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 slowdown and outshining apple on

stock performance and revenue growth. vonnie: markets close in two hours, so let's go straight to the market desk. vonnie: we are still in the red -- shery: we are still in the red right now. we are plunging into the red. the dow jones down 0.4%, s&p down zero point 25%. the nasdaq, though, seeing gains come up 0.1%. lot to do with what is happening in oil. function on the bloomberg and you can see the energy sector, one of those leading the declines, down 1.2%. crude right now trading at $45 a barrel. if you take a look at the s&p 500 intraday, you can see that we started declining as soon as crude started falling in today's session, so we are now down 0.2%. take a look at what crude has been doing. we have government data now, showing u.s. crude inventories

dropped less than expected. inde down 4.5%, a big plunge trading, at around $45 a barrel. that report from the energy administration showing crude stockpiles declined by 2.2 million barrels, not as much as expected. vonnie: so what are some notable drops today? shery: let's first look at at&t, because we had big news from citi, cutting it to neutral from a buy, so at&t falling 1.5% now. look at what citi is saying about the company, saying its valuation is elevated relative to historical levels, likely to limit further upside. verizon to medications also down 1.3%. and the big news today is crude, trading around $45 a barrel, so other companies that are down, energy companies, of course. we have to take a look at exxon,

at the lowest since june 29, falling 1.3%, followed the most since june 24, the immediate aftermath of the brexit the. we also have chevron, falling 1.9%. we're hearing that nigerian militants just claimed an attack on a chevron oil pipeline just two weeks after the government declared a cease-fire. at the lowest since february of this year. julie: energy-led selloff. thank you so much. let's check on the bloomberg first word news. ramy inocencio has more. ramy: first it capitol hill. hill.capitol fbi director james comey is being grilled for his decision not to pursue criminal charges against hillary clinton over her use of a private you know server. representative jason chaffetz told he was setting a dangerous precedent. >> you are the definitive voice.

i stand by that. but i am mystified, and i am confused, because 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 says there is no evidence the former secretary of state lied to the fbi, and noted there was only one precedent in the past 100 years for prosecuting on a gross negligence item, and no reasonable prosecutor would bring this case. the race to succeed david cameron is down to two candidates, theresa may and eadsom, who will proceed to a runifoff vote. michael gove came in last in the prior round of votes. minnesota's governor is asking the department justice to

investigate the shooting of a black man by police during a traffic stop, which sparked immediate outrage and protest. the victim's girlfriend posted the aftermath of the shooting life on facebook. police pulled him over for a broken tail light. the couple's daughter was in the back of the car. heat in june was a record for the united states, the hottest june since record-keeping started in 1895. the first six months of the year were the third warmest on record, and every single state in the country was warmer than average during that time. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. julie: every jobs report seems to be the most important piece of data, but maybe tomorrow's really is this time. want tos and economists know if the big miss in may was a blip or a confirmation of a loss of momentum, but a drop in

jobs may not result in a rate increase as officials continue to weigh risk, including brexit. our next guest made the case for why the next move will not be a rate hike, but a rate cut in december. the senior u.s. economist at standard chartered joins us right here in the studio. before we get to your rate outlook, which is intriguing, i want to talk about the jobs report tomorrow. where do you stack up? was may an anomaly? thomas: yes. it did under shoot the underlying trend, so we expect a rebound towards 150,000. even with 160,000 job growth, the three-month average would still look higher. vonnie: so if job growth is on track, why would not the fed the on track? thomas: the underlying growth is slowing down. the problem with the fed right now, hiking rates at a time when

the business cycle is slowing down, i think that's the main problem. the fed is running against the tide right now, and i don't think they will be able to hike rates that much. problem is, the economy is slowing down, and we expect a weaker slowing half, led by weakeer construction and car sales, and we think job growth will slow down as well, so we think the fed will cut rates in december. julie: considering how low rates already are, even after the fed increased them, how much upside does the fed get if they do a rate cut in december, given the balance of risks and rewards of it? is it really worth it, to come out and cut rates? thomas: that's a very good question. the wider question is, is that monetary -- if that monetary policy still works. the problem right now is that fiscal policy is not necessarily responding, and i don't think fiscal policy will be more forceful and active after the elections, so i think monetary

