♪ >> good afternoon. >> we take you from new york to london and paris. here is what we are watching. asglobal stocks are rising treasury and the dollar are declining ahead of the jobs report. investors are hoping to it clues about when the fed will raise rates. we have complete coverage. >> take you live to the alan idaho.nce in sun valley discussing everything from exit to the presidential election. dannan is adding soymilk and kale. it is the biggest deal and on

most a decade. let's head to the markets desk. from theod movers away dannone, we're not seeing much change away from the averages. nasdaq is still hanging onto a gain of 2/10 of 1%. industrials and tech are holding up well. earlier --paired its pepsi is gaining after the second quarter earnings beat estimates and raise the full-year forecast. from benefiting to kerley strong numbers in america. we are watching to play at this chipotle.

shares were down earlier even more. it is based on a tweet by somebody who said the editor got ill after eating at the lay. they are looking into this and are not aware of any illnesses. there is fragility in the stocks. the current valuation implies a much larger ultimate sales opportunity then management is guiding. down by 2%. there is also a new slant on a media company. julie: yes. john malone spoke in sun valley and made comments on a broad range of subjects. he talked about viacom and cbs.

he said viacom is undervalued because of the battle over the control of the company, it has depressed shares. malone also said if you look at cbs, the leader would be a good leader for both companies. if you look at how they are trading. bye a look at the shares, up a little more than 1%. shery ahn: thank you. matt: bloomberg first word news. taylor? taylor: the fbi director is being grilled over his decision not to pursue criminal charges against hillary clinton because of her use of the private e-mail server. that hemmittee had said was setting and dangerous precedent. >> i have defended your integrity every step of the way. you are the definitive voice.

i stand by that. but i am mystified and confused because if you listen to your fact pattern and come to the conclusion that there is no consequence, i don't know how to explain that. taylor: the director said that there was no evidence she lied. donald trump met with house republicans, hopeful he can unify the party for the new member elections. one congressman who attended all the reaction to donald trump muted. he is trying to unify the party before the convention in 11 days. outrage and protest in minnesota after please officer fatally a car with his

girlfriend and their child. the girlfriend says the police shot her boyfriend for no reason. the incident started after a traffic shot and at some point shots were fired. the race to succeed damage came -- david cameron is down to two candidates. a runoffroceed to ballot. the second round of voting is today among conservative party lawmakers. garnered more votes. a new leader will be declared by september 9. global news 24 hours a day, powered by our 2400 journalists in more than a 150 news bureaus this ishe world. bloomberg. matt: turning to markets, yields in the u.s. come u.k. and australia pushed all time lows.

average yields in bonds in ink of america's sovereign yield index dropped to all-time lows. do they change the way you should invest? i'm putting the question to mark kiesel. thank you for your time. let me start with how you invest. before we get into whether or not negative interest rates are working to spur global growth and inflation, does it change the way you are investing? or diesel get capital appreciation even more than you would before? mark: this has been the year of bonds, which have significantly outperformed equities. even the low yields, it is creating a challenge. you basically have 11 trillion of government bond markets at negative yields and over 85% of japan and german bonds.

investors have to get used to lower returns on bonds. it does not mean to abandon bonds. it means you have to be more selective. and also probably take less interest rate risk and be more selective in credit as all the yields have come down. matt: do you see more people investing in bonds for price action rather than yield? i would of thought is bonds only as an asset you use for yields. it seems everyone is talking about bonds for capital gains. mark: a lot of the capital gains, we think most of that is over. if you had bought long bonds, you would've had a great investment this year. the long bonds are basically are upents, the 30 years 14%. % government5-8 bond yields are at record lows. what this means is that

investors all over the world might choose to take a little bit more credit risk. 3-6%.n still get increasinglyors move into the u.s. market because the other advantage is still robust. shery ahn: when investors are looking at bonds here in the u.s., what type of bonds should they be looking at, especially when it looks to sectors? are talking about u.s. housing or banks? the first thing is we are favoring the u.s.. the u.s. economy is the least shirt.sturdy japan and europe are barely growing. europe should be able to -- u.s. should be able to grow. you want to favor the u.s..

we are very constructive still on housing. any of the consumer related sectors such as cable, telecom, health care and gaining are doing quite well. consumers are as strong as they had been in 10 years. believe it or not, u.s. bank bonds are actually very attractive. the last area we like is energy. we had been aggressive in adding energy and we still like pipelines at these levels. fory ahn: we are setting up a decent employment report tomorrow. how much of a conundrum is that for the fed? they are going to review the report and watch wages. he went to see wages go up. exit uncertainty is going to keep them on the sidelines. the fed today versus the fed 10 years ago is going to cite the global' global

considerations. we think the fed is on hold for several more months. we think they want to get off zero. the probability of them hiking is higher than the market has priced in. have the fedven moving until 2018. we think that is too pessimistic. our view is the fed will move more than is priced in. veryheless, it is a cautious fed. matt: are they too cautious? we do not see article 50 being triggered until christmas and it takes two years. his janet yellen going to wait what happens before she makes a decision? that is a good point.

if you look at services inflation, 60% of cpi, it is running above 3% and you see wages accelerate. youe is the risk, as highlight, that the fed could be behind the curb and too focused on global considerations. economy is the consumer. fundamentals are as strong as they had been in 10 years. it is look at fed policy, very much being influenced by the global factors. shery ahn: you have to wonder if it is better to have the brexit right away so that we do not have the added uncertainty. of pimco. mark kiesel oming up next, it is our mystery stock. and, there will be crying over spilled milk. this is bloomberg.

