from bloomberg world headquarters in new york, good afternoon. here is what we are watching. the weeke kicking off in the red. investors are wavering ahead of the decision on interest rates wednesday. microsoft is buying linkedin. one of the richest tech deals on record. is microsoft overpaying? we have an interview with honeywell ceo. technologies recently fell through. can talks be revised. of hour from the close trading. >> we are down at session lows. a snapshot of where we stand. nasdaq taking a beating now.

down two thirds of a percent. we are seeing a bunch of headwinds and fears related to that from the fed. we are in a risk off environment. we want to show you what is happening with the s&p 10 sectors. this is basically a broad. a tepidly broad selloff. are down by 1%. telecoms had been negative. utilities is in positive territory when rates come into the conversation. information technology had been the biggest lag or -- lagger. it had been in the green earlier today. morgan stanley saying it is up anding production sectors boosting their long-term views

on brent and crude for $20 per barrel on both sides of the atlantic. theing at what is on dashess side of things, up two thirds of a percent here. we are seeing copper rise. nymex crude down by half a percent. down three days in a row and continuing to fall. tout isbecause the u.s. rising for the second week in a row. the rise is the longest gain since august. shale drillers have added 12 oil rigs. with gold, it is risk off. by 1%.futures up

this is because of what is happening in china. china industrial production is up 6%. that is good news for the metal. let's go into the next. vix. -- let's go into up by nearly 19%. this matches its longest winning streak since this past august. let's look at what is happening in terms of safe havens and the u.s. 10 year yield. 1.36 percent. its lowest since december 10, 2012. vonnie: thank you. we will check back with you later. we want a check of the headlines. mark crumpton has more from the newsroom. comey says there was no indication the mass shooting in orlando, florida was directed outside the united states or that omar mateen was part of an

extremist network. director komi said the fbi was investigating his life in order to determine if anyone else was involved in the plot. >> he said he was doing this for the leader of isil, who he named and pledged loyalty to. with the solidarity perpetrators of the boston marathon bombing and a florida man who died as a suicide bomber in syria. the boston at marathon and the suicide bomber from florida were not an byard by isil -- were not inspired by isil. mark: they will look into electronic devices.

bernie sanders will meet with hillary clinton on tuesday. that is the last primary in washington, d.c. targeting attack court officials injured nine people in southeast turkey. three of the wounded were in serious condition. a police officer was among those injured. last week, two car bombings killed 17 in is temple. in australia, government is planning a fund to predict the -- to protect the great barrier reef. warming waters are bleaching the reefs' cpra;/ -- reefs' coral. it is the largest living structure on the planet. 2400powered by our journalists, i am mark crumpton.

a new era of prosperity is the theme of the economic forum of the americas. it is taking place in montreal. joining us is david cote. he is the chairman and ceo of honeywell. he has been speaking with the chairman of bmt pair of the -- a paribas. says we are in agreement here. policy see is monetary doing its job. the central banks have been doing their job. now we need governments in europe and the u.s. to do their jobs. companies want to invest in banks want to lend. you in ant's take example of a company trying to , you arerofit margins

trying to divest and trying to get rid of some of the units of honeywell. is this true? are you looking to sell some of your businesses? which one. david says the statement were displeased with margins is a significant overstatement. we have been increasing margin rate between 100 and 200 basis points per year. we told them in the first quarter because of the hadisitions we done -- we done, it was not going to show up in the first quarter, but the year would be up 80 basis points for the year. disappointment is an unfair characterization of what the actual performance was. they were happy about everything. happy: investors are not enough.

are you looking to sell the government services unit? david says to be clear, they were not displeased with the first quarter performance. they were quite pleased with it. our 1% organic growth, even though it sounded low, and it up being an upper quintile performance. were far from displeased. i do not know who is writing the stuff, but that is an unfair characterization. vonnie: i said often investors cannot be pleased when they do better in previous years. david says they were not displeased. we are probably an agreement, but investors can always be happier.