policy will still have to do the heavy lifting. vonnie: i'm curious to know what good a rate cut would be in december. what are the steps we will see in the u.s. economy before then? are we going to see a dramatic downturn in consumer confidence, spending, and so forth? we see noent, possibility of a rate cut this year or next year, but also perhaps not the possibility of a hike. thomas: what i take from the ratets, the pricing of a cut is something people are increasingly looking at even though that is a tail possibility. but if the economy slows, if inflation stays soft, and we think current inflation will move down, then the fed will be pressured to ease monetary policy and provide support to growth and also provide support

to inflation expectations. that's the key issue, inflation expectations are sliding and might slide further. julie: one thing you have not mentioned is the u.k. vote, which is interesting because there has been so much talk about it. one thing that struck me, supply management service, asking employers, will it have an effect? they said it would be negligible in terms of the effect on hiring. do you agree, after all the fanfare, in terms of the effect on the u.s. economy, is it going to be negligible? thomas: well, there are some positives, including low rates, which by definition are good for mortgages, for construction, and especially for housing, -family housing. however, there are negatives. i think the u.k. itself is not necessarily the biggest trade partner of the u.s. it is the fifth in terms of export destinations, morphed by mexico, canada -- dwarfed by mexico, canada, and china.

but there are risks around the european union. let's see what happens to the european union. if the european union starts to slow down, that is a further downside risk. i want to point out in the terminal the five-year forward, down to 1.34%, practically all-time lows for breakevens. is this a result of negative yields in europe? if so, europe is impacting monetary policy in the u.s. thomas: europe is impacting monetary policy and the 10-year yield, and yields are moving down, but i would say even within the u.s., inflation pressures are very soft. even if you look at -- let's not forget, the fed is still buying bonds. they are putting downward pressure on bond yields. saysurprised when the fed they are surprise yields are moving down. but they are still buying these bonds, and we are still setting

short-term rates. the big issue is the long-term rates, qe being ongoing, because they are still buying this bonds. that's also contributing to the move down in treasury yields. vonnie: fascinating. thomas, thank you so much. senior u.s. economist at standard chartered bank. we have much more on the jobs report at a: 30 eastern tomorrow morning. julie, you will be at the labor department with the numbers for us. economistmiss allianz and bloomberg view columnist mohamed el-erian. julie: it seems american consumers like therir chips and soft drinks. pepsico numbers are trading at a -- shares are trading at a record. we have all the numbers for you next. this is bloomberg. ♪

vonnie: this is "number of markets." you are looking out at beautiful midtown manhattan. it is what, 105 out there? julie: this is julie hyman. vonnie: a look at the biggest bloomberg stories right now. housing sales got worse. says appareler's and housewares sales fell in q2, worse than estimates. consumer confidence weakened in the run-up to the european referendum. microsoft ceo satya nadella is reorganizing his management team, making the move because operating officer kevin

turner will be leaving for a job at financial services firm citadel. nadella appointed julie: executives -- appointed two executives to head up sales. weeks after winning their first nba championship, the cavaliers are leading the league in merchandise sales, but steph curry has the nba's most popular jersey. lebron james has the second-most popular jersey, based on overall nba.com store sales from april to june. that's your bloomberg business flash update. julie: pepsi stock is gaining in today's session, reaching the highest level on record. the company boasting second quarter profits beating estimates, and boosting the full-year forecast. let's check out pepsico in today's "the numbers don't lie." pepsi was helped by rising sales of snacks and soft drinks in north america. by frito lay unit sales rose

2.3% to $3.5 billion, and revenue from beverages climbed 6.5%. pepsi says water and juice brands helped, along with organic friday's of tostitos chips. revenue has declined at an annual rate in 2013, with the strong dollar causing currency driven losses in latin america and sub-saharan africa. pepsi does have challenges. last year, it replaced aspartame pepsi,cralose in diet and they will reintroduce the aspartame-sweetened version. it's not just diet soda that has seen declines. the overall u.s. soda market fell to a 30 year low last year, and as a result pepsico has increased its "better for you" offerings. in global sales, pepsi is the clear number julietwo.

