from bloomberg world headquarters in new york, good afternoon. here is what we are watching -- markets are kicking all of june on a downbeat note but stocks are paring their losses after unexpected strengthen u.s. manufacturing. chinaare concerns over and europe reminding investors that overseas weakness could spread to the u.s. several events on the horizon are weighing down markets including tomorrow's opec meeting and can we expect a united front on limiting production in vienna? plus, special interview with the men's warehouse founder who has a new plan to buy back the company he founded. we are halfway through the u.s. trading days a let's go to the markets desk and julie hyman. a global pmi picture was lackluster and the u.s. pmi

number came in a confused everyone. julie: we are still seeing troxel -- stocks trade lower. eurozone, wethe get manufacturing data that was not worse than expected but only , justsmall expansion above the 50 line. in the u.s., the number came in ahead of estimates and was not that far above 50. nonetheless, we are seeing not a positive reaction. the nasdaq is leading in terms of gains. it's not even of one full point. the dow and the s&p have been lower intermittently. the dow is the laggard just like yesterday. the s&p 500 over the course of zigzag,had a kind of almost going positive at one point midmorning before dropping back down. june has not been a very favorable month for the s&p 500. this is a busy screen so focus on this column. this is the june column.

the average decline in june over the past 10 years has been 1.5%. six of the past 10 june 7 negative. it has not been a kind month. worstay's session, the drags her in the s&p 500. apple, microsoft, general electric are all sliding today not huge percentage declines. scarlet: the same time, we also have automakers coming out with their sales figures. what are we learning? julie: not much good. looking at general motors, it failed -- sales last month plunged 5% last month. sales fell across all of its brands. ford experienced a bigger drop beatestimated but fiat estimates and is rising but it's not helping the stock. ford, if you look at

general motors not ford, cadillac is down 60%, gmc, 18% and buick 22%. steep declines. the auto retailers are feeling the pain as a result. you can see they are lower. scarlet: thank you so much. we will check back in with you later. let's get to the bloomberg first word news. searchers may be a step closer to solving the mystery about what happened to the egypt airplane last month. a french ship in the mediterranean has possibly detected signals from the black boxes. the data and voice recorders are likely to be the only thing that can tell investigators why that plane went down. united nations is asking for a iraqi troops and islamic state

fighters to spare children caught in the battle for falluja. unicef estimates there are 20,000 children still trapped in the city. few families have been able to get out since iraqi troops began their offense of to retake the city from the islamic state more than a week ago. hillary clinton has a slightly over donald trump in a new national poll. 45% of voter support mrs. clinton while 41% favor mr. trump according to the latest survey from quinnipiac university. men and women are divided over the presidential contenders. -- mr.fer mr. tromp tromp and women go for mrs. clinton. is obama administration taking another crack at improving americans diets. saltda issued sweeping reduction goals today for everything from french fries to granola. the targets are voluntary but it puts major pressure on food manufacturers and restaurants to cut back on the sodium in processed foods.

news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. scarlet: tom thanks so much. let's get back to the markets, is extendingound its selloff as there is consolidation around the leave your campaign. looking at the chart, it shows the sterling decline versus the yen over the last three trading days. the yen caught up a bit after manufacturing data showed minimal growth. here to discuss how investors are pricing in the political shocks and global growth hgcerns is the president of advisors and our currency advisor. active for joining us. the pound-yen chart, why zero in on this? riskrkets are repricing and there has been a very positive sentiment prior to the

last few days in the u.k. that the remain boat was leading. turningolls shows that and this is simply a reversal of the risk on trade where folks are heading out of sterling and into yen. some good numbers out of japan, good capex numbers are helping the situation. scarlet: the bigger issue with japan is that people look to japan as a safe haven. right, i think this move in the yen is maybe a little bit more about risk off rather than a positive sentiment. it's a question of expectations and people have been really expecting this announcement last night of the delay in the consumption tax hike. people got a little bit ahead of themselves and were expecting some sort of announcement on a supplementary budget. when that did not come, there

was a disappointment trade and that explains part of the yen side of what we have been seeing. >> it's too early for that when you have the upper house elections coming up in july and what the fed may do. the market is getting a little ahead of themselves and expecting fiscal stimulus to snowball down. scarlet: markets are always known for getting ahead of themselves. >> they were very much ahead of themselves with sterling. trade in breaks it was very overdone. affect thew does it fed meeting doing something question mark >> it's very interesting and it's deliberate in their scheduling that they did this to see what the fed would do this year. investors talk about the doj moving but they -- but i don't think they trust coroda that much. he has been known to surprise the market.

easinglk about the boj and there is some prized in but i don't think there is a lot of conviction. inhink if they were to ease either june or july, you would see a fairly positive reaction in the equity markets and dollar-yen would go substantially higher especially with the fed helping them on the other side with tightening interest rates. u.s. andin the globally, everyone is looking ahead to the janet yellen speech next monday. she did not push back against the hawkish tone. is there reason to believe she will articulate her stance by monday? >> i would go further in saying she did not push back. i think it was a deliberate messaging. point of axclamation campaign that started with a district president and you had a couple of people from the board .

the fed understands that the market does not leave it until janet yellen herself speaks. this was a validation and confirmation of june-july when she talked about a few months. i don't think that means a september. some people think a few months might mean september. i don't think they are really listening. i think this was a pretty firm stamp on either june or july. >> i agree and the futures pricing since friday has dropped on the june hike in the markets are looking for a very obvious signs from the fed. they constantly say the fed is reality, theen in markets surprises themselves by not listening. scarlet: what did we learn from the december lift off? initially, markets took it well and a few weeks later in january, you saw the big risk off selloff. what did the markets learn? >> i think what they learned and what the fed learned -- and this

followshing that vinny closely -- is the sensitivity of the markets to the dollar and the fed. initially, the markets took it well and this is one thing the fed was concerned about is when they put forth their dot plot with 4 rate hikes, it was a hawkish signal. dollar was the expected by the fed but i think the transmission mechanism back into the markets and the economy was stronger than they felt. they toned that down and they pushed it off. if you look at a chart of the dollar from the beginning of the year until now, they managed to reduce those gains and it's starting to creep back up again. i think they are trying to manage this global blowback very carefully. hikeially, they were at a 4- pace and now settling into what might be a 2-3 hike, six-month rhythm.

