from bloomberg world headquarters in new york, good afternoon. david: here is what we are watching this hour. when our left in the trading day and u.s. stocks are unchanged. runs itwhat would a mean for travel? david: and wall street questioning whether elon musk's plan to combine tesla and solar city to go through even though musk is trying to convince investors that it is brimming with benefits. hour from the one close of trading. with go to the markets desk. ramy: stocks pretty much unchanged, starting off ending where we started the day with the brexit overhanging and the polls evenly divided and traders don't really know what to do or to expect.

the dow jones, s&p and nasdaq edging closer and closer to the flat line with an hour to go in the trading session. let's see how this has hand out in the s&p intraday. we started in positive territory and then we saw the drop when that opinion poll came in with leave edging out by one percentage point, the folks who are supporting stay. and then as janet yellen spoke, we saw another leg down. we are close to the flat line now. but part of the reason is in my bloomberg terminal. function.e svs basically, this is the current trading volume happening right now against the 20 day moving average. this is the way it has been throughout the entire day. it looks like seven industry volumesre trading at

less than the 20 day moving average. down 25%discretionary against the 20 day moving average and materials down, industrials down and people staying away from financials, down 13% there. at what isa look happening with currencies, specifically the pound against the dollar. it is up on the day, but you see before theright here opinion poll came out, it had been about as high as .8% against the dollar until the poll came out with leave being ahead. is's take a look at what happening with wti crude -- off the session lows but still down on the day, 1.4%. the big reason for this is because of new data showing stockpiles shrank that did not

shrink as much as expect did. the expectation was it would point 5 million. that's because of a jump in imports that rose to the highest level since december of three and half years ago. vonnie: i'm fascinated by the biotech story because they are leading today. we are seeing a biotech bounce right now. basically, we are seeing it bounce up and the good news is because medicare spending did not go past certain targets, we are up by 1.3%. medicare spending did not go thatcertain targets, so did not trigger a new advisory board. that board is supposed to cut medicare costs down. big-namebump in biotech companies, all up on the

order of 1% or 3%. david: let's get a check on the headlines with mark crumpton in the newsroom. iraq may government of have declared victory prematurely in the battle for falluja. the u.s. coalition says only one third of the city has been cleared of islamic state horses. the militants have held the city for more than two years. iraqi forces pushed into falluja last friday, leaving the government to declare victory. the united nations has funding shortages may force them to reduce already limited food distribution in war-ravaged yemen by august about fort teen million people, half the population, suffer from a lack of food. the yuan and aid agencies requested 1.8 billion dollars for a dish year but only 20% of that money has arrived. -- hashastert has risk

reported to a federal prison facility in southeastern minnesota where he will begin a 15 month sentence after he admitted guilt in a hash my case in an effort to conceal past child molestation. he's one of the highest-ranking u.s. politicians to ever serve prison time. president obama has signed into law the first overhaul of toxic chemical rules in 40 years. the law updates rules for tens of thousands of everyday chemicals used in household cleaners, clothing and furniture and set safety standards for dangerous chemicals like formaldehyde and asbestos. is in the final day of campaigning before its referendum on european union membership. markets arells and at odds over the outcome. we heard from prime yesterday would cameron a short time ago. mr. cameron: people will be going home tonight, sitting on

the phone or talking in the pub about how they want to vote. i would say to them put jobs first. put the economy first. put your children's future first. put our future first as a country. showsan online survey what the company calls a statistical dead heat with 45% for leave and 44% for remain. howard -- 244 hours a powered by 2600 journalists and analysts in the 120 countries. i'm mark crumpton. this is bloomberg. david: let's stay with the debate over the brexit vote. fed chair janet yellen was asked if a vote to leave the european union would affect the u.s. economy. miss yellen: i don't know that a brexit vote would have significant consequences for us, but it could and i think it is important to take that into account. david: let's get more insight on

