demanded.is as banks >> the german chancellor warns the u.k. should have no illusions about life outside of the eu. jonathan: for viewers worldwide, a warm welcome to "bloomberg ." with davidn ferro westin and alix steel. a couple rough days. david: everything is snapping back this morning after a really rough ride over the last two sessions. we have some great guests as we continue to cover the aftermath of brexit. is blackrock'ss

the i/o income, rick rider -- rick rieder. cuban in aup, mark bloomberg exclusive. it is an attribute you don't want to miss. three words are my favorite for today, dead cat bounce. jonathan: futures firmer up by one full percentage point if you looking at the s&p 500. in london, a firm session, up high 2.4%. stoxx 600 got pounded friday, monday, we are up by 2.7% at the moment. i will get to the other asset classes for you. the first post brexit day of gains for sterling .8% after the biggest two-day drop on record for the pound. looking at yields creeping higher, reflecting sentiment today.

up for basis points on a 10 year yields that is low, down 1.47% on the u.s. tenure. alix: never would have thought you would have seen that in march. let's go around the world and check in on the bloomberg team for in-depth coverage of the top stories. we have complete coverage on the latest brexit and market developments with live reports in london, brussels, berlin, and portugal. jonathan: let's bring in guy johnson in the city of london. some stability. should we call it that for now? guy: yes, we're coming back. if you look at the five-day chart, you can see these are very small bounces after very big selling. let's talk about sterling and the gilt market. ex-cats.ing about it is bouncing up a little bit, but only a little bit. the story is doing the rounds in the market, we have been taking this theory around.

the market may start to get comfortable with the idea that there is something more going on here than the u.k. leaving the eu. let's take a look at the gilt market as well, it is being sold up a little bit. i was looking at global advisories early on, the indication is there is so much priced in in terms of policy response, the market is going to get nervous. maybe we don't get such a good policy response story, and then you take a look at stocks on the move. the banks are being hammered. barclays credit back a little bit. unicredit down 22.2%, the miners are selling off a little bit, but gold is down. jonathan: the conversation we are going to have is whether bond vigilantes, they can no longer be because of central banks with a structural shift globally. his bank vigilante the new bond vigilante? is that will get the politicians together to get to some kind of conclusion? a point you can

squeeze, the eu relies so much on the bank channel. mario draghi has tried to fix it, and he hasn't. maybe this is where the market puts the pressure on some sort of resolution. jonathan: guy johnson in london. much more throughout the program. , want to bring in anna edwards you been camping down westminster, and the city right here in london, the focus, the uncertainty around the banks is striking. where are we? anna: we talk about politics in europe, and it often matters little to market action. now the politics matters. it's an amazing turn of events. the key concern for the banking sector in london -- the big focus it is on past boarding rights. rights.orting i caught up with the mayor of london and asked him about that, must take backou

control. he wants more control for london to set its own rules. camp, wantsremain to go along with the results of the referendum. he is very key for london to have a seat at the table. london does well, the country does well. that is why is it important for a seat around the negotiating table. london, to give upon -- the pun, to take back control. wanted toleave camp take back control. but it is early days. jonathan: thank you. david, so much uncertainty in the banks. don't think there is going to be a resolution for a long time. david: i am afraid that uncertainty may transfer right across the channel. todayders begin a summit following the brexit vote, ryan chilcote joins us live from brussels.

as is the first opportunity for mr. cameron to confront face-to-face his counterparts. they may be awkward, but realistically, what can expect to a cobbler and these two days? ryan: what they can expect to accomplish -- what can they expect to accomplish in these two days? ryan: they can expect to accomplish the airing of their views, but not much more. friday, in this divorce situation, they may the phone call to the european union saying we intend to move out and file for divorce. they have not done either. the eu says we're going to get together on tuesday anyways, let's sit down over dinner and discuss this. that is what's going to happen in brussels. david cameron across the table from the other 27 eu leaders, who were all going to want to know what is next. answer, heve that has already said he is not going to invoke article 50 and begin the official negotiations. he is not going to do it ever, it is going to be his successor.

from the other side of the table, the leader will be angela she made clear earlier today when speaking to the german parliament that she intends to play hardball. she will give the brits some time to make up their mind exactly how they want to move forward. she will wait with the rest of the eu for the next prime minister. one thing is clear, she told parliamentarians in germany today that britain should not delude itself, it is going to have to make some serious concessions if he wants to do business with the rest of the european union in the future. there won't be any official negotiations before the next prime minister shows up. david: that is ryan chilcote reporting live from brussels. alix: online merkel talking about -- angela merkel talking about the shock in brussels, that seems to be ahead of her meeting with david cameron. caroline hyde joins us. it's fascinating. she is talking tough.

for the first time, she has been the voice of calm and reasoned, but speaking to her own german parliamentarians, she is saying u.k., do not delude yourself about the necessary decisions you're going to have to make. article 50, it is up to the united kingdom to start the firing gun. if you want to start negotiating on the new relationship, if you want to breed calm into the vigilantes that john was just talking about, you will have to sit down at the negotiating table. to do that, you need to trigger article 50. nothing will be discussed informally, she said. when you get down to the negotiation, that isn't going to be easy. she talks of cherry picking, not being a principal they will abide by. whoever wants to leave this family, this family of europe, cannot expect to move away from the obligations that keep all the privileges. that is talking to the leave

campaigners. they can't keep the same trade perks, you cannot have business as usual if you then put up barriers to the eu citizens that are going to come within your country. clearly, talking tough. you cannot, britain, have your cake and eat it is the message coming from angela merkel. she is trying to rally the 27 other countries behind her, talking of the divergence that has been brewing. france and italy have been speed inhe need for these negotiations, worried about the domino other affect -- the domino effect. she wants to raise the unity. alix: thank you, caroline hyde, from berlin. david: we heard from central bank president mario draghi, speaking in portugal. elliott, he doesn't have his

counterparts from europe or the eu. what he had to say? elliott: what he said was less interesting than what he did say. he didn't want to mention -- what he didn't say. he didn't mention brexit even wants. everyone was expecting him to do so. all we know for mario draghi is that he was sad about the u.k. vote and that the european central bank stands ready to reduce liquidity if necessary. perhaps he was waiting for the ecb leaders meeting, sorry, the european union leaders meeting to take place in brussels, which is where he has left and is heading towards right now. the factd to focus on that from his perspective, he feels that policymakers should be working better together. draghi: we may not need formal coordination of policies, but we can benefit from alignment to policies. what i mean by alignment is a

shared diagnosis of the root causes of the challenges that affect us all. to a shared commitment founder domestic policies on that diagnosis. this printable challenges were low productivity and a high output gap. he is also seeing not so sad, because he won last night. david: certainly, jonathan is excited about that. elliott gotkine, reporting from portugal. jonathan: i was on air when the second goal went in. i had to stay calm. coming up, brexit aftershocks. $4 trillion from global equities, can we finally be finding a little stability? more "," is next. ♪

david: this is "bloomberg ," i'm david weston. we turned a julie hyman for a look at what's going on in the markets. want to talk about news that was just breaking in the last 15 minutes or so, job cuts at dow chemical. the company is cutting about 2500 jobs, and it sees high charges as a result. this is a result of its takeover of dow corning, which is a joint venture between it and corning. it announced in december it will be requiring that, just about 4% of the company's global workforce. dow is in the process of merging with dupont. both of these stocks were downgraded this morning at jpmorgan, both trading a little bit higher.

late breaking news this morning, lending club is now getting a permanent ceo, scott sanborn. he has been acting ceo since last month. and he has been there since about six years. lending club is also going to be cutting 179 employees to cope with the decline in loan volume it has been seeing following the departure. and vw, according to people ,amiliar with the situation said the cost to settle lawsuits tied to its reading of emissions test has jumped to more than $15 billion. the prior estimate with $10 billion. we'll be hearing from the epa and other federal officials at 9:30 a.m. they will be giving a press conference. jonathan: julie, thank you. great work on the markets. joining us is howard ward, great to have you with us on the program. we are going to begin with brexit. when i want to explore with you is what many people to consider

a bit of a paradigm shift after friday, where class get -- classic risk on/risk off symbols are not there. exclusion of saying the u.k. parliament would overrule the vote to leave, what would be the risk on signal that really turns this market around? mr. ward: i don't think parliament is going to go against the wishes of the people of the u.k. i think this is a done deal. secondly, i think we have had a lot of jumping to conclusions and can testify as an -- izing in the community. i don't think that is a good way to be investor. when one takes an analytical look at this, saying as the u.s. investor, the united states exports to the united kingdom represent a whopping 0.3% of gdp. the united states exports to the eurozone represent 1.4% of our

gdp, which is amazing, considering the economic unit of the eurozone is comparable to the united states in size. concerned,he u.s. is i hate to say it, but it is a sort of nonevent, economically. we are still at 2% growth gdp economy, perhaps next year with rising profits and a strong consumer, good balance sheets and probably continued rising stock prices. this would be an opportunity. we lost about half a multiple point, that's a reset, and uncertainty premium that the market has now demanded. so be it. there is a lot of uncertainty. that brings me to the next point, which is this is uncharted territory. if anybody tells you they know exactly how this is going to play out, they don't know what they don't know. we have been through this before. i do think when the dust settles, we're going to be just fine. i think the u.k. will have a rest -- a rough adjustment per iod, but it may be a good thing for the u.k.