scarlet: what the fed has to keep in mind is what happens in china. this is a chart of the gap between onshore and offshore. the blue line is the offshore yuen. offshore is consistently weaker than onshore. investors are trying to manage a slowdown. what are the risks of a u.s. rate increase on china question mark what will it do to the spread? >> go back a couple of months and see what it did in january. that's the big gap between onshore and offshore. that's what the fed and the chinese authorities are trying to offset. no one really wants to see that again. you see a slow grind higher in the dollar which has been well managed. part, that is why you of had regional governments and janet yellen saying it's coming

because we don't want to see awe in whatand off happened with commodity prices. scarlet: james gore said maybe the fed can stay on hold. how did the economies of china and the u.s. interactive this stage? >> the importance of the u.s. as an export market for china has been adjusting downwards over the years. the eu has gone up as a trading partner. obviously, the feedback loop is very strong. the chinese officials essentially feel that the chinese economy is settling in at a 6.7 gdp growth rate. they feel they can handle 2 rate hikes by the fed this year. this was communicated at the meetings where

they shared notes with each other between the u.s. and the fed and the u.s. and china. they said we can peg this. isn't issuer china of outflows. they are ok with 2 rate hikes but what they are trying to calibrate is whether it comes in june and july to manage the pace of depreciation of the yuan. they fought hard to control that. they don't really have a big problem with the yuan weakening but it's the outflows. they had massive numbers in january and february and got it down to almost last in april where you had inflows. i think they were 7 billion worth. they don't want those outflows to pick up again so they will let the yuan slide but that's mainly with their concerned about is a resumption of outflows. that's why they watch the offshore you one more closely. it's a more free market and it's

more of a litmus test for what the actual money is doing than the onshore market which is more controlled. you both so much. leaders gather in the abbott is this the beginning of the end for the oil cartel? we will break it down next. ♪

scarlet: you are watching bloomberg markets. opec is facing a crisis. this is not its first crisis but the current one could be the beginning of the end. what threatens their survival is something that helps bring it to life. shale production.

>> opec, the club of oil exporters is nearly 60 years old dying, dying from a self-inflicted wound. to understand why, we need to go all the way back to 1973 and the arab oil embargo. >> oil-producing countries of the arab world decided to use their oil as a political weapon. >> this was their golden age when a controlled more than half the world's oil production and members like iraq and iran and saudi arabia were nationalizing their oil operations. with the world's oil thirst merely unquenchable, opec demanded higher prices. in real terms they jump sixfold. the funny thing about prices that even for something as addictive as oil, the end up pushing people to either find more of the stuff or consume less. in the case of oil, they did 03

at by the mid-1980's, opec controlled less than 30% of the market that had slowed to a crawl. >> the oil bust. >> in 2008, oil prices hit their highest ever with rent crude reaching $146 per barrel. there was no embargo this time, just chinese demand. opec made windfall profits. once again presses did their worst and unleashed a new menace. shale. 2008, the long decline in u.s. oil production suddenly turned around with output surging back to levels last seen in the 1970's. ande resources are huge relatively quick to develop and have been getting cheaper. if opec tries to hold oil off the market now, that lets shale producers fill the gap. operating under a cartel, it is now every oil producer for themselves especially with key opec members like saudi arabia and iran

racing off. cartel has turned into country club. moreet: you can read commentary on the bloomberg. still i had, first it was mobile and now it's visual -- facebook's head of global marketing on the great disruption next. ♪

scarlet: this is bloomberg markets. doolittleo abigail live at the nasdaq were she is checking out facebook. >> we have shares of facebook trading slightly higher today but when we look at the bigger picture, important story emerges. this is the idea that facebook is the only one of the egg internet companies including amazon and netflix and alphabet to have emerged unscathed from the last two quarterly reports.

they posted monster quarters for december and march helped by mobile advertising revenue that was 79% of total revenue and this is a market forecast that surged 45% to $103 billion. it's likely that string for this could help explain why facebook is outperforming the other stocks on the year. it's up 13% year to date and amazon is up just 7% and net xml that are both down. it appears that facebook is the king of the fng stocks. scarlet: not just in terms of performance but the fundamentals. when you look at a chart of facebook, what does it suggest about whether it can continue to outperform the other guys question mark >> when we look at a weekly chart of facebook, it is beautiful and bullish with an uptrend and the buyers are in control. in 2014, they started to consolidate and strengthen ahead of another 60% move up to their

recent record high and the buyers appear to be consolidating again suggesting the shares of facebook may climb higher perhaps even to the piper jaffray price target of $170. this is a good one to watch. scarlet: thank you so much. facebook, since it went public in 2012, the stock price has climbed 213%. the companies's near-term growth is focused on video and news feed and instagram adds. the facebook vice president of global advertising said it surrounds mobile. >> mobile is the most profound disruption we have ever seen in business. in january, davos the theme was the fourth industrial revolution and when you look at the pace of disruption, we have never experience this in the history of any economy. the average lifespan of company used to be six to seven years old. now the average lifespan for the

s&p 500 is looking to be 15 years. companies that have been around for a long time have to do one of four things. they you do have to acquire a disruptor to inject that into their system, have a venture fund that invests in the disruption so they can participate, build a parallel organization, or rewire their culture which is the hardest thing to do. facebook and about it has been open about its own struggle as everything has shifted. how are you using that to do exactly what you are saying? companiesu convince of the profound cultural change they need to undergo to capitalize on mobile? >> we lived this disruption ourselves. when we went public, we had no mobile revenue. our mobile app at that time was built on html 5 and it was not particular good so mark held a company all hands and declared we needed to be mobile first but mobile best. andrew cultural change very quickly.

