this hour we are taking you from washington to los angeles. stocks surged higher on a stronger june juncture for it. today's gains restored the 1.42 [indiscernible] julie: is -- does this mean the rate hike is coming? we will discuss. and his oil trying to's lease the rain to and what has been a rough week for crude? it has had the worst week since every. >> let's head straight to the markets desk and get an update.

seeing firme footing in u.s. stocks. the dow is at the highest level since july of last year as the nasdaq is rising for three consecutive sessions of 1.5 percent. all of this after that excellent jobs report showing the u.s. economy added 287,000 jobs last month. take a look at the s&p 500 gaining one .4%. if you take a look at the intraday chart you will see that we are close to that record high of 2131. since gaining one point 4%. materials, financials leading this gains in the s&p 500. over here we are seeing some new records. the 30 year yield on treasuries now at a record low area take a look at that area this is a one-year chart for the year -- yield traded almost down 30%. it is an interesting movement

because of that labor data it we had earlier. we are seeing a two-year note yields keep rising and the 10 year note rose after the data. it is falling again and we're seeing the two-year and the 10 year spread at the tightest since 2007. take a look at the majors. we have now erased all of those losses following the frexit vote. year to date we are seeing the as much as the s&p 500. the nasdaq slightly in negative territory down 1.2% over the year. bonnie: thank you. taylor: attorney general loretto lentz is calling for peace and calm after the shootings in dallas. and fbi and atf are on

the scene working with local investigators. lynch said this has been a week of profound grief and heartbreaking loss. ms. lynch: americans across the country are feeling a sense of helplessness, of uncertainty and fear area these feelings are understandable and they are justified. but the answer must not be violence. the answer is never violence. rather, the answer, our answer, all our answer must we action. call him, peaceful, collaborative and determined action. >> lynch said her department will help investigators in dallas in any way necessary. house speaker paul ryan is calling for unity after the deadly ambush attack. in a speech on the house floor he noted this has been a long week for the country. he offered his condolences to the officers' families.

mr. ryan: we're all stunned by the events last night in dallas. we are all outraged. an attack on the people who protect us as an attack on all of us. our hearts are with the dallas police department. our hearts are with the victims and especially with their loved ones. they wear the badge, too. allancy pelosi said we are horrified by this despicable act of violence by perpetrators. those killings have put the presidential campaign on hold. hillary clinton has canceled an appearance in scranton, pennsylvania with vice president joe biden. she will reschedule. linton will go ahead with plans to speak at church convention in philadelphia. donald trump will hold up campaigning. he is canceled a speech in miami. the new leader of the

philippines is aiming the u.s. intervention for bloody conflicts in iraq on other middle eastern countries. suggesting that interest of policy was to blame for terror attacks on u.s. soil. global news 24 hours a day powered by more than 2600 and analyst in more than 120 companies -- countries. this is bloomberg. bonnie: june payrolls beat estimates but job growth still slowing on a trend basis. what is the federal reserve to do? just wanted el-erian told me earlier area >> if we can you to get this type of jobs report, we may end up with one hike this year. this is an expectations at had

sidelined the fed for the foreseeable future. bonnie: not -- what do you think? >> there are some doubts lingering. the question is do we see more of what june looks like or what the trend looks like and the trend is closer to 100 70,000 per month. if we are seeing gains of the nature we will see the unemployment rate grind lower over the second half of this year and we will start to see more wage pressures. that should be enough to push the fed to move but to hikes which is what the. lot signal that the last meeting, to hikes are a little too ambitious. the fed delivers one rate increase july way off the table. november, not a possibility due to its proximity to the elections so that boils down to does it occur in this --

september or december estimate we will start to see some of these had ends from the financial tightening due to the brexit vote and other international economic developments taking a toll on the economy and for that reason, policymakers will not have confidence to hike until december after the election. julie: you said we should start wage- to see more t pressures. we are seeing this inching growth higher. but what makes you so confident that it is finally going to come anymore decided fashion? >> what is more interesting here is if we watch the unemployment rate it has moved steadily lower over the past seven years or so, six pace of oneby a percentage point per year. that basically stop last fall and now we seem to be hovering around the 5% threshold or slightly below that. that tells us that some dynamics

labor force.in the maybe participation is starting to turn around and all of this is possibly a clue that at some natural level for the level of unemployment and once you push through that level you start to see greater wage pressure. if we look at average hourly earnings -- >> we can dip into my terminal. guest: the average hourly earnings are not breaking to new highs but they are at the other end of the range. we are seeing facing evidence of skilled labor shortages and rotter complaints of labor scarcity. as long as we can maintain job gains north of 150,000 per month which is easily possible in the second half of this year, growth lightly above trend of 2%. 2.5 in the second half of the year which i think is possible. that should begin to put more pressures on wages and it will work out.