what is the next move for honeywell? what: we are going to do we have always done, core, organic growth. margin rates are going to continue to expand. we have a lot of money. great cash generator and we will deploy it in a way that benefits share owners. we have been growing our earnings far different than other companies. we buy back shares if it is appropriate. we are going to do acquisitions that makes sense. all of that while investing in businesses. our investment rate has then about 170% of depreciation. are investing heavily because we have a wonderful future ahead of us. vonnie: are you going to try and revive talks about a potential merger? david: no. that was a unique opportunity at

a unique point in time and that time has passed. for shareowners to make a lot of money. they did not want to do it. it is done. theie: how much of portfolio pruning can we expect? goals are there, but in terms of pruning, which units do we look to for that? david: given this is the video, it makes it easier for me to use my example. to honeywell,ame we had a growth portfolio that look like this. that looks like this. we have 100 acquisitions, 70 do divestitures -- 70 . a good business, well positioned in its industry.

if we look at how that fits with the rest of honeywell, it is not there any longer. it is a good business, it will do well on its own. it does not quite fit with us. we will add to the top and take off from the bottom. vonnie: you served on president obama's debt commission. as a republican, are you a trump supporter? mrs. cote did not raise a fool. i am not going to answer that. you will not say whether you will vote for mr. tromp or not if he becomes the nominee? david: i have never said that. i am not going to start now. where do you estimate the u.s. economy will be growth rate wise?

david: it feels like slow growth environment is where we are stuck now. this is one where i say government needs to start doing something differently. investmentbecome an government than a transfer payment government. we need to put money into math and science, infrastructure, patton reform, and we need to do these things at the same time we fix our debt problem. is a transition that has to occur and it will stimulate our economy at some point. until then, we are stuck in the 2%, 2.5% range. i don't foresee a recession. buys into the who long in the tooth argument. a big recoveryad other than 2010. longer,this can go on

or ring some unforeseen incident. vonnie: thank you for joining us from montreal. congratulations as you add to growth and prune at the bottom. coming up, with anxiety building brexit,e briggs it -- investors are rushing into treasury bonds. good time to get in on that action? that is next. ♪

vonnie: a resurgence and

volatility across markets has left investors scrambling to develop their riskiest holdings. as the brexit debate enters the final stretch, we are joined by jason pride. jason joins us from philadelphia. waiting to see what happens this week? do you think all of this turbulence is hasty on the part of the investors? >> they are probably going to be .ressured to hike rates

it seems like investors are anxious nevertheless. on top of that, you have the briggs at risk. it carries some weight. a lot that is on the line in terms of the european coordinated. cooler heads will prevail. occasionally, it gets into an environment where a non-cool head can pop up. tonie: what are you doing address this? are you trying to profit from this? >> we are in the later stages of the expansion. we still want to have a healthy equity allocation. at the same time, when you are

in those later stages, the risk goes up. plusve seen two 10% drawdowns in the past months. we will see another at some point in time. you want to be prepared for that. position the equities, have a full equity weighting in order to absorb the hits coming along and take other opportunities. municipale see is high yields for investors. it offers what we think is a , even after-tax return risk adjusted for investors, in light of what is going on in puerto rico. they carry a lot of duration. if you have a flattening yield curve, they could field some of

those pressures. our expectation is because growth is slow and they are in that long, slow economic expansion, it should not -- that investment that much. you are picking up a coupon that is tax exempt for investors. junke: do you like the bonds or is there an industry that looks more attractive? >> we are liking it for taxable investors. that side's needs. a majority of it is puerto rico. if you strip out those two things, there are a lot of other opportunities, small, bite sized .onds all over the place continued care facilities, school. interestingot of debt there that carries better yields because it is unfollowed

by a lot of the marketplace and does not receive the same attention corporate bond space does. will leave it there. our thanks. will tell youe how to prepare for volatility. ♪

vonnie: breaking news this afternoon. fan joel and draft kings are in talks about a merger. we will keep an eye on that. >> joining me for the options insight is jim of mk am holdings. -- mkm holdings. volatility is up six days in a row. we are looking at brexit, what are you looking to?

