to show. if they had gone down the track of showing evidence and convincing the community that this was legitimate technology, this was going to be very different to what we see now. scarlet: thank you so much. alix: coming up, you are looking at a live picture of the room where janet yellen will speak in just 15 minutes. tune in on bloomberg tv, radio. ♪

scarlet: good afternoon, i'm scarlet fu. alix: i am alix steel. a are just minutes away from speech by janet yellen at harvard university, where she is receiving the radcliffe metal. as we await this comment, let's check in with julie hyman. to get a sense of where the markets are trading before the speech begins. if you look we have been treading water waiting for this. julie: actually, it's been a pretty good of week. at the end, a tapered off and we are seeing gains today, even as the nasdaq gains about .5%. it has that treading feeling because volume is down. we have volume today nearly 30% below the 20 day average, if you look at the s&p 500 specifically. let's take a look sector by sector.

telecom volume is down more than 40%, versus the 20 day average and we see declines of 20% to 30% of other groups in terms of the trading volume. going intoe friday the holiday weekend at a lot of investors waiting to hear from janet yellen until placing their bets on the market. seen a strong upswing, for the s&p it's the best weekly gain going back to early march. as we talked about earlier in the week, the mantra seems to have changed to don't fear the fed. stocks performing a pretty well in the face of that. individually, the winners on the like you see companies dollar tree which reported earnings, micron has been on the rise as well, and hewlett-packard enterprise pulling back this week, signet jewelers.

that companies numbers missed estimates. and marathon petroleum also lower on the week. alix: what about away from stocks? julie: looking at the asset classes in the lead up to janet yellen's talk today, here's a look at oil and gold, both of them trading down oil. gold on a days long losing streak here as we have seen more of her rotation back into risk assets. let's take a look at the 10 year as well. we will be watching this closely in the wake of her comments, if she does comments on monetary policy. , and the u.s. dollar has been gaining a little bit of steam today, the bloomberg dollar spot index of .25%. julie hyman, giving us the set up as we await janet yellen speech. a number of after fed officials indicated they

were open to a rate increase as early as june. beyond the fed lineup of officials speaking and giving this dovish tone, there are plenty of voices cautioning. alix: they expected dovish speech and predict the fed will prevent from raising in june, unless they assign a probability of at least 50% to such a move. joining us is samantha azzarello from j.p. morgan asset management which oversees $1.7 trillion, and with this is michael mckee. , what does the market need to hear from yellen, if anything today to get more positive on a rate hike in july and june? mike: it's a question of the data. everyone is annoyed that she is speaking on the friday before long three-day weekend, but this has been scheduled for months. it has nothing to do with the fact that they are getting closer to a rate increase. onget some important date tuesday, incoming spending plus the latest pce inflation numbers.

those of the ones of the fed follows. by tuesday, we should have better direction. and friday, the jobs report. a week from monday is the key janet yellen speech, june 6. she will probably lay out a direction. alix: that is the speech that was scheduled later. mike: that was just put on a short time ago. a day before the blackout. it was probably scheduled to give her the option to send a signal if they want to. thelet: what do you foresee fed speakers having to do in the next few weeks to talk of the markets for closer rate hike if the data hold up? obviously, when you look at the futures market, with the futures market is saying versus what the fed is expecting, there's a lot of volatility and disarray when those lies need to close. we think the fed is going to price down to what the market thinks.

if the market doesn't expect a rate hike, we don't expect it will move. i would be inclined to agree with the need to see a 50% or higher probability on a fed rate hike on the futures market before janet yellen will move. scarlet: does that mean fed officials are testing the waters? samantha: i think so. they try to move and then financial conditions tighten, the dollar shoots through the roof, that's what they're trying to avoid. it was see if the impact can be lessened if they start to priebus, and then time for liftoff. scarlet: why is it that was central bank wants to tighten, the need to telegraph it is much as possible and get everyone on board, where as if they want to lose, it makes more sense to catch people off guard? japanha: the bank of seems ok with shock and all, the fed is trying to be more cautious because things are fragile right now. we are growing at a decent clip, but no one really believes in the strength of the recovery

