over -- oliver. scarlet fu is on assignment. ♪ [closing bell] matt: the dow and the s&p extending their all-time high. joe: the question is, "what'd you miss"? matt: for wall street bond strategist, there's wrong and less wrong. we will look at the revisions from this year. carney'sig into mark strategy. r millennials in need of a housing bubble? our guest says so. brand-new all-time records for the s&p and the dow jones industrial average. i guess i don't have to say all time, right? a record is a record. the nasdaq retreating just a bit.

we will hear again from abigail doolittle a little bit later because of the biotech indices. one difference today was utilities, telecom, safety areas leading the way. of beenhey, that's kind the story. however, we are going to bounce back there. i want to jump into what we are looking at on the talk market. particularly a couple of sectors in the s&p complex. we had inventories they'll -- in the day. energy stocks went right down. we been talking about the defensive, energy stocks have been a big part of the rally. the only ones trading on higher what -- higher volume today. in addition to those, i'm checking out volatility. fascinating, down a bit today, but let the record show that for much of the day it was moving in the direction as the market.

matt: for the first time the german government bond went negative at auction. where people are straight up paying for what's always been on the secondary market. the first time people are officially paying the government to hold their money. matt: basically, they pay more to buy the bond and have no coupon? that's fascinating. the pound today, up for three days in a row, then turning down again. still, all 131 handle on the pound. -- a 131 handle on the pound. joe: inventory data, you can see that oil fell nearly 4%. the's sort of been one of stories lately, this divergence between stocks and oil, rallying yesterday to $55. absolutely crushed.

those are today's market minutes. taking a deep dive into the terminal, you can find all the following charts that we use. i know oliver actually has a function for it and i'm very excited about that, but i want to look at the chart i found on the bloomberg today. hungry for yield, starting for yield, investors still piling into high-yield corporate debt. you can see the high-yield corporate on index is right here in continues to climb. yieldaken the government an inverted it. you know they are purchasing high-yield that, it's coming out of treasuries. we will be talking more about this and where the treasury yields are going. looks like they are climbing a little bit higher with ends -- with investors falling off the debt. joe: you can feel what it's like for the price to go down. oliver: advanced terminal

skills. matt: thank you, thank you. joe: i'm going to jump to my. matt: speaking of advanced skills. joe: this greek function -- this great function shows you etf movement. right now i've got it on all asset lasses. year to date, let's start there, showing you that we got agg lcd with usmc in the low volatility index, actually crushing the rest of flows in terms of the money going into those eight ilion for agg. however, let's just flip it to this week. massive, massive reversal. 8.3 billion inflows in a week. out of here it's looking at the nasdaq of 1.3 billion in the iw m and the russell 2000. just this huge change in sentiment where people have all of a sudden gotten into quinnipiac stocks.

i crunched the numbers and the total flow through those group gifts is the most in a year since the rebound august selloff. they should have done that in february. joe: exactly. matt: i saw something on the terminal today comparing diamonds and gold. i added at the indexes that we have and i think this is a fascinating chart, going back to 2005. there's a wine index, diamond index, and goal. they all peaked around 2011, when real interest rates were at their very lowest. going not just into gold, but into other sort of nonfinancial, non-yielding assets. including diamonds and lines. we have seen them all selloff through next year. diamond prices are up, gold prices are up.

even the wine prices are up. you know that gold is going to take off. moneyere's no way to hold for you and earn money? such that you begin to see something fascinating in the chart, moving altogether. , as you can see them all on twitter. as bond yields reached record lows, forecasters are happy to acknowledge how very wrong they have been this year. it's only july but forecasters have had to revise their end of .ear forecast up to five times jpmorgan made its fifth revision guest today. they haven't been this wrong on the -- direction of yield since the recession. joining us now is allies of raw most.

