for more than 40 years, there has been an average of just over two months between a nomination and hearing. i nominated judge merrick garland to the supreme court more than 3 months ago. refusepublicans so far to even meet with him. they are allowing partisan politics to jeopardize something as fundamental as the impartiality and integrity of our justice system. america should not let it stand. this is an election year, and during election years, politicians tend to use the immigration issues to scare people with words like amnesty, in hopes that it will get them votes. keep in mind that millions of us, myself included, go back generations in this country. ancestors put in the painstaking efforts to become citizens. we don't like the notion that anyone might get a free pass to american citizenship. millions of people who have come forward and worked to get right

with the law under this policy, they have been living here for years to, in some cases even decades. leaving the broken system the way it is, that's not a solution. that's the real amnesty, pretending we can deport 11 million people or build a wall without spending tens of billions of dollars of taxpayer abetting what is factually incorrect. it's not going to work, it's not good for this country. it's a fantasy. it offers nothing to help the middle last and demeans our tradition of eating a nation of laws and a nation -- being a nation of laws and a nation of immigrants. it is my firm belief that immigration is not something to fear. we don't have to wall ourselves not lookthose who may like us right now or pray like we do or have a different last name, because being an american

is about something more than that. what makes us american is our shared commitment to an ideal that all of us are created equal , all of us have a chance to make of our lives what we will. that whetherhows it was the irish or the polls or or germans or the italians the chinese are the japanese are kenyans,ans or the byever showed up, over time, second or third generation, those kids are americans. they do look like us. because we don't look one way. we don't all have the same last names. but we all share a creed. to theshare a commitment values that founded this nation. that's who we are.

and that is what i believe most americans recognize. so, here's the bottom line. we have a very real choice that america faces right now. we will continue to implement the existing programs in place. we will not be able to move forward with the expanded programs that we wanted to move forward on because the supreme court was not able to issue a ruling at this stage, and now we've got a choice about what we are going to be as a country, what we want to teach our kids and how we want to be and theted in congress white house. we will have to make a decision about whether we are a people who tolerate the hypocrisy of pickystem, the workers who our fruit, make our beds, never had a chance to get right with the law, or whether we will give them a chance just like our forebears had chance, to take

responsibility and give their kids a better future. we will have to decide whether we are a people who accept the cruelty of ripping children from their parents arms, or whether we actually value families and keep them together for the sake of all of our communities. we will have to decide whether we are a people who continue to educate the world's brightest students in our high schools and universities, only to then send them away to compete against us, or whether we encourage them to stay and create new jobs and new businesses right here in the united states. these are all the questions now that voters are going to have to ask themselves and are going to have to answer in november. these are the issues that will be debated by candidates across the country, most congressional candidates, as well as the presidential candidates. in november, americans will have to make a decision about what we care about and who we are. sooner oryou this, later immigration reform will get done.

congress is not going to be able to ignore america forever. it's not a matter of if, it's a matter of when. i can say that with confidence because we have seen our history. of politics spasms around immigration, and fear mongering. traditions and our history and our better impulses kick in. that's how we all ended up here. i guarantee you, at some point everyone of us has somebody in didbackground who people not want coming here. and yet here we are. and that is was going to happen this time. the question is, do we do it in a smart, rational, sensible way, or do we keep on ticking the can down the road? deserves this country

an immigration policy that reflects the goodness of the american people, and i think we are going to get that ring we will get that in november. all right. i will take 2 questions. go ahead. realistically, what do you see is the risk of deportation to the more than 4 million people? you say we can't deport 11 million. there's a chunk of time here -- pres. obama: what was unaffected by today's ruling or lack of a ruling is the enforcement of priorities we put in place. our enforcement priorities that have been laid out by secretary jeh johnson at the department of homeland security are pretty clear. we prioritize criminals. we prioritize gangbangers. we prioritize folks who have just come in. what we don't do is prioritize

people who have been here a long time who are otherwise law-abiding, who have roots and connections in their communities. those enforcement priorities will continue. the work that we've done with s, thosem act kid policies remain in place. what this has prevented us from doing is expanding the scope of what we have done with the dream act kids. keep in mind that even that was just a temporary measure. all it was doing was saying to these kids, you can have confidence that you are not going to be deported, but it does not resolve your ultimate status. that will require congressional action. by theh i'm disappointed lack of decision today by the , thise court, deadlock does not substantially change

, and it doesn't negate what has always been the case, which is if we are really going to solve this problem effectively, we've got to have congress pass a law. i have pushed to the limits of my executive authority. we now have to have congress act. hopefully we're going to have a vigorous debate during this election. that's how democracy is supposed to work. and there will be a determination as to which direction we are going. over the long term i'm very confident about the direction this country will go in because we've seen this in the past. if we had not seen it in the past, america would look very different than it looks today. but whether we are going to get so thate now, soon,

this does not continue to be this divisive force in our down to, and we can get the business of all pulling together to create jobs and educate our kids and protect threats, from external and do the things that we need to do to ensure a better future for the next generation, that will be determined in part by how voters turnout and who they vote for in november. one more question. are you going to be able to do anything more at all for emigrants going forward in terms of executive action before the next president? do you in anyway take this as some republicans presented this, as a slap at your use of

executive authority? how this circumscribed aggressively or forcefully you use your authority in the remainder of your time in office? on the specifics of don't anticipate there are additional executive actions we can take. we can implement what we have already put in place that is not , butted by this decision we have to follow now what has been ruled on because the supreme court could not resolve the issue. we are going to have to abide by an electionuntil a ninthnfirmation of

justice of the supreme court so they can break this type. -- tie. we have always said we are going to do what we can lawfully through executive action. we can't go beyond that. does not have any impact from our perspective on the host of other issues we are working on. each one of these issues has a different analysis and is based on different statutes or different interpretations of our authority. on climate change, that is based on the clean air act. the epa and previous supreme court rulings, as opposed to a prosecutorial discussion which in the past every other president has exercised. the supreme court was not definitive one way or the other on this.

we don't have a ninth justice. republicans,to the i think what it tells you is that if you keep on blocking udges -- judges from getting on the bench, courts can't issue decisions. what that means is that you will have the status quo frozen, and we won't be able to make progress on important issues. that may have been her strategy from the start, but it's not a sustainable strategy and it is certainly a strategy that will be broken by this election, unless their basic theory is that we will never confirm judges again. hopefully that's not their theory. [inaudible] it was an opinion that said we can't come up with a decision. i think that would be a little bit of a stretch.