i don't think that case has been made enough in the press, that this is not necessarily all gloom and doom for the u.k. look at the decline in the pound, that hurts the purchasing power of the u.k. right now. however, u.k. exports should be very strong. --should all be poking booking trips to london for vacation. jonathan: i hope that is what happens, a lot of people are skeptical of exports, given the decline in the pound and responsive exports before. we are in a political vacuum, there's a lot of uncertainty. where it's playing quite clearly is the fx market. they are having the best two days since 2011, that may not matter to the economic figures you describe it. to the s&p 500, that does matter. do you expect that to continue? good point, you have 30% to 40% of s&p earnings that are generated abroad. the foreign profits of u.s. multinationals could get clipped here.

the change in the dollar has not been all that dramatic in the last few days, relative to the 20% rise in the dollar that we had over the previous two years. we are still below the peak in the dollar of a few months ago. the dollar could strengthen a little further, but i would be hesitant to jump to that confute -- that conclusion right now. , as we bit of a headwind surface, that is the strong dollar. domestically oriented companies should be somewhat sheltered from that. i don't think the earnings that will appear will change dramatically, and i think we are still looking towards a 10% increase in operating profits for next year. it is critical for the market ends this year. to illustrate howard's point, take a look at the bloomberg. this is the u.s. corporate profit index. you can see the stronger dollar damage, right there, corporate profits continuing to fall.

david: that raises the broader point that it may not be a material part of the u.s. economy, the u.k. or even europe, but we are in a global economy that was growing at 3% or sub 3%, flirting with technical recession. we did not eat anything shifting at all, and something like this can affect u.s. exports and s&p. are you worried about what this does to overall growth? mr. ward: no, because we are going to have even more central-bank accommodation at. accommodationk than before. central banks are on hold, more inclined to tease it tighten. the fed is probably not going to tighten at all this year. lower ranks, more central-bank accommodation. i think the consumer is all-important, and i think the economy -- it has been a slow growth economy for a long time. in fact, shifting gears for just a minute, if you look at the report card of the european union and the growth in europe for the past 20 years -- is that

the best we can do? is that the optimal risk, sub 2%? david: coming up next, you will give us the top extra opportunities in the wake of brexit. more "," is coming up next. ♪

alix: this is "bloomberg ," i'm alix steel. it's time to balm fish -- bottom fish. howard ward is still with us. you brought three stock picks. swap got hit very hard over the past three days, -- charles schwab got hit very hard over the past three days. what is your case for buying? it's the best large-cap growth play and financial service, as the stock has been hammered in the last couple of days. it has to do with expectations for lower rates for a longer period of time. they are growing nonetheless,

comparisons are against the low rate environment. $30 vacuuming up about billion, $35 billion of assets every quarter. you have to by schwab when he gets hammered. it doesn't stay down. david: we just got to notice the whirlpool came out and said only 5% of business is tied up in the u.k.. why do you like whirlpool? mr. ward: like housing. , we continuing to recover benefit from even lower rates today. whirlpool is selling a less than 10 times earning. alix: whirlpool has had a big run since february, not counting the selloff they got sucked into. housing play has been out there for a while. mr. ward: it's come down quite a bit from the peak, is under 10 times forward earnings, nearly 20% growth. a good place to be. david: allergan, tell us what you like elegant health care? -- allergan health care? for botox,est known

became well-known after the treasury department scuttled their deal with pfizer. you're looking at 20% less growth, 2017, 2018. 14 times forward earnings for that, $34 billion in cash in the next month or so in their deal to sell their generic business to teva. they are buying some growth with that money, a goodbye. david: are you concerned with risk??ory mr. ward: it's an ongoing headwind for pharma, the political talk about drug pricing. alix: howard, thank you. dan coats chief investment officer. he mentioned allergan, this week bloomberg is present in what we call focused on pharma, going deep on the global business of pharmaceuticals and biotechnology. they have a range of stories and analysis across everyone of

bloomberg's platforms. more on pharma as well as bloomberg.com/pharma. coming up, we have more "." we are talking energy and paying attention to the markets. jonathan: all attention on the markets, a little bit of stability and a rebound in market with the ftse 100 fire -- a little higher. points,futures up by 19 the ftse up by 2.4%, and the banks index of by two. the euro stoxx 600 bank index up by 2.64%. from london and new york, this is "bloomberg ." ♪ get ready for the rio olympic games

by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you? x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. jonathan: this is "bloomberg ," george osborne is speaking to business leaders at the times of london ceo summit. let's take a listen in. given muchrne: i've

of my adult life to public service, this is the biggest political challenge the country has faced in my lifetime. it would not be right for me to just walk away. how i can serve the conservative party is for the next leader to decide. so. >> we've heard from array of business leaders this morning about uncertainty and political instability. you have a massive policy challenge and the leadership elections to decide the next prime minister. is apeople really want quantity count on the great big question at the heart of where we go next, which is a single market. could you provide clarity on what you thought our relationship with a single market needed to be? very particularly this -- could you support an arrangement with

a single market, which is access rather than membership, but doesn't see the european government overseeing a, but doesn't and free movement? -- does not end free movement? george osborne: i know the business does not like uncertainty, and we have clarity and the results. it was a clear result. i don't think anyone can say that there was a low turnout. a large number of people voted, more than a general election. we have clarity about the result. now we need to arrive at clarity about the relationship of want with the european union. half the country was saying we don't want to leave and the other half of the country, and the politicians articulating the leave case had a whole range of different ideas about what their relationship should be. they were not united in that respect, they were united in saying we should leave, not united in what the new

relationship with our allies should be. i will be strongly arguing that we should try and maintain the closest possible economic ties, in terms of our access to the goods andket for our crucially our services and looking around this year, our financial services. be in going to negotiation, we're not going to be the only people sitting at the table at that negotiation. i should be our objective. which is set our minds to it. i think that your benefits enormously from the strength of the british economy, the second-largest economy in the continent. from the strength of our financial services. i think it's an enormous advantage to europe that one of the world's global financial centers is here in this continent. i think you have to be realistic, you think on the continent it's also really going

to pop up again in some other european capital. the challenge we are going to face is competitive pressure from non-european financial sectors. i think we can make that argument to the british people, essentially, if you interpret the referendum as people were aware of the economic benefits of the membership, but they had concerns about other aspects -- i don't think therefore, we should throw away those he, benefits or try and retain as many as possible. how we do that is going to be a subject of negotiation. obviously, i personally wouldn't want to see us leave a single market. i wouldn't want us to give up the financial services passport. how we achieve that in with the nature of the negotiation is, is going to unfold over the next couple of years. let's be honest, we are a few days after the results. to smoke is only begining clear from the battlefield.

>> [inaudible] there are many about,that were argued in terms of the costs of you membership -- of eu membership. the issues they raise about sovereignty and the like. we have to come to a collective agreement on what it is that we don't like, and what it is that we do like. i'm not saying it's complete with straightforward, that conversation. i can tell you why are -- where i'm coming from. at the heart of everything you want to achieve is economic security. jobs, they need bright futures. i've worked very hard with the people in this room to achieve that over the last six years, i don't want to throw it away. obviously, a message from the

regions came out of the vote as well, and a message from young people in the northern powerhouses. what does that look like as a plan, going forward, for how we act and listen to those regions? george oborne: one clear message was there were parts of our country who felt left behind. the reasons, only two years ago, i stood on the stage like this in manchester and said we needed to build up the northern powerhouses was to make sure that the whole country shares in our economic prosperity. in the last couple of years, this is a pretty short time frame the scheme of things, have agreements to elected mayors in great northern cities. we have central plans for transport investment, and we have made major commitments to new science facilities in the north of england and new

cultural facilities, and the like. all of that is designed to create an environment in which you, the private sector, fuel you want to invest more and build up the north and midland of this country. that, i am passionately committed to. we have to make that work now. i would say of anything, the referendum result is even more of an instruction to deliver that powerhouse and make it a reality for people. jenny, and then brent. that youllor, you said wouldn't want to back a candidate today, but you will have to make up your mind by thursday morning who you are going to go for. what will drive your decision? we would be about who is likely to win, or who has the best policies for the country? george oborne: i don't have to make a decision by thursday morning, though i agree, the clock is ticking.

the ballot is likely to be next week. the truth is, i want to see with the people who emerge as the candidates -- my colleagues -- have to say, and their answers some of these questions that you have been asking as well. it's been the nature of the conservative party that in the first four years that i was a member of parliament's we had four different leaders. we didn't have another leadership conference for 11 years. in all those leadership conferences, i ran the last leadership contest for david cameron. i ran his campaign. i havevious campaigns, backed winning and losing candidates. my advice to any member of parliament in my party is pick who you think is the best person for the job. how it's all game going to play out. you can see in the last two or three days, it moves very quickly.

start is toace to pick the person you think is the best person to be the prime minister. and when i said today that i was going to run his leadership campaign, we had six supporters, and we were universally told that we had absolutely no chance . and dare i mention it, there was a leader that said the david cameron should withdraw from the contest with dignity, because he was going to be humiliated. [laughter] not under the current editor, i must stress. asked -- you urge to business to speak out, and business did speak out in the end, quite well. where do you think business failed, and could have done better? one of my hunches is on immigration debate, could business have helped you make the more sophisticated case for immigration? to be honest, the

postmortem of why the country voted the way it did, from the perspective of someone who was arguing for remaining in the eu -- i think that is only starting to happen. i'm not sure where entirely -- we are entirely clear as a country why we made that decision. there is evidence that immigration was very prominent in the campaign, but equally, there was evidence that emerge subsequently that people filled in some way disenfranchised or lacked in economic empowerment. i don't think we should jump to any conclusions. what we know is they didn't want to be in the european union. it was the result of the referendum. we have to address that economic disenfranchisement, we clearly have to address concerns about immigration. what i would say to everyone in this room who campaigned passionately -- i want to thank you for putting your heads above the parapet for a remain vote.

