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 values are rising.

could missing $911 million in payments actually be a good thing for the u.s. commonwealth? we are one hour from the trade of closing for the day and week. are we going to make a record on the s&p? let's head to the markets desk shery ahn has a crystal ball. shery: it seems we are going in that direction. the s&p has rallied above the record close. we are talking about 2131. we are slightly down from that but are around that numbe. 2129 at the moment, up 1.5%. all sectors rising. the dow jones up 1.4%. the nasdaq gaining 1.6%. the dow is at the highest level since may of 2015. if you look at the majors for the year-to-date number, the nasdaq is the only one still in the negative right now. all the others have erased all those losses we saw after the

brexit vote. we are seeing the s&p 500 gaining one and 4% for the year. look at the s&p 500. the mac number right now is 2131 for the record 2134 for the intraday record high. we are at 2129, so very close to those levels. we will see what the next hour does to stocks. function ont the bloomberg so you can see all sectors of the s&p 500 rising right now. they are being led by materials and industrials. the energy sector feeling a bit of that lift coming from crude. financials also gaining 1.9%. today, the big data was the jobs data. the u.s. economy adding 287,000 jobs. u.s.e also seeing the

30-year treasury yield is at a record low for the year. it has fallen about 30%. the two-year note yield is currently rising. rose0-year note yield slightly after jobs data and is falling back again. and 10-year spreads are the tightest since 2007. a lot of market action right now, julie. julie: and not the action you might expect in the bond market with a jobs number like that. now is check the headlines on bloomberg's "first word" news. taylor riggs is in the newsroom. issued bystatement her attorney says responding to violence with violence is not the answer. alton sterling is the black man fatally shot days ago by police in louisiana.

the woman whose boyfriend had a fatal stop with police in minnesota said the dallas deaths were not caused by his death alone and she wants justice for everyone. attorney general loretta lynch is calling for peace and calm after the dallas shooting. the justice department including agents with the f.b.i. and e.t.f. are in texas working with local investigators. lynch says this has been a week of profound grief and heartbreaking loss. to all americans, i implore you, do not let this week we sedate a new normal in this country. i ask you to turn to each other as we move forward. let us support one another. one another.eal i urge you to remember that we are one nation, we are one people, and we stand together. taylor: she says her department will help investigators in

dallas in any way necessary. president obama has ordered flags at half staff today to honor the fallen officers. mississippi's governor is asking an appeals court to let a state law take effect that would let some businesses and government employees cite religious beliefs to deny or delay services to same-sex couples. the governor filed an appeal notice yesterday. the move comes after a lower federal court blocked the state law from taking effect july 1. u.k. applications for i.r.s. passports surged almost 20% this year on worries britain will leave the european union. last month's vote to leave raises concerns u.k. citizens could lose the right to live and work in europe without restrictions. the i.r.s. passport is seen as a way to -- the irish passport is seen as a way to retain those rights. i am taylor riggs. this is bloomberg. vonnie: thanks. stocks are surging.

the s&p 500 surpassing its record close before falling back a bit. reaction to the jobs report is not 100% positive. some say the report may be misleading. here is what we heard today from some of the most prominent lines in finance. are not as things hunky-dory as 287,000 might suggest. back to normal is 150,000. it is nothing to get excited about. get anyone't interested in what janet yellen and company are going to do? does this change the calculation of when they might move? bill: i don't think so. they still have brexit to look into. they have problems with the italian banks. the fed does not, but the e.c.b. anti-eu do. problems with u.k. property, mutual funds. of illiquiditye

in markets. concerned with markets to the extent if there's discord around the world, i think the fed stays where it is. they want to raise interest rate spread they did it once. i think they want to have us believe they will raise several times and have a positive yield curve which will help banks and insurance companies. for the most part, i don't think this changes much. >> wage growth picked up a little bit. highis kind of near the that you usually get at the top of the business cycle. everything looks right. one problem is employment rates are very low. that is a significant issue. away are we from full employment? >> my calculations suggest even if you correct for demographics, if you look at current hiring rates, the unemployment rate