held 25% of market share, and pepsico held 21%. pepsico is beginning a sweeping multiyear program targeting one billion years of savings annually. you see it reflected in operating margins, which have widened due to low commodity inflation. vonnie: julie, thanks. the stock now off 1.4%. we will see if it holds the all-time high. i want to bring in jenny kaplan, who covers beverage industry items for us here at bloomberg, and does a tremendous job. tell us little about pepsi, and how it has been rallying, relying on north american other companies have been looking abroad for growth opportunities. interesting.eally pepsico really has taken advantage of north american growth, particularly the frito lay unit. while macros are problematic

around the world, it has taken advantage of the u.s.'s relative strength. while people are turning away from soda, as you mentioned, at a 30 year low in terms of per capita consumption, the same health trends do not appear to be hurting their other units, particularly chips and snaps, which have helped -- snacks, which have helped achieve results. julie: what is leading growth, if you look at individual products or initiatives pepsi is doing? jenny: it is really innovation, particularly in frito lay, looking at becoming a more premium snack provider. typically they have been less so, and they are trying to boost margins by putting those more premium products out there where they can boost prices. so they say innovation, on the beverage side of things. they released aquafina sparkling. they have a new version of mountain dew which is craftier, which is supposed to appeal to consumers who want that sort of thing these days, doing all this

doing these cost cuts that have increased productivity. vonnie: do they need to rethink an acquisition? jenny: we asked them about that. they say they are looking at everything, the deals on the table, companies that have a not -- have not announced deals. if they were interested in a deal, they said they would not particularly respond, and if they are interested in a deal they would be in it. they said they will continue. their plan is to do about $500 million in acquisitions annually, so they will continue with that plan, but we have not seen much from them in terms of where that will play out. julie: what is their exposure like in the whitewave-like products, the so-called more natural products? you said the growth of that is not hurting them, but do they have a presence there? jenny: they do. pepsico and coca-cola are expanding their portfolio to get those consumers trying to eat healthier, more organic-type

food. pepsico has its own juice brands, stacy's chips, other snack brands trying to target that consumer, while the flagship soda brands are not really doing very well. vonnie: jenny kaplan of bloomberg news. thank you so much. julie: you can check out jenny's podcast, material world, on itunes. i highly recommend it. jenny: thank you. julie: still ahead, why target is placing its future in the hands of children. the reinvention plan, next. this is bloomberg. ♪

♪ julie: target is aiming to reinvent itself, again, and this time it's using 10-year-old fashion consultants. you can read about their strategy in this weekend's bloomberg business week.

the reporter who wrote the story joins us now. target has been trying a number of initiatives to reclaim the target status, right? is this what it's going to be, talking to kids to figure out what they want? susan: in this case, i guess more broadly they would say they are trying to listen to their customers more. as we know, target kind of lost its cachet, and now they are looking for ways in which they can make themselves special again. kids clothing is one of those ways. vonnie: analysts are giving target a certain amount of time to get it right and turn around. is that time a? -- up? our analysts pleased with how this is progressing? is this another leg up? susan: target and ceo brian cornell has said it is going to take many years to make target modern. they really fell behind during the recession. he has not wanted to say exactly how long that will be, but he told us, he still considers it

to be very early in the turnaround, and i think overall, his strategy has been to focus on a few categories, very broad. style, which kind of covers a lot of things. those categories are getting a lot more resources, getting a lot more attention, and they are growing more quickly than the rest of the categories in the store. so by that measure, they are doing ok. julie: this children's initiative, what exactly are they doing, and how is it different from what they have been doing? susan: target had two main brands of kids clothing, one that they've designed themselves, and one that they licensed. they decided they would do away with both of those and create their own line of clothing. right at the start, it will be a $1 billion business just by virtue of what it is replacing, but they have much higher hopes for that. they put in a lot of time and resources -- research about what kids want nowadays, put a lot of effort into it. they expect that overall the line of kids clothing will grow