matt: you are watching "bloomberg markets." its head to the markets desk where julie hyman has the big reveal on the mr. stock. the hint, for those of you who missed it, there will be crying over spilled milk. a big opportunity passed it by. a former suitor decided buying silk was a better formula. i am not up on my milk producers. julie: you know what the big deal was. what wave being purchased by dannone. johnson, a huge maker of

baby formula. this was something people have activated upon that might be attractive for a suitor like dannone. it is down 155%. this is on his appointment that it is not going to be the target. -- this is on the disappointment that it was not going to be a target. there is disappointment being expressed in the stock price. look at the gap at the price target as set by analysts and where it is actually trading. when this is red, it means the stock is trading above the average from analysts. they are less optimistic. white look at dannone and

wave, you see a different picture. it is trading slightly above that. there is speculation that could even be a bidding war. dannone, investors like this deal, those shares are trading higher. whitewave has growth. this looks at the annual growth versues whitewave. whitewave is seeing pixels of growth. , postedpsi gaining second quarter profits.

let's check out pepsico. helped by rising sales of snacks and drinks in north america. you can see the frito-lay unit rose. revenue in the beverage division climbed 0.6%. juiceo said water and .rands held the net revenue has to kind at -- youal average rate of can see here, it is down, the stronger dollar causing currency driven declines in latin america and europe, the sub-saharan african divisions as well. it is dragging down total revenue by more than 3%. pepsico does have its challenges beyond that.

and saidaced aspartame last week they will reintroduce the aspartame. people said that they like it better, or did not dislike it as much. it is not just i asserted that is seeing the decline. the overall u.s. soda market fell to a 30 year low last year. the lowest we have seen since the 80's. as a result, pepsico increased it's better for you offerings. pepsi is still a clear number two. coca-cola is dominant in sales 50% ofglobally holding the share of the market in 2015. these are the numbers and this is the picture, this is how it is.

they are embarking on a program targeting $1 billion in savings annually. you'll see it reflected in the improving operating margin. we will keep a watch on the stock throughout the session, but as i said, record highs for today. still ahead, i'm bloomberg markets, is the u.s. election anything like the u.k. referendum? how we can fix the problems here at home. this is bloomberg.

♪ matt: this is "bloomberg markets." shery ahn: we want to take you out to the allen co. conference in sunny valley.

with, you recently spoke he have to what did say with the media landscape? david: this is something everyone is talking about at the conference. i asked him whether he thought there is room for more consolidation in the media space area here is what he had to say. haim saban: there's nothing left to consolidate. that is it. david: how do you mean? haim saban: take a look around. network, oncele you deal with three, maximum for people, you have covered the grounds. that is pretty much consolidated. there are a lot of people who think that there is much more room for consolidation. some said there was always room for more deals. haim saban is on the other side of the spectrum.

his: let me ask you about portfolio. he is one of the wealthiest people in the world. what is he invested in right now? how does his portfolio look? david: he started in the music business. he is the man behind the mighty morphing power rangers. he has gravitated away from immediate exclusively. : as investors, we have a broad portfolio. very media centric. we are less media centric even though we have media expertise. stableus is really looking to thean

in and outs of private equity, which is what we did for probably eight or nine years. david: he is a guy who has a lot of money invested around the world. we asked him how the brags it decision -- brexit decision affected his portfolio. he said it was ok because of stock he owned in indonesia. they have laws that make it user .o invest he has done pretty well in the wake of the brexit vote. we also asked about univision. he is a big stakeholder. comments.f he could he said it was a quiet period and he could not. we asked him if what donald trump been saying, and what that has meant for the latino community, is that helped

univision. he said it was way out. you must of her conversations on the political landscape. what did he have to say about that. people here are talking about politics, but the organizers made a concerted decision not to have panels focus on politics in particular, suggesting perhaps it is just too contentious a subject. long time is a democratic voter. he gave $5 million this year. he is fundraising for hillary clinton. similarity if he saw between what is happening in the u k. the u.k. and the u.s. cannot be compared at all. demographic that voted for brexit is not the demographic

that vote here for trump. it is completely opposite. so if you look at it that way, you see there is really no correlation. our people angry? yes. are there many people who are suffering? yes. there is a remedy to all of this. vote hillary. david: he said he is committed to meeting what he calls tricky trump. matt: we are going talk more about politics in business ahead on "bloomberg markets." this is bloomberg. ♪ get ready for the rio olympic games

