alix steel is off. ♪ u.s. stocks closing higher. joe: the question is "what'd you miss?" whiplashhe market analyst ist, why one paying attention to gold and silver. joe: emerging markets had a great first half, could brexit ata game changer? >> we look what the u.k. vote means for the federal reserve's timeline for interest rates. we began on this friday with our market minutes. , the bestet averages week for the s&p 500 since july 2015. we saw selling last week after that u.k. referendum, but a big bounce back this week. joe: to say the least.

an incredible, breathtaking bounceback. >> briggs it came and went. -- brexit came and went. some interesting moves i wanted to check out. banks are one of the biggest parts of the market to pay attention to as we assess the fallout. solid day yesterday, a little down today, also down in bank of america, but most everyone did well with the stress tests. these banks did solidly on a week as everyone is looking at the financials. the entire banking complex was up on the week, very solid. , one of thetime laggards in the market in the materials group, up a little bit today, but overall only up six

tens of 1% on the week with some pretty big losses in the fertilizer and chemical companies, including dupont. joe: let's talk about the government bond market. yields just keep going down. u.s. 30 year yield hitting new lows. year isd on the 30 where the 10 year yield was at the end of december. i'm going to talk about currency. i'm going to talk about the russian ruble. there is a look at the change. the russian currency extending its biggest weekly advance in two months. the emerging markets becoming something of a benefit after that vote. oil stabilizing helped out the russian economy. sanctions against russia because of ukraine,

russia is somewhat immune to the u.k., so all that volatility impacting other markets this week not impacting russia as much. you can see the ruble rallying as a result. the precious metals had a good week, gold and silver doing well. there is a one-week chart of day, upally strong last 2% on the week. .ilver also doing well look at that. 11% on the week. i did not realize it was that big. a huge move for silver. there you go. >> that is a look at today's market minutes. let's take a deep dive into the bloomberg. is: one of the stories dropping yields. people think it will be a long time before the fed hikes, but the economic data in the u.s.

economy not that bad. mere is a chart of the is manufacturing report and the chicago pmi. i have a going back to the mid-1980's. those red vertical bars are recessions. and they have been around the 50 line or below or going down. we are above the 50 line in all these indices. none of them are going down. if you are worried about a recession, this chart says you should not be. if you think it will be forever before another fed hike, perhaps that assumption should not be taken so lightly. >> got to have some perspective. i'm looking how oil bulls need to look out. check out this chart. looking at the chinese strategic petroleum reserve, a big move up. chinese crude imports have risen , rivaling the u.s.

as the biggest oil purchaser. they built up their reserve so much that it has given some support to the energy markets. you wonder about what that means going forward if they are not a catalyst. it is something to keep an i on. that is a big move. >> joe, your chart got a lot of callers. i'm to take both of those charts, looking at correlations. this is pretty crazy, but stay with me. it is important for anyone in the stock market. this is looking at different asset correlations with the s&p 500. white is oil and stocks. blue is the u.s. dollar. orange is the yen. you had high correlations across asset classes. if we are high on the positive

that will show you the correlation is strong between those assets. fulcrum whereee a those correlations were breaking down, getting closer to zero, meaning things are moving independently of each other. that is good for someone trying to find yields, but guess what? brexit blue that out of the water. that has made it so hard for hedge fund guys and traders. joe: it is such a macro event. that night of the vote you saw all those correlations blowout. you can see all those charts and more on twitter. today's talk about trade in the week over all. we have three charts you cannot miss heading into the holiday weekend. look at all, take a what happened over this week.

do you are charts change a lot as a result of what happened? >> they don't. is ar world, the news byproduct of what prices are already telling us. we are more price-sensitive and less new sensitive. response this week out of gold and silver was in fact. silver up 11%. that was a meaningful breakout in sober. gold continues to consolidate above 1300. what i think is most interesting about briggs it is that the trends that were in place before remain the trends in place after brexit. gold and silver was gold going in and coming out. i think that continues. 1450 has been our goal target all year, and we are sticking with that. >> i heard people saying silver is the place to be relative to gold. given the move, do you think that stands? >> i do.