if we have a full court issuing a full opinion on anything, then we take it seriously. but it have to abide by, wasn't any kind of value statement or decision on the merits on these issues. thank you, guys. houselive from the white in washington, d.c., the president of the united states reaction today to a supreme court ruling, a tie vote that effectively kills his plan to shield the millions of immigrants in the u.s. illegally from deportation. our supreme court reporter is standing by. the president called this heartbreaking for millions of immigrants. there is nothing effectively the president can do between now and so does hisis term, prior decisions by the administration -- is the status

quo still in effect? >> yes. this is only the most recent program, called dapa, that could have affected 4 million people. these are mainly parents of children who are u.s. citizens. mark: what do we know in terms andtrategy going forward how this might affect the presidential campaign? the president was very clear, americans have a choice to make in november. >> that was always the case, that the presidential election would he at least as important as court in terms of this policy. wayillary clinton wins, the you could see it playing out is the same policy or a similar one she puts in place could come back to this court, which would have a new ninth justice, either merrick garland or someone appointed by hillary clinton, so

that policy might stand a better chance. then cements what the president and administration along, thatying all perhaps there would have been some sort of definitive ruling had republicans on the senate judiciary committee allowed his to print court nominee, merrick garland, to have a vote. >> there might have been. every. scalia died in merrick garland would have had to have gotten confirmed very quickly. i'm not sure he would have been on this court this term. it is clear that a ninth justice would be the pivot point if this issue ever came back to the supreme court. has: this is something that been making its way through the courts for some time. tell us a little bit about the fifth circuit court of appeals in new orleans. the justices there were the ones who first heard this case from

texas and other states. >> that is generally a conservative appeals court. i wasn't shocked that we got this conservative ruling. the other big case today, the affirmative action case, that court took a liberal approach and upheld the policy at the university of texas. the supreme court today affirmed that action. how dramatically was that decision altered i justice scalia's death? sure, butt know for you have to imagine pretty significantly. there's no question that justice scalia would have been on the other side of the case are elena kagan, one of the liberals, could not take part because she had been involved as an obama administration lawyer. we ended up with a seven justice court. with justice scaila we potentially could have had a 4-4 split.

still would have upheld the university of texas policy, but we would not have had this nationwide ruling we had today. mark: greg, thank you so much. global news 24 hours a day, powered by more than 2600 journalists and analysts and in i amthan 120 countries. mark crumpton. this is bloomberg. watchingyou are bloomberg markets. uk'scarlet fu print the voters go to the polls today to cast their votes on eu membership. we will be following all the action as the results come in. special coverage begins at 5:00 p.m. eastern. julie hyman has been tracking the moves. the moves and equities are higher. jlie: it's a risk on kind of day.

tocks are right now rising the highs of the session. the nasdaq leading the gains, up 1.25%. we are seeing this broad-based rally today. if you look at the groups that are on the move, its broad there as well. utilities have been bouncing between gains and losses. other than that, it's all green on the screen. financials have been leading gains as well. they have been pretty reactive to this risk on, risk off sentiment, moving along with the markets recently, materials and energy shares, tech industrials, all of the cyclicals up today. we are seeing banks do well also, in terms of the biggest contributors to gains today. we will get results of the first portions of the stress test. the stocks within the banking industry don't tend to move on

that. they move rather on the capital return plan approvals. that will happen next week. microsoft also on the list today, reflective of what we are seeing in technology. lions gate once again has approached stars on a potential deal. this is something that has happened in the past, now may be happening again. stocks are reacting, lions gate having a bump up in starz as wel l. up by 6.5% today. is the best commodity out there. it seems like risk on across asset classes. julie: a classic move right there. into stocks out of treasury, for example. if you look at the 10 year note, we are seeing that happen for sure. we have some selling of the japanese yen, u.s. dollars

rallying. the pound at the highest we have seen thus far in 2016. gold and oil, classics. gold futures are selling off and crude oil prices getting a bump up of 3/4 of 1%. scarlet: thank you so much. alix: when unicorn startup is making the case that it is for real, surging in its first day of trading on wall street. we will talk to the founder and ceo. ♪

scarlet: u.k. citizens are today voting on a referendum on theher to remain in european union. david cameron among those casting valance -- ballots.

we will be following all the action as a result. special coverage begins at 5:00 p.m. eastern, 10:00 p.m. eastern in london. alix: a snapshot of the situation shows the growing debt pile in corporate and total debt, and there are worries about risks associated with rapid deleveraging as well as the recent revelation and more wealth management projects are investing in each other in china. scarlet: jim grant sounded off earlier on bloomberg . a financial dystopia. it is immensely leveraged. the leverage is very dangerous, and debts of low quality. the first quarter they say gdp grew. evidently, banking assets grew at something like 17%. in the first quarter china materialized that $1 trillion of new debt. we are going to wake up someday

there has been overnight a combustion in the so-called wealth management product area of chinese finance. >> and get the world is clamoring for china to keep going. we keep watching it. what is the calamity you see? how will that play out? the bloomberg news department from may 29 wrote a fabulous piece on these wealth management products. there are $3.6 trillion worth of these things. they are blind pools, closed and funds investing in credit -- end funds investing in credit instruments. the principal method of refunding beast things is to issue more of them. of the great unexamined potential calamities in the world. we journalists have spent a lot

of time analyzing trouble spots. >> we have seen situations before where there have been bad loans made and it has to be reconciled. u.s. money center banks in the 1980's and latin america, but they grew their way out of it. is it possible in china for consumer spending to grow its way out of the problem? >> no. it's not possible. >> that is their theory, correct? >> right. twice aspproximately big as gdp and growing twice as fast as gdp. that is not a formula for happiness. >> what would your prescription be for china? >> be short. -- is dedicated to this oppression of free information and the proliferation of debt.

no. wrong way forward. what we need is freedom and less debt. scarlet: that was jim grant on bloomberg . stock of, our mystery the day. today's pick is attracting dozens of buyers like bees to honey. the stock has been a serial gain or -- gainer. alix: the former economic chairman alan krueger will be joining us. we will take a look at what today's forecast the jobs could mean to the fed. ♪

. . .

alix: live from bloomberg world headquarters in new york, i am alix steel. scarlet: and i am scarlet fu. today's mystery stock is

attracting buyers like bees to honey. guessed laura, i had a burts bees reference. cereal to food -- oats, soey bunches of you were on the right track. scarlet: that is a good hint. can see since then, the stock has almost tripled. it is trading at a record today, and it is up again in today's session. today, it looks like the catalyst was an upgrade to buy. analysts were saying they were concerned about the earnings outlook because of the , but they say the japanese businesswoman not be as bad as they had anticipated. they are also saying -- but they company will not be as

bad as the anticipated. they are also saying it will push into a record in today's session. startup isunicorn getting its first real test on wall street. trulio is passing with flying colors. 10 million shares at $15 a piece. twilio now has a market value billion. joining us now is founder and ceo jeff lawson. jeff, congratulations on the ipo. there has only been one vp-ba cked tech ipo this year. why pull the trigger now? jeff: we are proud of the company based on solid fundamentals. company, one of

the key aspects of our business is to build the platform, be public, and we are proud, so we are excited to be out today. tend to be down by about 16%. why in this environment where you have a lot of uncertainty and market volatility does this make sense for your company? jeff: as a company built on solid fundamentals, it is never exactly clear when the right time is, but we are proud of the business that we build, so we felt at the time was right for our business, and we decided to pull the trigger. scarlet: was it now or never? jeff: no, we had a lot of option alley. we did not need to raise money when we did. you raise money when you do not need it. certainly, we do not need it. we have a healthy balance sheet caret we thought it was a great time for our business, and markets will accept a strong business in any market.