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x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. ♪ shery ahn: life from bloomberg world headquarters. matt: this is "bloomberg markets." let's start off with the

headlines on bloomberg first word news this afternoon. is facingctor noticism for his decision to file charges against hillary clinton for her e-mail server. >> we try very hard to apply the same standard. we hope folks will take the time to understand the other cases, because there is a lot of confusion about what the facts are for the other cases. hearing, start of the the republican chairman said he was mystified by the decision. concern thatssed he was creating a double standard. marco rubio says he will not be attending the republican convention later this month. he said his decision has nothing to do with donald trump. he wants to focus on his

reelection to the senate. jamie dimon has a warning for the u.k. he might relocate a few of his employees if the uk's decision hurts banks. jamie dimon called on europe to address complaints about bureaucracy and regulation. the latest threat from islamic state and iraq. they are using explosive devices u.s. troops. global news 24 hours a day, powered by our 2400 journalists in more than a 150 news bureaus this ishe world. bloomberg. shery ahn: thank you. let's get a check of the

currency markets. hauled looselyp in the morning session but it is now resuming its drop. at one point in the session it we are currently looking at the pound injured intradate. -- this is the pound against the dollar. shery ahn: almost all the analysts expect the pound to remain weak. our next guest said there is .ore here to make his case is an diaz-alvarez. would you say that we have

already priced in all the damages following brexit? think we are pricing in a lot of damage. we are looking at the historical lows going back to the early 1980's. it is deserved. the situation has changed for the worst for sterling. drop in just a few days. matt: when do you think we see the damage -- is what we have shuttering of real estate funds for client withdrawals the kind of damage you are talking about? enrique: the open-ended real estate response, it is 25 billion pounds, a fairly small amount compared to u.k. gdp and market capitalization. theong as we don't see

freezes spread to other asset classes, it is nothing to worry about particularly. matt: overreaction is where we want to go. assuming it is a negative surprise, and a big swing to the upside, do you expect to see that here? think it is going to be difficult to see a move of that magnitude. drop.e already seen a 10% i think at that point, if it was going to start dropping, there is a good chance we would see some sort of concerted central-bank action from the bank of england or ecb to extend the drop. we dropping as much as they are comfortable.

shery ahn: could we see a drop to the 2000 low? enrique: it is a possibility. withal banks are concerned shortening volatility. it is correctly pricing in a severe downturn in the u.k.. the political stability of the union is going to be somewhat weakened over the next months and years by the referendum. i don't think the market priced that incorrectly. it really should not be. given your point on the bank of england providing more liquidity and easing financial conditions for the u.k., mario draghi would be the central banker who believes in a bigger bazooka. he does not believe negative interest rates to damage to a

economy. do you think financial markets are willing to bet he will do more to drive down the euro? enrique: i do not think the euro is pricing and the possibility that come september, mario draghi might have to expand once again. more importantly, how far the quality line does he go? whereits own guidance for i can buy that it can buy, he is running out of assets. in -- result shery ahn: let's go to the yen. tomorrow we have the labor cash report that will show minimum wage gross. what else can the boj do at this point and what pressure will that put on the yen? enrique: there are a lot of things that doj can do.

they have failed to be as aggressive as the market expected them to be. just expanding both the size and selection of assets. importantly, maybe hints about what is the tame level. that is what we expect to see as soon as the next meeting. not so much perhaps in terms of an absolute level against the dollar, but verbal intervention that we're getting to the point where exporters earnings are going to be seriously hurt and the doj has to abandon all targets. shery ahn: let's touch on the yuan. we are already seeing back in

january, we saw the yuan correlate to the s&p 500 and we saw when the yuan depreciated, we saw the market stall globally. we're not seeing that this time around. does it mean that global markets are more resilient to let the yuan is doing? enrique: yes. they've also stabilize to the yen with the yuan. chinese national bank has stabilized it slightly. clearly markets are not looking at the yuan as a measure of risk appetite. that is good for the central anchor china. matt: thank you for your time. incredibly fascinating stuff right now. it has been great. alvarez.iaz

coming up, mcdonald's narrows bids in its stores in china. who is on the short list there. this is bloomberg.

matt: we are focused on the jobs number that will be released tomorrow after the huge disappointment we got last month for u.s. jobs. we expect a better number. you have a chart showing we could indeed get that. shery ahn: we could get a rebound. this came out yesterday and it surprised in the positive, rising. it is the white line. in may, we saw the white line plunging and we saw the data

plunging along with it. this forecast, we might have better jobs data. today we had the report that the a hundred 72,000 jobs. how many jobs could we get tomorrow? hundred 80,000 is the consensus right now. matt: did you know you can put in a guess for the jobs data? it brings up a screen that allows you to put in a guess for any number of data points. payrolls.put in you can put in your guess up minutes before. there is a champions league. maybe can get up there. are going to take a break here on bloomberg markets. no, we are not. we are going to go to global markets first.

mark: i am mark barton. vonnie: here is what we're watching. donald's narrows the bids for stores in china and hong kong. who is on the short list. dannone is buying whitewave, but it was not cheap. vonnie: why abortion clinics are vanishing and why the spring court ruling could change that. selectedonald's has bidders in china for a deal. it is selling a 20 year mass franchise rights in china and hong kong. most of the restaurants are company-owned.

almost allly wants outlets to be under local ownership. vonnie: clothing sales dropped even more at marks & spencer's. sales of apparel and home goods fell almost 9% in the second quarter, much worst and estimates. consumer confidence weakened in the run-up to the eu referendum. havehains clothing sales been falling. by whitewavewill $2 billion.out talks between italy and the european commission are at an impasse. the stumbling bank is the losses in taxpayer funds.