that first product review when the team walked into his condors run showed him a death top mockup, he ended the meeting -- showed them a desktop mockup coming into the meeting. there were no meetings to do product reviews in that sent a message very quickly that we retrained all of our engineers within weeks and rebuild our andle app linked to ios android and 80% of our revenue is based on mobile so we went through the transition and we continue to. mobile is not the only one. we have seen visual comedic's take off which is why we acquired instagram which now has 400 million people using it, 200,000 businesses. and pulled whatsapp out messenger and have one theion people because of inflow of what we were seeing with people wanting to communicate with businesses. we are constantly seeing consumer behavior evolving. the facebook today looks entirely different than facebook from 2012.

scarlet: that was the vice president of global marketing solutions for facebook. our mystery stock of the a and today shares are getting expensive as the goods are getting cheaper and that has sparked analyst curiosities. ♪

scarlet: live from bloomberg world headquarters in new york, this is bloomberg markets.

let's go over to julie hyman where she has the big reveal our mystery stock. they hand is that the shares are getting expensive as the goods are getting cheaper. that has fed some analysts curiosity. shares are near a 2016 high. whole foods is what we are talking about. the shares are rising over an upgrade at credit suisse to out perform from neutral. is only up about 1.3%. over the past several years, it has been down sharply. the analyst at edward kelley says the company is in the early stages of a repositioning that should reinvigorate growth. looking at the shares today, they are rebounding on this call. they are up nearly 5% and they say there was a 50% drop in shares and their peak is providing an attractive entry point for this company as they continue to roll out its 365 brand which are smaller stores

and are supposed to be more value priced for customers. they are trying to compete in what has become a crowded marketplace. other analyst actions involved costco which was raised to eight buy from neutral at goldman sachs. they are looking at the transition to a new credit card and a prospective fee rate hike for members. charter communications was raised to a strong buy following the closure of its acquisition of time warner cable and bright house. the analyst expects the company to be added to the s&p 500 next ellipsis was raised in its more likely it could be an m&a target after drug similar to the one it makes got a positive response letter from the fda. bywas a drug made astrazeneca so those shares are

up or percent. scarlet: i'm concerned about costco raising its member fees. julie: i'm not a member. scarlet: i go far too often. let's get to the headlines. hillary clinton is expected to make the case that donald trump would be a threat to national security as president. tomorrow and california, she will deliver what her campaign calls a major foreign policy address. " fear, bigotry, and misplaced defeatism that trump has been selling to voters. the democratic national committee is charging mr. trump for refusing to release his tax returns. it has launched the website, com whichrump. supposedly shows his returns but when you click on the button, it moves. he says he will release his returns once an audit is complete. a new report from a federal watchdog says the nation's airports need more help from the

transportation security administration preventing security breaches. it identifies over 2500 security incidents in each of the past three years at the nation's 440 commercial airports. incidents include people jumping fences to reach jets and passenger terminals. russia has arrested 50 suspected members of a hacking ring that stole money from the russian bank. the government says since the middle of last year, hackers of stolen $45 million from banks and state entities. day,l news, 24 hours a powered by our 2400 journalists in more than 150 news peers around the world. scarlet: thanks so much. men's wearhouse founder and former ceo george zimmer is queuing up for battle and plotting his return and lining up private equity firms to buy back the company that ousted him. what is his plan? let's join him. he joins us from san francisco. good to see you. taylor brands is the name of the

merged company of men's wearhouse and joseph a bank has of its value since the deal closed two years ago. a bloomberg columnist wrote about the company's struggles as investors watch and wait. give us an update on the status. have you talked to the firm's? >> good morning, i have not actually been talking to a private equity firm. it's really unrealistic and i'm not in hiding. if anybody wanted me back, they know how to reach me. what i have done is opened up of as ms. that i know something about, suits and talks he does. .- talks he does -- tuxedos i'm not trying to interfere.

scarlet: you're not involved in taylor brown's? >> i'm not saying no but i am not actively pursuing it. what kind of overtures have you received from outside investors? >> i have not heard from any shareholder, interestingly enough. quite frankly, nobody has called me to suggest that if i were to come back that men's wearhouse would be better off. i am happy in my second act of generation tux, renting online, tuxedos and suits. it's like men's wearhouse 2.0. startupswith some tech savvy mixed in there. what was the biggest mistake that was made in the men's wearhouse deal or was it just having the deal come together? >> i believe that the deal

should never have happened. i was not there so i am not exactly sure what the thinking was. i know it must of had something to do with which board was going to be the surviving board and which board would remain employed by the company. scarlet: clearly, there was internal strife but there has also in changes in the retail landscape overall. in mallot declines traffic and the decline in the wearing of formalwear, there's also specific headwinds of a lot of that and too many stores and increased competition. how should a company like taylor brands go about fixing itself? >> i think you named it. there has been this incredible acceleration toward online apparel in the last few years. ineally believe -- i was bricks and mortar but i think that is yesterday's news. to figure oute

how to convert your bricks and mortar businesses into an online business which is what i have tried to do. scarlet: let's talk about your two businesses. its generation tux and v-tailors. what's your long-term goal? goal is i would like to become the amazon of apparel rental. this would not just be in the united states but globally of possible. right now, i would be happy just to get a bride's wedding and outfit her groomsmen in or suits.tuxedos i am starting slowly. we do about $1 million per month now which compared to the $400 million men's wearhouse does this category is not that significant. scarlet: what trends do you see? friday wherecasual

you are in silicon valley to people wearing hoodies all the time in the tech world. what will dressing professionally look like for men in five years? men believe that millennial will work in jeans and put on suits in the evening to go out to the clubs. generation where we sold a lot of navy and greg pinstripes, i think the younger generation will want hipper, snug or fitting clothing to party in. scarlet: at some point, your goal is to spread the market and go directly to consumers. right now you have found success by going to businesses. what is the distinction? >> i think you are referring to our z-tailor business. we are having success.

