>> flunked bloomberg world headquarters in new york, i am scarlet fu. story from san francisco to washington to istanbul. global stocks losing some ground, the s&p 500 retreating from all-time highs as investors consider bank and tech earnings. the $40 billion cigna-anthem deal and the 37 billion at that takeover of humana could be in danger. antitrust official poised to file lawsuits to block the move. looking for the best travel deals this summer, i sit down to look at what global shock means for travel companies. first, halfway through the u.s. trading day so let's check in at the market desk. julie hyman has been tracking the moves.

equities, a little push back. >> morgan stanley saying we will see maybe 1% in the first quarter of next year for the 10 year yield. some selling in stocks today. the money flowing to some extent into treasuries. the dow had been holding up relatively well. still down the least. back into the red. pulling back from the record close yesterday for the dow and s&p 500. the magnitude of the drop is not big, only one third of 1% for the s&p 500 but the brett of the decline pretty broad. all of the s&p 500 lower today led by energy and materials as we see a commodity led selloff. a lot of individual movers, netflix out with its earnings, the subscriber growth, or lack thereof drawing attention. adding 1.6 8 million subscribers

in the second quarter, falling shorts -- short of estimates blaming price increases. johnson from johnson & and lockheed martin, they had winners, though lockheed martin now lower after that companies earnings beat estimates, johnson & johnson with earnings that beat in the second quarter although they fell for the year earlier and raising its full-year forecast on the strength of its drug sales versus consumer unit. those shares are holding up. emc's shareholders have voted to approve its acquisition by dell. the company he controls is out with earnings that beat estimates. it is the virtualization company. that company has seen sales float but this quarters that quarter is reassuring to investors. -- that quarter is reassuring to investors.

some movers based on analyst calls, trip only is one of the stocks being affected iv popery -- by the popery. doing channel checks in new york city and they says traffic holding up well and coming back, shares up 1.5%. s5 networks rising. bravo interested in buying the company, periodically gaining on this speculation and rumors about takeovers, shares at 4.5%. >> thank you. let's look at the first word news. more from our newsroom. is reportinggazine that donald trump plans to nominate former goldman sachs banker steve nugent as treasury secretary if he is elected.

magazine reporting that donald trump will nominate a former goldman sachs manager if elected as treasury secretary's be a donald trump will see a couple of his children take the podium tonight, one is donald trump junior. also addressing the audience in cleveland, paul ryan and senate majority leader mitch mcconnell. hillary clinton says donald trump is trying to divide the nation and the fruit can be found in his rhetoric. here is the likely democratic presidential nominee speaking with charlie rose. hillary clinton: he appeals to the fears and anxieties and anger and i was done when he was inciting violence at his rally -- rallies over the past years. it is clear that he has staked his political identity and his

future as a presidential candidate on dividing us. >> you can watch the complete interview with hillary clinton on charlie rose at 7:00 and 10:00 p.m. new york time on bloomberg tv. germany is investing whether an afghan refugee who attacked train passengers with an ax was part of a terror group, police shot and killed the 17-year-old after he wounded 14 people -- four people, two critically, islamic state claimed responsibility and they found a flag of isis in his home. the international led the committee invest getting top russian sports officials and it wants to ban them from the rio games after a world anti-doping agency report accused the country's sports minister and his officials of overseeing a cover-up of hundreds of doping test failures by russians. several officials have been suspended on the order of the russian president. ♪ >> global news 24 hours a day

powered by more than 126 -- 2600 journalists and analysts and 120 countries. this is bloomberg. morgan stanley is making its case for the year of the ball, analysts say that 10 year u.s. yields will fall to 1% in the first quarter of 2017, the most optimistic forecasts on the street. --this optimism more and did warranted? when you heard this call, what was your first reaction? >> why are they going to 1%? a good and bad reason, the evil reason is the economy will be awful because people are fleeing to safety. the good reason is the power of money which is everywhere, so much money around which is what is causing rates to stay low. economy, juste the power of money looking for someplace to go.

scarlett: yields have backed up. they have come back to 1.55%. a change from what we saw last week when we saw the record lows. what is the bond market telling us about the state of the economy? is it telling a story? i thinknot think so, when it comes to the power of they, it worries me, in bond market, we are seeing something that amounts to force the buying, people have to do that. my experience is on the other side, when i saw for selling as a younger man, that was a reason for me to buy. decision, anl idiot force on the market, i am not sure it does not own the other way with bonds. scarlet: does a bounce back in yields making us make certain stocks less attractive -- does a

bounce back in yields make certain stocks less attractive? >> you are losing the fear factor, a condition on what is causing this. if it is the economy getting stronger and i think it is, the american consumer is doing better, i think earnings will get better, if that is what it is, that is fine for stocks and more positive for risk on stocks and non-risky stocks and not bad for anybody. >> we are contending with the earnings season, under earnings recession now. -- havetion for earnings dropped? >> they have not gone down a lot, i have been more wrong about other things in the past, they probably are going to drop, oil prices back up, a major contributor, i think the american consumer -- eight years since things fell apart, the job

picture and housing picture is be gettingngs should better these things say to me, the market always looks at earning but i do not know whether today's earnings, tomorrow earnings, or six months, nine months, 12 months down the road. comps.have easier the s&p 500 down. that has allowed stocks to break out of this raise they have been stuck in, what happens now, in a new range? >> i think we are moving higher, my nature is to be too optimistic here -- too optimistic. earnings are starting to get better. i think it was sideways earnings, slightly down, not great, not bad, that is starting to get better and if that gets better and we see new highs and earnings, the market could finally get excited about something. i have never seen a bull market and without investors getting

excited, no one has been excited recently. >> the least loved the market in history. as we near the end of the bull market, what signs are you looking for to determine whether this still has legs or we are on because of an inflection -- inflation raise? >> when the central bank is trying to help an economy, it pushes money toward the economy by the tubes between the fed and the economy, here are the capital markets and here are we. i look at the fed, are they about to tighten, not just raise rates but try to slow things down, then i look at earnings, am i right? if i'm going to be wrong about the next six months, nine months, it was the earnings do not lift off, no cynical -- cyclical improvement, that is what i am looking at more than anything. looking at earnings to see how they are trending. >> valuations for stocks come

s&p 500 around 20 times, the non-payer higher than the dividend payers, elevator -- elevated compared to the average, when you sum up this earnings season and look ahead to what we are waiting for, it the big cat companies are due to report, will be earnings justify evaluations? -- the vibrations -- the valuations? >> i look at forward earnings, 17 times, but the average, not a lot above the average. we have to justify at some point, the vix down, the market will have some pullback, that is not the story, the story is earnings can go higher and died relations are not an extreme, dilation for the market only really matter when they are at extremes. like in 2000 and 1982, i do not get a sense of that now. >> thank you for joining us.

