good afternoon, i am vonnie quinn. >> we're covering stories from new york to san paolo. at least 84 people are dead following a terrifying attack in nice. a truck plowed into a crowd of revelers last night. vonnie: donald trump picks indiana governor mike pence as vice president. >> an emerging market etf gets the biggest one-day close in 27 months. halfway into the trading day

julie has been keeping an eye on all the movers. julie: right now, we are seeing it come up a little bit. the dow was only off by 16 points but nonetheless we see it hold onto gains earlier. we're not on track for another record fall with declines across the board. what is going on? the groups on the move, much more red on the imap. financials of the worst performing group contributed to the declines. tech one of the biggest laggards right now. citigroup, turned the lower after initially opening higher. revenue matching estimates.

weaker than expected results in consumer banking. wells fargo matching estimates but reported some weakness in mortgage banking, a large part of the overall business. that is contributing to the declines overall putting pressure on the financials. we are also watching the travel stocks. no suffering from a downgrade. -- delta air suffering from a downgrade. it is weighing stocks overall. shery ahn: how did the retail sales data affect the dollar? julie: we had consumer price data that was a little stronger. the dollar got a lift. on the flipside, we got planarian data on consumer sentiment for july and it came

in weaker than expected. it did not slow down the rally we saw in the u.s. dollar. we are also watching the 10 year . we have not seen a turnaround. the yield has seen a big arise. 23 basis points was the increase in the 10 year yield. the biggest gain since february of 2016. shery ahn: let's get a check on the bloomberg first word news. mark crumpton has more. mark: just as france was cautiously returning to normal francois hollande is once again rallying his country in the face of another horrific terrorist attack. francois hollande: the whole world knows we are a strong

country, able to overcome whatever is thrown at us and we have had to face a number of those attacks in the months. we are showing a great example to the rest of the world. we have been able to show cohesion, togetherness. mark: francois hollande arrived in nice early today, visiting some of the wounded. 84 people were killed, dozens of others in the hospital after a driver rammed his truck into a crowd of people celebrating still day -- bastille day. dna checks are pending. president will speak at 3:10 p.m. washington time.

mr. trump told foxnews he would be willing to ask congress for a declaration of war against islamic state while mrs. clinton called for greater intelligence gathering. she said the u.s. is to do more to understand this is a war against radical jihadist groups. donald trump has selected indiana governor mike pence as his running mate. it was released in a tweet with mr. trump saying he was pleased to choose mike pence as his running mate. the selection process was postponed after the deadly attacks in nice. global news 24 hours a day, powered by our 2400 journalists in more than a 150 news bureaus around the world. this is bloomberg. vonnie: let's return to the

tragedy unfolding in france as a terrorist attack to the coastal town of nice. the attack came eight months a a murderous rampage it in paris. there implications for a country already traumatized. daniel is the former court nader at the counterterrorism unit of the u.s. state department. he joins us from hanover, new hampshire. france is particularly experienced at dealing with this kind of attack. this seems to be one of the worst ones with the fatalities reaching over 80. daniel: france has been hit hard over the last 18 months or so from charlie hebdo tot the november attacks.

it has a history of dealing with islamist terror going into the 80's. the casualty tallies have risen far above anything any european country is used to dealing with. this has become something of a crisis for france. vonnie: should we be careful how we characterize the nature of this attack, giving credit to a body or group that might not be it responsible for it? daniel: i think we have solution be careful at all times. there has been a willingness now to take any mass killing as being likely a terrorist attack and given what we know about this individual, he may well have seen this as an opportunity to carry forward a historic tide

the islamic state reports to be advancing. he is a criminal without a history of extremist activity. there is a question of whether there is an element of command or control. shery ahn: it seems this attack was quite simple without any planning ahead. plowing this crowd, how is violence changing and what would you call the democratization of violence? daniel: we find more and more people have the wherewithal to carry out attacks without very complicated or sophisticated attacks we saw for example from al qaeda late in the 1990's and early part of the point for

century most notably on 9/11. we have seen for example in israel a whole range of attacks carried out using tractors, stabbings the regular tax like this 1 -- vehicular attacks in england we saw our british soldier hacked to death. it is different from the attacks we saw in the 1970's. in our own country, assault weapons, it is different from the bombings carried out. shery ahn: violence is changing, had you prevent these sorts of attacks which do not take that much planning and are harder to catch?

daniel: it is very difficult to do, especially if it is a single operator who is not working with anyone else and therefore has not left of malachi trail -- left an electronic trail. vonnie: daniel benjamin, thank you, director of the john sloan dickey center for international understanding at dartmouth college. shery ahn: donald trump announces his vice presidential pick, mike pence. we will have details from cleveland. this is bloomberg.

shery ahn: you are watching "bloomberg markets." vonnie: let's head to the markets desk where julie hyman is standing by with a look at winners and losers. julie: their headlines from microsoft, saying in a statement it is not going to make its goal of selling one billion windows 10 devices by fiscal 2018. it will take longer to get to the goal. shares taking a little bit lower off by 9/10 of 1%. trying to get context about whether this was expected or unexpected by investors. we will bring your update once we have more details on this. elsewhere, in terms of winners, container board companies up. in a national paper also gaining