you can't turn around five days later and say the people got it wrong it, we need to elect some new people. you can't do that. that would be wrong in every respect. we are proud to be part of this democracy, and we have to listen to the people and the result have given us. jonathan: that was chancellor george osborne speaking at the time ceo summit. you have the conservative party leadership contest coming up, he still is not ready to back another candidate for that. i think the bigger headline is the u.k. should maintain the closest possible ties with the single market. that really speaks to the amount of uncertainty and risk right now. it was a lack of unity on the leave campaign over what the relationship with the eu would look like coming out on the other side, if the u.k. did vote to leave the european union. that is what we have now. there will be a scale of what

people will want, the relationship they want with the eu. chancellor george osborne would like the closest possible ties with a single market. the difference in the u.k. government is they need to be .esolved nevermind the negotiations that will eventually happen between the u.k. and the eu. i want to bring in alix steel and david weston. that line is fascinating, he still wants the closest possible ties with a single market. how does that resolve itself in the coming months, nevermind the coming years? david: bearing in mind, it takes in a negotiation. the u.k. does not get to decide it, there's someone on the other side of the table in the eu and what they want that relationship to look like, which makes it more complicated. i want to bring in tom keene from surveillance radio, he is here for the morning must-read. he decided what are morning must-read would be today. picking up on jonathan's point,

i think we may be saw the beginnings of the negotiation with the eu. he is saying the u.k. economy is really important, not just for the u.k., but for europe. at the u.k. financial services are important. it's better if we do our best not to throw out that relationship. -- ihe was understand understand he was in front of elite business auiences, i am pressed on how everyone is talking their book. that is what i saw from the chancellor. i think there's a distinction -- that americans are starting to learn about this idea of euro federalism. what really struck me in the osborne comments, the clarity of the result. he barely touched on the people of england. it is a financial audience. you would think that the dialogue would shift here. i'm waiting for that shift to occur. a little bit, he talked about economic disenfranchisement. the idea that you need to have

social globalization, meaning you need to have a global society, we are interconnected. need to bee prophets fed back to the people, and that is not what has happened. morehink you would hear talk about how to have that transition effect really work. david: there's a difficulty pointed to -- we're not sure what the british people think. side, thereleave was a variety of points of view, even within the campaigners for leave about what that meant. tom: there not sure what they mean. tom:-- they are not sure what they mean. saysolivier blanc chard there is a little bit too much hysteria going on right now. you still have to hear that from the chancellor, where we going to be in one month? -- where are we going to be in one month? alix: right here. tom: what is the rhetorical

ballet of the united kingdom going to change? david: and of anyone knows, which is why the markets are reacting so far. the first thing is they have to pick a prime minister. tom: i agree, he did touch upon that. alix: the rhetoric to that is who is going to want to take the mantle and be the one responsible for triggering article 50? who's going to want to go down in history as making that trigger? tom: we will see, it will keep us occupied the summer. david: tom keene, joining us from surveillance radio. tune in for bloomberg surveillance radio with tom keene and michael mckee everyday of the week. alix: the brexit aftermath sinking its teeth into commodities, oil prices down about 5% in the past wk. despite today's relief rally, you still a stronger dollar and global growth spheres potentially calving upside. barclays think rises could fall to $40 in the third quarter.

toning us is the man who has put money to work in oil, rob thummel. he has $15 billion in assets in energy stocks. we heard earlier the ceo of saudi aramco saying or supplies to europe are not affected. it's not the supplies we are worried about, it has to be the demand factor. mr. thummel: global demand is really important. we are still in the sweet spot for oil prices, and demand is really strong. it was really strong last year, well above average. still well above average forecast of for this year. next year, it is forecasted to be continued higher than average. alix: what helped as the stabilization of the dollar and oil prices. both of those things totally going out the window. how do you put money into energy stocks right now? mr. thummel: a great place to put money right now is high-yield energy stocks. we have a five star rated fund

that invests in nlp and other energy of a structure stocks. when you look at where the ten-year treasury is at about 1.5% -- investors really need current income, and a great way to get it is through healthy dividend yields, nlp's and they favor high percent, 6% -- they paid 5%, 6% yield. stocks, haveat outstanding current income, and offer growth in that current income, which is our great opportunity for investors that are looking for better returns than 1.5% in a 10 year treasury. david: they went through a very rough patch, and are coming back. why should we be confident they won't go back down? mr. thummel: they were not all created equal. there have been winners and losers. the winners are the ones who are left. they are consistent, steady cash flows, generating the profits from transporting product through the pipelines, charging a fee.

withe that had issues commodity prices for the most part are really behind us right now. that is in the rear beam your. alix: we are looking forward. alix:-- we're looking forward. washout,saw a total they really underperformed in the broader energy sector, because retail guys fled. make the case for that when you have this event risk over your head. mr. thummel: they've come back and outperform the market this year. like i said, we really need to that havehe mlp's sustainable dividends. the winners are sustainable dividends, the losers had to cut or eliminate dividends. investors like current yield, we know the demand for current yield over extended cycle is probably going to increase. the key is sustainable yield, and those are the mlp's that are most successful. david: the key is demand.

when she worried the aftermath of brexit will lead -- why aren't you worried that the aftermath of the brexit will lead to global production? mr. thummel: the u.k. demand is about-- europe demand is 15% of total global demand. the demand drivers are asia, china, and india. we don't see that changing. if prices stay low, it's actually a good thing that commodity prices are low, a good thing for the world, it helps gdp grow around the world and can offset some of the impacts that brexit my result in. alix: rob, good to get your perspective. david: coming up, politics with mark cuban. the dallas average owner tells us what he think about presidential hopefuls hillary clinton and donald trump, with choice words for the republican presumptive nominee. ♪

alix: this is "bloomberg ," i'm alix steel in the green room. coming up, blackrock cio of fixed income rick rieder will join us on "bloomberg ." david: welcome back to "bloomberg ." i am david weston. mark cuban, owner of the dallas mavericks, weighs in on the trump campaign of bloomberg story johnson in l.a. irrelevant. for my taxes, when it is tax time, there's a big living room table i have, and they're big stacks around the table. i look at the signature pages,

it takes me 45 minutes to sign all that stuff. i went and looked, in any previous years to this last one, i could not of told you how much i made or how much was on my taxes. it is certainly not a reflection of net worth. i don't think it's a reflection of how much anybody gives to charity or anything in any one given year, it may be up or down. i don't care if they release their taxes. >> why is not doing it? mr. cuban: my guess is that it may have been a down year for him. depending on what your sources of income are, you may say i have made a fortune in the markets but i'm not good to take my profits, and he might've had a negative income. that would match up to his brand, but it doesn't matter. comments that he is ashley gotten dumber as time goes on. mr. cuban: that's pretty straightforward. theent from maybe i will be nominee to ok, i am pretty much present of nominee, even before the others fell out of the race. presumptive nominee, even

before the others fell on the race. in a national campaign, there are certain things i have to do, certain skills that i will lead to make me smarter about running a national campaign. did he go out and hire people who can create a ground game? no. did you hire people who could help him on advisory basis, to help with the whole political machine that is required to get the vote out? he tried, all of those people keep on getting fired and turning over. rather than getting smarter and bringing in the help that is needed to run a campaign, he is doing the exact opposite. where we have gotten to his him pretty much being dependent on his kids. -- they are good kids, smart kids. i have met them, they are impressive in every which way. but i don't know that i would want them all of a sudden coming in to run a campaign. this isn't "shark tank," where you can help with this company. we are talking about running a campaign for the president of the united states. not beingupider means

able to hire the skills that's to make you smart, and think he has gotten worse, you are seeing it happen before our very eyes. >> i had dinner with some tech ceos, and we were talking about politics. and vice president choices for hillary. one of the ceos said you. seriously. mr. cuban: good. it's not going to happen. [laughter] but you never know until you take the first step and put it out there. anything is possible. illiteracy at the top for both candidates is a huge problem. we talked about how do you deal with immigration and radical islamic terrorists trying to come into the country from wherever. there is no way just physically you can interview everybody. you are going to need to use tech, whether it's facial recognition, or a variety of other options. tech is going to get us there. somebody has to at least start to understand those things. and how they apply to all the big issues. we talk about dealing with the

future, autonomous cars, robotics, ai, machine learning -- jobs are going to disappear. they're going to be jobs that are gone just like making records in terre haute, indiana were gone. making cameras for kodak in new york were gone. oal in western kentucky is gone. what are you going to do in anticipation that we may not have replacements? if you don't anticipate the issues, you can't come up with solutions. that is irrelevant problem. no one has the absolute answer, but i can help them start to understand that and come up with solutions. david: that was mark cuban, speaking with cory johnson in los angeles. that number one he said sooner or later, donald trump has to do with the traditional way and get his traditional staff. he has not done that, i would say he has no ground game. this man, so far, has defied every rule. i'm not sure in the general y

will be that different. alix: ira member pundits talking about this -- i remember pundits talking about this, about other candidates. and now look at where they are. david: mark cuban has a powerful point, about wt technology means for employment. that we as a country have come to terms with that. in terms taking away jobs in with a longer-term applicationsf that may be. comi up in the next hour of "bloomberg ," blackrock ci rick rieder will be here to talk about rates. looking at near record lows on the 10 year treasury yield. much more, coming up. this is "bloomberg ." ♪

david: markets snapped back. the pound studies, european stocks rebound, european -- u.s. futures are rising. jonathan: the bank of england governor shares a meeting of

financial stability officials as banks demand the liquidity surges. david: as eu leaders convened -- ,lix: as eu leaders convened merkel hardens her stance. ♪ david: welcome to the second hour of "bloomberg ." i'm david westin with alix steel in new york, and jonathan ferro is home in london. we are set up for another eventful day in the markets. jonathan: it's been quite a couple of days, european markets snapping back a little bit, along with sterling, coming off the biggest two-day drop ever. alix: i said before, dead cat bounce. rebound as well, remarkable moves across all classes. you have to keep the focus on the debt market.