i am tired of talking about it. i wanted to get over with. next can expect me cyclical volatility of event. we talk about it frequently. hedging fatigue. that means the folks out there , whilee bought hedges volatility has been muted, they get tired of it. they get tired of it at a time like this, when they might need it. -- look pastwas this hedging fatigue. we are due a volatility event. with that, we are trying to get some of our clients into hedges. >> speaking of volatility, we hit a high of 19 point nine.

that is its highest since late february. it is the longest period of volatility suppression. what is the takeaway? >> there are cyclical moves in volatility. , it lastse a cyclical between three weeks. , spot vickse on being under the 20 threshold, for 3.5 months. at the same time, it means the probability with each passing day is that a potential shock is real. hence, take this impulse seriously. >> let's go into your trade. why are you looking at it? it tracks in the mid-u.s. stocks. something we are trying to do

is pick out the right hedging tools. better.s performed havehree of these products very steep --. that is something we can take advantage of. iw am.focused on -- iwm. the trade we are looking at is a asked --using july 29 july 29 expiration. there is defined risk in this trade. what you pay for the put flies the max you can use. for many investors, that is an attractive structure. it has four-legs to it. in many of these cases, we have defined risk in our cases.

>> of vonnie, back to you. kings: fanduel and draft in talks about a merger. they have been in the news mostly last year because they had been talking about merging and they were raising money from investors in places like sports and other venture capital. they came under fire from regulators and the valuations dropped by half. still ahead, microsoft wants to add linkedin to its professional network. how will microsoft integrate its new acquisitions? ♪

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>> this is bloomberg markets. let's get a check of the headlines.

mark has more. mark: donald trump is calling for a ban on muslims entering the united states for an indeterminate time, speaking in new hampshire, he said he will quote suspend immigration from areas of the world where there is a proven history of terrorism against the u.s. or its allies. >> i called for a ban after san bernardino and it was met with scorn and anger. years, many are saying i was right to do so and although the pause is temporary, we must find out what is going on. we have to do it. fted, this band, when we can properly and perfectly screen these people coming into our country. they are pouring in and we do not know what we are doing. mark: he faulted lax screening .f immigrants

hillary clinton was in cleveland, ohio, telling supporters today is not a day for politics. -- mrs. clinton: this is a moment when americans need to stand together. no matter how many times we and your a tax like this -- we endure a tax like this, the horror never fades. it tears at our sense of security and makes us furious. now, we have to steal our resolve to respond. the presumptive democratic nominee says the country was facing a twisted ideology and poisoned psychology. pistorius faces up to 15 years in prison for killing his model girlfriend, reeva

steenkamp. hearings begin today. the judge who convicted him of manslaughter has been ordered to sentence him for murder instead. news 24 hours a day, powered by our 24 hour test 2400 journalists in more than 50 news bureaus around the world. scarlet: stock markets closing and less than 30 minutes from now. check in with abigail doolittle. >> the index opened at lower, tried to turn higher, but failed to do so. the index is down three days in a row. industrials led by american

airlines and jetblue. both of those stocks are down sharply. investors have renewed concerns about the effect of terrorism on travel. lingering -- could hurt these stocks more. -- some of the big names are down sharply. apple is down. another bearish report saying iphone sales are short for the first time. on news thatown citroen resource has been shorting shares of thick -- of facebook since the last quarterly report. mentioned microsoft

as a tech drag. what do the technicals indicate? back, there is a lot of uncertainty around us. a lot of people have been expecting microsoft to move toward the crowd -- toward the cloud. another concern may be the fact that microsoft is going to fund billion in debt on top of $15 billion taken on in the last year. that is the fundamental backdrop. we see volatility. there is an uptrend. on today's bearishness, it has dropped a low the 200 day moving average. sellers are pushing the last two times this happened. it has led to more than 10% downside for microsoft all in.