coming up, a window into microsoft earnings, fourth-quarter results after the bell, why the company has its head in the clouds. this is bloomberg. ♪

scarlet: this is bloomberg markets. microsoft is the latest to report earnings after the closing bell today. their ceo is transforming microsoft to make it more relevant in the world that prioritizes cloud computing and mobile technologies. microsoft buza capital expenditures by the most since 2014, building more data centers and expanded cloud services.

such as office 365 businesses. for the revenue growth cloud unit, 24% of its business, including enterprise services and hybrid cloud products. it has been trending higher, growth not happening fast enough to make up for the weakness in one time purchases of software. that revenue comes at a cost, increase investment in the cloud business is hurting profitability. operating margin has plateaued and the stagnation is a result of the slowdown in their legacy products which include software for personal computers and servers. this chart shows you how windows releases have affected personal computers sales over the years, they last announced it will not meet its goal of getting windows 10 on one billion devices within two years to three years, the failure led to a strategy and which they bought nokia and shut down and sold the business. the big headline for microsoft in the past quarter is the $26

billion purchase of linkedin, more than 84 times earnings, the highest earnings multiple of any takeover at at least $5 billion this year. we will look for color on that deal when they report earnings after the u.s. closing bell today. at what we might expect from microsoft in the report, cory johnson joins us. is the jury still out on the ceo's attempt to transform microsoft? >> he has shown significant changes in the business thus far. surprise, it seemed it would take forever to turn around like a battleship. they embraced mobility in the ways the company has not before. interesting to see how big their as googlebusiness stumbles to get into the cloud business and amazon has succeeded greatly, microsoft has

been a strong number two in that business and you can expect that to grow. that will be the other focus and linkedin will get a lot of questions about how that will work and what they might unveil, how much they want to be in the crm business to compete with salesforce and using the app that linkedin has created. scarlet: linkedin was such a massive purchase for microsoft, a loved emphasis and questions about -- a lot of emphasis and question about whether the ceo wants to make more big deals? >> it will cost microsoft one year worth of cash flow, a deal they can afford but a massive acquisition. not the kind of thing microsoft has done. traditionally, acquisitions and software can go that are then technical acquisitions but big acquisitions and technical generally go horrible. another piece of the puzzle that

the ceo will have to solve. that steve ballmer could not. scarlet: let's move on to a new technology company, netflix, shares down 14% today, pretty much what the options market had anticipated, betting on 11% move after the results came out on either directions as opposed to this degree, netflix did not disappoint, what was your take away from these results? >> the subscriber number has gotten too much of a focus. the reason it gets a big focus by wall street is it it tells you how big can the business be. the subscriber and number will driven by marketing. "jessica jones" and "daredevil" have not caught the attention of the people. subscriber numbers growing at 80.5 million -- 84.5 million --

the lack of growth in the u.s. subscribers cannot be overstated , 0.3% potential growth is horrible for this company. the worst they have ever done in the u.s. it suggest maybe there is a limit to how much market share they can get and you start to pencil that out around the world with additional content costs, is a problem. is going to company make new episodes of "making a murderer." i have not seen a new netflix program since "orange is the new black." scarlet: you need to sit -- >> you need to stay home and watch netflix, they need you. scarlet: when reed hastings was speaking, he apologized. >> a certain candor to his comments, he talked about the competition, suggesting it was

small. an interesting call from reed hastings, not the numbers they want. he suggest it is about the price increase and the growth will come back. i hope that is the case that the trend has not been their friend. scarlet: the message is be patient. thank you. coming up, antitrust officials said to look at filing lawsuits to stop and then take over -- anthems takeover. ♪

♪ scarlet: u.s. antitrust official mulling lawsuits to take over over--s this was your scoop, what did you learn? departmentice antitrust division has some serious concerns about both of

these deals. they feel that they are bad for consumers because they are of the biggest insurers in the u.s. scarlet: you cover health insurance companies, health care overall, specifically, what are antitrust officials concerned about, the number of players? deals, the concerns are a little bit different in each case. anthem and cigna would be big in the market for health insurance sold in big companies like bloomberg or jpmorgan. aetna and humana combined, the concerned, medicare advantage, private medicare policies. different sets of concerns, what is the next step, what will you be looking for? scarlet: these lawsuits, if not

settled soon would be filed this week or next week possibly. once they are filed, they were be litigation -- they would be litigated and possibly the companies could be settled but if they are not, it will go to a judge who will decide whether they can proceed. scarlet: at what point would this be made public, so far this is all according to people familiar with the situation? scarlet: it should be finished by next week -- >> it should be finished by next week. scarlet: what considerations are there with the political timetable with the election coming up, does that factor in to what the department of justice is doing? >> the department of justice would say no, they are nonpartisan in reviewing these deals. consider thist to is taking place in an industry

that is very important to this administration with the affordable care act and the president and health and human services secretary have spoken about the importance of preserving competition in health care markets. i think that is happening on the sideline. it is important to consider. scarlet: the share price reaction, humana shares down 5% in trading now while cigna down about 2%, moving from the premium countries are willing to pay. divest someanies assets, so companies, consulting operations to appease regulators concerns? >> a good question. we have heard aetna in their deal for humana has been shopping around 350,000 lives worth of medicare advantage, a quarter of their business. remains to be seen whether that canopies regulators, harder for anthem and cigna because the big

problem is there are few companies that can serve a ,ational market, a big employer that employs people across the country. who would you divest do is to be question. scarlet: you may want to come up where can you unload the assets -- you may want to, where can you on the vss? -- the assets? global catastrophes and the effect they have on the travel industry, we get a check on the state of travel. this is bloomberg. ♪

scarlet: breaking news -- these are live pictures of the tappan zee bridge connecting westchester county to rockland county in suburban new york.