rather than being 4.7% is probably in the high 5.0%'s. >> in general, it puts the recovery back on the track we thought it was on. it is slowing from last year. the average for the last three months has been less than the average for last year. that is not surprising. this has been a long recovery. we are at what most people would think of his full employment. not concern you that pace is slowing and yet we are not seeing meaningful increase in the atonement -- month on month weight gain? >> it certainly does concern me. that has been the bad news story. people have jobs that are not earning as much as they should be. i think that is the signal we need to be investing in productivity enhancing things ,ike improving infrastructure

improve the skills of the workforce, invest in science and technology. those are the things lacking over the last several years. >> this report is more like a goldilocks report for the markets. they will welcome the strong job creation. they will welcome the uptick in labor participation rate. but they will also note wage growth remains sluggish. what you are seeing is major movement at the short end of the yield curve. suggestslocks report things are ok and will not force the fed into hiking. some sectors will get short-term relief because of what is happening to the yield curve. vonnie: exactly. in wages, no meaningful acceleration. the participation rate did increase, which is good. what would it mean for the federal reserve?

can they put a rate hike back on the table this year? >> is says to them, don't assume we are talking sidelined. theyt does not mean will move quickly. if we continue to get this type of jobs report, we may end up with one hike this year. this is against partition that have basically sidelined the fed for the for seeable future. julie: that was bill gross, alice rivlin, and muhammad el-erian earlier on bloomberg. still ahead, a blessing in disguise. why missing the latest round of bond payments may lead order me go to a better place. we are watching stocks closely. we have been talking about a record potentially for the s&p 500. the dow's record close was last may at 18,312. it is a little further from its record close their the s&p 500,

but a considerable rally across the board in stocks today. this is "bloomberg markets." ♪

vonnie: this is "bloomberg markets." from new york, i am vonnie quinn. julie: i'm julie hyman in washington. i want to take a quick look at the s&p 500 as we have been watching the potential for a record close. 213082.ious record it across that and came back down slightly. there is still a ways to go. ,t is the classical cyclically-led rally today. the look at some

of the biggest business stories in the news right now. a majority of economists say the bank of england may cut rates next week for the first time since 2009 to stabilize the economy weakened by the vote to leave the european union. 2953 surveyed by bloomberg predict the benchmark -- 29 of 53 surveyed by bloomberg predict the benchmark will be lowered. vonnie: harley-davidson riders say their brakes failed without warning. the national transportation safety agency says it received and three crashes. harley davidson says it is cooperating with the investigation. increasing cities with data limits. now 23% of customers have limits

on how much data they can use before being hit with extra charges. the company says those users can still stream 700 hours of hd video before reaching that limit. flashs your business update. vonnie: the as puerto rico a step closer to getting -- is puerto rico a step closer to getting out of the debt mess? they default of a nearly half of the debt payment. while default is never good, our next guest says it could help as they move forward. also, the columnist joins us in new york. this breaks a stalemate that was dragging on. >> even the specter>> of default have a significant impact because you did have congress expedite a bill that would give puerto rico the ability to restructure this debt. before, they were about to restructure in a piecemeal way because they did not have

authority to file for bankruptcy the way other municipalities in the u.s. have. it pushed the u.s. towards resolution. the house passed a bill in may. right before the default, congress did make a point to pass it. it did not stave off the default but put it into perspective that it was the beginning of the next chapter which gives people a feeling of progress. julie: what kind of market action have we seen in puerto rico recently? lisa: it has been a pretty good run. they have rallied considerably. it has been a gradual rally. we would be remiss to not mention the fact that muni bonds in general rallied significantly last month. the flight to fixed income instruments. munis definitely benefited from

that even as they issued a lot of debt. puerto rico benefited from that trend. you have a lot of investors finally getting some sense there could be a framework a can count on. i think that is giving people some comfort. i talked with one bank that hired a trader specifically for puerto rico because they expected activity to come up and people to have more conviction with their bets now that there is a framework for restructuring going forward. vonnie: you point out in your column you can see this through the bond insurers. they will be suffering if there is any question mark. here. stock prices tell us what that tells us. lisa: the bond insurers are on the hook, the biggest creditors

a puerto rico. a lot of people were worried they were on the hook to make payment, that would be a big hit for them. would they be able to make the payments. according toened people i have been speaking to is it has been a benefit for them. not only has the short guarantee come forward and made more than enough to cover losses, it edifies why somebody would want to have bond insurance. it legitimizes the concept of bond insurance if they can comfort. also, it comes under a framework of u.s. congress passing legislation that does give some half forward that includes a fiscal control board, which a lot of investors have been asking for, which could look and see if puerto rico is managing its finances in a responsible way. julie: there has been progress in the past on puerto rico. then it has been reversed and gone forward again.