--international paper also gaining . demand is holding strong and stable exports. some of these companies should trade higher. official data from a trade organization after the close of trading today. also, on the losing side today, media stock cbs and discovery communications downgraded to sell. the analyst was talking about the second half market for ad sales on television will be weak for cbs if you exclude the effect of the olympics. for cbs in particular 2016 is not going to be great because of a testable and political -- of a

tough super bowl and medical political. i want you to focus here all the green is the by ratings on cbs. here is the neutral. not much red until now. this rating is the first we have seen in quite a while. 2010, is where he went to find to bearish stock. that is why you are seeing a 3% drop in the stock because it is against the grain in terms of sentiment. vonnie: thank you. shery ahn: it is official, donald trump has elected indiana governor mike pence as his running mate. he made the announcement via twitter ahead of the news conference tomorrow. let's go to megan murphy in

cleveland ahead of next week's rnc. we are now hearing that trump will make an appearance tomorrow to make the official announcement, what can we expect from the event. megan: it has been a painful weight over the last -- wait over the last 36 hours. we can expect to see what we expect to see in any vp announcement is there going to be a sense of camaraderie? a sense of trust you need in a running mate in a grueling battle? let's see what they look like on stage. they have to square us on some of the disagreements. hence has been -- pence has been vocal on donald trump's plan to

ban muslims. they've had public disagreements on important issues. vonnie: the choice of pensce, we know he is an evangelical, will it impact hillary's choice? megan: a really interesting question and fascinating. she has been doing her own auditioning. she is faced with a similar dilemma. do i go with someone who is going to add fire to the campaign? the need to win? or do i go with someone safer who will give me credibility and trustworthiness? they both have similar issues. trump made a safe choice which might surprise some people. we have yet to see if hillary clinton will look for a firebrand or safety. shery ahn: how will mike pence

encounter? er her? megan: chris christie is a true warrior and attack dog on the trail. we will have to see if mike pence a solid conservative, measured guy, if he is going to have the fire to go after her. we've seen hillary clinton lose grounds, significant grounds, in national polling, losing as much as 5-6 points over controversies about her e-mail server. we will see if mike pence will attacker or if he leaves it to donald trump. vonnie: in cleveland, it will be about momentum. will mike pence help there? megan: it has already been an unconventional lead up.

donald trump has promised a convention like nothing we have never seen. there has been controversy even over who is speaking. we are going to have to wait to see who lines up and gets in front of the lights just across the way. given how unexpected the past 36 hours have been, he lost control of the vp announcement process, we will see if they have the discipline and control to hammer home the message next week or if it is going to continue to be chaotic. shery ahn: it has been very unconventional and hectic and chaotic. is this any indication of what trump campaign could look like going forward? megan: trump's campaign all along has been embraced the chaos and move on. he has had so many controversies and moments where he we thought that could be a derailer. he has consistently polled now

they have to turn out both of their bases and they are going to have to convert undecideds. there are a large portion of people disappointed with both donald trump and hillary clinton as candidate. that is with the battle is going to be and where they need to marshal their forces and they need a compelling message. the environment is wracked with turmoil internationally and how they're going to heal the risks and economy -- economy and rift s. vonnie: there was a new york times poll yesterday about how donald trump already has the evangelical vote. maybe they are not fully

committed. will they read this pick as a hypocritical way to solidify their vote? megan: that it's a good question. mike pence has the support, they think it is a smart pick we have had a struggle with senior parties coming behind donald trump. i think he will help there. i think they will be surprised she he has picked safety. he has chosen the safe road. he could have picked chris christie or newt gingrich. we will have to see if this pans out. that is what people are not to

share -- too sur eae about. vonnie: both candidates responded to the attack in nice and sound like the commander in chief. did they do well? was there mileage they were trying to get out of that? megan: for donald trump, it plays into i'm going to protect you. for hillary clinton, a gets to the root of the causes. we will see how the american people judge them. vonnie: thank you, megan murphy in week's republican national convention. this is bloomberg.

shery ahn: this is "bloomberg markets." vonnie: it is time for bloomberg business flash, a look at some of the biggest business stories in the news right now. cheers moving higher after reaching $200 million -- shares moving higher after reaching a $200 million settlement. herbalife saysshery ahn: european car sales growth growing in june as the brexit vote weighed on consumer confidence. registrations were up 6.5% to 1.5 million vehicles. june marks the 34th street month of auto sales growth in europe but it was the slowest since

march. vonnie: british landlords are unsure or concerned at least about the consequences of brexit . that is according to research in a post-referendum survey, 40% said the vote will have a negative effect, a quarter are unsure what the results will be. shery ahn: that is your business flash update. vonnie: still high, we tell you about the emerging market etf they got one of the biggest one-day -- and more than two years. this is bloomberg.

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. shery ahn: live from bloomberg headquarters in new york i'm shery ahn. . i am vonnie quinn.

mark crumpton has more from our newsroom. mark: in northern england, people lined the streets to pay tribute and final respects to labour party legislator jo cox. she was shot and stabbed to death outside of a library in north london on june 16. the murder trial of the man accused in her death will begin in november. prime minister theresa may is willing to listen to proposals about scotland's feature relationship with the european union. she made the announcement in edinburgh after talking with nicola sturgeon. she said in light of last month's vote to leave the eu another referendum in her words, is highly likely. scotland's population voted to remain in the eu. a longshot attempt to buy delegates to prevent ronald trump's nomination -- donald

trump's nomination has been rejected. they voted to turn away an amendment that would allow delegates to vote their conscience and ignore caucuses in their state. it was a setback for anti-trump. the controversy over the use of a private e-mail server while secretary of state damaged hillary clinton. more than half of americans think mrs. clinton roque the law, and four in 10 believe she did so intentionally. the presumptive democratic nominee has been dolled by the perception she is -- dogged iv perception she is dishonest and used the private server to avoid laws. i mark crumpton, this is bloomberg. shery ahn: let's get a check on

u.s. stocks. markets feeling the downward pressure. equities struggling to advance. the dow jones down. remember, the u.s. benchmark, the s&p 500, flirting with the longest winning streak in two years. on a weekly basis, stocks headed for the third week of gains. the nasdaq down 2/10 of 1% reversing yesterday's gains. the more, let's go to abigail doolittle at the nasdaq. abigail: is that of looking at the tech movers, in light of the recent tragic attack in france we thought we would look at travel-related stocks. interestingly, we are seeing a bit of recovery -- in the airlines. some of the online travel agents. 2 exceptions. norwegian cruise line and priceline. no region cruise line is down more than 4%.