macy's.com and bloomingdale's.com are using z-tailors to provide tailoring for their customers who purchase online. right now, the consumer is not awakened to the idea that they can summon through their computer a taylor to come to their home to change the length of their slacks. we are hopeful that as consumers become more familiar with his business, they will invite our tailors to their closets where we can generate some real revenue. scarlet: do you see any room to brandste with tailored or are they strictly competition? >> i am open to everything and everybody. i think they feel a bit more hostile to me. they probably don't want anything to do with me. if they do, they know where to reach me. scarlet: your line is always

open. >> that's right. the cell phone is always on. scarlet: in terms of your experiences in the tech startup world, how are you folding that into these new ventures question mark what have you learned about how to scale technology as you build these retail businesses? learned a lot about what not to do. as you mentioned, i was not really a technology person. it has taken me a couple of years to get the right cpo and the right systems in place. now, our business is underway and we are renting thousands of tuxedos and suits at we are excited. scarlet: i wonder to what extent there are lessons you can offer to women's apparel which is had a tough time of it with all the department stores reporting

disappointing results and specialty retailers not being able to figure out how to mix and match brick-and-mortar presence with online. what are they doing wrong? >> of course, you're familiar with rent the runway and they have done pretty well. the key to the future of retailing is going to be what is referred to as a hybrid model where you have online apparel and you have in store whether it , orop-up stores, showrooms just regular, old-fashioned recs and mortar stores. i believe you need the combination of both to maximize your business in this environment. scarlet: is there too much supply out there? more of a to see shakeout through bankruptcies perhaps? >> there definitely will be bankruptcies and we definitely are over stored. it does not mean that stores will go away.

they become part of the hybrid success in online retailing. scarlet: george zimmer, thank you so much for joining us today. generationstarted up tux and ztailors. a quick programming note -- we will have live coverage of janet yellen on monday when she speaks at the world affairs council philadelphia luncheon event. you can catch her remarks right here on bloomberg television, radio, and our live at. this is bloomberg markets. ♪

scarlet: you are watching bloomberg. this is your global business report.

the alibaba larger shareholder is unloading $8 billion worth of stock in the company. we will tell you who is -- what's behind the softbank strategy. we will tell you how he carmaker is trying to lure more talent to its payroll. brazil sinks deeper into recession we will walk you through how south america's largest economy went into a downward spiral. we start in asia where it softbank will sell almost eight ilion dollars of its stake in alibaba. it will use the money to pay down debt and boost its cash position. softbank is the largest investor in alley bama with more than -- in alibaba with more than $1200 and -- $12 million in debt. atst-quarter profit fell 15% the hsbc investment bank. there is a three year to cut thousands of jobs.

the nissan a lance is luring workers away from silicon valley. hire tech experts in the software engineers would experience the goal conductivity and mobile services. automakers are trying to compete with the self driving car from google and uber. it is time for the bloomberg quick take where we provide context and background. brazil is in crisis as the economy has its biggest slump in a century and its paralyzed britt we explain how they got here. in recent years, brazil has gone through a roller coaster of turmoil between economic woes, corruption scandals, and impeachment proceedings, brazil is in a deep crisis. point to dilma rousseff who was recently suspended from office. this has been a slow unraveling for the world's fifth most populous country. therder to understand

president, you need to start with her president sir -- her predecessor, lula. she was wildly popular and became a symbol for brazil's economic a cent is one of the top exporters in the world of commodities such as oil, soybean, corn, and iron ore. dilma rousseff was his protege and became the first woman to be elected president of brazil in 20103 .during her presidency, global prices for raw natural begin dropping and a corruption scandal paralyzed many in perspective projects including some dead putting severe strain on the economy. the brazilian economy shrank 3.8% in 2015, the most in a quarter century. the country's credit rating was downgraded to junk and business and consumer confidence levels fell to nearly their lowest on record. her presidency has also been strained by the massive scandal involving petrobras, the state run oil company. operation carwash revealed a

deeply corrupt organization and government. it unearth the scheme started over a decade ago involving bribery, collusion, and kick backs implicating hatcher executives and brazilian officials. dilma rousseff has not been named in the probe. there are claims she doctored accounts to cover up the government deficit woes during her 2014 reelection campaign. in march, more than 3 million brazilians took to the streets calling for her ouster. on may 12, senate voted to put her on trial and it found -- and if found guilty, she would be removed from office permanently but she denies any wrongdoing. dilma rousseffnti- campaign say her time is over. even as she survives the trial with many say she won't, a fragmented government and angry public will prevent her from accomplishing anything meaningful. -- her supporters say her vice president is not much better. just last year, he said impeachment is unthinkable. since then, dilma rousseff has

accused him of attempting a coup. there are not many good guys here. of brazil's five hundred members of congress are currently under investigation for corruption. the brazilian future is uncertain but whoever rises to power next faces the tough task of stitching the company back together. scarlet: that is your global business report. for more stories, visit bloomberg.com. coming up next, we will tell you about an e-commerce company boosting its autumn by linking up with amazon.com. ♪

scarlet: we are watching the markets clawback from earlier losses. the dow in the asp it -- and essen -- the dow and the s&p have clawed back a little bit. since we are almost at the halfway point of the year, you have the dow and the s&p up by

about 2% and the nasdaq is down about 1%. my -- pmilobal the a numbers coming in lackluster for china but u.s. numbers indicated a surprise gain. that has helped u.s. stocks are their losses and perhaps the next move is higher for the s&p 500 and the dow. with giants like amazon and he may indicating e-commerce, startups cannot beat them but it can be roughly double join him by becoming a seller run by these larger companies. for approach is paid off five-year-old coming that sells health and beauty products. the ceo explains how they have grown from small to big. started out as a branch of a retail pharmacy in bronx, new york we had access to different merchandise and health and beauty products. we wanted to make it a side business and sell the merchandise online. we raised about $750,000 from

friends and family. that's how we started. at that point, we sought that retail was slowly on the decline and e-commerce was on the rise. another vision we had that many didn't see is that market places would need the malls of the future. we thought that amazon would lead the charge. our goal was to partner with them and work with them and become one of their largest retailers and build a brand within a brand. we were burning through cash the first couple of years and trying to will technology. we did not want to build a third party for a warehouse system and when needed an edge. we built our own e-commerce software and built a warehouse for fulfillment and logistics software. where the key factors was building out software that allowed us to dynamically price. we used shopping pattern characteristics and rankings and