scarlet: if it is not now or never, you have a backdrop where a lot of startups are saying they are avoiding going public because they do not want to do with the short-termism of being a publicly traded company. what would be your answer back? jeff: i think it is like any relationship you have feared if you tell them what you want to accomplish over the long-term, sure, you will have some people short-term focus, but i'm focused on the long term, and that is what i tell investors that we are investing for, and i think that is right way to run a business. i like having investors on board with feel the century alix: -- the same. alix: your revenue growth has been astronomical, up 88% last year, but you have not turned a profit. somehow the market is ok with that. they did that with amazon and then said ok, amazon, turn a profit. the: i cannot talk about

future, but we have grown our revenue very productively and rapidly but with a measured investment and responsible growth. we have always kept an eye on the bottom line while we are also attracting the top line. alix: you do not know when you will turn a profit get? jeff: i cannot favor the future, but we have built the business responsibly. we will continue to do so. scarlet: how do you feel about an appetite for tech ipo's specifically? what companies or narratives can successfully go public in this kind of environment? jeff: it is tough to generalize. businessod about the we built based on fundamentals, and i imagine other businesses that are built on fundamentals of business, strong customer base of, strong products, that investors will probably value those businesses as well. alix: one red flag is how dependent you guys are on on whatsapp, that makes about 17% of your total revenue.

todoes say they do not have provide any notice to you if they want to drop your service, and that is a red flag to them. what can you say about that? jeff: whatsapp is a customer in our variable market of customers. we are variable and base. base is 28,000 customers that represent the vast majority of our business, 80% of our revenue. they grow nicely and productively. it grew 80% year-over-year in the last several years during we feel good about the base business, and that is what we get up in the morning for your we love having what's up as a customer, but the real purpose is our base customers -- we love having whatsapp as a customer, but the roper this is our base customers. ceolet: all right, twilio jeff lawson joining us from the floor of the stock exchange. alix: we have not had a lot of ipo's. there have been a lot of cancellations, so it is good to see one that worked out. scarlet: from the ipo market to the jobs market, fewer americans

are forecasting filing for unemployment. it has been below 300,000 for more than a year. to discussng us now is former counsel at economic professort princeton alan krueger. thank you for joining us. what do you think the fed needs to see two-putt july on the table? they certainly hit the reset button after last month, so i think they need to see signs of a stronger job market, perhaps a resumption of 200,000 jobs a month again. & that we are going to move to signs that we are going to move to the 2% inflation. alix: do we get it? alan: there is a lot of volatility in the jobs numbers. our member of several -- i remember several periods where reported jobs growth was 0.

i think one has to take each report with a big grain of salt. the other indicators like you just mentioned, unemployment timeframe, it looks like the job market is healthy. sooner or later, we have to see slower job growth because the unemployment rate is below 5%, we're getting close to full employment with our population growth, with our current immigration policy -- which took a bit of a blow today from the supreme court. it means slower growth. scarlet: how will we know when we are at full employment? is it something we will know in retrospect? alan: i think we will know in real time. we should see a gradual ebbing in job growth because companies will find it harder and harder to fill positions when we hit full implement. there are different kinds of full employment. when we think of full employment, what we want is the best possible full employment where all segments of the workforce are growing. alix: talk about the labor

mismatch. you take a look at opening rates, they keep increasing, yet hiring rates are falling. this chart shows the gap is widening. the jobs are out there -- they are not finding the people to fill them. scarlet: and maybe this is a case where we do not have the right hills in this country, and it goes back to education. ofnow you and lawrence cass harvard university recently completed new research on alternative work arrangements. can you first tell us what that means and how that might contribute to the labor recession? alan: sure. we are looking at growth in nontraditional employment, freelancers, jobs being contracted out where workers work for one country but work -- one company but work through a firm. a small part of this is the gig economy, uber drivers. what we have seen looking over of the jobcade, most growth we are seeing is in this nontraditional sector.

fortunately, in a recovery over the last 10 years, we have added almost 14.5 million jobs, and what we have found over the last decade, that about 9 million jobs were created on net over the decade, it almost 9 million of them were in these alternative jobs. scarlet: how does this complicate the data we get from the u.s. government to determine whether we are at all employment? -- full employment? not all of this is captured. alan: it makes it harder for her to some of it is not. freelancers are not on anybody's payroll. they are on their own payroll. contract workers, however, are included. we've seen big growth in business services firms, companies providing gentle real for cafeteria -- janitorial or cafeteria services. the higher jobs are being contracted out. scarlet: white-collar jobs, for instance. alan: that does get reflected. the job market is evolving, and we need to keep track of how it is changing.

alix: how do something like this wind up playing into the presidential election we are seeing now in that we do not have a strong, unionized him a blue-collar workforce anymore? it is scattered mostly, we have a lot of freelancers like we are talking about. how does that contribute to the income inequality and divisiveness we see now? of anxiety in the workforce. what is interesting to see is even as the economy has gotten tyronger, that anxie seems to be surfacing. many workers have been left out by the growth we have been eating by the last 30 years. it is not just the recovery. the middle class has been hollowing out for quite sometime. i think it is important that we extend the safety net to the workers who were in a nontraditional sector. they do not get the traditional protections against determination. they cannot join unions. the national labor relations act does not cover them. the affordable care act does provide a much bigger umbrella and makes health care more

accessible for this growing segment of the workforce, but i think we could do more to help day, savefor a rainy for retirement, and extends many of the labor protections that traditional workers get. scarlet: do you see any of these perceptions being offered by the current presidential contenders? alan: on one side, you have donald trump, who has a fairly incoherent economic agenda, from what i can tell, and goes back and forth. one day he says we should get rid of the min wage, wages are day heh, the next says we should befall on the debt. secretary clinton has talked about providing paid leave for maternity, sick leave, paternity, family leave, also strengthening the of formal care act, which, as i mentioned, is a benefit that applies to workers in this growing segment of the economy as well. alix: i am glad you brought up wages. what is the tipping point when we finally see wages kicking off? we have seen a little bit of a

sprinkling. alan: i do not think it will be an explosion of wage growth, but we are seeing movement from 2% to 3% wage growth, and then from 3% to 3.5% is the job market continues to heal. there are a lot of different ways measures. the monthly payroll number that we get is showing some acceleration. this year, it is over 3%. the last option was quite weak in terms of jobs growth, but was solid in terms of wage growth. the conditions you mentioned before where there are many job openings, companies are reluctant to hire, part of that is they are reluctant to raise pay of scales -- pay scales. we see that with nurses. wages are low, they try to bring in temporary nurses, and in some cases, they have colluded to keep pay low. i think that will start to break down the longer the recovery goes on. scarlet: all right, alan krueger, great context, former