earlier bush weighed in saying european terrorism is weighing on consumers, preventing a sustained recovery in pricing. norwegian cruise line pulled out of turkey for 2016 and 2017. shares are down 30% this year. priceline down 1.5% the largest of the online travel agents. investors may fear the string of terror attacks could slow global leisure travel thus the stock is down. looking at a longer-term chart of priceline and norwegian cruise line with the nasdaq. norwegian cruise line in orange we see priceline and the nasdaq are correlated -- trading together. priceline is not too affected. norwegian cruise line, along the lines of what was said, appears to be hurt the most by

this string of events. shery ahn: thanks. another ripple effect. u.s. retail sales posting a healthy gain. a sign of consumer spending that should boast broader economic growth as we head into the second half of the year. let's get insight from the ubs chief economist who joins us from his offices in new york. another sign that the u.s. consumer is strong. give us context on the latest data and what it says for the u.s. economy. >> good news all around for most of the data. we had a good manufacturing data for june, led by autos. we had healthy inflation numbers. maybe putting the fed more at ease on the inflation front. we saw growth in the inflation readings. the areas of weakness were

empire manufacturing, which came out for july. if you were fed a member worried about the impact of the u.k. referendum, that might be something you would think was impacting that. probably speaking, everything points to strong growth in the u.s. consumer in the second quarter. we know it should continue into the third quarter. it seems things are getting brighter. vonnie: why have so many people put off the first fed rate increase forecast until september, or december? there are lots of uncertainties. the only really negative potential is the british renegotiation of trade agreements. it is pretty isolated to the british economy and the european economy. why can't the fed move in the summer? drew: this fed is not that independent. it wants to let things run for a decent period of time. when we get strong data, they discount it. when we get week data, they

highlight it. they are not ready to go yet. most people, are like ourselves, when we see the data clearly pointing to a reason to hike rates in the u.s. you look at whether the fed would follow through, the answer is probably not. this is a case where i would love to project with the fed should do, but i get aid to project what the fed will do. shery ahn: we have seen a turnaround from doom and gloom following the brexit vote to rallying equities globally. how cautious should investors be in this environment? drew: there is a lot and how things can go wrong here the economic front is looking better . not only that, but if we think about what will happen in the second quarter, those numbers are looking pretty good. we saw a slowdown in job creation.

that means the output for workers is going up and productivity is taking up, also good news -- ticking up also good news. vonnie: how will china come back into the scene? if you look at my terminal, the television chart you can actually access this. 2011. growth is happening. you have strong data overnight. will china become a factor again for the fed sometime this year? drew: it is impossible to tell. for the fed, good news is often ignored and bad news is fixated upon. if something bad happens, i imagine the fed would think about that. is something good happens, i imagine they would ignore it. vonnie: what you think will happen with china? slowing gdp with not as much fears? drew: that is a reasonable outlook. it is case based.

the important thing to rememberis the way china influences u.s. activity tends to be through the equity market. it is not the direct impact on u.s. activity on the ground. it is reasonably low. the financial market response to weakness or strength in china is disproportionate to its real economy impact. shery ahn: how do you feel about the earnings season so far? jp morgan, citigroup -- what is your sentiment? drew: that is a little out of my wheelhouse. as i said, things are looking better for the second half. rings are looking very stable very good -- things are looking very stable, very good. improvement on the inflation front. that is good for the u.s. economic outlook. shery ahn: thank you. ubs chief economist. coming up on bloomberg markets

emerging market etf on fire. which ones? we will tell you. this is a bloomberg. ♪

♪ mark: you are watching bloomberg television. i am mark barton. scarlet: i am scarlet fu. mark: first-half profit will fall by 50%. we will tell you why. scarlet: warren buffett living up to his word to give away most of his fortune. he donated 3 million dollars to charity. who got the bulk of the. mark: ranging from u.s. junk bonds to property in china.

the question is whether any values reflect pricing. what is called into question in today's quick take. scarlet: pushing officials to lower interest rates to boost an economy reeling in the aftermath of the vote to leave the european union. he said in a speech that easing will be required to protect the economy and jobs from a downturn caused by uncertainty that could linger. kissinger associates' said bloomberg markets needs to find new tools. >> monetary policy is not the answer. you need more effective fiscal policy. fiscal leaders need to understand. several bank governors have said this. draghi carney, bernanke, you have to have effective fiscal policy. mark: warning of a collapse in

first-half profits, cutting sales guidance for the profit slump by 60%. weaker markets in asia, europe and the strength of the swiss franc. costs are increasing after it decided to retain employees despite the slump. scarlet: warren buffett delivered his donation to five charities as part of his plan to gradually give away his fortune. the gifts were worth $2.9 billion. more than 9 billion berkshire shares were donated. the biggest share went to the bill and melinda gates foundation. shery ahn: i am shery ahn. we provide context and background on issues of interest in a bloomberg click take. -- quick take. sometimes people pay too much for things and lose money -- bad judgment. sometimes people pay too much

for things and everyone loses money -- that is a bubble. the differences are clear in retrospect, but telling them apart and real-time is trickier. ranging from u.s. junk bonds to property in china and london to tech startups is high. the borrowing levels are too. the question is if the values reflect mispricing. they have been boosted by the easy money made available by central banks, leading to a search for higher yields that has policy makers keeping a lid on a trend they are helping to fuel. low risk assets have arguably entered bubble territory. that ground, in each historical case of bubbles, investors bid out prices rather than miss out. when the bubble bursts, the scramble for profits can turn into a scramble for survival. high prices has been different this time. investors turned to risky assets

not in a mania for profits but to avoid returns elsewhere. the argument some regulators, including robert kaplan, have warned the impact from a bond selloff might be brought. the etf tracks dead markets, and top investors. optimists counter that interest rates are not about to rocket higher any time soon, meaning investors can breathe easy for now. more importantly the market has weathered a series of tests over the last year from china's sharp devaluation and august meltdown in stocks, to the federal reserve's first rate hike, to the european debt crisis. read more on bubbles and the quick takes on the terminal. that is your global business report. go to bloomberg.com for more stories. ♪