we have had a lot of back-and-forth. is the evidence this time is going to be different or are we going to get another reversal? lisa: if i say this is completely different, we will have a reversal in two weeks. i think it is different now that there is legislation for them to restructure with a fiscal control board. i think that is substantially different. whether the rally persists is questionable because we don't know whether this current environment, this fight to fixed , whether thatents is going to persist. you have a lot of people casting doubt on that. we shall see. vonnie: i thought the virgin islands and maybe guam? their debt is tiny in comparison. here forprecedents other states? puerto rico has the

most debt behind any state other than new york and california. it is shrinking dramatically population wise. there is no precedence except with a territory that has a fixed currency it must use so it cannot evaluate its currency to more easily pay back its debt the way a national enterprise would be able to do. this is a little bit of uncharted territory and will be the biggest u.s. municipal default. vonnie: thank you, lisa , columnist for gadfly. still ahead, we will be looking at a trade in the utility sector. here is a check on the s&p 500 utilities index this year. right behind telecom as the best performer of the year. this is bloomberg.

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this is "bloomberg markets." live from washington, i am julie hyman. vonnie: from new york, i am vonnie quinn. it is time for options insight was shery ahn. shery: joining me is mark sebastian in chicago. great to talk with you. we are seeing this rally in u.s. stocks, near record highs after the excellent jobs report. does this mean we could see a fed rate hike sooner than expected? what does that mean for markets? surface, the report looks great. wages did not rise too fast. the jobs number kind of blue

things out of the water. i think it will be less than a week before we get rabble rousing from fed governors that have voting privileges on interest rates. i think that is the next shoe. that will start the process of steepening the treasury curve which is incredibly flat. the fact that 10-year note is trading near a yield of 130 is shocking given the fed wants to raise rates right now. i think there's a lot of risk in bonds. interest-rate sensitive stocks are at a high risk of backing off from this strong rally higher. shery: we are talking about utilities because that is your trade. explain that to us. mark: i'm afraid to step in front of a freight train that is the 10-your note. but utilities have have a strong -- have had a strong run as well. i don't think they will

skyrocket higher. if there is some rabble, i think you'll see the underlying drop quickly. towardslu to move back $50.50. right now, they are around $.90. to $50.50,xlu drops you end up with a nice return, relatively low rate, and volatility low. shery: in 15 seconds, why banks are not interest-rate sensitive? >> i do like banks relative to the rest of the market. i think we are getting a little frothy. shery: mark sebastian, thank you so much. vonnie, julie, back to you. vonnie: thank you. still ahead, more on the jobs

report. julie: we continue to watch what is going on with stocks as the s&p 500 is just shy of a record on a closing basis. all three averages rallying strongly. the nasdaq up the most of the by about 1.6% as we also seeing buying in the bond market. yields across the board still at or near record lows. this is "bloomberg markets." ♪ you guy's be good. i'll see you later

[ bark ] [ bark ] bye. see ya pal. ever wonder what your pets do when you leave home? [ laughing ] aw you cutie pie. aw. aw. aw. aw. [ barking ] [ washing machine running ] party's on! know what your pets are up to with xfinity home. xfinity. the future of awesome. see the secret life of pets, in theaters july 8th. ♪ manhattan, you are watching this is "bloomberg markets." >> let's check in on the headlines from the first word news desk. here is taylor riggs.