mos.liza ray : they had no idea of the curveball that was coming. globals driven government bond yields down and encourage investors to swap treasuries. oliver: how much of this has been the post brexit reaction? eliza: that has been a pretty minor part. waslooming threat of brexit a factor all along, but once again people who didn't really think it was going to happen, they weren't factoring in a definite brexit. instead it was just a negative yields in europe and japan, bond buying in her up and japan, all

of that slowing growth around the world. matt: it's freaking people at the -- freaking people out. you got to put your money somewhere. looking at a chart of the 10 year, you see a spike, a peak in 1981. ever since then we have just been coming down, down, down he it the strategist that you talk to are always just a little bit -- they are not bullish enough on bonds. they are a little bit too bullish on the economy to realize that this will happen and they continue to revise the forecast to say -- when will we see a strategist say, you know what? half a percent at the end of the year. this year they made the mistake of focusing too much on domestic factors. they had their forecast

december. unemployment rates have fallen by half. it looked like the fed liftoff happened with rate hike this year. all the signals were genuinely pointing towards yield going higher. this year in particular they were just thrown off. joe: these forecasters seem to be wrong every year. there is this cliche that they are always a list, always seeing stocks up to the end of the year. treasury forecasters are always bearish. but they have had 30 years to realize that there is a bit of a pattern here. what is this perpetual wrongness? they can come up with excuse -- excuses, but they are always wrong. eliza: i think that they would say that it comes down to the fed cheney -- changing its politics or its leanings. but if your job is to

figure out something that is partially influenced by fed policy, blaming a change in fed policy is your own failure. oliver: maybe we should take solace in the fact that they were so wrong and so convinced. onbe their original basis which they made the calls have not changed entirely? eliza: that's exactly what one of them said to me this week. that if in fact they didn't have account for that reaction function changing significantly, they would be right. they said that these unemployment numbers and other economic data indicators were still backing up their original calls. but it is a global world. matt: we don't need a pollyanna to tell us that the economy will always great in the u.s. so don't worry about the rest of the world. economist at merrill

lynch for 30 years said he's been seeing this trend since 1981. why don't others get on board? if wall street doesn't get on board and capitulate, does that mean yields will turnaround? as soon as that happens, that's the only time we will see yields rise. one of the strategist from jpmorgan told me this week that this year they have barely even discussed domestic factions at all in the forecast meeting. that just shows you how much the formula forecasting has changed. some of the banks are being hesitant to fully adapt to that sort of regime. joe: all right, thank you very much. matt: matt: coming up -- matt: coming up, what will the new bank of england governor say about interest rates tomorrow?

this is bloomberg. ♪

the new british prime minister says that she and her on the will take concerns of average families. she accepted the invitation to form a new government and then gave her first comments as the new prime minister. a timeinister: we face of great national change. i know, we are great written and we will rise to the challenge. as we leave the european union we will forge a bold, new positive role for ourselves and the world and make written a

country that works -- and make britain a country that works not just for a privileged few, but for everyone of us. that will be the mission of the government by me. together we will build a better written. she takes over from david cameron, who resigned after the vote to leave the european union. david cameron said that it was the greatest honor of his minister.rvice prime the pentagon is investigating why the government in the dallas ambush attack that killed five officers received an honorable discharge from the army. micah johnson was accused of sexually harassing the female soldier and all of his military records are now under review. in south carolina judge delayed the start of the trial for the white man make the killing nine black parishioners at a charleston church last year, to give the prosecution and defense more time to prepare the case.