italy is taking a cautionary approach under the bank resolution rules that allows governments to bolster lenders capital gaps appear. david sarah gave his take on the problem. david: for the last seven or eight years, we have been slow. successe had limited in preparing the rating agency. they took it too easy, in my view. time for bloomberg with take, where we provide context supreme court decision was the most sweeping in decades. howquick take team explains

the supreme court's texas abortion ruling could change things. >> since two wen2011. , the number of abortion clinics that have closed their doors is skyrocketing. just 21 have opened. there are five states where just one abortion clinic remains. what happened? abortion opponents moved to ,heir battle to the statehouse testing how far abortion rights could be limited without being overturned. provided oneourt answer in june. in 1973, the supreme court and its landmark roe v wade case legalized abortion in all 50 states. in 1952, the high court laid the groundwork to undermine that rule. since then, opponents have been

testing just what undo burden means. legislation with restrictions aimed at clinics have been more potent than those aimed at patients. texas enacted a law that forced clinics to meet hospital standards and doctors to have admitting privileges at local hospitals. a 5-3 ruling, the supreme court struck down the law, undue it imposed an burden to a woman's right to an abortion. 24 hours later, the high court turned away appeals for wisconsin and mississippi to revive dr. admitting privilege laws. here is the argument. how do limits actually affect women? ofost al -- almost half

pregnant sees every year is unintended and half of those ended in abortion. the impact on women who cannot or will not travel could result in a 50% drop in abortions nationally. there is evidence that diminishing access results in more women resorting to dangerous and illegal means to reverse motherhood. vonnie: for more stories, visit bloomberg.com.

shery ahn: this is "bloomberg markets." let's talk about tech right now. we have up an awesome chart here showing what apple and samsung

are doing. itsung just released operating profit, the biggest in more than two years. apple, we have seen the headlines, they have not been doing great. you see the white line of apple spiking as they release new phones. but then they come down. samsung is gradually increasing operating income. matt: it is on two separate axes , they are not like for like. the trend is the important part of this. apple is very erratic. one of the reasons, asian people do not think they are getting as iphone. from an that is why apple is losing market share. it dropped low 11%.

the nasdaq. abigail doolittle is looking at maneuvers. abigail: the nasdaq is sending out a little bit, trading higher by 1/10 of 1%. the reason it stands out, it is the only one of the three major indexes that is still treating higher. the second a higher in a row. helping the nasdaq, costco. it is the second best news for reportedq, after they june costs are flat. not so exciting, but mildly better than what many expected. excited byis the traffic. she said that it has been strong and she expects it to remain strong as people shop value and

like value. count me in your value is a good thing. western digital, up, one of the movers after trading up -- the common factor is nan. they said the recent integration was part of it. many think it has something to do with nan/chip sales. you, abigail doolittle. danone is adding soy milk and kale to the menu. foods ught whitewave in a deal worth $10 billion.

all right, director, what do you have here. executive director of global deals. danone, ether you are general mills, pepsi, coke, they 1%not find growth beyond growth year. whitewave and companies like that are desirable. borrow so cheaply and you are craving growth, this is the kind of thing we are going to see happen. i would not be surprised if we see other independent organic companies. matt: you're getting companies get me. this is how i know i am too old. and evene soymilk, worse, kale, i think who is

going to buy these kind of products. 1994 1995, we have normalized whitewaverowth and is soaring. the kids love this stuff. jeff: not just the kids. it and is eating more of i am too. the company that owned the consumers like pepsi and coke they are scrambling and desperate. for things like danone, they want to be more in the united states. it is a play to get outside europe and the slow growth economy into an area where growth is much faster. shery ahn: what are the terms of the deal? jeff: it is all caps. the question is if someone will

jump the deal. investors who owned that hoped there would be a deal come this year. if a deal ever happens, it is not much in the future. might coke, general mills take a run and jump this deal. this is what everyone is wondering. matt: you and your kale can have it. we will take a break. jeff mccracken, sorry about giving you that new title. shery ahn: coming up on "bloomberg markets." back to the alan media conference in sun valley. this is bloomberg. ♪

matt: it's 1 p.m. in new york, 6:00 p.m. in london and 1:00 a.m. in hong kong. vonnie: welcome to bloomberg markets.

vonnie: from bloomberg world headquarters in new york, welcome. storieswe are covering globally, here is what we're watching. matt: we will have the latest on areminster where to women vying for the tory leadership in the united kingdom. we will tell you about the post-brexit policy. jpmorgan ceo jamie dimon has intriguing comments on brexit and what it means for their 16th -- there 16,000 employees across the u.k.. matt: wire consumer defaults on the rise? are lenders getting looser on credits? comments from the

head of credit strategy at ubs. vonnie: let's go to the markets desk and julie hyman. it's a turnaround today not just in stocks but across the board. oil is the tail wagging the dog. we have turned negative across the board am the nasdaq is slightly negative and that now and the s&p are off by at least 1/4 of 1%. let's look at the intranet date charts. -- intranet date charts. inventory data showed a draw down it was a little bit smaller than some analysts projected particularly after a large drawdown reported by the trade association. that is causing that leg downward in oil.

