increasing anxiety over global growth in a new era of populist politics. alix: controversy ahead of the election. the dnc begins today as the head of the committee resigns ahead of another e-mail leak. jon: and/or a warm -- a very warm welcome to "bloomberg ." we begin with some breaking news with yahoo! buyingerizon is yahoo!'s operating business for $4.83 billion in cash. you have verizon stock up by .3%. verizon is buying yahoo! operations for -- operating $4.83 billion.

great reporting by alex sherman over the last few days for this. the verizon sale will not include yahoo! cashiers in alibaba, and verizon will be integrated with aol. alex sherman is joining us now. you scooped this on friday. talk us through what happened in the last 72 hours because there were still stumbling brock's -- tumbling blocks on friday. alex: verizon was always a favorite and we have been talking about that since january. verizon upped its bid. in the last round of bids, verizon was still only bidding between $3.75 billion and $4 billion. that was not the high bid. yahoo! had more or less put pressure on verizon saying if you want to buy this thing, you have been the presumptive buyer the whole time, you have to step up and increase the bid.

we realize you do not want the nonessential into little property that is not part of the deal, but you still have to bump it up a little bit. verizon figured when push comes to shove, at the very end here, that is when we will make our move. but we do not want to go too early because we do not want to bid against ourselves. so that is what happened when the final bids finally came through, which was early last week. verizon did in fact bump its bid, and that got the deal done. way this works is that people sharpen the pencils and try to justify the higher price. how do they justify the higher price? alex: that will be a question we might be able to find out more about in 10 minutes or so. what is verizon's strategy? why are you paying for yahoo! and integrating it with aol? yahoo! has almost doubled the that aol does.

you can see why yahoo! would trade for more than aol, but aol has a stronger ad deck platform. you want to integrate this technology with your traffic, then marry that with verizon's fledgling mobile video product. that is the general overall structure. jon: let's talk about the people in the story because yahoo! is set to change the name and become a publicly traded investment company. you imagine the general assembly in -- the general assumption is that marissa mayer will not be getting that job. at verizon, there was a sense that tim armstrong would run the business. talk about marty ball seven over at for us -- about marty walton over at verizon. i do not think the

profitability has been divvied up with who will be running what. we will be able to ask them directly on bloomberg tv what each of you are going to be doing here. this has long been thought to be tim armstrong's idea. you can move the clock back --ost 24 months now went there were talks between tim armstrong and marissa mayer at that point. aol was in the background, verizon was in the background. tims not a coincidence that armstrong just happens to be at verizon and now this deal is being done. obviously tim armstrong is going to be a ringleader here. what exactly his responsibilities are compared to other people at verizon, i am sure that will be answered today. david: we will be talking live with tim armstrong and marty walden in a few moments time.

drama behind the tim armstrong and marissa mayer story -- they were colleagues at one point, friends at one point. he was the sales guy, she was the product person. what is the story that tells us? alex: they did a deal, so that would indicate there is not too much animosity there. they have maintained their friendship certainly to the point where there is a working relationship. but there will be attention when one person is losing their company and the other is buying it. tim armstrong has wanted to run combined aol/yahoo! that is something that has been an aspiration of his for a while. exactly what he plans on doing that marissa mayer has not been able to do certainly must have to do with aol assets. that is really the idea here, he must have a plan to merge aol with yahoo! in an interesting way.

and our their future acquisitions down the road that is part of the armstrong plan that may be marissa mayer was not able to do because she did not have enough firepower at yahoo! alix: even with yahoo!, you have this verizon that is third in the digital avenue, but third by a lot compared to facebook and google. are they happy with their plays? what will they do to fill that gap? alex: there is no doubt this is a bit of a change in strategy from verizon's standpoint. they will not play this price war game, but they have been a part on thetrying to compete wireless side of it with tivo and sprint and at&t. now they are changing focus and they will invest $10 billion or digital adng the game and trying to marry this with some video mobile product. we will have to see how it evolves through the years and

see if it really picks up with millennials. there is an irony that you are -- it -- that you are does appear to be the plan. david: it is a fundamental shift for verizon, which is basically a subscription-based company, a telephone company. this is now an advertising fight, buying aol first and yahoo! is verizon prepared to move into the advertising business? alex: they clearly are. this is an advertising play. they want to and feel like there is a lot of room that they can grasp whether or not competing directly against facebook and google or scoop up other players, it will take a lot of work to get up to one and two. it hints at our their other acquisitions down the road? are there more digital ad plays? twitter talks about

being a candidate for acquisition. that is a hefty paycheck, a have the price if verizon wants to buy the whole thing. is there some way that you can do a partnership there, buy a stake in twitter? to alex's point, it is the $4.8 billion deal for a $200 billion company. we all know the name yahoo!, but it is a small deal for verizon. bet: they are making a huge on a company that is so huge. alex sherman, wonderful reporting over the last three days. we will have the big players with us this morning. verizon's executive vice president, marty walden, and aol's ceo, tim armstrong. away from the big corporate story to the big story over the weekend, the g-20. i want to bring in enda curran

on the g-20. -- it often says the same thing and then they reproduce it again and again. what have we learned from this weekend? enda: good morning, jon. this meeting came a month after brexit sent shockwaves across ae world, and there was feeling that policymakers are hearing the anti-globalization wave. they are hearing the rise of populism and they are trying to push back because the communique put an unusual emphasis on inclusive growth and sharing the wealth. of course, as always, with the g-20, they are short on tons of

steps. nonetheless, there seems to be a recognition that perhaps there is a new push to do more on the physical side for those who cannot afford it. we are seeing that in canada, korea, china, even the u.k. talking about boosting the bootstraps there. there was another pledge to do more. that remains to be seen, whether they will actually deliver. putting pen to paper in a g-20 committee k, going home to their respective -- in a g-20 communique, and going home to the respective parliaments is a different story. jon: may be a shift where they acknowledge populist politics and that they have to do more in terms of fiscal policy and structural reforms. we begin the week and investors look to one thing, the potential for more stimulus from the likes of the bank of japan. our survey points out that expectations are right up here, so what can they deliver?