chairman of the council of economic advisers. s&p up 19, nasdaq up 56. this is "bloomberg markets." ♪

watching "bloomberg markets." .he index is up more than 1% amazon shares are up 1.3%. initiating coverage with a buy rating, 50% upward potential for the shares of amazon, plus with the recent broadband report showing amazon is beaming ground against netflix in streaming. --e are soft, thick

microsoft, shares every claimed the 5% drop after the company did announce the linked in acquisition last week. investors are becoming more comfortable with that. what stands out when we take a look at a one-year chart is not so much the linked in acquisition, but we have a range of volatility between the buyers and. sellers. -- and investors remain really concerned around the legacy products, suggesting there is a lot of pressure on the companies to move toward the lower. at the nasdaq market site, i am abigail doolittle. no more bloomberg. scarlet: you are watching bloomberg. i am still at fu. alix: i am alix steel. scarlet: credits weeks is set to face the u.s. probe -- credits ise is facing a u.s. probe. alix: and we will tell you about twitter's focus on live events. scarlet: it is nearly impossible

to know china's true jobless rate. it is the focus of today's quick take. alix: u.s. prosecutors are investigating credit suisse in a potential tax evasion case. there is a question on whether the employees may have helped clients in israel of aid u.s. taxes. the bank has placed five employees on leave while they investigate. scarlet: another sign that the turnaround is working at britain's largest grocers chain. tesla ceo dave lewis has been trying to win back happy shoppers by offering lower prices and better service at tesco. donald trump will interrupt his campaign with a quick trip to scotland. trump had promised to create thousands of new jobs. he now employees 150 people at the resorts, but that is a fraction of his initial pledge.

twitter is closing in on deals to stray more live events, everything from sporting events to political debates. on twitter this fall have been better than expected. twitter will show 10 nfl games for free. deals for other live events will be announced within weeks. bloomberg now for a quick take where we provide context and background on issues of interest. rep in your mind around china's economy is no small task. in fact, it is huge. second-largest's and is changing fast. the lack of transparency over economic data is coming to a head. can china change the image of its statistics? china's national bureau of statistics cobbles together data from many sources whose reliability is difficult to ascertain. the result can be eccentric. they reported gross domestic product of 2015 at $10.4 trillion, but the sum reported that china's 31 provinces was nearly 7% more.

its jobless rate is nearly impossible to really know. the government ignores more than 270 million migrant workers who frequently change jobs or get fired. china's premier once said he prefers not to rely on them that judge economic performance through other means like electricity consumption, rail cargo volume, and loan growth. here's the background -- this problem is not just politically motivated. distortion of the source was routine. china has not been able to keep up with the data of the country's modern, consumer-driven economy. here is the argument -- when it comes to economic data, interested in servers have to pick and choose results. resort to often anecdotal logic or their own measures. bank of america judges chinese industrial performance through an index composed of derivatives production, export and

import's, and car sales. win -- therises data may not be reliable even if it comes straight from the top. that is your global business report. for more stories, visit bloomberg.com. scarlet: we have an update in the airline industry. shares of southwest falling as the airline announces it will postpone delivery of boeing 787's by six years. will focus on tech and operational improvements. you can see boeing shares taking a big leg lower on the news. southwest, i should say. boeing up 109%. ♪

scarlet: mexico have played a central role in this year's presidential election, trying to fight negative perception by highlighting strong ties between

it and the u.s. laem enrique madrid sat down with carla paloma. enriquie: we want to set the record straight. thellion jobs in unites states are directly related to exports in from mexico. --. exports in two mexico adjust texas exports $94 billion in two mexico. a state like arizona also exports $9 billion in two mexico, which is 38% of the total exports. so the u.s. and american jobs of the u.s. people depend a lot on the relationship with mexico. also, the consumers are better off because of this trade relationship. for example, today you can buy clothing in the u.s. as prices for those in 1985. or if you move from one house to

another, the furniture you buy is close to the prices of 30 years ago. it is because of trade with mexico, and consumers are much better off because of this relationship. these are the kind of facts that we want the u.s. american people to know. some: we have seen business people in mexico worried about how these relations could be affected given these anti-immigration rhetoric. enrique: we are aware. even though this has been stretched a little bit, it is something that has been the american public. some people believe that because of trade, some jobs have been lost. have beenome could lost, but most of the jobs that have been lost and manufacturing have to do with modernization, with technology, but of course our country is to blame. that is not the truth. the example of caterpillar. extraordinary machinery

,ompany was about to go broke and because they move the plants 560exico, yes, they opened more jobs in mexico, and because of that, they were more competitive, they were able to lower their prices, build with better quality, and of course their sales went up. and as a consequence, 1500 new jobs were created back again in the united states. if so the idea that opening a plant in mexico necessarily creates layoffs in the united states is totally false. are also mexican plants being built in the united states, plants from bimbo, which is the largest right company in the world, those are mexican investments providing jobs in the united states. this entire relationship is very tight together. i think we require much better understanding of the benefits. that was mexico's

tourism secretary enrique daylight madrid. -- enrique de la madrid. alix: senator lewis really galvanized the gun sit-in movement yesterday right around noon, so it has been about 25 hours so far. u.s. speaker paul ryan says it is a publicity son. he actually dismissed and adjourned the house for a 3:00long vacation after a.m. yesterday. nevertheless, the democrats have hunkered down. scarlet: this is "bloomberg markets." ♪ e

alix: a visit 1:00 p.m. in new york and 1:00 a.m. in hong kong. scarlet: welcome to "bloomberg markets."

scarlet: in new york, good afternoon. i am scarlet fu. alix: i am alix steel. we are watching the u.k. registered voters going to the polls to cast their ballots on eu membership. holes are open, but we will be following all the action across a day of a special coverage starting today at 5:00 p.m. eastern. scarlet: could the success of a cloud company ipo surge away the tech offerings? alix: the u.s. housing authority what he, we will hear sees as the biggest challenge facing the market. scarlet: we wanted to head to the market desk, where julie hyman has been tracking the moves and they are green. julie: yes, they are.

not only that, but building on earlier gains. up by more than 1%. we have this risk on rally that has been going on across the market. with this game, the s&p 500 crossing back above 2100. however, still below the record. we were talking for a while there every day about getting closer and closer to the s&p 500 record. if you take a look at where we are now going back to may of 2015, we are about 1.2% below that level for the s&p 500, 2130 would be the number to beat on a closing basis to make the record. getting back closer to those levels. we want to look at the 10 year note and we see buying and stocks and selling in treasuries. it has risen in five of the past six sessions up to 1.73%, which is only the high since june 6, but that trajectory of the yield has been higher.

