vonnie: from bloomberg world headquarters in new york, i am vonnie quinn. julie: and i am julie hyman. we are taking from london to beijing to washington. here's a we are watching. vonnie: stocks swoon to start the trading week. energy and metals lead the decline is oil prices decline. the vti crude has its biggest drop in five months. julie: which stocks are poised to break out -- we will talk to mike holland. he sees value in and son mobile, child, and jpmorgan as well -- as well as others. fedie: how long can the delay the rate hike. bit.ly is looking for a dissent -- bill lee is looking for a december rise. julie: stocks are hanging around their lows. i have been all day. shery ahn joins us there. uncertainty and fear back

in the markets, it seems, right now, after we had some investor relief the last few days, but that is not holding up today pit we see the nasdaq leading those declines, down 1.1%. the s&p 500 also reversing four days of gains to lose 9/10 of a percent. the dow jones also down .8%. the s&p 500 is coming off of today's lows of 2081, still hanging in there, 2083, down 9/10 of 1%. if you look at the imap function on the bloomberg, you can see the sectors that are losing the most, and those include commodities and also financials. financials falling one point 9%. remember, they were some of those stocks that saw the best recovery from a 22-month level in february. they are down again, and not surprisingly, energy down 2.4%. of course, crude now headed for its biggest five-month drop.

we see a trade below $47 a barrel. $46.71 for crude we heard last week from american shale -- crude. we heard last week from american shale drillers they added the most oil rigs of any week this year. concerns of ample supply playing into the markets. let's look at the biggest .ercentage drags because of oil you have seen southwest energy down. down more than 11%. followed by chesapeake energy down more than 7%. take a look at government bond yields, because, of course, that safe-haven theme playing into the markets. 10-year currently at 1.36%, after falling to record lows, 50.unprecedented 1.37

7 we are talking about bond yields across the world, including australia, japan, germany, the u.k., and so on. vonnie: a few other notable lows today. shery: we have to talk about apple -- we see news from research analyst -- first of all, citi saying they are cutting their estimates for apple's third quarter and fourth quarter. we see the stock plunging 1.1%, falling the most since june 24. it is the immediate aftermath of the u.k. referendum. we see cities saying that apple tofacing more challenges due the vote for the u.k. to leave the european union, and now we see also apple suppliers, of course, falling, because pacific crest is now saying feedback from asia indicates iphone 7 units are expected to be down 15% to 20% compared to iphone 6s's when they were released. apple has been taking a cautious

view. pacific crest has cut from a market wait to an overweight. it is losing 6%. the other suppliers also taking a hit. vonnie: pretty notable, those drops. thank you, shery ahn. let's check the headlines on the first word news. rainy in a sense you has more. y: we are waiting for president obama and hillary clinton to speak at any moment charlotte, north coletta. this comes after the director of the fbi says the department will charges, but in a news conference james comey strongly could assess the likely presidential nominee. : although we did not find clear evidence that

they intended to violate laws information,s five that classified information, there is evidence they were very careless. was the did say there judgment that no reasonable prosecutor would bring a class against clinton. reince priebus says the obama administration never plan to prosecute hillary clinton over e-mail use, and the imagination is counting on her to deliver her -- there failed agenda for the third term. in london, theresa may has won the initial round of voting to lead the country's conservative party. andrea leadsom was second with 66. michael gove tallied 48 votes for third, with stephen crabb with 34, and liam fox at 13. fox has been illuminated for the cigarette -- eliminated for the second round.

oscar pistorius may return to jail tomorrow. rescued is want him to be handed at least a 15-year sentence. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. vonnie: bond yields touching historic lows and gold keeps on rising. do?tos an investor to brexit markets, we bring in michael holland, chairman of the holland company. now, michael, whenever we see events of this nature -- although i am not sure you can compare this to anything in the past -- you say wait it out for the long-term, ride this out, but this is potentially 10-year horizon event. do you really not want to make some changes to your portfolio based on what just happened? mr. holland: funny you should

ask. i have more cash than i have had in years, and i have been building it up over the last several months. not to say we are headed into a worldwide recession, a 10-year bear market -- i have lived through most of those -- through both of those and it is not fun. grudging growth in the u.s. and china. europe is a wildcard. interestthe german's to not have things going to duck soup. i think we will muddle through economically. the market is a different story. we talked about china many times in the past. their markets have been just crushed. evaluations are down. people who invest over there for us are not so sanguine as they used to be. having said that, the prices are way down. here in the u.s., as you report every day, we are close to all-time highs, and we have a valuation that is substantially above where it has been since 2008. so, that is not a great time to