a crane has collapsed and now lanes are closed on the tappan zee bridge. according to the new york post, there does not appear to be any life-threatening injuries. you can see emergency personnel are getting to the scene. all lanes are closed on the tappan zee bridge after the collapse of the crane. we will keep you posted, but it is close right now because of a crane collapse. we also want to get more headlines on bloomberg first word news this afternoon. mark crumpton has more from our newsroom. mark: trump campaign manager paul mariner fort is responding to criticism that melania trump 's speech copied michelle obama's speech at the 2008 democratic convention. he says that the "hillary campaign is trying to take her down because the threatens the democratic candidate." that we notedue that the clinton camp was the

first to get it out there and try to say that there was something untoward about the speech that melania trump gave. whenanother example that hillary clinton is threatened by female that the first thing she does is try to destroy the person. mark: in a recent interview, mrs. trump said she wrote this speech but acknowledged she had assistance. present obama wrote an open letter to law enforcement, acknowledging that there is danger they face. policees, "any attack on is an unjustified attack on all of us." turkey has stepped up its crackdown in the wake of friday's failed coup. the government fired almost 24,000 teachers and interior minister employees. university deans were told to resign. theresa may says her government must not be defined by the

decision to leave the european union. the prime minister held her first cabinet meeting today. she has told her senior minister that all of them will share responsibility for making the departure from the eu's success. global news 24 hours a day howard by more than 2600 journalists and analysts in more than 120 countries, i mark crumpton. this is bloomberg. scarlet: the global travel industry is dealing with shockwaves in the wake of last week's terror attacks in nice, france and political turmoil in turkey. how exactly is the online travel industry dealing with this fallout? joining us now to steve hafner. steve: great to see you. scarlet: you have access to live data and information coming in minute by minute. what kind of affects have the terrorist attacks had on demand for travel? steve: no one in the travel business likes the word terror because it suppresses consumer demand for services.

for those of us who routinely travel, and make security much more of a hassle. what we have seen so far in the kayak database is the impact has not been as significant from the attacks that we saw last year from paris. we have seen a little bit of a drop-off, but not as much as you might've thought. we have seen a bigger impact on the brexit referendum actually. scarlet: specifically what kind of impact? people insaw 50% more the u.s. looking at searches for the test u.k. we also saw by 40 higher search volume for people in the eu owing to th going to the u.k. scarlet: that was an immediate effect. has it's sustained itself? steve: it has. scarlet: turkey has been at the center of a lot of turmoil over the last couple of years. travel was already kind of

dented. steve: travel was dented, but what we have seen is that there is a definition of a lot of people interested, but the recent events have definitely dampened that interest. scarlet: i've been reading about erdogan is making a stable the capital -- the stamp capital.the steve: it's a beautiful city and something the american should go see and visit. i would just be helpful that he would back off on the rhetoric that's a little anti-american right now. scarlet: let's talk about the u.s. dollar. how is the stronger dollar impacting travel in the u.s. and abroad? steve: we are seeing a lot more people going to europe. historically people like to go to other states of the caribbean , but with the euro and the

pound, more people are willing to travel abroad. at kayak, we find cheap airline tickets and great accommodations. there are new carriers now linking the u.s. to europe like norwegian airlines. there are now hotel academicians that are great -- accommodations that are great value and quality in european cities. scarlet: a lot of people like to look at airplane tickets in the local currency than the u.s. dollar. how successful is that for the u.s. traveler? steve: you can do that on kayak, but the airlines adhere to the rules and apply to the country of origin with the right currency. you do run the risk of being denied entry on the plane. scarlet: that is all available on the boarding pass? steve: the airlines have point of sales policies and we try to adhere to those at kayak and i would to just that consumers adhere to those as well. scarlet: i almost bought a

ticket in pounds, but i got it in dollars. with brexit you saw the impact right away, with the dollar strength, was there and delayed effect with people trying to get advantage of that or did happen immediately? steve: it is a delayed effect because most americans do not think of exchange rates. it takes time for someone saying, you know what? europe is a third cheaper than it was last year. it takes time to build, but that interest will be there. scarlet: how might that inform you on what happens over the next six months to a year? we know the federal reserve is looking to raise interest rates or normalize interest rate policy in contrast with other central banks. steve: i'm a businessman so i cannot speak intelligently about financial policy. overall stable currencies are pretty good for the travel business, even though you have these one-off movements. hopefully there is stability in the exchange rates and then

business will be good for everybody. scarlet: let's talk about airbnb because that is stiff competition for hotels other. out there. what is kayak and your competition due to mitigate those headwinds? steve: airbnb is an amazing company and bought a lot of opportunities that went there. in peak periods of demand, like the real world cup, hotels used to be able to gouge you by taking the price went up because of limited supply. they do not have that same ability anymore with the additional inventory that airbnb has brought online. scarlet: what has been the response? how are they countering the impact of airbnb? what are they doing to make themselves more competitive? how does that translate to what you offer to consumers? steve: we offer both inventory from nontraditional hotels and apartments as well as traditional hotels.