we have been watching commodities there and we are seeing risk appetite come back end. that is evident in the crude oil rally and as alix pointed out, the copper rally. 1.4% is the trade increase percentage wise gold trading a little bit lower, even though there is a lot of long bets on gold as people hedge. scarlet: those are the big fx moves, but what about individual movers? julie: i wanted to update you on boeing and southwest. boeing cfo speaking at the conference and there have been market moving headlines. most notably affecting boeing. southwest will postpone delivery of 67 boeing 737 fax 8 aircrafts, a new kind of by asft and elaine it much as six years. they're not canceling the order, at least not right now, but they are delaying it and it will not ship until 2023 and 2025. originally, 2019 to 2022, so

boeing taking ahead. southwest taking a hit, punching and coming back to some degree. the company said that the revenue environment remains soft, so that is one of the things pulling into trading. the other developing news story theowing has to do with potential deal in the entertainment industry. lions gate and starz, back in talks once again on a potential deal. something that has surfaced before and our reporters are following it and we will bring you developments when we had them, but lions gate shares reacting to that headline and they continue to move higher. same situation with starz but they have come up off the highs but still up 1.4%. scarlet: thank you. the bloomberg on first word news. we have more from our newsroom with mark crumpton. u.k. citizens voting today

on the country's membership in the european union. prime minister david cameron was among those casting ballots. u.k. law prevents us from reporting on voting or ofcussing an analysis referendum issues while the polls are open, but we will be following all the action as the results come. special coverage starts at 5:00 p.m. new york time and 10:00 p.m. london time. the supreme court has launched president obama's plan that would have kept millions of those link -- living illegally in the u.s. supported. there is over court ruling that the president overstepped his authority and it kills the plan for the rest of mr. obama's presidency. president obama: good millions of immigrants who have made families here, who voted for the opportunity to work, pay taxes, seven of military and fully contribute to this country we all love in an open way.

mark: hillary clinton called it "unacceptable," and sent in a statement that she believes the hisident "acted well within constitutional and legal authority." house republicans refuse to give into an unprecedented democrat protest. almost 16to recess hours after democrats posed a sick-and on gun control measures. john lewis says the sick-and will and shortly. goodson, the baltimore police officer basing the most serious charges in the 2015 death of freddie gray, has been found not guilty. officer goodson opted for a bench trial is set upon by jury. he drove the van in which the 25-year-old freddie gray suffered a single -- suffered a fatal spinal cord injury. none of the officers have been convicted and six faces charges

in connection with the case. global news powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton and this is bloomberg. back to you. scarlet: thank you. i want to update you that the democratic sick-in has officially ended. presented at lewis ended it moments ago and the sit in lasted honey five hours and has now ended. earlier today, jim grant spoke on bloomberg about his disapproval of janet yellen and the feds excessive action instability the economy. gradually andas by degree moved from a species of central banking into some species of central planning it seems to me. it is of the greatest -- it is ubiquitous and it has enterprise. david: where do we see that manifested in the real economy? jim: interest rates are prices,

and people instead of saying interest rates at prices, they would begin to think about the errors of price control. the fed does not control all interest rates by no means, but it administers many, and it exerts a kind of body english to various markets, so it is in the administering prices at a proper capital system that would be discovered in the marketplace. david: if that were to happen in this country now, suppose janet yellen followed your advice, where would interest rates be? time,ver a long sweep of probably between 5% and 6%. that shows you how far we are from the average. i think that janet yellen and the fed have wrist their market -- have risked their market. i think the next rate would be to reduce rates and not raise them. you ask where rates ought to be,

i am in a poor position to tell you where they should be, but it seems to me that if i were the fed, that will not happen, david, and i would say henceforth, we are going to do less. presence iness of a the marketplace. if we knew by our first, last and middle name the life story of a baseball on fire, we would think less of the game of baseball. you do not want the umpire to be in the spotlight. our very reactivation with the fed than miss yellen, a very nice person, shows you how far we have strayed from the true path. alix: that was jim grant, founder of grant interest rate observer, speaking earlier on bloomberg. breaking news, the democrats have ended their sit-and as paul ryan rejects the gun vote. let's go to mark crumpton for details. mark: as you mentioned a moment

ago, this was an unprecedented action by house democrats. they were demanding votes on gun control legislation. this in the wake of that filibuster last week from senator chris murphy of connecticut. he made reference to what had where somethe town young schoolchildren were shot to death and killed in the massacre there. also, because john lewis, one of the veterans of the house and one of the veterans of the civil , yesterday,ent demanding that the house in his words "to its job, let us do our work," so that sit-and officially ended by democrats. alix: thank you. much more coming up on bloomberg. this is "bloomberg markets." ♪

scarlet: you are watching "bloomberg markets." i am scarlet fu. alix: i am alix steel. scarlet: let's head to the desk where we had eyes on market movers. julie: and i saying this right? we heard from the ceo and shares are doing quite well. one of the better traded ipos that we have had as of late. the company selling 10 million shares at $15 a piece and that was above the range rejected. andmaker of different apps also cloud-based services, soap it is trading quite well on its first day of trading. we areum another company watching. here the results are not so good stock wise, shares down 9%. the company is doing a 1.60 billion dollar debt exchange and it will exchange non-convertible as well as comfortable notes into new mandatory convertible

notes. they are mandatory because you have to convert them into shares, and 4% is going to be converted every single day from june 23 two the subsequent 25 is why sessions, so that we are seeing pressure on the stock today. finally, looking not hot ash and fertilizer producers today. if industries are all trading higher and this is after we reported that india is and that mightg signal that there is recovery in the market for potash this year and seeing big gains in some of these potash makers as a result. scarlet: thank you. it is time for the bloomberg business flash, look at some of the biggest business stories in the news right now. --. of america will pay 34 millions of dollars and they failed to disclose certain

costs, and the bank is paying 1400 $15 million to settle the case and another 15 million to resolve a separate probe by the sec and financial industry financial regulatory authority. will pay owners of to 7000 dollars and has agreed to a grant program to offset air pollution. it all stems from a $10 billion settlement be negotiated for submission to federal judge and that comes next week. towill provide cash payments $7,000 depending on the vehicle's age and other factors. scarlet: changes could be on the horizon at the world's biggest shipping company. they are changing ceos. the chairman says a number of options are on the table, including their operations. sk has not hired any bank to adviser during this process get. that alix: is the bloomberg business flash update.