that is why it is taking so long. inflation is a lagging indicator and labor inflation is a lagging indicator. julie: i want to get back to me which was worse than it looked. it might have to do with seasonal anomalies. without getting too far into the weeds can you explain to us what happened? guest: absolutely. the seasonal adjustment factor that was used on the main number was very we will say generous. if you use a much more typical seasonal adjustment, let's say the average of what we have seen in may over the last five or 10 years, that should have pushed into negative territory. we saw that in the private sector numbers. nonetheless, the seasonal fact or do not capture things perfectly and the school year ended a little later. summer employment picked up later than usual. that could destroy these

numbers. there are big seasonal flows around the end of year holidays and the start and end of summer vacation. i think that may be what is happening here. the way around this is to average the two together or more important leanne wood say look at an even larger moving average or 12 month moving average and that tells you that the labor market is doing good but not great. that is fair enough for the economy but not enough to create a lot of pressure on policymakers that they need to take action anytime soon. bonnie: we have not talking about china very much recently. the weakness is continuing at pace. guest: we have some big currency moves we have to keep an eye on area is not just the pound sterling. the yuan is at a six-year low. that is a major trade competitor and so that has significant implications for the u.s. manufacturing sector. as we view shocks to the u.s.

economy whether it is frexit or knock on eect from brexit or currency movements we have to view it through the lens that it can impact consumer spending. that is the predominant and possibly only engine of economic activity in the latter half of this year. when you see a shot hitting the economy, imagine how it is impact consumers and that is why we are watching household income creations of closely. that is another why looking at the report, average hourly earnings was not impressive and the work week was flat. if you look at total income created in the labor force in the month of june it is moving percent in the low range. consumer spending should hold up but it does not -- it is not creating the environment where we could see consumer spending a salary -- accelerate and lead to

a broader economic acceleration. julie: when you look at these factors whether it -- it is china or domestically, what is the thing that is -- you are most worried about, what is the biggest factor to your -- to growth? guest: it would have to be something that happens in the domestic economy. it would have to impact consumers. hiring stall would be the and that would concern me most. and mind you, i am fairly optimistic for the overall economic outlook. it has been a very weak corporate profits environment and the economy is growing at a trend like to present case so things could easily get knocked off balance. something that would cause a crisis of confidence among employers that leads to a stall, that would make me worried. >> thank you.

this is bloomberg.

bonnie: this is bloomberg markets. julie: it is time for the bloomberg business flash. we begin with back maker takata reaching out to as many as possible buyers. the company is open to a sale to a equity partner, a parts supplier or a combination. two companies are said to have expressed interest areas astrazeneca has the lawsuit to

allowing thefrom sale of generic versions of crestor. they're working intensively with authorities. it is said to be the subject of bailout talks but led to a deadlock between italy and the other eu nations. the ecb has ordered the bank to offload 40% of its nonperforming loans -- loans by 2018. investors fleeing markets rocked by the brexit have fueled the rush to corporate bonds. they just investors may be taking too much of her wrist. >> it is obvious when interest rate's are at zero or negative that everything is tied together.

they are tied together in some way. you must assume i think that the high-yield bond area is artificially priced and at risk in -- under certain circumstances. i would not buy them. i am short them. categories of corporate or just high-yield? are cdx and igcdx which are derivatives that are easily traded. asusrades are at 80 points. youcally at 425. yes when buy protection as opposed to sell protection which i have done, that is the same as shorting then you are giving up that carry but you are looking

for a widening of spreads and ultimately that is what happens in both of those markets. of banks, ourst corporate bonds way the channel for monetary policy now is to mark -- now? are the asset class of the day with the swiss national that we just found out. they have $500 billion worth of stocks around the world including apple and johnson & johnson. that is staggering. we have known that the japanese by stock split we never knew that this was national bank bought stocks. it is almost like a sovereign wealth fund. distortede market is by cash flows that never have been.