jury selection was set for december and will now start january area a federal appeals court has that id attempt by tom brady to get another hearing -- has denied the attempt of tom brady to get another hearing on deflate eight. roger goodell says that he was within his power for suspending him for four games for his scheme to dr. footballs in a playoff game. brady's remaining hope is to appeal to the u.s. supreme court. global news, powered by 2400 journalists and analysts in 120 countries. matt, back over to you. news, yumking earnings are crossing. the restaurant chain owner is making more money with less money. eds, with the adjusted share modem -- share number we were looking at analysts. nonetheless it is better than the $.66 per share that they

made last year. earnings, good. sales, bad. 0.9 billionoking at compared to 3.4 billion from last year. growth ofoking for a 2.3%. the owner of taco bell, pizza hut, and kentucky fried chicken. >> this is your favorite food order? matt: second favorite. i have to love wendy's. plus the quality. percent.were down a kfc in line with us mitts for those chains. while all eyes were trained on the new prime minister, mark carney figured out how to minimize potential in -- potential turmoil in the wake

of the vote. tomorrow they will deliver the latest. rob wood joins us now on the phone from london. joining us on the phone from london, robert, all of these boe meetings have been us news for the last several years. tomorrow could be interesting. what are you looking for? >> tomorrow could be interesting. date will turn it down sharply. i'm looking for them to cut rates, cut 40 basis points. oliver: how does that set them up going forward this time? robert: i think that what they will do is try and do conventional policy that they can.

that that is as low as they are going to take interest rates. especially for innovative tools. you say that the u.k. economy has turned it down fairly significantly. what are the most important signifiers of that? what's the economic data to back it up? think that one of the first ones is consumer confidence. there have been a number of special ceremonies and one of the key ones was consumer confidence, which fell the most in a month in over 20 years. mid july, it fell across a broad range. i think that consumers are receiving concerns that are , the one for pmi construction in particular, when you might think it would get hit by uncertainty with house

building and construction that fell. there is plenty of anecdote about those companies putting investments on hold by the u.k.. it's bad news. joe: several months ago it feels like we were talking about the ae hiking before the fed with tighter labor market and labor force participation rate. once all of this uncertainty is gone and there is a new path, this broader to underlying structural factor in the economy? robert: to be honest, the vote to leave the eu has changed the path the policy for a long time in the u.k.

uncertainty will last a long time. i think those trade terms will probably be worse in the long term with a long-term cost. a downturn on growth in the meantime probably pushing up unemployment, catching up afterwards so that the u.k. will have to push down on unemployment. i think that rate hikes are a distant prospect in the u.k. right now. the markets reacted such to this uncertainty from exit, but are you saying -- from brexit, but are you saying that we should assume logically that there is uncertainty around this negative economic impact? how does that make sense? robert: that's a good question. there are a couple of ways of looking at this. the first is that the data already shows the growth had slowed. which is precisely what you would expect following about to leave eu, which most economists

would think would lead to weaker growth. .e do in fact see weaker growth one of the reasons the firms are in certain about how bad all that will be, they are waiting theee before they invest other interest rates are at low it makes sense to get ahead of the issue. even if you aren't sure what the fallout is, it's better to air err onside of caution -- the side of caution. if you are wrong, in a few months they could hike. but i don't think they will. oliver: interesting. thank you so much, robert. bank of america merrill lynch chief u.k. economist. matt: pharmaceuticals fell after citroen's andrew left says he's checking a new position. we have the charts you can't

this. shares of yum! brands, trading with a beat on earnings by a penny when revenue is slightly off. yum says they are on track to separate its business in october. ♪

joe: i'm joe weisenthal. "?hat'd you miss the fed is looking to continue the hiking cycle, but is index, the lower it goes, the loser conditions are. from theee the big sur

market plunge, but now we are basically at the lowest level the stockhanks to market rally, the rally in bonds, lower spread, all that .tuff if the fed wants to hike or is worried, this is one issue that no longer seems to be standing in the way. matt: you know what's awesome? devaluing currency. we just spoke with rob wood about what would happen with u.k. economy and he said it seen a serious downturn since the brexit vote. i just look at the index that they put together against the liquidity waited indexes, but you can see that when they took a huge dive, the blue line fell as well. well, that's real gdp prices. , gdp picksevaluation up and to the right on your

screen. now we have had another massive devaluation of the town and the west and is -- will that be enough to keep them from falling into the recession and lowering consumer confidence? that is a pretty steep blue line. i'm going to come out of left field here. citroen andrew left of research, this is a chart that you can pull up on bloomberg. adding an event study looking at mentions of him, that's where these blue dots are. you are looking at the fact that this guy was bullish on his shorts around october of last year. then he got long on valiant roughly last year. today he says once again he's short on valiant and for sure now it's going to zero. matt: he's very bad news for corporate lore.