coming up later this hour, we are joined by black rock's cio of fixed income, rick rieder. another big hour for "." another look at the big market movers we're seeing today. jonathan: the story in the markets concentrate in the fx market, but equities finding a firmer footing after two days in europe. i would look at the european banks index specifically, because that got hammered friday and monday, and now we are back by 3% or four percentage points. maybe a little bit of respite for people who have been beaten up the last couple of days. i said the focus was the fx market because the bloomberg dollar index but together the previous today part since 2011. softer dollar story today with the pound up to 133 46. gains earlier, up three basis points. we were behind in that earlier in the session. we trade on the 10 year at 1.47%, which historically is

history -- incredibly low. alix: let's go around the world and check in with the bloomberg team. we have complete coverage of the latest break the development and market reaction for you. live reports in london, brussels, and new york. i want to stay with new york, julie hyman checking out the movers. breaking news on volkswagen. julie: information of how much volkswagen will have to pay to settle the omission schedules, pointing four $7 billion, opposed to the $15 billion -- $14.7 billion. that is the claim settlement of the u.s.. that will be broken down a number of different chunks. the settlement that is paying to cover costs to buy back vehicles at pre-scandal values, and then compensate drivers were as much as $10,000 per car for their troubles. that is according to people familiar with the settlement.

we don't yet have all the details of the settlement between vw and united states. it looks like it is also going to have to pay some fines to the epa. the epa, along with other regulators, is going to be holding a press conference at 9:30 a.m. at that point, hopefully we will get new details. as i'm looking at the headlines, what we have is the overall number, $14.7 billion. jonathan: julie, thank you. in london, markets on a firmer footing. i want to bring in guy johnson, having a look at the markets and anna edwards looking at the politics. the markets, a firmer footing, little bit of stabilization. i imagine that is as far she can go. you cant is as far as go after the severe selling we have seen in the banking center and some of the insurance companies. you were always going to see the market stabilizing a little bit after a couple of days. the market never moves in a

straight direction for very long. as a magnitude, the drop was going to generate a little bit of a pause. we will see what happens next. it's the politics of pulling anything around at the moment and it understanding -- and understanding where the u.k. sits in the world. how on earth do you price big banks and the insurance sector when you don't understand the regulatory regime and you don't understand the passporting story. jonathan: that's what mervyn king was talking about on bloomberg surveillance. you have to find a new equilibrium, you'll get overshifts to the downside and overshoots of the upside until you find this lower footing that most people assume is an adjustment lower. we saw that friday, monday. the bank of england, banks demanding a whole lot more liquidity today from the bank of england. the financial stability officials convened on threat needle street. what is the role in the midst of all of this? guy: making sure the plumbing works. they are plumbers right now.

the financial system has to operate as it is meant to operate. we cannot go back to the time during the financial crisis when we had liquidity crunches. you can see very clearly in the ois libel spread. there is in distress there. the overnight lending rates have not become as elevated as they once were during the financial crisis. when you can see at this point in time is that the plumbing is functioning. the central banks job right now is to make sure that happened. it's a good thing that banks are demanding liquidity, they want to have insurance to make sure the system operates. jonathan: and then maybe down the road shortly, think about the stimulus. edwards, bring in anna the politics are fascinating. the politics of london are very much in focus after the days in scotland. anna: the pressure on the banking sector is about the future of the banks in london as well as other issues that surround them. structurally, are they going to radio -- to be able to have access to the central banks?

they are trying to work out what's important. london needs to have a seat at the negotiating table, and in terms of that conversation with is this, this is what he told me. >> i've been speaking to chief executives in the financial sector, and what they are telling me is important -- number one, we have access to the single market. and also, access to financial services. if we don't, the banks and insurance sector and others will be leaving london to go to berlin, or frankfurt, or paris, which means jobs leaving our cities. limitationsmight be to the attraction of those cities, but if you are a bank in the city of london, you know what the rules are. you are asking yourself where you want to put those people in the future, it may be too early to make that call. passporting for banks in london realistic? he said it is, it's something they're going to ask for. angela merkel says don't delude yourselves. jonathan: here's the headline of

the last 30 minutes. chancellor osborne, the u.k. should remain and maintain the closest possible ties with a single market. have the game's just begun in a big way inside the conservative party? guy: of course they have. everyone is playing for position. where are you is the question that everyone is asking themselves. he is talking about that, and making it very clear that that is where he feels the story should go. the comments about deluding yourself is very interesting as well. the game is afoot, this is game theory in action. we've heard from the eastern europeans in the last couple of hours as well. this is the side of europe that has also skin in this game. they don't want to see london decreasing, they don't want to see the money they get from the eu decreasing. out of those things could happen if we do see the brexit. they're saying you want access to the free market, the price is freedom of movement, and we are

back to the same conversation. into thinking that was that was set by the chancellor is we will not lose out to other cities in europe. we will lose out other global cities. europe will lose, not just london. jonathan: guy johnson and anna edwards. the politics is fascinating. as fascinating as it is, it is very uncertain. for that reason, the markets are unstable despite the snapback. david: it is uncertain across the channel. we go to brussels, where ryan chilcote joins us live. yesterday, mr. cameron, who is in brussels today, said out a process -- set out a team for negotiations. woulde hopes that we start a process on the eu side about how they negotiate a relationship with the u.k.? ryan: i don't think we have much hope of that. i think the most we can expect out today and tomorrow in terms

of this divorce between britain and the european union is really an airing of views. if you think about it, on friday, with the referendum is all -- result, the u.k. made a phone call to the european union saying we are moving out of the house and are going to file for divorce. the eu said let's talk about it at dinner. that is going to take place tonight. they were cameron on one side, the 27 eu leaders on the other side. -- david cameron on one side, the 27 eu leaders on the other side. many leaders are furious with david cameron for having this referendum in the first place, and they just want to get on with it. he has made it very clear that it won't be for him to actually begin the negotiations on how britain exits and what its future relationship is going to be. that is going to be the job of the next prime minister. i think they are going to have a little shout at one another. hopefully there will be some consolatory air in the room.

this is about where we go from here, relationship wise. david: that ryan chilcote, reporting from brussels. alix: breaking news at the top of the hour, volkswagen is paying $14.7 billion to settle claims with the u.s.. the u.s. emissions test they cheated. a volkswagen settlement will cover about 580,000 vehicles, and volkswagen must achieve 85% recall rates or pay more into a trust. the first potential bill we heard of for volkswagen was $10 billion, is 14 for -- $14.7 billion is more than expected, the epa and doj will atholding a press conference 9:30 a.m. eastern, and volkswagen stock is up in european trading. alix, thank you. coming up, the brexit political

moral -- political turmoil has sent u.s. stocks to fresh lows, plunging more than 5% in two days. features indicating a big bounce this morning. withhaefele the joins us his strategy for brexit volatility. ♪

david: this is "bloomberg ," i'm david westin. we asked about opportunities in this market after the brexit. >> is one of the situations where investors say i'm going to

be defensive and see how this pans out, see how it blows over, and eventually things get cheap enough in some other areas, i may go there. we're only in day two of this. i think it's far too early to be looking at markets at the moment. david: joining us now is mark haefele, global chief investment officer. ubs is responsible for over $2 trillion in investments. we have to pay attention to what he has to say. what do you think about what we just heard? is it too early to go back into the market? mr. haefele: it's hard to say if this is going to be to permit bottom to things. we are seeing some opportunities as we look globally. -- be the permanent bottom to things. we are seeing some opportunities as we look globally. the direct effects of on the united states of the u.k. brexit is probably low. we nobody yields are going to remain lower for longer, and i can help things like dividends,

strategies, and the continued drive for finding yields globally amongst investors. david: to what extent is the degree of uncertainty a challenge? we don't know how big it is, where he goes. doesn't it make it difficult to go back into this market? mr. haefele: i think directly in the u.k. prime minister could even be the last prime minister of the united kingdom, should some of these referendums come to fruition in the united kingdom. that is particularly a challenge. we have had political uncertainty before these events, and we will have the master. the main point for investors is into as we go further out these experimental central-bank policies and referendums, you have to be diversified across political economic regimes in the world. alix: something that is interesting in the u.k. -- the divergence between mid cap and large cap stocks. this shows the ftse 100, so

large cap stocks trading at the biggest pretty and -- biggest premiums ever versus the euro chart.0 you have the large-cap exposure, you have the weaker sterling, is this right? would you be betting on this? we said all along that should this happen, certainly it is the large caps in the ftse that will be better. that's because they are getting paid in other currencies, and potentially recording in the pound, that helps them. it should help exports. a high component of material commodity stocks in the ftse index. as commodities do better at oil comes off the bottom, that helps them as well. jonathan: i want to understand the conversations you have had with your clients since friday. what kind of activity have you seen from them? are they pulling back, zynga want to pull my money out of the ubs interested on cash for a while? mr. haefele: there has been a

high level of cash going into this, because these clients are very international, very diversified. the brexit risk is only one of the risks they have been looking at around the world. many of them located in the u.k. also wanted to leave. there is a real range of views. a few things are there, we are seeing the blue had loans in pounds maybe paying some of those back -- the people who had loans in pounds maybe paying some of those back. we are seeing clients investing in their own businesses, and we see the hunt for yielding assets globally. jonathan: what are you advising them other than cash? are using more people look for gold or reach out for storage capacity, vaults, etc.? have you seen the kind of activity pick up? mr. haefele: there is increased interest in gold, but we would steer them to bonds for gold producers.

