good friday afternoon. covering stories from london to washington dc to san francisco and beyond. global stocks extending their post brexit recovery. the s&p 500 on track for its best week of the year. investors speculating that central banks will act to limit any fallout from the u.k. vote to leave the european union. scarlet:scarlet: we wrap up our focus on farm a week by how you can play the sector. shery: and apple reportedly in talks for buying jc title. andlikely is it to get done why is apple even interested? scarlet:scarlet: first, we got a check on the markets. we are halfway through the trading day. julie hyman has been checking julie: we are set for

the best week since november, which is kind of shocking compared to how things looked after the u.k. vote. not seeing as large gains, but continuing the trend we've seen -- the trend we've seen in the past four years. manufacturing data showed the biggest expansion in more than a year. we also got more positive manufacturing numbers out of europe. take a look at the biggest gaining groups today. consumer discretionary is leading in part on the strength of automakers, health care, industrials, and tech is also higher. and we see more expensive groups like staples and financial groups lower. withd fiat both came out june sales and their sales are higher. because of the strength of the sales we did see you were in suv, a higher-margin product.

we are also watching gold today. gold going higher. we see the miners benefit as well. in particular, newmont mining gaining. twofold froming the price of gold and from that deal. also a lot of news and the m&a sphere. julie: it has been an interesting and strange day. we have had some speculation, news on the m&a front. honeywell is making an teligrade.n of in davidson.ve harley and thor industries, an rv maker, buying a privately held rv maker. so those sales are making. hershey, we continue to watch that company on the possibility that it may sell itself to ilese.s -- to mond

. is unclear what is going to come of that. williams companies removing much of its board -- much of its board resigning, should say. tons gate still trying acquire starz. some say that is not such a good idea. scarlet: thanks so much. let's check in on the first word news. mark crumpton has more. u.s. attorney general loretta lynch has moved to defuse a controversy over hillary clinton and her private e-mail server. says she expects to -- lynch says that she expects to receive recommendations. she sparked controversy when she met former president bill

clinton at an airport in phoenix. the issue is how does it impact the work that i do with the department -- and what the department of justice does. i certainly wouldn't do it again. [laughter] because i think it has cast a shadow over what it should not, over what it will not touch. mark: by agreeing to follow others advise, lynch is addressing concerns that he could exert influence over the case. although she is reserving the right to overrule those recommendations. anbul hask in istna raised concerns about security at the airports in the u.s. a patchwork of state and local police are responsible for security. former tsa deputy administrator john hollins case says those agencies are understaffed and underfunded. a major foreign relations between turkey and russia.

met today toters restore their anti-terror cooperation and military contacts. ties were cut when a turkish jet shot down a russian warplane last november. the two nations decided to amend guys once turkey top -- turkey apologized. a recordco has pushed number of bonds to default to for the first time, it has failed to pay its general obligation bonds. president obama signed a bill sheltering the alan from bondholder lawsuits. -- sheltering the island from on holder lawsuits. as soon as next week, the bank of england may cut back capital requirements that,

according to people familiar with the matter, this will give lenders more flexibility to -- to the fallout of the withstand the fall out of the brides of vote. barclays ceo spoke with erik schatzker yesterday. take a listen. has athe bank of england lot of tools and i think they have the objective of doing the right thing to preserve the power and the grooves of the u.k. economy and they will do that. and they will do that in part by how they relate the banks going forward. joining us now is michael moore. michael, great to see you. this mean for u.k. banks in the financial system? michael: this gives them a little more flexibility and a little more room, if you will, to continue to extend credit if we do see an economic downturn from the brexit vote. this is why the buffer was put in place. it was put in place so the banks would not go overboard when the

times were good and would not cut back to miss when times are bad. we will see if it works as intended for the banks to continue extending credit. shery: is this an incremental move or game changer? s fairly incremental to we are talking a half percentage point on the capital ratios, which tend to be around 10%. so it's not nothing, but certainly gives them a little more breathing room. scarlet: mark carney, the bank of england governor behind this effort. blessed take a listen to what he told his nation yesterday. is tot we will do continue to relentlessly pursue monetary and financial stability. and by doing so, facilitate the adjustments that are needed, consistent with those plans and for this economy to reach its full potential. scarlet: so you could argue, by cutting bank capital requirements, that is a step in

the right direction. will there be other announcements are measures he might take as well? michael: right, tuesday is when the financial policy committee releases its report and they will have a press conference on that day. he has talked about doing whatever is necessary to both protected the economy and financial stability. this certainly seems in line with that. he's got some other tools that he is able to use, including -- they are having weekly liquidity that.ns if the bank needs so there is certainly a range of options. shery: how are thanks reacting? how much confidence do they have in the boe's response? michael: it's been pretty positive across the board in the past week. you haven't seen the libor mover much. you haven't seen much stress and the funding markets for the banks. i think carney coming out that morning of the brexit vote and saying we are willing to inject

a lot of money into the markets as needed, that certainly helped the confidence and banks in general being better capitalized than they were in previous crises has led this to not being as dramatic as some may have feared. michael moore, thank you for giving us the latest on the banking system in the u.k. terms of the u.k. divorce from the european union may come down to whether germany or france is more influential in negotiations. here's nina ship on who may prevail. nina: it's already very clear. even though there are divides amongst the eu leaders, the trade-off in this negotiation is going to be slow market access in exchange for free movement of people. this is really difficult because, if you know how the campaign was run, the leave campaign, it was done so on the promise that leaving the eu

would mean that immigration would come down significantly. certainl really impact sectors potentially of the u.k. markets, specifically the financial services sector. and we have already seen hollande the keen on how this is all going to move to the eurozone. and i think merkel will be the more pragmatic leader in these negotiations. however, let's not forget what happened in greece. when it comes to the eu, if you put france and germany against each other and they have to choose from the u.k., ultimately, they will stick together because it is symbolically very important for the eu to stick together now in these negotiations. scarlet: do you see any situation in which the brexit could bring continental europe closer together rather than deep in the fragmentation that is taking place? nina: obviously, there has been some ball at rhetoric on how this will make europe stronger. i think in practice, very difficult proposition. acause there is still fun mental structural flaws in the eurozone and it is different how