most of the big hotel chains are trying to cite the quality of the service, the reliability of the service they provide, their loyalty programs as well. all the things that you associate with marriott or hilton, the biggest unknown with airbnb is what are you going to get when you show up at the actual apartment? is that going to be an inconsistent experience from where you stay last time? scarlet: and safety is something that big brands can offer that airbnb can't. do americans prefer living like a local or staying at the four seasons? generational,nerall but millennials do not have the same desire to own assets in the same way my generation does. experimental more and they are willing to share. airbnb plays into that very well . scarlet: what kind of surprises

could we expect from the real olympics this summer? steve: the first prize is are the russians going to be there or not? the brazilians have put in a lot of effort to make it as world-class as it can be. hopefully the couple not be a concern and holy there will be a great time to be had. concernwill not be a and hopefully there will be a great time to be had. i think rio and brazil will do a great job. scarlet: have had experience hosting the world cup. steve hafner, ceo of kayak. still ahead, we are going to turn to media. how could a cbs and five, union save the struggling media empire? it's all about sumner redstone. this is bloomberg. ♪

vonnie: i am vonnie quinn. nejra: this is your global business o report. who sources say have the best chance for the yahoo! winning bid. vonnie: the second time is no charm for bayer. the company is open to further conversations. will look at indonesia's shrinking rain forest. indonesia is already the world leader and forced lost -- in forests lost with the dry conditions from el niño making the situation more dire. nnie: the winning bidder for yahoo! may be made in a week. so far, yahoo! ceo marissa

mayer is being tightlipped on the process. >> or boards independent strategic review committee, leaving a well-run and robust process continues to manage this effort and we are making great progress. while we have no announcement today, i can see that we're deep in the process of evaluating proposals and alternatives and will update shareholders as soon .s is it is prudent nejra: johnson & johnson updating its forecast with results driven by growth in the pharmaceutical division. shares of johnson & johnson have almost doubled since the start of 2010 and the company has topped earnings estimates every period since 2010. monsanto has rejected beyers latest takeover offer. the world's largest food company calls it financially. inadequate. bloomberg news has reported that

monsanto might consider a deal with another german company. year,e third time this although has cut its outlook for north american truck market. in theruck orders fell second quarter and the sweetest company says it will lower its u.s. output the summer. volvo sales also fill in europe. vonnie: time now for a bloomberg quick take, where we provide context and background on issues of interest. there is good news about the world's rain forest. , butnd amazon has slowed not everything is well and another part of the globe. in indonesia, dry conditions fires overo led to the course of 2015, the most damaging on record. the slash and burn technique moved over to malaysia and singapore, where pollution spiked to hazardous levels. here's the background. indonesia overtook brazil as the world's leader in forest lost in

,. they are disappearing at twice the race than what the government's report. demand for pulp and paper and especially palm oil surged. produces aboutodies a third of the palm oil crop each year. conservationists are pushing for corporations and consumers to get involved in groups say that indonesia needs to follow the lead of other countries that have slowed deforestation by andngthening its moratorium restoring damages to peak winds. promised dollars to restore the rain forest, but researchers say it could take up a decade to stop the burning that causes the haze. you can read more about the rain forest and all of our quick takes on the terminal. as your global business report. -- that is your global business report. had to bloomberg.com for more

stories. ♪

scarlet: this is "bloomberg markets." i am scarlet fu. in a turbulent battle for control of viacom, the daughter of sumner redstone may just get what she wants. bloomberg gadfly explains why her plan may be exciting for investors who want to in the stocks whil wild ride. >> viacom is in the business of entertaining people. lately though, its shareholders are anything but entertained. sumner redstone, the ailing media mogul that can trails voting shares, and his daughter have been sparring with the people who run viacom. it has become a bitter battle pitting the roun the red stones against the ceo and a number of board members, some of whom you used to be in the inner circle. she can only presume that is using control of her

93-year-old dad's empire, pushing out anyone who stands in her way. the drama is weighing on the stock price, already taking a hit from disappointing quarterly results. $20 billion of shareholder value has vanished in just two years. corporate has been a governance nightmare, it could end in a dream for shareholders . there have been reports that sherry wants to recombine viacom and cbs. he split them up about a decade ago. strategically and financially, and now make sense to put them back together. let me explain. viacom's networks are not as popular as they once were. mtv has lost nearly 300,000 viewers since a high and 2014. it is a similar story for comedy central. the networks are struggling to remain relevant as the industry moves towards things like skinny bundle cable packages and on-demand television. by icons ratings and ad sales are in decline in the stock has fallen behind competitors like time warner and fox.

cbs on the other hand is doing pretty well. les moonves is considered a genius by the industry. if anyone can turn around viacom, it is probably him. a merger would re-strengthen the companies negotiating power against pay-tv providers that recently underwent their own mergers and are deciding which channels are crucial to viewers and which can be dropped from certain offerings. a deal would also simple by sumner redstone's empire before he passes, making the future a lot clearer for shareholders who have to endure the left in the dark for months now. scarlet: that was careless of tara from bloomberg gadfly. we're going to head over now to the nasdaq where abigail doolittle's live in checking out tech reporters. abigail: from a more macro standpoint, we're looking at mild selling action.

pretty fitting for the action that we have seen for the last several sessions. it is probably ahead of the index's next big directional move. this mild move overall for the index really does not tell us about the bigger movers, including the biotech index down more than 1%. netflix is today's biggest mover, down nearly 14%, having its worst drop since october 16th, 2014. that is when the company missed estimates for subscriber growth in the second quarter. the third quarter guide is disappointing. it is setting a bearish tone for the nasdaq ahead of the microsoft report that you just mentioned. this will be a big one after the close today. the company reported a disappointing march quarterback in april. and investors will be wondering if they will see the same thing, especially around the company server business. there is a big drop in the last quarter. they will be also looking to see whether not the company will provide details on the linkedin

update, the acquisition, the cloud business, and whether or not there is some slowdown in i.t. spending. as for the potential influence of microsoft on the nasdaq, we look at this chart over the last three months and we see the disappointing quarters and the big drop-down of microsoft in blue. nasdaq followed. just today, we have microsoft crossing below its of trend. sellers are really looking to pounce. if this quarter is disappointing, we could see the recent consolidation of the nasdaq swing right back down. scarlet: thank you very much. we will be reporting live on microsoft's results after the close. let us stay on the tech scene because apple is reporting earnings next week and it's not looking so rosy. revenue is inspected to fall extra tepid demand for the latest iphone's. analysts are not exactly giving up on the company. the recent analyst at piper