as gold prices rise, we think there are some attractive yields on the gold producers aside. david: i wonder if this is different from the other situations we have seen. this is not a financial or markets driven uncertainty, it is a geopolitical uncertainty. it is an own goal, as it were. , when you advise clients you're figuring out who are going to run the u.k., with the negotiating is going to be, how you advise clients? of haefele: in this period high political noise, you have to focus on the things that matter at the end of the day, which is earnings growth, just central-bank policy, and then global gdp growth. we try and take a medium-term strategy and look through to those forces. david: mark a full, ubs global chief investment officer, will be staying with us. alix: u.s. financials just up from the biggest two-day drop in five years. they are staying -- showing some

signs of life ahead of the open this morning. this is "bloomberg ." ♪

jonathan: this is "bloomberg ," i'm jonathan ferro. bank stocks have been hammered before today. the european stoxx 600 bank index dropped over 20% in just the past two days. 43.65%.x is down with us.ele is still looking at a dramatic forward in financials. the question i would ask of you is typically you have the bond vigilantes. when they saw political risk, they went after bonds, whether it emerging markets or on the periphery in europe. that has been insulated by the ecb. do you think financials to be

proxies for political distress in the eurozone, and will that affect you? mr. haefele: financials are bearing the brunt of it because there is uncertainties around the politics, and in part because there is uncertainties about how this bleeds through to their earnings. and in part because they were the epicenter in the last crisis. how the financials trade over the shorter term is really up to getting some kind of rules of the road in place for what happens next. alix: we've seen stress in cocoa bonds, contingent convertible bonds that can be converted into equities during certain times of stress. the blue line is barclays and the white light is hsbc. lower, the price moving we are not at the february stress lows, but nonetheless that is a sign of where we can go look for some contagion. when you look at something like reflectes that

financial instability and contagion, or is that somewhere in between? mr. haefele: i think we're looking absolutely at things like the spreads for these different bonds that are out there. we don't think they have reached contagion levels yet. one of the reasons the market ends up now is because there is expected to be more of a central bank action sooner, rather than later. and if they don't act relatively soon, we could take another leg down. david: to what extent is their diversions across the atlantic, u.s. banks versus european and specifically english banks on how they have been capitalized since the 2008 crisis? it's been thought the capital situation with you guys is pretty strong. what is it like in england? they had a meeting to talk about liquidity going to the banks. mr. haefele: i think the fact that these talks are going on is important. we have seen a lot of liquidity taken from the bank of england as a precaution.

i think he goes back to a point we discussed right at the beginning, which is the u.s. is going into something like this much stronger. the u.s. did recapitalize its banks very early after the financial crisis. it has been a beneficiary of not ever since. you are much more overweight on the u.s. than anything else. mr. haefele: that's right. one of the reasons for that is relative isolation or insulation of the u.s. economy. and the fact that europe had these questions, has some existential questions and needs s ofork through, regardles how that specific brexit vote played out. jonathan: what we have seen over the last couple of years is that central banks have really struggled to stimulate asset prices. we've seen that in the eurozone from the ecb. wethe last couple of days, have seen a push towards stability rather than stimulus. do think they're going to push the stimulus button, and what choice do they have left? mr. haefele: this is the thing.

certainly, diminishing returns from the stimulus are in the headlines. we do see things like the ecb buying in that corporate bond space, and buying at the hairy edge of it as well. it is in there. when we had a few months of stability from political risk, in part because of the stimulus and in part because u.s. and european growth is positive, we did see things like the s&p coming back again. i think there is still a tension in these markets, as gdp growth still exists. it is one of the things you do still have to be careful with those very high-grade bonds, since they are at these very historic lows. alix: you like some parts of the u.s., you like gold stock bonds, which i love. i hated to end with something rudimentary, but what is on your shopping list?

would you want to pull the trigger on? we like being long the u.s. dollar versus the australian dollar. that is a hedge in the portfolio, should asia come back as a center of risk. alix: great stuff, market, great to see you. mark haefele, ubs wealth management global chief investment officer. up, we dig deeper into u.s. financials, feeling the heat from a brexit. looking strong ahead of today's open. have we found a brexit bottom, or is this the dead cat bounce? more when- "bloomberg ," returns. ♪

ojn: we are one hour away from the new york city open. up by one full

percentage point. in london, a decent rally but an ugly couple of days. efx market had its biggest today pop since 2011. it's a weaker dollar story today. this is the third read of the first quarter gdp coming in -- one point12% 12%. you had better construction spending and core shipments and better trade and better manufacturing inventories helping gdp. consumption turned around this quarter at about 2%,

slightly lighter than estimates. a stronger read of gdp. this is null and void to what will happen in the afternoon -- in the aftermath of brexit. jon: in london, the comparisons between markets getting it right and wrong -- north korea tensions were a tipping point and the market correctly predicted there would be no war. there was talk of another exit from greece but that did not happen and the markets did not buy it at how did the market get the brexit results so wrong this time? how did the market get it so wrong? >> when you have a consensus from just about every expert on to planet from economists

business leaders and presidents and prime ministers to everybody devoted to knowing something say this would be a disaster for the u.k., a disaster for citizens of the u.k. to vote on, that's how the market got it wrong. when the market got it wrong, it then issued its verdict and said this is a disaster. i don't mean to smile about it that the market did respond violently in its reaction. jon: the story of that night will be reflected on for things to come. the pound continued to climb because there was an utter conviction that it was done. that's seem to exacerbate the move to the downside. >> that's correct, that day, there was a poll that said the result would be exactly the opposite of what it turned out to be.

you had people through a combination of complacency and wishful thinking believing this would be a disaster. there was an enormous relief initially in the thinking that it outcome would be what hopes to be and when it wasn't, the reaction was so violent that we have a disaster to look at from this point on. price discovery is fascinating and we are trying to find that equilibrium and we all have the same information but some are better at using it than others. was the market being rational with what it did know? >> the market expects people with a certain amount of information to behave in their best interest which is another way of saying it expects people to behave rationally. it even expects leaders who commit rash acts to behave

rationally. places like north korea and greece. in this instance, you had too many voters behaving irrationally and the market could not compute. they could not anticipate that. what about the predictive capacity of markets? do you think we have entered a new world where the market cannot compute this? storms occur and black swans occur and that goes into that category. what we are looking at is something that is an isolated event and not something that will be replicated. today, theat exists longer it goes on for the british people, the more others looking at it will say this is not where we want to be.

we had an election in spain which could have gone either way. the outcome surprised a lot of theentators because it was status quo which was supposedly not working. when people in spain took a look across the pond, they could see this is not where they wanted to be. jon: fascinating story. find that on bloomberg view. great to have you with us. david: the $13 trillion u.s. government want market is having its best year since 1995. -- some heavyweights saves just the beginning. welcome back to the program. so much has happened since last

thursday night. let's start with u.s. treasuries and look at the yield curve in treasuries. now ifould you invest you invested in u.s. treasuries? where would you go in the yield curve? >> the front and of the u.s. yield curve has no value. have priced in a high probability that the fed will cut rates but i don't think that in any consideration in the near future unless there is a real crisis. along the yield curve, it still reasonably attractive. the demand that comes in from overseas and the demand for the long end of the curve. markets are attractive for the rest of the world. year bonde the 10 it could go as low

as 1.25 by years end. where would you think we might be at the end of the year? >> we talk about 10 years in a range. you want to say we will move to some extreme number. i think we were in a range 1.60 four around range and i think you have to take 25 points off of that now. the brexit will be a drag. take that down another 25 aces points so you have brought that 1.65 and bringbe it down to 1.30. steamk it will take each -- extreme pressure.