>> we have been looking at sterling swiss as a proxy for safe haven. i think all of our world would like to know, the bloomberg surveillance world would like to know what you were thinking in the drama of the brexit vote. what were you thinking as you saw the united kingdom shift to leave versus the presumed remain? guest: i was watching that overnight. what i was watching is i had some options on u.s. treasuries both calls". initially the u.s. treasuries were declining in price. and declining too much but all of a sudden, as exit was waiting, treasuries wind-up and they were going up too much. mucho not want to sell as volatility as happened on that

night and it was a long night for me. it turned out very well. that is the problem with a sudden change. there are so many positions and so many -- much leverage currency wise as you point out. almost every five minutes. that is good. there are huge currency positions have to be unwound and rebalance. there are huge positions in terms of credit and treasuries, jgb's andions across it is treasuries. -- u.s. treasuries. this is lots of volatility and a lot of loss taking on one side and profit taking on the other. it is not a way capitalism should be run. to a a casino as opposed midwestern farm. julie: that was no gross

speaking earlier. bonnie: where watching the s&p 500. 2130.ecord was that is a little higher. within a couple of points of that as stocks rally, the s&p of 1.5% after that better than estimated headline number on the jobs report. this is bloomberg. ♪

bonnie: this is bloomberg markets. along with julie -- julie hyman. of pagan rituals and rumors of secret payments. you can read about it in the latest bloomberg is this week reporters. -- businessweek reporter.

are -- briefly tell us about the banker who went to puerto rico who went to turn around a failing bank and ended up dead. distinguishedad a career at regional banks. he was offered a promotion to come be the number two executive at dural bank. he moved down there and tried to clear things up. he was there a few months before he was murdered on his way home from work. julie: you did a lot of research on that front. why has it been so difficult to find out who exactly was responsible? killed on highway. you would think there would be a lot of witnesses but apparently in the confusion no one saw anything.

this was about five years ago and the cases been handled by the fbi. alsoave been looking into fraud at the bank. they claim that they're close to solving the murder but officially the have not said anything about their suspect or how they might solve the case. the rank was started as a single mortgage company. the people who started it, the family came in, wealthy bankers in puerto rico and then went troubles started amassing, symbiosis, another banker came in and he is living and doing fine. was almost on during -- the bank fraud.ost undone about the ceo that came in to facilitate this bailout, when wakeman came from ge capital. his been very successful there and they thought he was the man

to get there house on -- in order. with they could not expect is puerto rico's economy would you so badly after they failed out the bank area bonnie: he ended up dead and his widow is totally going to file another lawsuit. >> i am not sure. she sued bank and she claimed that there was a conspiracy, that her husband had uncovered fraud and that is why he was killed. deposed forhe was the lawsuit she had to admit she did not have any evidence beyond what her husband had told her. bonnie: you have to read the story. this is bloomberg businessweek. ♪

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

shery ahn is monitoring the action. may be up but it has not been a great week. little bity up a because of more optimism about the health of the u.s. economy. the largest consumer of crude. if you look at the trend for the week, we are going to see it has fallen. it is down 6%. this is the worst week since may 6. of course, we had data that u.s. crude stockpiles declined less than expected so there has been a lot of pressure on oil. we have seen oil trading between $44 and $52 a barrel for the past month. there has been some supply disruptions. also expectations u.s. output would follow. if you look at the weekly rate data, you will realize increasing rakes was the fifth gain in six weeks. this is five-year data. for the weekly number, we are

seeing a fifth gain in six weeks. analysts saying government data may be underestimating the fact we could have output from uncompleted shale wells as well. gold is staying with commodities. gold has been fluctuating with the labor data out today. for the week, we are seeing it again again, 3%, save haven asset. consumers flocking to what they consider a safe haven. this is the longest string of weekly advances since july 2014. we are talking about six weeks of consecutive games. look at another commodity, i ron ore is gaining today slightly reversing two days of losses. for the year, up 24%. the world's biggest shipper of iron ore, australia, they have cut price forecast by about 20%