silver is about beta. it had gotten too stretched in favor of gold. that is now reverting back to silver. you want to seize over going up if you are a gold bull. i like the fact that silver is leading us here. we have seen this incredible rally. how much of the market is participating? >> on yesterday's move, 20% of the s&p made a 52 week high. when you start to look into that number, where those new highs ts, utilities, staples. a very unusual leadership framework. it is easy to want to extrapolate in terms of what that may mean for global growth. we don't want to play that game. the post-brexit

trends are similar to the pre-brexit trends. other words, people are excited about the boring stuff in ways we have not seen. >> it is liquidity that drives equity prices. the curve has not changed from last friday. the curve was 85 basis points. it is 85 right now. if are going to look for a shift in leadership, we would expect the curve to steep in. stick with staples, utilities, and reits. >> i guess talked about this being a liquidity driven market, not on fundamentals. does that trip you up? >> it doesn't. believer that it is liquidity that drive stock prices in all environments, so perhaps that is more pronounced at the current juncture than other times. financials continue to get

beaten down, still not doing well for the year. what do you see when you look at financials? >> i am a seller of these rallies. below recentl well highs, even while the market makes a new high. we look at that as a show of weakness. deutsche bank made new lows yesterday. we think it is a problem. to thiskeep coming up level of around 2100 over and over again. it looks like we will break out, then we get slammed back down. are we going to break through? how high could we go on the s&p? >> july tends to be a good month for stocks, earnings tend to be decent. i think that is enough to get us through 2135, but i want to be mindful that august, september, and october tend to be far less forgiving and kind.

a rally is an opportunity to sell into strength as opposed to chasing strakes -- strength. >> what do you see when you look at transports? >> it is a group diverting from the broader strength of the market. the transports are not near recent highs. the rally and transports the last several days has been more tepid compared to other pockets of the market. on my list of concerns that we need to pay attention to in context of the longer-term picture. joe: thank you for joining us. up, we take a look at it emerging markets. brexit turning out to be what emerging-market investors have been waiting for. why they are outperforming their risk peers. this is bloomberg. ♪

"what'd you miss?" two police officers killed as gunmen hold 30 people hostage inside a bangladeshi restaurant popular with foreigners. local tv says the attackers entered a bakery in the capital. the gunmen set off explosives and exchanged fire with security forces. in washington, a state department spokesperson says they have accounted for all the american citizens under the authority of the diplomatic chief of mission. u.s. attorney general loretta lynch has acknowledged that a meeting with bill clinton at an airport in her words "cast a shadow on the public perception of the e-mail investigation involving former secretary of state hillary clinton." controversyd the

and colorado. >> people have wondered and raise questions about my role in the ultimate resolution of matters involving investigation of the state department into e-mails. havee extent that people questions about that, about my role in that, certainly might meeting raises questions and concerns, so i completely get that question. the attorney general added that she would follow the recommendation of career prosecutors on whether to file criminal charges against mrs. clinton. president obama says a vaccine for the zika virus could be developed in "fairly short order if congress acts to pass a zika prevention bill." he is "fairlysays confident that the virus can be stop before it spreads to the continental united states because lawmakers should not take their summer recess before

passing the bill." took to the streets to protest hong kong's top leader, saying china is encroaching on their freedoms and encouraging political reform. the demonstrations were smaller than past years. today marked the 19th anniversary of hong kong's return to chinese rule under a deal with the u.k. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton. this is bloomberg. >> thank you very much. "what'd you miss?" moving on signs that global banks will move to avoid coming page and -- avoid contagion. comeback inedible the emerging markets, back to pre-brexit levels. are we heading higher? >> friday and monday was the end of the world, people talking

about the crisis. thursday,ednesday, and today, everything is great and don't worry. i think the truth is somewhere in between. i like emerging markets from a longer-term perspective. i think markets are getting too complacent about the risk. we don't even know when brexit will happen. there is a lot of uncertainty still out there which makes me nervous about this risk rally. looking at what is going on with equitiesmarkets, the picture has been interesting because there has been such a performance in emerging markets. regions or, what areas do people have to be watching in terms of the fallout from that.