coming up, we will look at the u.s. housing market. ♪ get ready for the rio olympic games

by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you? x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1.

the new british prime minister has started assembling her new government. hammond, the new treasury chief, replaces george osborne, who held the job for six years. osborne has resigned from the government. she also named boris johnson foreign secretary as she shuffles top jobs before appointing a brexit minister. she also appointed amber rudd to be home secretary. that was the position that may held before she became prime minister. she cap david davis to be chief minister for brexit.

appearing today in springfield, illinois, hillary clinton spoke at the same place that abraham lincoln delivered his famous address about the perils of slavery in june of 1858. secretary clinton: this man is the nominee of the party of lincoln. we are watching come the party of trump. mark: secretary clinton called on the country, including herself, to be -- to do a better job of listening after a series of high-profile shootings. donald is reportedly still undecided about a running mate. pressd the associated late tuesday that there was still no decision. some say that mike pence is the front runner. others say that trump knows he needs to make a decision by ride a.

the driver killed by an officer last week in minnesota in a traffic stop, his girlfriend has reported that he was shot after he told the officer he was armed and had a permit to carry and then reached for his id. the japanese emperor said that he wanted to advocate at some point in the future. he is 82 and has been emperor since his father died in 1989. the japanese emperor is the ceremonial head of state. global news powered by 2600 journalists and analysts in 120 countries. this is bloomberg. back over to you. recapping today's market

action quickly, we saw no record of the dow jones industrial average and s&p 500 all-time records. i guess we doubt a record. -- eeked out a record. we have yet to hit the nasdaq all-time high, maybe because of biotech stocks. but what were the industry groups? the fangs? joe: the stubs. oliver: i hadn't heard that. say, itas going to brings the total market cap added to the s&p to two dollars trillion -- to $2 trillion. joe: the 10 year yield fell down

again with rates again. not good for oil, though. flax oil got hit again. 4% -- 4% down to 45. >> millennials, wishing for a bubble. why is it causing the homebuilders to build more? sands, portfolio manager and columnist who joins us now on the phone from atlanta. we need all of this housing for millennials, but they are's will not building very much. construction is subdued. what's going on? conor: the interesting thing from last friday in the jobs are or is that things hit a 16 year low in response to the trends we a lack ofg about. supply. it seems like there is something

going on here where the market is not responding the way they think it should. matt: i know that many of these workers left in the downturn and didn't come back. factors? the two main conor: i got a lot of e-mails in response to my piece today talking about how things have changed in the neck several years. labor shortage, they've compounded to make it a difficult environment. oliver: clarify this for me. your article today, millennials need a housing bubble, who needs a bubble? doesn't that sound dangerous? it does, but it's one of those things where millennials have to live somewhere. we need more supply and the west and is, if these market horses

pipe supply or all of these higher prices to incentivize economic activity. let's walk through your argument a little bit more. you made an interesting analogy to 2005, when oil was raging in that huge oil exploration boom. walk through that a bit more. conor: sure. brazil was the big story back in. the other concern was the oil. the only way that we have things like fracking and new technologies, going high enough to incentivize these new production forces. you talk about the responses you got your column. i have to ask, we all remember

-- we all heard after the fact about paul krugman us 2002 new york times editorial, when he called for a housing bubble to replace that bubble. that didn't turn out so hot. some of us may remember the onions lori that demands a new bubble. pushback? the last bubble was difficult to recover from. conor: it's funny, there was more of that early in the cycle but people were coming around to this view of massive supply constraint and needing to do something to fix that. anything tohere take into account here? demographically, can't believe this, i guess i'm a millennial. people don't do that same things they used to 10 to 20 years ago. is that perhaps at play here to some degree? that's part of it.