push tothink there is a move interest rates higher. david: so you are saying that is the range. the markets love round numbers. 1.50 ist a place where a place where treasuries want to be. i think the demand will keep it at that place and i can certainly move lower if you get weaker economic data. i like long and treasuries. -- long and treasuries. how much flatter can the yield curve go? >> if you had weaker growth six or sevenlf -- months ago, the u.s. economy had seen the best and we were starting to trend lower. dynamic where you

can continue to trend down a bit them here and the curve could get 15-20 flatter from where it is. i don't think there is a lot of inflation pressure. on: let's talk about the downward forces on yield in general. what we saw in japan overnight is a continuation of something that has been happening several years. the entire curve is 0.1%. is this where the global market is going? >> i think there are a couple of major secular forces at play at different levels of intensity around the world. technologys and change meaning how the economy operates. andn has been a tough place

is now as far as demographics. you go to the u.s. new think about growth in the u.s. i don't see the u.s. is moving into a japan like economic paradigm. wasu.k. pre-brexit sinceing with 2% growth 2013 growth. it's where you are in the world. be moderateh will for the next couple of years but i don't believe in eight global japanification. ,avid: besides demographics experts are warning between the disparity between the rich and the poor. also the leverage of the sovereigns themselves because they can no longer come in and simulate -- and stimulate. will they keep the yield down? >> yes, we need a couple of

hours to talk about that. there was a presentation on business cycles and credit cycles and business and technology. monetarywhat excessive the income is expand and where the benefit gets to in the economy. i would argue the vote in the u.k. was an expression of that discontent. i think that will continue to play through. interest rates will probably have a cap on them for a while. we had 10 year yields in the u.k. at 1%. we are staying there. i want to put you on the spot. foreign holdings of guilt are on the rise. would you be paring back your gilt holdings given the

direction of sterling? with relative certainty, i think u.s. treasuries has a yield level that makes sense. gilt.is volatility in toould argue the flight quality becomes ambiguous at these levels. a remain vote, would you have been where gilt wood would be strong? i think so but i don't think gilt holds the same a lore after this vote. thank you very much, much more coming up. futures, the on

dow futures are up 218 points. this is "bloomberg ." ♪

david: this is "bloomberg ." pharmaup, our focus on continues in the next hour. alix: rick rieder is with us. he is responsible for one $.6 trillion in investments. we talked about the global bond market so let's dig into the u.s. corporate bond markets.

this is u.s. investment grade monthly on the buying. issuance really fell off in february and was down in april but really picked up again in june. what is your expectation for the rest of the year? >> i think you are in an environment where there are three ways companies can return on equity, topline revenue, margins come oral brevet -- or leverage. --erage and margins are equity and revenue are difficult. debt to revenue is growing but that too services not growing. one of the metrics is your interest coverage. it's your cash flow relative to your interest expense because of where policy is an rates are. companies are pulling that putting up more debt but their

debt servicing costs are not going up. i think that supply will keep coming to the market place. alix: a company can borrow money from the market with very little restrictions. where is that trend? >> there is a demand for yield. that means there are times in the markets where the issuer has the upper hand in times when the investor has the upper hand. the issuer has the upper hand today. name and itright fits where people are looking to a non-cyclical entity, they can issue with light covenants and terms that fit them. the world needs yield and carry but issuers will have a good go of it. the debt services going

down because the interest rates are going down but eventually you have to pay back the money. will companies have to come up with the cash in the out years to pay off that debt? >> that's another to our question. hourat's another 2 question. monetary policy exit strategy is the leverage is fine as long as rates don't move up 200 races points. what happens of rates move up 200 basis points? like japan, that economy would be under duress. will have a long tail in the u.s. and that's why the fed will be very deliberate over the next couple of years and other parts will be more leveraged. you cannot let those interest burdens increase too quickly.

so there was a four day freeze on the markets and it's being opened up today. >> that happens. but who was the first issue where this is a noncyclical company. to be a fairly consistent cash flow so the markets will watch. after that, they will go deeper into risk. markets tend to open with the safest industries and assets. david: let's push out the geographic curve. looking at emerging markets, where are you on emerging market debt? have added someone and we would hope markets would push that debt a little cheaper to buy some. we do like adding some of the emerging markets. we think we will be in a slow

growth world for a while. think the global economy is moderating but we don't think it is a crisis. and indonesia, we have added even argentina and brazil and you are creating some structural reform in those places and policy has to be easier. real rates in the developed world where europe and japan is are not very attractive. emerging markets have attractive real rates when you think about getting real interest rates in my portfolio. emerging markets are reasonable. vote was abrexit vote against globalization. how can you make a case for buying the credit? >> we are talking about debt versus equity and you are right, global growth will be moderate. if you think about the perfect environment to be a debt

investor, it's moderate growth, not overheating, not word debt keeps going on to propel the growth further. that growth sense is coming off in global trade will shut down, emerging markets, you want to be careful. the places we look to buy emerging markets are places where we think they are fundamentally stable. mexico.ike debt is not performing terribly well but it's a 3% economy and that's pretty's table. we look to places we think are not ultrasensitive to that cycle. alix: great to have rick here. thank you very much. as investors flock to inereign debt, we show you

battle of the charts coming up next. ♪

david: time for battle of the charts with a rematch of julie hyman against alix steel. alix: this is something fascinating that is happening in u.k.tse and gilt in the this is the ftse dividend yield in u.k. stocks and the blue line is the yield on u.k. gilt. look at the divergence. they are yielding about 4.5% where gilts are under 1%. the divergence is pretty much unheard of them he saw a spike in 2009. historically, the chart goes back to 1997, we have always seen higher yields on gilts than stocks and it shows the risk aversion and the rush into

safety. the yield keeps rising. david: that's a big spread. julie: that's happening in the u.s. as well. you saw it similar because of zero interest rate policy. i have another look at the extent of the carnage in the u.k. in the stock market. the white line is the u.k. see that innd you the white line and the purple line is france and germany combined on the aqua line is japan. the market cap in japan is larger than the u.k. and france and germany. now france and germany combined, the market cap is larger than the u.k.. there is the shrinking of the market cap in the u.k. compared to france and germany combined and japan and the u.s. is way up there. this will go down in

history for this. it's a lesson that dividend yield fluctuate. highividend yields are so because many investors think they will be cut. the stock adjusts for the dividend price cut and in the dividend yield goes up. we have to break the tie. i have to go with julie. but alex wins the battle of the chart. in our next hour, our focus on pharma continues. ♪

stabilizel markets and u.s. equities rebound after two days. david: the bank of england

governor shares a meeting of financial stability alix:. merkel hardens her stance as she says the u.k. should have no illusions of life outside the eu. david: we are just under 30 minutes away from the opening bell. coming up, we have several big interviews. in a few minutes carolyn mccall will be joining us. our special coverage will focus on pharma. we will speak with heather brasch. on: a little bit of

stability in the markets. futures are much firmer, up by 1.25%. today is the first post brexit rally in the market following a two-day drop. the banks are performing well. the story of risk on is reflected in the currency market are there is a cable. rate of 134 and the euro north of $1.10 after the biggest today drop of sterling ever. ourd: let's check in with stock reporters.

julie: this is similar to what we are seeing in europe. helping leads are this in today's session and they were among the worst performers over the last couple of days. the banks are coming back this morning and so is tech knowledge he. -- technology. apple and amazon and facebook are trading higher. i am looking at the year to date returns and the various groups within the s&p 500 and financials are the worst performing group down by 10% and technology is the number two loser. you have under performance over the last couple of sessions but also year to date and a little bit of a rotation back into those stocks.

ail: we have a number of big internet names trading higher in the premarket at the nasdaq which includes netflix come alphabets, priceline, and expedia. these for internet companies are selloff.the brexit fires underestimate the growth potential these companies offer. there is a 60% upside potential for the shares of net likes. -- netflix. aere is a company that has blood potassium drug in treating like pressure. shares are up nicely in the premarket for relypsa. after a two-day selloff in

the stoxx 600, we have a rebound today. we are gaining 3.3% which is the biggest -- second-biggest gain of this year. one trillion euros have been knocked off of the market in the last two days. yesterday down by 2.9%. today, we are rebounding by 1.2%. 10%three-day move is almost with money moving away from safe haven assets into riskier assets which is moving the yield up. the 30 year yield and the 10 year yield are at record lows. 14.7 million dollar

emissions settlement between the u.s. and volkswagen but their shares are rising. they had fallen in the last two days by 17%. jon: thank you very much. in a couple of hours in the u.k., a question for the aviation industry. have onact will brexit the tourism business? us is carolyn maccoll. have you seen demand fall off in the last couple of days? no, i don't think we have seen demand fall off because of brexit but there has been fall of of demand from atc strikes and we have another one today. i'm in brussels to talk about air-traffic control action with the other airline ceo's.

had an effect on demand yet. jon: yet is the big question. will it have an impact on volume or average selling price. >> i'm not sure it will have an effect. i don't think we have a problem with demand. we are seeing a lot of capacity in the market and some uncertainty but a lot of disruption. it's the disruption that has been difficult. i don't really think brexit will be about the demand environment. i think a lot of people might come to the u.k. because of the pound. families may be thinking their holidays may be more expensive

owing to europe. our fares will not go up, it's the exchange rate that will affect that but it will not be demand. it will be that airlines have reduced their pricing already and stimulated the demand. british consumers, this is a fantastic time to go on holiday. : the market is taking a different position with the stock down friday. what is the message you want to give to the investment taste today? i think our investors understand what is going on. blip on a seismic friday and i think financial markets reacted. that is a view that it was a real overreaction. our fundamentals of not changed. we are an incredibly strong airline with good dividends and a strong that one sheet and a fantastic strategy.