take a lot of risk. isn't the rally that we are seeing here in the u.s. -- whether you are talking about stocks or bonds -- isn't that partially a function of only so many places to put your money where you can expect any kind of return in this environment? mr. holland: sherk. of course -- sure. of course. for the stock market the answer is a definitive, loud, yes. for the bond market, you have had since 2008, governments around the was manipulated the markets. it is their own word, not mine. you have artificial prices. some people are beginning to say the cause of this has been a contributor to this slowing down of people's risk-taken around the world, rather than having people take more risk, which was their goal. so, if that is the case, maybe we're getting to intrastate levels, some people would say, -- interest rates levels that some people would say makes sense. to me, it makes no sense.

i was reading on bloomberg this morning over one/three of government -- government bonds -- 36% are trading at negative yields. if you get the answer right, i have a dollar in my pocket -- 96% of all government bonds yield less than what? vonnie: 1.25%. 2%.holland: the stocks you mentioned before all yield more than 2%, and these are copies that have better balance sheet than the government. julie: what i'm saying is doesn't that mean there will be underlying demand for u.s. stocks, particularly high-dividend yielding u.s. docs, even if there is a decoupling and the economy goes south in some way? doesn't that, at the very least, provide a floor for some of these stocks? mr. holland: the quick answer is yes, and in a severe bear market, should we have 1 -- i

have always been -- ready for anything. i do think it is a high probability. they would go down far less than other things. if you made the case for some company that has -- johnson & johnson, microsoft, exxon mobil -- go through the list of 2% and three-percent -- 3% yield yielders, they will increase their dividend overtime. you have deflation and a large multiple. these are low multiples right now. vonnie: we will talk more about this in a moment, but briefly, how many assumptions or how much of your worldview changed once britain decided to exit? cobbe there are so many uncertainties, but i'm a for example, it seems like the fed has been put off. em countries have seen a great boost, at least for the moment. overall, are all of those assumptions different for you now? mr. holland: not all different,

no. it was something of a surprise because we were told by the experts it would not happen this way. david cameron certainly do not expect it to happen this way. having said that, we have talked about all-whether portfolios could i like to sleep well for myself and for my clients. there are possibilities things could happen at either end, and in the middle, where is the value? looking at it that way, what i expect to happen in the eurozone is something that milton friedman, the nobel winning prize economist, at the founding and 1990 -- 1999 the eurozone said at the first sign of crisis this union will disappear, disintegrate, because you cannot have a monetary union without a political union, and we are beginning to see some of that happening. i think it has been a possibility from the outset because it has been a grand experiment. it looks like it is maybe began to fail. vonnie: britain has never fully -- mr. holland: they were never fully unit. france,people like

scotland, northern ireland -- people are talking about getting away from this, people do not like the way the world is today. julie: i guess he did not predict how long it might take it we will keep you here, mike holland, for the moment. we will be right back with more of this discussion, but we do have some breaking news in the meantime. stephen crabb already withdrawing from the u.k. tory leadership conference, saying he is supporting theresa may for tory leadership. this is after we saw liam fox job out because he did not get enough votes in the first round of votes to determine who might be the new prime minister of the u.k.. vonnie: this is fascinating, because this means thursday's vote might decided all can we had five, now we have three, and a many to eliminate one more. no small, we could get a decision sooner than later. the firsto awaiting campaign. hillary clinton and president

obama. you're looking at live pictures. this. -- this is bloomberg. ♪

this is bloomberg markets. i am vonnie quinn. julie: and i am julie hyman. i want to bring back in michael holland, chairman of holland and company. we did not get to this quite yet, but you have been looking at valuations in the u.s. market. you are seeing them go to above the historical norm for sure. is that, alone, a reason to sell, or how does valuation factor into your investing equation? mr. holland: it is only one

input, but it is a very important input. if you think growth is going to be accelerating in the future you would say -- look at a stock like amazon. how can you justify owning amazon? the only way you can justify it is you believe you could have continued growth in revenues and someday growth in earnings. in the case of markets around the world, i would look at china, for example. they are going to have some growth. it won't be easy, but it might be 3%, 5% growth. the companies in our portfolio out there are doing just about that, but they have the lowest valuation may have had in quite some time. when you look at the u.s. market, which is 20% higher on a pe basis than it was a year ago, and bloomberg is reporting that next week when we start the earnings season, earnings will be down by 1% overall, that is not a great recipe when you have near historically high valuations and not a good earnings outlook. what are you selling in terms of u.s. docs, or are