twice as fast as industry average. vonnie: we certainly lost some teen retailers in the last year or two. the target stock price is close to all-time highs. short interest is up, as you can see on the terminal, but it's not at massive levels, so looks like investors are also willing to give this time. susan: i think so. brian cornell came into the company two years ago with a pretty good reputation. i think what he has done so far, including cutting costs, has made people feel a little more comfortable. the way he's talking about what target can be,, again even people hope for their first time in a lot of years. julie: you come from retail more broadly. when you talk about target's kids business growing at a certain multiple of the industry average, the industry average right now is not very good, whether you're talking about children's or apparel more roughly. so target has issues, and there's the industrywide issues. what are you hearing from analysts, in terms of whether

they will be able to break free from that? susan: it is really tough, as you know, in the apparel industry overall. it's going through tough times. a lot of the teen retailers are going through bankruptcy, or heading that way,. i think what target decided with this line, they are focusing on younger kids. the line goes up to about 12 years old, so they are not getting into the teen or between -- tween market. that is competent it. this is a group of kids were everybody needs to shop. kids grow and need new cloaks -- clothing. vonnie: you can read the latest story in bloomberg businessweek. i highly recommend it. still ahead, wti down 5% now. this is bloomberg. ♪

♪ ♪ from bloomberg world "bloomberg markets headquarters in new york, this is "bloomberg markets." i am vonnie quinn. julie: i am julie hyman.

commodity markets are closing, and it doesn't look like a pretty close, especially for energy. shery has details. we are seeing oil taking a sharp u-turn after a government report early this morning showed crude stockpiles declined less than expected, so crude down 4.7%, trading around $45 a barrel. and you can see the sharp plunge around 10:00, when we had the data showing crude stockpiles declined only 2.2 million barrels, instead of the expected 2.5 million barrels, so we are at seeing the cracks spread, the lowest in two months. that means refineries are seeing less profit. profit margins for refineries are at one of the lowest levels in about two months now. you can see, down 62% for the year. we are seeing the abundance of gasoline in the u.s., seeing the

d falling through the year. we have u.s. natural gas as well, another decline of today, falling 0.3%, and that is on a mixed weather outlook. we could see, the recent rally we see with natural gas is being derailed because of a pullback in hot weather. now, copper is also seeing a third day of declines right now, its biggest three-day lost since early may, and of course we have concerns over growth in china, which is the largest consumer of these metals. we have copper down 1.5%, but also because of concerns over europe. of course, we had germany just releasing their industrial output dropping to the lowest in 21 months. julie: thank you so much for that commodity roundup. let's get you caught up on the bloomberg first word news at this hour. ramy inocencio has more from the newsroom. ramy: thanks very much.

fbi director james comey is now criticismonslaught of from republicans regarding his decision not to pursue criminal charges against hillary clinton over her use of a private e-mail server. but comey defended that decision. >> we try to apply the same standard whether you are rich or poor, white or black, old or young, famous or not known at all. i hope people will take the time to understand the other cases, because there's a lot of confusion about what the facts were of the other cases, and understandably good people and reasonable people have questions. ramy: at the start of the hearing, republican jason chaffetz said he was mystified by the decision, and expressed concern he was creating a double standard. former presidential candidate marco rubio says he will not attend the republican convention later this month. he says his decision has nothing to do with the party's presented nominee, donald trump. he says he wants to instead focus on his reelection campaign to the senate. bernie sanders today has signaled his former endorsement

-- formal endorsement of hillary clinton is coming soon. the vermont senator spoke with bloomberg news's albert hunt, and said that donald trump is a pathological liar. he intends to throw his full support behind hillary clinton for president. letter to put in has signed an anti-terror law drawn criticism for eroding civil liberties, which compels russian front cover these to keep recordings internetalls and activities for six months per it among its critics, edwards noted in, who has asylum in russia after leaking u.s. secrets. he says the law must be condemned. all the news 24 hours a day, powered by journalists in more than 120 countries. vonnie: thanks. in post-brexit politics, home secretary theresa may and energy minister andrea leadsom are in the final runoff for leadership

of the conservative party after david cameron steps down. the impact of the referendum is being felt in the real estate markets. after more u.k. property bonds froze withdrawals as investors seek to dump their holdings. but one investor says reactions might be overblown. >> i think it's a big overreaction, on a lot of levels. one, the referendum is not binding, and with just about everybody involved in the referendum now gone, i think it's very unlikely, with a pro-remain parliament, that they will leave. >> is that right? you think it's likely they will not leave? >> i do. , anything can happen and we saw anything, can happen with the referendum. but similarly to the greek referendum, you asked the people, and they said, we don't want more austerity, and then the government agrees to more austerity because that's what they had to do. i don't think it's in the best interest of the u.k. to leave. >> but you do have 17.4 million

