>> from bloomberg world headquarters, i am shery ahn. fu int: i am scarlet london. here is what we are watching. warning that structural forces are weighing on the future of u.s. economic growth. nigel chok joins us with the latest. outgoing eu commissioner jonathan hill joins us live from brussels with his thoughts on the future of the capital market union and theresa may. scarlet: an exclusive interview with the ubs ceo. he tells us where he thinks markets are headed and why ubs is preparing for a reversal. let's head directly --

shery: let's head to the markets desk were julie hyman has the latest. we are still at record highs. julie: for the s&p and the dow. the nasdaq is not at record highs but it is turning positive. -- the s&p at 2153. point the dow did touch an intraday record. not only do you have this risk appetite on market, you also have it on relatively high training volume. -- trading volume. overall for the s&p volume is up about 6% but you see the surge in volume of material stocks, 76% higher than a 20 year average and the same thing on industrials.

even as we approach these record highs, it is worth mentioning what is going on with valuation for the us you 500. -- s&p 500. we are just a hair shy of 20. we have seen valuations push-up during this current rally. in terms of today's session and what is getting the most, we have seagate after they announced an expansion of job -- ana lot of the american airlines saying it's -- will be boosted because of a new agreement with credit card providers. scarlet: getting back to the valuations of stocks, they make sense if you look at the valuations of hans. how our bonds faring? julie: there is a $20 billion auction of 10-year note and it

will be interesting to see what the demand will be although we are seeing-year-old push higher for the second -- we are seeing yields push higher for the second day. if you go back to the history -- we do not have time, i will show you later the correlation. we will be bringing you the result of that auction. shery: we will be looking forward to it. let's check in with mark crumpton. mark: after a long and sometimes acrimonious campaign, bernie sanders has officially endorsed hillary clinton for president at a campaign in portsmouth, new hampshire. he thinks she will make an outstanding president and he is proud to stand with her. sanders' long resistance to endorsing clinton diminished his political leverage as the

campaign drew to a close. newt gingrich may not end up as donald trump's running mate but he could end up with a role in the trumpet administration. according to people familiar, the republican candidate may pick gingrich for a top national security post if elected. president obama travels to dallas to meet with the families of five police officers killed and an ambush last week and will speak at his 11th memorial and reelingidency to a city . one day after a surprise stop in iraq, as carter is in afghanistan, meeting with top u.s. commanders as well as afghan officials. secretary carter says the united states will continue to train and advise afghan forces.

global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: thank you so much. from global uncertainty surrounding grexit to italy's banking crisis, the crisis is facing a number of economic headwinds but a study by the imf shows the u.s. economy is holding up pretty well. what downsize risks remain? nigel chok joins us from washington -- chalk joins us from washington. i want to start with some of the moves that we have seen and the market because it seems like a lot of contradictions. questions about whether the u.s. economy is slowing down. what do these market extremes reflect when it comes to the u.s. economic fundamentals? nigel: i think what c is they

are very good. it is a strong labor market. we see very good numbers on retail sales and the weight that economysed on the u.s. from the stronger dollar seems to be alleviated. i think we are seeing some reflection of a strong u.s. economy. when we look at the treasury yields they seem to be reflecting risk aversion and global capital flows into u.s. assets. given that market data, you say there is a clear case to proceed along a very gradual upward path for u.s. interest rates. how much of the potential brexit fallout played into your stance? nigel: brexit does not have a huge effect on the u.s. economy, what we have seen so far. the main channel is through a stronger dollar and as you just mentioned, u.s. equity markets

are at an all-time high and the dollar has not had a huge effect on the u.k. referendum so that does not feed very much into our calculations. what does is the state of u.s. inflation, still struggling to get to the 2% target the fed has and we see downside risks to inflation. that is why we call for a very cautious move upward. scarlet: the fed disagrees with your call to overshoot on inflation. how do you factor in a stronger u.s. dollar? if the fed were to follow the imf's recommendation, wouldn't that push the dollar higher as well and eventually eating into growth? nigel: i think there is a trade-off. if the rates stay low in the u.s. it is unlikely we will see a strengthening of the dollar. if the rate increase is more

frontloaded than is currently expected we could see some upward by for the dollar that would eat into the growth. talk about theo u.s. election because the imf warned on the consequence of a brexit but they voted to leave anyway. we are seeing a similar rhetoric coming from donald trump, re-declaring independence on trade, immigration. how does the u.s. election impact the u.s. economy? nigel: we do not see a large effect but what we have tried to do is look ahead to the new administration and the forces that will face the u.s. economy in the coming years. we think it is important. these are an increasingly -- and a declining labor force participation. we think these are the forces

that will need to be tackled. scarlet: that is a pretty long to do list. i know we talked about brexit already but how do you fold in political disruption and uncertainty, whether it is the upcoming u.s. election or external events like rex it or something in -- like grexit or something in asia -- brexit or something in asia? nigel: it is difficult to quantify. we do not have a straight quantification but we do feel there are downside risks to the u.s. economy although we have a relatively up eight forecast. shery: and all of these challenges you are advising concerted policy action sooner rather than later. what would those be? nigel: we look at a range of actions and depending on the challenges we are facing, we think poverty is an important issue that needs to be tackled,

we have advocated for a higher minimum wage, and asked that the federal government looks at poverty programs and stroke -- and improves them. we think skills-based immigration reform would be an important thing and we think there could be in court changes -- important changes made to the u.k. -- u.s. taxes. scarlet: one final question, something that comes up all the time when we are awaiting inflation. do you think the traditional relationship between unemployment and inflation is breaking down? i am speaking of the phillips curve. nigel: certainly that has been in the public debate as of late because we have seen a strong decline in u.s. unemployment yet there does not seem to be much wage appreciation. what we find is the relationship between unemployment and inflation has not changed post