continuing. they just want to make sure everyone is on the same page before the move. alix: doesn't the fed actually want them to tighten? mike: exactly. bill dudley made that point in a comments just a week or so ago. they are getting to the point where they are tired of the circular game that we are talking about. irrespectivemove of the markets, if they are too far away, they probably won't. the feds that is as the data come out, the marcus lee or -- the marks will either move towards the fed, with the fed will back off because the data don't support the move. they're kind of looking past the market at this point, focused on the data, even the we are at 38% for june. it will probably go even if they get just a little bit closer to 50% if the numbers come in. but watch the numbers. if they are stronger, you will get market reaction as well. you are seeing ben

bernanke, the former fed chair and janet yellen's predecessor, helping give introductory remarks before janet yellen takes the stage. when you look at economic data we got today, gdp for the first quarter that was revised higher in addition to some disappointing reads on consumer confidence, does it move the needle for the fed? had was a big jump up and consumer confidence in the parliamentary report, and it comes back down little bit. but compared to earlier, consumer confidence is way up. the fed has looked past this gdp report, they told us it is seasonally affected somehow, we don't really know why. but they're not getting a lot of attention to it. a couple of things in their they're looking at, business spending. they talk about that a lot in the april minutes. businessmen and was very weak in the gdp report, revised down a little more. -- fouror numbers numbers for spending. without profits, business is don't invest. corporate office did rise of --

corporate profits did rise, but only a little. there is some good and some bad. overall, it's backward looking , they are looking forward. alix: what is the one thing you look at to show -- what asset class will be the first to be affected by the probability of a rate hike as the data actually improves? samantha: high-yield or credit markets. equities, i think right now are really focused on earnings. we have had enough of financial engineering and central-bank easy policy great i do think equity investors are really focused on earnings and whether they're going to pop and we will see the growth. i think you will see it with the tightening of credit conditions, and a movement there. scarlet: if you go inside the bloomberg terminal, she is a chart showing how corporate profitability has increased in the first quarter surprisingly,

because a lot of people weren't necessarily looking for that. all of profits from overseas to a big tumble. business lending is not really improving as the fed might hope to see. samantha: there's a deutsche bank keep wondering if profits continue to not be that great, at some point, demand is so weak , will investors need to get back some of the hiring they have done? samantha: it's a possibility. we were looking at the second half of the year to see if earnings come through. first quarter, second quarter, a little more variable. but we are really waiting for the end of the year to see of earnings are going to come back. scarlet: you were saying that the federal reserve is looking at the yield curve and at the short end of the curve, because that's really influencing things. less so on the wrong end. long,ha: it's the dictated by forces well outside of the fed's control. we have foreign inflows pouring

into u.s. treasury markets for a nice real yield, and also, growth. growth is going to influence the long end of the curve. we think in that sense, lower trend growth in the u.s. will anchor the long end of the curve. scarlet: samantha azzarello, thank you. and michael mckee are sticking with us as we await janet yellen to speak ahead of this long holiday weekend. there's ben bernanke continuing his introductory remarks to tear janet yellen. -- will speak shortly after at harvard university. ♪

scarlet: you are looking at live pictures of harvard, sitting down with janet yellen.

>> let me begin by thanking you. [laughter] done forou do and have this country. i thought it would start off with a little bit of biography. in all of those years, i've never met a five-year-old who comes up to me and says when i grow up, i want to be an economist. but some of them do grow up to be economists, and there's always a moment where they say that. when did you want to be an economist, and why? janet yellen: i want to express my great gratitude for them in the remarks. i am testing honored by this ben is a good friend and colleague. and america owes him an enormous debt of gratitude. [applause]

>> when did you decide to become an economist? janet yellen: i became hooked on economics when i took econ one, three content here. econ 10 here. i always enjoyed math, and i saw economics is a field that uses math and uses quantitative techniques, but for important social purpose. and that is advancing human welfare and understanding problems that keep people from fulfilling their lots. it was the social welfare implications of economics, plus the analytic rigor that involved

was the, nation that appeals to me. also, in my first macroeconomics class, i studied the great depression and business cycles more generally. to themy first exposure general theory. i think i came to appreciate that i don't think anyone has ever invented of better economic system then capitalism, it worked very well for a large number of purposes. it is capable of breakdowns, periodically, and which one has massive unemployment, the great depression, the great recession, fortunately not nearly so scary, but nevertheless, a very difficult episode. i saw that monetary and fiscal policy were tools that could be used to address unemployment and improve people's lives. that attracted me and continue to be my motivation.