people who voted that way. wouldn't they be unhappy, if you said, never mind? >> it's possible. [laughter] >> the difference between the greek referendum and the u.k. referendum, the greek referendum was a negotiating tactic. here in the u k, calling the referendum was a negotiated tactic and what they got from europe wasn't enough. so i wonder, from your point of view, i have not heard a single tory leader candidates say they don't want to pull the trigger on article 50. it's just a matter of time. what do you expect to have them row back? >> that's a great point. we hear the same, that the candidates themselves talk about leave, because that's how they will get elected in the current environment where the people have said, 52 to 48, we want to leave. but once they get in, whoever becomes the new pm has to then deal with parliament, and we don't see that they will be able to get that through. >> so when you take a look at investment strategies over the

next six months, where there is a lot of uncertainty and you have a huge global bond rally and see gold pop, what do you do with asset allocations? >> you guys had the acronym bugs, bonds, bug utilities, gold, staples. they talked about bugs. clearly, if you had a brexit, that's the only thing you want to own. maybe cash, too. but if we start to move away from brexit, i think it's time to go bottom fishing. look what happened with european financials, particularly u.k. financials. deutsche bank has real problems, but some of the u.k. financials seem like they have been overly punished. >> if people are overreacting to the downside, that must mean there are opportunities and things are underpriced. what categories would you look at as being underpriced because of brexit? >> clearly, some of the overreaction in the property market is likely to unearth opportunities. we think the european financials

are starting to look interesting. you have to be careful. there are banks, particularly natalie, that have real -- in italy, that have real problems. but some have been unfairly punished, with the idea that brexit will suddenly cut off trade. we don't see that happening. there is too much on the line for germany, just like with the greece issue, to let this really go too far out of field. >> transportation and airlines have also been hit hard. a euphemism for wrong, on my call a year ago, saying airlines were stupid cheap, and they valued a lot in the second half of the year. they have given that all back, and as of last year they are stupid cheap again. transportation could be a really interesting sector. >> we had a downgrade from credit suisse, pretty brutal yesterday. the idea was that airline earnings have peaked. what do you see a value? >> we think the older airlines that have older planes that are less fuel-efficient, but in a $50 oil environment they are at

a advantage because they don't have depreciation charges. we think the earnings will surprise to the upside. these are selling at syntel digit multiples and still growing. passenger miles are rising. we think it is much ado about nothing, but we will see. >> i like the counterintuitive play. another one, companies in the permian base. production per rig in the permian basin, getting more for permian, uniquee to this area of shale in the u.s. >> if an incredible chart. just to give you an example, two years ago it took 30 days to drill a well. we just had a well completed in 11 days. so you need fewer rigs, and the cost of drilling wells is going down, so the companies like rsp permian, diamondback energy,

this year, you want to own fang, diamondback, and not fang, facebook, amazon, netflix, google. >> but these are already traded at a premium because that data is known. how much are you willing to pay for that? >> we don't think these will double, like they have over the last six months. we think they can compound 15% to 20% in the for siebel future. there's more oil in the permian basin than there is in saudi. this is really a technology play, not in oil play. >> one last counterintuitive is steel. you are big on steel. i have not heard that recently. >> we came in at the end of the year, looking at what was beaten down, what was unloved, and steel was one of those things. when you throw on top of it tariffs, which are always good for profits -- high tariffs make

profit margins really juicy? >> that's the play. julie: still to come, donald is meeting with house republicans today, at the same time as the audition to become his vp is becoming a public display. we will cover it all out of washington. this is bloomberg. ♪