for the next year. they are saying global markets remain will supply. not to mention the could see output in china shrinking further as we move through the rest of the year. vonnie: shery ahn, thank you. monday kicks off second quarter earnings seasons. stocks may have recovered post-brexit with the s&p close to a record in session highs today. joining us now is dave wilson. we are looking for 5% down it comes to earnings? dave: 5.7% is the latest number. most of that outside of energy. if you take energy out of the auation, we are anticipating 2.2% decline. this is based on analyst forecasts on individual companies. it gives you a sense of what is happening. there is this pattern that has

been going on with earnings for more than a year. we are looking at the 5th street quarter of falling profit. ,f you look quarter to quarter you have seen consistently analysts anticipated recovery. recovery has not been there. this time, isow it going to happen? stocks are not behaving as though it will not materialize. we have stocks within less than half a point of a record close on the s&p 500. you read a lot of notes. you talk to a lot of folks. what gives? there is this divergence between earnings and stock behavior. that is the case if you look at it from the perspective of falling profits. that said, investors have been willing to pay more for the profits companies have been able to generate. we talk about price-to-earnings ratios going up.

beyond that, it is a matter of where you are going to go for income these days. when you look at the s&p 500 dividends and the yield you generate from them, it is higher than not only to 10-year treasury but the 30-year treasury. you have investors turning to stocks for income. you see that in the performance since the s&p 500 had his previous peak in may of last year. utilities and phone companies at the forefront of the s&p 500. vonnie: on that note, i'm going to bring up a chart. give me two seconds. , on your terminal, 1776. for some reason, that is not the correct number. vanguard high-yield, high e.t.end each yes -- f.'s are raking in the money. dave: yes.

chart of the day looks at that high-yield e.t.f.. it compares it not only with the s&p 500 e.t.f. but also something called the shareholder yield e.t.f. that particular e.t.f. also brings in stock repurchases and debt repayment. that is trailing the s&p 500 this year. it makes the point that adam partne had in his latest note yesterday saying there is this dividend-you cessation going on -- dividend-yield cessation going on. julie: how difficult is it that you see these evident-yielding sectors -- dividend-yielding sectors leading a rally? how long can that last? dave: it is not that typical in a sense. stocks typically do well in the economy does well, when we know

growth has stumbled along. we are seven years into expansion at this point, so you have that sustained growth. nonetheless, what we are seeing is relatively unusual. if nothing else, it speaks to the need for income among investors. they are not getting it in the bond market. almost $12ng about trillion of debt with negative yields. you pay for the privilege of owning the bond. people are looking for income wherever they can find it. for a lot, it is in higher-yielding stocks. vonnie: a record year for corporate downgrades by fitch. what will be the sector we talk about? has all the carnage been seen in energy? financials? what will stand out? dave: financials may be the one that stands out for a couple of reasons. next week, j.p. morgan, chase, group, and wells fargo.

we will get a read on the effects of what is happened in the u.k. in europe with the brexit vote. look at j.p. morgan chase, 25% of the revenue comes from europe, middle east, and africa. citigroup is 15%. another company worth checking out, delta airlines, whose numbers are also out next week. they get something like 20% of their passenger revenue from transatlantic flight. of course, that is all going to europe so we will see how it looks for them. vonnie: as you speak, the s&p has risen above the record close. not above the intraday close yet, but we will see if it happens. that is dave wilson. if you want to see his charts ifing he has his own code -- you want to see his charts, he has his own code or you can e-mail him. taylor riggs has more from the newsroom. taylor: one of the suspected

en in the ambush has been identified as micah johnson. johnson reportedly served in the army reserve as a carpentry and masonry specialist. he was killed by an explosives strapped to a police robot after hours of negotiating with police. "the new york times" reports he appeared to be the lone gunmen. nancy pelosi is calling for unity after the murders in dallas. in an address from the house floor, she said it is important americans must not let such acts divide them. nancy pelosi: actions like this should unify us as a country. horrified by this despicable act of violence and we share in the shock and grief for the officers killed, their loved ones, and the entire dallas community.