what effect will china slowdown have? >> i would say the central european economies are on the front line. we had the czechoslovakian president saying we should have a referendum ourselves. there is fear of a domino affect. those nations are on the front lines. emergency --n emerging markets is liquidity driven. that also makes me nervous. an old-school fundamental guy. liquidity is a great story, but it is not something you can count on forever. i think you are stuck with the fundamentals. >> what does it mean for the british pound? maybe it is something in the middle, you said, how do you anticipate trade for the pound? we are going to have the starts and stops. >> absolutely.

there will be heightened volatility. direction is more difficult. will have to go with consensus that it will get weaker. i thought it was great that mark carney came out so quickly and said this is what we are willing to do. and 2008, the fed and the bank of england were really aggressive with qe. currencies took a hit. it was the beginning of a multi-euro-dollar swoon. the bank of england was supposed to be the second central ban k taking back easing. i think sterling will underperform going forward. the things we have seen in the last few weeks has been an extraordinary pushing

out of expectations for the next fed rate hike. market storm price in a rate hike this year, maybe not even next year. how important is that too emerging markets. upthe u.s. data were to pick again, what with that mean for dollar strength and emerging-market weakness? over the last year, any time fed hike expectations have gone up, the markets have gone down. it is the liquidity story. , the markets are pricing in a rate cut by the fed in july. back, butwalk that we're talking about no hikes until 2018. >> that could change quickly. >> it's almost like a free pass. my bias that rates will continue to go up in the u.s.

come, that will be stressful for emerging markets. >> we talked about the move in the russian ruble. do you have a favorite currency over the next few months? >> a favorite currency are one i will keep an eye on? >> one you will keep an eye on. is always bubbling. i don't think it is a disaster scenario. are reassessment of the fed and something coming out of china. oil is a big question. as long as it stays in the 45-50 range, i think that is good for emerging-market exporters. it is having trouble getting about that. commodities, we have not seen it yet. joe: thank you very much.

creditng up in a week, investors are shrugging off brexit anxiety. we have the charts you cannot miss. that is next. this is bloomberg. ♪

>> what did you miss? credit investors are shrugging off credit anxiety. -- brexit anxiety. we saw extreme moves. the you are looking at is europe index, taking a look at investment grade corporate debt, credit default swaps on it.

we sell that move up dramatically after the u.k. referendum vote, but it has pulled back a lot and is down 16 basis points or more as investors have calmed down when it comes to credit risk in those investment-grade issues. this and all the asset classes. joe: still elevated, but off its highs. i am looking at government bonds, surprise, surprise. we normally see lines going down and to the right. i am looking at price. if you just bought long bonds at the beginning of this year, you made a lot of money. top isue line at the japanese government bond maturing in 2045, up almost 35% on your money. , bonds maturing in 2046, up 27%. at the bottom is canada, a percent on your money. second andd for a

just think about the massive capital gains you would have already had if you bought these warring government bonds that pay you nothing. >> i think you took your favorite chart and flipped it upside down. joe: it does drive home the raw capital gains. of times people think about yields going down and they rush to safety. 's.ill be looking at s&p mini this is a battle of the charts from monday. talking about the degree to which investors have gotten long ahead of brexit. in the top panel, white and blue , white is long, blue is short contracts. it's incredible how many people were so convicted on this. andy guest, the degree asymmetry was long, that's why

you had that big rally. the first two days might have been more reflection of this trade then a referendum. how extremely swings have been. >> interesting charts and something to think about. coming up, the three charts that illustrate the feds wait and see approach. this is bloomberg. ♪ you guy's be good. i'll see you later

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party's on! know what your pets are up to with xfinity home. xfinity. the future of awesome. see the secret life of pets, in theaters july 8th. mark: let's get the first word news. u.s. attorney general loretta lynch has ignored that an impromptu meeting with a bill clinton edit phoenix airport in her words cast a shadow on the perception of the e-mail investigation involving former secretary of state hillary clinton. donald trump had this to say at a political event in denver. >> bill clinton goes in the other day into an airplane, just happened to be a coincidence, you know. he just happened to be at the airport this time, think of it, just happened to be at the airport. when i first of the story, isaac, no, no, you're kidding. i thought some but he was joking.