the stock could be set up bearish lee. scarlet: i want to get back to the news vonnie referenced earlier. fanduel and draft kings reportedly talking about a merger. alex sherman helped break this story. we talk about investors, they have been pushing for something like this. it has been going on for about three months. rumored andn a long discussed merger behind the scenes. things have gotten more serious. these companies have been in the news a lot, first, the publicity was good.

things fell apart after governments started looking at both sides as potentially illegal gambling sites. daily fantasy sports are a big deal. if you watch any sporting event, companies spend millions and millions of dollars. scarlet: i feel advertising has dropped off quite a bit. it is not nfl season anymore. you can expect it to ramp up. these companies now have lost quite a bit of valuation since they have gotten into legal troubles. those troubles are working out here.

part of the merger talks would have to be -- maybe we are a stronger company as one. you may have to ask -- are there regulatory issues? yahoo! has daily fantasy sports. other sites do, too. i doubt they will look at it so narrow to say these two companies cannot turn into one. we do not know if any deal will happen. goingrger talks have been on. aboutt: what do we know their financials. >> none of this stuff is publicly available. you gain a user base, a big user

base and then you can start to ramp down the advertising and become more profitable. that is the model for both of these companies. it is not sustainable. it is not a healthy practice. exact samethe products and surfaces. scarlet: alex sherman. thank you. staying with the transaction theme, it is merger monday here. microsoft and linkedin. we are joined by the president of idc. i am joined by betty liu. a lot of people talk about how business.as a broken

will it be easier for jeff to fix it as part of microsoft? it will be. has played this as far as they could. tools, they need to behave in a way that is going to give them act fast to more cognitive technology and bring them into the enterprise. microsoft has some of that opportunity. allow them to invest in new areas that they would not have been able to do on their own. you have been, looking at linkedin and can't help but notice the slowdown in growth. toty: was this price tagged rich? if you look out one growth rate in particular, revenue numbers. likeue growing

gangbusters. linkedin probably took this out as far as it could. growth rates have been declining since five years ago. look at this chart, you wonder, did they pay them too much to get linkedin? >> you are talking about the rolodex of the world. 400 million users. them are active. how do you bring more services and content to those hundred million people to expand the hundred million and getting people to start using and engaging on this platform. there are not that many networks with the kind of scale these companies operate at. standpoint, this is going to look like a better investment than what microsoft

was considering not that long ago. betty: do you think this would obviousn an combination? >> we have been talking about combinations for linkedin since the beginning of last year. we believe they have a unique isortunity to -- microsoft where one billion people are using tools every day. linkedin is engaged with 100 million of those people. you expand that? we have been expecting a deal like this. microsoft has been bold to move in this direction. scarlet: google is the only other natural acquirer of linkedin. is there a possibility google might throw its hat into the ring? >> there is always a possibility of that kind of move. other companies would be

interested. to the point you made, given the valuation of what microsoft decided to pay, it is a predatory move that will keep others away from making a move like that. scarlet: for linkedin, weiss l now? growth rate has dropped off. it was a case of looking for the right buyer. the industry's first quarter results were disappointing. betty: they were. people questioned the strategy. seemed to be on point. jeff has been a terrific ceo, but people began to question the slowdown in the revenue and user numbers. people began to wonder -- what about the recent acquisitions,

was that taking on too much? found a like they have way to leverage that onto a whole different platform. isrlet: to what extent linkedin betting on china. >> that is a huge part of the strategy. the ability to expand into china to an provide services underserved customer base. you have facebook, we chat, linkedin. our data, around the world, finding a job, recruiting the employees, there is a lot of underserved customers in china. up in the air. everyone else is getting to the end of the runway.

