>> from bloomberg world headquarters in new york, good afternoon. i am david or a. shery: i am shery ahn. janet yellen says the ongoing improvement in the u.s. economy could foreign to a nether interest rate increase in the coming months, but stopped short of saying exactly when. we will follow reaction in the stock and treasury markets. get ready to wait. airports are expected to spend millions to help customers avoid long security lines, but will it be enough? and what this means for your travel plans this season. shery: protein is hot and chocolate is not so her she is diversifying -- hershey is diversifying. beef turkey? we will explain. we are one hour closer to the

close of trading. julie hyman, how are stocks holding up? julie: relatively well. janet yellen is not derailing the rally, small though it was. we have pretty much made a round trip to where we were before she made her comments about interest rates potentially going up at some point this year. there had been some expectation going into her comments that she might be more dovish. basically, with that more dovish commentary, that created a market reaction. if you look at volume on the bloomberg, it is definitely down. down, in fact, more than 25%. you see various groups on the s&p 500 and the drop in volume. from harvard interviewing janet yellen made a

good economy joke, saying there were investors delaying their private jets to the hamptons because they wanted to hear what she had to say. the stocks contributing to most of the gains today, google on the rise after a victory over oracle in court yesterday and a dispute over the origins of android. verizon gaining after news that it came to an agreement with unions, and microsoft participating in the game. , apple is down about point 4%. -- .4%. stocks not doing much, but what about other reactions? julie: we saw a more noticeable reaction in some other areas. here is the dollar index.

we have seen the gains, intraday, up about six points. also, we want to look at what happened with the treasury market. if you look at the 10 year note, a gain in yields there. it is not as huge magnitude wise. a magnitude larger in the two-year. about four text following her comments. -- ticks following her comments. david: some breaking news on lending club. help,ave sought emergency temporary financing, and a subsequent mortgage. of theet a check headlines. mark crumpton has that in the newsroom. chief investigator says the search for the plane that crashed last week, killing

all 66 people on board, has narrowed to a three mile wide area in the mediterranean sea based on signals from the plane's begin. teams clarified that the beak and information was from the day of the crash and no other -- beacon information was from the day of the crash and no other signals have been received. china endured heavy rains and -- galece winds in the force winds in the first storm of the hurricane season. the weather is expected to last until saturday. it has now reached the western part of the province. has died andperson three others are missing after flooding andought mobile homes washed away. there have been more than 50 rescues since the rain started yesterday morning in austin. in tennis, rafael nadal is out of the french open. he is left-handed and says he

injured his left wrist. 24 hours a dayid powered by 2400 to journalists in more than 150 news bureaus around the world. david: janet yellen suggested there may be a rate hike in the coming months. she spoke at harvard university earlier today. ms. yellen: it is appropriate, as it has been in the past, for the fed to gradually and cautiously increase our overnight interest rates over time. probably, in the coming months, it would be appropriate. saw the dollar rising on this. i want to bring in a financial manager from boston. let me get your reaction to what janet yellen had to say.

as expected, a lot of the conversation was biographical. what is your reaction to what she had to say? >> i don't think it was too much to the ground. on the first summer friday of the year, it did make some news. i think the market got a little too passive about what they was going to do. earlier last week, you had a whole bunch of people say the fed would hike rates. then you had the minutes come out and say there was a pretty good chance of a hike this year, and then janet yellen followed it up. the fed has put the market on watch, and so far, the market has reacted ok. i think a june or july rate hike is pretty big right now. much does the market need to price in before janet will move?

>> at the beginning of last week, there was like a 4% chance they would hike in june and 17 percent in july. right around 50%, 60%, that's probably enough for the fed. there is some uncertainty out there. they have said repeatedly that a rate hike is data dependent, so if data continues to track the way it has been, the fed is likely to hike in june or july. if it comes in stronger, they might even squeeze in a third rate hike this year. you get a hike in june or july, probably another one in september, maybe another one in december as well. away from big take the meeting was that there seems to be a disconnect from the fed and the markets. has closed athat bit? >> a bit. it is still relatively wide.