jaffray's spoke in minneapolis. he talked about how apple turn all around. >> apple has been in decline for the last few quarters. it is going to return to growth. when the growth returns, down from 8% in 2016 to up 10% in in 2017, i think that will be the key metric. investors continue to look at the iphone seven and seemed to be disappointed with it. i think that really misses the point. even with a disappointing iphone seven, apple can return to growth. i think that is going to be a positive for the stock. i think there is a lot of outperformance we now in the end of the year for apple. a conversation we had was about netflix and bad communication over what to expect from some of the numbers. tim cook has come under criticism as well in the last couple of quarters about the way he has handled communication and the way he has handled guidance, speaking to the markets,

specifically around issues that have emerged in china. what are your views currently on that communication from apple executives? >> i think tim cook has done a great job. i think he has been in a tough position because china has been such a big win for them and it has had some headwinds. he communicated thatcommunicaten they reported their december quarterback in january. about china times and typically they do not mention that at all. if you would not have made that exclamation point, investors with an irritated. he is done the right thing about communicating that and you will start to see a change in their town over the next few quarters about some optimism. i give him credit for being up front and i think he's going to be upfront about the change in the business that's going to be coming. alix:+++

analysts cannot get a grip on what actually matters for apple. looking at currency volatility affecting iphone sales and others looking at the replacement cycle, what do you say to those bearish factors? >> i think that people are dependent on their iphones. the work that we have done is that read by rates continue to be better than 93%. there is not a competitive issue. people are holding onto their phones a little bit longer, but they are still going to need to upgrade. we think they will come back to the iphone. from an investor standpoint, this is a unique opportunity .ould i woul you have low that expectations and then there is the 10th anniversary phone that is coming out in 2017 that will be a much different form factor. i think investors will get behind that more soon. what i would say to investors is that it has been rough and they are good things coming to you need own that.

jonathan: you are the third biggest price target on wall street run-u right now. ' as investors called you come in considering this is one of the most well researched companies on the planet, what is the one thing people are underestimating? >> the biggest thing they are underestimating is that people can't survive with phones that are three years old. i think that there is a belief that the upgrade cycles are extended three years and beyond. that is not going to happen. when you start to run the math behind that, but shows apple returning to growth. i think that is going to be a positive for the story. scarlet: in the next hour, the ceo of piper jaffray joins us. this is bloomberg. ♪

?c+sv scarlet: it is 1:00 in new york and 1:00 a.m. in hong kong. welcome to "bloomberg markets." ♪

scarlet: from bloomberg world headquarters in new york, good tuesday afternoon. i'm scarlet fu. in this hour, we are covering stories from toronto to washington and i and instabul. the leader of weaken for and the stock market selling off, is it time to look into turkey? i speak with the colorado governor, a potential moneymaker hillary clinton. -- running mate for hillary clinton. an exclusivet an interview with the piper jaffray ceo from minneapolis. let's head to the markets desk where julie hyman has been tracking moves. a lot of earnings to sift

through with netflix being one of them. we're still stuck in this trading range after record highs. julie: there is always the sort of balancing act between all the mixed earnings reports that you get. it's just a question of which ones are sort of more dominant than others. none of them are dominant today in terms of setting the tone for the trading action because the dow is higher. the s&p and the nasdaq are being dragged lower in part by netflix. there's enough on either side that you are not seeing more of a direction. netflix, as scarlet mentioned, coming up with earnings that beat estimates, but subscriber growth trailed estimates because it raised its prices. goldman sachs beating estimates, but equities and trading revenue falling but the company not raising dividends. ibm is now lower at the moment. t saw profit fall year-over-year. spirit airlines came in the

below -- below what somewhere estimated. the are seeing -- we are seeing some pressure from the department of justice. according to bloomberg's reporting, the department of justice is weighing whether to file lawsuits to block anthems cigna, which would consolidate the largest health insurers to three from five . there are some questions among officials on whether this is good for consumers. all of these stocks are trading lower. they took the legs lower after the story came out. stocks, i'may from looking at the bond market and this is something that scarlet alluded to earlier. a bold call from morgan stanley that we could see a 1% yield for the 10 year in the first quarter of next year. he says we are going to continue to see gdp come lower and that is going to cause more buying of

the tenure and push that yield even lower. he really is an outlier when it comes to the call. this is looking at a histogram a forecast for the 10-year note going out to the first quarter of 2017. you can get to this by going to byfc. this is where they are forecast from 1.5% to up to around 2.1%. 1% is almost not even on here. that is how unusual it is for this kind of forecast coming from one of the major banks. scarlet: 1% is literally off the charts. julie hyman, thank you so much. who want to check in now with first word news. markup and has more from the newsroom. -- mark crumpton has more from the newsroom. mark: donald trump is hours away from accepting the nomination as the rollcall estates happens tonight in cleveland. areresident bushes not there.

reince priebus is one of the reasons maybe jeb bush is unsuccessful run for the white house. >> that was a bruising primary. lots of healing to do. i understand that i guess why some people make those choices, but i would prefer that as republicans we would recognize that it's a binary choice. choice, itbinary would be nice if they would be here. bloombergpoke at a politics breakfast. a new name suddenly in the mix as a possible running mate for hillary clinton is tom vilsack. politico reports the former iowa governor has been rising as of late. others reportedly in the running include virginia senator tim kaine and labor secretary tom perez. global news 24 hours a day powered by journalists and analysts in more than 120 countries, i am mark crumpton. this is bloomberg.

scarlet: we are going to stay in that presents a race because the republican national convention will continue to make headlines as donald trump presents his case for the presidency to delegates before a national audience in cleveland. later tonight, we will hear from former candidate ben carson, tomorrow newt gingrich, and then mike pence will address the convention. on thursday, highlighted barrett andlude tom of course donald trump himself. as for the democratic side, hillary clinton is still weighing on who she wants on the ticket alongside her. tom hickenlooper is considered a possibility. an exclusive interview today, i asked the governor how things have evolved since that meeting. no, ande got to say refer those questions to the campaign. frustrated journalist, i am was younger.