you just holding on to what you have? mr. holland: the stocks i have, as we were talking about in the last segment, we have some earnings that could keep them from going down less should we had a major decline, but on the one hand, it is across the board . i don't have to own a rethink that i would sell a little bit of everything because i like what i have. julie: speaking of what you have, let's talk about your picks you mention a couple of them a few moments ago. i made a chart of their forward pe's because i was intrigued by your talk about forward valuation. these are mike's picks. the pink line here at the top is exxon mobil. we have seen valuation, at least on an estimated pe basis go higher. we have microsoft as the white line. chubb is the aqua line. jpmorgan, all the way down there is the, sort of, purple line. mr. holland: with the lowest multiple. julie: we have seen a

languishing of bank multiples. the one that stands out to me is exxon mobil, as you would imagine. the dividend yield is relatively high, yes, but it is trading at a premium to the market and its peers, for that matter. mr. holland: so how did i own it -- why would i ever owned it? julie: that does my job for me, mike. mr. holland: it is one of the best managed copies in the world. i have been them with -- as an investor for many years. i have found that in times like this when they are under pressure because of the commodities crisis and what is going on in their industry they find other ways to pay upward. they have a 50-year horizon. they think of 50. as a property, business, do i want to be an owner when the stock prices under pressure and i'm getting paid a decent yield? yes. it does not mean when you talk about the next few quarters these are stocks i own. i have no idea what they will do the next three or four quarters, but i know i want to own them at these prices.

on the listrgan is there, and you will continue to hold onto jpmorgan. what is your impression of what banks will do with their headquarters in london -- will they move, find some way to keep everybody happy? mr. holland: early indications are among the things they have , will at, dublin, vonnie be a beneficiary. the crazy cities that are being talked about -- i think they would have trouble attracting a lot of the professionals from london or dublin to go to these other cities. so, i think when we look to europe, i think there will continue to be london and dublin. vonnie: you really think that article 50 will be triggered and there will be brexit? mr. holland: that is a great question to we don't know. greece had a referendum and they did not trigger anything. some people are saying maybe they will not invoke article 50, let it drag on forever as greece has done. i presume that is not the case. i think david cameron set the

tone. i think they will. it is possible they want it i have no crystal ball that tells me any -- won't. i have no crystal ball. i am prepared for a lot of these things to happen. i think article 50, probably is a good that that it is going to happen. julie: whether it happens not, we have seen economic growth in europe slow down, and these companies that you are talking about -- on many them -- aren't many of them -- 1/5 of the revenue is coming from europe. how much of a problem is that? mr. holland: it is going to be a problem and if they do to growth in other parts of the world to offset it, it is going to slow. the mindset for investors today is growth is slowing everywhere, and we are looking at 5% earnings decline in the coming quarter. it is not as if we have people excited about the future. it is the opposite. -- e: vonnie: current, mike holland,

thank you. still had, the options insight -- looking at a trade involving apple ahead of earnings at the end of the month. this is bloomberg. ♪

this is bloomberg markets. i am vonnie quinn. julie: i am julie hyman. it is time for options inside. shery ahn, what do you have? shery: it is my turn. joining me is kevin kelly, the chief investment officer at recon capital. thank you so much for coming in. with a question today is the volatility index, the vicks. it tumbled, what, 40 3% last week, and today we see double-digit gains. what is happening here? mr. kelly: another unprecedented thing happened and we have seen that over the last year.

the largest week over week decline ever. it went from 25 to below 15 at about 14, and that is in a heightened environment where brexit was happening. one of the reasons we can see that is monetary policies, right? you had everyone across the ,oard from carney to the ecb out and say they are going to try to stabilize financial markets. that is what happened in the run-up from 2012 to 2015. we saw financial that -- volatility compressed down and vix trade around the 14 level. shery: what do we see when it comes to your trade, because you are playing off a trade you made earlier. yeah, back on may 23, i was speaking with julie -- a trade on apple p are we bought the stock and sold the september 100 call against it for about four dollars. the great thing is you can buy it back today for about $1.50.