to surprisen't want the markets. the fed doesn't want to get to the point where they were, for example, in february of 1994, blue,he fed, out of the raise rates by 75 basis points. given that the fed is much more transparent than they were. the markets are much less misaligned today than they were generally first when they were promising for hikes this year. so yes, the gap has narrowed, but it is still there. important is the revised first-quarter gdp data? >> i think the first quarter gdp data is important only in that little bit maybe a about what going to happen in the second quarter. years, wet couple of have had a weak first-quarter and a rebound in the second quarter. 1%.first quarter was about

second quarter about 3%. that's above where the potential growth rate of the economy is. that's picking up slack. over the second half of the year, if we can get 2.25 or even 2.50 percent growth, that might spur a rate hike. i wouldn't make too much of the first quarter gdp. people are focused on the second quarter and more important, the second half, a second-half tracking toward 3% might mean three rate hikes this year. coming down of data the pike, and i want to talk about the jobs data we are expecting in a week or so. you think the fed is satisfied with the unemployment rate? >> they are probably more happy with the full employment side. they spent late last year and

early this year saying that job gains as low as 100,000 are enough to tighten the labor market, so the fed was probably not even swayed by the 160 points we got last month. if we add another 160 this month, the fed would probably still go ahead and hike rates a few times. i think they are mostly satisfied with the employment side. on the inflation side, i think they are less satisfied. with oil at $50, i think they could quickly approach the 2% target, maybe as soon as the third quarter. that could get the fed to raise rates again this year as well. shery: from what you are hearing from federal officials, how much ,o you think it weighs on them landing, asible hard possible brexit, compared to domestic issues? >> right now, the global

, financialcture stresses we saw earlier this year as weighing a bit, largely i think if the data was overwhelmingly strong, if we saw 300,000 plus up jobs or the fed would probably go in june regardless but if the data continues on the path it's been on, it's probably july. they are still concerned about pausing financial stress because of rates, but i think the financial stress has come down an awful lot since january and february. >> and nothing compared to january or august of last year. thank you so much. david: still ahead, if you're traveling by air for the long holiday weekend, get ready to wait as much as three hours. how airports are working to fix

that problem, coming up next. ♪

david: let's take a look at the major indexes right now. all of them in the green after janet yellen spoke. traders have powered up the helicopters and left for the hamptons, to paraphrase someone who was there. about .3%. nasdaq about .5%. shery: time for the bloomberg

business flash, a look at some of the biggest business stories in the news right now. david: verizon communications and the unions have reached a new agreement, in principle, on a labor contract. that means about 30,000 employees will return to work after a 44 day strike. they should return to work next week. ayer is close to choosing banks to arrange the funds for its proposed acquisition of monsanto. the move comes after months and are rejected an initial $62 billion bid as too low. will probably raise more than $40 billion in short-term bridge financing, and the remainder in short-term loans. british airways is evaluating its routes to nigeria . it's sister airline and u.s. competitor halted flights to the

country. nigeria owes almost $60 million for tickets sold in the nation. slumping oil prices depleted the government's u.s. currency reserves. shery: microsoft is ready to bid for cloud-based software provider marketo. earlier today marketo shares spiked to a session high. that's your business flash update. head into the holiday weekend, travelers may head into headwinds at the airports. it's expected to be a record year for summer travel. airline screeners are seeing people spend as long as three hours in security lines. shery: what should we be expecting for this weekend? , passengers should

brace themselves for long lines. tsa is advising people to get to the airport at least two hours early. interestingly, so far today, we have not seen any major long .ines atlanta was reporting around 15 minutes for the security lines. here in washington, pretty about the same time. hopefully, fingers crossed, we may be able to make it through this weekend without a catastrophe. nothing focuses the mind like summer vacation. a lot of officials on capital hill this week are answering -- capitol hill this week are answering questions about the tsa. what is the root cause of these delays? >> it's kind of a perfect storm of many different factors. the tsa past few years, has seen a decrease in the number of screeners by about 5000, a pretty hefty chunk, and

they did that because they thought they could be more efficient by funneling people through the so-called pre-check , but then that fell apart last year when a series of reports came out that were very critical of tsa ca screenings. basically, now they are screening people much harder, so that takes more time. add to that, record number of travelers this summer. these numbers weren't exactly forecast. the combination has been really difficult. we have heard estimates of tens missingands of people flights this spring as a result. we have seen dogs getting involved, trying to screen the lines. we have seen tsa hiring more people. does that mean we will see an improvement? well, that's the 64,000 dollar question. i do think we will see some

improvement. is throwing everything, including the kitchen sink after this. employing assistance from airline workers and airport workers who cannot do the screenings themselves, but who can move bins around and help facilitate speedier lines. they are trying to bring another several hundred people online by , on and on.une they are doing everything. in congress who are trying to expedite this by possibly increasing their funding. we will see. david: airlines bear the brunt of frustrations that passengers have. what powers do they have to get people on to their planes?