, but youying that coul should ask the campaign those questions. scarlet: she says she is focused on governance rather than the election when she considers vice presidential candidates. what specific attributes and skill sets would your experience as a small business owner offer to a present ticket? -- presidential ticket? tom: i do not feel comfortable commenting on that. i do think it is worth pointing out that her command of policy, especially economic development -- her father was a small business person. she really does understand it at a very deep level. an allr words, she, like assets of public policy, she has studied it.she is work with people across the country. the difference between her and donald trump, who does not care

about public policy to a large extent, is dramatic. especially in terms of the economy,ces to the and i'm not just talking about the u.s. economy but the global economy. so much of this is based on having good policy but also predict ability. if you have someone who is changing their mind and says one thing one day and the next day, they say they are changing their mind. predictability is what drives capital investment. if suddenly we have a high level of unpredictability at the highest levels of u.s. government, capital investment would almost without question go down significantly. scarlet: the biggest enemy is uncertainty. mastery of public policy does not seem to be as critical in this campaign cycle. emotion and anger play a pretty big role. what should the democrats be doing to tap into that emotion, that anger, and maybe that

hope? tom: anger and hope are two sides of the same coin. i think somebody people, not just in the united states, but so many people have lost not just their job but their career. maybe they're working now, but they are making a third less or even half as much as they were making 10 years ago. that is very difficult for people. they look to them and they see government not doing what they should be doing. the anti-trade movement i think comes from this. the vast majority of job losses are not from imports or exports trade deals. it is really technology. it is imaging and big data. whole careers are getting washed out and we have to do a much better job. to a certain extent, i do not blame people for being pissed off. we have to get a better job of getting people who lost their career in one place. let's look at their skills and

say how do we take those people and look at new emerging careers? bank tellers, with a nine-month training, bank tellers have precision and requirements for coding. scarlet: let's talk about marijuana. four years ago, you opposed the decision to legalize the drug. yes and soft in your view. -- you have since softened your view. what is your take? tom: marijuana is no longer the first thing i am asked. second or third thing i'm asked. we are worried about the usage by kids and driving while high and edible. we have not seen any of those, at least in a significant fashion, materialized. we still have a long way to go. i tell governors when asked me to wait a couple of years.

we are not sure of the unintended consequences. we are going to see the relevance of less drug dealers. you would assume the salesforce would diminish. we are hopeful that is the full consequence. scarlet: let us talk a little bit about housing in colorado. 2015,the second half of house prices have almost risen 7.5%. it makes colorado the fastest-growing state. does government factor into making the housing market strong? tom: we focus on the overall economy and we try to make sure that everybody gets their fair share. if you look back over the last 30 years, colorado is either first or second in terms of the study consisted appreciation of housing, which i think is one of the strong as economic indicators you have. it means that people are coming into your state. you are growing but it's not a sudden next financial growth.

-- exponential growth. have to hope that job creation matches the influx. we have been first or second for the inflow of mor millennials. they are going to start businesses and create jobs. they are part of economic success we have. we have more miles of bike path than anywhere else. scarlet: livability has gone way up in colorado. part of that comes back to the diversification of the economy as well. that is critical to colorado success. what specifically is colorado doing to attract more business and growing sectors like clean energy? oil and gas at the old industry, but what about clean energy? tom: we are all of the above. we provide a lot of incentive and effort for a lot of research and health care. health care is a growing industry worldwide. we want to make sure that we get a lot of the rmb. many of the large health care

companies, pharmaceutical companies, do a bunch of research in colorado. industries at new over the last five or 10 years, they have really grown and health care has been one of them that significant. materials and energy used to be over half of our total economy. now i think it is a quarter. a diversified economy is a strong economy. any company does not want to have one source of revenue. they want to have a diversified source of revenue coul.. states are the same way. scarlet: that was mike's list of interview with tom hickenlooper. charlie rose will have an interview with hillary clinton double air here on bluebird television. we will have more coverage of the rnc coming up. this is bloomberg. ♪

scarlet: you are looking at a live shot here of the floor of the republican national convention taking place in cleveland. activities really get underway tonight. yesterday, the speech by melania trump marred the evening after accusations that she lifted races from the speech that michelle obama gave in 2008. where does the convention go from here? megan, a lot of attention paid to the speech that melania trump gave last night, comparing it to michelle obama speech. a lot of controversy in the mainstream media. is it a big talking point and focus their in cleveland among the attendance of the rnc? >> it is the only talking point

for many of the attendees here in cleveland. it is because the campaign has not managed to get beyond what many people have said is that they should just apologize or fire or discipline the person who came up with that speech and clearly either lifted or was influenced by extracts from michelle obama's 2008 convention speech. the have continued to defend it in on ways whether it was chris christie saying it was only 7% of the speech or other advisors saying they were fragments of her own words and really refusing to take ownership of this at the campaign. why this is important is not because it's going to be the defining moment of the campaign. it's so emblematic of the struggles they have had coming into what should be the shining showcase for them in cleveland . instead it is missed up after misstep and this is frankly a pretty bad one. scarlet: this is a highly produced event and this has the makings of something that could be improvised as you go along.