betty: they have an easier time in china than face. scarlet: no politics involved there. betty liu, thank you. we are going to stay on the china scene. coming up, china's recent battles to reduce corruption in the official ranks. could it be having an impact on growth? we have that coming up next. ♪

scarlet: we have about 15 minutes before the stock market closes.

the indexes are at session lows. the dow off by 116 points. in terms of the industry groups, we are looking at all 10 sectors falling, led by materials and the technology group. in terms of decliners and advancers, more than five stocks lower for everyone than is higher. this is a global retreat. stocks falling in asia and europe as well. let's talk about china. the anticorruption campaign kicked off in november, 2012. has the fight on corruption been a drag on economic growth? data says no, there is no relationship between officials investigated and what happens to 's growth rate.

this is fascinating because a lot of people equate the two together. >> at the time, when the anticorruption campaign first launched and growth was slowing down, there was a lot of anxiety . people were saying this is the way people conduct business. resurgence, they try to see if there is a connection between the growth rate in various provinces and the amount of anticorruption activity in those provinces and there is no relationship. the growth slowdown, probably .nevitable

intelligencemberg economist found signs of corruption is bad for growth. it does not help. of course people should be not excited about the existence of -- scarlet: it pushes back against conventional wisdom. tom combed through shows that is not the case. toit is cool he was able look at this in a systematic way. scarlet: we will talk about this along with the china data dump at the end of last week and the

ramifications for the global economy. joe and i will talk about more .n what did you miss that is at 4:00 p.m. eastern time. coming up on bloomberg markets, the close of trading is minutes away. we are at session lows for the major stock indexes. ♪

scarlet: this is bloomberg markets. stocks close in 10 minutes. heavily onweighing the markets now. we see that happen and reflect in what is happening. all at session lows.

it is funny, a couple of days ago, we were talking about the s&p 500 inching closer to a record high. a couple of days later, this is where we are. the imap function. for five sectors in the green. we are in the red. byerials are down the most 1.3%. let's take a look at what is happening in terms of the biggest tech sector movers. apple is up -- down by 1.5%. iphone shipments are expected to fall 8.6%. 2.3%.ok is down an extensiveosing

amount of relevancy. twitter is rising by 4%. this is because of speculation in the social media space after microsoft and linkedin talked about that. microsoft down 2.5% because of capital expenditure. linkedin rising because it is uyee.y h scarlet: thank you. we want to bring in dave wilson to help us wrap up the last few minutes of trading. we are on our third day of losses for u.s. stocks. all of this talk about how the u.s. economy is holding its own is starting to fade. >> it is amazing what three days of declines will do.

we haven't had a three-day gain for the index since march. you have not seen these patterns establish themselves so much. there is so much to look ahead to with fed policy getting together, the bank of japan meeting. vote, whether england will stay in the european union or not. if you want to watch stocks fall, you have a lot of explanations you can turn to. scarlet: it looks like people are doing that just yet. you were looking at research. stockton is talking about the recession again. on stocks forsh the last 20 years. the whole idea that deflation

takes hold in the economy and bonds do better in stocks. he is looking for the s&p 500 to get back its gains. that is where he is coming from. he points to this labor market conditions index. it compiles job related indicators. data goes back to 1976. each it recession over the past 40 years has been preceded i a high in this index. we had one last december. thank you so much. that does it for bloomberg markets. ♪

scarlet: we are moments away from the closing bell. i'm joe weisenthal. >> and i'm danny berger. steele is a -- alix steel

is on assignment. ♪ [closing bell] scarlet: stocks closing at their session lows. closing at its highest levels since february. joe: but the question is, "what'd you miss?" scarlet: microsoft buys linkedin for $25 million. joe: global equity shows increasing anxiety over the brexit vote next week. we speak to one strategist about a defensives strategy is not the answer. >> and the energy complex, is it looking better? scarlet: dave wilson was just telling us that this is the first three data climb for the s&p 500 in a month and we saw indexes close after session lows . the inverse is the increase in the fix. just