what it could mean. joining us is alan gayle, up from richmond, virginia. let me ask you about how you are positioning yourself ahead of this vote tomorrow. what have you done? alan: in managing the allocation strategy, their three elements to the process. we are looking at valuations always, but we are looking at the macro headwinds and tailwind and looking for the technical factors that help us with timing. when i look at something like brexit, that has become a significant event that has caused me along with some other macro factors to cut act on international exposure in the second half of january. just trying to take some risk off. complicated even if the leave vote wins. the aftermath will be a long

duration of uncertainty. the market is more nervous about this than it is an fomc meeting. you took some positions off and reduced exposure in january. does that mean once it is out of the way that you will look more at international markets again? when will international look attractive? alan: what we did in late january was add to gold miners, using that same process. give can see the market the all clear signal and breakout of this trading range we have been in for a year, that will tell me we can start adding data to my portfolios and that is going to show up in the international space. david: so you would take another look at international equities and the like? what does it mean for the fed?

several moments that we have to get through. we get the vote tomorrow and that's a big thing. we also have to get through the next jobs report. there's been a significant slowing in job creation on the back of what i consider lukewarm to soft manufacturing surveys. a lot of the employment opponents have been softer, so we are starting to see softer job growth. that's why there's a lot riding on this jobs report coming up. and then we have the elections. vonnie: how have you been tilting your allocations given this potential weakness in the u.s. economy? i have a belief in a procyclical bias. and theasically neutral believeor that is we

utilities are way overvalued and stables are way overvalued. the truth of the matter is that it's moving in the other direction. macro tailwinds and we will see the market embrace both of those factors. that's not happening in the first half of 2016. vonnie: do you see good valuations anywhere? alan: we are differently warming up to the energy space. but now the fed appears to be on per mole. better.als are looking we starting to see traction overseas, looking at the port data, we are seeing more exports and imports. all of those are encouraging and that would be good news for the industrials. slow toet has been embrace these trends. david: janet yellen is saying

she is cautiously optimistic. talk a bit more about that. alan: we are cautious over the near-term but ultimately, we think the economy will move forward and the s&p 500 is going to finish at higher levels than we are today. very encouraged by what is going on with the consumer. job growth has been good. , core consumerng spending that feeds into the gdp number is almost 6% in the second quarter. the housing numbers, we had a soft number but overall, housing is doing better. if you look at the biggest component of the u.s. economy, they are getting better. are you liking fixed income? alan: we have been neutral on fixed income.

we want to go short duration in here. we have not. the 10-year note is still in a downtrend. exposure,e high-yield but we are monitoring that closely. david: that was alan gayle at ridge worth investments. the morganing up, stanley president weighs in on the brexit debate. he has a dire warning or those who want britain to go it alone. ♪

david: this is bloomberg markets. a quick check on the markets.

what are you looking at? looking at the indices, they are lower very modestly. the s&p unchanged and the nasdaq down, just a slight reversal. david: let's get back to the debate over the brexit. erik schatzker stat down with the president of morgan stanley and asked about the potential of england leaving the european union. guest: i think this would be the most consequential thing postwar that we would see. i don't want to go on about history too much but the whole reason for being for the european union was politically inspired. the political ramifications are profound. erik: the most consequential thing in the postwar time, that saying something. what about for the city of wedon eschew mark guest: said before and we are convinced

in thendon cannot suffer event after a brexit vote. london has done very well being part of the european union. the exchanges, clearing everything in london and this being challenged historically by other members of the european union. erik: does london seat its leadership and, if it does, to what city? guest: i don't think we will see its leadership in global financial services, but i think new york is getting bigger than london as the global financial services center. if there's an attrition of london's role in the case of brexit, which we believe there will be, we believe it will be a mix of frank for and paris. erik: if you were to take the total number of people employed in the city and envision a post -brexit world, how many would there be? guest: i don't want to get to specific but there would be a material diminution in global

financial services in the u.k. erik: what about four morgan stanley? britishe are hoping the voter will show sense and listen to the economic arguments and stay, but we are clearly looking at our plans. what is not clear is what the effect of the renegotiations will be in the of -- after brexit and what it means for the market and britain's access to it. erik: come friday, what does morgan stanley do differently? -- is assuming guest: assuming there is a brexit, we have contingency plans. we will look at having a european headquarters that will be acceptable and in terms of a combined -- erik: where would that be? guest: possibly dublin or frankfurt. i like the idea of dublin. do, but youre you