♪ shery ahn: this is "bloomberg markets." i am shery ahn. vonnie: i am vonnie quinn. emerging markets etf. investors put $4 billion into them. which ones are seeing action? the analyst for bloomberg intelligence -- etf, obviously we saw a lot of turmoil. which ones? >> the brexit is over. you have a risk on attitude that hit investors. we look at which etf's took inflows. the one that caught my eye is the biggest one. it has been losing to cheaper products, mostly retail investors. em got hit hard. the average five-day volume is $3 billion a day, more than

apple. when you see a chunk of change going into e.m. and a lot of volume that means big fish are biting. e.m. is used because they do not care about the cost. it attracts 20 odd countries, they are all up. it is a case of all pistons go for e.m. and emerging markets in general. e.m. in particular tells you there is institutional interest right now. shery ahn: what regions are we talking about? asian, south american, african? eric: all of them. everything inside of emerging markets. china is up the most in terms of bigger weighting. think trade, having less of an effect, money coming out of japan -- 13 billion. 12 billion into emerging markets. shery ahn: you're talking about a trade off. a move in money? eric: possibly. that is my take. e.m. has been beat up for many

years. it is a bit of a rebound play. it is not part of the central bank trade. it is more ripe for the taking right now. shery ahn: when we saw the u.s. stock rally go up, we saw capital outflows out of the u.s. -- that must have gone somewhere. i am assuming that a lot of the emerging markets, they had that flow. eric: we saw 20 billion go to etf. emerging markets took in 4 billion. etf took in a ton -- junk bonds -- anything that trading crowd likes that is risk on got flows. it was one of the weeks that is a complete turnaround from the other six months of the year. it was about gold, low vol and fixed income. this was a hungry rally. vonnie: let me ask how sustainable this is. if you look at the top companies in that etf, you are looking at china companies -- china mobile

china bank -- we saw a record inflows into china. how safe is that money? shery ahn: are those companies mostly been getting state backing? eric: e.m. does not hold any eight shares. that is one rap against e.m.. you have not seen any single country e.m. etf take and money. all the money comes into e.m.. it is more of a risk on trade rather than i like individual companies in the emerging market trade. we have seen the reverse in the last couple of years. people were choosing their battle. whether they wanted to go into brazil, china, or out. this is a general risk on emerging market rally. they do not care which stocks it owns it just wants to own emerging markets. vonnie: how much risk are you taking buying into this. it is up 10% this year, but

going back 12 months, it is down. eric: we have seen money going into the emerging market. it is up 11% in the past three years. the emerging markets bond etf is also up. there have been places that have done better than e.m.. emerging markets equities has seen a ton of outflows for the last three years because it has not been performing well. however, low vol is a big thing it this year. buying emerging markets low vol is not the right move if you think it will be fast-moving. it will lag this year, but outperform when the going gets tough. that is what we have seen. vonnie: you did point out gamr -- there is an etf to play pokemon? up 20%. we will get to that later. shery ahn: thank you, eric. vonnie: bloomberg intelligence.

new treasury rules out making it harder for companies to spin off units tax free. for more on this regulation and what deals it may affect is lauren davidson from bloomberg. she joins us from washington. tell us about the latest developments. >> the irs is trying to crack down on companies using tax free spin off to distribute shareholders and profits without paying capital gains tax. yahoo! try to do this last year with the stake in alibaba, but backed off after pressure from investors and the irs. but the iris and treasury are saying is you cannot take investment assets, put a little in there, and spin it off. the business needs to be 5% of the total value. the irs will look at -- after the spinoff from the parent company and these been off

company -- is there parity and how much investments and cash are in both? these rules are not final yet here they will not be final until the irs issues a formal version of the rules -- which could be up to one year or more. any spinoffs in the works right now, they fall under the old rules. they do not have the 5% threshold the business has to meet and they do not look at how much -- is in the two companies after the spinoff. time is of the essence if there are businesses that want to spin off entities. the longer timeline, you want to make sure the numbers add up. shery ahn: let's talk about yahoo! and alibaba. good yahoo! decide if they want to spin off? is alibaba holding? lara: technically, they could. the law has not changed. that seems unlikely. yahoo! seems committed to a sale

of its core assets. they have gotten pressure from the irs after they introduced the deal that said we don't like this. and investors say they are not comfortable with preceding because the deal could be taxed at 35%, a huge loss for shareholders. vonnie: are there alternatives for companies that want to do a deal and not pay the tax? lara: i can do a's lit off -- a split off instead of a spinoff. then they don't have to have the level of parity and cash and investments. liberty interactive is doing this with its liberty in expedia business. he used to be seen as a radical move. one tax attorney told me it was socially unacceptable, but it is becoming more so as more rules and regulations apply to spinoffs. split offs are a better option

for shareholders. shery ahn: our tax reporter on capitol hill. a quick look at the majors. down 1/10 of 1%. the s&p 500 down 3/10 of 1%. vonnie: the nasdaq down one quarter of 1%. the s&p 500 flirting with the longest winning streak in two years. downward pressure today. stocks headed for a third week of gains. ♪

>> welcome to "bloomberg markets ."

good afternoon. i'm vonnie quinn. >> and i'm shery ahn. here is what we are watching. stocks trading near record highs. so why are the world's top investors putting up warning signs? >> what could a trump-pence administration mean for the markets? >> shares of herbalife surging. the company paying a $200 million fine to avoid being labeled as a permit scheme. -- pyramid scheme. julie: the record closes have come to a close. yesterday the nasdaq also down a

quarter percent. we have seen losses accelerate as we have gotten further into the session. there appeared to be 2 main industry groups. the first is financials. if you look at the s&p financials over the course of the day, you will see that they have flirted with going positive -- open positive, and have taken a turn for the worse as we have gotten more deeply into the session. we had 2 big earnings reports today. one of those was citigroup. initially citigroup was trading higher. it actually dropped it down but then was holding onto those gains until about 11:00 a.m.. it looks like investors stuck more deeply into the numbers. they were not necessarily happy with what they saw. overall citigroup numbers did beat analysts estimates but there was weakness on the consumer side. so too the numbers out of wells fargo, which saw weakness in its