berlin and paris want to tackle the challenge. the u.k. leaving is actually a huge blow to the eu. a lot of liberal allies that the u.k. had come including the netherlands, the nordics, feel isolated in europe now. they don't like the fact that they are left alone with germany and france and and fundamentally, germany and france think so differently as to how the eu and the eurozone should proceed, it's just been to make things very awkward. so i think a lot more to come. >> they seem to have the -- matt: they seem to really solidify the european union. but they don't want to talk about it. they don't to go public with it because it is so unpopular monks the voters. nina: this has always been a problem with the eu, especially with the eurozone. how can you have monetary union without full-fledged lyrical union? germany has to decide -- political union? germany has to decide. will they seed deaths of

countries like greece are not? whilst the u.k. was in the eu, that presented at least a strong partner for a more flexible eu. where the single market was the joining force. don'tose countries who join the eurozone can stay outside and is a multi currency union. it is interesting to see when the british commissioner resigned, his financial services brief was given to the commissioner -- scarlet: that was nina schick. shery: coming up, it's our mystery stop of the day. cutting the pr blow, this is more than a free lunch. this is bloomberg. ♪

you are watching bloomberg markets. scarlet: the news has gone from bad to illegal for today's pick, which felt the 2013 levels after more controversy on a tough year. chart from the middle of last year. that is the correct answer. it has to do with the chief creative and development officer chuck krum packer.

he was related to a cocaine bust in new york. it hit the news last night. according to some analysts, this could hinder the company's turnaround efforts. this adds to some of the uncertainty. umpacker added a new rewards program for chipotle customers. the shares were down 34%. there have been some food safety issues at chipotle. if you look at how the stock is doing, it is done another percent, not a huge decline. but the issue at hand really for chipotle is the comparable sales. the comparable sales changes. you see the collapse in cops sales as a result of what is happening. the free lunch reference has to do with the fact that chipotle has been offering promotions to customers to get them back in the door. one of the interesting things we

found is that come if you look at the valuation of chipotle, it is still well above the peers. down,ly has a price come but the earnings forecast has come down as well. this is the index of various restaurants. then you have chipotle up here. even though the stock has gone down, the forward pe has actually gone up. so still trading at some lofty evaluations. shery: i like their burritos. julie: i like their burritos, too. scarlet: not a fan. but hey, free lunch. mohamed el-erian penned a fresh, today on brexit and the impact on central banks. he spoke was vonnie quinn and mark barton on the phone and give more details. mohammed: central banks are now looking at even more difficult growth.

most agree that the brexit uncertainty will not at least a half percentage point. and all thatospect comes with that, the central banks, the bank of england of particular, feel that they need to do more. likely, the ecb will do more qe. vonnie: the spread between the two and 10 year is now six basis points. well the u.s. continue to be a safe haven for investors? and what will the federal reserve have to do? mohamed: so the federal reserve right now is seeing its yield curve captured by what has happened in europe. and the result is a relentless decline in yields and a relentless fattening --

flattening of the yield curve. if you are facing negative interest rates on over 30% of government debt, you will look rates.ay to get positive and you few think the currency will be in your favor, then u.s. creditors become even more compelling. so what you are seeing is basically the globalization of the fixed income market and the massive influence that the slowdown in europe and the incremental policy activism is having around the world. mark: but how low does the u.s. tenure go? -- 10-year ago? mohamed: if you go down 1.25% easily if we continue to see this combination of more central-bank activism and a slowdown in europe. ironically, the u.s. numbers are not that bad. so you may get quite a bit of volatility. ,ut as the tug-of-war develops

the u.s. is doing ok and the pressure for lower yields have come from across the atlantic. scarlet: that was mohamed el-erian. shery: time now for the bloomberg business flash. a federal court in brazil has ordered more than $6 million in facebook funds frozen. popular messaging service whatsapp has repeatedly defied a messagesorder to send from major trafficking gang. found that employees fewer than half are proud to work there. deutsche bank said the results ain't a sobering picture. last year, the ceo outlined plans to cut jobs and risky assets. , itlet: still aheadscarlet: is focus on farm a week your bloomberg. etf'sl look at biotech

and pharma etf's investment opportunities in that sector. this is bloomberg. ♪

this is bloomberg markets. pharmait's focus on this week. scarlet: there's lots of different ways investors can play this industry with etf's. let's start with the most basic spder.- the reflected in the outflows? health care has taken it on the chin. if you want to blame anybody, blame heller quentin on that. ever since she mentioned price blame hillary clinton

on that. ever since she mentioned price gouging. this has been a bullish area for a lot of people. use, itth care etf you is all 50% pharma. for people looking to play pharma, most people are probably happy with 50% exposure. but there are some etf that drill down and just give you pharma. scarlet: where are the opportunities are nowscarlet:? eric: the one the most people are using, pgp, powershares dynamic pharmaceuticals. down 9% this is year, but up 160% in the past five years. performingest 10-year etf of all of them. here's why. it is recently outperforming other pharma by about 40% in the last five years because it has biotech. biotech.adds 30% it is not necessarily the smart beta design inside of it. just the fact that it is liberal and let's biotech in.

it is a rocket booster. so you got to look at these ats and look at the subsectors. etf's and look at the subsectors. having said all that, when you talk about pharma, the drug spades, is it a growth play for a value play or a safety play? eric: a little bit of both good and some people go their defensive or the yields or some people think it is a growth. if you look at the fundamentals in that market going forward, again, the baby boomers are retiring. they have a lot of money and they want to live forever. that alone is a pent-up demand that is what you keep coming. you look at one of the areas of pharma the has gotten a claim is the generic drugs. now there is an etf that tracks that.