are biased. what's most challenging from an operational standpoint? guest: i don't know if we will see the details yet. i've think the clearing of europe will move to continental europe and the exchanges will be moved. him aactical things straightaway, longer-term, you can have all sorts of issues on movement of labor and visa travel. this is affecting risk appetite and business decisions. what do you see specifically among your domestic clients and international clients? guest: i'm not going to comment on the u.s. election as an irishman, i think that would be impertinent. big we have seen is a falloff in volumes.

uncertainty in the u.s., it is >> it, it is china, it is a brexitof things -- it is , it is china, it is a number of things. the: which is to say if brexit issue is resolved favorably, which is to say britain chooses to remain a member of the european union, that does not remove the cloud of uncertainty. what will it take for client volumes to return? you will have a small rally, but it would be significant and it's just one thing you take off the list. for clients to come back, we need a normalization of economic and 70. erik: how many years away are we from that --

normalization of economic activity. ofid: still ahead, shares red hat have not gained much rum last year, but they have been looking bullish lately. is it time to get in? ♪

vonnie: this is bloomberg markets. david: time now for options insight with ramy inocencio for top -- ramy inocencio. bauerjoining me is scott and he joins me from the cboe and chicago. thanks for joining me. taking a look at the markets, they are moving toward the flatline. slightly negative on the day and exit is happening one day from

now. where is your money when it comes to brexit? : i have to believe at the end of the day they are going to stay. but if you look at what the vix has been doing, you are seeing it fairly elevated. that put the question into what is going to happen here. but i think at the end of the day, they are going to stay. in terms of volume and debate amongst the traders, there's more talk about who's the greatest ask about player of all whether brexit is going to happen or not. but watch out, the volatility index might be telling us something. ramy: looking at the industrial groups, at least six or seven industry groups are down on the day in terms of the 20 day average volume. going back to the vix, have you gamed out what might happen if there is an exit?

are you going to see a pop either way? scott: you will see a pop either way. if they leave, what happened almostst week is we saw an inversion where the back months became inverted with the front months which told us things were not going to happen. now it is going the other way again. if there is a exit, i think you will see the near term come down concern farther out being when are they going to make a decision as to when they are going to leave. that is going to put a lot of fear into the markets going into the latter part of the year. you: looking at the trade, are looking at red hat, the world lead us to writer of open source software. down about .5%. year to date, and not down much. we have earnings coming out after develop. why are you looking at it?

scott: i'm putting on a one by two call spread and it doesn't cost me anything. i have no downsides risk if the stock goes to the downside but what i like is a short pop to the upside. the option market is pricing in a 6% or 7% move. i'm buying and 82 strike call, selling to of the 85 strike call. up to 88, which is my breakeven. i like 85 as the target because that's the recent near term highs and fits right in with what the options market is expecting. stopped at 88 and have no risk to the downside if the stock does go down. ramy: deutsche bank and pacific crest are bullish in terms of their earnings calls. whatou in line with them

are you thinking when the bell rings and we hear red hat earnings come out? scott: with the position i have, i'm thinking 85, but i like the upside. toit does have low earnings the upside, i will have to scramble a bit that i like the upside. they have lagged in the sector and in the overall markets this year, so they have a little room to make up for that. bullishe been forming a pattern over the last month or so and that is why i like the upside. i do get his 3% or 4% and we are good to go there. you are watching bloomberg markets. don't go away. ♪