obviously the campaign is looking to put these accusations it.leasures and a pas plagiaris what will they be focusing on? megan: tonight's theme is make america work against. . we will have mitch mcconnell and chris christie. they will have high wattage speakers talk on economic policy and touch on trade, which has been tremendously controversial given donald trump's stance on trade, which is almost an anathema. we are looking for unity and for a unified voice. they have really struggled to do that. tonight, that's going to be the critical issue of this night. can they really get a unified message between these groups of senior politicians and donald trump? scarlet: quickly, we have about 30 seconds left. what happened at the rnc during the day? megan: there is a man standing

outside right now who looks like a cross between donald trump and boris johnson. there are lots of people milling about and people who are taking in the whole atmosphere. people selling things, t-shirts, memorabilia. the floor inside the convention center, the delegates are meeting and we will go to the nominating process. you will see if there's another attempt at a mini revolt like we saw on the floor yesterday. scarlet: megan murphy, thank you so much. she is joining us live from cleveland at the site of the rnc. still ahead, is the bear market for emerging market debt coming to an end? this is bloomberg. ♪

scarlet: this is "bloomberg markets." i'm scarlet fu and it's time for the bloomberg business flash, a look at the business stories in

the news right now. volkswagen is facing new lawsuits. it is being sued by new york and two other states over environmental damage by devices that help cheap emissions test. the former ceo and others are accused of orchestrating an elaborate cover-up when the scam can to light. maryland and massachusetts are filing parallel lawsuits. goldman sachs is filing an increase in second-quarter profit behind the rise of falling litigation and compensation costs. fixed income revenue surpassed estimates. share.ome came at 3.72 a that was $.67 better than expected. lloyd blankfein has been investing in technology. 400 people have been drop this year. twitter is teaming up with the mba to develop original content that will run on its platform. to include two exclusive weekly replaysnd combine

with the periscope at. pp. the nda could not offer live games. that is the bloomberg business flash. turkeys lira continues to drop after friday's failed coup attempt. the country's rating could be cut to junk status. the credit rating company said they lower their 2015 forecast for growth. downgraded moody's brooke just before he arrived on set. >> i think there are a lot of questions in the investment community about turkey and whether it warranted in investment grade for probably since the beginning of this year. certainly on the heels of a coup attempt, you have to figure that economic policies of the country are going to take a backseat to erdogan establishing political control. on the fixed income side where

by 25k, country was, basis points, most of corporate is 40 to 60 basis points. i think you will see more of that. >> if you are an investor and held positions in turkish debt or equities, do you get out of that or hold onto your position based on whatever fundamental reasoning there might've been months ago? >> it probably depends on what kind of strategy you are taking. i think anybody who is a short-term traders should probably get out of the way. i do not see the situation getting better before it gets worse. we are seen time and time again that when a government focuses on consolidating clinical control, the economy suffers. it just never gets better. scarlet: describe that path. what is the timeframe in which things pau fall apart? does it take a while or abruptly in stages? >> you seeing growth slow up already and inflation take up a little bit.

i do not think you're going to see a big bump in economic activity. tourism is not all of a sudden -- turkey is not going to be a favorite destination for people for a while. there's an immediate impact, but i think generally that this can take years. you can really start pulling as you startnomy getting the leadership focusing on consolidating political control. they do not care about the economy. they care about politics. >> you mentioned that it's never a good sign for growth when leaders start consolidating power. can you give an example of a country where we have seen this playbook? >> if you take a look at the lost decade of argentina, the issue was that he became president just to consolidate political control. any economic decisions he made were geared toward him. he was able to control the

political situation. it cost argentina a good 10 years. i do not know what will happen in turkey, but if you see this doganre between er and the eu and the u.s., this is not good. >> what would you want to see? >> i would prefer it not to publicly execute all the coup plotters. the rhetoric needs to be geared much more to this is a great place to invest and not so much retribution. hey, we can manage our political issues. ,here's obviously some things there are a lot of things that could be said and done right now to say that we are still open for business, not i'm going to call whoever does not like me. hanslet: that was o humes. we have david kirkpatrick

joining us to give us context. coming up, our mystery stock of the day. it's weak sales and not smoke and mirrors that is taking our stock lower today. focus was not enough to hack its way through government restrictions. that is a stock that has gone up, up, up since september 2015. this is bloomberg. ♪

e scarlet: from bloomberg world headquarters in new york, you are watching "bloomberg markets ." julie hyman has the big reveal

on our mystery stock. it is weak sales, not smoke and mirrors come taking our pick lower today. phillip morris. julie: you had it. i was going to ask joe if he had a guess. you guys both got it today. you both get the gold star. phillip morris came out with earnings that missed estimates. we saw the big up move today. seeing a pullback come after the company posted profit that missed analyst estimates. being hurt by the stronger dollar because the morris gets all of its revenue overseas. -- phillip morris gets all of its revenue overseas. 2.9 billion units.

some other countries now restricting tobacco. that is crimping phillip morris demand. there are still concerns about the health effects of cigarettes, not just in the u.s., but abroad. there's optimism in new ing andogies, vap other things they could capitalize on. the breakdown among the cigarette makers in terms of their foreign exposure, you will see that philip morris gets all of it here. other companies in the s&p 500 that get a lot of their sales outside the u.s., phillip morris is the highest here. altria down slightly, as is

reynolds american. david: i didn't realize that qualcomm gets 90% of its revenue from overseas. julie: stuff is not made here. , most are selling chips of that stuff is made in asia. let's get you the headlines on the first word news this afternoon. mark crumpton has more from our newsroom. ] it could be a big night for donald trump -- mark: it could be a big night for donald trump. he will see two of his children take the podium. son from executive vice president at the trump organization. also addressing the audience tonight, house speaker paul ryan and senate majority leader mitch mcconnell. the likely democratic nominee

spoke with charlie rose. gave myclinton: when i first speech, based on what he had said in san diego, i had followed it, but even i was surprised when we began pulling together all the information. let's return to torture. i will order the american military to commit war crimes. let's pull out of nato. we don't need them. this kind of talk which some people say, well, he cannot possibly mean it best maybe one thing if you said it six months ago and then listens to people who knew more than he ever will know, maybe so, but not now. what he has laid out is the most dangerous, reckless approach to being president that i think we have ever seen. you can watch the entire interview on charlie rose here on bloomberg television. a traffic nightmare for new york area commuters today following a

crane collapse on the bridge that left two people injured. the collapse has forced the closure of all lanes on the bridge. the bridge will be closed until further notice. traffic is backed up for miles in eastbound and westbound lanes. thean investigators say 17-year-old afghan asylum seeker who used an ax and a knife to attack train passengers wanted to take revenge on infidels. islamic state has claimed responsibility. five passengers were wounded. the suspect was shot and killed by police. in australia, malcolm turnbull has been sworn in for a second term as prime minister. was theral collision narrow winner in the july 2 election as government will have control of just one seat in australia's house of representatives.