taylor: the suspected gunman in dallas has been identified by multiple media outlets as a 25 euros, johnson, of texas. he served in the army reserve as a carpentry specialist and did a tour of duty in afghanistan. he was killed by an explosive device after hours of negotiations with police. the new york times says johnson appears to be the lone gunmen. and members of the congressional black caucus are condemning the violence that transpired in america this week, including the fatal shootings of black men in minnesota and louisiana and of those five police officers in dallas. >> today, we feel the pain, the hurt of the people in baton and dallas anda, all across the country. whatever we do, we must do it in

a peaceful, nonviolent fashion. we have redeemed the soul of forica, bring us together the beloved community. because we all live in the same house. taylor: paul ryan and nancy pelosi urged unity from the house floor. and penn state suing the u.s. government overrules requiring the public schools to let transgender students select the bathroom of choice. it includes in nebraska where the lawsuit was filed. other states sued over the same directive. and in columbia, the output of raw material for making cocaine has gone to its highest level since 2007. the government says that rebels .re encouraging farmers they are said to be telling the farmers that they will be paid subsidies. ♪

taylor: global news 24 hours a day, powered by six -- 2600 journalists, this is bloomberg. joe: u.s. stock market closing in 30 minutes. benchmarks near their highs. we will go to abigail. abigail: we are looking at a rally for the nasdaq. we do have a close to session highs. 1.5%.ally mode, about up all factors are participating. theave a race the -- erased brexit losses. and the nasdaq has a second weekly gain in a row. a lot of election activity -- bullish activity for the nasdaq. taking a look at the percentage standpoint, one standout are the chairs of the biotech company -- -- shares of the biotech

company, coming on the heels of roche that was considering an acquisition of by ameren. -- biomarin. it could reach one is a $50 per share. -- $150 per share. a big premium if the deal goes through. and a suntrust saying that they are a logical target for them. so maybe we will see it happen. as for what boosted the most from a point to point standpoint, the tech names including amazon, facebook, and intel. what appears to be behind the strength for intel, and upgrade today. taking the rating to market performance, from underperforming. so there is less bearish data. they say it does not make sense to go sure into the quarter. he thinks the quarter could be ok. but later, he says it could -- they could revisit.

joe: you talked about the nasdaq, but we have been talking about the dow and s&p reaching record highs, what gives? abigail: the fact that the nasdaq is not even close to record highs, about 5% below those record highs. the nasdaq has not even solaimed the 5000 level, biging behind this, the tech names including amazon and apple. and biotech dragging this year. we take a look at a chart and there is a lot of volatility, downswings and uncertainty among investors. over the last year we have a bearish set of highs, so this tells us that sellers are getting ready to pounce. there could be, despite the strength today, even more weakness ahead for the nasdaq. joe: ok. now, on the surface the 287,000

jobs created last month is an impressive number, but if you judge it in the three much -- three-month average, it loses luster. matt: it was way below the first quarter. we will bring in the chief economist, john. thank you for joining us. i think i have a chart. if i pull it up. i have the three-month moving average and i put a trend line around the last couple of years. it is below trend right now, so are we actually slowing down as far as adding jobs? john: we are, but the question is why? ofis a lack -- is it a lack demand of labor or supply? i believe on the second one. we have a record number of jobs created. we have a record low number of unemployment claims.

in relation to the labor force, so people are not getting laid off. and i think that we have rising wages. skills have is that the needed to fill the jobs are not possessed by those that are looking for jobs. in any event, the and on that rate -- unemployment rate is at 5%. theory wouldof the say it does not happen like this, we are either growing or shrinking and it is hard to find examples of times when we had a strong economy, but running out of supply of labor. can you point to where we did decline with the pace of job creation, but it was not because of the economy? john: they're in mind, that demographics are moving toward a slower labor force. we are getting grayer, i am. we are moving in the direction

of, we have 100,000 jobs as enough to keep people fully employed. we need to keep in mind that the benchmarks we used to think about my 250,000 as the jobs years, 150,000 will be a strong number relative to those people who can come into the labor force, based on aging alone. matt: we will talk about this later, breaking it into age groups. the guys in our age range, not as young as joe, but 40's and 50's who are having trouble finding jobs. they have not dropped out of the labor force. this is the theory that participation has come down because of retirement. it is a lack of skill, the mismatch of skill that is holding people out of the workforce, isn't it? john: it is, and what can we do about it? one thing we cannot do is keep interest rates low for a long

time, that will not give people the necessary skills. we really need a broader policy, we need more fiscal policy, less regulation. and more labor market retraining policy. and unfortunately right now, when it comes to the labor market policies, those are aimed at raising the minimum wage. which is great, except we have a productivity crisis. we are in the slowest productivity rate so far in the recovery, which is now seven years old, compared to any other economic expansion. and with that slow productivity growth, unfortunately we get slow wage growth. if we push the price of labor too much, we could undermine job creation. hope that productivity will pick up as we hit the full employment level and companies invest more capital, instead of hiring cheap labor?