you can make $2.50. keep the stock, stay in september, and what you want to do is sell the $90 put. you will get $2.20 for that. it has trade that says not gone anywhere, but we want 7he run-up going into the new 1 relief. shery: 10 by on a down day when it is down 4%. you mentioned a problem with apple in china when it comes to the culture there with encrypted phones. explain that to us, especially when shares -- sales there of the iphone 7 might not be as high as some people anticipated before. mr. kelly: apple has hinged the next phase of growth in china -- you saw tim cook say that two conference calls ago, where he expects the middle class to adapt, but the problem is they are encrypted devices, and the chinese government is supportive of -- that is a big issue. we see that play out with the

copyright and trademark infringements, even on the latest model that they lost. shery: the fun with apple -- what else can they sell? thank you for js. investment, chief officer at recon partners. vonnie: shery ahn, thank you. still ahead, has brexit put the nail in the coffin for a 2016 rate increase, or is one still likely in september? joinsm lee of citi bloomberg markets next. a look at the majors. julie: all three major averages hovering around the low of the session. volume on the s&p today, about 6% below the 20-day average. ♪\] get ready for the rio olympic games

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nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. matt: from bloomberg world headquarters, you're watching bloomberg markets. president obama making his first campaign appearance for hillary

clinton today in charlotte north carolina. that event was canceled due to the orlando shootings. you can watch the event on your bloomberg. go and you can watch that event. let's start with a check of the headlines on the bloomberg first word news this afternoon. the fbi has recommended no charges be filed against hillary clinton over her use of a , that hermail server aides were extremely careless but there was no intentional misconduct. they were expected to announce his running mate next week. indiana governor mike pence among those on the list. trump deviously said he would the republican national convention which begins in about two weeks.

toll has risen from a deadly truck bombing. 200 others were wounded. they claim that responsibility is the deadliest attack in baghdad in more than a decade. thousands of officers and dozens of gang members into custody over the fourth of july weekend. fewer people were shot to death more suffered gunshot wounds. eliminate figures show that people were fatally shot and 60 others injured by gunfire. news 24 hours a day powered by 26 of the journalist -- analysts. update.ive nasdaq the best rally since the middle of february, we're looking at a selloff. on therading lower

technology front, lots of big drags there. apple suppliers including sky works and sears logic down 6%. as much about apple as the suppliers. recent supply chain checks suggest the demand for the upcoming iphone seven could be suggesting demand is dropping by 15% to 20% relative to the success to the 6s. that upgrade cycle could really help apple.

not just these suppliers, but apple. taking a look at the consumer discretionary space. netflix had the biggest dragon in the biggest boost. the possibility of less international subscriber growth. read around noon, it started to pop higher. 10.4 million video subscribers. it is a cool deal for netflix. there is a subset that is dragging on the nasdaq which is biotech, the index down about 1% on a well -- off of the lows.

the bear market and biotech just continues. without brutal it has been. they did in fact carved out a new lower-level, it often proves to be bearish. it will be interesting to see if the lows can hold. matt: nearly $10 trillion. and the upcoming june jobs report could be the final nail in the coffin. joins us from the firm's

trading in new york. what your call is for the jobs number. >> not quite zero but we are below consensus. it's really underlying growth. it is a relatively weak recovery where normal is 125 to 175. the underlying labor data and the spending data to see where the weaknesses are.

could the market upward reprice just as fast if it turns out it might be just a blip? market seems very fickle and what the traders have been telling me is that they can practice that scenario. the fed itself is supposed to be a source of anchoring to macro fundamentals. they are looking at each other to support direction. matt: we see the yield come down below 1.3 6% today and i was talking to gary shilling

earlier. he says he sees 1%, 2% for the 30 year. a bondable butn do you think he's going to far? >> i think it's a sign. those market interactions are , that is what the federal have to obsess. how much normalization do we put in place? by the end of the year, possibly. joe: you mentioned that as of this month, you see job creation around 120 k. we had been closer to 200 k or between 150 k and 200 k. if we drug down to the 120 k

area. does this signal a slowing , that we get the same job creation as we did before? >> if it goes of janet yellen's productivity, if we keep hiring people and not producing something, there is something wrong. it is probably the appropriate level of employment growth. 2%.s growing at about >> it allows you to go in and put in your own data.

i will put in zero there and you can choose a natural rate. it should be 1.25%. >> to the rule tells you are the fed would be offputting under normal operating conditions. it means they're going to be hitting the taylor rule very soon. joe: is there a case to be made that they have to play catch-up, , it they have the economy

could possibly go to. >> you just put that zero and in the past years, it is much higher. you that it became several. they view the structural headwinds as being persistent. matt: coming up, brexit fears are hitting the u.k. property market hard.