people used to do the marriage and the house thing in their late 20's, now it is their early 30's, so perhaps they are waiting longer? millennials have taken longer to get started. maybe they need to push back the whole cycle a few years. but we believe it will happen. talk to us about geography. in some places house prices have absolutely at loaded. new york is one of them. the bay area. it hasn't caused a massive increase in supply. how important is it that the increase spreads to areas where people can actually build? and furthermore, that these areas are places that millennials will want to move to and live in. matt: sure, right now probably -- conor: sure, probably the biggest response right now are places they are moving to. denver, portland, yellow. you have to go somewhere. these other mountain west metro

areas are similar, culture wise. matt: you see it here in new york. oliver may consider moving to queens, where as i wouldn't have 20 years ago when i was his age. do you see other places in the country with prices high enough to encourage pricing? i think that's along the line of what joe is asking. or is that part of the problem, you don't get the pricing to bring people in? part of that is the regulatory costs going up. it takes a high price point incentivize construction and if you go high enough, people probably can't afford them. but if it isn't high enough, the offers are not incentivized. oliver: great article, conor. and otherew his

articles on bloomberg view go. up, the u.k.'sng decision to leave the eu is not like you -- likely to trigger a fresh banking crisis. at least not on to andrea's. you will hear from him, next. ♪

matt: time for the bloomberg business flash and a look at the biggest stories in the news right now. shares of yum! brands going higher after the company top second-quarter earnings estimates and raised its forecast. one driving factor, a better than expected performance in china. yum! brands now says that they like operating profit to rise by

14% this year, compared to the previous forecast of 12%. exxon mobil is close to making a takeover proposal for inter-oil, according to a person familiar with the matter. inter-oil owns trillions of cubic feet of natural gas discoveries in poppa new guinea. itsit squeeze has changed -- credit suisse has changed its compensation structure, eliminating the so-called undernces that have come regulatory scrutiny. other lenders have made similar was wants his those rules. joe? joe: "what'd you miss?" europe's top banking mines gathered in a brexit themed conference. caroline was in frankfurt or with ok who simply

andreas. >> negotiations have not even started. what we really shouldn't be doing is prejudging. i also don't think it would be a good thing for us to educate the united kingdom. we just wait, we see, and we observe. i say that about the speech tonight. we have nothing against the british banking system. we have worked with it for such a long time. should there be gaps because a regulatory or other decisions, we will see that nothing will happen soon. >> what about the regulatory perspective of outside the eu? is that something that will continue? it depends on the size

of it. it was always a little off to have this outside the euro area, but as long as this was in the european union it was not too much of an issue. i think it will take a lot off of supervisors, to see this continue once the united kingdom has left the european union. so, i think there must be changes in this regard area matt: -- this regard. >> what about the deals themselves? policy judgments will be coming soon enough. what do we think in terms of that picture? andreas: i'm neutral on any announced mergers. but i think that the u.k. leaving the european union makes the economic question of such a combination, as bizarre as it

higher.even strengthening the economic question. we need bridges in the future between the economic -- european union and united kingdom. the more bridges that we repair the economic sense, the better. i'm not passing any judgment or taking any advice. from a german perspective i would have to add, regarding governance, is not one where, you know, everyone in germany would be overly happy. things must be reevaluated now, given the brecht it decision -- brexit decision that occurred. the good thing in this isouncement in this merger that even before the brexit vote , the installation of the referendum community now has to take its time and think through

reacting to it without giving advice. interesting enough. the economic rationale has increase rather than decrease. what about the stability of the banking system in general? there have been perhaps unforeseen consequences thrown into the light within the banking system. are you worried about what's firston outside? andreas: of all, i would like to stress how well the markets work. the financial markets work very well. we traded we trade despite the high volume eight to 10 times on june 24 above what we normally have. the margin calls are all fine. these circuit breakers that were enacted, i'm very happy with how the financial markets work. this was a fight between two things. the banks having seriously prepared for this and being very professional before and after,