mortgage banking business as well. this week stock never really traded higher here. the other group really responsible for losses today is consumer discretionary, ironic since we got a retail sales report better than estimated for last month. cbs, which was downgraded to sell over ubs. delta being hit with other travel shares in the wake of the attack in nice. delta downgraded. should probably mexican grill is going to take years to get back to its peak sales growth. all of those shares weighing down consumer discretionary. >> stocks are weak on this last trading day of the week. how did they do for the entire week? julie: still higher. we had those records day after day until today. we saw major averages gain on the week. it's the third straight weekly gain we have seen for u.s. stocks. the movement weakly even more

notable when you look at the bond market. there we saw a big selloff in the 10 year in particular big pop-up great coming up from record lows were the yield. a 24 basis point move on the week in the 10-year note higher in yield that is the biggest move we have seen going back to february 2015. the other notable move is the weekly movement in gold. gold prices heading lower and having the first weekly decline we've seen going back to may. sentiment really seem to flip during this week, even if it's not in line with the week today. on a weekly basis there were some changes in sentiment. >> julie, thanks. let's take in the bloomberg first word news spread mark crumpton has more from our newsroom. mark: french president francois hollande is in nice following last night's deadly attack. resident hollande arrived earlier today, visiting the

wounded and offering words of comfort and support to the traumatized resort town. in an address to the french people, he commended doctors and nurses for working frantically through the night to save victims. he also praised the officers who took out the attacker. >> our security forces are fully committed to this fight. they had been busy in the past few months, of course, after the attacks in november in paris andaint-denis. i would like to pay tribute to those forces because they are the pride of france. mark: witnesses and officials say a truck plowed into a crowd celebrating france's national holiday, bastille day. 84 people were killed, dozens more maimed. the attacker was shot dead by authorities. they cautioned dna and identity checks with acquaintances are pending to fully verify the alleged attackers identity.

spain says it is maintaining its national security alert at one step below maximum following the nice attacks but he will step up police controls in transit centers. it is official, indiana governor mike pence is donald trump's running mate. the likely republican presidential nominee made the announcement on twitter. the two will appear at a news conference on saturday. mr. trump was set to make the formal announcement today but said he's elated after yesterday's -- he delayed it after yesterday's terror attacks. hillary clinton's campaign chairman says the indiana governor is quote, and incredibly divisive and unpopular figure. the clinton team notes pence led the fight to defund planned parenthood and restrict abortion rights. the white house predicted today the government's budget deficit

for the soon to end fiscal year will hit $600 billion, an increase of $162 billion over last year's tally. it reverses the trend -- global news -- global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. vonnie, back to you. vonnie: global markets are at a $64.5 trillion capitalization, the highest so far this year. by the runaway in stocks and bonds has some money managers ringing the alarm. our investors ignoring sluggish economic growth and corporate earnings as they look to put their money into the markets? joining us now is our stocks are porter. joe, money is flowing into stocks. it's also flowing into bonds. are these warnings going unheeded? >> what we are seeing is people

may be being persuaded by the economic data we've seen. the citigroup u.s. economic surprise index just turned positive for the first time since january 2015 this week and we got that blockbuster nonfarm payroll number. economic data is looking strong and people might be using that as a reason. there's also dovish monetary policy from the bank of england the bank of japan, perhaps informing the bull case and causing people to ignore these warning signs. we have big-time people like larry fink from blackrock coming out and saying, maybe we should be more cautious. going into earnings season where we will be seeing earnings contraction, it might be time to reconsider. that's what some people think they think because sentiment is

appearing to be so overwhelmingly positive right now, that can be a negative thing. part of the thing that power the bull market for the last few years is this undercurrent of pessimism this whole not everyone is convinced, so there's always money on the sidelines to pour back in when optimism peaks straight if you look at allocations, active managers are 97% full and their equity allocation, there's not much higher to go. there's a lot of speculation that may be that number is slowing. >> quite a u-turn from that gloom and doom following brexit. >> their clients are being recommended to hold some cash. how do those two positions align if there are 97% of active managers in equities and yet there is a lot of cash out there, why wouldn't equities continue to go higher? >> that was the big theme this year, how much cash was left on the sideline. we've seen huge flows.

this last month we've seen the most since september. people are deploying that cash. it is something that about may be a month old, people definitely piling back in. we are seeing the push to new highs. there is a sense that the reason why we made four straight record highs leading up to friday was because of these etf flows. >> the difference between a correction and the end of the markets what are these money managers saying? >> 10% correction is what we've seen. it doesn't necessarily spell the doom of it. we came back just fine within a few weeks. what it says is people might be willing to show some pessimism and jump back in when the market adds a more favorable valuation. we have seen a lot of big money managers taking advantage. yesterday was the first time because we were at a record high for a fourth straight day.

some of these guys came out and said, will pump the brakes save it. -- we'll pump the brakes a bit. >> coming up on "bloomberg markets" we will dig into the two big earnings of the day citigroup and wells fargo. this is bloomberg. ♪

>> you're watching "bloomberg markets." i'm shery ahn. vonnie: i'm vonnie quinn. julie hyman is checking on some company movers. julie: i'm starting with harley davidson, seeing a downgrade.

the company has limited upside potential because of the ongoing fundamental challenges to the business, notably weaker second-quarter u.s. retail motorcycles ales, competition from india at this weather conditions in may. analysts questioning the economic feasibility of a rumored takeout. her has been speculation surrounding the company because of valuations being talked about. harley shares down 8/10 of 1%. we are watching a potential deal that could be happening here. walgreens agreed to take over rite aid for 9.4 billion dollars. there have been questions about whether it would get regulatory approval. today "the new york post" reporting there might be some -- on this front. rite aid shares moving higher by nearly or percent as walgreens

--4% as walgreens falls back. a settlement with the ftc, about $200 million as part of that settlement treated also will make some changes to the business, how various customers and so-called members are classified how long it will take before these members can open a nutrition club to seller of a life products. -- herbalife products. shares are spiking by 11% today. >> thanks a lot. 11% for the life. let's turn now to the banks, wells fargo reporting earnings this morning. >> wells fargo is the biggest laggard in the s&p i've hundred today after the world most valuable bank posted second-quarter profit the l nearly 3%. -- that fell nearly 3% trade analysts surveyed by bloomberg estimated a combined net income