enda: they are sky high. there has not been much anticipation for governor kuroda to deliver since he took office in 2013, which begs the question, is it being set up for disappointment. do when theyboj are ruling with helicopter money? order, cut theto negative rate deeper. or pull a surprise out of the hat. but no doubt about it, it is yet another week of high anticipation on governor kuroda. enda curran in hong kong on the g-20, thank you for joining this program. david, i think it was you who came over to me once with a series of communiques from the g-20. there is a word change here or there, but not much. jonathan, last week it was cleveland. now the presidential race moved to philadelphia, where the

democratic convention begins today. the democrats have followed suit on drama. we are joined by megan murphy, reporting from philadelphia. what is gone with these leaked e-mails, and why do we care about them so much? megan: it does seem like inside baseball, causing turmoil in the democratic party as they prepare to kick off their convention. debbie wasserman schultz was forced to resign yesterday after it was showed that she was actively involved in what was leading into hillary clinton's campaign and favoring her campaign over bernie sanders. to have the chair of the party's committee resign on the eve of the convention is drama like we have not seen at one of these conventions in many years. it looks like the democrats are going to rival the republicans

for a convention that is full of news. david: it is pretty clear that hillary clinton and her kmart -- hillary clinton and her campaign are trying to move past it quickly. she tried to set a different tone. mrs. clinton: i am not going to engage in that kind of insult fest that he seems to thrive on. whatever he says about me, he is free to use up his own airtime and his own space to do. i am going to talk about what he has done, how he has heard people in business. david: megan, there you have it. what are they trying to do this week in philadelphia? megan: i and not sure that is a different tone. hillary clinton is very sanguine about the fact that this is going to be a very brutal campaign, where he has branded her lying, crooked hillary.

cleveland was an incredible rocky, unconventional convention. donald trump has gotten a little bit of a bump this morning, showing that he is pulling even with her. what she will face and what the true challenge is for her, she will try to set a positive message this week. she will have barack obama, joe biden, michelle obama speaking for her. at the end of the day, it will be a true war, with independent voters weighing up two very unpopular candidates. who are they going to vote for, even though not a lot of independent voters really like either of these two candidates? david: i saw a cnn poll that had trump ahead by three points or so, which is not surprising coming off his own convention. what does hillary clinton need to do to persuade voters, to win this thing? megan: the white working-class voters -- they call them reagan democrats, people who have felt very disenfranchised,

disaffected by the economic shifts we have seen, people who have been struck out of the labor markets and who have struggled to get back into work, people who feel like the american dream is no longer theirs. those are the voters they are both competing for, and that she needs to win over with a positive message that i have a better vision for america than donald trump has. david: that is megan murphy reporting from philadelphia. alix: from the drama in philadelphia to stocks. verizon is paying $4.8 billion for yahoo!'s core assets. and tim marty walden armstrong will be joining us to give us the details and what happens next. suspended inis premarket trading. this is bloomberg. ♪

jon: from new york city, this is "bloomberg ." at anp 500 closing friday all-time high. futures doing their thing, firm, stable, positive. in europe, equities are on the charge with the dax up by a full percentage point. business confidence is out today, showing in access -- showing an absence of any real brexit anxiety. in the fx market, dollar-yen stable around 1.06 -- around 106. but overwhelming amount of economists are spending stimulus from governor kuroda. in the commodity market, brent and wti near two-month lows.

brent crude is at $45.41. a quick look at the bond market. yields on the front end of this was curve, coming up four basis points, though still overwhelmingly negative at -1%. alix: unreal. you know what is also unreal? yahoo!eaking news about and verizon. marissa mayer is planning to stay into the company. it is important for me to see yahoo! into the next chapter." marty walden is saying they will come back when ready to talk about leaders. the statement was that marissa mayer would be leaving yahoo! on any type of sale of its core business. now that might not be so clear. for more m&a as well as deals and earnings, john gonzalez joins us now for more. jonathan, great to see you?

m&a really coming back. average premiums are 25% right now. what does that tell you about the overall state of the market? john: it is a really big deal. one of my concerns after the brakes at issue was that corporate activity would try up and that that would be a damper on the banking sector, on the market more broadly. that is absolutely not the case. the market is wide open for market volatility. david: why does this seem to be the tech sector? alix: energy has not seen the pop we have been looking for. jon: the fact that there is deal activity going on there right assume yahoo! is really about yahoo! as opposed to something broader. we also see in health care that the sector has jumped back into favor, which is a group that had fallen out of favor. alix: which leads us to the

other big theme of s&p, which is earnings. 128 s&p companies have reported. is it because expectations were so low, that we are seeing some kind of clawback in topline growth? jon: the answer is yes. last earnings season, remember, the market had just fallen apart and earnings estimates came tumbling down in april. a big makeup is that we are seeing. of 6% is huge.ch david: the important word is "beat." year over they are down year-over-year. what does that do to price-earnings ratios? jon: let's talk about the growth rates. you have to throw out the energy sector, which is the reason the overall growth rate is as

negative as it is. if you take out the earnings for the energy sector, we are going to see positive growth rate more broadly. as far as the pe for the market, right now under 17, i do not see that as a problem given where interest rates are. alix: jonathan, thank you so much per jonathan golub. lots more coming up with you. we want to turn back to the big deal of the morning, verizon announcing it will buy yahoo!'s operating market. -- marty walden joins us, as well as tim armstrong. thank you very much for joining us in this very big deal on this monday morning. tim, i want to start with you. what was the interest of yahoo! from the verizon/aol standpoint?

tim: we have collectively come up with some scale goals for the company, and we want to be competitive in the next generation of how digital is taking over the world from a consumer media standpoint, so we let out a set of 2020 goals when we did our deal last year. the main goal is to get to 2 billion consumers by 2020. for us, the yahoo! brand is an excellent brand, the yahoo! team is an excellent team, and it fits into the larger strategy. from our standpoint, if you look at what we announced 12 months ago on our original deal to what is getting announced today, you will see a line of straight focus and straight strategy focus. david: this is not a big surprise. yahoo! had been in decline. it had been losing money. how quickly can you turn that around and put it together with

aol and the other verizon asked next -- other verizon assets? >> it is going to take a lot of work. we understand that it will take some work to integrate it, but we are confident that there are brands that people love and there are billions, as tim said, in terms of audience that we can -- that the that that we can bring to the platform. it is hard work putting two companies together, but we feel like we have the right talent and leadership to make that happen. specific?ou be more we expected you to say that they are great assets, but can you identify the assets that verizon of that can make the job yahoo! that others cannot. : when we bought aol, it was obviously about tim and his talent and the acid capabilities. he had a great brand, but we were not at scale.