john: i have hope, but i do not have a confident. seenu look at what we have in the expansion, very slow growth investment. a worker has been flat for the last seven or eight years, compared to the postwar. laststwar era, to the decade. so the question is, why aren't companies investing in the u.s.? i would argue because we have a high corporate tax rate, where the global tax rate is falling and you only get taxed on profits that you make in the u.s. if you keep the profits overseas, you do not get taxed on those. so it is biased against investment. matt: i want to get back to the negative rates. you were in advisor of the bank of england and an economist at the federal reserve, so what do you think central bankers should be doing right now after most

people think that negative rates have been as effective -- have not been as effective as they plans? john: the bank of england has brexit to deal with, that will keep not only the bank on the sideline, but they will cut interest rates when they meet next week. they will probably go into a recession. by the u.s. is going to be relatively unaffected. and the expansion is seven years old, we should not have interest rates close to zero. unfortunately, many have missed the boat to raise those rates and they seem to sideline themselves by having the market focus on the fed's reaction to the markets. -- s a catch 22 situation : joe we are about to hit an all-time high. we have less than 5% unemployment. we have 2.5% wage inflation. john: absolutely. i think if somebody could waive

the magic wand, and ask, where should the interest rates be? it would be 2%, 2.5%, but the problem is getting from here to there in this environment and the fed unfortunately, they are reacting to biometric data. will the strong do number resolve the uncertainty? i would be skeptical that when they meet in august, that they will be confident that the labor market is in a solid recovery mode. i think that they should be accumulating more information. matt: thank you. joe: the job market may have stirred life last month, but then bill gross says that the economy is not hunky-dory. he will explain, next. ♪

♪ >> this is "bloomberg markets." it is time for the business flash, the biggest business stories right now. univision is suing charter for shortchanging it on programming fees after acquiring time warner cable. the broadcaster claims they are entitled to pay lower rates under a contract with time warner cable, that runs for six more years. charter says it will honor the long-term contract. matt: twitter looking to expand their content. the company is in talks with the nba and the cable network turner about streaming rights for live sports and events. they already have a deal with the nfl for some thursday night football games.

and people increasing borrowing in may, using more credit cards and taking on more loans. the federal reserve says that total borrowing has jumped the most since march, the biggest monthly increase on record. again pushed total consumer credit to a record $3.6 trillion. that is the bloomberg business flash. joe: bill gross among those unimpressed with the jobs report, despite a whopping over 200,000 jobs added, he says the economy is far from perfect and they say it will not be good to meet -- weekly move rates. bill gross: things are not as then,dory as 250,000 but it is nothing to get excited about. interestedget anyone

in what janet yellen and company are going to do? does a change the cancellation of when they might move? bill gross: i do not think so. lookstill have brexit to into the eyes of, the whites of the eyes. problems with italian banks and the ecb and the eu, problems with the u.k. property mutual funds. of know, there is a sense illiquidity in markets and the fed is obsessed with markets to the extent that there is discord around the world. i think that they will stay where they are. they have wanted to raise interest rates, they did it once. i think that they will raise several times, and have a positive yield, which will help thanks -- thanks.