♪ scarlet: from bloomberg

headquarters, i am scarlet fu. al:mark crumpton is in the newsroom. that it is almost certain hillary clinton will be the democratic nominee. was asked what role he would play at the democratic national convention. i am not going to be determining the scope of the convention. i had a meeting with secretary clinton. reporter: how did that go? mr. sanders: good. years we served in the senate. mark: who he considers to be liberal, he says it would be, in his mistake, a terrible mistake or her to go to a candidate who has roots in wall street or who has been backed by wall street. to lead the he once health, education, welfare, and pensions committee in the senate

next year. mrs. clinton picked up the endorsement of a retired u.s. air force general and a national security adviser under gerald ford and george h w bush, brent scope cross. unique she would bring experience to the presidency. and house democrats, led by georgia, they staged a sitdown protest, seeking a vote on gun control measures following the orlando nightclub shooting. they demanded house speaker paul cancel the recess to debate and vote on gun legislation. calling on the leadership to the house to bring commonsense legislation to the house floor. give us a vote. let us about. we came here to do our job. we came here to work. the house was not in during that, and they ordered

the c-span cameras turned off. and john kerry was scheduled to meet in rome on sunday. they will discuss peace talks with the palestinians. those negotiations collapsed two years ago. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. i am mark crumpton. scarlet, back to you. scarlet: let's head to the nasdaq, where abigail doolittle is. : we are down ever so slightly, and this morning up slightly, fluctuating between gains and losses, and dragging there are some of the technology and consumer discretionary names. as for that biotech strength, we are looking for the nasdaq biotech index, up, being helped by some of the big biotech names, all on news that a panel

to cut costs was not triggered with one of the many headwinds behind this year's continuing market.bear the biggest drive on the nasdaq, tesla shares down sharply, in fact, having their worst day, on pace for their worst drop in more than a year, as investors are looking at the news to buy solar city. with lots of met skepticism around the idea that this would add uncertainty to an already uncertain story. some believe the vision of elon musk to deliver electric vehicles to the mass-market, being bears, 25% think that the company production goals are lofty, and they are bothered by the company's high cash burn. scarlet: what does this look like?

abigail: looking at atw-year chart, uncertainty. 41.80.call it 1 it is a battle between the bulls and the bears. maybe we see them climb into that range, and otherwise maybe back to the bottom, so overall, this is an on story, and that suggests of volatility that nobody knows. it will be an interesting story to see has it evolves. scarlet? : we will talk more about tesla and solar city, coming up. alix: brexit tomorrow, and given that london is the biggest way for travel to europe, a u.k. separation could create a storm of regulatory headaches. joining us is a managing director for travel zoo. they recently surveyed members

from various countries like u.k., italy, france, spain, the u.s. what was your biggest takeaway from that? >> well, the biggest takeaway was the impact that the european markets that we surveyed had on whether britain leaving would have an impact on people visiting the u.k., so roughly around 30% of pain and italy and germany and 25% of france would be less likely to visit the $4 billion in revenue for the u.k. tourism industry. even those as far away as canada and the u.s. said it might impact them wanting to visit. anchor: what about going to continental europe? we do vote to leave, it would be two years with their changes in legislation, but the short-term impact, people are pretty much predicting that if we do vote to leave, the pound will lose its value against the

euro, and what that means is that brits going to europe this summer will likely find higher prices, and then there is easyjet, minor, and ryan jet coming out and saying they believe it would lead to higher prices and less competition from the airlines. alix: under any signs that anyone would have to pay more taxes once they are there, anything along those lines? >> certainly not for two years. after that, actually, who is to say? there is a lot of unknowns here with how those from england or britain going abroad would be taxed after that two-year period, that is a big unknown. peopleood that bring over to the u.k.? >> that is an upside. it could make visiting written cheaper, so for domestic tourism, that might be a short-term boom.

something that may counteract that is the leisure industry is a big employer from the eu, and i need in london, it is as much in70% of the workforce hospitality is a migrant workforce. obviously, if that changes, if we have to have higher wages to attract u.k. employees, that might counteract any currency drop. scarlet: that is a really good point. we have seen an increase in travelers, and japanese visitors are anxious to visit the u.k., and we know there has been a safe haven for those worried about a brexit possibility. britishone factor the have found of being outside of that agreement is that the chinese and asian tourists are typically traveling to europe more than they do britain, simply because they can get one

visa to visit the countries, and britain decided to stay out of that agreement. last chinese visitors are coming. isx: did you take the pulse europe once the u.k. to stay? >> yes, we asked that question, ofwell, and pretty much 70% the european markets all wanted the u.k. to stay, that only because they did not want to see written leave, but there was a worry that if britain were to vote to leave, there is anti-european sentiment in other countries in europe, and maybe there was some worry that there may be some domino effect in britain were to leave. alix: a slippery slope. managing director for travel zoo u.k. scarlet: and the ceo of ryanair spoke on bloomberg's "countdown," and he supports them to remain.