>> it's really the legal responsibility of tsa to screen people, so the airlines have somewhat limited power. interestingly, some folks here in washington has suggested that the airlines are actually part by increasing bag fees. that means more people carry their bags through security, which slows the lines down. they actually called on the airlines to eliminate the bag fees this weekend, but i am not holding my breath. david: have a good long weekend. we appreciate it. salon still ahead, stock is rising. is it time to cash in? ♪

julie: i'm julie hyman. it's time for today's options insight. we heard from janet yellen a little bit earlier today. she was not, perhaps, as dovish as some would have expected, and have held up relatively well, especially going into a holiday weekend. were you surprised by that? not too surprised. i don't think anybody is surprised that janet yellen is telling everybody to expect a rate hike in june. -- whatwhat is telling it's telling the whole market is that the economy is just fine, going to be ok, but not exactly fantastic. we are not breaking through the top range, which is why we are

hearing news like this. julie: i'm curious what kind of .ptions activity you saw i know that volume was relatively low today, but when you look at some of the macro options, what kind of activity have you been seeing? >> it has been pretty quiet. we have the fix at 13 and change. not a lot going on. even on the sc why, just the shares like 37 million or something like that. it might as well be christmas eve with that kind of volume. julie: let's turn to where there have been some fireworks today. -- ulta, a retailer of cosmetics, beat reports. analysts are raving about how this company is doing.

but you are shorting the spread. first, take me through the mechanics of how you short a spread? >> the guys out there buying the poets are betting that the stock is going down. i'm just taking all their bets. i am selling the poets and getting some money there. i am not is going to be out here naked with all this exposure. i'm going to buy a 200 put. that will limit my risk if this doesn't work out for me. but i think it will work out. ulta is where i get my beard oil. julie: oh, in that case, everybody buy, buy, buy. you are looking for to go higher from these levels, right? >> rate. i am pretty bullish on it. i do think it's going to break higher. it keeps breaking higher quarter after quarter. you start to wonder how much is left in the tank.

stock guy, i buy high and sell higher. i still think there is a good bit of premium in the put options, so i am going to take that less risky play and put it in my pocket. julie: interesting. obviously, you are not alone in ness.bearded ne im going to start doing informal surveys of where other people by their beard oil. we will be right back. coming up, a federal investigation into the relationship between pharmaceutical companies and charity that is widening. we will tell you how charity can become a profitable investment. ♪

>> from bloomberg or's world headquarters, i'm david gura -- david gura. >> let's start with a check of the headlines.

mark crumpton has more from the newsroom. mark: global leaders are meeting in japan, a place to take collective action on expanding economic growth. the group of nations wrapped up their summit at a seaside resort. the declaration lost over differences on the issue of physical stimulus -- fiscal stimulus. germany resisted calls for an expansionary fiscal policy. hillary clinton is expanding the ranks of her donors, bringing in democraticto fund-raising. since the start of the year ms. clinton's campaign has raised 125 bunglers. among none of them were the bunglers disposed by mrs. clinton in 2008 or by president obama in either of his campaigns. travelers taking to the skies for the memorial day weekend's a security lines are moving faster than expected. bomb sniffing dogs are being used at busier airports to help speed up lines. by dogss screened

aren't being required to remove their shoes or take laptops out of carry-on bags. at hartsfield jackson international airport atlantic, all 16 lanes at the main security checkpoints were open. the 96-year-old surgeon credited with developing his namesake heimlich maneuver recently used the emergency technique for the first time. saved a womanlich choking on food at his senior living center. he told "the cincinnati enquirer" he has demonstrated the maneuver many times, but never before used it on a person who was choking. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. shery, david, that to you. david: markets close in about 30 minutes. abigail: we have the nasdaq trading higher today. it's up by 1/2 of 1%. higher 4 days in a row for the