-- banks. mike: your call is for how many rate moves this year? bill gross: about .5 over the next 12 months. about 12 basis points each. that is the market. i think we will raise once, or try to raise once, and we will continue to get employment numbers like this, if they can get wages up, perhaps they will have a chance later in the year. i think they really do want to raise rates. some of them like evans have a sense that they need higher interest rates in order to balance out the savings. which is invested right now. mike: we have seen a lot of people rushing into corporate bonds as everybody tries to get closer to yields. is that a smart move? are people taking too much of a risk, using at -- using it as a proxy?

bill gross: it is a quick formula. you figure out what the spread is, take a high-yield at 250 basis points. and you analyze folks will be an recovery, 4% let's say. and it takes two points off of the 4.5%. it is relative to the treasuries. that is not a bad deal, but it is not the deal that investors think they will get. and if we have problems elsewhere, then it will certainly widen out. i think it is obvious when interest rates are zero and negative, everything is tied together. the knee bone and the hipbone. the negative interest bonds, they are all tied together in some way. so you must assume i think, that the high-yield bond area is artificially priced and at risk under certain circumstances. i would not buy them.

shorter of fact, i am them. categories ofll corporate, or just high-yield? cdf's,oss: there are which is an index of high-yield bonds, and an index of investment grade bonds. those are derivatives that are easily traded. the ig trades have the high-yield, basically about 425. so when you buy protection as opposed to selling it, which i have done, then you are giving up the kerry -- carry. but are you -- but you are looking for a widening of spreads. mike: the cost of money for banks trading, our corporate bonds the channel from monetary policy right now? bill gross: well, they certainly

are beginning to the, with -- to become a with the ecb. stocks with the swiss national bank, they have about $500 billion worth of stocks around the world, including apple, johnson and johnson. it is staggering, we know that the japanese purchase stocks, but i never knew that this was national bank purchased stocks -- swiss national bank purchased stocks. the entire market is distorted by cash flow that have never been. joe: that was bill gross earlier on bloomberg. matt: coming up, how has global banking policy affected the world economy? run report says -- one report says it has been a failure. we will show you the numbers, next.

this is bloomberg. ♪

♪ joe: this is "bloomberg markets." america'sne of bank global researchers notes today, they laid out a portrait of qualitative failure, a look at how central-bank policy has affected the world economy. joe: i am looking at yields on deposit accounts and this bank of america report had extraordinary statistics. if you wanted to double money and a one-year deposit account in the u.s., it would take 107 years at the current rate, but that is good compared to germany, where you would need 1387 years to double your money. even that looks good compared to japan, where he would have to wait until the year 9000 or

something like that, to double your money. i do not think that anybody should expect to double their money in a risk-free one-year deposit account, but these are extraordinary figures. and they talk about the wild statistics of this. matt: if you want, how many years would it take you to double money if you were in something that was yielding a negative right? literally, it would never happen. joe: it would be lucky to even double your money. matt: i have been talking about this, and with bill gross earlier, i wonder about the price depreciation. of course now, it has turned around and those yields will rise. centrals looking at bankers around the world, they times sincees 659

the crisis, said that negative yielding debt we talked about, $13 trillion worth of government debt around the world is less than zero. and the most negative bond yields in the world are in switzerland. and if i search on bloomberg, it is true. the gc 3-d function i have always loved, because it allows you to look at it in three dimensions, the bond yields. with time being on this access, and rates here. i wish i could annotate this with a redline. everything from 30 years on is yielding a negative rate. although, 30 years is just about -- actually you can purchase 50 years in switzerland. joe: there is still yield out there. matt: that is right. but this is interesting because it is yielding the least. now, negative 1.25% right

i guess that is you pain this was government -- paying this was government to hold your money. it is like a coupon. that is a for bloomberg markets. we hope you enjoyed it. the market was his next. -- close is next. take a look at the average as they approach record highs. is at at is at a -- dow high already. we are watching it closely. it will be a record close and we are to short of it. we may get it. this is bloomberg. ♪

?c+sv ♪ joe: we are moments away from the closing bell. i am joe weisenthal. matt: and i am matt miller. scarlet fu is off today. ♪ [bell]

u.s. stocks closing higher this friday with s&p 500 near a record high. but the question is -- would you miss -- what did you miss? june blowsults for others out of the water. does it show a drifting economy? joe: and life after brexit. taking a look at the state of european banking. matt: and whether the tesla stock is actually worth the money. our guest says it is is easier -- it is easier to justify their value than amazon. matt: looking at the market minute, i am looking at the dow jones industrial average. i want to know if it is at a closing high. i believe it is. the s&p 500, we know -- joe: