barton. markets" onomberg bloomberg television. vonnie: we are going to take you from chicago to london to washington in the next hour. here is what we are watching. the fed begins its two-day meeting as retail sales rise more than forecast in may. where the central bank stands on a rate increase and where investors are putting their money ahead of tomorrow's all-important decision. mark: anxiety over the brexit vote is wreaking havoc on the global market. falls to a10 yield negative. we will talk with pimco's scott mather. vonnie: yuri milner weighs in on

one of the biggest deals of the year. microsoft paying 26 billion dollars plus to purchase linked in. mark: two minutes to the close of trading in europe. have a look at where equities are trading, every single industry group is trading lower on the stoxx 600, down for the fifth consecutive day. days, 7% hasive been wiped off the value of european equities, the most since february 11. that was when the stoxx 600 fell , 600two and half year low billion euros has been wiped off the valley -- value. we are down by 8% since april the 20th. it is all about brexit fears and as the fed meets on its day one,

the boj, boe, and smb all meet this week. look at volatility in equities. this is europe's fear index, rising for a fifth consecutive day, the longest stretch since march. it has risen by 55% in the past five days. it is below february's high and august's high when we had the chinese devaluation. that was the most since 2011. we are also seeing some stress in the currency markets as well. the premium for one-month --tacts -- contracts compared to those betting on an advance has surged nine percentage points. that is a record in risk reversal data going back to 2003. .ne-month volatility

sterling-dollar implied is the highest since 2008. where is the money going? it is continuing to flow into government bonds. this is the government bond story of the day. the yields on the german 10 year has fallen negative. it is below zero for the first time ever. have been talking about this for a few days and finally it has happened. the low is minus .033. germany joins the like of switzerland and japan, countries to have a bond market up to at least 10 years in negative territory. more than $2.5 trillion of euro region debt has yields below zero. this tells you everything you need to know about the anxiety out there in the market as we approach that brexit vote in just nine days. we are 30 minutes into the

session in the united states. let's get over to the markets desk, julie hyman has the latest. that you arencerns seeing manifest in europe and the u.k. as well as in the eurozone are not really manifesting here in the same way . we are seeing much more muted reaction to these recent polls that show increased odds for the leave camp. the dow is off just by 26 points. the s&p 500 very little change. we are not seeing the spill over to the same degree that we are seeing there. that said, we have just seen and a wiping out of an enormous amount of market cap for the global indices. year to have it for the date and you see the drop over the past couple of days. it wiped $1 trillion off to the global market cap values.

at least in the u.s. you are saying almost a pause coming on the heels of some significant declines. take a look at what is on the move. here you have a mixed picture for u.s. stocks. technology holding up well and since that is one of the most heavily weighted groups in the s&p 500, that is helping. ' reaction to the apple conference has been largely positive. if you look at the bloomberg at the analyst ratings on the company, the green would be buy ratings. 92%.are still at about the sell side community is pretty bullish on apple. game, yahoo! is trading higher along with alibaba. julie, just getting some

breaking news. net neutrality rules have been upheld by the court of appeals. this is a victory for the likes of google, yelp, and other internet firms. it has upheld the obama-backed internet rules. the net neutrality rule has been .pheld by the court of appeals let's get to bloomberg first word news. has joined the investigation into the crash of the egyptair flight the mediterranean, but time is running out to find the black box flight recorders. the u.s. was asked to join the search because the plane's engines were made in part by pratt and whitney. angela merkel says china is increasingly becoming germany's economic rival. she is wrapping up a three-day

visit. china's push to produce higher value output is making it a competitor. ae u.s. senate set to vote on $6.2 billion bill but president obama objects to numerous provisions in the bill. the white house also opposes provisions that would limit the size of the national security staff. voters in the district of alumbia could hand hillary final and largely meaningless victory in the last primary of the 2016 campaign season. bernie sanders held a campaign rally in the district last week but clinton is expected to do , due in large part to the 49% african-american population. a los angeles court will try to

decide if led zeppelin stole the opening of their hit song "stairway to heaven." jimmy page and robert plant are named as defendants. beatneys contend they hop .- copied music global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am emma chandra. going to send it back to mark. investor anxiety over the brexit vote is wreaking havoc from tokyo to london. dive into my terminal to check out this global stress index .hat has been stable for months in the last week it has surged more than 90%. joining us to navigate all this ceortainty is got rather,