longest winning streak since april 1. we have the nasdaq higher on the week by more than 3%, it's best week in more than three months. this week being driven by technology especially in terms of -- apple, alphabet, and microsoft. up about 5%.le this is interesting, considering there was mixed news on apple this week, including a downgrade at otr capital today to negative, a setback around the company's ambitions in india. what could be going on here is something we were talking about at the warren buffett rally. shares are up 10% since disclosure of a roughly $1 billion stake by warren buffett. berkshire hathaway and apple in the first quarter, we will have to see if that one continues to play out. david: what are some stocks boosting it by percentage? abigail: some of the top

percentage performers in the nasdaq 100 include dollar tree, micron, and western digital. the best of those three is dollar tree. year earnings forecast raised by 7%. on this strength, the stock hit a record high, really taking out the selling pressure. it appears that strength just could be sustainable for the shares of dollar tree. shery: abigail doolittle at the nasdaq. with two otherg pharma companies, disclosed it received subpoenas aligned with the federal probe into the industry's relationship with charities to help people afford their products to -- products. toid: ben, it's good to talk you again. get us up to speed. what's happening since the last time we talked about this?

ben: basically several pharma companies have disclosed they have been subpoenaed for documents relating to their relationship with these co-pay to charities who they themselves are funding. it is clear the feds are widening a probe into this area. shery: explain to us how all these charities get their money. ben: these are charities that have doled out a billion dollars in contributions back in 2014. they are growing immensely. 95% or so of their donations tend to come from the drug industries themselves. david: do we have a sense of what these investigations are centering on? the u.s. attorney in massachusetts is taking and especially keen interest in some of these companies. ben: we know the u.s. attorney's office there has a health care fraud unit and they are closely looked at -- and they closely looked at the pharma industries in the past.

the relationship between the charities and pharma companies, it's pretty clear these charities are allowed to dole out money from pharma companies to patients. what is not allowed to happen, drug companies cannot be exerting sway over the charities. charities cannot be favoring patients from donor companies over patients from companies that don't donate to these companies. it's pretty clear that's probably what they are looking into. shery: which drugmakers are we talking about right now being targeted? ben: the ones that have disclosed recently have been gilead, biogen, and jazz pharmaceuticals. the first one that really came the end ofeant at last year, with the first indication that this probe is going on. david: remind us why companies do this. there could be altruistic motives here, but there is certainly more to it than that. these companies

are giving tens of hundreds of millions of dollars to these charities, and it helps these charities pay money to patients who need help with their out-of-pocket costs. there seemingly is this all through his degrees and. drug companies are raising prices and normatively i'm what this could potentially do is erode their customer base. even patient's out-of-pocket a year drug$100,000 can be immense. what these drug companies don't want is for patients to go off their drugs. by giving to these charities who then give to the patients, they are essentially helping their bottom line. shery: what does this mean for the broader health care system? ben: the costs are enormous. in our article a week ago we looked at one example of a cancer drug made by novartis. this drug alone, the price medicare pays for this drug has nearly doubled in the last four years. is amount that medicare pays

nearly $1 billion. this is a coast that gets -- cost that gets borne by taxpayers, anyone paying an insurance premium. shery: thanks for putting this into perspective. you can read ben's businessweek story on bloomberg.com. coming up in the next 20 minutes of "bloomberg markets," her she is known for its chocolate. -- hershey is known for its chocolate. ♪

david: this is "bloomberg markets."

i'm david gura. shery: you can see the s&p 500 on course for its biggest weekly event since march, up 3/10 of 1% after fed chair janet yellen stating the red -- the rate hike is coming and coming months and that may be appropriate. we seeing the dow reversing yesterday's losses. nasdaq up 1/2 of 1%. david: let's send out the bloomberg business flash. the founder of lending club got into a jam in january when the company shares pledged were collateral -- were pledged as collateral for a loan. ceo, also atanley lending club board member -- a property record showed morgan stanley later provided a record to him. the company said to be in talks with citigroup at the bank.