we have been watching the 10 year after it hit that hit a record low yield. the yields are coming back today by the trajectory has changed it still hanging onto again of one point at the moment. matt: talk to me about the big equity movers? julie: we have been talking about white wave. it's trading one penny above its company rate and then there is avg technology that trades in the u.s. and is being acquired by the privately held avast and will help it with security for mobile devices. those shares are trading higher. this has to do with deal roche might make a and costcoomarin

came out with june sales that beat the most pessimistic estimates. traffic also rose 3%. vonnie: thank you for that. matt: let's check in on first word news. ramy: thank you. the director of the fbi is defending himself on capitol hill. he testified before a house committee about his decision not to bring charges against hillary clinton overuse of e-mails while secretary of state. day,hope at the end of the people can agree and disagree but they will understand the decision was made and the recommendation was made the way would you would want to be by people who did not give a hoot about politics but shared the facts and the law and how similar people come all people have been treated in the past. the house oversight committee chairman told him he was mystified by his decision. how stomach rats are staging another protest over in action. on gun control legislation

they are reading the names and showing photos of gun violence victims. house republicans cut off the feet and called a recess. houston kratz had a sit in last month that lasted almost 26 hours. the u.s. justice department is investigating the shooting of a black man in louisiana. protesters in baton rouge held a protest last night and mobile phone videos show to white officers arresting alton sterling. rises around the world rose in june by the most in almost four years. the united nations index was up by almost 4%. grains, dairy, and meet were higher. global news, 24 hours a day, powered i more than 2600 journalists in more than 120 counties -- countries. matt: for the latest in you keep that in u.k. politics, the all-important tory party leadership race coming out today

time, we will get an update on the latest round of voting from westminster. rob hutton is standing by in the green. what are you expecting is far's the results? >> i have the results. i have had them for an hour. britain's next prime minister is going to be a woman. the only question is which woman will it he? -- will it be. they are tory members of parliament. a couple of hours ago, we got secretary who is running on a platform of solid and sensible if a little dull m,t 199 votes and andrea ledso m the energy minister is running on a platform of everyone should

cheer up and enjoy brags it, got -- brags it -- brags it -- rex it our next prime minister will be the second woman to lead britain after margaret thatcher who left office 25 years ago. benie: teresa may seems to leading and she is the most powerful female politician in government but we have not heard much about her economic policies. what do we know so far? i don't know whether we will hear much. her basic pitch is everybody should, down and everything will be fine, i am here. i would expect not a huge amount of change. whenaid a significant ring

she launched her campaign last week was that she abandoned any expectation britain will try to reach a surplus by 2020. that is slightly obscure but that has been the central goal of the government for the last six years. brexit makes that impossible because of the vote. apart from that, we don't know what she wants in terms of what brexit should look like. she thinks immigration should be controlled which suggests we would not have much access to the european single market. she also says she wants access to the european single market and wants access for the service industry which would include financial services. matt: thanks very much. it will be very interesting to see because more than twice as many lawmakers voted for teresa may the was a remain supporter and now it will go to a party

that voted overwhelmingly for leave. , it looks likeg the voters in the u casein to disagree with their party in either case. shery: jamie dimon of jpmorgan indicates he may move some of his employees from the united kingdom. >> the u.k. is important for jpmorgan as a european market and a source of revenue. it's got several thousand staff and the u.k. but this is a story

of financial sector and london. london is the european center of finance. it is global as well and if that is wondering means you will see relocation very soon as far as potential rival centers before we know the details of the brexit agreement that could take years to finalize. any indication of where jamie dimon might take his people? to set up aant capital for finance in paris. we have heard the italians pushing for malan and dublin wants to be the center. who will be the winner here? >> it's tough to say. they are all pushing. i think paris is offering a lot of tax breaks but they are temporary.

paris is still a little bit pricey on a long-term basis in terms of social charges. paris and frankfurt still may not be as easy to fire and higher as it is in london. today, there is no easy answer. beind of thing dublin might doing better than people expect. there is not a lot of resources there but it still close to london and it's very attractive tax wise. maybe dublin just might pull something out of the bag. jamie dimon does not necessarily by the brexit vote yet saying maybe there could be a reversal. yeah, no one has done this before. even people who believe there should be a brags, cannot agree upon the right flavor of brexit. will you be norway which still has access to the single market

or canada? nobody knows and banks really want to know what is going to happen in terms of access to the single market. that is all important. if you keep that passport into europe, we may see a single -- we may not see a single job move away from london. matt: i read the comment by jamie dimon saying that they can solve any problem with the right people in a room together. has he taken any flack for that? it sounds like he is yeah a small amount of powerful elite to defeat the will of a democratic vote. >> i don't think so. i think the mood of the u.k. is one of complete confusion. there is lots of market turmoil. politically, we have two front runners for the next conservative leader. a few weeks ago, we thought it would be ours johnson. -- boris johnson.

elite.t just up to the the point is, we don't know what flavor of brexit will be adopted and negotiated. it could be that the u.k. stops being a full eu member but has access to the single market. it's feasible and the mood right now is so confused that frankly, i am not surprised they would not be outraged. it was interesting to see the eu leaders urging britain to pull the trigger and declare article 50 as soon as possible. i'm sure everyone else is urging the british government to hold off on that and wait a minute before they do that. is there a consensus as to when the brexit trigger would be pulled? >> not at all. that is really on purpose. candidates, i think

teresa may, said it would not the pulled this year. maybe it could be pulled in a year. it's a very ambiguous and vague stage area even those who campaigned to leave make no mention of an immediate trigger, this article 50. that we mayarted never see it triggered at all. shery: thank you so much for joining us. up, the u.s. credit since is on shaky ground that vote and we will look at the outlook for high yield bonds next. this is bloomberg. ♪

matt: you are watching bloomberg markets. shery: time for the bloomberg business flash, look at the biggest business stories. microsoft ceo is shuffling management. co kevincomes as financialarts from a services term. he is appointing to executives to split up sales responsibility. other managers will take on other parts of the responsibility. newng says it is testing nonstick aircraft coding and the icet is designed to cause off an airplane's wings.