for u.s. core strategies that the $86d he manages billion total return fund. thank you for joining us today. the stress index is below the levels of february which were the highest in almost five years. are we approaching with the referendum here in the u.k. just around the corner, those sorts of levels of stress in financial markets? scott: we do not see that yet on level.-based when you look at other spreads and levels of concern, you certainly do not see the risk asset and you do not see the same level of concern with good reason. the concerns at the beginning of the year were about a major economic downturn in much larger areas of the global economy, specifically china and perhaps the u.s. it is right to have some concern and worry about spillover effects if the vote is for brexit, but remember the u.k. is

a much smaller portion of the global economy. in terms of a macro event it would be much less important than if china were to have a disorderly slowdown or if the u.s. were approaching recession. mark: how do we position ourselves within the fixed income credit space for a brexit eventuality? what do we do with our portfolio? been: certainly it has wise to have a portfolio that is not highest to have 2 -- biased to have too much risk. we think that is a good position to take, because it generally elevated levels of financial asset prices. a lot of uncertainty about the role of monetary policy, how much is because of extreme monetary policy? investors question the fundamentals anytime there is some kind of uncertainty. we think people should be biased

to having a portfolio that allows them to add risk. it may well be that the market panic sort of spreads if there is a vote for brexit. that would provide a great opportunity for investors to look for higher quality assets to add to their portfolio. it is only an opportunity if you are fairly carefully positioned going into it. vonnie: just how expensive are global bonds at the moment? where would you be looking for value and how would you hedge currency-wise if it is elsewhere than the u.s.? scott: we think investors should still have a biased short-term for hedging out of risk currencies. we have a long dollar bias in many of our strategies. lendink this strategy will support and safety to the u.s. dollar. we think people should take that into account and certainly for

investors investing into the british pound, realizing there will be a lot of volatility both ways on the election outcome. we think there is great opportunity in fixed income to seek shelter in high-quality ways. credit, short dated investment dated credit is attractive. of high-quality government securities, we think the most value is in inflation linked government bonds, particularly in the u.s. that have a large degree of cushion built into their prices. 1.594% therey at is no value at all in the u.s. 10 year, is there? scott: it is hard to say there is any fundamental value. a good reason it is priced where it is is because of the nature of global yields. you mentioned german boones -- bundsboones being

being priced below zero. government bonds will do well if we have more of a risk off atmosphere, and if equities dipped further into negative territory. durationhold core u.s. but we prefer to do that in inflation linked treasury bonds. mark: we are literally four minutes into an interview with timco the day before the fed -- pimco the day before the fed announces its rate decision, and we have not mentioned the federal reserve. therehat reflect the fact is a 0% chance of a move tomorrow? scott: it is probably not zero but it is probably not very high in terms of an interest rate increase tomorrow. we do expect the federal reserve will want to emphasize that it

is very possible that we could have a hike at the july meeting so they want to preserve their option alley. ty.option ali we think that is reasonable and what we will hear from them more likely is that they want a little bit more data just to confirm that the weakness in payrolls that we saw in the last survey is not a trend, and really the economy is growing consistent with all the other indicators we have seen, which is somewhere on the order of 2% on average. we probably had growth in this quarter that will turn out to be closer to two and a half percent. and their perspective, the member they have modeled for monthly payroll growth to be slowing down month on month throughout this year because we are pretty close to full employment. thing fore a good wages and does not indicate necessarily the u.s. economy is tipping into recession. that is what we think the press

conference will be about. you.e: scott mather, thank do not miss our special coverage rate decision and a press conference that starts tomorrow at 1:00 p.m. eastern. stocksup, we look at the moving in the early session here in the u.s. capital one down about 3/10 of 1% and the s&p down about 2/10 of 1%. ♪

vonnie: i am vonnie quinn in chicago. from the morningstar investment conference you are watching "bloomberg markets."

mark: i am mark barton, 3:17 in london. vonnie: time for the bloomberg business flash. rose 1.1% production across the eurozone in april after a two-month decline in output. the european union statistics agency says the main reason is higher production of big-ticket items like kitchen appliances. authorities in china have evicted hundreds of shanghai asidents as dozens -- in effort to clean up the air and make way for the newest disney theme park. hundreds of employees of closed factories have been forced to look for their next job. shanghai disney opens thursday. that is your latest bloomberg business flash. that's head to the markets desk

where julie hyman have the latest. julie: i am taking a look at synchrony financial which is the worst performing financial in the s&p 500, down eight and a half percent after the company said it was setting aside more money for loan losses. they said the loss rate in its portfolio is at historically low levels but they very recently finished their loss forecast and are expecting a 20 to 30 basis point increase in the net charge-off rate over the next 12 months. investors were caught offguard and those shares are down sharply. it is pulling down other credit card related companies today. capital one financial down by nearly 4% as there is concerned that this kind of thing might spread potentially to some of the other credit card issuers. welle looking at 80 yes as