it's a unique network that is customer friendly. the fundamentals of our business of not changed. i'm sure the market will see that. we are going through short term turbulence. from an aviation point of view, the deregulation was an enormous and if it it we will be able to continue to get those benefits either through a single eu market. if not that, we will find our a legaluse we will get entity and that will allow us to keep flying and that's what we do brilliantly. are you preparing to set up a non-u.k. subsidiary? for an we will look airline operated certificate. run one in

another country so we will look at that. jon: you brought up the dividend, can you guarantee the dividend to investors? >> i wouldn't want to do that on radio but i don't see any reason we would not be committed to our dividend. you say you're working on the non-u.k. subsidiary. it will take several years to clean up the local mass. how quickly can you set up that subsidiary and would you do it before we have established what relationship the u.k. has with the eu? >> we will have to wait and see. we have had informal discussions with the jurisdictions in the eu. we will now formalize those discussions to become more structured. we will do it early and rigorously as you would expect us to do. we will just have to wait and

see what we do next. our strategy will not change, we have a strong strategy and the fundamentals are strong and we will continue to be successful and we are a structural winner long-term. nothing changes because of the vote. fundamentals don't change. we will certainly find a way. as you say, the political situation in great britain is not clear. i cannot give you an idea of timing. what has changed is the value of your company over the last couple of days. your company just got a whole lot cheaper. if someone made an approach to buy, would you talk to potential buyers? >> i will not comment on that.

most of the companies in the footsie lost a lot of value on friday and monday. you know what financial markets are more than most other people and you know they will recover and stabilize. the majority of companies in the ftse are in the same position we are in terms of valuation. jon: so you are not a seller. >> i would not answer that ever on a program like this. jon: i gave it a try, thank you very much. great interview. tokswagen is one step closer putting its omission scandal behind of settling with the u.s. for nearly 15 billion dollars. later, our special coverage focus on pharma continues.

we are just about 20 minutes from the opening bell and we have the dow jones futures up up asints and the snp well and it's a risk on rally today. ♪

alix: european leaders meet in brussels today to consider first steps after the u.k. voted to leave the union. cameron just spoke upon arrival at the two-day summit expressing his hope that the british exit will be constructive as possible. for anive to brussels update. what was the big standout? we learned that this is a guy who did not want the u.k. to

learn -- to leave the european union and he struck that town - tone. he campaigned in his own country for the u.k. to remain in the european union and yet, in a couple of hours time, he will sit down for dinner with 27 other eu leaders and tell them we are going but i did not want us to go. i'm not the one who can tell you what that will look like and when it will begin. it's a very conciliatory david cameron. there are many jabs between the two sides. but david cameron is clearly coming here saying let's just work through this. andaid i does not want this you did not want this but this is where we are. alix: thank you so much. volkswagen will have to pay 14.7 million dollars to settle claims it jaded on -- it cheated on u.s. emissions tests.

joining us now from london is matt miller. take us through this settlement. the are they paying for and -- and does this take care of everything? matt: it does not take care of all of it buta large part of the uncertainty is taken out of the picture. volkswagen has agreed to buy precrisis levels for customers who want to ge rid of them and ve them as much as $10,00for their trouble or recall the cars and fix them so the customers can drive them legally in the state. that will cost about $10 billion. that's about how much they figure it will cost. -- 2.7 billion dollars will go to the epa in the california air resources board. about $2 billion they pledged to invest in clean energy technology.

something they would have done to begin with but now that is mandated. there are other settlements with u.s. states including new york that total up to $400 million. there are many things they have to achieve. ratehave to get a recall of 85% of the cars affected or more by 2019. if they don't, they have to pay $85 million because they missed the goal. david: it does not cover criminal issues or anything internationally because there are other legal proceedings pending. how much did they reserved for that? a good point, they have put aside about $17.8 billion to deal with this. this settlement will take about 15 billion dollars and it only covers the u.s. there are a number of other

jurisdictions that are still to be dealt with. in europe, they have achieved or fix witho a tax - european regulators to get the cars to be less polluted and continue to drive around. that may be all they have to do here. other lawsuitso in the u.k. and the u.s. and open to other lawsuits from clients and customers, class-action suits and they have criminal issues to deal with. david: thank you so much. with two trading sessions that were up behind us, where are the opportunities? we will explore that next. ♪

alix: global stocks are getting

for the first time since the brexit vote was announced. is this a fundamental shift? we have the invested manager at hearing asset management. thathetoric seems to be the only reason for a risk rally is the hope that a brexit followthrough does not happen. what do you think? >> brexit has been discussed quite a bit and it's clear that this is a political crisis, not necessarily an economic or market crisis. this is another leg down in terms of growth expectations. growth has been hard to find out there. in terms of what's happening here, this is a typical reaction in terms of the market selling down. we are trying to find equilibrium this morning. alix: what is your strategy when

you see a bounce like this? >> there are opportunities that pop up all the time. if you're looking for assets that are money good with growth, it's a great time to buy. you have to have an idea of what some the macro economic indicators are. the ranks inon to the u.k. to determine whether there is a significant leg down. it's unlikely we will see a contagion to the states. consumption has been the global driver in terms of the developed markets in the u.k. and europe. any leg down in terms of consumption growth or consumer growth will have a knock on effect to global growth to david. how will you know if

there is a problem? be therbank lending will most important thing to keep an eye on. we will look at how banks will start to put across loan-loss reserves. of banksclear in terms exposed to the u.k. market. they will have exposure in many different places. this has obvious knock on effect to the rest of the world but there are areas to look at. why are you interested in consumer staples? been steering away from the stables but we are focused on consumer confidence. david: you think they are fully valued? >> and they have been for quite some time.

there is room for growth in discretionary's. automatable -- automobile growth has been high. we are looking at the housing market within china which continues to grow. there are parallels within the european market but the consumer story for us tends to steer toward the u.s. alix: one of our favorite charts of the day was the premium that investors are willing to pay for large-cap stocks in the u.k. ftse 100 is at its highest level ever. it's a reaction of the weakness on the sterling. i don't fully buy into it just yet. the exporters from the u.k. market of high labor and there is not a lot of

low-end that comes out of the u.k. so it's questionable how much of a bump you will see from the weakness in the pound. questionable, what about a high dollar? could that hurt u.s. companies? both instances will have an impact in the near term. i don't know how sustainable those are. this has to do with the fact that there will be a loss in terms of export market share. alix: everyone is starting to think that the trough and first quarter warnings -- earnings were it. but then the oil went down. >> the fed is watching that closely as well. bulls structural dollar at this point. as we see the dollar start to

strengthen ahead of that, there will be some concerns. there is not a lot left support the earnings growth. good to have you with us today. jon: the market open is coming up about four minutes away. futures are firmer in the u.s. ahead of the open. in london, the rally is a snap back. there was a two day loss of 5.6%. today weaker dollar story with the pound at $1.33. ♪

are moments away from the open in new york city. positive, it's a

global risk on rally. , after two days of losses, we have come back 2.9%. a little bit of stability after two days of that news. -- a bad news. it's a weaker dollar story on this session with the cable rate $.33 -- at $1.33. treasuries are paring the early losses. let's get over to julie hyman for your market open. julie: we've got the rebound in the u.s. so all major averages are higher. the s&p 500 had pulled back 5.3% over the last two sessions. the rebound is coming on the back of that, the biggest a

klein going back to last august. the s&p to date is up above 2000 and the now up about the same and the nasdaq is leading to the upside right 1.1%. in the last 15 minutes, carnival, the cruise company has been a big victim of the selloff. over concerns about travel. 40% of its revenue from europe overall and shares are up 4% after earnings came in $.10 above what analysts anticipated and the announced a $1 billion buyback authorization. the third-quarter forecast missed estimates and it narrowed its full-year forecast bringing down the top end of that. estimates because third-quarter costs are higher because of advertising and it's doing a remastering of the queen mary ii in dry dock. oil has been rebounding today.

we have the weekly supply data coming out at 10:30 a.m. so oil and gas companies are rebounding along with it. we are watching the industrials coming that. they were hits over the last couple of days and we had that latest gdp revision. for the last quarter. i wanted to look at the stocks that have performed the worst since the u.k. vote. coming act in today's session. even though we are seeing a rebound today in many of these groups, we are definitely not recouping the losses we have seen over the last several days. jon: that is your market open. no certainty

whatsoever. london withd in more on that side of the story. dramatically has great britain changed since friday? >> we think we will have a weaker pound and inflation push above the 2% target and we will have a hit to growth over the next two years. jon: people have come onto this program and tell me that what we marketing is a real sterling trading on structural issues. 7% of gdp is where the current account deficit is.

dramatic. been this how significant is that chart? >> that's the big risk with multiple sources of uncertainty about the future of trade relationship with europe. situation where the annual current account deficit is about 5%. historically, it's the widest of any major economy. are nonresidents going to be willing to hold their u.k. and by $100ssets billion per year which is what you need to support sterling at the current levels. if they take flight or take a break, you can see a dramatic adjustment in the pound. if we stay at current levels of the just meant or maybe lower, that will support the improved trade account and improved

income account. you will have an orderly adjustment back toward a more sustainable and lower account deficit area sometimes adjustments are not orderly and that's the tail risk in this situation. if that happens, you have to expect it will be more dramatic impact on the domestic economy. we expect investments to go negative with firms sitting back and saying we will wait this out. but what happens to the consumer? pre-referendum, they kept spending. if we have some kind of disruptive market movement, that can interrupt that consumer psychology and take it into a full-blown referendum/recession. look at these comments coming out of brussels. the president of france regrets the eu vote.