leave and then argue which way you want the game played. the only way to reform the eu is and reform among the eastern european countries, but the idea particularly with the u.k. economy powering ahead strongly, it is now one of the most efficient economies in europe. it is poised to grow very strongly. and then france, spain, italy -- the idea that you pick that time to leave is absolutely insanely crazy. held back from making any decisions? you and i spent half an hour together back at the start of this campaign, and i asked you if you were doing anymore hedging, and you said, no, i am not doing anymore hedging. delayed anything? have you considered anything, you and the board? >> no. the heart in our terms, about

eight years, but the question the allocations, and it is absolutely no doubt that we would allocate fewer aircraft to the u.k. if they vote to leave. airports, 26 u.k. they will move to other european airports. not all, but some would definitely move. jobs createde less by ryanair in the u.k. if they leave, more jobs created if they stay. if they stay, the u.k. economy would do better in the next two or three years, and there it be job creation in the u.k. anchor: would you consider what would happen if a decision of the u.k., if it comes to >> it, what that would do, whether there'd be some kind of domino effect, and we start to ask bigger questions? putting your business model at risk? it does not put business model at risk, but uncertainty

certainly is a threat over the next few years. if you go at longer-term, whatever happens, businesses and economies will deal with it, but over the next few years, it will create uncertainty. if the u.k. leaves, i think that would be the end of the european project, and there would be , and it wouldures be hard to keep them together, or at least the peripheral countries together. the germans, dutch, and the ,rench possibly would continue but i think it would be damaged. alix: that was the ryanair ceo. coming up, tesla. i've a getting a shine, or are they getting a burn? scarlet: to be debated, next.

♪ scarlet: this is "bloomberg markets." i am scarlet fu. alix: and i am alix steel. t: one company said they would buy 56% shot, the first takeover of a major japanese electronics maker by a foreign company, and there was a meeting , valued at $6.2 a share. blackberry will release a first-quarter earnings, and they could see a trend lower to challenges. the ceo conceded that the blackberry android phone was too

high-end. pg&e's plan to shut the last power plant by 2025 would cost a lot. this is according to bloomberg intelligence analysts. the multibillion estimate underscores the kospi utilities in the consumer space across the u.s. as power generated by cheaper plans overwhelms the replacement costs. and that is your business flash update. well, elon musk has defended his marriage of tesla, and he says this is a no-brainer to combine the companies. but the investors have not embraced that news. they are on pace for an ugly two-day chart. joining us is our reporter in our bloomberg anchor of "asia daybreak," betty liu, who has also been falling story -- following the story.

why would this combo make sense? musk, what he is saying could fans of his brand go to one stop shopping, right? they can get their solar power, their energy storage, and charge with an applecar brand, and like you have apple and itunes, and you can share apps, that kind of a thing, and it probably helps them with the of his management of his time. solarits his time between city, spacex, and tesla, and gets the least of that, so it could make things simpler for him. for shareholders, it is a lot tougher rationale. scarlet: to what extent is this a defensive move? some are subsidized and are very

competitive. yes, we are seeing this in some of the biggest markets, like brazil, turkey, chile. have a lot of capital, and they are building out and requiring a lot of companies. this may not make a lot of sense, as jamie was saying, for tesla shareholders, but if you believe in the future of solar energy, i believe prices are about where -- there are estimates that the prices for solar energy/electricity is over to drop about percent the next 10 years or sooner than that, and their other estimates that by the time -- by the time we reach 2030, as we are still here, that solar power is going to be about 13% of all usage, so it makes sense that you want to make this that. know that if shareholders who bought into a car company are all of that excited about it.

get my tesla and do my battery. though, tesla has a lot of debt, on the flip side. they are still trying to meet their estimates, and they still want to turn profits, right? talk about what this debt competition is going to do for them. it is not like tesla has the strongest balance sheet out there anyway. they are still in very much startup mode, building the world's largest battery factory in nevada, trying to get a third model into their lineup, and there is so many challenges they in $3.2d then to add billion of solarcity debt, having the equity raise, as you mentioned, when people bought that stop just last month, they were thinking this was a company that was going to triple its debts, so it definitely throws the balance sheet out of whack, and this is a different

proposition than they were getting into. rlet: you talked about elon musk and his attention being between two companies. jamie: it could affect them where they are not able to have a dealership. solarcity, and then, by the way, here is our tesla s or our model 3 car, and then go online and not sell it in the store. alix: it was exciting. jamie butters, thank you, and tune into betty:'s new show. she will be joined by angie lau. you can watch on bloomberg wherever you are, mid net in

london, 7:00 p.m. in new york. she is everywhere you want to be. scarlet: are market roundup is next. you have got the dow and the s&p lower. trading in a pretty narrow range. this is "bloomberg markets." ♪

♪ alix: this is "bloomberg markets." i am alix steel. scarlet: and i'm scarlet fu. joining us is joe weisenthal. alix: there is the pound and the s&p mini futures. thisa look at this, and kind of describes what happens today. around 11:30, we got a new poll was shows that one camp getting a little bit of steam,

and you saw the pound index fall. that is that white line, and s is the s&p mini other, and then they moved in tandem at the close, and now you are cbs and p --you are seeing the s&p minis. you should not have risk assets move with the pound. t: what we see being picked up, and it is fairly low volume. here is another way of looking at it or the lack of volume. you can really see that across the s&p 10 sectors, with the volume intelligent indications maybealth care, and consumer staples is on average or above average. everything else is seeing slower than average trading, and what is interesting about telecom, 30% above the 20-day average,

and at&t is up for a fifth straight day, only to climate three times this month. extinct trading days in june. it has only declined three times. it was mentioned it is the leading bid over yahoo! at: one thing i am looking today, biotech stocks happen pretty big losers, this index is surging after a panel declined to invoke its ability to regulate prices. you can see the nasdaq biotech level surginghat , and ine panel declined this day of red across the board, biotech, which had been losing a lot, is having a good day. alix: and i am looking at steel

and a, u.s. steel, deutsche bank analysts came out and said the industry could see restart.pply that is incredible. someally you had permanently closed and some not permit me close, and when that comes back, -- you know what, though? we have to want this up with another look at the pound, and what is going on with the >> it debate. the white line is the index -- what is going on with the brexit ebate, and the white line is the index, and this is tracking to buy tech, and that was not the case back in april. joe: this is really tightened in the last couple of months, so owing back to the spring, we were not talking about the pounds, the relationship with and may and june,

that relationship between >> it -- between brexit odds and the pound. scarlet: at the referendum was announced in january. it was may and june when people started looking at it. is going to be a very exciting 24 hours. that wraps it up for "bloomberg markets." miss?" is next, and we are four minutes before the close, -- "bloombergis is markets." ♪

scarlet: we are moments away from the closing bell, i am scarlet fu. joe: and i am joe weisenthal. alix: and i am alix steel. ♪

[closing bell] scarlet: u.s. stocks closing lower this afternoon, oil sliding below $39 a barrel. joe: the question is, "what'd you miss?" scarlet: welcome to our one hour exit special, whether or not britain will stay in the european union. joe: we will look at the implication across the world. alix: and we will speak to those in both the leave and remain camps, including lord skidelsky. scarlet: first, let's get to our market minutes. u.s. stocks closing after session lows, losing steam as the session continues. we started with optimism, but dampening that as they are closer than anticipated in the previous days. six out of 10 major groups lower. joe: and we