that is according to a person familiar with that discussion. is gettingviacom ceo a quick hearing after his removal from a trust that will eventually control sumner redstone's empire. he will go on before a judge on june 7 in massachusetts court. the 93-year-old redstone has been taking steps to reassert his control over viacom. last week redstone removed the viacom director from the roles overseeing the trial. david: the memorial day weekend is upon us and gas prices at their lowest level of this time of year since 2000 five. triple-a says more than 38 million americans will travel this weekend with 90% going by car. shery: warren buffett's berkshire hathaway has bought shares of phillips 66 for a sixth straight trading day, as our regulatory filing no indicates, berkshire now owns 77 million shares of the oil refiner. david: that is your business

flash update. shery: shares of retailer big lots are surging today. the company crushed earnings estimates, extending a run discount change come outperforming higher-priced tiers. meanwhile, retailers like macy's and nordstrom's are struggling. let's bring in matt townsend for more. what is behind the results here at big lots? matt: wiest in this dichotomy. quarter, big lots was this example where you offer a lot of value, you are doing pretty well. home depot and lowe's were doing well. kind of continue this trend in the first quarter two accelerated, where people were toding down at discounters buy stuff for their home. shery: what does this tell you

about the bigger retail picture? matt: we have seen this for about two years, this dichotomy. there's a transformation going on. either you are a discounter and you get people that way. retailers are stuck in the middle like the macy's and pricedstores, full stores at a mole, they have to do something to attract customers. we are seeing new players can out of the market. the market.t of this transformation retail and that's what we are seeing right now. david: what web presence does a place like bit lots -- big lots have? of anthey have somewhat online presence. costco not a big part of their business. big lots, big things. outside of cities, people still go to stores and buy big things and put them in their cars and take them home.

home depot and lowe's are the same thing. you have to buy a lot of wood. shery: we are going to get some consumer spending numbers as soon as next week. what does this mean for the rest of the economy and how consumers spent? like aspecially with target and a walmart -- what happened in the recession is people traded down from target to walmart. we have been seeing that. the discounters are doing well. it is something to look at. consumers are trading down, that means something. they are worried about their spending are looking for deals more than ever. just on the home front, what has kept people investing in their home is the rise in home prices. if that starts to decelerate, that's one big thing that is kept people spending. that could weigh on spending as well. david: fiscal trouble for the macy's we're talking about here, or longer-term? matt: that's up for debate.

people think department stores, is that model going away. a lot of malls that are in the department store leagues, an h&m will come in or some relatively new retailer will pick up that space. store model,nt sort of a dying thing. that's where our parents and grandparents shopped. kids nowadays, that's not really where they shop. you so much for that. bloomberg's matt townsend here with us. david: hershey's is taking a bold step. shery: the company known for sugary items is launching a line of beef jerky. what's going on here? hershey and beef jerky? >> the are facing declining chocolate consumption. they make almost all of their money selling chocolate in the

u.s. chocolate sales have gone up a little the past couple years but that's because people are trading up for more expensive dark chocolate. sugar is a health boogeyman these days. that means less hershey's kisses, less hershey's rhesus pieces. -- reeses pieces. --ry: i thought that a cow that cacao was good for you. are buyinghy they more expensive dark chocolate, fair trade chocolate. that's where the growth has been, not mass-market chocolate like the stuff that hershey sells. enter hershey beef jerky. this sort of repositioning of beef jerky as a health food is something i've been fascinated by the last couple of years. low sugar, low-carb, high-protein. it is still processed meat.

but it's amazing, now there's grass fed beef jerky and it is viewed as a healthy thing. people want protein on the go. jerky and unbelievable numbers the last couple years. sort of integrating that, and the double distribution, double the sales, and look to get future growth. shery: i'm not buying into that. >> they want to make $2 billion from snacks. right now snacking is only 2% of their sales and a look at this high-end from the beginning, they have recommended wine pairings that go with this jerky. ofis the premiumization jerky. some people say they are late to the trend. jerky has been rising the last couple years. buy it being hershey, they know

every single convenience store, every gas station. there are hershey products in every store in this country. their relationship with retailers, they are able to get this out here. i have done well by boosting out the distribution and we will see if it takes off from here. shery: does that mean that hershey is going more high-end? >> absolutely. they bought a canadian company called brookside. they call it mass premium. this is a little higher and chocolate that can sell in target and walmart. the movement is away from hershey bar and reese's towards premium, towards protein. hershey trying to be where the customers are. shery: i'm sticking with chocolate. david: thank you very much. shery: coming up on "bloomberg markets," the close of trading is just minutes away. a look at the major averages right now, the dow up 2/10 of 1%. the nasdaq gaining more than 1/2 of 1%. ♪