he will respect the vote. it's that uncertainty that tells me it's something difficult to do, to model these forecasts. is the tail risk that you could face a southern stop of capital? could it be that disorderly? >> i think that's too extreme. the u.k. has well-established stability. we've got a process now for choosing a new prime minister by september 2. we should know who that is. then we will get some clarity on what the lead government's objectives are in their negotiations with europe. will they go for a norwegian styled deal in order to maintain access to single markets?

or are they going to insist on having an immigration pont system in which case, we would likely have more restricted access to the single market. we don't know because they have not been clear. until we get that piece of clarity, it's hard to have a clear view and a way forward. alix: stephen lender had a note out saying how the pound was in emerging market asset. do you agree with that kind of comparison? we've got huge savings and sterling which you don't tend to have an emerging market currencies and we don't have much efx denominated liabilities. i think it is still a developed market that has its own savings.

does not have liabilities in foreign currency but it does have that wide account deficit and that creates a vulnerability to more dramatic moves in the foreign exchange market than most other emerging markets -- most other developed markets. i wonder about a secondary effect of reduced immigration and travel across borders. we tend to focus on trade in goods but one of the issues in the leave/remain debate was immigration. could there be a knock on effect as people close their borders more and even in the united states where we hear about this, what could that due to economies? >> that's a political risk that continues. that's part of the fuel that sparks a lot of the leave campaign is the pressure from

the immigration issue. the u.k. leaves itself vulnerable for pressure points from the rest of europe. there are many issues from the immigration standpoint. as far as affecting individuals, that's a broader long-term question. there has been an overreaction in terms of professionals leaving the u.k. and setting up shop in france. i think that is a little over alone. as far as tourism, it's probably a good time to go to the u.k. on: i won't tell you about my shopping habits over the last week or so. over the last week or so, we

face a significant amount of uncertainty. it's not clear. the housing market comes up again and again. talk to me about how that plays out from here. >> we think the housing market is overvalued i about 20%. it's vulnerable to correction if there is some kind of catalyst. when rates started to rise, we thought that would trigger a mild direction and house prices. -- in house prices. in this world, the bias will be toward easier policies. if the shock is not too bad and we avoid a recession, it will stay on hold. if we have a full-blown referendum recession, that will cut rates 10 basis points. we will probably see easier fiscal policy as well. in that environment, you have a cushion of lower rates that will

mitigate that negative impact on the housing market. it will get at the bad impact from brexit. you need to have something that shocks the consumer. the consumer is quite resilient generally. this looks like an idiosyncratic risk about -- rather than a systemic risk. at the moment, we are fairly cautious about calling for some dramatic correction in the housing market. one or twoing at digit fall in house prices. jon: great to have you with us on the program. so much to get through. it's very complex. this is fundamentally apolitical issue that's having broad-based effect around the world. what will brexit mean for u.s. companies doing business in the u.k. next. ♪

david: coming up later, we will have pearson ceo john fallon. you are looking at stocks ,umping right at the open halting a two-day losing streak. level wehere near the were before the brexit referendum. julie: we've got stocks extending their gains in the past few minutes since they opened. best one since last thursday where we saw a surge on

optimism that it would be a remain vote in the referendum. the major averages are seeing a pretty sizable ounce back at the moment. we are looking at lending club. it's getting a more permanent ceo who was the same man who was the act and ceo. scott sanborn has been at the company for six years. lending club will dismiss 179 employees because they see a decline in loan volume. we are looking at dow chemical jobs as it acquires dow corning. it will close a couple of

silicone plants in north carolina and japan. because the company is in the process of merging and they hope to close that deal by the end of the year. both of the stocks were downgraded at j.p. morgan this morning. we are looking at and from and cigna with reports of they may -- we're looking at and thumb -- may terminatena their merger agreement but there is a report they are not in these talks. they are talking with the department of justice with the combination of the two companies. and us trillion company agreed to buy generic drugs from these two pharma companies.

a lot of deals in various stages this morning. alix: thank you so much. on tech stocks with abigail doolittle at the nasdaq. gail: after the worst two-day slum for the nasdaq since august of last year, we are looking at a big rally of 1.5% which is out pacing the dow and the s&p 500. amazon, and apple which is higher because of cautious commentary and we have a nice rally in internet names. netflix anddefended others saying they should be bought on the brexit selloff of the nasdaq is still down about seven percent per date. over brexit hit

everywhere including pharma. haveirma companies the most exposure to brexit. elin is exposed the most at 32% and joining me now is there ceo. thank you for joining us. you to brexit? >> when you look at our exposure to the u.k., it's immaterial. everyone is taking a different slice of how far-reaching the brexit is affecting the entire euro market. when you think about myalin being a global company and we diversified across 150 countries and thousands of products, that puts us in a sustainable position that we are not that exposed to any one country. david: how important would it be

to you and the company whether they remained part of a single market as opposed to separate? when you've got something as complicated and intertwined as how the euro has evolved over the last several decades, everything from the regulatory system to drug approval. when you think about the pharmaceutical industry, there is an impact perhaps on product and licensing. i think it will affect everyone equally whether they stay part of it and do a euro agreement and be able to leverage the regulatory or if they break away completely. in any event, it certainly would not impact the product or the portfolio we have in the u.k.. is a part of a focus on pharmasset let's take a step back and talk about generics. alin is a major player in generics. what role do generics play in

the overall health business and the health of people? play a very, they significant part of our health care system around the globe. starting in the united states, generics have become the back home of the health care system. we represent 88% of all drugs dispensed in the united states. globally, different parts of the world have different utilization rights. health care system is looking for cost containment and health care solutions. we work very hard to break down the barriers to provide access literally to the world's 7 billion people to provide affordable health care. there has never been a more important time whether you are talking about developing countries, emerging markets, or throughout europe. we continue to fight and increased generic utilization to have a more sustainable health care system in these countries. as you say, affordable

health care is important and that takes us to drug pricing. how concerned are you about possible regulation of drug prices going forward under a new administration? what we have said repeatedly is we are going to look at the system but let's look at the whole system. if we are going to talk about fixing up piece of it, you typically end up not getting to the root of the problem. i would argue that in the united states, we've gotten it ready right. -waxman established that balance between innovation and competition. that's not to say that there are abusive actresses that could affect that but overall, we have been able to represent 88 percent in drug utilization and saved $1.6 trillion for the united states health care system over the last decade. the balance of innovation and competition we think is

important. letting the open market supply and demand decide -- we have been competitive in the markets have corrected pretty quickly when something has gone awry or there are abuses in the system. we believe the system works. we believe we've got to constantly be challenging ourselves and our government and the regulatory regimes to maintain and keep pace with the globalization of the industry on every front. i believe foundation laid that our system is the right one and it has definitely provided the most innovation the world and provided the best of care and we just need to make sure we can continue to provide access so that everybody is afford the luxury of actually getting the health care. it should be a right, not a privilege. david: you talk about competition but in america, you hear these stories about health care price increases.

people get upset. a report about one reflects drug where the price went up over 400%. can you explain why that happens? i empathize with the person who goes into the pharmacy and the drug cost more than it did the last time. you've got to understand the complexity of the entire system. you have cost shifting going from employers to employees with obamacare and the high deductible plans and payers who have continued to play a huge role in formularies and the drugs you can take depending on what plan you are on. there has been shifting of costs that is felt that the pharmacy level more than any other point of our health care whether it's

in hospitals. you're never sure what you are paying for or what your bill is but you know when you are asked to pay a higher co-pay or hired to dockable around her from a cynical. it -- or higher the duck double around -- generic run except come down over 70% over the last seven years. demandy is a supply and and there are times when prices go up. if you look at absolute dollars, people are throwing out percentages. one dollar-two dollars can be 100%. of look at the billions doses we put into the market place and you look at our revenues in the united states, we make pennies on the dose. one -- i have

argued that some of our products were too low. you're talking about a highly regulated injectable that should cause -- should cost more than a cup of coffee. david: there has been a lot of mergers and acquisitions in health care. are you interested specifically in any of the valeant assets? >> we are always looking for products and things that would complement our portfolio. we think we have amassed the right global scale commercially and operationally but we are always looking for, metairie assets that we can leverage across the globe. we would be looking at anything that would be a good product that would complement our existing infrastructure. david: thank you so much for being with us. this week, bloomberg is presenting focus on pharma, going deep on the global business of pharmaceuticals and biotechnology with a range of stories and analysis across our

platforms. find more at pharma as well as on bloomberg.com/pharma. jon: let's get up to speed on the markets -- stocks are climbing higher and the s&p 500 is up as much as it was on her's day of the vote in the u.k. it's a bounceback for u.s. equities. the dow is up by over 200 points. euro dollar is north of $1.10. it's a weaker dollar story and a stronger pound. coverage continues. ♪

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>> it is 10:00 a.m. in new york, 3:00 p.m. in london. i'm vonnie quinn. mark: i am mark barton. this is bloomberg markets of bloomberg television.

♪ vonnie: we are going to take you from new york to london to brussels. here is what we are watching. , pounds,cks commodities gaining for the first time since britain's vote to leave the european union. of threend coming off .6 billion dollars with wipes off of global equities. tensions in brussels as european leaders meet with british prime minister david cameron for the first time since the brexit vote, discussing the next step in the u.k.'s breakup with the eu. vonnie: a permanent ceo. one hundred 79 jobs are cut. ue founder and ceo