♪ vonnie: this is "bloomberg markets." julie: time now for the bloomberg business flash, a look at the biggest business stories in the news right now. tata steel has temporarily put the sale of u.k. assets on hold, according to people familiar with the matter. many of the bidders pulled out

due to uncertainty in the wake of the brexit vote. a steel millets, in wales. mcdonald's has selected bidders in china for what could be a $2 billion deal. mcdonald's is selling twenty-year franchise rights in china and hong kong. most mcdonald's restaurants in china are company-owned. the chain eventually wants almost all outlets to be under local ownership. american airlines will be the first u.s. carrier to offer premium economy cabins with more legroom. delta had plans for a similar product. u.s. carriers are trying to catch up with foreign competitors which already enhance -- offer enhanced service. that's your business flash update. vonnie: donald trump met with house republicans today, and many came away saying he can unify their party. about 200 house republicans attended the meeting, including speaker paul ryan, who said, "we had a great meeting." meanwhile the very public on for trump's vp continues.

i want to bring in jennifer jacobs, bloomberg's national political reporter, joining us from washington. what was your main take away from the events this afternoon? jennifer: i talked with several of the congo's men after the meeting, and house republicans are pretty uniformly saying it was a good meeting. several of them said it was a great meeting. i talked to trent franks, who was a vociferous opponent of donald trump, and now after this meeting he's one of his strong to supporters. but several people said, you know, i have not been backing him and i still do not back in after this meeting. he said the reaction in the meeting today was muted. other said it was very positive, saying he is saying things that americans are saying to them back in their districts, and he thought it was positive. the senators had a meeting later in the day, which sounds like it got a little contentious. the washington post reported trump had a confrontation with three of the senators, jeff flake from arizona, ben sass

from nebraska, and mark kirk from illinois, who have not supported trump in the past and have been hesitant to support him. sounds like they exchanged a few words that were a bit testy. but for the most part, the meeting went well according to senators we spoke to. julie: do we know what exactly, for those who had been iffy on trump and are more wholeheartedly supporting him, do we know the content of the meeting, what he said to win them over? jennifer: for the house republicans, he opened the meeting by saying he raised $51 million in the last month, and he says, no one thought i could do that, it's amazing and i will raise even more money for july. he had his daughter ivanka at the meeting and her husband, jerod kushner, putting his best foot forward. people really like his familt and they respond well -- family and they respond well to them. they talk about various issues. him,al congressmen did ask

can we trust you to stick with what you say you are going to do? he said he would. a couple congressmen told me afterwards, they were reassured by what he had to say. vonnie: there's a lot of posturing going on, because he has not announced a vp pick and their several people out there. jennifer: donald trump appears to be having a lot of fun with this vice presidential pick. instead of sneaking around and being with people very covertly, he's being very public about it. he was just with mike pence golfing on saturday. on fourth of july, he had lunch with joni ernst, a senator from iowa. then, he was with bob corker, the senator from tennessee, in north carolina on tuesday. last night, he had newt gingrich up on stage with him in ohio. he caught up with jeff sessions in d.c. today. he tweets about these meetings. he talks about these meetings. he's very public about saying he's meeting with these popular

republicans, really showcasing the fact he has always interesting people willing to stand up with him. butknows who he will pick, he's very much stoking interest in you that choice will be. julie: jennifer, there's a long list of vp potential candidates. what there is not yet is a list of speakers for the republican convention, and there was supposed to be this list by now. what is the hold up? do we know when we will find out? jennifer: we are still expecting it. we will see. everyone is very intrigued to see who actually does show up for this event. julie: thanks so much, jennifer jacobs out of our washington bureau talking to us about the campaign. let's head to the markets desk where shery has the latest. today, allbig movers about milk and the food industry in the u.s., triggered by the anone takeover of whitewave, $10 billion takeover. chart is straigh

point at thene bid price of danone. it is right now at that price, at the highest level it has ever been. ewave dealnone-whit sending waves across the food industry, because we are now seeing speculation we may see more takeovers. so take a look, surging the most in almost two years, 6.8% right now. this is the biggest intraday gain since august 2014. speculation we may see big food makers target this company. but a little bit of pressure f rom this company, previously thought to be a takeover target a danone, now falling 1.9%,