david: markets close in about 10 minutes time. julie hyman as your market check. julie: one final check on volume, which is 26% below the average. happy friday. we're all feeling it. we are seeing a rise going into the holiday weekend. conventional wisdom on wall street frequently seems to be that people don't want to be long going into holiday weekends, but that has not been the case today. after janet yellen spoke and gave no indication that she was sort of reversing, trying to reverse the general markets view over the past week that the fed might be more aggressive, it's interesting we have seen stocks continuing to gain. take a look at what we have seen on the week as well. the s&p 500 having its best weekly gain going back to march.

the dow and nasdaq also having strong weeks over the past week. face of still rising bond yields as well. we saw a big surge in this bond week after the federal reserve minutes. the gains have been more moderate this week, facing that uptrend as well as an uptrend this week in u.s. dollars. oil and gold, wanted to get a check there as well. in the case of oil, it is the third straight weekly gain. for gold, it is the third straight weekly loss. even though oil ended the week on a down note, it touched about 50 over the course of trading and over the course of the week. it comes full circle back to stocks. take a look at bloomberg here. i'm looking at the various groups in the s&p 500 and what they have done this week, technology and financials elading the -- leading the game. groups, groups seen as

benefiting in an economic recovery and potentially in the case of financials, rates go higher as well. there were also broad-based gains. all of the s&p gained on the week. david: here to wrap up the weekend the session is dave wilson, stocks call missed for bloomberg news. start with janet yellen. about herq&a biography, student loans, things like that. she did talk about monetary policy and it had an effect today. there was an effect, but it was a short-lived effect. it's not that she had not said anything that others have not said before. david: that she hasn't said before. dave: she's the chair and people pay particular attention to the chair, but it's not like somehow the idea that the fed will raise rates in a couple months or whatever is somehow different from what we heard before. shery: technology shares led the gains this week. other factors are affected by economic growth.

tell us why this matters. dave: it matters because it's really at odds with what we've seen over the past year or so, since the last week in this bull market. phone companies, utilities, those makers of consumer staples, food, beverage, tobacco companies. what we're seeing more recently at odds with that track record and also perhaps a sign that people see enough room for the economy to grow, but they don't want to worry so much about the fed raising interest rates. are we seeing the chill start to thaw in the ipo market? dave: we are very we've seen share sales in the last couple of months. when you look at the bloomberg ipo index, which tracks the shares of companies that have gone public in the past year, a really bottomed out in february

along with the rest of the market and kind of took off as stocks rose. performance,d of a it's a good time for companies to go ahead and spell shares. shery: we are seeing them outperform european ipo indices there. i want to talk about retailers. we are seeing the first quarter season from them under earnings pretty much ending. what is the state of the industry? dave: it is really a story of the department store chains and amazon as sort of front and center themes. beyond that, you really need to look at these areas that did well, at least where the earnings were well received. you look at the home-improvement chains, home depot and lowe's. nonetheless, still beating estimates. something like late yesterday from salon cosmetics. the beauty business is not something that amazon --

it comes down to there is companies have those sort of doing well,es for or dollar store chains, we saw that yesterday with dollar general and dollar tree. david: thank you very much. have a good long weekend. that's it for "bloomberg markets ." and theyou miss?" market closes coming up next. we see the dow up 2/10 of 1%. the s&p 500 up 4/10 of 1%. the nasdaq up 6/10 of 1%. that's it for "bloomberg markets ." ♪

>> we are moments away from the closing bell. ♪

[bell] closing higherks ahead of the memorial day weekend, the best week for the s&p 500 since march. the question is, what did you miss? we take you to all the moves. and the market moves as janet yellen said another hike is likely appropriate in the coming months, but when? >> and the rise of protectionism in the u.s. and europe, our guess is it could be a less competitive world. ♪ alix: we begin with our market minute, the s&p 500 and nasdaq closing of the best levels of the session, this is the fourth straight week of gains for the major indexes. and within the groups -- financials and telecom