>> as a teacher of principles of economics here at harvard, i'm glad to hear that course could be so transformative in such important lives. [laughter] you mentioned keynesian economics. i want to talk about your intellectual pedigree. he went to yale as a grad student, you studied -- you know this, but to give the audience some background, he was one of the great macroeconomists of the 20th century. he studied here at harvard under first hansen, one of the people in the united states to take canes very serious it. and bring a lot of ideas of the general theory to the united states. you see that trajectory. i learned at lunch the utah alan garber. taught alan garber. janet yellen: i went to gail, when i chose you as a place to get my phd, because i was so

impressed by tobin. i took his course in monetary economics, i served as a teaching assistant in the core graduate macro class, he was certainly an important mentor to me and a friend. then later on, but it went to serve the federal reserve and council of economic -- he would visit me and economic -- in washington and give me the benefit of his policy advice. tobin, to me, was more than just a teacher. he was really an inspiration. tobinat inspired me about was that he had a passion for social justice. compass that pointed straight north. economist, sometimes are accused of working on highly -- thetical models that

applicability of them is questionable. for tobin, that was never the case. economics was always important because the policy applications of it have the potential to make people's lives better. as you indicated, he studied here at harvard, where the general theory, shortly after it was published, went to depression. -- went through the depression. -- they the here economic toll, but also the political and social repercussions of that, for many, many years. he was determined to make sure that our country never suffered ,hrough such a situation again when they were policy tools that could be deployed, and that exactly was the focus that i've

had throughout my career. >> i noticed as a macroeconomists, that recessions do have one positive byproduct, they generate a lot of macroeconomists. the great depression created an entire generation. i went to grad school in 82, a lot of people were taking macro. that's one upside. evolutionk about the of economic thought. you think about what you learned and how the economy works as a student, both at brown and yale, and today, what do we know today that is really fundamentally important that they didn't know when you were a student? janet yellen: macroeconomics as a field has continued to advance and the dean's remarks talked about what i'll referred to as the microeconomic foundations of macroeconomics. this is something that not only did i work on, but you have made

important contributions to is well. theory i think was wage and price stickiness or rigidity plays an important role in understanding unemployment, but the economic foundations, the micro-foundations of wages and prices sticking hadn't been well understood. i thing we really made a lot of progress in advancing that. greg, as you mentioned, when there is financial crisis or a time of high unemployment, it does stimulate people to think about macroeconomics and to take off in new directions. i think that is happened in this financial crisis. in particular, i would point to isrowing body of work that at the border of finance theory and macroeconomics, which really

is helping us understand the nature of systemic risk, the way in which it can rise and propagate itself, what to look for as we monitor the economy, obviously, we don't want to have another financial crisis. we want to do everything in our power to spot developments that could produce a financial crisis. this work is going to help us understand that. yes -- you say that asked me about tobin's work, i would say that tobin's work continues to have great relevance to the problems we face today. 2008, we had lowered our overnight short-term interest rate to zero. unemployment was still high, and looked like it could linger for many, many years. we were searching for new things

that we could do to get the economy going. one of the things that we ended up doing, and other central banks have as well, was in gauging in large-scale purchases of longer-term assets. in our case, long-term treasury bonds and mortgage-backed securities. the theory is that in part, by removing these long-term assets from the portfolio of the public, we would would downward pressure on interest rates at a time when there was no more to be accomplished in the short end. really, a lot of tobin's work on portfolio choice and were fully on modeling tries to understand what determines the relative rates of return on different , how demand and supply of matter to that, was in fact the electoral foundation for those policies and

comparable ones that are being used in other parts of the world. apocryphal, the old chinese curse that says may you live in interesting times, that certainly applies a central bankers. you have legendary interest in times. looking back over the past decade, we experience -- and implement reach 10%, but not the 25% that we saw in the 1930's. it wasn't great news, but not as bad as it might have been. looking back at your time in the federal reserve system, what did the fed do right and what to do do wrong? janet yellen: i think the fed's handling of the financial crisis, once it was upon us, was nothing short of magnificent, and the credit here goes to ben. [applause]

he was the right person with the right intellectual background, and the courage to think outside until he saw, in the height of the financial crisis, credit just drying up in the economy, something that would end up crippling businesses and households, and could have ended us up in another great recession. thate immediate problem the fed faced was how to get credit flowing back into the economy to avoid that kind of outcome? and although the fed is supposed to be a slow-moving and pretty conservative institution, he encouraged this thinking.