gnrx has done better than the pharma this year. it is down only 5%. the other ones are all u.s.. this one goes international. you are getting 30% u.s.. but it's got india, israel and south korea. it is a much more global take on generics. shery: that was my question as well. how concerned should you be when you are so internationally exposed? eric: it's good and bad. more tricky. much but in this case, it's good. scarlet: this is bloomberg. ♪

shery: life are from bloomberg world headquarters in new york, i'm shery ahn. scarlet: and i'm scarlet fu. this is "bloomberg markets." mark: st. louis fed president

james bullard says for now, he is sticking with his call on rate hikes. he said in london that he still believes there will be one interest rate increase this year. bullard also was asked about the impact of brexit on the u.s. economy. there is the issue about whether europe, whether there would be further contagion to europe, but i don't see that so far, either. so far, i don't see a big impact on the u.s. mark: bullard says the pullout -- the fallout will unfold for many years. expected toama is issue an executive order to make protecting civilians a more integral part of planning u.s. military operations. the president will disclose the number of civilians that have been killed in drone strikes in pakistan, yemen and africa since he took office. going on inair war

the u.s. presidential campaign. hillary spend roughly $500,000 a day on tv commercials. the biggest concentration of ads came in three battleground states, florida, colorado and north carolina. the countdown is on as nasa gears up for a close encounter with the biggest landed in our solar system. -- biggest planet in our solicitor. the juneau probe will reach jupiter after a five-year journey from earth. the approach is critical because if it fails to decelerate, it will slingshot past and disappear into space. global news 24 hours a day powered by 2600 journalists and analysts and more than 120 countries. i'm mark crumpton. this is bloomberg. shery: donald trump zeroing in

on his proposals for reforming american trade policy. on tuesday, he unveiled a plan to abandon the transpacific partnership, renegotiate nafta. joining me now is brendan greeley from washington. to see aprising candidate who has benefited from trade with the world take this stance. is he truly an anti-trade candidate? brendan: he says he is getting his ideas when they are gladhanding on the campaign trail. there is good academic support for the idea that those trade benefits everyone in aggregate, it does not benefit everyone the same way. there have been pockets of the u.s. that have been severely affected by trade. there is some academic support

for what donald trump is saying. what does he want to do about it. he says he does not want to end trade. he wants better trade, more efficient trade, he wants trade negotiated on better terms. to that, i say good luck. we've been trying this for decades. he wants to reform trade as opposed to eradicate trade.

+++ actions at the wto. we have a lot of pending action. some actions already coming from the u.s. it would not be that much of a divergence. he says he is going to instruct the u.s. trade representative office to find every trade violation that is currently happening from other countries and he will bring actions to the wto. experts say there is no such list. it is hard to figure out what the violations are. case is good evidence that is brought to the deputy oh do not have that much of an effect on trade. it's not like you can go and bring a court case and when it in world trade organization -- win it.en it shery: you can have no trade and perfect sovereignty, all on north korea. explain this to us. brendan: there was a bit of

north korea, u.k. in his speech. he has the same challenge that the brexiteers have. he says i want trade with protection without a loss of sovereignty. that's the same thing they are saying in the u.k.. europe, it is the european court of justice that defines what free-trade is. you can compare apples to apples and trade them across borders. it is through the cumbersome bureaucracy of european howission that we know things are sold and we prevent subsidies th. nations have given up some of their sovereignty to have these things defined for them. donald trump says i want more sovereignty, or trade, well-defined trade with good

protection, but i don't want to submit to the commission that is laid out in the tpp, for example. it is very difficult to retain perfect sovereignty and have good productive trade that protects your workers. much.t: thank you so brendan greeley joining us from washington. we are taking a look at bolts wagon -- volkswagen's big emissions scandal settlement. this is bloomberg. ♪

scarlet: this is "bloomberg markets."

it has been a tough week for auto giant volkswagen. u.s. sales dropped 22% in june, marking the eighth straight month of sales declines for .olkswagen coul patrick, government officials touted this $14.7 billion settlement as unprecedented. give us some context there. how is that the case, how does it compare to others? >> it is a pretty big number, obviously, compared to other auto settlements. it dwarfs the g.m. ignition switch settlement them of the toyota accelerator settlement. shery: this is a huge chunk of money. where is the money going?

patrick: the bulk of it will be allocated to the consumers, the people who bought an least these cars. one of the egg options, they will be able to sell back that car -- one of the big options. -- it's a will sell fix is found, they will get a and get a cash payment on top of that for their trouble. scarlet: $10 billion goes directly to the buyers. what about the rest of it? >> the other $4.7 million goes -- $4.7 billion goes to a

fund to address in our mental issues. -- environmental issues. upgrade vehicles to cleaner sources. the other $2 billion will go to zero emission vehicle infrastructure. electric charging stations that will be public. a lot of that money is going to california, which has been a leader in electric vehicles. of volkswagen's problems does this actually solid? -- actually solve? patrick: there's another engines of three liter that have not been addressed.

there's also the possibility they could face additional civil and commercial penalties from the u.s. government. clean airions of the act, an ongoing criminal investigation. this will take a wild to play out, this is the government, after all. what kind of timeline are we looking at? patrick: it is only a proposed settlement right now. the buybacks could start as soon as october. it is going to be a long process. people will have until 2018 to decide what they want to do. there is a trigger, bolts wagon -- volkswagen needs to get 85% of these vehicles off the roads or fixed. people do not participate in that settlement, that adds up quickly. scarlet: do we have any sense of this might -- of whether this

might set a precedent for these other carmakers like mitsubishi? are looking at this settlement, how it is built and carried out to see if this can be used as a model for future settlements. they hope this serves as a deterrent factor to prevent other automakers from engaging in this kind of behavior in the future. shery: patrick, thank you for joining us. still ahead, we will talk about the week plus stories from the world of media. apple is considering a purchase of jay-z's tidal. this is "bloomberg markets." ♪

shery: a beautiful day in new york. you are watching "bloomberg markets." michael is the latest conservative mp vying to replace david cameron.

obvious omission. >> the vote was held, turnout was high and the public gave their verdict. there must be no attempt to remain inside the eu and no second referendum. leaders are changing our prisons and justice system. a leader who led the case for change in this referendum campaign. >> i love my country, i love my party and i genuinely believe that what i stand for, the values ever-present, the strength i bring are exactly those required. >> in order to heal the divisions created by the referendum, we must admit the given- the instructions to us by the british people.