exclusive an interview with linkedin cofounder reid hoffman and his thoughts on microsoft purchase of his company and the future of technology. this is "bloomberg markets." ♪

this is "bloomberg markets." i am scarlet fu. alix: i am alix steel. microsoft announced they were buying linkedin for $26 billion in cash. scarlet: clinton chairman and cofounder -- linkedin cofounder reid hoffman is clive at the global entrepreneur summit with an interview with emily chang. emily: hey, hewitt reid hoffman, who just got off stage after giving a fabulous speech. great to have you back here. reid: great to be here. obama has donet

this summit not for a few years and you travel a lot. how successful has the white house in an exporting entrepreneurship and an american brand of entrepreneurship? and it cannk good always be better, but he did the first global entrepreneurship summit in 2010. i think part of the thing is what does america help the whole with? vr and entrepreneurial country, where potentially the first of the start of countries, where it is, ok, now we are world order, creating a new one, and i think it is good to take that position. i think what they are doing is saying, this is what america is about and here's how we form relationships with you, our culture with their country because we help your entrepreneur's be better for whatever we can possibly get we learn from you, too. emily: you joked that president

obama will go off and start his company, which may be the case. he told bloomberg businessweek you would be a good entrepreneur. reid: he would. emily: what does government need to do? reid: two parts, one of the classic, role of law, ease of formulating business, ease of doing investment, ease of getting customers, getting off the ground, reliability of culture. and then also kind of an ability to provide enough of an at that it is a risky thing, -- other f a net, that is a risky thing, so make it totally like it is not death if you hit the ground and you can recover and play again. in more detail, it is building networks and helping them form. it is part of what this summit is about, part of what creates companies and part of what makes silicon valley where because we have networks of talent, customers, capital. those are the things that amplify on chipping in russia.

emily: you are part of a group business leaders that endorsed hillary clinton, including warren buffett, eric schmidt, why hillary and why now? reid: i think hillary has a great track record and history of experience. almost the most prepared candidate ever for the job. she cares a lot about entrepreneurship, innovation, middle-class, so she says come how do we put these things together and make that work? which she has some, unlike maybe other people -- [laughter] are actually in fact good policies for actually trading the future -- creating the future we want to be in. emily: why are you not concerned about the power of trump? reid: i am concerned. i think that the government is not the reality show. i think the question is about global connection and it is in fact one of the things that creates good business.

we need to mention that creates a stronger middle class great i understand people feel threatened by global connection, but all this entrepreneurship is created by immigrants. we want these immigrants to create these businesses, jobs. americans get jobs, it is really important. i think hillary is the pro-business candidate terry and think that the question about what we are seeing with kind of trump's -- call it social media populism -- is actually not going to create the future that we want and that is why think it is important. emily: does trump then what the president has built when it comes to on to ownership in silicon valley? i think entrepreneurship is not building walls. to bar off the pope's comments, it is building bridges. it is making the right connections, building alliances, being partners with people.

for example, we are a country of immigrants. we are all immigrants, well, think it of us, so i is good to honor that and respect that, and that is what makes america great. emily: the company you spent more than one decade building, linked in selling to microsoft for $26 billion. that has surprised on most everyone in silicon valley. curious from your side, how did this happen? in the first month after we launched linkedin, when i was talking with my cofounders, we said, what would be the dream thing? we said innovation and outlook. [laughter] thing, to be the where people are working, connecting and communicating with people, and it has always been our intent to get more toward the daily work practice. we do a lot of things on news, information, finding partners, jobs, and we wanted to get there.

considered very thoughtful conversations. you have microsoft, the world leader in institutional for id ofty, the wide range, some of it should be useful. imagine an artificial intelligence career assistant saying, you should learn this, look at this and that would be useful. we do not have the ability to build that and microsoft has great a.i. technology and how should be go direct individuals? how should we help individuals be productive, not just in their day but their career? cat is linked in, and you have this very natural synergy between the companies. emily: this must have been emotional for you. this is your baby and you have been building it for so long. but was it like emotionally to make that decision and let go in a way? reid: the fortunate thing for me is i have always -- the mission

is what matters carry that is the reason why i have hired ceos and -- mission is what matters. that is the reason why i have hired ceos and to me, it has always been in service to the mission. of course, it is a big change, kids going off to college, it is a big deal, but the mission is what matters, how you make every individual more connected in order to be successful and productive. that is what matters and everything else secondary. emily: $26 billion, the second-biggest tech deal in history but less than what linkedin was trading at before. did you worry that it was honorable? vulnerable? reid: i think it was trading at more, but there is always some former ability. view chart strategy outside -- upside and downside and you pay

attention to downside, but we do and we will continue it he could as we are under the assumption as subsidiary and we still have a bunch of plans and we are still going to do those plans. it is much more of a question of when i looked at how do you throw link in and make it more impactful -- how do you grow linkedin, how do we could more impactful? emily: do you see the fates of tech m&a happening in the aftermath of this? whether or not it is because of this, do you see more of that? reid: i think it is likely that folks will make some -- some folks will make decisions to us because when you say, ok, what is the best way to accomplish my mission? it i aligned that with other assets really good and i'll line with other business models, therefore, i can amplify those and amplify the thing i am doing on my mission, when you get comes muchs, that

more natural. mission folks do not go, i feel it is what makes it important but it is the mission that makes it important. emily: there has been a lot of talk about twitter. twitter is now the only other public social network, aside just --s book, is it aside from facebook, is it hard to beat the social network? do you see twitter selling as well? reid: i have no inside information on this to be clear, but i think it is unknown. twitter plays a really critical function in what is happening right now and the ability to aggregate that information. when you're at that mid-stage size, which is you are kind of in the 10 billion digits, there is actually a way pressure to get bigger or smaller, so it has to go through that kind of turbulence and that is challenging. it is a great product. i think he is a wonderful ceo. i think it has prospect, but i

think it could go either way. emily: so what you see in the next year when it comes to silicon valley, we talk about valuation and we have seen a big holdup in ipo's, we are seeing a pickup potential in m&a, what is the next year hold for us? reid: i think there will be some more m&a and i also think there will be people tend to jump to the new trend and say, the new trend is going to win. i think we are still playing through mobile phones, networks, data,ta or human index site think all of that is still playing. artificial intelligence will amplify that, and i think the global trends by which there are global footprints in these companies will also be intensifying. i think you will see more of that. at greylock, we invested networks so we are always looking for the next one. they say, all the networks and marketplaces are done.

i guarantee in the next 10 years there will be an new interesting network and marketplace used. that may be starting right now at this conference, certain you are always looking for the spirit emily: do you think there's more innovation in social networking? reid: for sure. emily: the way they raise billions of dollars is by not spending but pausing in testing, what has happened? is activeure capital management and part of active management is, is now a good time to be spending a lot of money? if you do not see the clear text trend or clear companies, part of what your lps pay you for is to wait. it is paradoxical, but he will need to make the good investments and they do not want you to just invest in 2016. example, at greylock, we don't have a particular time frame. we invest into we think we have a good what folio could basket and delete race the next fund. i do not think that is a

challenge at all. i think it is part of the wisdom of the market. emily: what is happening with in companies right now? you said there was a pause in hiring. said people were getting laid off, is there a reckoning happening? is iti think what happens is not a smooth curve with these entrepreneurial bubbles. that means that there are corrections. corrections on company sales, sometimes they resize, and that is part of planning for long-term. that is part of, we over anticipated how fast next year would be and we will correct. that is part of what makes it hard and part of good business judgment. famed reid hoffman, chaparro capitalist, great to have you here. -- famed entrepreneurial capitalist, great to have you here. back to you. thelet: let's start with headlines on bloomberg first word news. we will check in with mark