it's not a joke. it is not joke. it is a very serious thing. to have a thing like that happen, so sad, and as you know hillary is so guilty. she is so guilty. how that is not being pursued properly. attorney general lynch added that she followed the recommendation of career prosecutors on whether to file criminal charges against mrs. clinton. hillary clinton's campaign called and $70 million in june, 40 million of that went to her campaign, which has 44 main dollars in cash on hand. the rest of the money went to the democratic national committee and state parties. mrs. clinton's campaign said the average donation is $48. president obama has issued an executive order to make protecting civilians a more integral part of planning u.s. military operations. the president also disclose that -116 civilians were killed and drum strikes and other strikes in pakistan,

libya, yemen, somalia, and north africa since he took office. two police officers have been killed as a group of gunmen hold at least 30 people hostage inside a bangladeshi restaurant popular with foreigners. local tv said the attackers .ntered a bakery in the capital authorities say at least nine gunmen set off explosives and exchanged gunfire with security forces. in washington, state department spokesperson said the embassy has accounted for all of the american citizens who are under the authority of the diplomatic chief of mission. islamic state is now reportedly claiming responsibility for the attack. global news 24 hours a day apart by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. >> thank you. let's get a recap of today's market averages. check it out. a little bit higher

on the dow and s&p 500. each of those major equity averages up 3.2%. the s&p 500 having its best week since february. >> increases across the board everywhere. joe: "what'd you miss?" three charts that illustrate why the fed is in wait and see mode. we saw some extraordinary stuff in the aftermath of that drags it vote. what you watching? -- that brexit vote. would you watching? increasingly it looks like markets are pricing in higher i over of a fed rate cut the longer term.

break down the slope of the yield curve into different verbal's the probability of a rate cut, rate hike, and staying on hold. are coming down our because those rate cut probabilities are going up. been an interesting development. it is not something you see it in a tightening cycle, especially at the onset of the cycle. it is more like an end of cycle development. >> a lot of people were being nextarians, saying the move will be lower. does this validate those people at all, those views? >> i think it does. if you look at the data. at liftoff in december when the fed first raise rates, there was a 20% probability that the fed would be back at zero by the end

of 2018. you can see that here. that was the blue line. the white line shows where we are now. a 40%is almost probability that the fed is back at zero by 2018. that is an astounding development. it explains why yields have come down so much. know fed fund futures can be sensitive and driven by what is going on in the macro environment. this could change again. even if i look at the probability of a cut, it was 13%, 14% off of the brexit vote. they are very sensitive. >> absolutely. given everything going on, there is a lot of uncertainty out there. good thing is that the u.s. consumer remains really strong. this chart shows that in the first quarter, we just got new data on this, the percentage of personal income that consumers have left over after spending on

food, energy, and debt payments hit an all-time high, on the 75% , so that is really good news. we got some weak auto sales data today, but this reinforces the idea that the consumer does have the capacity to spend going forward. there iisposable cash guess, what does that look like when we put it against inflation. is that a potential rollover if prices get higher? have seen signs that wages are taking up, but also you are are absolutely right, the price of gas fell so much and so there is a lot more money left over in consumers pockets to spend on other things. of inflation, another thing you have been tracking are options that pay out in the event of deflation happening. explain what these instruments are and what they are saying. >> they pay out in the event that inflation is negative over a specified time frame out to 10

years. with that.contrast we are seeing a higher probability of rate cuts, but a lower probability of deflation priced into the market since liftoff. that is an interesting contrast good you would think the two go together, but it is really not. clear why that is, but it could be that in december oil was still sliding so we had these elevated probabilities of deflation. it is interesting that they have not gone up much, but the rate cut probabilities have. joe: besides oil, other fundamental factors are going towards inflation, wages are rising, generally trending up. other measures of inflation trending higher. the something happen to give here, no inflation, no hikes until 2018, where as other things you look at say the fundamentals might justify it? >> a lot hinges on the jobs report next week.