crisis, but what seems to have changed is the number of shocks hitting the u.s. economy. they seem to be hit more and more by dis-inflationary shocks. they could come from low commodity prices, a smaller dollar, and that is changing the inflation dynamics. scarlet: thank you. coming up on bloomberg markets, an exclusive interview with lord jonathan hill. he has three days left as eu commissioner of foreign services. we ask what is next and what he makes of theresa may as the uk's next prime minister. ♪

scarlet: you are -- shery: you are watching bloomberg markets. i am shery ahn with scarlet fu. julie: i'm going to start with oracle. it is being updated like keith 1.6%, an update to an outperform from a market perform. the analyst has a higher conviction that the company can meet consensus estimates and generate operating income growth. they will continue to be aggressive with shareholder capital but does not expect a large m&a. then there are a duo of interesting analyst on countries that we see a sort of being on the brink. cliff's natural is one, the price target being raised to the highest on the street.

jpmorgan says this company is not headed to bankruptcy despite the extreme high short-term interest. the shares at 11% today. he says the recent bankruptcy of -- and theyesota have filed a shelf registration for a $3 million equity offering which would likely push out any near-term debt maturity. that is why they have a higher conviction they are not headed to bankruptcy. then there is chesapeake energy, there has been concern about their debt and balance sheet. an analyst at piper jaffray says the risk has diminished given the fact that they have completed $950 million into vestige or's they have a more lenient credit pack in several credit or equity deals, as well as an improving natural gas.

the shares are bouncing by 7%. having a pretty big effect on the stocks today. scarlet: thank you so much, julie hyman. coming up, an exclusive interview with lord jonathan hill. he has three days left as eu commissioner for financial services. what is nextking and what he makes of theresa may. this is bloomberg. ♪

scarlet: this is bloomberg markets, i am scarlet fu in london with shery ahn in new york. financial services will be the second are most affected i the u.k. departure from the eu but where do you begin to start? we will take you to brussels where ryan chilcote is standing by with an interview with lord

jonathan hill. ryan: jonathan hill is actually stepping down from that role as britain's commissioner in the european union in just two days. he will be leaving the post of being in charge of financial services and regulation in the eu, and he has already seated some of those powers. it is a pleasure to speak with you. i wanted to start with a slightly provocative question. in termsany way that of access to the single market, uk's new relationship the eu can be better than what it has had as a member? i argued that the benefits of being in a single market were clear and strong and i think it has benefited from being in the single market. the fact is, there has been a

big decision taken by the british people. that is the decision you have to ,espect, there is no going back and what people need to do in the u.k. is make the most of that, and look for new opportunities that maybe were not there before and are how you deal with the new situation. i think they have been thinking in a certain way for the last 40 years and now they need to reimagine a whole economic model. ryan: you have talked about the norwegian model. that is outside of the european union but they still have access to the single market and have agreed on some other thing like freedom of movement. they pay into the eu and are subject to eu laws, but you have said there is an intellectual inconsistency in going for that approach. explain that. sir jonathan: i think the deal that the norwegians have works that they dogians

not have such a developed financial services sector obviously as the u.k., and the basic deal is they have to sign up or rules but do not have much influence over the rulemaking. the british people have decided that they want a different i do notd so now, think of this as being one kind of model that you have got to take off the peg like you are buying a suit in a shop. with the wholel intellectually rigorous process of working out what your priorities are, what you want your economy to be shaped like, the role financial services will play, and then the complicated negotiation as to how you can best deliver what you can and also think about domestic policy tools that might be needed to compensate for some of the things you might be losing. ryan: like reducing the corporation task. what do you say to the financial firms operating in the city who are saying there is a lot of

uncertainty and my guess is, the best that the u.k. can get outside the eu is not going to be as good as it is now, what would you say? sir jonathan: i would say get your thinking caps on and be part of the process whereby britain and the british government needs to rethink what it is offering. i think that with the expertise that they have, knowing how the markets work, knowing how international trade works, knowing what it is that it tracks people to london, they need to come up with their top asks and work with the government to come up with a proper strategy. ryan: how long do you think it is going to take to get the clarity they are looking for? sir jonathan: i think it is hard at the moment. it is hard to be clear on the length of time. clearly there is pressure in the rest of europe for the process to start but it is also the case

in the u.k. that we have a new prime minister starting tomorrow. they have to go through the process before you are in a position where you come to the rest of europe with a set of initial proposals. i think no one wants to make it take longer than it needs to but i think at the minute, setting a time frame until you have done your homework is quite hard. i would think people would not want uncertainty to last as long as it has been. ryan: do you see yourself as part of the u.k. negotiating team? sir jonathan: i see no role for myself other than going back to my garden and cultivating it. ryan: have you had a chance to talk to the new prime minister? sir jonathan: no. the soon-to-be new prime minister did not know they were going to be the soon-to-be new prime minister until tee time. i am in brussels and have a job to do trying to set a future

path of financial regulation. ryan: who do you think should lead the uk's negotiating? sir jonathan: that is not for me to say. there are plenty of people who will be smart and keen to do it. my only contribution i think is to say that on both sides of it, on the british side and on the side of the rest of europe, we need to find a process that enables the heart discussions -- hard discussions to take place. those who escalate the rhetoric, it is not going to help and we do not want outcome were people on either side end up cutting off their nose despite their face. keep it steady in the kind of way that mrs. merkel has been suggesting. ryan: there's a lot of confusion about article 50 and in brussels they say it has to be invoked before we actually begin any negotiations.