crumpton. citizens today are voting in a referendum on the country's membership in the european union. prime minister david cameron was among those casting ballots. u.k. law prevents us from reporting on voting or discussion of referendum issues while the polls are open, but we will be following all the action as those results come in. special coverage against at 5:00 p.m. new york time and 10:00 p.m. in london. a man shot and killed by an arm to man shot and killed by police in germany. authorities confront the suspect was a shooting during a televised statement, adding that no one else was injured. german media reports say at least 25 people were hit right pepper spray during that standoff between the alleged assailant and police. senators marco rubio of florida and bernie sanders of vermont are the most popular choices for vice president. this is according to a new poll

from monmouth university. 50 percent of other cited voters say they are more likely to vote for hillary clinton if sanders is the running mate. 27% are more likely to vote for donald trump if senator rubio is his running mate. authorities are spotting to a southern california pipeline spill that has released 700 to nearly 30,000 gallons of crude oil. firefighters are trying to prevent the oil from reaching a beach in ventura county. just over a year ago, coastal pipeline in nearby santa barbara county league to more than 125,000 gallons of oil. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: news from the oil patch that might not be good. the southwest economy report shows energy-related loan losses

are on the rise. among the problems, hedges are less effective the longer prices stay low. pressure ase facing the cash flows get stretched. scarlet: tracy wrote about the report for bloomberg news and joins us on phone from abu dhabi. persistent issue. to what extent have regulators focused on it? know thate, we regulators of been concerned about credit markets for some time, but specifically, they have looked at things like commercial real estate, leveraged loans. to some extent, commercial and industrial lending, which is the loans tendat energy to fall under, has kind of gone under the radar. but perhaps things are starting to change. we saw the office of the comptroller, the currency regulator in march, suggest a new way for banks to value

accounts for the energy loans in their portfolio. they said that from now on, they will have to take into account the entire debt profile of the borrower work. in other words, how able they are to repay their debt, instead of just valuing these loans on the basis of the underlying collateral. that could put some more on these energy loans going forward. slix: we have seen me cni loan moving altogether. what have you seen in terms of the loan performance? tracy: this is the interesting thing about the dallas fed report. this is the heart of shale country, and it is currently saying we have seen quite a significant uptick in noncurrent cni loans, loans that are basically past-due. in the dallas fed district have grown to become the igo single component of past

due loans of the region spanks, -- banks,ng rigid outstripping commercial real estate for the first time since 2005. the pace of the amount of loans seems to be clicking -- quickening. the question is whether or not it is indicative of these loan losses reaching the peak of whether this is the beginning of something more significant. the big thing to watch going forward is oil prices per but there is contention, because you could see oil prices actually gain around $50 a barrel or recover. it would be good for shale producers and lenders. but to some extent, it means if we saw oil fall again, that could end up affecting recovery values on those loans, if the shale companies are able to sort of survive for another two to three years but not really thrive. scarlet: something we will be watching. thank you for joining us by

phone from abu dhabi. alix: for more on what is going on in the trenches, want to bring in paul murphy, president whicho of cadence bank, is in houston, that lends to oil and gas companies. at wegreat to see you heard tracy talk about the increase in his energy loans, the fact that they are underperforming. you are in the trenches. what do you see? paul: i think tracy is ripe we are -- i think tracy is right. there is a lot of stress for energy are a worse, and reconstruction is underway. again company with good assets, and nine-with process, and the closing was delayed three different times per they ultimately got the deal closed, got a restructuring or they went from a nonperforming loan to a past loan. so a lot of good work is being done. alix: banks do not want the oil companies to default on those loans, so they will help them appeared but two results could

happen from the dallas study. one, more loans could be downgraded or banks like yourself will have to raise more money and set it aside. what do you think? paul: i think we will continue to see reserves increasing for the industry for another couple quarters. i think we are deep enough into the process now we are most of the bad news has been recognized. i agree with tracy, a lot of it depends on prices. if we see improvement, it will get better quickly. will get erodes, it more challenging. scarlet: we know european banks are scaling back lending to the energy sector and selling off energy loans. do you have plans to do any of these things? if so, why, or perhaps, why not? paul: we are about 15% of our energy. it is in mainstream and -- it is midstream and doing fine. cycle, we're

sticking with it. we have a lot of great borrowers, but admittedly, it is tough. one private equity firm to the survey and found banks are not service oilfield exposure at this point. that is tough is hit. are you lending? recently approved a new loan, good management team, good set of assets. we have a very high bar currently. open might be a strong word, but we're not closed. alix: fair. after the downturn, do you feel like you will go back to the kind of lending you might have seen a few years ago or does that high bar restriction stay? paul: our underwriting renteria hasnot changed -- criteria not changed significantly through the cycle. the process is done every six months.

i think we will go back and examine some of the assumptions, underlying premises for our underwriting, and there could be some tightening up there. fundamental approach is good and has held together reasonably well. scarlet: oil prices went to about $26 a barrel in february and have come back a long way, currently just under $50. why isn't the rebound in oil prices helping? paul: it is helping. energy are hours during restructuring are held significantly by this higher level of pricing. i think the same is true for oilfield service. while you have not seen increase in activity, but they have reason to be optimistic about more activity. if prices can move up another notch, it would be huge for these companies in completing their restructuring. restructuring bankruptcies, where are we in this cycle? paul: the question. i think the next since months

will be the prime time for restructurings. most companies would prefer to restructure outside of bankruptcy, do a collaborative deal. in some places that is not possible. i am a freight it is coming too late for some companies that are overleveraged. some bankruptcies will be unavoidable. scarlet: in march, the government issued new guidance on how banks should lend to oil and gas companies. what has been the impact to you? paul: yeah, it has been the reason why our nonperforming loans increased. regulatory agencies issued the guidance and look at total leverage of the company. banks have looked at the senior secure portion. if it was covered with collateral, we had a more favorable grade on it. that is throughout the industry. i will remind viewers that a loan with aoan is a well-defined weakness.

so there are a lot of loans that meet the classification. it does not mean it will be a charge off or that ultimate credit exposure exists on that loan, but we see a big increase in classified loans. alix: we have spoken to private equity guys, and they are putting money to work in the energy sector. in the next cycle, do you expect energy companies to come to you first must and regulate be cheaper but maybe more volatile. or do you expect them to go to the p/e guys? paul: really good question. the concern we have is that cfo's of the world will be less available with the bank facilities, because it is like a margin loan. you have to redetermine every six months. so i think we will be a smaller percentage of the capital stack in the future for emp companies, but i still think there is a place for us. we're less expensive and try to work with our clients. what i would not be surprised to see leverage of energy companies

being less leveraged going forward than they have been up until this point. alix: such a great perspective here thank you, paul murphy, president of cadence bank. helpful getting his first-hand perspective. coming up, a look at how the lack of affordable starter homes is wreaking havoc on housing. ♪

scarlet: this is bloomberg markets. alix: is go to julie hyman who is looking at the risk on rally.