taylor: the house speaker also spoke from the floor calling americans to come together to heal after the shooting. after the shootings in dallas, police in several cities across the country are patrolling in pairs. police in new york, boston, chicago, and washington, d.c., have ordered officers to pair up in patrol cars. the state department's opening an internal investigation into possible mishandling of classified information by then secretary of state hillary clinton. some of clinton's closest confidant to be facing punishment including the loss of security clearances. the state department suspended its probe in deference to the f.b.i. investigation. global news 24 hours a day powered by more than 2600 journalists and analysts in more 120 countries, i am taylor riggs. will be our rupkey guest. he said rate hikes are coming sooner than you might think.

he also says the labor market is stronger than the fed thought. we are continuing to watch the s&p 500. .t rose above its record close the intraday level has not been breached, but we will be watching. we will see if it does close at a record level. this is bloomberg. ♪

julie: this is "bloomberg markets." live from washington, i am julie hyman. vonnie: i am vonnie quinn. will a fed hike be this year thanks to the earlier jobs report? once rivlin joined us "bloomberg markets." >> there are a lot of

uncertainties, like what might happen with brexit. toould guess they would want be back on the track of raising at a gradual pace. that could mean another raise this year. theie: our next guest says fed will never raise rates again because they are too busy watching the world. i think he is saying it a little bit tongue in cheek. joining us is chris rupkey. you say the fed should have gone already. but we don't see that strength in the numbers yet, do we? chris: for the longest time, they wanted economic growth to be strong so they could be assured the of employment rate would come down. the unemployment rate is down and cannot go any lower. wantare practicing we stronger growth again. there's always something lacking. it is incredible.

what are the risks to raising rates? what is the real holdup? do you think they are being disingenuous were really concerned about growth? chris: i think this that has taken a lesson from the original moves on the part of greenspan where some were for risk management reasons just in case. this that has embraced risk management and taken it to a new high. no matter what happens, they seem to be very cautious. the kind of goes with yellen's personality, her lifelong habit. bernanke introducer at radcliffe and said she always gets to the airport early and made a joke of it. she makes a joke of it. they are too cautious. what is core cpi right now? 2.2%. don't tell me they are looking at pce inflation.

there's just as much inflation at the core level as there was when greenspan moved rates 17 times. vonnie: why are we not seeing more rate pressure? wish she had not thrown it out. she throws it out and takes it back. wages are growing enough at the moment, 2%. one reason wages are not growing up is we don't have a lot of inflation. from this point forward, wages should go up a little faster. 3%, 3.5% because unemployment has come down below 5%. you asked the risk. hadrisk for me is i $100,000 in the bank in 2008. now it only buys $90,000. i am losing money by them not normalizing rates. julie: do you think as a result that rather than spurring investment, which is what the

quantitative easing was supposed to do, that now is doing the opposite in some ways? chris: it is interesting. i like your idea about investment. investment is also housing scarred. we have seenness and the idea rates came down and did not boost investment, it is primarily the housing sector did not recover. housing starts are one point to something, not 1.5, not 2 million units being built each year. the investment lag is residential housing which may be due to demographics. i wish they were not so call sears -- i wish they were not so cautious. brexit is a factor. markets arencial shrugging off the brexit risk in the u.s. julie: i'm thinking not just about residential housing but capital investment, corporate investment. we were talking earlier with david wilson.

companies are raising dividends. they are still buying back shares. they are not necessarily putting money back in their businesses. would they be doing that if there was not such an impetus to return money to shareholders, and part of that comes from having low rates? hris: if the fed is , i think they have waited too late. if you look at things like durable goods orders equipment, they came back to the old peak already. now they are starting to slow for different reasons. don't forget. how much equipment do you need when we are going to enter the eighth year of economic expansion starting in july? you have already probably bought. i would be shocked if is this is order more equipment. i think they have bought all they need for this point in time. vonnie: there is not just one

golden opportunity, right? you say they have waited too long. it is not like we cannot raise now. they can raise many times. every time they look like they are about to, there is a market shop. chris: something else comes up. , it's been china devaluation. flash crash on the dow last september. if you wait for the latest risk to stop you from normalizing afraid -- my call is legal in september. maybe they don't go in december because there will always be additional risk. vonnie: chris rupkey on the september fed rate increase. thank you so much. chief financial economist at bank of tokyo mitsubishi. let's head to the markets desk for a check on stocks moving on analyst calls.