he tapped everybody around him with being as inventive, as innovative as they possibly could, to come up with programs -- some of them might work, some of them might not, might be rejected, might not work. but to throw everything we had to keep credit flowing to the american economy. we invented a whole bunch of programs with an alphabet of mnemonics that i won't recall, but i think that really stemmed the financial crisis. after that, the programs we adopted -- asset purchases and for guidance -- forward guidance has gotten the economy back on its feet. i think those are things that the fed can feel very proud of

. he was courageous in doing this and this face of great deal of criticism. it was a huge contribution. >> i agree. he is the hero. when they push you a little on that. at saying i look wish i could've done that thing differently, for example, i wish i had save lehman brothers? janet yellen: we didn't see the financial crisis coming. mentioned -- steve cohen mentioned the half price bubble. but i don't think we saw -- this was true for the regulators and it is true of economists generally and the private sector trees, theus saw the house price overvaluation over bubble was a tree.

this growing leverage in the shadow banking sector, some people thought that putting it all together, this would come together and create systemic risk. a very severe financial crisis, where only derivatives, we really didn't see that coming. in that sense, i would say we are really trying now to do a better job of that. >> that's my next question. financial regulation is an important part of the fed does. of financialr job relations today than we did before the financial crisis? janet yellen: absolutely. point for why we are doing a better job is -- we are focused on systemic risk. we are focused on financial stability. spot emerging

conditions that could potentially results in another financial crisis. i think we have a better understanding of how to look for those conditions, and we are putting a lot of resources and intellectual effort into doing just that. we now have an entire division of financial stability at the fed. with respect to our supervision of the banking system, really the most important thing is that we are bringing in new mindset to how we supervise the largest and most systemic firms. instead of taking a trees approach in this institution or looks safe and sound, we're taking -- thinking about the interconnection among this firm and their connections with other parts of the financial system. this is sometimes called a macro prudential approach, might of

the micro-prudential approach. beyond that, in terms of regulating the financial sector and making the banking system safer and sounder, i think we accomplished a lot. the amount of capital in the banking system, and this is particularly true for the largest and most systemic firms, has increased enormously. the quality of that capital is greatly improved trade the amount of liquidity that we are requiring large making organizations to hold is greatly increased trade and with greater chancety, there's less that if one firm encounters risk, that will end up mushrooming into a liquidity shortage for the system as a whole and its financial crisis. there are also putting a great deal of work into thinking how to resolve this systemic firm,

if one were to fail or encounter serious losses, without imposing costs on the taxpayers, the so-called too big to fail problem. we forced firms to produce living wills that would show how they could be safely dismantled using tools at our disposal, and we're working very closely with foreign regulators, particularly in england and in europe, to handle tricky cross-border issues and making sure that we're all prepared. i do think things have improved enormously. >> let's term to current -- let's turn to current economic issues. we have a slow recovery by historic standards. have you think the economy is doing right now? has been a slow recovery, but we have made great deal of progress. 10%, it's down to

5% now. just over the last year, we've created around 2.7 million new jobs. million since the lowest point for employment. , onrally the labor market almost any metric you could use to evaluate it, is really improved. labor force participation has , whichp from last year is an encouraging development, because in a society that is aging, with more retirees, there is a persistent downward negative trend in labor force participation. people who became discouraged about finding work have moved back into the labor force. i definitely think we have made a lot of rye grass. that said, i think further gains

are possible. we are close to an unemployment rate that i think most economists would associate with our employment goal. the number of individuals working on time who would like to have full-time jobs is unusually high. and we really not seem much improvement in wage growth, which is suggestive of slack in the labor market. improved,abor markets and notable and less positive development is the growth of output has been remarkably slow. something like 2% on average over the last several years. i have a lot of jobs being created in the face of not much output growth, unfortunately, that means that productivity growth, which is the growth in output per worker is very slow.