another thing that has impacted market pricing was the last jobs report. wewe get a good jobs report, will talk about the fed hiking this year pretty soon. it will be an to see how that plays out next friday. of other macro issues, central bankers are looking at that. beyond brexit, is in china to keep a watch on? >> china is a big concern. there were news reports that they are going to devalue their currency a bit more towards the end of the year. japan is looking really weak right now, and so there is a question as to what the boj will do. those are top of mind issues right now. i want to go back to that jobs report. we have the june jobs report next friday. one thing that seems dry can is how that jobs report only change the tone of everything. the fed was sounding hawkish, people were talking about a real possibility of a hike in one of

the summer meetings, and that one report seems to have changed all kinds of stuff from the markets to the tone of central bankers. weak number,eally and we got revisions to previous months that made it look more like a downward trend rather than a one-off. that was caused for concern. you put it against this backdrop of uncertainty and it gives you a reason to stay put and not raise rates, and so that is deftly a key thing they will need to see improve before we are talking about rate hikes again, but it may happen very soon. joe: it will be fun to watch that. thank you for coming on. >> up next, what is the outlook to treat and its drug cancer. we will hear from the chairman and ceo, up next. this is bloomberg. ♪

>> it is time for the bloomberg is this flesh. -- business flash. planning to sell assets according to people familiar with the matter. they want to calm regulatory concerns over the takeover of humana. aetna once to reduce overlap between the companies. ups pilots would receive a 29% raise over five years in a new proposed contract. that is according to bloomberg. pilots would receive an initial raise followed by an annual 3% increase. ups and the independent pilots association say they have reached a tentative agreement.

berkshire hathaway seeking to expand wells fargo. 10%ings have hit the threshold, which requires regulatory review. warren buffett does not have a specific transaction in mind. that is your bloomberg business flash. joe: "what'd you miss?" focus on pharma week. we talked with the merck chairman and ceo kenneth frazier about the latest advances in treating cancer. >> it has been something that looked -- people have looked at entering the about for many years. they allow the body zone defenses to attack and defeat tumors, so we have been studying 30 different tumor types in more than 300 studies. the date is one of the first agents that has the promise of being a broad-spectrum agent across many different kinds of cancer it. this have the potential

to replace chemotherapy? >> it does. an important subset of lung cancer patients against chemotherapy. chemotherapy, while it has benefits, also has tremendous side effects. what that study showed is that if you compare the population, with respectbetter to providing protection against progression of cancer, and more importantly, overall survival, so now you have a drug that has many fewer side effects that is much more effective for an important subset of lung cancer patients. that is revolutionary. >> can you give us a sense of an arc of a drug like this. 30 different tumors testing, 300 different studies. when did you start this? how far are you along in that process? >> we have gotten to market three and a half years after the

first does. the thing about this medicine is that we could immediately see its impact on tumors, and so we are rushing to try to get this drug to as many people. we have to study it tumor by toomer. >> which tumors have you got clearance for. >> melanoma and second line non-small lung cancer. we are looking at first line in lung cancer. we are looking at head and neck. we are looking at classical non-hodgkin's lymphoma. we are looking at bladder cancer. we will have many filings over the next year. >> how big could this be in terms of the number people affected with cancer? >> i think it is hard to say how high the ceiling is. we are trying to figure out which tumors it does not work in right now. we are very excited about the possibility that this could be a broad-spectrum agent against many different malignancies. sense ofs some rough

the investment required. how much roughly do you invest in order to get to market with a drug like this question mark > --? >> out-of-pocket, it has to be $2 billion this year. $2 billion? that is quite an investment. >> it really is. he gets to the point that we have to have a serious conversation in this country about the health care system. >> let's talk about that. would a dosage cost if i had cancer and it was approved for that. how much does it cause the patient or their health care company? >> the list price is $125,000 an year for melanoma. >> $125,000 a year? yes, if you have it administered in the hospital, it will cost you more. that is the list price. then there are rebates that are negotiated by the payers who we work with, the managed-care

providers. >> how can our society deal with that issue? a promising drug that can save lives and transform lives. hand, 17% of our gdp as a country is going to health care. trees can't grow to the sky. at what point do we say we cannot afford that much? >> let me make a point about health care expenditures. everyone realizes that there is a significant amount of waste in the system. we have to figure out how to get the waste out of the system. this drug will do something that nothing has ever done before, save many lives in a particular way. i think the debate about health care today is polarizing. i think it falsely pits all pharmaceutical companies against society. society needs these drugs. the reality of the world is that if we don't have a sufficient return on investment, we will not get the significant capital that we need to put up for