theresa may has talked about how it would be useful to have informal negotiations first. in an informal fashion with member states, do you think it is possible to u.k. can get started in this process with a dialogue with important members now, or does it have to wait until next year? sir jonathan: i think all of that stuff will become clear. you're absolutely right, the position of the european council and commission is that until article 50 starts they do not want to start the process of negotiation. i think one has to respect that is what they said. how it hands out in the real world, people have telephones. i cannot foresee. clearly i think everyone would want to be in a position where you can start the process of negotiation as soon as both sides are ready to do so, because i do not think it is going to be quick and i think

therefore the sooner you start, the better that is for everyone. ryan: jonathan hill, thank you so much for your time. that is britain's outgoing commissioner in financial services. he is stepping down because the u.k. has voted to accept the european union, something he did not want to see happen but nevertheless, it is time for him to go. shery: ryan chilcote talking to jonathan hill. coming up on "bloomberg markets," an exclusive interview -- with ubs' investment banker. ♪

>> live from bloomberg world headquarters in new york. scarlet: this is bloomberg markets.

muskeaking news, elon saying he has no plans to disable the autopilot according to a report by the wall street journal. tesla is facing probes over the crash that killed the driver of one of its cars. tesla shares not reacting much, still up, gaining for a sixth consecutive session. investigators are asking tesla for details on how the autopilot system worked and why failed to detect a tractor-trailer. they have noing plans to disable the autopilot in cars. we will continue to keep an eye on those headlines for you. meanwhile, mark crumpton has more. at ramoner a long and he is, bernie sanders officially endorsed hillary clinton for

mr. sanders: she will be the democratic nominee for president. and i intend to do everything i can to make certain she will be the next president of the united days. -- united states. from there was reaction the donald trump campaign. a statement was released criticizing sanders saying, the candidate who ran against aecial interests is endorsing candidate who embodies special interests. england against criticism for its role in the brexit campaign. the governor testified before parliament today and denied the central bank undermined its independence by highlighting the risk of the british decision to leave the european union. attorneys for the white man charge with killing nine black

parishioners in a church now says he has a missile on this. the evidence will be assessed during the phase. the june 2015 shootings. he faces nine murder charges and that trial is set for next year. today thatch told the community they serve has never been more different or important. a shooting including a sniper attack on five officers and alice rocked the country. the white house host a meeting tomorrow with law enforcement, community activists, and political news. i am mark crumpton. this is bloomberg. back to you.

>> thank you. erik schatzker sat down with the u.s. -- discussed market volatility and the recent brexit vote. erik: ubs has one of the world has his biggest equity sales franchises and has the view inflows and risk-taking. volatility, id want to know what they think. here's what he said. >> brexit has increasing uncertainty. central banks have intervened liquidity, making sure they held the market cold but in my

opinion, still too early to say we have seen an outcome pass comesh, we have seen out that if changed significantly going for it. >> how is it we are where we are today? s&p hundredthe almost that 2150. the vix is at 13.5. given the uncertainty and fragility of their, how is it we are where we are? the first thing is cash burns in your pocket. negative rates everywhere. just the fact the brexit has a view that the fed will now raise interest rates as fast or as much as everybody anticipated

before, combined with the unemployment rate, now has dealsed average interesting again because everyone is chasing the yield. people are chasing equity again. if we are expended in those environments and we do that because the environment drag time,ay, at the same you're taking a lot of tail risk in the market reverse will reverse very quickly. waiting is the cost as well. depending on the mood, it moves quickly from one side to the other. >> given where we are in the credit cycle, is the healthy thing, surely cannot be healthy

for investors to once again reach for a yield and load up on equities. >> if the question is how ubs is only with this, very risk off and very conservative data. they are ready to take on the cost of being observing the situation as opposed to playing the situation. they think there are a very large number of factors that can move the situation quite quickly. ik: in other words, you are preparing for a reversal. >> we want to be ready for a reversal. it is never possible to completely compare for a reversal because you do not know when it will hit and you are in the middle for clients. in the meantime, what does it mean for your business? is it a good thing or a bad thing, do better in an upturn or a downturn? >> i know many people say that.

but ubs generally, volatility and transaction audis are good things. they are good things because we are structured in a way where we follow clients, clients are active. we have a tendency to do better. if clients are inactive, we carry what we carry, we tend to do works. significant volatility, limited edition and movement for , and to do quite well. for the fact to help clients, we in thesetion and markets, we need something that is quite risky. erik: what you heard explained

there is one of the most difficult and often frustrating positions. to use a stimulate inventory, it means you do not make markets and perhaps benefit death benefit. it is really tough, and ubs has .aken the prudent course it means ubs will not get hurt if markets reverse in the next several weeks. >> let's is that mean for the business and also for the investment banking industry as a whole? >> he talks about fragility and uncertainty, not just in the

context of what we are seeing now. he believes because of the looming decisions that will have to be made as a result of the vote and other things, we will be living in this kind of environment or in essman things are operating in this kind of environment from here at least until the end of 2017. got regulation coming, more than investors understand or anticipate. that will crush revenues and it will put pressure on capital levels. ubs will have to find ways of cutting costs. this is been a monster -- the mantra on wall street for years it will only continue. ubs, they have been cutting cost it four years already and was categorical that they are done cutting jobs, find me another investment bank on wall street, ubs may be the only one.