wage and dimensions that allowed us to currently change your prices across the board every 45 minutes. some of the metrics speak for themselves. we used to have an 89% rating and now it's 99%. our customers are happy and our partners are happy. 140,000hipping out packages. we started out with six employees and we have now 350. we went to a 3000 square foot facility to 32,000 square feet and we are currently moving to 142,000 square feet. we did $1 million the first year and currently, we'll finish up this year between $140 million-100 $50 million. we created a plug-and-play model. within three of five years, we could be a $500 million company. up, the feding

schedules being released at 5:00 p.m. two-year notes are recording the worst month since december when the fed again left off for the first time in almost a decade. will we see another retreat? that brings us to a quick programming note -- we will have live coverage of fed chief janet yellen on monday when she speaks at a world affairs council philadelphia luncheon event. you can watch their marks right here on bloomberg television, radio, and bloomberg at livego. this is bloomberg markets. ♪

>> is 1:00 p.m. in new york. welcome to bloomberg markets. ♪

>> from bloomberg headquarters in new york, good afternoon. here is what we're watching at this hour. heading into the peak flying season, following years of conflicts. the ceo will tell us what he will do to get the airline back on course. a rough month for u.s. automakers that most reported auto sales. the fed's plans to raise rates this summer. new drugs for cancer, are giving hope to patients with advanced forms of the disease -- of the disease. first, we will head to the markets desk where julie hyman has been tracking the ups and downs. the index is making a come back here. julie: a little bit.

bouncing around all day. the s&p and the nasdaq are higher. making a comeback from the slows of the day and i am looking at number two c how this is tracking with oil prices. this is a chart of the s&p 500 in white versus oil and yellow. -- happening without a leg up in oil. directionally, they have been going pretty much correspondingly in today'session. it seems to be helping the s&p 500. i also want to take a look at the group on the move. one of the best-performing groups, a number of upgrades today. lift after the acquisition announced yesterday has caused analysts and investors to look elsewhere within the biotech industry to see who might be a target.

consumer staples, financials looking a little better. telecom and energy still remain the laggards. let's take a look at the 10-year note as well. there has been some money flowing into the bond earlier but that now is mitigating as we see the stock fell off unchanged yield. buying of the japanese yen not only on the safety move but also on the move to delay a sales tax increase in the country. about 1% versus the japanese yen today. that part of it has been relatively consistent throughout the day. >> we are halfway through the euro at the end of this month. what does it look like now? average wecurrent surveyed, 2154 for the s&p 500. we have a chart 1522.

here is the s&p 500 and here is where the forecast's are. still above where we are right now by about 50 points, not by much. at the estimates for individual companies and then extrapolate what that means for the overall s&p i've hundred. >> thank you. let's check in now with mark crumpton from our newsroom. mark: a french company says a special undersea's ship has detected signals from one of the black box flight recorders on the egypt air flight that crashed into the mediterranean sea last month. the statement, he says signals are from flight 24 but they did not indicate how they were able to make such an attorney -- a determination. they say it is impossible to know whether they are from the flight's data or voice recorder. is number one for

voters according to the latest gallup survey. -- pressingus issues for voters include immigration and health care and health care reform, 10%. the nigerian army says it has rescued people who may have been hostages of the islamist militant group boko laurent. they include 131 children, being screened to ensure they are not members of the terror group .efore being moved five were killed in the rescue operation. a steady stream of traffic is moving into the canadian city. thousands of people who fled a wildfire returned to see what is left. it destroyed structures when it ripped through the city, leading to the evacuation of more than 80,000 residents. officials are expecting thousands to return, the first day of a staged reentry.

news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. back to you. thank you. as we head into the peak of summer flying season, an is facing major headwinds. struggling with new routes and putting plans at risk. can the airline get things back on track? we are joined from dublin, where he is attending the airline industry's annual meeting. thank you for speaking with us. i wanted to get a sense from you about how negotiations are progressing. can you guarantee a summer vacation time free of strikes this year? >> i can guarantee we are in constructive dialogue at this point. we have a joint goal, to ensure the core fleet is able to grow again after years of shrinking

of the aircraft. that is what the staff wants and what the passengers want and even what the owners are quite happy when we are bringing down the cost level to allow for new growth. you can share my optimism for sure. when are you expected to strike a deal? what is your timeline in terms of striking a deal? >> it is more important to have the right deal than a fast deal. negotiation is key for our future sustainability in terms grant, which i mentioned before is the goal. ands important we sit down confidential talks. scarlet: let's talk about euro wings. you launch this for your short-haul operations. my question to you is when do you expect the carriers to join?

>> we have quite a few carriers operating. the firm -- former german went -- operates long-haul aircraft for us. we are approaching aircraft quickly and we establish this as a point-to-point carrier, a short amount of time. further a need for conservation. in biggest aviation group europe is ready to play an active part in that is what it is set up for. it is more important to find the fast.product than to find we are quite optimistic about seeing a major player in the business that is becoming so much more important in the home we are convinced that , thereur premium brand

is room for a dual grant. will you be outright buying airlines or will it be voluntary partnerships? >> we will have different levels of partnerships. we are buying airlines and we have quite successfully integrated swiss into our group of airlines. star lines invented many years ago. relationships with almost all of our important intercontinental markets. the toolbox of partnerships and we are looking to play as well as doing it with our prime brand. scarlet: what are the themes taking place at the -- one of the themes taking place --