this morning on macy's. remember, terry lundgren has been at the company for more than a decade, but he is going to be leaving as ceo after the first quarter of 2017, when president jeff jeanette will take on the role. lundgren will remain an advisor. this is a big change at macy's since he is been there for so long. shareholders seem ok with it for the day. shares of by about 2%. look at the bloomberg here for what the stock has seen under and he becameure ceo back in 2003 when it was still called federate. it changed to macy's in 2007. the stock has rallied quite a bit since then. , and thena recession more recently, the overall downturn in retail. here are same-store sales on the bottom, negative stretch during recession, and a more recent negative stretch.

best inas once viewed class within the departments for industry but has suffered from headwinds facing that industry overall. it has also faced pressure from investors in order to monetize some of its real estate assets. lundgren has not acted on much of that, so some analysts say perhaps his departure might have something to do with that. barnes & noble, as well, those shares up by 10%. the company out with earnings and the business update during investor day. earnings last quarter missed estimates, but the company says comparable sales this year will be unchanged to up 1%. it said that nook losses will be cut to about $10 million in fiscal 2018. the company says its balance sheet is healthier. a couple other gainers. we have a couple analyst upgrades affecting turner, a health care services company.

suntrust raising its rating to buy, singh estimates are down to more achievable level and the company will meet bookings and earnings expectations. .elp raising it was upgraded at needham. the analysts of their says the company's getting better at paying attention to account management and catering to advertisers. both of those stocks benefiting from those calls. scarlet: thank you. conflicting reports on the state of the housing market, seemingly conflicting reports. sales of new homes in the u.s. declining last month from a type in your high. sales of existing homes reaching their highest in nine years. joining us is trulia chief economist ralph mclachlan. one month does not a trend make, but there is a broader narrative. what is it? ralph: existing home sales are up and new home cells are down.

existing home sales are up, primarily because inventory is tight and there is demand to buy homes. cells is down a little bit -- new home sales is dell obit from april, but april is a really big month. without april, may was the month with the highest number of new home sales in the last year. so the housing market is doing well. we are looking at inventory now. that is the story. inventory is down. lack of how does this existing inventory compare with previous cycles? ralph: it is down quite a bit, down about 40% over the last four years, unprecedented. buyers, itarter home is down, and that is the segment of the market we are counting on to lead the housing market to a full recovery. a lot of young persons out there want to buy homes to a saving of for a down payment is difficult, and the most important thing they are telling us is actually

finding a home. so we are getting validation from buyers about how tricky it something. alix: yes, just come to brooklyn. how much construction do you think will be needed to help first home buyers? ralph: that only satisfies about home sales in any given month. it is really existing homes we are tracking. a couple reasons why it may be down first order homes, investors were buying these up in 2010 and 2011 because they were steals. as they are being kept renters. and there is still a large share of homes underwater, particularly starter homes, and that is keeping investors or those that do not own a home from selling them, because they do not want to take that loss. your firstu buy house, and a couple years later you feel good and by your second house. what is the feeling when it comes to inventory for trading

out a house? ralph: it is gridlock. there may be existing homeowners that weathered the recession fairly well, and they may be looking to find their next home, their trade up home or premium home, and since inventory is down, it is difficult. instead of putting their house on the market, they are to stay and renovate. scarlet: and it is the spring selling season. it turns out that the medium purchase price of u.s. existing -- it is circled here, and you can see the seasonal pattern. families with kids are looking at bigger homes or they want the start of ae new school year. you see these higher highs in the price of the medium home sales for sale. at what stage of a housing cycle does limited inventory usually appear, the middle, the end? limited amatory is at the bottom end.

it dropped by about 12% last year. trade up inventory is down quite a bit. premium inventory is only down by about 1%. if you are looking for that premium home, it is probably not a bad time to buy. but the starter home level is difficult. aarlet: you have identified couple markets where supply is not the issue, including charleston and columbia, south carolina. ralph: yes, we have been looking at this for a long time. we have identified 20 markets were starter home inventory is down the prices are either flight -- flat or down, as well. moreose markets, it is demand. demand has fallen at a higher rate than inventory. there are other places, like oakland, california, where a starter home buyer will have to spend 8% or 10% more of their income. a lot of that is spillover demand from san francisco. alix: the fed noted housing has

approved, but it is really new home sales that is the juicy part when it comes to gdp. construction, jobs. talk about the nuances. ralph: nuances are very important. it is not just providing homes for someone looking tob buy them. -- spilloverll effects from new housing construction. they also had to fill up new homes with staff are there to purchase refrigerators, dads. scarlet: home depot, lowe's. ralph: exactly. it is very important to watch. alix: if you're my husband, you purchase antique typewriters for no reason. thank you, ralph mclachlan from trulia. scarlet: u.s. secretary state john kerry on the intersection of technology from the summit am annexed. ♪

alix: this is bloomberg markets. more highlights from the global entrepreneurship summit. and we chang set down with john kerry at the summit -- emily chang that down with john kerry to talk about the intersection of democracy and technology. kerry: it can be, certainly, in terms of communication and speed, the freedom to invest, the nature of risk taking tends to want openness, that i think it works more effectively, but it is not exclusive to that. there are ranging capitalist enterprises going on in a authoritarian governments, and countries with authoritarian

governments. china is an example. it is a one-party system, and authoritarian government, and it is competing around the world. what i think china has them challenges because of its internet policy and the nature of risk taking there in the nature of partnerships required in some things. there isomething among that. emily: mark zuckerberg was recently photographed with a shot of his laptop, but you can see in the back on that he had tape over the camera and over the microphone. what does that say about the state of cyber security in this world? secretary kerry: well, cyber security is a challenge. if you are not aware of what you are doing and saying, telephone can be a listening device as well as a communications device, and then a camera. in the camera can work different ways. so people obviously need to be

aware. we are working very hard with countries to establish the norms , and we have rules of the road with respect to cyber. we made progress with china to some degree. we're still working on implementation. but it is a challenge, and in government, we're particularly sensitized and careful. that was u.s. secretary of state john kerry speaking to emily chang. coming up, democratic congas meant jared huffman will join us to discuss the 25-hour set-in on capitol hill. scarlet: this is bloomberg markets. ♪

e welcome to bloomberg markets.

from world headquarters in new york, i am david gura. vonnie: and i vonnie quinn. david: u.k. vote is going to the polls to cast their votes on eu membership. we will be following all the action throughout the day, special coverage. vonnie: warning signs from the fed. 2% gdp growth. it appears to be speaking the market. congressional democrats hold a sit-in to demand gun control legislation, and across the street, the supreme or devotes a for affirmative action and against president obama's immigration laws. markets close in two hours. let's get the latest from remy.