well,e shares -- ads as , a downdraftdown from what is going on with synchrony. mark: coming up, the brexit aftermath. we are going to break down the potential consequences of a british exit from the eu would look like. ♪

vonnie: you are watching "bloomberg markets," i am vonnie quinn in chicago. mark: live from london i am mark barton. power ofissected the the polls and possibility of a brexit, but what will the days after a brexit look like if it happens? ian wishart has been writing

about the potential shockwave surrounding a british exit from the eu. the eu has drawn up a roadmap in case there is a brexit eventuality. why is that? ian: i think as much as anything because for a long time they did not really believe it could happen. it was something that was talked about that they did not really believe it. the weeks and days of this campaign have gone on and it has become more and more like a reality so what they are trying to do is come up with a plan not to deal with brexit but to sort of firefight of how to stop eventualities like other countries thinking about doing the same thing, about what if the markets get scared, these things all made to be sorted out if there is a vote to leave. mark: give us an idea of what

this damage limitation exercise could look like in the days after if the u.k. votes to leave the eu until maybe a week after? what is the exercise countdown going to look like? ian: we have one thing that is fixed in stone, the following tuesday and wednesday when there is an eu's to -- and eu summit scheduled. david cameron may well come to that summit and say, this is my official notification that the u.k. is going to leave the eu. in between the referendum and that summit is when it is all up for grabs. we could find out as early as the day after the referendum the europe finance ministers convene to send out a message to the market. as early as the weekend, there could be an emergency summit.

that would be 27 liters. vonnie: part of the problem is that it is not divided down party lines. david cameron would be tasked with managing the fallout. you see david cameron campaigning with labor party leaders and so forth. terms ofit fall out in who will come to the table? ian: at the start it would be david cameron. he is the prime minister and it is dry -- his job to represent the british government and people, and even though he would disagree with his vote to leave it would be up to him to come to the eu to do negotiations to with the u.k. from the eu, something that in law would take those go years. as you rightly say, he is not in so camp campaigning to leave

therefore he might well be toppled as prime minister. you could may well have a new leader and it may be boris johnson who is leading the out campaign. perhaps he would come in to negotiate with the rest of the we just do not know how the rest of the eu would react. vonnie: in wishart of bloomberg news, check out his article. still ahead on bloomberg television, we will talk to ontario finance minister ♪.

at the live from chicago morningstar investment conference, i am vonnie quinn. mark: i am mark barton in london.

it's get to bloomberg first word. emma chandra is in the newsroom. is a big victory for the fcc. a federal appeals court has upheld the net neutrality rules. at&t, verizon, and comcast had challenged the rules. no word if they will appeal. astests in paris demonstrators turned out by the thousands to oppose labor reforms. the cgt union promised to rally more investors -- demonstrators. they are the most vocal opponent of the president's plan to make the labor market more flexible. advisors are urging israeli prime minister benjamin netanyahu to reach an agreement with president obama on military aid.

israeli officials are worried donald trump is unpredictable and hillary clinton is unreliable. israel gets $3 billion from the u.s. and they want to increase that to as much as $5 billion. one of the largest commemorations took place in orlando to remember the 49 people who were gunned down in a nightclub. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am emma chandra. canada, theng on country is undergoing a modest economic recovery but still facing significant risks from elevatedmodity prices, household debt, and the floppy housing market. province isiggest seeing gdp growth.

alix steel, the cohost of what you missed is standing by with charles sousa. lix: the topic on everyone's mind this morning is brexit fears. how does that impact you? obviously it is up to the british people and we valued a strong relationship with the eu, and trade relations we have been having for many years. canada makes about $13 billion off of exports to the u.k.. do you see anything fundamentally at risk if the volatility continues and brexit happens? charles: britain and canada have a long-standing relationship but a lot of our trade is with the european union. the discussions we are having with respect to those trade negotiations are with the european union.

andee a lot of merit strength in that united force and we hope that will continue. alix: most medium banks are based in ontario. is there a risk for your banking sector if we see a brexit? charles: we are second to new york in north america and we are the only zone with a have in north america. it is critical for us to have some leadership. we have our tentacles all around the world. a strong european union i think makes a lot of sense. alix: in terms of the global bond yields, who would've thought we would of seen the german ten-year bund yield at below 0%. the yield curve in canada has also been flattening.