$16.5 billion baby food company. this deal is the 13th largest m&a deal in the food industry, so huge repercussions. another company, dean foods, a former parent of whitewave, and now there is rampant speculation we could see it be a takeover target. it has been rising seven consecutive days, now up 1% and at the highest level since march. so a lot of shakeup in the food industry in the u.s. right now. we have nine proposed deals in this sector alone. vonnie: more company news ahead. we will have a closer look at samsung after the smartphone maker's blowout quarter. plus, how the rivalry with apple stacks up in three charts you

don't want to miss. this is bloomberg. ♪

vonnie: this is "bloomberg markets." julie: samsung is reporting its biggest operating profit in more than two years, bolstered by high demand for its galaxy s7 smartphone, cost controls, and sluggish iphone sales. cory johnson joins us with more. why was this such a strong quarter for samsung? s7 did a lot better than expected. they sold a lot more. korean companies report in a very interesting way. they gave an indication of what the quarter held without releasing the full set of income statements, balance sheets, and capital statements. that will come in a few weeks when they suss out the numbers,

so there is still room for, interpretation, but the s7 just worked in a quarter when there was not a fresh iphone. that mattered on the retail level. the carriers, because they didn't have a new iphone to promote, they spend a lot more money marketing the phone, so samsung was able to dial back marketing. carrier spent a lot more, and the result was really big sales of the phone for samsung. julie: aside from the marketing and market opportunity sensing had with the s7, is there anything about it that makes it better, cooler, more appealing in some way? cory: it has the visual, the screen on the side, so i guess if you are completely passed out drunk on the floor, or in a gutter. you can look. is arrivingur uber to pick you up. [laughter] i don't know. i won't call that a wow factor, but it's a point of differentiation, which seemed to work for them at least in this quarter.

the absence of a new iphone and a fitted them, not only because it was out there on the shelf new and different, but the marketing carried the day here. vonnie: we have a chart to show this. outstripped byg samsung. that might change again. these cycles can be pretty quick when it comes to mobile phone makers. cory: i think it's important to look at kind of longer-term trends here, in terms of this revenue growth. apple certainly is putting a bottom in terms of revenue growth. who knows if some of the concerns about the pause in sales, with brexit making it worse for apple in the current month, in the current timeframe of the calendar, the third quarter, but we will see if that leads to a change in sales as a citibank analyst protected. the citibank analyst who lowered numbers for apple did not lower the recommendation for the stock. but that's the machinations of

wall street. interesting, samsung really turned themselves around with a successful product, cutting some costs, and it really won for them in this quarter. julie: and that has made a difference for the stock prices as well. not only have we seen revenue growth at samsung outpacing that of apple, but share price has also been performing better. whether it is sort of playing wall street better, or what have you, the fact the matter is, the stock has been doing better. cory: things are getting better at that company. this quarter, it all came together. i will be anxious to see the final results, so we can see division by division what happened. the tv division, the semiconductor division is also important, but it looks like they avoided problems in those other divisions and work in position to benefit from the great success of the phone, at least in the second calendar quarter. vonnie: apple did not have a particularly big update to the iphone last time, so could this all reverse as soon as we get the next iphone update? cory: it certainly could.

what's interesting about this industry, you have operating profit, not net profit, and they don't give us sector by sector. but apple really vacuums up most of the profits in the industry, even though they do not lead in terms of revenues. curious to see how well sensing does in terms of profitability, but apple is really walking home with the most cash at the end of the day. cory sent us an e-mail saying, at the break feel free to mock my jacket. [laughter] that is a fantastic jacket. cory: it is perfect for san francisco summers, because it has summer colors but winter fabric. julie: if you want to see that again, you can watch cory johnson at 6:00 p.m. eastern. ♪

vonnie: it is 3:00 p.m. in new york, 8:00 p.m. in london, 3:00 a.m. in new york. julie: welcome to "bloomberg markets."

from bloomberg world headquarters in new york, good afternoon. i am vonnie quinn. julie: i am julie hyman. we will cover out of asia, london, and los angeles in the next quarter. u.s. stocks weighed down by oil today. crude at $45 a barrel amid renewed concern of an oversupply in america, and awaiting tomorrow's all-important payrolls report. says viacommalone is undervalued. the liberty media chairman says the battle for control of the company is overshadowing how great some of its assets are. julie: fbi director james comey, defending his recommendation against pursuing criminal charges for hillary clinton, telling republican lawmakers the inquiry was conducted by people who did not "give a hoot" about politics.