shery ahn has been looking out for them. shery: we are seeing big boosts and others declining. look at intel. bernstein has upgraded to market perform ahead of the company's second quarter results. they are citing a recovery in the p.c. market. intel gaining 2.4%. that is nearing the 52-week high of $35.59 which analysts are saying is the next resistance level. look at this other stock at a 16-year high. this is in ks instruments -- mks instruments up 4.9% today. pacific thread has increased the price target. they say they see strong demand for the company's core semiconductor business in the second half from important

customer such as applied materials. this is a stock feeling the downward pressure today on not a great day for the stock, down .9%. that is because it was cut to equal weight at barclays, so it is reversing two days of gains. barclays saying the stock has momentum, has improving momentum, but they think the earnings boost from efficiency savings and increment of cash returns are unlikely until next year. look at humana down 2.8%. this stock fell 10% yesterday. it is continuing its downward slide. we are seeing it fall 2.8% because j.p. morgan is saying they think that deal with aetna will probably not go through. they are doubting the deal will happen so it is at the lowest levels since february. julie: thank you so much for the latest on the analyst calls. coming up, with the shootings in

dallas, baton rouge, and the how cities, we will look at the latest technology is helping police patrol the streets. this is bloomberg. ♪\ ♪

vonnie: this is "bloomberg markets." i am vonnie quinn. julie: i am julie hyman. facebook's live video service is drawn scrutiny after screening graphic content from recent shootings. it raises questions about how he the content should be monitored and curated. what is facebook's responsibility? it is a corporation, not a nonprofit or government entity to what should it be responsible for? it is interesting the way this has all unfolded this week with the use of technology and how the conversation in america has changed, the conversation

about violence against african americans at the hands of police has changed because of this technology readily available on the streets. minneapolisn reached for her phone and went to facebook live to broadcast what was happening to the world was shocking. not even snapchat. not even the video camera on her phone. who went to this new, live streaming product in this moment of terrible crisis as her boyfriend was shot to death next to her. i think it shows the conversation of what is happening in america and with race in america is changing because of the technology suddenly readily available to people. in a lot of ways, it is letting us see lots of different things and bringing a voice to people who did not have a voice before.

jennings lastllen night about how this is changing that conversation and how technology is changing the way people are experiencing what is happening. listen to what he had to say. >> this technology is a game changer in multiple ways. ofmeans the movement individuals are documenting treatment that too often communities of color are receiving. share it,ble to sometimes livestream, sometimes after the fact, with millions. and then they are able to organize. you see people working together in disparate parts of the country and world who never could have connected before this technology was available. cory: i think it is a game changer. i don't think we should underestimate the way this could change things. vonnie: it is changing the way law enforcement operates as well. cory: absolutely. we saw the story last night of the dallas police using a robot with a bomb to kill someone in a

situation, a really aggressive use of technology, military technology in a domestic situation. we are going to dig into that on "bloomberg west" tonight, the technological capabilities and moral questions raised by this. vonnie: and about who should be curating those conversations. you can catch more on the role in reporting violence on "bloomberg west" at 6:00 eastern and 3:00 pacific as always. coming up in the next hour, john ryding will join at the bottom of the hour. we are on record watch for the s&p 500. this is bloomberg. ♪

vonnie: it is 3:00 in new york, 8:00 in london. i am vonnie quinn from new york. julie: live from washington, i am julie hyman. welcome to "bloomberg markets."

julie: we are taking you from washington to new york to san francisco to los angeles. here is what we are watching. the u.s. labor market were back in june with 287,000 jobs added. are we back on track for a rate hike? >> i think if we continue to get this type of jobs report, we may end up with one hike this year. this is against expectations that sidelined the fed for the foreseeable future. vonnie: stocks are searching on the jobs report. the dow and s&p 500 touching their highest levels in nearly a year. the s&p is flirting with a record close. julie: puerto rico just had its biggest default ever, yet on