she lauded president obama for saving the u.s. from the second great depression. you can watch that event on live go on your bloomberg terminal. ♪

matt: it is time for the bloomberg business flash, a look at some of the biggest stories in the news right now. yahoo! suitors will submit a third round of bids tomorrow. the selection process is expected to take place around july 18. remaining bidders include verizon and dan gilbert. the u.s. government is investigating complaints from

ford explorer owners. the national highway traffic safety administration says it received 100 84 complaints. one driver said the odor caused a low-speed crash. not saying how many vehicles are involved. american express will debut an online loan let form for small business clients this year. it will approve loans and minutes for existing small business card owners that can use the money to pay vendors. the service targets territory occupied by startups like square and on debt capital. and that is your bloomberg business flash update. joe: the brexit vote is taking a toll on the real estate market with three major funds freezing almost one billion in assets in the past two days in the u.k.. standard life, the free property funds, david shop portfolio on skype fromus

raleigh, north carolina. david, these funds in the u.k. freezing trade reminds me a lot of last year when there were concerns about high yield, freezing redemptions. what do you make of this type of investment structure or property? do you expect this kind of problem to worsen? >> people redeem and put in new money every day. the type that there is this kind of liquidity mismatch where real properties were put in and they were able to get day-to-day liquidity, there is quite a mismatch. the funds sometimes can't meet the obligations and has to go to market in london or retail buildings. it is striking that these funds exist.

there is no surprise that these redemptions come in so that all investors are treated fairly. since the brexit vote, we have seen bankshares around europe and the u.s. gets slammed again. why are just dumping them at any price. isif you look at the low, it a conscious decision. loans and have given up some income in that.

all in the hope that when rates go up, those of the best. this industry being asset sensitive. we don't think rates can go down any further. ratesas happened is the of gone down because they are really unprepared. their deposit rates are kind of four to zero. in the u.s., it is reluctant to do that. the equities are going down.

matt: he thinks rates can only go up from here. rates are higher later. this fear of uncertainty doesn't really affect the u.s.. think? you , willveryone capitulate they continue to forecast higher rates?

>> we don't believe what they are saying. right now, it is brexit. the inflationary margins, it is how much that plays in. i think there is a lot going on.

i think people are starting to step back and ponder that. such as metlife and funds. they are really starting to be trapped. eventually, people start capitulating. you throughout a lot of possibilities for what is causing this huge decline, but what is your favorite. . what is the most powerful explanation? >> i do think the low-end rate environment. it is kind of the self-fulfilling prophecy.

it is a productivity mystery. it is only making things worse. another wild day and u.k. politics. potential for political upheaval and spillover even more and to market? speaking of politics, president obama is speaking right now. eventn watch the entire on your bloomberg terminal. ♪

matt: this is bloomberg markets. just a few minutes left in the

trading day here in the u.s. and here are some of the charts we're looking at today. this morning, talking about bankers bonuses and a great on bonuses getting cut by 30%. , if profits and revenues are falling, we have to cut bonuses. i wonder what analysts are expecting from british banks. 30 banks here. and eps in blue. the red line is june 23. it's interesting that analysts estimates have climbed so high and even for profit is well. i thought about it. a big bank like hsbc is so much of its profits from offshore

that it's going to make a lot more money. why the big global companies listed in the u.k. have done so well because they get international revenues and it's all converted back into pounds. you see companies that are there as well. even hsbc, they will look at the u.k. operations to determine the bonus. i'm also looking at the bnp. bob measure of political risk in the eurozone. it has been surging since late 2015. it tries to use headlines to measure political anxiety. question.e key fallout, butonomic -- or they political

will be redoing that vote for president, it will create a much longer term issue. and i think we seek global political uncertainty depending on the outcome. joe: interesting is ahead on the politics front. is up next.ou miss it less than four minutes to go until we hear the bell toll on wall street. the dow jones industrial average down .6%. s&p down .7% and the nasdaq down .8%. ♪

joe: moments away from the closing bell. closing --stocks ♪

u.s. stocks closing lower this afternoon. oil falling more than 4%. joe: but the question is, what a jew miss? -- what did you miss? we break down the biggest moves. joe: is the decline in the u.k. deficit a good sign or a bad one? matt: yields fall to an all-time low. what does it mean for the rate ? market minutes and asset classes. i was looking at property developers.