>> it was quite a surprise and not something we hear often. , ank you for the insight great conversation, to. that exclusive interview with ubs investment bank president andrea. scarlet? scarlet: we have more running out. puerto rico on about a billion dollars due to bondholders. what are the next steps? we speak with this governor in and ask lucid interview. -- an exclusive interview. ♪

vonnie: i am vonnie quinn. mark: i am mark barton. forecasting higher demands for meanwhile,ext year, saudi arabia pumps near record levels a midsummer consumption. vonnie: are cities beating bmw at the half-year mark, moving closer for the first time since 2005.

mark: corporate china has been on an international shop industry but they do not have the same opportunity in china. opec is forecasting higher demand for oil make here. the global need for crude rising while production outside opec will fall. oil prices have bounced back 7% this year after a 12 week love. as a global surface starts to receive. investment bank signaling the job cuts have come to an end. also spoke to erik schatzker about the size of the workforce after dozens of jobs were eliminated at the swiss bank. exact and we are where we should we to face the of we have, to face the wrath --

regulations we have and the forces we have. at this when in time, the challenge is to execute correctly what we have in front of us. mark: there are a few caveats. the worsening of market conditions could force ubs to cut more. china is calling a landmark ruling on the south china the new orleans void. arbitration ruled that china has no historic rights within the waters. china claims territorial rights to more than 80% of the south china sea. . battling for a potential blockbuster order worth about $12 billion according to the matter, twoh the

years ago, spice jet was struggling to survive and it is now looking to expand and mercedes is lou -- moving closer to become in the world's best lecture he carmaker. best w sellinge brand for a decade. timeout for the quick take. corporate china has been on an unprecedented shopping spree. here is what the company is now own. cereal, the soccer team, the hotel, and the hollywood studio behind drastic world to what are the implications? it took the company four months to surpass a record for overseas deals. the big highlight, the swiss

giant, from 46 billion u.s. dollars. deals like this are under heavy scrutiny especially by regulators. you have a particular focus on technology deals. they became a popular target thanks to a weaker euro. foreign trade only opened up after paying began unlocking the chinese borders in 1979. the government has encouraged the recent overseas push and businesses have had an extensive -- incentive to spend cash sooner rather than later. critics say china should loosen restrictions and give foreign companies the same freedom that company firms enjoy when making overseas acquisitions and that

easy has a huge advantage, financing on government-backed banks. some argue the investment should be embraced. one report found the takeover is not safe and may -- most have resulted in an expansion. they say nothing unusual and the u.s. codes more than twice as many deals in 2015. for more stories, visit bloomberg.com. ♪

vonnie: puerto rico just defaulted on about $1 billion, marking the biggest payment ever in the u.s. meniscal on market. they are about to undergo an unprecedented takeover by the u.s. government. david has been following this story and is standing by with an exclusive interview. david: defaulted on a growing share of $7 billion in debt. i'm joined now from washington, d.c.

that we have had this default, what happens next with negotiations with creditors? >> we are open to continuing a discussion with them. the same week it was approved, we were supposed to have a meeting they decided not to have , so now they have to negotiaten through the process, something i will do without dell. meeting was canceled because they will await the board? maybe. not know, the same care for puerto rico, like the governor of course.

i think they were hoping they -- theyve more leverage would not have that. now they have more leverage. they should not negotiate with .s in good faith higher i think that set the table for the negation -- the negotiation with the board. they have a right to know that they have to conquered. they lost. now they need to negotiate. >> the next big deadline for payments, you will see a solution? -- if you remember back then, , they took a number

and saw they were true. there is no litigation i think thinkappened first, i they have, again, the full set possibilities ahead. this creation of the federally appointed oversight board, how comfortable are you with that and how much will you lobby? >> it is a mixed bag. on the one hand, it allows us, then, litigation and for process. on the other hand, intervening

unnecessarily on the commonwealth, of course it is not like that. choice.e was no real on the one side, misery for my people, or on the other side, the to choose misery to unnecessary intrusion of the democratic institution of the commonwealth. someone asks you for your wallet, you do not want to give your while and you may think no, but the consequences are worse. >> the question about the legislation on your desk, a $2 billion water bill, are these pieces of legislation you can sign? in order that he will sign

it. 11.9 billion dollars. 9.1, and they have the budget. if i feel this, it will be driven by that. >> more bloomberg markets coming up in just a moment. >> this is bloomberg. ♪

>> it is 5:00 p.m. here in london and midnight in hong kong. >> welcome to bloomberg markets. ♪

>> good afternoon. scarlet: here is what we're watching. u.s. equities coming to record highs as the earnings season gets underway. >> china was dealt a serious low, undercutting the china's effort -- the china's presidents efforts. after thousands of job cuts come he tells us whether downsizing has paid off and whether more layouts are to come. >> let's head to the markets desk where julie hyman has the markets. treasuries falling and yields are rising. scarlet: we are awaiting the

results of the 10 year auction. this will be important because demand,be a test of demand for treasuries in the lake of yield falling to wreck close. when we checked on what is going on, we do have this rally and yields in the selloff in treasuries, the largest we have seen on a two day basis. we have a 14 basis point move in the 10 year yield. 1.5% is where we are yielding going into the auction. we will continue to keep an eye on it and give you the details when we get it. the stocks, the selloff, a more traditional pattern that has been turned on its head thus far this year. major averages rallying the s&p in the dow is still on closing highs and the p5 hundred and the dow actually both touching intraday records as well in the

course of the session. what is on the move today, you see yields rising and utilities are getting hit, but otherwise, a lot of green on the screen. materials, in terms of percentage gains, financial and tax also holding their own. out with earnings later this week, kicking it all off after the close last night. what are the individual names you are watching? dear wee are looking at got the latest from corn inventories from the u.s. and those will be less than estimated according to the usda. gear, they shares of stay a following, that news about 1.5% and corn itself also spiking after those numbers coming out about a lf hour ago.