>> first of all, we have seen public growth. we are looking this year. the industry is worried about 6% globally and there is not much around the world, showing that kind of growth. there is a demand by air travel. that demand is so much higher than global gdp growth because prices have been going down, parlayed of course because prices are falling. we are looking quite optimistically to the year 2016. how much capacity will you then be adding this year? >> a little bit less than 6% this year, about 2% on the mainline. we believe that is very much inbounds with demand. the most important market is quite solid. i feel optimistic about the

right capacity planning for the year over the last month. scarlet: we're looking for an update on the planned commercial joint venture with china. is there a risk this may not happen? it seems to be the -- taking longer than expected. >> a joint venture negotiation is complex. who knows better than us. with an day and now even singapore airlines. we are taking the time we need. i will be going to china very soon and we hope to take another big step forward in that visit. it would be our cop lamenting joint ventures and then we would have joint ventures in all major intercontinental markets. goalhas been our strategic here and we would be the first airlines to have that. withe moving forward

something eventually coming out of this. i'm quite convinced. scarlet: thank you for your time. this is bloomberg markets. ♪

scarlet: you are watching bloomberg markets. an interesting trend is developing in the corporate market. junk bond sales are at their lowest since 2009. lisa abramowicz joins us now with more. corporate bond sales are doing fine but high-yield bond sales are not. >> everyone is going to investment grade, which i find fascinating. , to you have risk periods

price perspective, when you look at that knee look at whatever you want to call it, investment grade world, you would think this means investors are going out there and taking more risk. they are really not. they are just using corporate bonds as a proxy for government bonds with a little more yield. not willing to actually take risks and delve into the most highly indebted companies for a little more yield. scarlet: what everyone talks about recovery in credit, you are not seeing much. how much has the -- how long has this been going on for? >> the entire year so far. may was record-breaking, worldwide, in particular in the u.s. as well. where yous function can look at what that is in terms of gross domestic product for different countries. it is the peruvian economy sold

in investment grade ons in the month of may. yet for high-yield bonds in the u.s., it was the smallest in may issued in 2012. you would see the ongoing trend for a while and one thing i find notable is even within the issuance of high-yield bonds, there have been fewer triple c rated bonds, the lowest rated. in other words, even that, you are seeing a bifurcation between the safe stuff in junk in the less safe stuff. scarlet: what options do they really have if they cannot get their issuances off the ground? >> you are seeing some investors starting to come and raise more the companies.e in some ways, it is a good time to invest if there is less issuance, and frankly if people are not really that willing to

take risks. there is a great irony of the moment where central banks are basically saying, go take risks and they will. apple, microsoft, they have so much cash they do not know what to do with it. to taiwan and australia to raise more debt for what? it is because they can. scarlet: has this happened before? >> yes. typically a risk off sentiment. it underscores how the rally we have seen in riskier assets is not with conviction. you are not seeing people have faith in the recovery. it raises an interesting question about the bonds all of these are selling. is it too much and are people too confident? defaultsens when it and surprises markets? you have a lot of investors pouring money into this particular market through etf.

rallye trying to ride the as the central bank begin to corporate bond program as they tiptoe around raising rates. do they add or subtract liquidity? there is so much debate around this. asone will say of course it liquidity, but you get the sense from a lot of investors that it makes them a little weary. [laughter] >> etf's helped investors move quickly in the market as long as you have a two-sided market. moving tooit is not quickly in either direction. these have not really been tested in the true incarnation in a market that is really collapsing. at the extremes, we will see what they do with respect to liquidity's. >> when we are talking about junk rated companies, i presume we're talking about a lot of commodity related companies?

have we broken it down to see if it is the case? it.hat is part of in some ways the boom we saw was the energy, the u.s. shale boom. the energy is what has been driving the climb. it also the retail sector. lisa, thank you so much. ,or more of lisa's commentary head to bloomberg. coming up, weighing the grexit risk as the june 23 of referendum approaches. historical perspective on you k's political debate next. ♪

scarlet: the global economy is at risk of getting caught in a low growth trap, a warning from

the ou cd. among the risks identified is a potential british exit from the european union. they say uncertainty surrounding the referendum has already undermined both in europe and elsewhere substantially. let's join cory johnson and carry -- carrie massar. >> thank you. we have the chief executive officer joining us in our studio. the function on the terminal, a 41% chance on the u.k. leaving -- leaving the european union. 70% do not know. what do you make of the polls out there? are they accurate? >> there are a lot of different polls. some point to a neck and neck type of potential outcome. the remain.favor of when you get to potential votes for the grexit, 30 or more

tellnt, they are not just risks anymore. they are real-life probabilities. every bit of research reveals this as being nothing less than a potential disaster with respect to trade in the finance center going forward. not just the u.k. but also the euro zone, which is struggling so much with weak growth and week inflation at this point. >> we talk about the horse race and the numbers and percentages, but i think the direct impacts are more interesting, what is at stake here. give me one thing you think could happen that might surprise people if the grexit happens? >> there are a couple of different things. first is the economic slowdown. a huge number of trade agreements that need to be rewritten. the utility opting out of the

european trade agreement. these are long-term damages that take lace over potentially years. from my standpoint and risk advisors in the -- in the business of helping clients understand risk. risk is a feeling, a sentiment sometimes. this is the sort of thing that especially as the u.s. embarks on what is almost certainly a messy and divisive election season, this is the sort of thing from a sentiment standpoint, we point to certain asset prices like the s&p near its all-time high. not a good thing with respect to the overall climate for risk-taking and enthusiasm about committing t asset prices. >> how important is the u.k. in terms of global trade, in terms of the global financial system and being a part of the global picture? >> not super important. center.finance you have got a huge presence of finance in the u.k..

the banking system is exceptionally large. of me wants to think about back in 2008 and the channel of contagion's through banks, a lot has been done to make banks safer as a channel of contagion, but we need to remember that the bigger issue with the uk's not the u.k.. it is what does this mean for the euro or eu project as a whole? one chart i found very striking of people in different countries in the you -- in the eu. the survey asked if you'd like to have a grexit style referendum in your country. in france, roughly six deeper -- 60% want a referendum. the cat is out of the bag a little bit. even if this does not pass, you will have potentially copy cut -- copycat referendums. it will be very challenging.

grease in the fire and you have got u.k. and maybe it will come back if it does not pass this time around. >> i think greece has got a lid on it. us know that long-term this is unsustainable. the ability to kick the can down the road should not be underestimated. back to, specific to the eurozone, you have a fragile backdrop. they cannot generate inflation and they are trying like crazy, the ecb, so it is not a good situation. >> we have seen some of this play out in terms of volatility with the british pound. in terms of the bulk of the market that might be impacted by the grexit, have we not seen that yet? bit priced into options of the euro. if we were looking for one, we would opt out of the hedges because they are so expensive and focus on the euro.