is alreadyhose two the right start for us. but we also have been investing and content assets across verizon, so you have seen us go from licensing linear content and moving into ownership, a company called complex, which we have a 50% ownership in. we are building out our digital channels. we are making investments in mobile, which is incredibly scale theon how we business. our goal is to take all of those content assets and bring those across the digital platform that bring more people to the platform and ultimately make the flywheel spin. jon: a lot of people would say when you merge two companies, it is difficult because people lose their jobs. but when you move two pieces of technology, that is very difficult. how will you do that? tim: taking a step back is probably the most important time in global advertising, a $600

million industry -- a fraction of it is digitized at this point. advertising will be as easy as e-commerce. we will be building with yahoo!, buying a set of platforms and assets to attack the $600 billion industry. now, thee we sit integration is going to be focused on a planning process with yahoo!. one of the things that has happened with the auction dynamic, we have not had it tremendous -- we have not had a tremendous sense to sit down. the reason this deal is different, you will go everywhere from mobile video at scale with incredible content from the nfl and nba all the way through our ad tech landforms and systems. from a combined entity, we will serve over one billion consumers with some of the best brands in and we work with

silicon valley all the time. we have multiple offices there. the yahoo! team we have spent time with, i think we both have a similar strategy and similar outcomes. there may be synergies in the deal, but the deal is about growth and we will focus on the growth areas. synergies have -- synergies will come, but it has to be about strategy and structure. alix: talk a little bit about who will be running what. it was the popular belief that were so why are -- that marissa mayer will no longer be with yahoo!, but from our wire, there is talk that she is planning to stay. when we bought aol, all of the management team were working side-by-side to talk about who was going to lead, what roles people would play. we were doing that before the deal even close. we did not have the ability to talk freely about those things.

tim and i will be out in the area this week with marissa and her team. we will talk about integration plans. andill come back to you talk to you about who is in what leadership roles. for us, for verizon, tim will lead the integration for us, and we will work closely with marissa and her team to make sure that we have the best and smooth integration and all of the best talent. ask -- you i want to are number three now, but distant from google and facebook in the mobile advertising business. what do you need to get to that scale yet they? that really route matters is mobile. verizon is the best company on the planet in serving consumers with mobile services. you look at the investments for us and has made, it is a company that has aggressively moved from

just being a network into being a full-service provider for consumers. that is a huge differentiation from google and facebook. the second piece is that mobile in terms of media consumption has radically changed the way consumers are taking media and taking advertising. if you took a step back and said today is my first day on planet earth, what do you think is the most important aspect to focus on and who would you partner with? aol, verizon,n of and yahoo!, the reality is that if you look at the hundreds of media companies in the world, the hundreds of internet companies, being number three with an opportunity to gain market share is what the deal is about. from the verizon side of the house, it is a very smart deal. you look at the top five internet copies of the world, their valuations are in the hundreds of billions. verizon in 12 months has gotten

into the space for an investment of around $10 billion. when you look up and say we are number three at a very reasonable investment size overall compared to what the upside valuation is and you have a very hard-working team of people at yahoo!, at aol, and verizon that will work well together, this is a very strategic deal and a very important deal for the future. persuasive is always that you have a long way to grow to catch up with the big guys. do you need to buy more companies? get the scale, are there more acquisitions in your future? will never say it's the end but we think this is a really good start for us. as i said, we have been assembling and making investments in content. it has been the millennial content that is growing at record pace. we will continue to do that and

work with our partners. we had a number of people reach out who are excited about the deal. through partnerships and investment, we will continue to scale this business. verizon has not been shy at scaling businesses. i think you will see us do it again and when we do something, we plan to compete and plan to be successful. jonathan: who is driving the acquisitions and do you have a blank check? >> it's a team effort. we have several things we continue to look at. got a team that helps support that and we will continue to talk about how we scale this business so he plays a huge role there. we will continue to be active. it will be the right things at the right time. take us out two or three

years and let's assume this is a successful deal. what made it successful? is it the advertising and content side or are you selling more wireless? i know you will save both that what really drove this deal? charters i have is not only to build products and services for our core businesses but lowell and the board have asked that we stand up businesses that can generate multiple billion dollars of revenue in the future. goal for this is to create an incremental opportunity. we always want the core businesses to grow but this is about standing up a business that will generate that kind of revenue in the future. we hope both grow and we believe they will. this is a new stream of business for verizon. the famous saying that culture eats strategy for

breakfast, culture is the wonder -- is the one thing we want to get done. we are integrating the cultures together. today, we are a different company. we did the millennial deal, the microsoft deal and now we are announcing the yahoo! deal. it's important that the yahoo! team bleeds purple. we have a commitment to the yahoo! ran. data brand. growth ande revenue profit growth but more importantly, culture growth. from our standpoint, the people coming together and working properly together and being excited for the future is the most important aspect of the deal. david: you talk about strategy but most deals fail because of the culture clash. you know that yahoo! comes from valleywest coast/silicon culture as opposed to aol on the

east coast. huge presence in silicon valley. i started my career working for paul allen, the cofounder of microsoft. that's when the west coast started to take off. i spend my time shuttling between new york and california for the last 15-20 years. i think we are uniquely positioned as a company to understand both coasts. we call it culture in code at aol but the real culture of new york mixed with code in silicon valley and the rest of the world is what will make this successful. i inc. ucla popping up -- i think you see l a popping up and paris. i don't think silicon valley and new york are different anymore. you're bringing culture and code

together and we are operably the best positioned company to do that. to thee are listening head of product innovation at verizon and tim armstrong of aol. who and how will you be leading this combined company? what rolet say marissa mayer will take him but there was so much pressure from and she washolders not able to turn the company around and had to resort to a sale. it makes the case for wanting to keep her in any kind of role. process has, this been completely different than what we did with tim and the aol team. we need to spend time with marissa and her team. she will be key to successful integration so i will leave it at that are now. we will come back when the time is right but it's premature to

talk about who will be in what roles. alix: if you will look to her during the transition process, how long do you expect it to be? >> we did our aol deal in 3.5 months. we expect this one will take a bit longer. we will know as we get further into it and cross all of the things we need to cross. it to be the end of the year or the first quarter before the transition is fully done. tim will be leading this for verizon and aol. we will be working on her plans to make sure we have the best outcome for the employees and shareholders and for all of our partners which is important to us. alix: thank you both for your time. congratulations on a successful deal with yahoo!. walden as well as tim armstrong.

hear from the yahoo! ceo marissa mayer later in the program during our 9:00 hour. you do not want to miss that. it's a busy morning. if you had withdrawal over the weekend, you are getting your fix right now. what struck me about that deal is if they know what the future of marissa mayer is, they will not reveal it but perhaps she can do that herself. alix: will it be one year or more? david: how long do you pay her as opposed to what she actually does. let her have her dignity and have a smooth transition. i don't know if that's what they are doing but that's how i would handle it. alix: it would be no surprise if she was not part of it. star board value wanted the core assets being sold.

beenhareholders have against her pretty intensely over the last couple of years. we are not sure what she has to do with a merger like this. forward, it's a $5 billion deal and verizon is massive. you had a blank check but there will be more add-on deals here. david: especially if you want to catch up with google and facebook. they are so huge so it will take something more. 5.2% compared to facebook at 15%. clearly, there is some confidence in u.s. businesses but this yahoo! story is different.

verizon looking for $5 billion deals. it must mean something in terms of confidence. >> there is no question whenever you see egg headline name deals and more than the size of it, the headline name is one people are familiar with. this creates a lot of buzz about stocks in the market and is good for investors. it has moved to the market more than the earnings season or the economic back up. the buzz is going to be a big deal and that's good for markets. it's also a different kind of deal. it's not simply growing the top line growth. they believe they will build a better mousetrap. i am not a banker in the tech space so i'm not sure how much i can add to that discussion. the markets and investors love to see these kind of headlines and it creates laws

and excitement and we have seen the stock market at all time highs and this adds to the enthusiasm. alix: also better earnings. the chatter at the end of the second quarter was this trough. the trends have reversed, oil is selling off steeply again and the dollar is going higher. does that change the earnings picture over the next two quarters? >> a tiny bit. about oil ands supply and demand. a stronger dollar is bad for oil. that probably puts a damper on the recovery in the energy sector. gets stronger, it draws assets from around the world into the u.s. and that pushes multiples up. while it's a tiny damper and earnings, i'm not sure it's a negative for stocks. david: as you look at these earnings coming in, are there

particular bellwethers you look for? when we look at all the sectors with the exception of utilities, we have results for nine of them. you are seeing nice speeds across the board in the more cyclical part of the market and where the market wants to see it. when you see good results and industrial mains and tech names, that's much more rewarding than if you see a beat in telecom or staples. those are doing fine but the servant -- the cyclical sectors are really killing at this quarter and that's a big positive for the market. alcoa earnings used to be the big story. jonathan gullible -- golub thanks for being with us. alix: credit versus equities next. are you better off betting on

record highs in the s&p 500? you will find out next. this is bloomberg. ♪

david: this is "bloomberg ." coming up later, yahoo! ceo marissa mayer will join us to talk about the verizon deal. jonathan: from new york city, i am jonathan ferro. weak corporate earnings are driving new highs. what is causing the shift in how should you position your money? stephen caprio joins us now.

great to have you with us. if you want to face a risk, you say go after the s&p 500 and envoy -- and avoid high-yield credit. >> i think a lot of the recent rally has been less about the did for yield and a lot about less supply. we have high yield issuance down depending where you are on the credit rating spectrum. that means companies cannot refinance debt. it's not good for the long run fundamentals. credit spreads are tightening at a time when default rates are starting to rise and ban' nonperforming loans are increasing. that's not a good single -- signal. we think the dollar could become a boost to earnings if nothing changes from today. equitiest framework, provide a better value than high end yield. alix: why isn't this bad for

stocks? there is a natural progression in past credit cycles were credit spreads will widen first for the s&p 500. last six months, that is what we have seen. high-yield borrowing costs are 150 basis points higher than where they were at the low point in the cycle despite the move lower in treasury rates while the s&p 500 make new highs. a lot of investors we speak to are waiting for the s&p 500 to fall. they are not looking at u.s. high-yield which keeps me worried in terms of a crowded trade. jonathan: is your point that if you have to be bullish with risk assets, the point of being bullish on the s&p 500 is the first thing to drop will be credit? exactly, how has high-yield beaten equities?

if the five-year treasuries all, that implies no fed rate hikes. to have credit spreads tighten again when default rates are rising. that does not seem likely. alix: we are pondering, who cares? there are negative yields all over europe as well as japan. you want yield where you can get it, right? >> and that technical is strong but it's stronger in risk-free assets or higher quality assets. treasuries, investment-grade thereate, high-yield -- is $15 billion of inflows in the first-half of this year and 95 alien dollars of outflows -- $95 billion of outflows last year. investors want yield but they are more willing to take a duration risk rather than credit risk. jonathan: do you see the story as cyclical that will have momentum behind it? is there something fundamentally that could beat changing?

>> i think the dollar strengthens and the fed becomes more hawkish. any type of dollar strengthening will lead to negative feedback. you'll see pressure in emerging markets and china which would force us to back off. to the extent the fed becomes more hawkish, i think that would damage the s&p 500. it would also do damage high-yield because oil prices will likely follow that scenario. alix: we have seen this play out, there was a $320 million debt offering that fell through. investors shied away from that. jonathan: we have seen a couple of auctions whether it's where the or bunds demand has started to come away. are we seeing signs of appetite >> starting to wane a little bit? >>i think so given how quickly spreads of mood. could be aseads much as 100 basis points expensive.

we keep a neutral view in the asset class because the technicals are strong. looking out further, the fundamentals, you have leverage at record levels. there is a limited bid for high-yield. it's a more risky place to be and it's longer run and the equity universe were sentiment have been weaker, you have a better chance that the equity market could bubble up. jonathan: thank you very much for being here. oil is on pace for its biggest client since early january. we will debate the next stop for oil and a big preview with oil earnings from chevron and exxon. this is bloomberg. ♪

alix: this is "bloomberg ." it is the chart that will help

big oil earnings this week and scare them going forward. it is global refining margins. joining us is dan dicker. he taught me everything i know about oil. we've got to blame you for this. you give me money on the backside, i will take the blame. alix: these are the global refining margins which went up and that has saved the integrated as oil prices have fallen but that has now turned and global refining margins have started to roll over due to the glut of gasoline demand. what does this mean question mark >> this is a big deal. it has put a damper on what we thought was a steady rise in oil prices through the rest of this year and we are now looking at such a glut in refined products that it literally stops the flow of oil into the refinery places. refiners have to make a choice. some of them have switched to

what we call a winter blend which is a little bit cheaper make. they can look for some export markets but clearly, what is happening in this country is that when gas prices went down in the past, you would get this economy 101 with people burning more gas. people would travel more and by trucks. none of that is happening this year. the reasons for that are confusing. i think we have run out of space in terms of infrastructure. the traffic is so bad that no one can get anywhere. i don't think there are many more cars you can put on the road which is a major problem for the u.s. economy in terms of growth of that is supposed to happen in gasoline usage when the prices are this low. does it mean for the big integrated oil majors?

it's him is like a natural hedge for the $45 crude. importanteam is less to the majors than upstream, the p sections of that. it's a difference from 2015. they made some of that money back but overall they did terribly but with place -- but with prices going up a little bit and refining going down, they are happier with oil prices higher and production margins better as a root -- as opposed to refining being worse. in terms of earnings, expect to see good earnings despite the downstream problems from the majors. if you were going to play into the oil space now which i don't think you should come i think you should play it it in natural gas. if you are going into oil, i think majors are the place to

go, the big names. valuewhy'd you see more than natural gas? >> we have seen a rally from under 2 over the -- we have had these huge degree day records. june was the worst in 25 years and july looks like it will be worse still. a lot of the natural gas stocks are raced upon what you get in degree day numbers and the rest of the summer looks as brutal as the last week. in thell be a catalyst short term for a lot of these depressed natural gas producers. david: so pick a couple. ot and a couple of others are good plays in natural gas. alix: you had a $150 price target for gas, have you changed of that? >> there is a short-term blockage in terms of refined products.

in the united states, production continues to fall. morgan stanley came out with a report today that outside of opec and a huge production fall in brazil and canada and mexico. these play into a huge supply shortage going into next year and the year after. i have not changed my call. alix: we will get them back on that call. thank you so much. jonathan: coming up, much more on the deal of the morning, verizon buying yahoo!. marissa mayer will be with us. much more from new york city, this is bloomberg. ♪

buys yahoo!'s core assets giving a big news to the verizon advertising. jonathan: the g-20 finance

cheese signal anxiety over global growth. alix: controversy ahead of the convention, the democratic national convention begins today as the head of the committee resigns over another e-mail leak. jonathan: from new york city, a warm welcome to the second hour of "bloomberg ." it's a busy start to the trading week. david: that is fair because we let up with the big verizon/yahoo! deal ending the two decade run as an independent company. alix: marissa mayer will join us to talk about the deal and what it means for her as well as core investors. first, you will look at the

markets. jonathan: things are stable right now. futures are stable but positive throughout most of the session for the united states. in the equity market in europe, almost one full percentage point. anxiety is not there and that has given a lift to sentiment. there is a dollar-yen story later this week with a boj decision coming up friday. the yen is down 11 percent which is the augustine years. looking at the bond market, yields are pushing higher. market,ommodity in-depth's check in on coverage on art top stories. we will talk about the

verizon/yahoo! deal. the democratic national convention kicks off today so let's ring in jeff mccracken on the verizon/yahoo! deal. we talk about what this means for the but -- combined company but what does it mean for the losers? began in january or february, there might have been 20 different people who bid. runate equity funds made a and we know at&t looked and dan gilbert look and yellow pages look. they had different views of what they could do with yahoo! dan gilbert thought he would run the company and be a better manager. he would ring out the inefficiencies. at&t were looking at it as a way to poke verizon but get into the mobile ad space. -- they arenewer nowhere near google or facebook. these companies were not going

to spend as much as verizon but they had different philosophies. alix: we talk about the future of marissa mayer. walden seems to be a leader of the combined companies. is this her deal? >> we wrote about her a couple of weeks ago. her presence and her name is growing a lot in silicon valley and in new york. she is becoming a known entity. former us a meyer, what happens? she will leave but they will not admit that now but why december or january, she will move on and work for maybe a private equity fund or a venture capital company and make a fair amount of money. many shareholders are pretty disappointed with her performance. alix: what does a combined verizon/yahoo! look like? it's probably the most important time in global

advertising, $600 billion industry and a fraction is digitized and eventually, advertising will be as easy as e-commerce oh it's about putting together the commerce systems. we will be building with yahoo! a combined set of platforms and assets to attack that $600 billion industry. is as easy asing e-commerce but they are in third place. i think they are at 5% so they are in third place. people wonder what they would do next. they will not do anything for the rest of this year but maybe next year, maybe they will look at twitter. maybe they can close the gap that way. if they want to close the gap and build content, twitter might be a way to go. interesting, thank you very much. marissa mayer, the ceo of yahoo! will be here at 9:30 a.m.

eastern on "bloomberg ." it's exciting to see how this will unfold. jonathan: there are bank earnings throughout a week as well as deutsche bank so europe isn't focus. with the fed on wednesday and the boj friday, let's bring in our economics editor. let's begin with the federal reserve, how do they fit in given what's happening globally now? michael: you've got to central banks going opposite directions but tied together by the currencies. the fed is not expected to do anything. will they suggest that they might do a rate increase earlier than the first quarter of next year which is where the market has a priced in? if they do that, that will strengthen the dollar which is what the japanese would like. the stronger yen we have seen so far this year is hurting the japanese economy.

exports are down for nine months in a row. the prime minister has suggested fiscal stimulus is coming but it's not ready. does the bank of japan hold off? they expect a small change in her base rate from -10 basis basis points as they try to weaken their currency. they could really use the fed increasing interest rates. jonathan: in terms of communication from the federal reserve, the boj has got experience of disappointing and surprising. do they want to do that? michael: probably not because the markets have priced it in a way not to be good for the japanese. they want a lower yen and want to stimulate the economy and the fed is one of -- does not want a surprise. they want to give themselves some option now it's a.

to --ion a la optionality. david: we will also look forward to than democratic national convention. they made one big announcement which is that heavy wasserman schultz, the chair of the dnc, will be stepping down over the controversy a leaked e-mail. let's go to philadelphia. do we expect her to preside over this convention recognizing she is stepping down? >> i think we will see some presence from her but her role will be greatly diminished. democrats will try to keep her out of the spotlight as much as possible. so quickly tong remove her, does this put this dispute between bernie sanders and the hillary clinton camps to bed? >> i think it gets rid of the immediate problem. the center's campaign has felt that everyone us him and schultz

and the dnc has been unfair to them throughout the process especially after the nevada's eight convention. they thought her response was too strong and critical. feel this iss ordering an ice cream sundae and just getting that cherry on top. they want to see platform changes and reforms. david: who will be speaking tonight? we will see a lot of progressives speaking, elizabeth warren, bernie sanders and i think people will look to see whether bernie sanders will be aggressive enough in telling his supporters that hillary clinton is the best choice to be donald trump. -- to beat donald trump. i think we will also see him tell supporters this is what we need to look to next. he has a number of successor groups he is pushing to work on policies and getting progressive candidates into office.

it will be about whether he can balance that by making the party happy and his supporters happy. david: thank you so much. date on thingsup outside the business world. taylor: in fort myers, florida, at least two people were killed and many more injured. three people have been taken into custody and police are looking for others who may have been involved. authorities in germany are trying to figure out if of tom explosion in germany is linked to terrorism. bloom self up at a music festival and 12 people were wounded. refugeeies say -- a blew himself up at a music festival. it was the fourth attack in germany in the last week. we'll let the village in rio de has not passed a stress

test. found a leaky pipes and exposed wiring and olympic officials say repairs will be completed this week are in global news, 24 hours a day, powered by 2400 journalists and analysts in more than 120 countries. jonathan: thank you. coming up, honeywell cut its sales forecast friday. up next, the ceo reveals if central bankers are making the right choice to stimulate the economy. this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg ."

slightlyre firm and positive. an all-time high on the s&p 500 on friday. in london, it's flat. the outperformance is in mainland europe with the dax up and german confidence is holding up despite brexit. dollar-yen is capturing risk sentiments. . when we get the bank of japan on friday, 32 out of 41 individuals we surveyed expect news out of the bank of japan. many leaders brexit would heighten risk but that may not be the case. great to have you with us. we will get to your company in a moment. beginning with the sluggish sales growth over at honeywell, we have a series of discussions

on this program about what the g-20 can do as well as central bank. what do you want to see from these big institutions like the federal reserve or the g-20? >> when it comes to the federal reserve and the european central bank, i think they have been the adult so far in this economic discussion. have --had what you what you would call easy money and it gets easier and easier. you can only go so far. i don't think is a case where someone says i would really like to do this project of interest rates drop another 1/2 a percent. i don't think that's the sentiment out there. what we need in europe and america is to have the government become adults when it comes to things like taking a look at entitlements and our debt position, looking where we things like math

and science education and patent reform and infrastructure. we need to become more invested in the economy then today. we are an entitlement economy. you look at social transfers in the u.s. with mandatory auditing, it's all 75% of what we spend today. we spent almost $4 trillion. we need to look at things differently than we have in the past. government needs to do his job. you talk about stem education, everyone agrees that's essential but it would take a long time before that showed up in the economy. thating in a shorter term the governments can do to stimulate that demand? >> for me, one of the things we could do in the u.s. is get tax entitlements, and then start investing. you look at infrastructure investing. you should have an impact from

that pretty soon. you look at math and science education, we don't do a very good job across the nation saying how we get people to a certain level. pretty much do it with everybody and i will be fundamental in this digital century especially where china will become a bigger and bigger player in the world. i have oftentimes said it will not show up later. there is this whole thing that says the best time to plant a tree was 20 years ago and the second best time is today. we need to start doing this. alix: there has been sluggish growth the last few quarters. what is the country where you think you have to be in right now? >> in general, i view high-growth regions that way. if you look at global insight where there is a macro look. it 2010,ok at 1990,

and 2030, you would see developed markets declining overall as a percentage of world gdp. if you look at high-growth regions, you would see it going 4%,990 from 24% to 2010, 30 2030, 47% of the world economy. the problem with high-growth regions as they don't grow steadily. the frequency wave is pretty volatile. alliew is you have to be in of them because you never know when one of them will take off. the biggest ones are china and india. jonathan: how do businesses operate in this environment? ge said sales growth will not be great. it's a big struggle for topline growth. the bottom line seems to be holding up because the cost component has been squeeze. how much is that a vicious cycle? they squeeze the cost for the

bottom line and you have to be doing that. while we were down 2% on sales growth, we had forecasted we would be -2 to 0. on margin right we said it +10.0 to the actual sales growth was -2, the margin rate was +10. if you look at the analysis we try to do with sales and explain to everybody, 70% of our work earlier will be growing 5% which is not. 30% comprised oil and we think the bottom of the cycle happens this year. we have a huge order from the u.s. both -- postal service we delivered on last year. we kept saying this shows up

last year and will not show up this year as a result you get a decline. i think it's a bit of an overreaction when i hear people say it's a big myth. it's exactly what we told you. jonathan: you cut the forecast. >> we did in terms of the overall growth. it's still in the range we originally said. surprised on the sales side and it was interesting to see the press that day. exceedsed off with eps consensus and only took an hour before someone said wait a minute. they missed on sales. i kept trying to say it's exactly what we told you. it's one of those phenomena that i keep telling myself that i've

been doing this for 14 years in every quarter, i will not react to whatever the market reaction is that day yet i still do. alix: stick with us. m&aill discuss their strategy and leadership and it's a big week for tech earnings. .e will preview the report this is bloomberg. ♪

david: this is "bloomberg ." mergersl is looking to and acquisitions to boost itself on the stock is up 12% this year. dave cody is with us who is the ceo. can you run on cost cuts? can you run out of targets to buy? what you have done is to find companies you can run better than they can running get the margins up.

are you running out of targets? we are $40say in a $40n sales trillion economy so i think we still have room to go. we keep a very active pipeline. we always have 100 companies in the pipeline we look at her all kinds of stuff. they can be small strategic companies all the way to a new segment. we look at a number of things. the targets are still there. a fairlyu have rigorous set of standards as to what you will buy. you actually read the stuff i put out? david: that narrows down the number of companies? are there companies that can work under those auspices? >> but you have to have somebody who is willing to sell. and say whether

they are public or private, here is the price we think makes sense and someone has to be willing to sell at that price and if they are not, we are willing to wait. if this one doesn't work, the next one does. there are more ideas than we have money for. this allows us to be more picky. alix: you have eight months left to make those big ideas happen. has been to get the premium valuation on your stock. the price-to-earnings ratio of naherwell versus 3m and da versus the entire s&p industrials. if you take a broader look over the last five years, it tells an interesting history of where honeywell p/e has gone.

what you do to get that back up? >> this is one of my tenured frustrations. here, we used to sell at a 20% discount and we have reduced that. to the meaneversion mentality among investors which is however you have done historically is how you get value going forward. -- therein a meeting is an amazing amount of resilience in that view. you get a lot of forgiveness if you have a high multiple. if you have a low multiple, it's hard to get it above. continued outperformance is the only thing that works. in the last quarter, we outperformed on marginal eps in cash flow which should cause investors to say this is one more quarter they did it. so far, that's the only answer i have been able to find. you just have to keep doing it. at some point the market catches up to your performance. and the short, the market is a voting machine and in the long

term, the market is a machine. i am 64 and at some point, investors look at you in say we like you but when will this change? you don't want to lose a good guy. jonathan: he is a good guy and he is sticking with this. we will talk politics but maybe he wants to leave. boj will havee policy decisions later this week. this is bloomberg. ♪

alix: this is bloomberg . i am alix steel. not a terrible quarter for the company. it added more users than expected, about 180,000 users.

it was the best in the company's history and revenue per average user. also up, it in good day at first sprint. that company raising a second quarter guidance inching higher in free market. rounding out with dinner. -- danaher. it expects equipment to take a current leg down. the best thing that a company like deere wants to hear. jonathan: i would not say it is ugly for the market, i would say it is pretty stable. a fourth straight week of gains on the s&p 500. an all-time high at the closing friday. we march on with the dax up 1.4 percentage points. so much talk about brexit

anxiety. that is giving sentiment a lift across much of europe. look out for this one, the bloomberg dollar index. on wednesday, it is the fed decision. on friday it is the boj decision. .xpecting some action the stardoll story over the last couple of weeks laying into this story with brent and wti softer. w ti trading at 43 .68. brent crude around $45. we will be on top of it, about 60 minutes away from the cash open in new york city. let's look at headlines outside of the business world. overshadows the start of the democratic national convention in philadelphia. w wasserman schultz will resign at the end of the week over released e-mails. community staffers favored hillary clinton and try to undermine bernie sanders. or, santos supporters have been calling for resignations --

resignation. in fort myers, florida, at least two people were killed and 13 injured. the victims ranged in age from 12 to 27. three people have been taken into custody. china's tightening its grip on internet and information industries. the regulator has ordered major online companies to stop original news reporting. according to people familiar with the matter, the web company will be allowed to carry only reports from government controlled rent online media. -- controlled print or online media. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. i am taylor rig's, this is bloomberg. david. david: the democratic national convention kicks off in philadelphia. david cody is still with us. we now have the leader of a multinational company. one of the things that is being

talked about his trade. donald trump and hillary clinton both seem to be a fairly reluctant about globalization. how does that affect your business? >> i would i say the specifics affect us. tpp whether it passes or not is not a huge significance for us in terms of specific business. however, i do think it is a mistake to think we cannot do some of these trade deals and have the economy perform as well as it did. it is not going to. trade will help overall and that will be true for honeywell overall -- and that will be true for honeywell. another one of the items i did not mention was trade. improving these free trade deals and interestingly, people arguing about free trade since the phoenicians were added a couple of millennia ago. his productivity good? is trade good?

every century we learn the same lesson. we need to shift the psyche of the american people to recognize that trade is a good phenomenon overall. these are good deals. david: it seems like american sentiment has been shifting the other way, more hostile toward globalization. what do you hear back from them? how difficult is this for them lyrically to support free trade -- for them politically to support free trade? >> when you have to try and make the argument to the populace, the problem is the negative argument is so much easier to make than the positive argument, because whether it is productivity or trade, you can show the plan that is not there anymore that used to be. it is a very visual reminder. could endsee the jobs up occurring because a particular segment grows more than it did before. the fact that that benefit far

overwhelms what you see with the plant. people can see the plant. so it is a much tougher argument to make. trade is a good phenomenon. david: to ceos like you who understand this, do you have a role in explain to -- and explain to the making people that there is a plant we are running? >> we do make that argument. -- we do make those arguments. it is true. if you take a look at honeywell, we exported from the u.s. $5 billion. it is important for us to export more freely, to have better relationships with these countries. it is important for us geopolitically. we have to do something like tpp if you want to help establish rules for how you are going to handle labor, the environment,

what are you going to do to make sure people have the freedoms we think they deserve? we don't do that by abdicating, he you do that by participating. weekend,o over the donald trump gave an interview where he would step back from the w teal if it got in his way. >> i was surprised to hear that. i would like to think it was a comment made off-the-cuff, rather than something that was a serious pursuit. that would be a mistake. the couple help badly would just david: how badly with that hurt your company? >> it would hurt our company in that it would hurt the entire global economy. because if we are out of the w teal, others will exit the wto. or they will stay in and we will be excluded. it is not a good phenomenon. david: what sorts of things are

you looking for an deciding who you would like to be president? >> i want somebody reasonable, .ogical, who is in the middle i feel like 70% of the american population is. can't we all get along and just do something to advance the country, rather than arguing ideologically and accomplishing absolutely nothing at a time when the world is changing very rapidly. the growth of china, the population growing from 7 billion to 10 billion. i would like somebody who focused on that and said how do we get things done to make our country better. david: dave, thank you so much for being here. jonathan: [laughter] let's turn to the morning meeting where we hear what key banks we're looking at. michael hanson focusing on what to expect.

talking about expectations, michael, let's begin with friday. the boj decision and the overwhelming number of analysts economists expect action from the boj. what are you expecting from the bank of japan? michael: it is more likely than not that we will get some sort of easing and quite possibly in some form of fiscal stimulus package, for them to step up their etf versus and potentially -- etf purchases and add to japanese bonds. we are rather leery of the idea that they are going to do further interest rate cuts. that remains a tool for kuroda and the boj but i don't think it is at the top of the list. they wait for the fiscal plan to come together and they don't do anything at this meeting, quite frankly. that is the risk. jonathan: the debate has been about monetary policy. is it more important that we get

some fiscal stimulus? because the bank of japan cannot increase without the finance ministry increasing its debt issuance. michael: i think that helps. you get a positive feedback between fiscal and monetary moving together. that is a good signaling impact. the bank of japan has been looking on things like etf then they have on bond purchases. i don't think it is critical, but they are going to signal strongly that they are going to give us can -- give us any tools they have at their disposal to get inflation back. jonathan: how has the boj debate evolved after the stronger japanese yen? for the federal reserve, i wonder what brexit means for them. looking ahead to the fed on wednesday, what you think the statement looks like?

on the: i think based risks and concerns that were listed in the minutes of the june meeting, the fed has to be signing a sigh of relief that the brexit impact has not been as bad as some feared. u.s. data has been better although there was a big slowdown. we are going to have stronger gdp growth in q2 than 2 -- than in q1. the statement overall is going to be more positive. the fed is very cautious and they are not in any rush to hike rates. we're not getting any strong signal, but i think they're going to leave their options open. we are to get more from chair , obviously not having a press conference this week. jonathan: a lot of people are looking at the yield curve, flat , only about four basis points.

it is a debate about whether there is a signal a whether a consequence that it has been an international bond market. let's talk about the symptoms and consequences. does it matter what causes it bad the consequences can be anyway? should that be a concern for the fed? michael: the fed was to keep an i on whether some of the every small size are going to spill over in a broader sense. on the flipside come the fed and the data supportive of the idea that low longer-term bond yields -- it keeps mortgage rates low. given that that is where you have the big blowup and a slow recovery, i don't think of a flat yield curve as a negative sign that they are a bit concerned about where the limits of policy and what are the potential impacts for this intermediation.

