headquarters in new york, good afternoon. i'm vonnie quinn. david: and i'm david gura. vonnie: markets are one hour from the close. a lot of thinking going on before jpmorgan reports thursday. we will show you what to watch. the future of one japanese company as a media platform? -- getsthe u.k. starts a new prime minister. we will have the latest there. david: we are one hour away from the close of trading. let's head to the markets desk. shery? the s&p 500 is now at an all-time high, 21 with 5/10 of 1%.

the nasdaq is at its highest level since december of 2015. also headed for a record high close. take a look at the s&p 500. it has now passed a record close, pass the intraday high -- past the intraday -- passed intraday high if you take a look chart. which, hopefully, we can pull up right there. the dow jones is also closing in on the summer record high. this, 18,254. so, pretty close to that. also very close to an intraday high. those are the two numbers i wish you would watch out for. going to the function on the bloomberg terminal, you can see that those factors are gaining with the only two decliners

being the defense on this risk on environment where you see consumer staples and telecom communications declining. remember, they are also subject interest-rate risks. vonnie: what are the individual movers that you are watching? shery: looking at airlines, boeing has this big boost coming from the air show. 1.6% foreing them gain the third consecutive day. for 30,ounced the deal more than $3 billion. that is giving a big boost to boeing. more analysts ask the question, what is twitter? people have a clear answer to that. twitter has fallen 1.4%. a lack ofiting

confidence on the company's direction and their ability to actually make money on new product. take a look at this, one of the biggest percentage gainers on the s&p 500. we are hearing that they may boost dividends and share buybacks after half of its stake in the pipeline. declining half of 1%. still, people saying that that could help to relieve their debt burden. thank you. let's check in on our first word news desk. -- mark: david cameron says that he will offer his resid asian to the after a final session of prime minister's questions in the house of commons. theresa may, the way was clear

for her today. i think that tangerine you has made the right decision to that aside and it is clear theresa may has the overwhelming support of a conservative parliament. i'm also delighted that theresa may will be the next prime minister. she is strong, competent, more than able to provide the leadership needed in the years ahead. she will have my. or. -- my full support. mark: in central and southern china, weeks of torrential rain across the country has risked more flooding. hundreds have died. transportation has been disrupted. farmland has been flooded. by thebeen made worse arrival of a typhoon over the weekend. the united states is sending another 560 troops to iraq. secretary of state ash carter may be announcement today in a

surprise visit. the troops will be used to ul.ake modal -- most the governor of texas is recovering today from what is said to be at sense of turns on his legs and feet. he was accidentally scalded with hot water. no further details were provided. his office says he may miss the republican convention in cleveland. a basketball icon is calling his career. tim duncan, of the san antonio spurs, announced his retirement today. entire 19 year career in san antonio, leading the team to five championships. he won two world's most valuable player awards and appeared in 15 all-star game's. per day,ws, 24 hours powered by over 2600 and analyst in 120 countries.

i'm mark crumpton. back to you. thanks. the s&p 500 hitting an all-time high. banks are the big story this week. special reporte thursday, followed by citigroup on friday. joe, not expected to be a wonderful earnings is an overall. are the banks going to outperform the worst performers? joe: it is the third worst out of the s&p. investors are hedging and gearing up. the premium for hedges is the highest in 2011. you know, what we are seeing that theafraid financials have gone too high, maybe have run-up to much instant brexit referendum. harder in the s&p and

it really track hand in hand. a.b. there is a bit to get back from there. on my terminal, the highest payment looking in, 2009 in your chart book. that's pretty high. joe: you are seeing the reactionary period for earnings. there's not really a lot else going on. exit had -- brexit has settled. the table has kind of been set for bank earnings to come in and be a market driver this week. it is important to note that we saw a lot of buyback activity in the week following the brexit decision. maybe some of the negative effect trip income for -- negative affect on the interest income for -- negative effects