>> we will leave it on that note. thank you so much. scarlet, back to you. scarlet: thank you so much. coming up, on bloomberg markets, a disappointing month for u.s. auto sales p are we will look at influencing the fed's's decision later this month. ♪

scarlet: you are watching

bloomberg markets. ims scarlet fu. mark crumpton has more. in los angeles are responding to a report of a possible shooter at the university of california at ucla. is on lockdown this hour. you're looking at live pictures from the campus. a media relations officer tells the associated press that police are on the scene and we will have more details on that story as they become available. is asking nations iraqi troops and islamic state fighters to spare children caught in the battle. stillare 20,000 children trapped in the city. few families have been able to get out since the iraqi troops have the gun their offense is more than a week ago. opposed to britain staying in the european union are offering a deal to voters. if u.k. backs up in the june referendums, they promise to overhaul immigration policy.

that would limit the number of people entering the company -- the country. the leak has been focusing on immigration where polls show that it has an advtage. donald trump tops hillary clinton on honesty according to a new national -- national poll. 32% of voters found mr. trump more honest than most politicians compared to 15% from mrs. clinton. presidentialboth candidates less honest than most other politicians. clinton -- mrs. clinton and 45% say mr. trump. by 2400ews powered journalists in more than 150 news bureaus around the world. scarlet? scarlet: canadian money has been funneled and more is potentially coming from that government. the ceo spoke with bloomberg from the world air transfer summit.

from torontous now with more. tell us more about what the ceo said regarding a further cash injection. not budge on this. about asked several times whether the talks are ongoing. talks are ongoing with the government for potentially up to $1 billion in funding. extent,s to a certain it is a bit of a question whether they need the money and whether the talks are ongoing. they are ongoing but we did not hear any further details on that. withis a midsized plane 150 seats, a brand-new plane coming to the market. good on the environmental side, low fuel line and noise and so on. anythingnot mean because the whole program has been plagued by delays and shortfalls and so on. funding has come through except

thethe rail division but government coming through with $1 billion for the program and ownership a part of the program. the question now is will the deal get completed and will the government step in with $1 billion? bloomberg intelligence says the money is needed whether it comes from the federal government or crunch a needed to shortfall of up to $1 million. whether whether this would be warranted. >> every national government, whether the united states, france, germany, europe, every national government does it because the capital cost of developing new products is just too high. important, value-added jobs, knowledge-based economy. we should be doing everything we

can to maintain this kind of industry and maintain the presence everywhere. >> it is obvious he is in line with the federal government coming through with more money. completed big deals with delta. to what extent does discounting play a role? >> it is in interesting point. in april, delta came through with an order for 75 planes. price is about 6 billion so we do not know what they paid. it was assumed by many that quite a lot of discounting went on there. what they did tell bloomberg is the signing of the delta deal, what it did for momentum. here is what he said. quality of customers we have is solid.

now delta. very strongen us momentum and the team is actively working on new potential campaigns. >> he is talking about the momentum with the program. a lot of question marks around it. learn aboutt did we it ramping up again? >> they said they saw it coming. for a long time, they are still the cash cow in many ways. see demand from russia and demand from the middle east and private jets was coming down from china. got ahead of that and made the program smaller and he says there will be a time

when that ramps up again, but not at the moment as they got ahead of it. thank you for joining us. from planes to cars, the latest auto sales numbers are in and softer than expected for the month of may. -- next month?wn 20 is now, keith. give us a sense of how soft the numbers were. analysts were looking for declines already. >> that is right. they thought it would be a slower month because it was a shorter month and last year. worse than expected. gm down 18%. ford and honda down more than expected. consumerseing starting to cool off. a record your last year. we seem to be hitting a plateau. a consumer highlighted as the

bright spot of the economy. they could not continue growing at the pace they were. how much more quickly is the slowdown happening now? big pullback.is a whether that will continue remains to be seen. we are selling autos at close to record levels. still top that this year but they cannot have many more months like this. >> right. in terms of the breakdown of numbers, traps in sales of suv's, givenhan the stable gas prices right now? >> that has been a big issue for quite some time. the sedan market is collapsing. sales were down 25%. we are seeing a rise in suv's. there are shortages.

cadillac is a hot you asleep at they do not have enough of it and people cannot buy it and that is hurting sales as well. they need to buy more suv's and fewer cars. the world has changed. any carmakers that saw some strength in some segment of the lineup? >> chrysler kept the sales streak going and it has been increasing for six years now. they did it on the strength of the jeep suv. trucks, thoseup two segments are driving the industry right now. scarlet: what about sales to rental cars? what did we learn there? >> we are seeing more and more fleet sales, to take nearly rental fleets. that is how the cap sales going. that is what happens as the

market starts to slow. the company starts putting cars into rental fleet instead of into consumer's hands. scarlet: were there a lot of rebates offered in may? >> not as much as you might think. traditionally when the rebates start going up as the auto dealers start to clear up a lot to make way for the new model year in the fall. it a piece -- might be one way it turns around. scarlet: we might see rebates pickup and that might have an official boost from auto sales. what are you reading when it comes to economists extrapolating week may sales number for automakers into something more substantive for what it means for the consumer going forward and what it means next? >> it will give them pause about increasing interest rates because the auto market did slow this month. that would tell us it is not

time to start hiking rates and slow it further. this could be a break on interest rate increases. scarlet: ok. thank you for your perspective. have livewill coverage of the fed chair on monday when she speaks in philadelphia. you can catch her remarks right here on bloomberg television. this is bloomberg markets. ♪

scarlet: this is bloomberg markets. julie hyman has a check on movers beginning with retailers. >> i am sure you saw under armour and nike both on the move

after nike came out and got negative commentary by analysts. nike in particular was downgraded by bank of america merrill lynch. one thing providing challenge to both of them is the liquidation of sports authority because it was a major customer for these companies. it means there was a lot of inventory right now. existing customers might not be making the same level of orders. as j said in his report in nike, many are fragmenting markets, including under armour, and nike is lasting five years of growth. more competition in the industry , representing a little bit of a challenge for nike. under armour is looking for sales of $14 billion. the price -- before it had been $5 billion.

michael out with commentary about the future. raising the upper end of the forecast for the year because of the acquisition to champion europe and specific plans -- specific brands. coming out with revenue that rose by about 11%. michael has been releasing summer products early only in course -- core stores. thing going on there. >> thank you, julie. breaking news on a shooting at ucla. >> thank you. a spokeswoman now confirming there has in a shooting on the campus with two victims. conditions are not known. you are looking at an aerial shot from the campus of the university of california in los angeles. one of the prominent u.s. universities.

a media relations officer two people have been shot there at the university's engineering school. conditions are not known. the campus remaining on lockdown at this hour. we have received no word from authorities on whether or not an active search for a shooter is underway. you see there has now been a massive presence there. the shooting took place at the engineering school at the los angeles campus. back over to you. will keep an eye on those headlines as they continue to roll in. let's turn to cancer. it is responsible for one in every seven deaths around the globe. remarkable progress fighting the disease. we're joined now from san

francisco with more. some doctors are daring to use the word cure when it comes to cancer. what has changed? >> the medical definition is five years cancer free. what happens is there is a new type of therapy developed for the past few years that try to help a patient's immune system fight cancer. some of the earliest -- that is what is making doctors very excited that these might you long-lasting treatments. some of them might be saying we can think about the word cure for these patients. tell is about the companies leading the way for the new drugs? of one type of these drugs, which basically work by taking the brakes off of your immune system to just go after the cancer. another type of treatment

involves taking your t cells out and genetic modifying them and then giving them back to you. biotech.eing led by scarlet: who are the new drugs helping? what kinds of patients? the checkpoint inhibitors, about 20% of patients are responding. it is not everybody yet. there is a subset of patients that would have been considered terminal that for some reason are just surviving. wrought is not percentages yet, they are making doctors excited. scarlet: one out of five people responding is huge progress. during extent our people to make forecasts for the future in terms of what they would like to see the numbers get to? are people going that are? >> i think people are hesitant to put out numbers. the next challenge is to figure

out why some patients are in that and why some are not. 90% of the patients are responding. the hard work ahead is to figure out why patients are responding and why some are not in trying to shift more and more patients into the bucket that can be considered a cure. scarlet: so there is a lot more work to be done as you would expect. in chicago, do you expect this to be a part of the conversation? what might we learn? >> absolutely. what we are looking for at the conference is the two categories of data. one is new data on therapeutics being tried and developed, and the other data is looking for long-term data, tracking patients with long-term

therapies and following them year after year. att is what we are seeing the conference. >> you mentioned the companies developing the new drugs. do you hear much about how the jugs maybe changing the financial aspects of the company? bristol-myers,ly the checkpoint inhibitor has becomeken off and it has their number two drug. it happened quickly. there is a lot of change happening, a lot of money going into early cancer startups as well. scarlet: caroline joining us from san francisco. coming up, we are counting you down to 40's u.s. jobs report. discuss what is expected and how manufacturing data can affect the decision later this month. ♪

scarlet: according to the bloomberg function, the june and july increase are now around 22 but in an e3 percent respectively, lower than they were on friday when janet yellen sigg old a willingness to move as long as the economy showed progress. at bank with michelle of america merrill lynch about what would force the fed to raise rates. >> the reality is it will be dependent on the data and that is what the fed has an saying over and over again. it is dependent on financial conditions and what we may or

may not see in the economy. we will calibrate based on how these things evolve. that is difficult to do which is why they rely so much on messaging. >> that is what i would ask about. we know the fed is data dependent. why do expectations about the rate hikes seem to be around what they say? >> there is confusion around what exactly would force the fed to move. dependent.nly data it is risk aversion and what the level of risk they have. a differentriced in -- decent path of interest rates. a path to a higher rate environment. these events in january and february and the fed made it very clear they would he risk averse and they want time

to assess the damage. they have told us they have enough time. that is hard for market arches of this to understand and it is hard for fed watchers to understand as well. scarlet: the fed and market watchers are out of sync and to that end, the fed uses job owning as a tool. i love this example. the operations of the federal reserve before the fomc meeting. telling us that janet yellen's speech was scheduled pre-late to give her maximum option alley to signal whether there is a rate increase coming or not weeks before the actual meeting. how critical is the payrolls report? >> it is right that the fed will use open mouth observations. be rightes, they will before a meeting or after an economic indicator. after the last jobs report, they

came out and spoke and delivered . we will hear after that. the jobs report matters. that will give us an indication about the trend. and number of things will be a little difficult to determine. one factor is how do they play a role in the fed number? factors theyecial might have to account for. you always want to calibrate for these factors. mykola -- cohost is joining us now. it went to the upside. really surging 20 the highest levels in years. there is the chart surging over 60, the highest level since 2011

we continue with more inflation. it has not really searched, the -- ndary measure scarlet: with what we saw overseas showing minimal growth. this is something we will be discussing later today and also later today, wenzhou and i host what did you miss, we will be's who will be scott discussing the latest trends in m&a and investment banking. ♪

david: this is breaking news. we are moments away from the release of the beige book. shery: it is published eight

times a year and contains information about the current economic conditions in each of the 12 federal reserve districts. david: it is published two weeks before the next fomc meeting. erik schatzker is live in washington, d.c. with the breaking news. word, mass. -- mess. yes, the economy is still growing, but at only a modest pace. to fed used the same word describe wage increases since the last beige book in april. this is not the kind of assessment that turns hawks into dubs. s. dove the one arewi