with oath in terms of preparation and execution. there are structural issues in the eurozone banking arena. landscape.banking they haven't changed that much. i don't think we could seriously take exit as an excuse now to asay or postpone -- brexit an excuse to delay or postpone. we have to continue to work on those structural issues. i think that we will do that and the brexit has little to do with that. >> should they use the reform that's in place at the moment? like italy? andreas: i'm not going to cast a question on whether or not a bailout is necessary right now. that would mean that the banks

go beyond or below, i should say . i'm not going to come in on that and i don't see that right now. i don't see if there is a bill in requirement at this very moment. that comes to us from frankfurt. joe: breaking news right now on monsanto. that company has said to have revived talks with its german rival about a combination of its agrochemical business according to people familiar with the matter. this is a horse after they rebuffed a bit by a buyer that came in may. ever since then they been looking around for an alternative to placate that obviously want most money.

the ceo has been looking around and maybe this is the alternative that he stumbled upon. after rejecting the bid. right? the move, i was looking at the shares after hours. there was a pretty big spike, 101 to 104 with a big jump in and now back down to where it was. not the most heavily volume trading after-hours. interesting story that we will continue to follow. japan slashes its at -- economic estimate for stimulus. we will give you the details. ♪

matt: i'm matt miller. "what'd you miss?" japan cutting its forecast for growth and inflation at the same time that the prime minister is said to be considering mega-stimulus from the government and the central bank. 'soomberg daybreak asia coanchor is joining us now. that's not really mega-stimulus, is it? betty: it is still a lot of relief. matt: better than a poke in the eye. betty: it comes after the election where they won the majority of the upper house. everyone has been looking to see the details of this stimulus package. what is important perhaps more than the money itself is coordinated action, right? , plus monetary stimulus together, that's what we're looking at. enjoying action from the government to stimulate the

growth, cutting their forecast which is barely growing in japan, worse than it was in the last order. inflation is barely moving, right? that's why they have this coordinated action. another thing we have seen this week, it's been positive against the weakening, especially after going negative earlier this year. it seems like markets are much more excited about this emulates, even if it's not going right.igantic. betty: how many times around the world have central-bank said that monetary stimulus will not be enough to should mark we need help from the fiscal side, from the government and their counterparts. i think that that is why you are seeing the yen decline, seeing stock markets rally because they feel that this is much more credible coming out of japan.

a lot more people are talking about if we are now going to helicopter pagoda. know, ben bernanke had been there a few days ago talking to various japanese officials. that raises the question of whether or not they are considering helicopter money, considering direct money to the japanese consumer. so far japanese officials say no, that is not happening, but it is a viable alternative, perhaps a method of last resort. something that ben bernanke has talked about quite a bit. those forecasts are not exactly the best picture. they have a lot of work to do. do.y: they just to remind you, tonight they are talking about china. stephen roach will be joining us. matt: what time is that

happening? betty: 7 p.m. eastern time, 7:00 a.m. in hong kong. oliver: china, fading out of the picture. bring it back. [laughter] at 7 a.m. in that hong kong, 7 p.m. in new york year. coming up, what you need to know to gear up for tomorrow's trading day, next. ♪

this.don't miss jpmorgan earnings out tomorrow at 6:45 a.m. the street will be watching these like a hawk. joe: don't miss this, tomorrow at 7 a.m. eastern time, doe, not

be oh z for the first time in a while. oliver: tomorrow new york time, don't miss that. joe: that's all for "what'd you miss

with all due respect to donald trump, the search for a running mate has become kind of confusing. donald trump: i am narrowing it down. at three, potentially four. in my mind i'm thinking about two. ♪ mark: it would not be the quadrennial the stakes without some dramatic twists and turns. today donald trump took his showmanship to new and dramatic heights by moving his