on the interest income for banks. david: the latest round of stress tests, what did that for that wasly pass? joe: huge, all three of them passing. that was the web a after the brexit referendum. -- that was the wednesday after the brexit referendum. people work worried if we were going down to -- people were worried if we were going down to 1800. partwas attributed in big two the stress sentiment and the subsequent $52 million in profit buybacks. that has really been sort of like the invisible pillar for the market. this ability to use these rock-bottom interest rates to basically thought back -- buyback euro shares. -- buyback shares. we know the interest

margins are not going anywhere anytime. joe: trading income will not get big thing. not the a big thing. trading income is huge part of the bottom line for these firms. people know what to expect, otherwise. but those will be the numbers that they focus in on. 7.7 percent for earnings growth is a low bar to step over. people will be wary of that. 60se banks will be set up to -- succeed where they are right now. david: the indexes today, it begs the question, how significant was this referendum on the u.s. economy at least? everyone kept saying that it wouldn't be a big deal for the u.s..

there is not a lot of export being done there. it really did, if you look at the way it responded to the rest of the global market. it wasn't down as much. on the terminal, people were adequately hedged. i would say that if you had to pick one market in the world that was prepared, it was u.s. stocks. maybe a little bit too hot. compared to these negative banks docs. -- stocks. vonnie: looking at the kbw bank index up seven, we are getting back those trolling calls. you can see the effect of brags it there. brexit there. that is a big part of it that you can ignore in this discussion of what the big banks are doing.

you have to keep in mind that this is what the big banks are watching. what is priced into the market. the swings in either direction, these regional banks that don't have as much covering them. in thoset be as much hedge fund portfolios but that may be something to key in on. next we have bank of america on monday. david: joe, thank you so much, really appreciate it. coming up, one of the biggest ipo's of the year. raised $1.3 billion after pricing its ipo at the top of its charts. more details on that, just ahead. ♪

david: this is "bloomberg markets." i'm david gura. vonnie: and i'm vonnie quinn.

plans foras scrapped the canary wharf, the largest share workspace startup. that is according to two people familiar with the matter. they say that in addition to saying no to leasing the 4500 square-foot space, new york is defending plans for the building yet to be developed. reports a fourth consecutive month of positive flows, bringing the total assets to just under $1.5 billion. outperforming two thirds of , 2.5 percent since they took over management in 2014. the time to cut costs includes a partial hiring freeze according to those with knowledge of the matter. confirming that restrictions apply.

they have been pushing to trim costs and's the first quarter profits dropped 64%. that is your business flash update. it's been a big week for japan us popular messaging app. line, about to go public. shares begin trading in the u.s. on thursday. about 40 million shares priced at the high end of the target range. expanding outside bloomberg news ipo reporters -- expanding outside, bloomberg news ipo reporters joining us now. let's remember, they filed a few years -- >> remember, they filed a few years act. now they will be getting out the door, trading on thursday. it seems like they have been heading downwards, trying to build up a business. they have done well in their home markets outside of that. it could be some of the rationale for how this listing

is structured. two thirds of what's here in the u.s., to your right, the rest is in the market in asia. unique for a japanese company. maybe the investor base is your. it gives them investor recognition, facebook, snapchat. more than these other u.s. based messaging apps have. when you look at users of messaging app, only 12% of users .ere use line compare that to taiwan, worth more than 80%. they have explicitly said, and they talk about it on the roadshow, this is the market they are looking to move into. they make a lot of revenue selling stickers or things within the platform. not a lot on advertising. that's the mo for the advertising company.

trying to figure out where they can get in the u.s. market. be the number one thing in this company. the biggest tech ipo in the year. excited about getting into ipo, this is one of their few chances. there is a lot of excitement going around the offering. the fear is that a little bit of the demand here might overrun the company. one month from now, three months from now, again, the people i talked to in the streets looked to twitter versus facebook. you don't want to go by way of twitter today. shares are off so much because of these concerns around growth. these expectations are continuing to grow quarter after quarter. david: when you look at the ipo

landscape, cyber security is a bright spot. >> they did agree to get acquired by symantec. we have written on carbon black, another cyber security startup. they both hired jpmorgan and moreland -- and morgan stanley to prep for ipo. sources tell me that carbon black maybe this year. they won't go any sooner the next year. there is movement on the ground. remember, we have had only two venture capital backed companies. not a lot of activity in actual listings yet. the fact that they are getting ready and hiring advisers is a good sign. that is if markets stay less volatile. might we be seeing a change in the industry?

the exit of old? >> we started to see that last year in the private funding landscape. the typical funding investors, hedge funds, mutual funds. the issue is that all of the best he didn't exit to show actual lives returning. whether it is m&a or ipo, there has to be an exit at some point. given the fact that volatility has been flush over the last two years, we have not seen a lot of ipo's. , because werobably haven't seen a lot of exits in the last 12 months. david: thanks very much. vonnie: still ahead, will the italian constitutional referendum be the next

referendum on the global markets? this is numbered. ♪ -- bloomberg. ♪

♪ this is "bloomberg markets." time for options with shery ahn. shery: joining me is jim stronger. jim, great to see you. stocks around record highs with bond yields climbing from those record lows. still the fix, the fear gauge edging higher today. why is that? jim: it has just popped up a little bit. let me give you a data point on the vick. -- vix. the interesting fact is the 11 largest declines over 10 days have all occurred since 2011. obviously, there has been some sort of structural shift that

people like me will ruminate over for the foreseeable future. the spot fix has sort of found its force in the last year. it's important to watch in this environment. sustainables set to rake out in an all-time high. moving lower, sharply through that 13 level. tend to think not. this is the sort of thing we will see going forward. in a high volatility environment. we are now forecasting the quarterly earnings for the s&p 500 declining again. which would mean the longest streak of the kleins since what, -- streak of declines, since what, on record? banks are reporting this week. their stock, what are they going to do from now on? jim: volatility and what that says about earnings season suggests a benign environment. volatility coming in with the to

shock, spaced about five months apart. we have been defensive for a while. with this unwind you have to expect a benign environment. on the equity as well, strained with financials. translating to the u.s., the volatility backdrop suggests not as much. whereg across the banks, do we see a trade in the next few weeks? all the universal banks will report. the one we are really focused on his goldman sachs. --has been a bit of a weekly weak link. 15% financials overall that are the middling performer since brexit concluded. goldman trading nine times below earnings. looking at valuation and underperformance of the stocks, set up nicely into earnings.

it only moves about 3% historically before what the options market is implying right now. we like going out to october and expressing long directional exposure. you are selling to 180, you do that for 370. 180,an sachs stock above you have created a nice 4.1 potential payoff. those that still see risk out there with directional exposure, it's a nice way to get it. -- shery: what about financials? jim: if you believe the broad market s&p breakout is for real, you get a performance with financials and you have to positiveat they have a

backdrop. you have exposure more broadly. jim, thank you so much for joining us from an km holdings. david: taking a quick look at the indexes, the dow is up. this has been a big day, vonnie. said, they arey off in terms of yields, at least. still ahead, could italian stocks become hostage to opinion polls? we will break that down. this is numbered. -- bloomberg. ♪

♪ david: from bloomberg world headquarters in downtown manhattan, i david gura. amjoe: and i and joe weisenthal.

and i am matt miller. mark crumpton has more. the gunman, whose ambush left five officers dead. nson was that micah joh taunting them, at one point in time asking how many officers he had shot. shocked,y say they are and that he returned from afghanistan a changed demand. and they are urging protesters to avoid some areas. video says she is surprised to see some responding violence. fiercest fighting in syria today, with a massive rebel , and thatin aleppo

despite a cease-fire that is supposedly in effect. several wounded after rockets and shells pounded their largest city and former commercial capital. roon is not taking any chances of bird flu. they ordered the destruction of after an outbreak of avian influenza in effort you are regions. millions since the outbreak was reported in may. jordan spieth is the latest golfer to pull out of the rio olympics. internationale association it was because of health concerns. and others have withdrawn. this marks the first time in 112 years that golf is going to be part of the olympic games. global news 24 hours a day powered by more than 2600

journalists in more than 120 countries. i am mark crumpton. back to you. joe: let's go to abigail doolittle. abigail: thanks, oliver. rally, and the nasdaq, and third, the divergence we are seeing between the nasdaq and the s&p 500, so let's take into the stories just a little bit more. today's rally, we are looking at a robust rally, the nasdaq up a tent of 1%, -- of a 10th of 1%. really a big recovery here. facebook, and share classes of google. ago, we a few minutes did have the nasdaq back above 5000. this is after 12:30, as well.

and when we consider this year's volatility, this is really a remarkable recovery. at one point, the nasdaq had been down 19% from last year's peak, 1% away from a bear market, and now we have the nasdaq less than 2/10 of 1% of being even on the year, so really a big turnaround, and two of the big usuals, amazon and facebook, are beyond that, but comcast andrs being others. looking at health care, biotech continues to weigh on the nasdaq, oliver. oliver: you are mentioning the s&p and where there are new highs, where you look at the nasdaq, it is still about 4% from that record level. tell us what is going on there. they are not even close to the record highs, more than 4% from the record highs, but as we know, the s&p 500, the

more mature s&p 500 has carved out record highs. what does this tell us. ofdo not have the growth stocks catching up, that they are lagging, or telling us there is potential for the nasdaq itself? at chief technical officer one company says he sees the later case. he believes there is a potential for a catch up with the nasdaq. over the last two years, all of the wild volatility we have been experiencing, he believes this could be consolidation before a breakout high, the potential for the nasdaq, but there was another technical analysis, one person says it is probably too early to see the s&p breakout as free and clear, considering we do have the growth here and the nasdaq lagging, so two opinions on the market. it will be interesting to see what happens in the days to come, considering the volatility

in the last two weeks and the volatility. oliver? abigail doolittle at the nasdaq, thank you. anchor: leaders on the far right call for an italian referendum. the ftse 100 is the only index up year to date. check out this table here. are various european indexes, and you can see italy getting destroyed relative to other european indexes. who has a is a person particular emphasis on the economy and the eu integration process. thank you very much for joining us. tell us about this referendum. to prime so important minister renzi, and how to the prospects look? worried about the banks as we are for the

potential of political blowback of any bank rescue if these were needed later in the year. this comes on the back of an already pretty fragile political context. there has been a number of pressure, and the ruling party is declining in the polls, mainly due to the eurosceptic five-star movement, and he stakes his political future onlly on this referendum institutional reform that is in many ways the linchpin of this, which is scheduled to take place in the fall. i think the reform is quite popular with the public quite broadly. a negative result, he effectively has a referendum about himself, personally, as much as the reform itself. and the polls, which were initially very favorable, have already narrowed quite drastically. will have that brexit

an impact on growth in europe and italy, as well. policy to shore up the domestic popularity, and banks have been coming under more pressure. first early in the year and then in the immediate aftermath of the u.k. vote, so this can be sort of the final nail in the coffin, if you will. the government already paid a very heavy price for the rescue of smaller banks at the end of last year, which actually saw, going to be aas lot more stringent since the crisis. junior bondholders in particular bearing a lot of the losses, and that was a major political move for the government, so we could very well be looking at a government collapsed by the end of 2016. don't theyerico, have to find a fix for that? because a failure in italy would make the already fragile

political construct fall apart, right? federico: true. ultimately, i expect that they will be able to step in and rescue the banks one way or another, but there is only so much flexibility that is built into the rules, and even though i say i expect they will be able if the banks needed to raise additional capital, which is quite possible, the still comes with the now -in, which, like i said, requires equity and junior bondholders to bear significant losses. now, in the case of italy, in particular, junior bondholders are said to be retail investors. just want to say deceived but misled into purchasing these assets that are, in fact, quite risky. the voters of the institutional shareholders backed away a long time ago?