i think people will want somebody to lead the country who believes in britain plus future outside the eu -- britain's future outside the eu. colleaguesonsulted and in lieu of the circumstances , i have concluded that person cannot be me. scarlet: we will continue to --ng you all the highlights rings have moved past the brexit with the s&p 500 gaining for a fourth straight day. six out of 10 industry groups are gaining for the day. led by consumer discretionary and health care. higher,all 10 groups

led by health care and telecom. to abigail doolittle live at the nasdaq where she is checking out tech movers. abigail: a quick macro check. the nasdaq is modestly higher. volatility. last thursday come other was a big rally, then the big brexit selloff come into the four day rally. the nasdaq is off of its highs. volatility. the question remained, what does it mean? will we carve out new highs? we see a decent ending trading range, huge with saws up and down telling us all the uncertainty between the buyers and sellers, we are moving up towards resistance. the head of technical analysis

and be tig is saying that that should be tig is saying that while the snapback rally is impressive, there could be more downside ahead for the broader equity indexes in the u.s. overall. shery: what was one of the best for the nasdaq and one of the worst? abigail: one of the top is resources.wrangles over the last seven days, it is up 22%. on the downside, looking at a come experience therapeutics commissioners shares down 36% over the last seven days. the company said it is unlikely the fda is going to approve one forheir experimental drugs

cholesterol. gold,gh go, but ran investors are probably people used that's pleased with the last seven days. scarlet: apple is said to be in talks to buy jay-z's streaming service tidal lions gate made an let's bring in a partner at 80 kearny. t kearney. scale, content and capability -- at this point in the cycle, which is dominant? >> the rates for content is key. you want the talents to compete against other options out there. , buto need to get content when you think about industry sectors under pressure, things like news media, newspapers,

local television, those are segments in the industry that you are starting to see that pressure from decline and those companies aren't -- are looking to fill the scale. lions gate and stars is an interesting one. it introduces an interesting element from a content perspective. as we start seeing the channels and the networks compete for new shows and good creative talent, that wase like starz somewhat undersized, having access to a creative engine like lions gate makes the more of a destination for those up-and-coming creative talents looking for a home. starz, which may have been a fourth or fifth choice is now almost guaranteed a seat at the

table. when you think about the capability side and the ability to really push content through a pipe and expand the influence of brands, that will play in that mix as well. starz,: lions gate and in terms of market cap, they are roughly the same size. it could have easily been starz purchasing lions gate. acquiring the content inside lions gate, those are meaningful brands. a distribution engine could do a lot of work with those. just the start of something new, something bigger? greg: the sense out there is we have a few of these big deals that need to clear. and you will have winners and losers and the winners will still have elements of their portfolio they need to clean up. the losers will be looking for that consolidation play to

really build their capabilities. we are at the precipice of a lot of activity in the space. content is still going to be king. that will still be the driving force, but you still have the play of distribution capability as well as legacy and digital. scarlet: let's talk about apple potentially buying jay-z's company tidal. how does that fit into the three elements of media strategy, content, scale and capability? greg: it is clearly a play for content. way they are managing those artists in terms of giving them a piece of the action and also allowing them to expand and grow becomes a key part of apple's strategy moving forward. jay-z spent the last year cleaning up tidal, they are now

a credible player in the space. distressedt buying a property anymore, they are buying true content and true artist they can build on. scarlet: is this a play for talent, too? is this a case of apple trying to reach out to jay-z? does not make sense unless they get that talent in-house. how do those deals get structure going forward? scarlet: the expertise of someone like jay-z. >> and the ability to move music beyond audio into an experience. think about apple's platform and their ability to take content and make it experiential beyond the original form at the consumer level, it becomes exciting for artists, i would think. shery: thank you so much for joining us.

coming up next on "bloomberg markets," is at one and done for the fed on interest rates? james bullard will give us his forecast. this is bloomberg. ♪ . .

>> welcome to "bloomberg markets."

>> scarlet: welcome to "bloomberg markets." london,we take you from to beijing and back. scarlet: the u.s. 10 and 30 year bond yields falling to record lows. shery: the fed president says he sees little impact of the right to vote on the u.s. economy. more highlights to come. scarlet: hershey's board rejects the takeover offer. on how they pick the best opportunities in takeover deals. first, we had to the markets --k, or julie hyman has where julie hyman has a rap of

the week. julie: it's been eradicated. as we've seen this and credible rally -- incredible rally. the rally today is moderated, to be sure. but over the past four days, the s&p 500 has gained around 5%, -- i was asked to see the volume is not that low. here's a various group volume versus the 20 day average. inare seeing an increase consumer staples volume and overall volume for the s&p 500 is little changed versus what we have seen over the past 20 days. as for where we are now, versus last week. here was last thursday, and the rally we had going into the u.k. vote. the subsequent two days in the big decline, and now the rally back. about .5%.

of about 3% or so. answer some of the stocks that were doing the worst in the wake of this brexit vote, i wanted to check in on where they are now. there are still lower, talking about lincoln national, cf industries, invesco, and schwab. these are the companies that investors and traders were seeing as most exposed following the vote. let's talk about markets now. julie: in terms of index points, the biggest gains we are seeing today -- amazon and apple are frequent on this list, home depot as well, which is at 1.8%. percentage terms, to point out a couple of significant movers that we are seeing today, netflix has been gaining ground. research says the company's international subscriber growth was better than netflix anticipated. though shares up 5%.

dick's sporting goods winning an auction, number of sports authority locations, paying $15 million for intellectual property for the name. analysts say that is a win for the company. higher, is down 8.5%, less than estimate it. it's now 25 straight months of declining gaining revenue in macau. scarlet: an ugly stat. they queue, julie hyman. shery: let's check in on bloomberg first word news, mark crumpton has more from the newsroom. mark: loretta lynch is it knowledge that in impromptu meeting with bill clinton and a phoenix airport cast a shadow on the public perception of the e-mail investigation, involving former secretary of state hillary clinton. the attorney general address the controversy today at the aspen ideas festival in colorado. loretta lynch: people have wondered and raised questions about my role in the ultimate