inverted andk of perhaps a recession risk, are those buzzwords in ontario? charles: we are sensitive to what is happening around the world. we have better returns in other parts of the world. the liquidity of our bonds are strong and that helps. we will see what the bank of canada and the feds do in the u.s.. it appears to me this is a long-term low rate environment. the bonds are going to have, i suspect in the end, the fiscal policy that we have in place to try to germinate a little more activity is helping certainly in ontario. alix: do you feel like to promote more spending, do you feel like we will see more borrowing? is less our borrowing because our deficits are lower than had been anticipated.

consumer borrowing is much higher than in the past because of low rates. we are sensitive to partnering more with the private sector and more investment. the next 20 over years is being put in our infrastructure. alix: you guys launched a very ambitious plan last week to curb emissions. canada will bee able to still balance the books even if you do not get that inflow of revenue from the cap in trade that you are looking for? charles: it is part of the western climate initiative. we anticipate one point billion dollars in receipts next year through that program, prescribed for investment back into the economy.

the last auction was a little lower than what we anticipated but we will invest what we receive. our balance is not predicated by cap and trade. it is by our spending and ability to generate revenues, and we have over succeeded in our targets for seven years running. alix: the other theme in ontario is jobs moving to mexico in the next few years. bombardier has a lot of jobs in ontario. do you think the federal government should support them for the request of $1 billion in aid? charles: we have manufacturing plants in thunder bay and we welcome the injection of support by the federal government. in terms of the auto sector and what is happening in mexico, we have gm investing more into some of our plant. i think we are announcing today the inclusion of yet another auto manufacturer from italy coming into town.

that is boosting our overall support for the auto sector. grant,n the form of a that is what gm is hoping for? charles: yes. that has been helpful to us in maintaining a primary stronghold. alix: ontario's financial minister charles susa. mark, back to you. mark: coming up, we are going to talk to fame and -- famed russian entrepreneur yuri milner . he has invested in facebook, twitter, and alibaba. we want to find out what he thinks of the microsoft-linked in deal. lies with the h you are capital management founder from the morningstar conference in chicago. later we will take you to

atlanta or david westin sits down with former president bill clinton at the clinton foundation's sixth annual cgi meeting. ♪

mark: this is "bloomberg markets," live from london and chicago. in europe, about 50 minutes left of the session, the fifth day of declines for the stoxx 600. in that five days the european benchmark has fallen 7%, the most since february 11. that is the equity picture right now, european stocks 1.5% lower.

they were down as much is 1.6%. have a look at the industry groups that are suffering, every single one, all 19 are following today. concerned, it has heightened anxiety ahead of the u.k. referendum in nine days time. check what is happening in currencies, sterling is down. we have another record low, the sixth consecutive record low for the u.k. 10 year and the german ten-year bund yield has fallen below zero for the first time ever. every single bond to 10 years in germany yields a low zero. quite incredible. let's get back to the u.s.. abigail doolittle has the latest live from the nasdaq. how is it looking? abigail: we have the nasdaq down

slightly at this point by 3/10 of 1%. lots of tension as the bulls and bears fight for the primary position for the nasdaq stocks on the session. apple the biggest boosts, , after the worldwide developer conference yesterday when they announced new designs for the apple watch mtv, and said that syria is open for developers. the platform enhancements are impressive but this is unlikely to do anything in terms of earnings near-term. that is likely to come down to iphone sales that have been a little weaker than what was expected. shares are down more than 5% this year for apple. mark: you have been chatting about the tension in the nasdaq. apple is the biggest point boost .

what is the worst ranked? abigail: that is microsoft, that is the worst drag on the nasdaq. it is down six days in a row, the worst losing streak in about six months following the announcement of the acquisition of linked in for $26.2 billion. ross mcmillan is calling the acquisition mixed. it does not address the biggest challenge of developer analysis. richard is reiterating his $36 price target, suggesting the price could drop as much as 25%. the stock has quite definitively moving below the average, telling us the sellers are really moving in. the last time this happened microsoft fell all in 10% so we could be bearish lee positioned at least in the near term.

mark: vonnie, all yours. vonnie: we are staying on tech because yuri milner is weighing dealsone of the biggest microsoft making a deal with linked in. the founder describes why he is intrigued i the deal. yuri: i think the most exciting part to me of this transaction is the long-term potential ,ynergy, which is the databased data processing capability of microsoft applied to the data accumulated by linked in. i think it should not be underestimated that linkedin is a major global organic monopoly. andas a network effect there is almost no competition around the world except for maybe in china, but in china

they also have a joint venture which is doing very well. so how many global, organic monopolies do we have out there left? i think it is, i have no doubt that linked in will continue to accumulate relevant data and i also think that this artificial intelligence future that many people envision in the next 10 or 15 years can be applied to this particular transaction. if you think about applying microsoft's skills and abilities and the technology they are developing around artificial intelligence, and apply that to what we know about linkedin's data set and what it might evolve into, what could they do? yuri: they can know much better what your next job should be.