-- net income that the sixth 18% in the second quarter. one key focus today is energy loans. you can see the lender has been dealing with these loans worsening for the last few quarters. the provision for credit loss has more than tripled to 1.0 7 billion from a year ago. the oil bust in the quarter claimed several of the clients. another key number always for wells fargo is net interest in margins about the profitability measure. low interest rates have really weighed on that it's the great recession and this margin decreased by 4 basis points to 2.86% which fell short of some analysts estimates. analysts do see mortgage lending as a bright spot for banks. you can see here wells fargo's

pre-big lead on the rest of the market. another issue is the brexit vote. the company has about 1100 employees throughout europe, the middle east and africa. you can see exposure of the major banks to britain, which contributes a pretty high amount. brexit will have a much lower impact on the company compared to its peers and could result in lower rates for even longer. because of those reasons, we will be watching wells fargo stocks throughout today's session. shery: thank you for that. let's continue the conversation. for more on wells fargo and citigroup, we are joined by bloomberg intelligence. let's get started with citigroup. their profits beat analysts estimates. what were the bright spots there? >> for citigroup, one key bright spot was better than expected

income -- expected trading volume. rates and currency trading are a strength of citigroup and that's where we saw a lot of the surprise coming in at the end of -- following the u.k. vote. also today what i thought interest in is, a lot of people have been worried about the investment banking deal pipeline following brexit. it creates a lot of uncertainty and that's not good for a deal. jpmorgan's management pointed out a number of positive that could be offset, including the lower long-term rates which can include debt financing. citigroup's head of m&a had talked about in the past that new deal could be created as a result of brexit and today management saying that they feel pretty good about their pipeline and their activity. despite some of the uncertainty

we will continue to see in that region. >> so far at least, the thinking is that banks have been doing really well this quarter. revenues are down. it's not like they are outperforming, they are just outperforming x tatian's -- expectations. >> you have the point there really, the way the stocks are going to react is not necessarily on what exactly happened in the profit decline in the quarter. for the global investment banks, estimates are down 20% to 30% this year. we've seen a sharp decline coming into the end of the quarter and after the brexit vote there is a lot of uncertainty about what that meant. we have seen some metrics coming in better-than-expected. to some extent, trading results coming better-than-expected for second quarter are not really going to mean much to the outlet trade people are focused on the go for it, and it's very early to try to tell what the results will be for the third order.

the negative that investors are focusing on, jpmorgan and wells fargo we saw net interest margins a little bit more challenged. investors had been hoping. we saw mortgage banking results fare a little bit worse than expected, and again and offset of lower long-term interest rates is we can get a pickup in mortgage volume going into the third quarter. for wells fargo, there is sort of a number of things that contributed to a core earnings mess and so that's obviously not positive from a go forward basis. >> wells fargo has traded at a significant premium to boost values since the global financial crisis. what do the latest earnings tell us about where they are headed? >> the valuation, when you look at the price to book value for a bank, the higher the return on equity, the higher multiple of

book value investors are going to be willing to pay. it's not about what the returns are today, but what investors feel are sustainable returns or at least over the next few years when they are valuing the stocks today. what investors are starting to get a little bit more worried about is in general the broader credit outlook, so energy is something that investors have been focusing on since the beginning of the year, as oil prices rising are better for that specific category. we are starting to hear things on the consumer side that investors are getting a little bit more concerned about. jpmorgan talked about some trends in credit underwriting talk about some trends in auto underwriting that they talked about broadly for the industry and not mrs. verily what they are specifically doing with regard to auto. those are big areas of wells fargo. if those categories start to weaken for the industry, that's

obviously an overall concern for all of the banks in the industry and especially someone who has been growing relatively asked her in those product categories. >> wells fargo down almost 3% now. bloomberg's alison williams thank you for that. >> one house spokesman is speaking now. he's saying that president obama and the french president of today about the nice attacks. last night a man drove a truck through a crowd and killed 84 evil and injured 202 -- people and injured 202 during a bastille day celebration. we will be waiting for president obama to be speaking about these latest developments. we will have this story as it develops. this is bloomberg. >> there is more that needs to

be done -- ♪

>> chinese stocks are reaching key technical levels gained on the shanghai composite, among the largest of the world's biggest equity market since the brexit vote. if you come inside my terminal you will see a few panels right now, the top when showing the shanghai composite -- the orange line -- climbing towards its 200 day moving average. we saw this more than i percent surge on the index of mainland shares. now they are 50 points away from that 200 day moving average. if you take a look at the bottom panel, you can see the stocks, 14 day relative strength index. this week it edged above 70, the first time since just before last summer's $5 trillion row.

the question now would be with chinese stocks hitting key technical levels, can the rally actually last? >> that's the key question, are they overhauled. we did get that better economic data out of china overnight, gdp data that came in better than forecast. other data, and credit growth. you see credit growth is rebounding. it hit a low inmate and hasn't read -- low in may and hasn't rebounded since. that's pretty positive in terms of heaping those share prices supported. shery: that's pretty positive, but a key point here in china is credit growth is growing, but it's growing in the safe sector in the states on companies. big, giant soe's that need to be

reformed. the private sector isn't actually catching up to the public sector. that is where we are seeing some discrepancies in the chinese market and chinese economy, that's what analysts are pretty worried about. vonnie: we keep an eye on that. and on the value of the yuan which has been weakening. shery: significantly since the brexit vote. that could cause more turmoil. vonnie: still ahead, donald trump took to twitter to announce indiana governor mike pence as his take for -- pick for vp. ♪

>> from bloomberg world headquarters in new york, i'm shery ahn. vonnie: i'm vonnie quinn. let's start with the headlines. mark crumpton is in our newsroom

greatmark: the democratic national convention unveiled a partial list of some of its speakers. former presidential candidate bernie sanders, first lady michelle obama they will highlight the first night of the convention on july 25. other speakers include former president bill clinton president obama, and vice president biden. hillary clinton and her daughter chelsea will headlight the -- headline the final night of the convention. british prime minister theresa may says she's willing to listen to proposals about scotland's future relationship with the european union. she made her comments in edinburgh following comments by the scottish prime minister. sturgeon has said to leave the eu. a referendum is, in her words highly likely. scotland's population voted overwhelmingly to remain in the european union. tom brady will not appeal his four-game suspension to the u.s.