resolution of matters involving the investigation into the state department e-mails. to the extent of people have questions about that, about my role in that, certainly my meeting with him raises questions and concerns. believe me, i completely get that question. market: the attorney general added she would follow the recommendation of prosecutors on whether to file criminal charges against mrs. clinton. families of some of the nine people shot to death in a south carolina church last year are suing the fbi. the lawsuit accuses the government of errors that allow dylan roof to buy a handgun allegedly used in the june 2015 massacre in tarleton. fbi director james comey has said that he should not have been able to buy the gun, and he promised a full review. president obama says a vaccine for the zika virus could be developed in fairly short order, if congress acts to passes the gut convention -- a zika virus

prevention bill. the president says of the effort is well-funded, he is fairly confident that the virus can be stopped before it spreads to the continental u.s.. he says that lawmakers should not take their summer recess before passing the bill. traffic deaths surged to a record high last year as cheaper gas prices caused drivers to hit the roads more. prillaman area statistics from the federal government show fatalities rose 7.7% to more than 35,000 last year. that makes 2015 the deadliest driving year since 2008. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. i am mark crumpton, this is bloomberg. back to you. shery: mark, thank you. yield on the 10 and 30 year treasury's hit new historic lows this morning. but the u.s. isn't alone, yields a been plunging to all-time lows

around the world. scarlet: if you take a look inside a bloomberg, this really illustrated. it has been the case that the u.k., germany, and japan, the purple, blue and white lines at the bottom, the u.s. holding up a little better. the 10 year yield is coming to a fresh low just today. people continue to pile on the safety of government debt. shery: talk more about this, thised el-erian notes shows more dovish growth. we talk about this with michael mcdonough. mike, when you look at the divergence between what we between equities, where the emerging market index is pretty much back to pre-brexit highs, and u.s. stocks continued to extend the games so far this week. i think he hit the nail

on the head. you have a situation where central banks are looking less likely to hike, and in many cases, in the case of the u.k., may now cut. ais is with people not having lot of confidence in the future, they're buying the bonds. central bank seems to support pushing these euros lower. the same time, the fundamental haven't changed. we have good data out of the u.s., you don't want to bet against the fed. it's a mindset that people have. people are buying into equities. shery: in the u.k. come in terms of what the boe has been saying, when do you expect that cut to come, and how big will it be? michael: we expected 25 basis point cut. july could be on the table as well. it will probably occur this summer, and i think the boe has been handling the situation pretty brilliantly. soul voicese of the of reason in what's happening in the united kingdom. and boe action is probably going to prevent the u.k. from falling

into recession. the boe has been handling that really well. joe: they talk about no growth, but there is evidence of rising prices and some evidence that high prices is coming. isthe u.s., the atlanta fed now tracking 2.7%, really solid manufacturing. is it possible that people are being too blasé about the idea that the data might justify hikes in the medium-term? i think so. i think the fed really pivoted off of one data point, the may implement report. we will get another employment report for june on july 8. data is still pointing close to full employment. with it would come all the things it you just said. continued wage gains. it would support rate hikes this year. goodet: he brings up a

point about inflation. the u.k. is going to see inflation with the pound we getting so much the last couple of days. that being the case, is there distinct and to be made between good inflation versus bad inflation? kind of inflation that's wrought on by imported inflation? joe: the bank of england is going to ignore the rise of inflation, and choose to support growth. you're going to see the cuts despite a rise in inflation, which will come because of the currency. michael: they may have to expand the pool of bonds that they buy, due to the fact that so many bonds are technically ineligible due to the collapse in rates. is policy doing enough to stimulate growth when seeing the expanded bond buying? michael: expanding the assets they could purchase, the criteria was sort of inevitable, as much as they are buying, they're soaking up the thing. and then you have this flight to safety as you just said. area is going to get

better, but the ecb is probably not going to move the rate. they are going to have to tinker with asset purchases. they may need to do more. we still don't know what the impact greg fundamentally will have on the rest of the world. , it would is obvious think it will be minimal outside of the u.k., but time will tell. shery: i want to take the conversation to china. we've been talking so much about the u.k. brexit and the european union. what is happening there, because we are seeing pmi falling to 50, is around that level, it is still expanding manufacturing, but not really there yet. what are you seeing their? re? michael: one of the concerns we have is there has been a surprising amount of monetary easing in china going on behind the scenes. what's worrying is when you have this much monetary easing, you expect growth to rise with it. but we have been saying is growth not rising, but stabilizing.

this means when you look out through the rest of the euro, you're going to have to have more easing into may depend more on the physical side. we think china's economy will be stable, but it's only going to be stable because they have to do more easing. and growth will probably end of the year somewhere above six point 5%. -- 6.5%. shery: i have a chart showing that shlomo -- a chinese companies are weakening. as opposed to larger countries that have been supported by the government. is this just backtracking now? going into government spending and the biggest at least. michael: it's much bigger than small companies and big companies. as they have been ramping up the season, it's been going to support the industries that they are trying to get out of. the largest though he is, housing, construction, heavy manufacturing. it has been going to support the wrong areas in terms of the rebalancing agenda. and that's a little bit troublesome. it means that this kind of takes the can on how quickly they can do this. it also increases risk for the future.

you have seen housing come back up. we --a is -- as though soe's are going back up. they are leveraging in the wrong places. the sectors that could do more with the credit are getting the credit, the sectors that can do a lot with it are getting it. they know they can go there and get the growth. that's what's happening. joe: in way to expand further. are people too optimistic about china's ability to change its growth model? we talk about economic reform and weaning off these industries that have all of this overcapacity. you are saying it doesn't really sound like that happening. if anything is going in reverse. people: i don't think are too optimistic, i just think they have a timeline wrong. it's good to take longer than people expect. i think what's happening now is a step backwards. they really need to thread the needle. you need to do leverage these heavy manufacturing sectors, the sectors where you have too much capacity, and really at the same time shift credit and make sure

and companies with good ideas are getting the funding. that is where you get productivity growth and wage growth. deleveraging, reducing overcapacity means people will have to lose their jobs in some sectors. you need to get those jobs somewhere else. scarlet: let's tie this all together. the extensive coordination we may have just seen with all the pronouncements from different central banks pledging to add liquidity into the financial system should it be required, how does the ecb and boe action this week constrain or limit china's next move in any way? michael: china is a very close eye on the dollar. the dollar is appreciating substantially, you've seen some yuan weakness. they are concerned with how this how ispact the u.s. and the fed going to react and how is the dollar going to react? if you see a strong appreciation of the dollar, you'll probably see -- china talks about moving

to a basket of currencies. if you see a sharp rise in the dollar, that transition is probably going to happen much sooner. if the dollar is stable, they will probably keep more or less a de facto pace with the dollar for a while longer. scarlet: michael mcdonough, thank you. and joe weisenthal. you can find more on the bloomberg. and joe you can catch later on "what a gymnast -- what did you miss?" this is bloomberg. ♪

scarlet: -- shery: you are

watching "bloomberg markets." investors are still assessing whether last week's brexit vote will mark the beginning of a domino effect. this morning on "bloomberg surveillance," the st. louis fed chair shared his views on the implication of brexit, and if we should expect a longer span of slower growth. >> i have added 2%, and the growth rates for the whole post 2007, 2009 recession has been about 2%, 2.1% to the u.s.. i think any cyclical dynamics are probably worked out of the system, and will continue to grow at 2%. i don't consider that pessimistic, exactly. i think you could transition to a higher growth rate, but you're going to need higher productivity growth in order to get that. >> did brexit alter your outlook? far isink the verdict so that brings it will not have a big impact on the u.s., possibly

zero. flight to the dollar, the dollar is a little stronger, but not enough to really have a big impact. yields are lower, you just pointed to lower yields, that's usually considered a bullish factor for the u.s.. those two probably offset, you get to zero. those of the kinds of analyses i'm seeing so far. there is the issue about whether europe, whether there would be further contagion to europe. i don't see that so far either. we are definitely waiting to see. so far, not the a big impact on the u.s.. does brexit not put deflationary pressures around the world that makes it more difficult for the fed to achieve a 2% target? >> i don't think brexit by itself is going to influence deflation. the concern would be that something spreads in europe is in more trouble or somehow going forward. i'm just not seeing that happening right now. that other the idea

countries are going to copy this vote. that doesn't seem very likely at this point. for now, this is a big issue for the u.k.. it's great human capital, great business tradition, a lot of great things can happen to the u.k. you have to plot for a new relationship with a consonant -- with the continent. it's going to take a long time to negotiate that, the canada to seven years. if you can get on that glide path, you will be able to throw the uncertainty around situation and get to a better outcome. tom: anytime jim bullard mentions plot, everyone sits up worldwide. let's plot over to this chart. i need to give you a for standard deviation chart.

this is the lollipop chart. here is the two-year yield, and here's the different fed meetings. here jim bullard has ham and cheese. but this one, he has been a better and jelly. and up we go. this is what the market wants, francine. the answer is, we rolled over down to the new lows today, and we are 1, 2, 3, 4 standard deviations off the script. jim bullard, do you and share yellen and others, governor carney, do need to blow up the central bank script right now because of what markets are telling you? jim: we had these new ideas about our plot, and how to describe the current situation in the u.s., and a lot of it has to do with the idea that we are in low growth high liquidity premium regime. there's no reason really to forecasts that will come out of

that regime. i don't see this as particularly pessimistic. i think we will still grow at 2%. unemployment is low, labor markets will remain strong. the fed will be able to hit its inflation target of 2%. think, is very reasonable and good outcome, a reasonably good outcome for the u.s. nothing be better, but bad is going on i don't think in the current environment. shery: that was st. louis fed president james bullard speaking earlier on bloomberg. he wanted to show you a five day intraday chart of the s&p 500, because it really tells the story of what's been happening. spillover you had from the selloff following the brexit vote. and then the recovery began on tuesday. up now have the s&p 500 three point 2% for the week, with all time in history groups higher. this is bloomberg. ♪

scarlet: this is "bloomberg markets," i'm scarlet fu. shery: i'm shery ahn. scarlet: we've had data in the on manufacturing, which was better than anticipated for the u.s. economy. in may.sus 51.3 this shows the manufacturing expanded at the fastest pace in more than a year. the bookings and production sections of this report also climbed to three-month highs. that's perhaps an indication that games can be sustained. this represents activity bottoming in the energy and commodity sectors, and the improved tone of the credit markets should help activity over the summer months. the caveat is that this was

taken fore the brexit. and before the u.s. dollar had a bit of a resurgence as well. he says there is a parallel to 1998, when i is that manufacturing went through a dry spell and then had a powerful snapback. 18 years ago, the fed was there to cut interest rates following the asian financial crisis. this time around, the fed has made it very clear, it is on hold. in both instances, the international view prevailed. shery: i want to take a look at some positive use that you gave us out of the u.s., taking it over to the u.k. in europe. take a look at some of the winners out of the brexit. utilities have benefited from the u.k. vote to leave the european union, investors taking flight to some safety stocks. the referendum result they are, soaring afterese that. we're not just talking about these, talking about european

electricity and gas companies. lot still flocking to safety, despite this bump we have seen in the markets recently. scarlet: people still need power. shery: they do. with only to use power. scarlet: still coming up on "bloomberg markets," a busy week for m&a. we take a look of the deals in the making or breaking. this is bloomberg. ♪

scarlet: from bloomberg world had -- shery: from bloomberg

world headquarters, i'm shery ahn. scarlet: and i'm scarlet fu. you are watching "bloomberg markets." attacked an have restaurant in the bangladeshi capital. there are reports of able being taken hostage. cnn reports the u.s. embassy warned of the situation on twitter, advising people to shelter in place. we will continue to follow this story as it develops. we will have more details as soon as we get them. laid out theis reason why he should be the uk's next prime minister. the british justice secretary promised to reduce immigration and to make the country a better place to live. he had this to say when asked about whether the u.k. would invoke the european union's exit clause. would only trigger it after extensive for luminary talks, of the chyna discussed earlier. i have no expectations that article 50 would be in this calendar year.

market: he broke with david cameron overstaying in the eu. the judge presiding over the trial of a white tv -- police officer says he will appoint as national prosecutor. an investigation will focus on the other officers on the scene of the 2014 shooting. civil rights attorneys say they suspect other officers conspired to cover up what happened. the judge is already appointed a special prosecutor for jason van dyke, the officer charged in the fatal shooting of laquan mcdonald. a federal judge blocked a mississippian law moments before he was scheduled to the effect. it would have allowed merchants and government employees to deny or delay services to same-sex couples based on religious beliefs. the law also protected the belief that conception -- sex could only take place in a man and a woman. tonight's mega millions strong will give lottery players a shot at the 10th largest jackpot in u.s. history. the prize is now an estimated

$115 million. the record prize with at $1.6 million powerball jackpot in january. the latest is the largest jackpot since a four to $30 million powerball prize was won by a new jersey family back in may. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. i am mark crumpton, this is bloomberg. back to you. shery: i went ahead to the markets desk for julie hyman joins us, we are taking on m&a. julie: the number of movers off, this m&a, first is a maker of recreational vehicles, the suv's up by 6.4%. company bought a privately held for $576 million. it looks at investors like that deal. we are also seeing again another

makers of a different kind of recreational vehicle. harley davidson has been leading other kind of recreational vehicle makers. are talkinge, we about polaris and arctic cat, which makes no mobiles. harley davidson is a by 12%. it seems very nonspecific, it's unclear if it has any basis in reality or what its source is. also, honeywell making an acquisition today, buying a company that is privately held, a warehouse automation company. company backed a by for my refund. honey what was up earlier, now the stock is little changed. the latest in the williams company saga. wasgy transfer partners attempting to acquire williams company over the past year or so at least. the companies have been in talks

, a court ruling last friday seemed to pave the way for it to dissolve. today,est in the saga six of williams directors designed -- resigned after a failed attempt to remove the ceo. armstrong had been in favor of keeping williams independent. these directors wanted williams to go ahead with the sale. a conflict here. both of the stocks are trading lower today. shery: julie, thank you. scarlet: it's been a busy week in the dealmaking world between hershey rebuffing a bid yesterday to lions gate $4.4 billion deals to buy stars. the regulatory landscape makes it harder for these mna's to come to fruition. take a look at the deals that have been scrapped so far this year. pfizer allegan, baker hughes, halliburton. and stables at office depot. , we are joined by y and ed hammond.

we showed a graphic of deals that have not come together. regulators appeared to be whatially aggressive, and changed? ira: halliburton was pushing the limits in terms of size. abletionally people were to rely on antitrust precedent and say within a given industry, this was the market definition, and if market shares exceed a certain level, they would vest. in this case, because there were other components involved in terms of innovation and integration of the products, he wasn't able to get approved. when they talked about blocking halliburton baker hughes, i talked about how any kind of solution would be so convoluted and unmanageable that they wouldn't allow behavioral oversight of it. you need a structural do is to

turn out if a deal is antitrust problems, more so than before. wholet: as a reporter covers all the deals, the first question that must run for your head is can they guess pat regulars -- get past regulators? ed: because we're seeing so many large deals, and so many get blocked in washington, it's an immediate question. seeing that reflected in the , we were talking just before we came on, particularly on the health insurer deals, both of which are in front of justice at the moment, the spreads are very wide. it sort of reflects this fear that has come into a lot of big deals, which you can just play the traditional what is the regulatory risk? they seem to be much tougher in these industries at or very near and game in terms of consolidation. that, continuing up on

this week we just had senator elizabeth warren out to talk about these aggressive enforcement of antitrust laws. this mean we see more enforcement? ed: they telegraphed they are willing to be tough on deals, halliburton baker hughes deal being blown up, and a few around that, i think the justice has shown they have teeth. anyone going in will be frightened, and going into the election cycle, it makes great headlines for politicians to be very tough on this idea. anything that is anticompetitive or seen as bad for the consumer, i imagine those with war and others will come out swinging on very tough. shery: elizabeth warren is among democratic senators trying to block mergers. what are you looking at now in this environment? with elizabeth moran, i doubt the department of justice needs her to tell them to take a closer look at this. they are making their own

decisions on whether or not the deal is anticompetitive. scarlet: she is to make noise anyways. of: there's a different making noise and how long it moves forward. in my opinion, she has no impact on the transactions that are going to occur now, especially because they are going to be decided before the next election. scarlet: i want to bring up this humanity will spread turns whiter, which would suggest that people don't see this necessarily happening. it's much more negative. ira: correct. there's a very big difference between how spread the reflected -- spreads reflect family the probability of that averment of justice proving it, they also reflect how people are feeling at the time. as hedge funds have performed poorly, and there is redemptions, people trade out of it. and also, humana has been unfairly tarred with the issues that cigna has. shery: how does that compare? ira: it's a much different transaction.

in terms of keeping it as quick as i can with a limited time, going back to my comment before about the difference between behavioral remedies and structural remedies, i think cigna anthem would require behavioral remedies that are unmanageable. network,national blue they also have this two thirds the bluesing part of association, which limits the amount of competition they can have. with regard to humana, humana is primarily a medicare advantage transaction. those are discrete markets, defined on a local level. that's where they come up with a medicare benchmark. it's a very good business with willing buyers. of course, there is real risk to this. our implied probability elevation through a process believes that it's a much higher probability that the market is reflecting. scarlet: i want to bring up the average premium. have a function of bloomberg

alleges a look at it. if you come inside my bloomberg, you can really see how it has moved. you can ignore the final print for thecause that's third quarter were you really haven't seen a lot of deals. nevertheless, you can see that the premium last quarter in the second quarter was somewhere in the neighborhood of 25%. not that far off from where it was five years ago. hammond, when you look at how the deals volumes have dropped off since the end of last year, what increases the deal premium more? is there a correlation? ed: i think there is a correlation. company is one of the very few numbers of what you do, that will come at a very high premium. you would many bidders going after you. i think another thing we have seen is in particular

industries, the premiums have been astronomical in the past year or year and a half. this m&a frenzy where so many deals are being done, so many companies were trying to buy into these early-stage her mid-stage companies. and get in the pipeline of for that pipeline into their existing one. you saw enormous premiums being paid. that's going to come up, you can only keep going up for a certain time. i want to talk about a merger arbitrage. more money is being committed to this. funds like paulson have increased their allocation. how crowded has this become? ira: it's always difficult to say. arelarge transactions, they far too big. every thing they put in a position recognizes there is a real probability they are going to be wrong and they have to size their positions accordingly. is to narrowan do

our probabilities. opportunities when there is a dislocation, for example, rite aid is a security that i also think has much better antitrust clearance prospects that is being reflected in the stock. being unfairly tarred with the same brush with office depot stables. office depot stables, there was this concern about this national market, and it did come to fruition. with regard to rite aid, i believe they are discrete markets that can be divested. you have something called psa , prescription service of ministry organizations which excellent help support disparate pharmacies. those are the distributors. shery: thank you. ira gorsky and ed hammond, thank

you. scarlet: much more coming up on "bloomberg markets." a new report reveals surprising details on the nations wage disparity. shery: donald trump, the presumptive republican nominee is speaking at the western conservative summit in denver. annual summit draws prominent conservatives from around the country. donald trump has been trying to master a tight rope walking with evangelical christians, who helped fuel his rise to the top of the publican party. you can watch the speech on your bloomberg and life go. this is bloomberg. ♪

mark: you are watching

"bloomberg markets." i am mark barton. vonnie.i'm james bullard will get the forecast. market: goldman sachs reportedly cutting jobs. we tell you which employees are being let go. vonnie: a new era in the philippines. a look at what the new president rings to the office. james bullard says he is sticking with his full on rate increases. he says he thinks it will be one interest-rate increase this year. he was asked about the impact of brexit on the u.s. economy. the issueard: there's of there would be further contagion to europe, but i see that so far either. we'll keep an eye on it. we are wait and see. so far, i don't see a big impact. says the fallout from the brexit but will unfold over many years.

meanwhile, the bank of england is planning to cut capital requirements. it would give lenders more flexibility to withstand the fallout of the nation's vote to leave the european union. u.k. bank stocks have plunged in the weeks since the vote with nearly three of the largest lenders all down with 25%. mark: manufacturing in the euro area picked up steam in june, a group of the fastest pace in six months. the data was collected before the uk's vote to leave the eu. the only country where manufacturing shrank was france, which was hit by a number of strikes. in brazil's bonds have been world beaters this year. his concern about the country's topsy-turvy policies. brazil's local bonds have returned 46% in dollars so far this year. theng confidence that government can pull it out of recession. , thetential roadblock

administration gets caught up in the long-running corruption probe. goldman sachs has dismissed about 60 traders and sales papers in new york and london. it affects staff in fixed income and inequities. oldman already and am elated more than 350 jobs in new york this year because of a slump in trading and deal making, the firm is in commenting. -- is not commenting. time for theie: bloomberg quick take. pasthe philippines, the six years have been marked by relative stability and economic growth. country may be veering onto another course as voters turned to a new president. here's the situation. landslide win in the may presidential election, finishing more than 15 percentage points ahead of the candidate favored by the incumbent president.

middle class, including reinstating the death and shifting to a federal government system. after centuries of spanish of finallye, europeans determined to its own fate. emerged -- the outgoing president is the son of the former president, whose revolution ended a brutal and corrupt 21 year rule. the economy has averaged 6.2% gdp growth rate the world bank phrase the philippines, the yellow bar, and asia's rising tiger, surpassing its neighbors. also on his watch, the philippines for curing first-ever investment-grade credit rating, and seeing a surging stock market. here's the argument.

critics see him as the biggest menace since marcos and a threat to democracy. he says he want except move by lawmakers to block his plans. he has been conflicting signals over his policy on territorial disputes in the south china sea. philippians watchers say winning the election will be easy compared to the challenge of dealing with entrenched political elites and bring substance to his promises. after global business report. for more stories, visit bloomberg.com. ♪

shery: news is -- findings that today show that progress has been made in some cases, but in others, not so much. than man still earn more

most other racial groups, and women as a whole. kessler joins us with more. it were a lot of reports to go through. what did you find most interesting? zara: they were looking at medium wages very if you look at those in 2013, they are breaking this down by racial and ethnic groups, you were thinking who is going to be at the top of this, white men. it turns out that asian men outpace white men. shery: my huge margin. men earned15, asian it $24 an hour compared to $21 an hour for white males. that is significant. shery: i'm not surprised. educationt to do with , we have lots of highly

educated asian people. what does this have to do with that? zara: asians are more likely to have a bachelor degree, they are also more likely to have an advanced degree. at the 25 years old and older with at least a bachelor degree, those workers when you look at their median hourly earnings, we still actually see that asians are ahead. in 2015 for asian men, compared to $32 an hour for white men. scarlet: one thing you can't help but notice is women not earning as much. in every case. in fact, if you look at it, of course, women are earning less than white men and black men. asian women. shery: we have to lead the pack. zara: if you look at each racial category, women are going to be

earning less than men in terms of their median hourly wages and also if you compare all of them to white men. but what is somewhat interesting is white and asian women actually outpaced black and hispanic men. when you're looking at the overall workers 15 years old and older. scarlet: when we talking about asian people, we're not talking like they are all the same. that is one big caveat with all of this. the asian american population is very diverse. if you are talking about various -- korean versus another population, we don't have it in the data, but it is likely going to see a lot of different outcomes. scarlet: when things looked like in terms of the pay gap over time? see --vertime, what you

we are always comparing to white men. women in all these different racial and ethnic groups have closed the gap. white women a lot more so than black and hispanic women. what is interesting is black and hispanic men have not closed the gap with white man overtime. so the women have made in that sense, the women have made more progress than the men. scarlet: really interesting findings. thank you for joining us. up, the auto industry is on watch for potholes after u.s. sales were mixed in june. what does that say about the prospect for rebounds in july? this is bloomberg. ♪

a

york, 7:0000 in new in london, and 1:00 in hong kong. welcome to bloomberg markets.

vonnie: from bloomberg world headquarters in new york, i am vonnie quinn. here is what we're watching. stocks are fighting to stay higher to start the third quarter. the s&p 500 on pace for its best 2014, but october, some of those gains have fizzled with financials being the hardest hit sectors. commodity markets will be ,losing the week after brexit oil closing down 1.5%, well itsral -- silver hitting highest level in 2014. gf, fiat, chrysler among the companies missing estimates. markets close anou