over the last five years, productivity growth is down .5 cent per year. miserable case in historical context. productivity growth ultimately determines the pace of improvement in living standards for society as a whole,, that's a serious and negative development. with respect to inflation, inflation for a number of years now has been running below the fed's 2% objective. this last year, our measure of inflation that we look at increased only .8%. very important reasons for the short all, first of all, the plunge we've seen in oil prices and second of all, a marked

depreciation of the dollar which pushed down import races. -- prices. those factors you might they are roughly stabilizing at this point. my own expectation is that all of inflation is lower than our objective, if we see stability there in improving labor market, that inflation will move back up over the next couple of years to that 2% objective. >> i have been told that a bunch of money managers in new york have delayed victory trip to the hamptons this afternoon. [laughter] so they can listen to your talk today, so this is your chance to move markets. do you want to tell us anything the path of monetary policy point forward? you are welcome to say no. and if you say no, we will leave for the hamptons. say a fewen: let me

sentences so i want to leave a very long. won't delay them very long. the economy is continuing to improve. we sell weak growth in the first quarter of the year, and relatively weak growth at the end of last year. upwth looks to be picking from the various stages that we monitor. continues, and if the labor market continues to improve, i expect those things will occur. we will continue to monitoring incoming data, and also, we will assess risk to the outlook. when it's appropriate, and i have said this in the past, i think, for the fed to gradually and cautiously increase our overnight interest rate over time. and probably in the coming

months, such a move would be appropriate. >> you can go to the hamptons now. [laughter] [applause] one of the interesting challenges the fed raises interest rates go to rock adam -- rock bottom. we are not in the situation now where it's a big concern, but people are concerned. if we have another recessionary shock in the future, that the fed won't have many tools left. how much does that worry you and what you imagine doing in that scenario? and eurasian going with negative interest rates of some european countries have been trying? janet yellen: let me agree with what doug said this morning. it is a concern. focus atery limited this point to use our traditional technique, mainly

lowering overnight interest rates. for the economy, if there is an adverse shock. even if a go for some time without an adverse shock, and even if you take a reasonably optimistic scenario, participants in the ethel lance the arrest to write down -- participants in the fomc are asked to write down what they see as a normal long-term level of interest rate. five to seven years from now. so quite a ways down the road. now write down a number like 3% or 3.25% is the median. even if we were to go for a number of years without encountering an adverse shock, and the short-term rates affect to that level, that's lower than a lower level of rate we've seen

historically. we don't even know for sure this level is normal or neutral will rise that high. in the typical, think doug mentioned this this morning. recession, when the fed wants to risk bond, you would cut short-term interest rate by 400 or 500 basis points. we don't have that scope. todid invent other tools address stimulating the economy. we use these longer-term asset purchases and we tried to shape market expectations about the path short-term interest rates through our communications and so-called for guidance. i think we would resort to those tools again. negative interest rates is something we considered briefly.

we were concerned at the time that there could be a number of negative repercussions for lowering negative interest rates , from lowering interest rates to zero or negative territory. so we didn't really pursue that, and it is not something that we are really thinking a great deal about now. although other countries have used it. concern, one of the reasons i believe it's important for us to be cautious in raising interest rates is precisely because if we were to raise interest rates to steeply, and we were to trigger a downturn and contribute to a downturn, we have limited scope for responding. it is an important reason for caution. i would like to see doug and others talk about this, this morning. it should be greater scope for fiscal policy in the future to

be usable to address economic weakness, and if we were to take steps to raise productivity growth, our panelists talked about a number of things, education, children, investment in infrastructure, investment and innovation -- if we had faster productivity growth, that would probably push up the normal level of interest rates in the economy and give us a bit more scope there as well. >> one final question. i'm assuming out here in the audience are some student, i'm sure some students are looking at you and they wow, she has had a really cool career. i want to do some like that. what advice would you give that students? janet yellen: i think the starting point for me, as i commented,thers have was finding a subject i love,

and would have been able to feel passionate about over all these years of my career, namely, economics. obviously, it's not going to be economics for everybody. but finding some field, some interest that you want to get up on,y day, you want to work obviously, a successful career does require hard work. and it's a lot less hard if what you are working on is something you are really interested in. to me, that is key. thatss i would also say something that has been thinking to me -- about a career, i know i've achieved a remarkable vision. of it's not just the import one careers matters, a satisfying career is about what you do all the way throughout your working years, leading up