global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. turkey's highest education authority has asked university faculty heads across the country to resign. the council of higher education seeking the resignation of 5000 deans at state and private universities nationwide. we have been following this story carefully. we knew the central bank was meeting today. they cut interest rates. >> this is the real story. for beingthe reason cautious on turkey going forward was not the coup per se, but the backlash to it. the attempt by her to want to consolidate power further -- e

rdogan to consolidate power further. peoplea further purge of suspected of not being friendly with the government. you see the market reaction instantly investors not liking the way this is going. the turkish lender has canceled a $550 million on sale. hans says youing don't want to see happen. this turmoil means business cannot go on as usual. slow orre is the long, rapid consolidation of power. there's the short-term issues of the need for foreign funding, banks and support. so forth.nd if you have this fear of investors, that put a lot of strain on financial

institutions. scarlet: you wonder how much this will affect the demand for emerging-market assets. they had already covered after the brexit vote, the post brexit confusion. now, turkey is here to remind everyone of how quickly things can change. , during the worst ,f the emerging-market selloff the rookie little problems in brazil and the scandal in malaysia and the issues with the destabilization at the ministry of finance and south africa. you don't hear as much about those stories anymore. however, turkey is a good reminder that that political risk lurks out there in countries with less stable institutions. scarlet: much of the risk has been in the developed world. of --ould be the year

>> things we would never expect to happen. we will talk about an interesting way to look at italian banks. we all know the bad debt story. how difficult it is to get italian banks out of their mess. a story looking at the challenges of taking these nonperforming loans from italy and packaging them in some way and raising money from them. system orn group c tested it could take eight years to deal with the bankruptcies. you are buying into this pool of nonperforming loans. you are hoping that they liquidate and the properties eventually accrue to you. scarlet: 7.8 years on average

compared to an average of just over two years for the rest of europe. turkey is not even as bad as italy. greece is at the very other end. people would assume that greece would be up there, too, given the reputation about corruption and inefficiency. thing, extraordinary inefficiency for investors who want to unlock some of the assets backing up these nonperforming loans, really shows what a challenge it is to sell these assets to raise money for the bank. many saythat's why there's no other solution other than a bail in. >> it speaks to the whole idea of raising money through the private sector is so difficult. scarlet: we will be talking more

about this later on today. we will discuss toronto's condominium market after canada's housing agency says there is no risk of a bubble. this is bloomberg. ♪

scarlet: this is "bloomberg markets." we want to head to minneapolis were matt miller has an --lusive interview with matt: really appreciate your time today. thank you for joining us. i was flying over here thinking what i wanted to ask you. the main theme this year has been we are seeing stocks at an all-time high.

rates at an all-time low. andrew: great to have you here. the only way you can reconcile it much your point, it is unconventional, i would argue is extraordinary monetary policy globally which has brought so much liquidity that it has impacted yields and created a search for yield that will ultimately go into the equity markets and pushed evaluations -- push the valuations. -- when youilities look at them on a pe basis, they don't make a lot of sense, but when you look at them on a yield basis, that is what has gotten us here. matt: we were just talking about matthew marbach from morgan stanley coming up with a tenure year.- a call on the 10 andrew: we are entering more

economic strength. we should see 2% gdp in third and fourth quarter you have improving employment, consumer confidence, a bit of inflation. bias tothe fed has a try to normalize the yield curve or start the process. i would be very supportive of i would be very supportive of that. matt: we do have unemployment below

a business we already have. so, that works. a fedas we look ahead to at may be ready to move back up again, as we look ahead to an election, where do you see the risks? andrew: it normally an election does not present a lot of risk. this one is potentially unusual with a level of uncertainty and there are less tenured politicians.

matt: one of them is very tenured. andrew: fair enough. matt: what about the fed? andrew: i would like for janet yellen to move the yield curve up and begins normalize. the stimulus benefit has deteriorated. meanwhile, the search for a yield is slowly creating asset bubbles. it would be very productive to begin to bring rates back up. matt: think is a much. -- thank you so much. scarlet: we will have more coverage on bloomberg. ♪

scarlet: this is "bloomberg markets." developers in toronto are making sure they reach a higher level of sales for they begin construction on condos there to avoid the housing bubble that has unfolded in the city or did unfold in the cities back in the 1980's. for more, i want to bring in amanda lang. does this alleviate some of the concern about a housing market bubble in toronto? amanda: this report is suggesting that we are seeing signs of conservative behavior on the part of developers, almost 80% of them waiting until they are more than two thirds sold before breaking ground. the remaining 20% are large developers with good track records or the project or small -- are small. you can also see that conservative behavior as a negative sign, the developers are nervous.

on the one hand come it is a double-edged sword. we will not see major bankruptcies, from the sounds of it. on the other hand, the folks closest to the ground seemed to be displaying behaviors that make them nervous. scarlet: the government agency that insures mortgages in canada , does that programming a major price collapse? amanda: it is supposed to stabilize the market, like fannie mae o but in a slightly different way. taxpayers are exposed to any big market correction. even our central banker remains those are big economically important areas. are taxpayers overly exposed? we will see a reduced exposure

to mortgages. mortgage insurance was dropped to 50%. that means the other 50% is now privately insured. are they as careful or are they a little more risk willing when it comes to granting new mortgages? a bit of economic spillover. scarlet: amanda lang, thank you so much for the perspective. hour, we in the next take you back to cleveland for day two of the republican national convention where muriel bowser is promoting her efforts to make the district the nation's 51st state. this is bloomberg. ♪

sherry: it is 2:00 p.m. in new it is 2:00 p.m. in new york and 2:00 a.m. in

hong kong. to bloomberg. are covering stories out of san francisco, cleveland and new york and washington, d.c. in the next hour. : say goodbye to stocks -- morgan stanley billing bullish and bonds saying the 10 year treasuries will fall to 9%. vonnie: facebook live is harnessing hundreds of thousands of viewers each day. gaminges ahead for the scene around the world? shery: with the mayor of the district of columbia thinks of e