we're watching tesla at this hour. according to the wall street journal, elon musk has no plans to disable autopilot from the reports ofthere were a crash fatality that involved the autopilot. tesla shares are a little -- little changed at this point. the newscheck into this afternoon. has: bernie sanders endorsed bernie said -- hillary clinton for president. told the crowd that clinton would make an outstanding president and he said he is proud than with her. donald trump is not thrilled with the new unity between the clinton and sanders camps, and sanders hasd that totally sold out to crooked hillary clinton and he promises to do everything he can to defeat trump in november.

the italian authorities say death toll could rise following a head on collision between commuter trains. he does people were killed and dozens more -- excuse me, 20 people were killed and dozens more injured in the crash, where there is a single track. said rescueeports workers pulled a small child alive from the wreckage. china has lost a landmark court ,attle over the china sea arbitration found that china has no historical rights in the area. they claimed virtually the entire south china sea, both imports and runways. china boycotted the arbitration process and called the ruling nolan void. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. back to you.

>> stocks are climbing for a third day, the dow climbing above the record close from may of last year. the s&p 500 now in line with wall street is fictitious as investors continue to come back into equities. in new york says he is focused on the ability to grow dividends. chiefis joining us now, investment officer of global wealth and investment management at bank of america. great to see you. the first thing we need to ask about is the tension that exists in the market. chart, whatto my you would see is the s&p 500 has climbed to a record high while the 10 yield -- 10 year yield closed record lows. how do you explain that? .arnings are falling >> the interesting part is if you look at the dividend yield of the day, it is 2%, 60% well

above the u.s. treasuries. looking at yield in general, you will go to equities and growth cyber equities and you will go if you are overseas investor, u.s. 10 year pushing that down, that is what we have seen for quite some time and everyone is waiting for the great rotation, which first us out of cash into equities and then out of bonds into equities p are early in the process. >> are we talking about low volatility ones, because i have a chart i want to show you. this is a note from goldman sachs showing that basically expanding on scarlet's point that the s&p 500 has decoupled not only from the 10 year treasury yield, but also regional markets, and we're seeing that the s&p 500 has an boosted by the utility phone companies, just gaining more

than 20%. is there more up site -- upside on that? >> it will be a source of funds because the rest of the market will rot now and it will get more cyclical to the momentum season. the back half of the year, the search for yield will be back on and it is still up in the --sumer staple it utilities staple utilities. it is still early. the wrong decision is to look at the valuation and say, my goodness, these are well overvalued. to what? to the history, the rest of the market, and there are a number of different ways to look at it. high quality versus low-quality, a good and consistent yield versus too high of a yield, it is the way to go in the market. >> i think what you said was perfectly put here relative to what? several different asset cars -- markets are overvalued.

valuations -- you could say valuations are extraordinarily high or pretty fairly valued relative to u.s. treasuries. is that the case? >> it is. we often get caught up in the world of looking at things in a vacuum. if you go across all asset classes in all regions and factors, and you make an assessment of where we are in the cycle, we are midcycle. not yet late cycle. almost 13tantly, trillion in bonds and negative interest rates, overvalued to what is what i keep asking. >> you mentioned your portfolio strategy is get paid to wait. explain that to us. >> if you're going to worry each day, each week, each quarter, and each year about the water big concerns that ultimately change, you want

to get paid while those concerns fade away. when there is no deal in the world and the risk is on the saver, you want to be tod to wait for those materialize, at least you have high quality exposure, and if you do not come you still have exposure to a risk asset that could rise. >> dollar strength did lead to a tightening of financial conditions in the past here at the bank of england committed to keeping monetary policy possibly tothursday and committed more stimulus as well, won't that just lead to more again, putting us in and that -- in that vicious cycle? >> with the saver does is a whole other story. if you take a look at what central banks are doing, we are well into the policy experiment and we are going further than that.

the short-term provides liquidity for the market and movement of dollars to go and the area of greatest opportunity, still where the yield is. over the long-term, there has to be a massive transition to central-bank policy, the end-all be-all to a fiscal policy. possibly helicopter money coming out of japan should break the fiscal impasse the world has since the onset of the credit crisis. for real, we break out of a low, long-term interest rate dynamic that we have been in. >> is the brexit a result of the credit event? >> not necessarily. what we have seen going back to the crisis is very different. that issidize all of very different. the brexit event is the voter saying, basic we know maas.

more to this highly bureaucratic pushing down of growth and full austerity all the time and ultimately, restrictions have to be leaked to allow a new growth cycle to hit. that is what the voter is saying bureaucratic pushing down of growth and full austerity all the time and ultimately, restrictions have to be leaked to allow a new growth cycle to hit. that is what the voter is saying and any ref random traditionally but particularly now. >> chris, investment management at bank of america. coming up, ubs investment bank finally reached a stable size after thousands in recent years. that is next. this is bloomberg. ♪