to wherever it ends. for me, i think back on all the stages -- [applause] i have enjoyed them all, they've all been satisfying. i will mention to other things. i think it's really important to be -- affiliate yourself with organizations that you really feel identified with their mission. you feel proud that you work for the organization. i certainly felt that way at the various universities have been at, and i felt that way very much working in the federal government. thisf our panelists morning talked about public service, and i will state that some of the finest, smartest, most dedicated, most passionate people that i have worked with have been at the federal

reserve, and in the federal government. throughout, finding people to work with that you brainstorm together, you have to figure out what are we going to do about this problem, and coming into work and having a group of people you feel that these are people that want to hang out with, i feel proud to have these people as my family, that's always been important to me. the people you work with and choosing organizations you feel -- someone says where you work, i work at the federal reserve, i feel proud of that. it's an important organization devoted to the well-being of america. >> thank you. [applause] scarlet: that was janet yellen in a conversation at harvard university, the right foot

institute for advanced study. the institute for advanced study. statedhe specifically she saw growth taking up in the labor market is improving and she expected those things to improve, and that she did think that a gradual cautious rate rise in the coming months would be something to consider. scarlet: such a move would be appropriate. i love the way to greg back into that question saying there are some anecdotes out there about traders wanting to go to the hamptons but nothing you do so before you said something about the industry. michael mckee is still with us. what about that but she said that the markets thinking that she was more hawkish. mike: it was what she didn't say. everyone was wondering a janet yellen would push back against the conventional wisdom at the fed is looking for a june or july rate hike. the last time she spoke was march 29, she was very dovish of

the new york economics club. today, she basically repeat of the party line that came out of april minutes. if we see the economy develop as we expect, which is stronger growth and improving labor market, the fed would raise rates for the next couple of months. she added -- i expect those things to occur. we are data dependent, with the the data is going to be good enough to raise rates, and i agree. scarlet: what happened between march 29 and today the change her worldview. ? mike: you've seen the dollar level up, we've seen the problems in china fadeout for right now. the world situation is a little bit better. up, the benefit gdp now suggesting the second quarter sing a strong rebound. we saw stronger cti report on tuesday, so maybe a little more inflation, and maybe the forecast of a little more growth rate but there hasn't been a huge seachange yet. scarlet: a decent april jobs

number, but in may, not so great. it's kind of a wash. mike: we are going to have a bad number next week. people aren't focused on this quite yet. the verizon workers are on strike, and those are going to come out of the payrolls report. you will see a lower payrolls number and perhaps wall street is expected, but the fed will look past that. scarlet: there was a headline about 30 minutes ago that the u.s. is announced an agreement on over -- a new verizon contract. the labor secretary expect workers will be back on the job next week. alreadye survey week is over, the payrolls will not be on the payrolls, but there will be a big jump in june. scarlet: a lot of data coming up next week. what do you think is the key point that the fed will need to see to corroborate what janet yellen was saying -- of the data stays good, we're doing it. they were at the workers

back in and figure out what it looks like. as the unemployment rate is stable or the arises for the good reasons, more people are coming into the labor force, we get a little bit of wage growth. none of the trigger points we normally see in the jobs report are bad. if we get a reasonable pce inflation reading on tuesday, that verifies where the cbi says we are going, than they are in pretty good shape. then it comes down to the question of what the polls say about brexit. if it looks close, they might decide to wait and see. it looks like it's going to be defeated overwhelmingly, they may go ahead in june. scarlet: she last spoke march 29, almost two months before she spoke again, but janet yellen will give us the pleasure of her commentary in about a week and a half when she speaks on june 6. this was scheduled rather late, you think there's a reason. mike: what the fed wanted to be will to do was send a signal to the market if there racing into low, the possibility of june remove. -- rate move.

they give themselves the option alley. if the numbers are bad, she can we don't wantay to move in june. we will and see where things go. but if we've a strong number, she can nudge the markets in the direction they want them to go. alix: option alley, was that a word that existed? i talk about this every day and finance. look at today, we get to more market reaction the second. we did see a selloff in stocks, we did ceos job, especially the two-year. since then, markets and come back a little bit. mike: the bond market hasn't moved back. that's good news for the fed. but they're looking for is a market that is ok with a rate increase. it looks like over the last week or so that's where equity traders have been telling us. if we avoid volatility we saw on january when people were talking about rates, it just makes the path even smoother for the fed. scarlet: that goes back to the

idea that someone else mentioned, if the market is pricing in the prospect of rate hikes, but not necessarily equities. incomehing the fixed market was pricing and, but fx inequities were not. mica, which you anticipate market reaction to be this week as we get this data coming out? how much more to we need to see? mike: probably not much in the curve. it's moved into the range will be trading in. the 10 year has room to go up, but there's a lot of crosscurrents and factors affecting that, including a lot of investment from overseas. probablyrkets are going to continue to go in the direction they're going. and by that, i'm in they can't strengthen the people think stocks are worth dying. you look at all the other factors that affect stocks, anduding earnings potential with the price-earnings ratio is good enough. if the dollar index you want to follow. it's when we very sensitive to what they think the fed is doing. the fed is betting that the

dollar is going to be level. it's when you go up a little bit, but not a whole lot. if you look at the dx why chart over time, there was a huge move or 822% in 2014 and 2015. since then, we are basically flat. the ups and downs, the fed increase goes up a little, down a little, that takes the pressure off companies have adjusted and the fed doesn't have to worry about it. if we look what we're going to see a rate increase, watch the dollar and whether he goes up significantly or not. he did go up a little today, but it is still within that range. scarlet: michael mckee, thank you. running tof you not catch your helicopter to get to the hamptons, we are right back on "bloomberg markets." ♪

alix: this is "bloomberg markets," i'm alix steel. scarlet: i'm scarlet fu. alix: julie hyman has the latest. julie: the backup of this is some people have already taken their helicopters to the hamptons. trading volume today is already quite then. any moves you might otherwise see can be exacerbated in some cases, exaggerated in some cases. if you look at stocks right now, we're pretty much where we were before she began speaking. maybe a little bit smaller a rally in today's session. take a look at the s&p 500 intraday, you will see the movie are talking about here. a little bit of movement down on her talking about emphasizing the idea that june could be on the table, yes we could see more hikes this year. when the expectation by some was that she might to the opposite.

said theye capital thought she would be more dovish, and that was not correct. a little bit of a zigzag in stocks. if you look at what's going on with rates, with the treasuries, we are seeing more dramatic of a move. one that also had more staying power. this uptick, although the magnitude is small, still at 1.85%, the same goes for the two-year note. ,e saw an increase in the yield a bigger move here. 0.91%, then we saw on the shorter end of the curve trade the u.s. dollar, which you just heard them discussing is seeing a leg up now, just about doubling the move that we saw in the dollar index earlier today. , as the dollar goes higher, gold goes lower, no surprise. , are fed fundsg futures calculator looking at the probability of what the fed

may do, we sought uptick here in expectations for the june meeting, it was 30% earlier today, now that's over 34%. it does operate on a 10 minute lag, but it was 30% even in the wake of her speaking and now has picked up trade now we are seeing a take-up of about four percentage points for july as well. seeing a little bit of a reaction to her commentary. as mike says come everything to change next week we get more economic data. but for right now going into this holiday weekend, june is still firmly on the table. scarlet: julie hyman, thank you. earlier in the hour, we got thelines regarding verizon, unions reached agreement in principle on per contract. this is according to the u.s. labor department. that paves the way for about 39,000 landline employees to return to work after a 44 day strike. as mike mckee was mentioning, the fact that these rights workers were on strike will

probably hurt the main jobs report, which we get next friday. alix: i have an of verizon stocks, this news came out 1:30, we did see a big spike up for verizon stocks, but now we are off that level nonetheless. off of theirs were job, the landline workers, so coming back online the market seems to be interpreted as a relative positive. scarlet: it push the number of the striking u.s. workers in the highest and four years. alix: in the next hour of "bloomberg markets," with oil prices on the rise, which is that mean for energy? expert, this is "bloomberg markets." ♪

>> it's 2:00 p.m. in new york, 7:00 p.m. in london, and 2:00 a.m. in hong kong. welcome to "bloomberg markets.

from bloomberg world headquarters in new york, i am shery ahn. here is what we are watching. janet yellen says a rate hike may be coming. yellen: it is appropriate, and i have said this in the past, to gradually and cautiously increase our interest rate over time. and probably in the coming such a move would be appropriate. climbing ine still light trading. seeties are on pace to their best games since march. airline stocks have been grounded this year. will the troubles with long security lines