significant risks in order to continue current and future research. >> that was merck chairman and ceo kenneth frazier. china'sg up, where does economy stand to grow post-brexit. that is coming up next. this is bloomberg. ♪

joe: i am joe weisenthal. "what'd you miss?" central bank stepped up its called to closely aligned with policymakers after the brexit vote. enough toicy stimulate growth?

i asked the question earlier today. >> expanding the assets they could purchase was inevitable. then you have this flight to safety. euro area is getting better, but they will have to tinker with the asset purchases going forward. we still don't know what the impact will have on the rest of the world. the impact is obvious in the u.k. we think it will be minimal outside the u.k., but time will tell. >> we have been talking so much about the u.k., brexit, and the european union. we are now seeing pmi falling to 50. expandinging is still . what a using there? >> i was recently in china. one of the concerns we have is that there has been a surprising

amount -- a lot of monetary easing in china going on behind the scenes. what is worrying is that you expect growth to rise with this monetary easing, but what we have been seeing is growth not rising, but stabilizing. when you look out through the rest of the year, you will probably have to have more easing. will be chinese economy stable, but only because they have to do more easing and growth will end the year slightly above 6.5% on the back of it. showinge this chart small chinese companies are weakening as opposed to larger companies supported by the government. is it backtracking now? going into government spending and the state owned enterprises? >> the underlying trend is that as they have been ramping up easing, it is supporting industries, large state owned enterprises, housing,

construction, heavy manufacturing. it has been going to support the wrong areas, at least in terms of the rebalancing agenda. that is troublesome. how quickly can on they can do this and increases risks for the future. you have seen housing come back up, the state owned enterprises are getting funding, credit they are further levering the chinese economy in the wrong places. the sectors that could do more with credit are not getting the sector. they know they can go there and get the growth. optimisticople too about china's ability to change its growth model? they talk about economic reform and weaning off industries with overcapacity, but you say it does not sound like it is happening. people are took optimistic. i think they have the timeline

wrong. i think what is happening is a step backwards. the needle, thread right? you need to deliver heavy manufacturing sectors, where you have too much capacity, and at the same time, shift credit and make sure small companies with good ideas are getting funding. you will get productivity growth and job growth and wage growth. deleveraging reducing overcapacity means people will have to lose their jobs in some sectors. >> let's tie this all together. when it comes to central-bank action, the extent of coordination with all the different announcements pledging to add liquidity into the financial system should it be does the ecb how and bank of england's actions constrain or limit china's next move in any way? a close eyekeeping on the dollar. if the dollar is appreciating substantially, you see yuan

weakness. of course there are other fundamental connections, but how will the fed react, how will the dollar react? -- a see a strong appreciation of the dollar, they talk about moving to a basket of currencies in dividing the yuan, if you see a sharp rise in the dollar, that transition will happen sooner. joe: coming up, what you need to know to gear up for next week. this is bloomberg. ♪

>> all right, everybody. what did you miss?

don't forget next week, because we've got a reading of the chinese p.m.i. services sector. get that monday. i think we're looking for 51.2, mark.ying above that 50 >> there you go. don't miss this either. eurozone retail sales are going to be out new york time, tuesday, 5 a.m. shopping? >> not in europe. >> okay. right. of thosee advantage currency prices. >> exactly! >> and i'll just be spending the next week counting down to friday's jobs reports. had that miserable one last month, expected to bounce back 200k, a little bit below that. a lot is riding on whether that labor market is not doing as badly as that may report. everything is hanging on that. just a month? >> no. it's a trend. >> all right, everybody. did youll for what miss. thank you so much for watching! great fourth of july

weekend!

july 4th. >> "with all due respect" to the staff members leaving donald trump's campaign, are you sick already?g >> on our show tonight, a swing dance. supreme court encore. a special performance by johnny. first, the attorney general or was lynch changed key she singing offpitch to begin with?