>> you are watching bloomberg markets. i am with scarlet fu in london. let's can straight ahead to breaking news, julie hyman has the results of that auction of $20 billion in 10 year treasury. weaker than we have seen recently. a $20 billion auction of 10 year treasuries. the yield, 1.51%. uptick in thew an treasury yields. an acceleration selling. other pertinent details, 2.33, the average of the last, 2.8. sinceks to be the lowest march of 2009. one measure of demand for tenured outs. primary rewards, the highest in january of 2013, the primary dealers with the treasury, the deal in these times. less demand. the bottom line is less demand for treasuries in this auction

as we see yields creep lower and lower spec -- except the last couple of days. >> meantime, signaling that job cuts have come to an end, spoke exclusively to erik schatzker about the size of the work was after thousands of jobs were eliminated. >> at this point, i think we are , tockley where we should be face the environment and regulation we have, to face forces we have. at this point in time, the challenge is to execute correctly what we have in front of us. i think the firm is focused on doing so. regulation, market environment, complication continues to tighten. time, ihis point in

would not use the term comfortable, but i would say confident that the organization has done and especially the investment tank has done the hard work it requires to do in order to face the environment from a position of strength. are you yet in a position where you could add people on a net basis? or is hiring still frozen? >> i think it is not either or. if you are asking whether we can hide -- hire people on that basis in this environment, the answer is no. if you are asking whether we have continued collective talents and self financing, the answer is yes. >> where do you want to hire people? beginning, we haven't knowledge that our position is unbalanced, if you want to put it this way. it is not necessarily to be

interpreted as a negative term. we have a lot of asia and asia-pacific in our best tank. we should be in europe and probably in the u.s. it is a key market, one that is the most profitable that it rests. we have always said we need to increase the weight of the u.s. you have done that over the last four years. in areas, take equities and research, we have seen already the progress we wanted to see. in other areas, like traditional estimate banking, which takes longer, attract the right talent get the cliento to demonstrate that we cannot value them, but we are continuing even through this location, to try and

attract the right people for us one by one, and it may be a little slow but it is the right way. >> what is your mess to employees? once you have now and the once you want to hire on pay? >> the message is if you are not passionate about the business, you should not be in it. hand, we are in a competitive industry and while pay should not the attraction point, pay cannot be the reason why you cannot join. we need to be competitive. who do notut people understand that in all probability, they are not going to get paid this year or next year like last year? many peoplesaying

expect this year or next year but this year is a bumper year. thate understand performance leads to compensation and come nation is probably a topic that is over discussed. it should be something that, if it observes, it is contained, it will be a tough year for everyone. >> that was the ubs investment bank president speaking exclusively with erik schatzker. >> president obama will speak in dallas. you are looking at life interest of that interfaith memorial for the five police officers that were killed last week. president obama is meeting with the voice of five police officer's that were killed. thely speaking with memorial service, the 11th time during his presidency that mr. a city thatcused in

was really from a mass shooting. we will bring this to you live when it happens. this is bloomberg. ♪

>> this is bloomberg markets. i'm in new york with scarlet fu in london. fitness is a big is this and ,eople around the world spending $3 trillion, but how long will the trend last? material world, they join us now and i think i have heard everything. let's start with jane. i think we heard that people with cycles inside to get to the gym here at how big is the business? -- per se?he fitness >> we have seen evidence that the business of fitness was

through chilean dollars and it is huge. apparel,s everything, workout classes, a gym membership, the food you eat, the apps you download to help learn to meditate. it is a huge opportunity for companies. we are seeing new companies piling in. >> did this originate west to east? how is the movement going? >> you mentioned jane fonda. it was baby boomers who started off doing things like chance -- jane fonda videos. they now have plenty of children and those were raised outside their childhood and understanding wellness is something that is important and needs to be focused on.

the people really feeling this will him, it is millennial's and then it is also the fact we are just living longer and people are really taking action to feel better and make the extra years last. lastly, a major push for this is women. title ix passed and a whole generation of women started playing high school and college sportsthe people really feelings will him, it is millennial's and then it is also the fact we are and after they graduated, they continued to want to be fit. they did not decide that they would just lay out on the couch. >> i am not surprised. who of us does not have fitness in their apps. who is profiting the most? >> it seems to be a lot of profiting. owned by under armour now. there are plenty of think theies, and we wellness trend is here to stay and not going anywhere. but some apps, some fitness classes might he a little more,

i think it will evolve but i think we will continue to spend more of our wallets on being fit and active. >> we were talking about the millennial's just feeling this room. the trend of what consumers want, has that changed in any way over the years? >> i think this is a big part of it. we want to be healthy and look active in what we are wearing. coca-cola and pepsi, they are changing portfolios to match what millennial's want trying to treat our bodies better. it is a status similar to some just symbol to some extent. is active apparel market bigger, growing much faster, than the overall apparel market. if you extracted market apparel from apparel sales, sales fell

last year. it is impressive. >> what makes the strategy success? it has something to do with status? >> it definitely does. it is seen as a symbol. we have an obesity epidemic in this country. it tends to be in the lower socioeconomic classes. people are trying to differentiate by spending their time and money on things that make them looks -- look trim and fit. their podcast on the retail business. material world. you're watching bloomberg television. ♪ get ready for the rio olympic games

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nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. >> from london, i am scarlet fu and you're watching bloomberg markets. let's get you the headlines on

the news this afternoon. mark: after a long and bitter campaign, hillary clinton and bernie sanders finally made her debut on the campaign trail today. sanders officially endorsed mrs. clinton for president, saying he was proud to them beside her. ms. clinton: i have to say it is such a great privilege to be here with senator sanders. being here with him in new hampshire, i cannot help but reflect on how much more enjoyable this election is going to be now that we are on this &. [applause] because you know what, we are stronger together. mark: sanders said while he was not giving up on the ideals he campaigned for, he is looking toward the future. a house committee questioning hillarylynch about

clinton e-mail case. the attorney general says she is proud of the investigation but refused to discuss specifics. >> i accepted their unanimous recommendation that the thorough and year-long investigation be closed and no charges the brought against any individuals within the scope of the investigation. i understand the investigation has generated significant public interest, but as attorney general, it would be inappropriate for me to comment earlier on the underlying facts of the investigation or the legal basis for the recommendation. itk: she also defended her -- her decision to not recuse herself. we are looking at -- at a courthouse on monday. an inmate who was handcuffed overpowered a shares deputy at a courthouse, taking his gun and

two palis. officials killed him, who is facing criminal and factual con -- misconduct, and kidnapping charges. toresa may has two days rescue the u.k. from a political crisis. to replace david cameron as prime minister by tomorrow night . they need to decide fast who will be in charge of negotiations to leave the european union and also needs to select someone to steer the economy as chancellor. president obama is in dallas, texas, meeting with the families of police officers killed last week. the president will speak at a memorial service in about an hour, the 11th time during his presidency that mr. obama has spoken in a city really from a mass shooting. george w. bush will also take part in the service. news 24 hours a day

powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. back to you in london. scarlet: thank you. isna's claim to remain a c no one void. a court said china's efforts to assert control over that waterway has conceded. scott kennedy joins us now, deputy director of the center for strategic and international studies. great to speak with you. china made clear it will not comply with the ruling. if there is no enforcement , what is the significance of the ruling beyond the legal rolling? >> maybe not today and tomorrow. >> they ruled on what could be

sovereignty claims on the future. it the baseline for how china the otheriate with claimants in the south china sea going forward. it also puts china on notice. his judging based on the actions. >> what does this tell you about china's position. classic painted itself into a big corner. >> it does not mean the chinese will take more drastic action like creating something of that nature or renouncing, it does it would cooperate on

anybody -- this puts pressure on them to do so. >> how do you fall that into your analysis of china's attempt to transition the economy and guide the slowdown without causing a hard landing? >> in two lace. watching thebe south china sea and china's relationship with the united states and is neighbors, to look for any signs of instability or .otential conflict that cannot do much to promote growth or investment which the chinese definitely need. secondly, south china sea are full of resource is which until they were put aside in a peaceful way, no one has access to those resources and therefore, hurt in the short term potentially.

and long-term. the markets reacted, it was a relatively slamdunk case the philippines resented. everyone are you knew this would be the likely outcome and the chinese have sick before they were not going to accept it. at least not today. >> mentioned china did not participate and with future up,reign claims, coming more likely to take part in future rulings.

>> the decision would come looking things and make it harder. i think this will not them not in the easy way. the philippines put forward the possibility of wanting to talk to the chinese. you might see other claimants make similar suggestions and gestures. u.s. has certainly been encouraging that. it will not happen quickly. i would expect in the coming , china with g-20 looming is unlikely to take drastic action immediately. >> you mentioned the united states. the u.s. did not necessarily take a position on the claims but it did work through to garner channels support for the ruling. what does this do for the u.s. for thelations? >>

moment, i think it puts the u.s. and china on different sides of the issue. not the sovereignty claims that has, but thecally decision issued today, which was not about the civic sovereignty ,laims, but certain features but it may make things more tense, but i think a little bit of tension might actually improve the relationship and will make it more important for there to be a positive outcome out of g-20 and some other type of positive out comes through the rest of the obama administration. toit is quite interesting hear more tension could be beneficial in the long run. thank you for that. coming up, we will hear from oracle's co-ceo about the future of the store maker. this is bloomberg. ♪

scarlet: let's turn our focus to the markets with a look at stocks in the u.k. despite a three day recovery, take a look here. u.k. stocks have rallied. in ftse 100 gained the most europe, up about five .4%, also the case on our risk-adjusted basis. when you take into account price links.

in multinationals benefit from a weaker currency to ftse 100 companies make more than two thirds of the sales overseas. rateve seen analysts three ftse 100 stocks. the sharpest in more than a forde following the vote companies. the options market also show investor fear is coming down. three day volatility in ftse 100 is at the lowest his late april. earnings season will be the beginning as well. we will get anecdotal evidence of whether this optimism is justified when they begin reporting on july 21. just the u.k.. europe and the global market rallying into the fourth day. i want to take a look into my terminal because i have a chart showing what japanese stocks are doing. the biggest two-day jump since february, one of the broadest gains in lunch. -- in months. the total of 800 stocks rising in the index on monday. only 50 of them fell.

you can see the vertical line back in january and spiking right now back in july. the verticalry in wind, we have this rallying more than 6%. could this mean a further rally for japanese stocks especially announcing that the prime minister could put forward that helicopter money after that upper house election win. a lot of happening around markets and across the world, japan and u.k. it here in the u.s., we have seen new highs. let's now get a quick check of u.s. stocks. we are seeing rallies across the board. talking about the s&p 500, -- a third day of

gains, the nasdaq at 2016 eyes. -- highs. yield -- on the year for the first time in 2016. a big round number of 5000 and what does this all mean? let's go to abigail doolittle live from the nasdaq. what are you seeing? abigail: funny enough, with regard to the bullish information out there, it may mean all that much. falling, local growth concerns in last august big risk rallies and we are seeing the same thing now. the reason it may not mean much relation to the nasdaq, we see huge whipsaw's up and down, the uncertainty between the buyers and the sellers. matters is how it

re-breaks. higher, new all-time highs that are sustainable and or, downside. there are bearish signals, bearish lower highs, which tell us the sellers are really waiting to pounce. we have bearish lower lows that tell us the buyers are weakening it we will have to see how that plays out. it may be a more -- a tad more bearish than bullish. we are looking at a nice rally. shares are soaring, having the heredays since october 2011, the company preannounced the fourth quarter revenue more than 4%. nonetheless, still somewhat neutral here. we have at least 65% of analyst out there on the sidelines. they are taking the competitor

western digital higher. western digital higher. that is what is happening here at the nasdaq. >> speaking of tech related companies, increasingly robust analytical tools, cloud-based platforms will likely make software the market in information technology during the next couple of years. mark in spoke with singapore and asked about the i.t. spending. >> if you look at i.t. spending, called it a trade, a little less than that, but let's call it a trade. 30% of that is the developing and testing of applications. $300 billion worth. i think it could be five or six or seven years, and all of that goes to the. i think all of it goes. see is movingu today, it is quick and i think it will continue to accelerate. in terms of applications, i think almost all production applications are taking place.

80% of alle 70 or applications in the cloud. take thestart to ,pplication by application function by function, i think you will see a little bit of this in terms of the increase of spending. i see when on to discuss future m&a opportunities as well in the current per folio. has beenot think there a day when we have not been considering. we think we have a good view of market here and me say we feel havegood about what we the past several

years, from an organic perspective as well as what we have acquired p are we made a couple of acquisitions we announced in the april or may timeframe that closed in the early part of june. those are the kinds of acquisitions you have seen us making. in the case of the two, we just did, these were cloud software and service applications, dedicated to an industry application. it made a ton of strategic sense to us. valuations were reasonable and we think we can execute them. evaluateue to look and but make no mistake, we feel good about the current position of our portfolio. >> that was the ceo speaking in singapore. >> coming up, bernie sanders officially endorsed hillary clinton for president. is it enough to get sanders supporters to back clinton? that is next. ♪

>> i'm in new york with scarlet fu in london. bernie sanders joined most of the rest of the democratic party today by amalie endorsing hillary clinton as the presumptive nominee at a rally in new hampshire. the senator from vermont said he is not giving up on the ideals he campaigned for and is looking to the future. joining us now is can of bloomberg politics. how big of a deal is this? it is a pretty big deal especially for democrats to have unity going into the convention in two weeks. as far as sanders supporters going to hillary clinton, 85% of sanders supporters said they would vote for clinton. if you compare that to clinton supporters in 2008, 69% said they would vote for barack obama. far as partyeal as unity, but as far as standard

supporters meeting over hillary clinton, it seems like they are on track to go toward voting for her. >> the question is how is hillary clinton capitalizing? >> she added an option for supporters to donate $27, the average of sanders supporters donating to his campaign. it seems like she is reaching out on social media and trying to capitalize on the moment of party unity and while the democratic platform is coming out with some progressive ideas that bernie sanders really championed. we getting reports that president obama called the thelies of alton sterling, memorial service, while he is expecting him to say?

>> this will be the 11th time president obama will speak -- it ise speaking to a city giving condolences to the families of the police officers. police officers will try to walk on race relations and guns. you will not expect to hear much areolicy and politics p mostly it will be how do we as a country go forward from here? is georgeng to note w. bush will be there as well. what is the significance of president obama. with his predecessor for the event? >> this during presidential momentn season, a good for bipartisanship. senatorbama, also

cornyn, and ted cruz who traveled on air force one with president obama. george w. bush has not been in since hec spotlight campaigned with his brother, jeb bush. low, soen he has laid this is a significant moment for george w. bush. >> with all of the speeches coming up, how do you expect this to influence how americans feel right now? there is anxiety in the environment with high-profile going on.and crime >> yes. seems obama is having an issue trying to please everyone. he will also try to reassure americans that with all of the racial tension and all of the violence, that we can still come together as a country, diff old to do when you have a country that is clearly divided between republican and democrat especially during the convention.

we will watch his language closely and his posture toward policy. to come close to that, we will see him try to unify all americans to live together peacefully. >> coming up, the president will begin speaking in the next hour for that memorial service. at bloomberg, hank greenberg will be joining us to discuss the recent market rally and the brexit vote as well as his latest trip to china. as the close-out the hour, let's look at the market trading. at 18,350 and the nasdaq climbing as well. a gain of .7%, following the heels of gains in europe. the ftse off by one hair, down two points.

see that within the s&p 500, gains across the board with energy leading the way up 2.4 per's, financials by 1.3% heading up -- ahead of the earnings report on thursday. >> it is surprising we are seeing the energy sector gaining more than 2%. higher or a second day in three days p are oil rebounding from the two-month low. stockpilese see sliding. declines, as risk appetite returns. a big global rally going on right now. scarlet: will continue to monitor the moves for you. this is bloomberg. ♪

david: it is 2:00 p.m. in new york at 2:00 a.m. in hong kong. ry: welcome to bloomberg markets.

david: from bloomberg world had courtesan new york, i'm just world headquarters -- from bloomberg world headquarters in new york, i'm david gura. hillary clinton gets a supporter and former rival bernie sanders. can he help excite her campaign? donald trump may be close to selecting a bp. vp.a vonnie: just a few moments, president obama is expected to memorialize the slain police officers in last week's shooting there in dallas. david: let's head to the markets desk where julie hyman is lookg