supreme court. a federal appeals court denied brady's attempt to get a new hearing on his deflate-gate suspension. a panel said the roger goodell was within his powers when he suspended rating for his role in the scheme to dr. football's used in a playoff game. nascar legend jeff gordon make him out of retirement next weekend if dale earnhardt jr. isn't cleared to race. alex bowman will drive in his place. gordon agreed to return to drive next week if he is needed. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. shery, back to you. shery: donald trump announced indiana governor mike pence as his running mate today, adding significant government experience to trump's campaign

for the white house. hillary clinton will likely be next to announce as she nears a decision on her own running mate. how will the presidential candidates -- joining us now is the director of washington research. he provide strategic advice regarding the impact of the political world on financial markets. that much anticipated announcement is going to be trump and pence. give us your reaction to that. >> i think over the last couple of days, pence was clearly on the final cuts. i don't think it was a big surprise. that being said, with tunnel trump -- donald trump there always surprises. because of the terror attacks in france, people certitude question whether it would be pence or not. it's nice to get some finality enclosure that it is pence. >> markets are ignoring the idea of someone taking a nice presidential or combo -- taking advice presidential or combo

ticket. >> i think they will start to take notice of the election may be in august. we have to see how it lays out. -- plays out. we've seen an evolution of the race where trump had some really bad weeks.clinton then had her own problems earlier this month when the fbi director comey came out with his findings and it did not put clinton in a good light. each candidate will get a bump out of their convention. i suspect when we get to the first week of august after the democratic convention, clinton will have reestablished a four to six point lead on average in the polls. if we got to august and trump got a bounce and clinton doesn't, then i think you start to see some reaction by the markets. then maybe they are -- they have to recalibrate their overwhelming expectations.

>> how much influence does pence have on donald trump in the sense that we haven't really heard donald trump's views on a lot of, such as financial regulation? how does pence play into this? >> going back to my earlier question, with trump you never really know. he shoots from the hip. there's no track record of his career in public service so he doesn't have a paper trail like pence would have. it's kind of interesting trying to your out what exactly pence means. on financial regulation, trump has been saying throughout the campaign that he wants to repeal dodd frank. he has never said what he would replace it with. there is broad agreement that you are not just going to repeal dodd frank. pence is close with house republicans, especially the head of the house financial services

committee who has come out recently with an alternative framework to dodd frank. i think some people are jumping to the conclusion that this is a sign that trump can get behind the hinterland -- the bill. we're talking about the house and what the impact of pence is how the bill should get through the house. that's not where the action is going to be. the action is going to be in the senate. elizabeth warren, bernie sanders and the left wing of the democratic already -- party will be there the whole time on determining what passes. i don't see pence really having any kind of impact on where the real fight will be, which is the united states senate. i stepped back and said, this is a nice little push. it's all about winning on governing. i'm very skeptical. >> what economic policies --

well pence have any influence over donald trump? >> that's a great question that cannot be answered until 2017. i would offer the idea that i think would get a very good glimpse into this, in early 2017. we are actually starting to shape up for a big fight. regardless of who wins the presidency. in february, march of 2017. we will see what congress does with the budget and they may do a continuing resolution into the winter or spring of 2017 and the debt ceiling has to be raised in march of 2017. pence is going to get an early test, and trump too if it comes to that, of how they will manage congressional relations and what kind of influence mike pence will have on the hill. i still think his relationship are on the house side. it has to be proven to people

that he can move the ball in the senate and the senate is where the action is going to be. >> we have to talk about the tragedy in nice. how does that play into the election and financial market? >> obviously uncomfortable to talk and cynical political terms when you have a tragedy that occurred in nice especially for so many innocent civilians. but the raw political reality is that events like this play into donald trump's hands. he is a master at manipulating the media, and getting out in front and showing that he is a strong leader. i think he did that very effectively through the republican primaries. i could flip that argument and say this is the general election and we don't know if he's going to get the same political catapults that he did in the republican primary. i've been saying for months that

any time there is any kind of terrorist attack in the world i think it ultimately helps donald trump. >> this time around drawing attention to the nice tragedy by delaying the announcement of his running mate. now, we will be following the ramifications of the nice attacks throughout the day. this is bloomberg. ♪

>> this is "bloomberg markets." i'm vonnie quinn. shery: i'm shery ahn.

the cloth has been ticking on poor performance over the past year and it is slipping away again after competitors results. i have to say i have no idea. i don't even know which ones are the key words here. julie: control room, everybody? >> the clock has been taking. -- ticking. julie: our director got it great -- got it. it's fossil. shares are down 59% over the past year. it's had a couple of rough earnings reports that have driven it down and it's down once again in today's session. it has to do with swatch. the group has members that missed estimates, sales are going to fall much more than had been anticipated for you look at fossil in today's session, we

are seeing that stock selloff as a result. fossil today is one of the stocks selling off great expert said here today. if you look at how swatch traded in swiss trading it too was down sharply. what's interesting about swatch as well is the executives of the company made comments about the terror attacks in nice. in general, the increase in terrorism we've seen in europe has had an effect on travel and sales to tourist as a result. swatch lower. >> thanks, julie. >> harsh geography and falling time in prices is not dumping canada from living it's diamond dream. -- diamond prices is not

stopping canada from living its diamond dream. it's a remarkable trip to a remote area for just mining. what is it like up there? >> it's not like anywhere i've ever been before. most canadians live within 100 miles or so of the canadian border with the united states and i'm no exception to that never been this far north. when you go that far north, you are above the tree line. there's no trees, just rocks and frozen lake. i was there in may, so everything was still iced over. on top of that, there's no roads, which is a stunning thing to imagine if you look out a plane window and for hundreds of miles in all directions you see no sign of people whatsoever. set only on the horizon you fly over one of these diamond mines and it's like a meteor crater in the landscape, shocking to see. all you see with the exception of the ice road, a road made out

of ice every year. it takes 3 months to build. it lasts about 3 months before it melts. it kind of over the horizon like a -- undulates over the horizon like a ribbon. >> and the beers is about to open a large diamond mine -- debeers is about to open a large diamond mine. >> everything that goes into these mines, there's only 2 ways in. you fly in or you go in for the 2 months of the road that the ice road is operating. the window is limited, and the cost to do anything up there is high. i interviewed the ceo of debeers. it will be the largest diamond mine in the world. it cost about $1 billion to build, 30% more than it would

cost in other parts of the world. the expectation is that the quality of stones that will be coming out of the area are bridal quality. they are white high-margin stones, so it will be worthwhile. debeers has another mine it shattered last year. in seven years that mine never made money, so there's not a lot of margin for error. >> thanks appreciate your time today from canada. >> the company outbid. monsanto has been in talks with the agrochemicals unit. should monsanto take bayer's deal or pursue its own plan to become a one-stop shop for farmers? joining us is bloomberg deals reporter ed hammond. this offer is only three dollars a share more than the previous bid. is a buyer -- is bayer likely to

come back with a higher offer? >> they will probably wait to see what monsanto does. monsanto has been in possession of this as far as we know since early july. details emerged --probably at some point today or earlier next week, saying it is something they accept and they are kind of trying to avoid with bayer, or therefore it's back in bayer's court. >> what are the regulatory concerns meant cento might have? >> it's a standard rake feature, about 3%. if probably would help monsanto in terms of getting them over some of those concerns. it was something they have said early on in this process if they would engage in dialogue they wanted some clarity on what bayer would be prepared to do to

mitigate those concerns. i think it helps, but this will come down to price ultimately. a three dollars a share bump is not huge at this point. whatever ends up happening here it's going to be for a high price. >> analysts saying monsanto is not really a hasty seller here. what alternative does monsanto have? are they something that shareholders won? >> i think monsanto believes it's the best company in the world, and it thinks it has -- the basf deal, they can do this sot deal and in exchange basf would take stake in the company. syngenta is doing a deal with cam china. -- chem china. they think they have lots of things to play with here. on the question of their shareholders, they are in cell

mode right now. they've seen this coming from bayer. it would be difficult for monsanto to persuade shareholders it would be a better deal for them. >> are we going to get into a ludicrous situation where we have a three dollars bid from bsf and four dollars or five dollars response from the other companies? >> they are essentially betting against himself at the moment. the size of the bob -- bump suggests they have room to go here. so, i think logic we they probably have a bit more. they don't want to be seen as aggressive bidding against themselves. the next move will be monsanto's to make. give us a bit more cash and we can open the books and do some

due diligence. >> thank you. coming up on "bloomberg markets " details on what is happening at herbalife after shares surged there. ♪

shery: this is "bloomberg markets." >> it's time for the bloomberg business flash, a look at the biggest stories in the news right now. kkr and company along with a.m. capital partners are among investors considering buying stake in troubled indian steelmakers, according to people with knowledge of the matter. they say kkr and a.m. are weighing investments in a still company back to buy a billionaire evaluating the

potential purchase in electro steel. >> viacom shareholders national amusements is opposing a deal with paramount pictures. the redstone family company said it would undermine rather than uphold shareholders interest. the company is reportedly seeking a deal between $8 billion and $10 billion. herbalife is not a pyramid scheme, according to the federal trade commission, which settles a long-running regulatory probe into the company this morning. shares of herbalife search to their highest level since 2014 on the news. they were up 25% from pretty low valuation. for more on herbalife, we are joined by bloomberg news'matt

townsend, who has been covering the company's long-running travels -- troubles. >> it's a win for herbalife, a win for carl icahn. this is just one day. the interpreting of what ftc said and did and the order and changes they are bringing to the company remains to be seen. there's going to be an audit compliance officer in place for 7 years to make sure the company stands by this agreement. are the changes to the compensation plan and other parts of the business worth long -term hurt the company? >> he has the big loser, hasn't he? he has been shortselling the campaign for a long time. >> just got the complaint and look at it, basically a lot of the charges the ftc makes against herbalife mirror what ackman is saying there's no

real retail sales, it's all driven by recruitment, a lot of people lose money. the ftc did not say it was a pyramid scheme but it also did not say it wasn't. it's done a bunch of these things, it's created victims. herbalife is paying $200 million. >> to an extent, bill ackman put his money where his mouth was. it was a moral issue for him and he said the company was an immoral company. he could say this is a win too. >> if you read the statement of ackman's hedge fund they say maybe pyramid scheme was not in the ftc's document, but what they were saying this is not a great company to work for or be involved with because it potentially hurts you financially. look, bill ackman, as we know a

lot of times goes and stays -- he has done this for 3 years. he can potentially stay in this for several more years, keep trying to provoke and find more things going on. >> inside my terminal you can see as my short call, that was when the stock was at $42.73. it gives a little bit of context on the ackman stake, which hasn't really turned out well and still waiting to break even. tell us about those losses he's going to suffer. >> for pershing square and bill ackman, it's another hit to his investment palace. i forget the direct quote, but it was something like i've never been more sure of any investment in my entire life. >> it's from a bloomberg television interview with bill ackman earlier this year. >> at this point it's a race to the bottom great will the

business fall apart before the government intervenes, or will the government intervened before the business fall apart -- falls apart? >> he was basically willing to sell it short for this. >> the highest conviction he's ever had great everyone was saying he was told sure. -- had. everyone was saying he was so sure. the changes they want the company to make he could sort of take a victory away from it. >> matt townsend from bloomberg news. more to come in in a shower of "bloomberg markets." this is bloomberg. ♪

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

we are covering stories from cleveland to new york to london. more details on the driver of the truck who killed more than 80 people last night in nice france. twitter official, donald trump picks indiana governor mike pence. hillary clinton taking to twitter saying pence is trumped with a different haircut. we will break down the health of the u.s. economy. let's head to the markets desk where julie hyman has the latest. julie: markets ending the week on a down note. the dow and s&p are now taking a breath here.