correct, andrect, this is about the government being in the hands of banking law, big business, and this has just reinforced to that, so it is not with the risk of government instability, but it comes into the context of being already fragile. it could be a nail in the coffin, quite possibly. a lot of thisco, goes into the electoral system in place, which seems kind of crazy, changes with the election process, so how does that have the potential to also shape the next four or five years for italy? : well, italy has gone through several changes to its electoral process. it is not new to the country. it is meant to koppelman and earlier change in the electoral system that is meant to put in place or facilitate more stable governments.

pretty drastic, a pretty sizable again, the aim is to assure that the governments are more stable and in a better chance of remaining in power for legislature. will, is thatyou that also significantly increases the risk -- like i said, the five-star movement, not only winning the next election but also gaining power, potentially with an absolute majority, which we fairly unprecedented in the case of italy, in which it is not a particularly stable government coalition that tends to be the norm. of course, five-star, having an unclear commitment to euro zone, to say the least, very undefined economic policy agenda, based on the expansionary bias, i would argue, those are all things that could potentially, you know, compromise the stability of the italian economy. ynchor: federico, reall

--germany is seen as blocking that. what does that do to their perception of the eu, if they see that another country is essentially telling their government what it can and cannot do? rico: well, it shows that the government is somewhat impotent in this case. they did agree to the rules for the banking union, so there was some degree of risk mediation, sharing the risks in the eurozone, but eventually being in a position where they have to backstop week banking systems, but they have played into the hands of the opposition, really, and five-star is not explicitly eurosceptic. they do not argue for italy to leave the eu, but they have been very critical, the commission being one of them, and germany. that is why this is so politically sensitive. chor: all right, thank you,

santi from the eurasia group. do not have to take orders anymore. this is bloomberg. ♪

♪ matt: this is " "bloomberg markets." i am matt miller. a mixed martial arts company has changed hands, ufc, telling -- mma company that

bought for a staggering $4 billion. it is said to be the most expensive transaction in sports there was the abu dhabi government, and still owns a 10% stake in the company. at least one world leader is sold on the relative safety of tesla's self driving vehicle. angela merkellor speaking at a press rally, saying the most dangerous driver is a human being. she also says tesla is a household name and that her countries automakers are highly competitive but lagging on electric vehicles. and speaking of, volkswagen will -- repay some loans. nearly $1.1 billion approved at the end of 2014, but this comes as the company grapples with the fall at its diesel emissions scandal, so it have to get those out of the way, and daimler has asked the mercedes ben's maker

for adjustments in costs ccurred due to the takata thanl, which cost more $550 million behind for mercedes and that is your bloomberg business flash update. oliver? minister new prime upcoming. in britain, one candidate dropped out. >> the immediate appointment of a strong and well supported prime minister. i am therefore withdrawing from the elections, and i wish may the greatest success. i assure her with my full support. -- oliver:: joining

us on the phone is simon, who oversees news there. itll us, where does this brex take us? simon: she has been a secretary, dealing with things like immigration, a safe pair of hands. sher to the referendum, don't with various issues, and also her party. party wereative known as the nasty party in order to reinvent themselves, so not afraid to speak truth to power. she is a stabilizing force among some of the candidates who were there before her, and she will that at theuild on time they are in a bit of crisis. she will try to be a calming towardsd work

extricating the european union, as she has promised to do. anchor: as soon as the news came out, we saw a rally in the pound. i am curious as to your take on that. is that because people like the security? or if it is triggered that the get that theressa may may would be favorable question what what is your read on how they are interpreting these events? : all of those points. the main reason, before today, they were facing nine weeks to take a new prime and asked weeks of uncertainty, nine weeks of political back-and-forth, which we saw the trouble over the weekend with the comments on motherhood, and nine more weeks of that after three weeks of a change in foreign policy, the prime minister resigning, that

is not what the market particularly likes, but at the same time, i do think a small part of that rally was on this kind of view in the market that perhaps brexit would happen. was a remain.ay she has been much quieter than other people who have been eurosceptic in the past. obviously on the immigration issues. but she said brexit means brexit. maybe after there is the idea that she is more likely at least andrealow on brexit than would have done, and the kind of or she wouldd get have been, very much pumping down on free movement. i wonder, simon, if you

have seen a dichotomy? on the one hand, a masters like to compare her to margaret thatcher a lot. she is a safe pair of hands. she is conservative. hear. that we but on the other had, she is bringing in the socialist or european socialist things of putting labor unions on the boards of countries and clamping corporate taxes. she does not want just the -- a cryd few to enjoy out to the popular voters. do you see those two w things playing in her campaign? simon: absolutely. she spoke today before she knew she was going to be prime minister. she was talking about the economy needs to include more people, and share the wealth that much more, and david miliband, previously the leader, a year ago, taking on david cameron in the general election, it's certainly a taste of french and german politics there, but

think about it. party inhe labour disarray. it certainly does not have the leadership, and with theresa may , why not broaden my base? to take some from the center, but also to appeal to some of those people who voted for brexit, because they feel they have not had a chance to make up their wealth or their wages since the financial crisis. theresa may pivoting towards those people is good politics probably in their mind. anchor: all right, thank you very much. simon kennedy. coming up, we look at the s&p was billion despite recession. do not miss that chart, next. this is bloomberg. ♪

♪ is "bloomberg

markets." miller.t just minutes away from the closing, and i want to kick it off with the ftse, hitting a full market. the british stocks index in white hitting a bull market from low, but what is interesting is what is in blue. andve charted the ftse 350, this is a broader measure, and it is only 20% away from hitting a game, and if you look at the 350 after the brexit vote, it at it is the ftse 100, now below, so it took a harder hit, but it is a broader measure of domestic stocks. i am taking a look at the malaysian ringgit. i cannot not think we talked about it a lot this year, but we talked a lot about it last year with all of the emerging-market stocks. it is having a good year, the

best-performing currency in asia. it is being held why perceived relative stability. remember, there was the big scandal. and it is up 4%, a pretty monster turn. you can see it versus the inverted or the jpmorgan asian index. : that is a pretty big comeback. the malaysian ringgit, always one of the currencies we forget about. i am looking at stocks and earnings, and the fact that the s&p is closing at an all-time high, 2138, and this is what has been happening here throughout that entire bull run, and that is that earnings have slightly been recovering, and it has been in a dip the past year. intoe now looking at going a fifth year of declines. we may actually break even, but this shows you the look. the earnings picture is not good, obviously. however, when you actually look at what is going on in sort of

the granularity of the market, it is not that deep or widespread, and it is not terrible. : how much with the market have to beat by to of what a corporate recession? 6%, thenthey beat by we will have a game, rather than the 5.5% loss we expected. still, isn't this the longest stretch of quarterly losses that we have seen? >> in a really long time. hopefully, there will be a message there. for "bloombergt markets." this is bloomberg. ♪

♪ joe: we are moments away from the closing bell. ♪

>> stocks closing higher. a new record this afternoon. through.00 bursting >> but the question is, what did you miss? the s&p 500 at a record high despite that profit recession we have been talking about. we will break earnings are just a minute. plus we look at the federal reserve as a political institution. how much leeway doesn't really had one tried to come up with new policy? election caused more stimulus in japan. we will look at what is next. ♪ close wasvious record 1230.8. but we had blown through it today at 2