calubai pharmaceuticals is looking to cut ties with its controversial former ceo. it has reached an agreement to buy back his shares. he came under fire for raising drug prices and was later indicted on federal securities fraud charges. controls and it bars them from nominating board members. that is the bloomberg business flash. matt: brexit is becoming a headache for credit investors. while the u.k. struggles to get the fallout of deciding to leave the eu, the global credit market has run for cover. for more on high yield investing, let's bring in the head of credit strategy at ubs. thank you for joining us. start to see the impact of the vote and how severe has it become two weeks on? impactink the initial

certainly was in capital market conditions. you saw high-yield issuance fall from about eight-$12 billion per week. 2.5 weeks, we have not been able to price a deal in high-yield. that reflects elevated uncertainty and initially reflected a significant outflow, almost $2 billion in u.s. high-yield funds. a lot of that money has retraced as expectations for the actual potential votive there is one or the triggering of article 50 gets pushed out to the future. the flows have come back, almost $2 billion over the last five sessions. issuance has still been very tepid. hopefully we will price later this week in the first deal that will come from an oil service firm which is large. the initial indication in the last few days are encouraging but for the last 2.5-3 weeks,

issuance has been stalled. the reaction in market valuations have been fairly well behaved. part of that reflects that outflows have not been sustained. it also reflects the support of central-bank policy. is it how significant that we see a shock so late in the credit cycle and when central banks are near zero bound? >> it makes one more concerned for more disciplined around risk taking. we have a variety of different indicators in a credit-based recession gauge that suggest the risk of recession over the last 12 months has gone from the low single digits to 34%. it certainly seems later stages. beenindicator has mainly driven by the weakness in earnings and the rise and leverage as well as the start of

tightening of credit conditions and rising defaults. in the context of brexit, the biggest concerns we have our to what degree does impact earnings, like u.s. earnings, and the channels are varied. the two we are focused on is the impact on the dollar and whether it will strengthen from here and also on commodities and whether or not oil moves lower. the second key channel we are watching is credit market conditions and whether issuance is temporarily disrupted or whether the disruption is more structural. aile bank loans are still relatively small part of the corporate funding market, whether or not ask themselves tighten loans to corporate and industrial and other entities. matt: just looking at the u.s. consumer, we were talking to ando a little while ago

they said the consumer looks the best it has in 10 years. a great ubsubs do evidence lab that i love. about three weeks ago, you talked about consumer credit and the acceleration of the fault. although the overall picture looks good, there is a disturbing inequality as far as consumers who are able to keep up with their debt. increased since the financial crisis? is it a problem that is getting worse? as you highlight, the distinction we would make is when one looks at the aggregates, one has to acknowledge that most of the gains in income and household wealth have occurred at the top of the income distribution. variety of studies concluded the amount of consumer inequality is fairly widespread and almost as severe as it was when you go back to the great depression. post crisis is that

the gains have benefited relatively few. what we have seen is while the banks have been forced by regulations to tighten lending conditions, have not grown loans as much. non-bank loan growth is basically driven about a $1 trillion expansion and consumer credit. nonbanks are responsible for and if you look at the near prime or sub rhyme origination, nonbanks dominate in terms of the overall origination. what we are arguing now is that combination of significant consumer inequality, substantial increase in non-bank lending which is riskier origination, is now basically pushing up delinquency and default rates in a natural evolution. ubs, fascinating data by thank you so much. ahead, andl

explosive interview with the argentinian president next. ♪

matt: you are watching bloomberg markets. shery: let's take a look at some charts. it's all about the fed. the bloomberg terminal has some amazing functions to help the fed's upcoming decisions and look at the historical decisions and predict what will happen in the future. shery: it's a lot to do with the dot plot. you can see a little over a year fed was looking at 1.26% for 2017. we had the fed minutes yesterday

and they are at about half of that. how good is the fed at predicting what it will do? matt: especially when no one expects the fed to raise rates this year. if you look at wirp, the interest rate probability page, it is defaulted to the u.s. and as far aso prediction the futures market of an going out toe 831% interesting way to watch the fed and tomorrow's job september of 2017. number will have a huge effect. still ahead, we will hear from the argentina president. this is bloomberg. ♪

?c+sv bloomberg world headquarters in new york, you are watching bloomberg markets. let's start with the headlines on first word news. ramy: thank you. house republicans are squaring off against the director of the fbi today.

to capitol hill over his decision not to recommend criminal charges against hillary clinton over her private e-mails. congressman jason j fits is -- che fits jason che fits is head of the oversight committee. >> you are the definitive voice and i stand by that what i am mystified and i am confused if you listen to your fact pattern and come to the conclusion that there is no consequence? i don't know how to explain that. comey said there was no evidence that what clinton and her staff were doing was against the law. the bulk of insurance losses come from people covered by medicaid that the plan would lower premiums significantly for some buyers. federal aid is on the way to

help west virginia pay for the damage of the flooding that killed 22 people. provides support for debris removal and replacement or restoration of flood damaged has already given out $18 million in assistance. get your suitcase ready, the u.s. government has tentative approval for scheduled commercial airlines to havana, cuba from 10 u.s. cities. eight airlines are expected to begin service this fall. it has been more than 50 years since the last scheduled air service. 24 hours per day, powered by more than 2600 analysts and reporters. matt: let's go out to sun valley, idaho where david gura is at the allen and company conference. you had a sit down with the venezuelan president, why is he

there? at the invitation of the allen and company to talk about the prospects for the argentine economy. here, theders do come prime minister of canada was here yesterday. let's hear his reasons for being here. everybodyre to invite to come to my beautiful country. we are going to grow in the near future. it's a big and wonderful country. i am looking forward to investors and people coming to work in my country. >> in terms of the financial it's not just technology and media but also financial investments? we need this to reduce property and we need to create

your -- to reduce poverty and we need to create jobs. financial inflows go in and out but that does not help much. money to produce real investments in real companies. that's what i am looking for. at the beginning, everybody thinks a big mess has come back to the world. i'm not saying anything very original. i talked with chancellor angela they ared consolidating the european union and maybe we will work closer with them. maybe that will help.

you heard about the effect of brexit on the argentine economy. the european union will become tighter and that will advance the position of south america. i was talking with an attendee of the conference about his speech and his event today. he said that in years past, brazil was in the limelight. economic promise and i you have argentina under a new president with a new focus on getting their economy back into shape and that they -- that may be good for investors here in sun valley. argentina has reopened its bond market after being closed for a long while so there is opportunity there. shery: we rarely hear what south american countries are doing reacting to brexit. thank you so much. matt: also from the sun valley

conference, we spoke to liberty media ceo john malone. sherry redstone is fighting with i am hopingnt.\ >> it all settles down and everybody is treated fairly. sumner has been a long-term friend and sometimes partner and renemy and you hate to see distress in a family situation. i certainly hope it all works out to everybody's benefit. >they have created some great assets over the years. they are an important part of our industry. would you be interested in buying the paramount stakes? >> would i? the theatrical side?

no, that would not be where i would go. if it was my decision. they've got some great assets. they are substantially undervalued because of the turmoil right now. i think they will straighten it out. >> if you were a betting man, would you expect it combination of cbs and viacom? moonves would do a terrific job of they went that way. he is a terrific operator. i have no idea what sherry has in mind as a strategic direction. i have no idea what kind of tax problems they will face in with a have to do to satisfy those. i'm sure it is a complicated process. shery: that was john malone.

a panic in italy arises amid europeanhat they commission is in deadlock over how to fix the broken italian banking system. workoutnk the optimal is first, for the last seven or eight years, there have been -- nonperforming loans. they have limited success in getting information ready and preparing the services and the rating agency. they just took it too easy, in my view. i think the ecb will give a clear timetable. will include 50% of yearspl in the next 3-5 so you're looking at disposing

maybe $8 billion of equity with collateral over the next three or four years. and there will be plenty of demand. the last two years, we deployed $500 million of equity into mpl in italy secured by real estate. we are generating extremely high returns and there is plenty of investor demand. i think it is one of those places in the stressed market where you can achieve double-digit returns on secured assets. i think capital will come in as a result. now you have a summer panic because you have the brags it -- brexit. great: hindsight is a thing. they could have dealt with it from the start and a robust way. do you think this will be help with and valuations will go higher?

what if we have a bank run? maybe the european union will not be flexible. we have a bank run on a tank, how systemic is it? is it a domino effect that takes all the italian banks down with it? >> i don't think this could happen. francine: mario draghi says he thinks it's possible. applicationt have to less than 100% of the banks. result, you need a deposit guarantee scheme. willnk the government guarantee $150 billion of retail bonds. for italy, you have the insurance deposit scheme. i cannot believe that when a

country has eight trillion euro of wealth, you're discussing $5 billion. it's 0.5 basis points. within the rules, i think they will find a solution because it will be ridiculous if they don't. typically in europe, at a time when everybody is panicking, that's when they move. up, in the past year, sancor energy has been $6 billion on deals. we will discuss that next. this is bloomberg. ♪

matt: you're watching bloomberg markets. time for the bloomberg business flash. first-time claims for unemployment benefits in the u.s. have not been this low since mid-april when they were at a 1973 low and jobless claims drop last week i 16,000. firings have been hovering around four decade lows and the june jobs report comes out tomorrow which is one of the many reasons why we care. a $2ald's has selected billion deal in china. mcdonald's is selling twenty-year mass franchises in hong kong. those restaurants in china are company-owned. the chain eventually wants nearly all the outlets to be under local ownership. american airlines will become the first u.s. carrier to offer a premium economy cabin with more legroom.

delta has plans for a similar product and u.s. carriers of trying to catch up to foreign competitors who already offer enhanced service. that is your bloomberg business flash. sancor energy in canada has become the largest acquirer of oil companies over the last year, surpassing many others. it is warren buffett's largest play on oil. pamela richie joins us with more on the suncor purchases. give us a size of the recent acquisition? over the course of the last year, $6 billion is what suncor has put to work to buy a different companies. it is the 13th largest integrated oil producer in the world by market value. they have taken advantage of a distressed environment and they did it early on and they got in there and managed to make it

work. the ceo entered the 2014 oil price downturn with some dry powder on hand and was able to use a combination of stock and buy up the canadian oil sands earlier this year. stake in a totale's project in alberta and brought up -- and bought up a murphy's oil share in a project. they are trying to boost their daily production to 800,000 barrels per day from 600,000 barrels per day. matt: does the company intend to do more buying? -- theyber of analysts have to make sure that they are cost cutting as well as investing. there are other ways to sure up capital. they have done some equity

raises it may have to do more and they have to watch that because their cash balance has been hit. analysts say there are slimmer pickings to buy. they got in there early and got great assets but it's not expected to see them go back to market area in the other long-term thing to remember is analysts say there is an export capacity issue in canada. will be built or not but it does hang over all of the canadian oilsands companies. -- whathy is their cash is their caste position after these acquisitions? >> it is certainly depleted. they have done equity raises and were successful with bat. a number of canadian companies have done that. they may have to go back to do that to sustain themselves. it depends how long the oil price remains where it is.

an excellent job as being as low cost producer as it can be. it has been depleted and a lot hangs on where the oil price goes. matt: thank you so much. -- theut this tory story. shery: coming up, the pouncey -- afteref effort hitting levels not seen since 1973. ♪

matt: it looks so hot out there. is over 90 degrees for the second day in a row in new york city and should be the same tomorrow and that will officially be a heat wave. shery: we are fine and the studio. matt: thank goodness we have air

conditioning. you are watching bloomberg markets. shery: the pound is finally getting some relief after setting a three decade low caused by fear over the u.k. leadership vacuum and the countries potential exit from the eu. matt: we spoke yesterday with the global head of g 10 fx strategy to help us navigate the post brexit fx market. >> at the end of the day, we have a large deficit previously financed by foreign direct investment. we will now see foreign direct investment outflows. you've got a terrible narrow base and that the main weight of the pound at this point. >> as the political situation quiets down, it looks like we will pay more attention to the dollar-yen.

which ways that going? if we break 100, i think will accelerate to the downside. hedging theirre foreign securities exposure. they have too many dollars. when the dollar starts to depreciate, they need to hedge that and reinforced dollar depreciation. anything that is changelaunch in order to the direction of dollar-yen? >> i don't think so. we just showea five-year chart and we are just down to 2014 levels in dollar-yen but 1984 levels on dollar-pound. >> the levels matter a little bit but if the speed that matters as well.

is problematic from a financial conditions standpoint and that's not what the japanese economy needs. there is some sort of notion that eventually, the japanese will get down to a helicopter drop of cash which is a coordination of fiscal policy and monetary policy. i think we will get there eventually but probably in a next recession rather than immediately. >> going back to the start of the year, the big call was to buy the dollar and there will be a big policy gap between the u.s. tightening and everyone else on hold. it does not seem that anyone is tightening. thequestion of which way dollar goes is crucial especially to domestic investors trying to figure out what companies have dollar risk exposure. which way next for the dollar? >> we need to distinguish between what currencies we are talking about.

the will probably be stronger and the dollar will be weaker against only the yen. the main currencies people tend to watch as the euro. we are looking at $1.05 at year end it with have not change that forecast. that's actually not terribly aggressive. we have been there before. is joeoining us now weisenthal, the creator of the show. what if you got today? joe: we are going to look ahead to the jobs report tomorrow. since we got that may job report, what is the -- what does the other labor they to show? if you look at initial jobless claims, it looks like the week report was perhaps a blip. i have a chart of one of my favorite ways to look at the initial jobless claims data.

averagee 52 week moving of the nonseasonally adjusted numbers. basically, matt: tell me what number is your chart. joe: g-321. shery: there we go. is that it? matt: is it your own library? shows initial jobless claims remain very low. matt: the lowest since april. out the: if you smooth numbers to exclude the noise, it's still very low. you look at that may number of the other data suggest it's a blip. we also got a strong ism number and services of egg part of the debt is a big part of the economy. shery: maybe the report could be very strong tomorrow. how much of a headache is this for the fed considering the brexit effect.

joe: that is the big question. people look at u.s. data and say we are near full employment and there are signs that inflation might be firming and wages might be firming. the data might say we can resume investing but there is foreign risk and brexit and a you a selection and what's going on in china. the international conditions are dominating the discussion. matt: for posterity, your chart was 1958 in the library. joe: there we go. matt: that's joe's favorite measure. line is a new't post crisis low. that shows continual steady improvements based on this measure. matt: maybe we are getting

closer to full employment as much as the fed does not want to admit it. we will see you later today. we will also speak with the amherst pierpont securities strategist bob cinch at 4:00 p.m. eastern. shery: coming up in the next hour, pepsi stock is jumping. we will take a closer look at what's behind the forecast. this is bloomberg. ♪

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>> 2:00 in new york, 7:00 in london, and 2:00 a.m. in hong kong. welcome to "bloomberg markets." funny: from bloomberg world

headquarters in new york, good afternoon. julie: this hour we will cover stories from houston to san francisco to london. here's what we are watching. friday 's payrolls report under even more scrutiny after may saw the weakest increase in five years. we look at how much emphasis investors and the fed might be putting on this one piece of data. vonnie: a bright spot in the north american consumer and an appetite for flavored waters helping pepsico beat second-quarter promises. reporting itssung biggest operating profit in more than two years with help from the galaxy s7. phone marketart ow