aboutan know much better the job market in general. they can see different trends globally, and i think they can be eventually marginally useful for users if the machine gets smarter and smarter. what does this decision say to you about the way the incumbent technology giants, microsoft, google, facebook, alibaba, perhaps we will throw apple in, what does this say about the way they are looking at the future? yuri: i think in the last couple of years -- if the last couple of years is any guidance for us to see where the future lies, all of the companies that you have mentioned added more than $100 billion to their market cap

. i think the gap between them and the second or third tier have widened in the last couple of years, and that is what allowed this acquisition to happen and some other acquisitions that have happened in the last couple of years. that theresting trend big are getting bigger and the smaller getting smaller, it basically defines the next few years as an interesting period of time where it is possible that significant value will accrue to the already existing companies. aboutlook 10 years back, $2 trillion were generated in terms of market globally and internet space. that is not accounting for apple . andinteresting question is, that will help us to predict the future, what fraction of this value accrued to the already

existing companies years ago and what accrued to the new companies? the answer is 60/40. 60% went to existing companies, 40% to the new companies that went public in that period of time. i think if we project, and there are convincing reasons economically to believe that every five years there will be an additional trillion dollars of value created. what percentage of that is going to be this big existing company and what percentage is new companies? the answer is, we do not know. but today, if you add all private companies versus all companies in that space, it will be roughly 90/10. that will mean the ratio will shift so dramatically but it may

be somewhere in between 10% and 40%. vonnie: that was erik schatzker's exclusive interview with yuri milner of dst global. more from the tech conference in san francisco including a conversation with mark andreasen. that is coming up at 4:00 new york time. the watergate hotel is rio penang for the first time in nearly a decade. we will get a sneak peek from the new owner in washington. also from washington, we are awaiting president obama to talk about the islamic state. be 11:55upposed to a.m. new york time following the domestic terror attack in orlando two days ago. ♪

vonnie: you are watching "bloomberg markets." i am vonnie quinn along with mark barton in london. no need to break into the watergate hotel anymore. the new owners are doing everything they can to make sure guests get the full flavor of this scandalous hotel. with this is jack:, the new cohen.- jack i want to ask you why you bought the watergate but the answer is partly obvious. jack: it was quite an eyesore. everybody had seen it, everybody was afraid of it, but we saw tremendous opportunity in a believe we have one of the best hotels in the world.

you spent $125 million on a facebook. how do you expend -- plan on reading that back? jacques: it was a big investment but i think the city really need a property like that, that is a hotel.xury lifestyle with a softed opening and we are already fully booked. 125 millions what dollars does when it comes to applying a facelift for a hotel. what was the most significant changes and challenges you faced? jacques: the hotel had many challenges and we spent the money where the challenges were. grandated a very large

ballroom, 7000 grand -- square feet. we had to demolish the garden in the middle of the watergate complex. the hotel was very clustered back then. he did not have any views on the water so we spent a lot of money opening it up and creating views on the water. lastly, the hotel we thought had a tremendous potential to become an urban resort with its views on the water again, so we created six different terraces. a rooftop terrace with 160 views , it is going to be the best rooftop bar inbound -- in town. we also have a restaurant terrace so the resort feel is on the present in the hotel. mark: how important was having a 1960's vibe, this richer feel?

-- retro feel? i understand you have created uniforms. jacques: the watergate rebuilding is a story of love and passion. we fell in love with the architecture. we saw a right away the potential to re-create the glamour of the 1960's, really pretty much immediately. the watergate was a tremendous glamorous spot back when it opened in the early 1960's. we already had done all these curves. it was back then a revolution in the architecture world when the watergate complex was built, so for us it is a top to bottom 1960's branding. we believe we are fun.

, andlieve we are energetic we bring the same level of luxury and glamour. we have created the rules of the watergate. one of them is champagne is a food group. that is glamour. .ark: thank you for joining us founder of euro capital properties. close up on "the european ," stocks falling today, german 10 year bond yields are below zero. we will examine the market reaction as the odds increase for a u.k. exit from the european union. vonnie: i will be speaking -- ♪

vonnie: are is 10 a.m. here in chicago. i am vonnie quinn. mark: i am mark barton.

there are 30 minutes left in the trading day in europe. you are watching the european close on "bloomberg markets." here's what we're watching today. are gripping the market. risks are being felt in the market. the german 10 year falls. the japanese falls into negative territory. we are finding out new information about the shooting in orlando. president obama has met with his national security team. let's have a look at what european equities are trading.