i don't think that is a primary near-term of the fed. that is something they are going to watch. jonathan: a busy week for you. michael hanson, global economists. verizon buying yahoo! 44 $.8 billion in cash. what the deal means for yahoo! shareholders. more go is next. this is bloomberg. ♪

david: this is bloomberg . coming up later, yahoo!'s ceo will join us to discuss that verizon, yahoo! $4.8 billion

deal. alix: verizon agreeing to buy yahoo! for 4.8 lien dollars in cash. scott galloway, professor of marketing. scott, let's start with verizon, yahoo!. how does it compete with facebook? 50% ad revenue -- 15% ad revenue. be rc they are going to cola to cook and pepsi. they have some assets. yahoo! and it -- and aol have some assets. 225 e-mail subscribers. -- 225 million e-mail subscribers. a lot of opportunity for geo-targeting. there are some assets but there is no doubt about it, the duopoly has a mini third competitor. it is going to be an uphill

battle are -- uphill battle. i am quite bullish. this is a good deal for a ride -- for verizon. i think it is a good deal for yahoo! employees to have access to better management and a road forward. -- whatwant to increase other companies do they have to go by to do that? can they do it in-house? scott: i don't know. that is not a lot out there that adds up. aol did 1.5. they are going to want to increase their shares slowly but surely and position themselves as a viable competitor against the current duopoly. that duopoly being google and facebook. tim armstrong, he is a big winner. it is incredible vindication for his management ability. aol doing a good deal with verizon. i am optimistic about this. i'm biased toward wanting the

deal and wanting the new verizon to work because the echo system needs a third player. i think it is good for advertisers, consumers, the planet. they have a lot of assets to work with. this is going to be interesting. alix: what happened to marissa mayer. she -- the word on street is that she would not be a part of the company. her tenure, can you talk to us about it? but ite the alibaba ipo, was not the worst thing in the world. she is going to go down as the most overpaid ceo and tech history. -- in tech history. if she leaves of her own collision, she leaves $55 million on the table. she has been a dead man walking since -- this is over. they will give her a peace with honor.

this is a series of watched acquisitions. -- series of botched acquisitions. andcrease in revenue of 20% she is walking out the door of a quart -- with a quarter of a billion dollars. the best of luck to her but this is the end of her reign at yahoo!. some much bigger tech companies who are going to announce like alphabet. it has been somewhat of a juggernaut. are there some headwinds? some problematic issues they are facing, the cost of maintaining the traffic? you mightheadwinds see ship -- do you see some headwinds showing up? scott: you would argue that people are spending a lot more time on mobile. 80% of the time on apps. great app economy isn't

for google because when people are in a nap, they are less prone to search and be directed toward google. there is a big -- a bit of a negative. advertisers are willing to pay less for advertising on mobile. google is the greatest concentration of iq in the history of mankind. nafta,reater than with the manhattan project. their failures, whether it is google glass are a good thing. this is a company that is not afraid to stop its toe. you don't want to bet against google. it is a great company and expecting them to beat to the upside is never bad. >> what about amazon? what are their margins looking like? awful.one, they look

two, i'm not sure it matters anymore. they used a trojan horse. they're operating profits are coming from the cloud and amazon web services. they established prime relationships to 55 million households. the cord cutting continues and --and amazon prime continues this is the best run company in the world right now. alix: positive statement about amazon and google but just don't bring up marissa mayer. speaking of marissa mayer, she will be here at 9:30 a.m. eastern time on bloomberg . you do not want to miss that. david: the benefit of investor -- of investing in companies that the market has deemed undersold. this is bloomberg. ♪

david: this is bloomberg , i am david westin. gox steel, you are going to first. alix: this blue line is the bond term premium. how much investors need to take on in order to go for long-term risk in the bond market. that premium has gone to negative which means you don't need a lot of compensation. they are giving money in order to hold bonds for a long time. this purple line is a year on year gdp growth. what we see is the term premium tends to predict what happens to gdp over six to 12 months. gdp winds up falling as well. if we see the term premium keeps falling, doesn't mean we will see a rollover in gdp? it is term premium that winds up addicting gdp growth -- predicting gdp growth.

will we see that rollover? david: a bit of a downer. alix: not a downer. i did get. i can work with this. what i am looking at is the index that i built using numbers sustained one in the first two months of the year and then post-brexit. when a company falls back, there's a relative strength index. upis an index that is built on what would happen if you went and bought a company whose strength index fell under 30 and sold it when it went back over echo very hard to implement, not a strategy per se. strategies have returned 30% year to date. is you've hads us a lot of wide breath in terms of

the drawdown in the markets where big swathes of companies are getting sold off altogether, especially january, february, after brexit. if you were to go in and see other companies were sold off, after brexit, banks were a bit concerned. all of the banks sold off seated companies that move down really fast and they pop right back up. it is an interesting strategy for people who want to put money to work. >> that is why hedge funds have had such a hard year because they were in energy and the beginning of the year and look at what happened to energy. jonathan: have a question. -- i have a question. does it tell us what is coming? >> this is 100% what was. the sentiment causes, everything to fall together in case there some kind of drop. david: i am going to go with alix. it makes sense. you can keep the money forever,

it means i don't think much is going on. jonathan: i am at the falling knife index. david: we need a vote from the control room. it.than: she takes will be joined by yahoo! ceo, marissa mayer to discuss the verizon yahoo! deal. what is in store for her lack of that is the question -- store for her? that is a question that remains unanswered. a rally of mainland europe with the dax punching higher. this is bloomberg. ♪

jonathan: from new york city, where 30 minutes away from the cache open in new york city and this is how we trade. futures pretty stable after four weeks of gains. that index as a -- that index at

an all-time high. -- in the fx market, a dollar story. currency throughout the week with the fed on wednesday and the boj on friday. the bloomberg dollar index stronger, up .1%. ti -- the future -- w ti throughout. yields up about a basis point. .he focus will shift to equity we are 20 mike -- 29 minutes away from the open. we are counting you down. ♪ david: we are 30 minutes away from the opening bell. this is bloomberg , i am david westin here with jonathan ferro and alix steel. the big story is the $4.8

billion deal between verizon and yahoo!. no intention to sell alibaba shares from that new company. the new company will return all caps minus operating costs. jonathan: what the skill set is needed. andwho japan and alibaba sell some of the assets as well. one that it is not marissa mayer and we are hoping to get an answer later. david: yet to come in every morning and checked the ticker -- you have to come in every morning and checked the ticker. alix: shery ahn is here in new york with a look ahead of the open in the u.s.. cherry, let's begin with you here in new york. individual movers that are

shaking things up? about we are talking sprint, another telecom company in the u.s., the fourth-largest. they released earnings this morning and now the stock surging, because we just found out they had 180,000 monthly described -- monthly subscribers beating analysts forecasts. we are seeing the stock reacting . another company that is moving, hershey. that billion trust controls the company has 81% voting rights, they are up more than 1.5% because the deal with the pennsylvania attorney general to reform governance. we're taking a look at cvs because of those are down more than a percent after barron's said clients may stage a crackdown. we have health transformation alliance which may put pressure on them to be more transparent it comes to prices.

let's head to nasdaq with abigail. abigail: news -- yahoo! has agreed to sell to verizon for $4.8 billion. it does and a month-long sale process after ceo marissa mayer came under pressure to turn around the web pioneer. doing her four-year tenure, the operating income is down 98%. the stock up 150%. pretty interesting dynamic. news. is in the the company has adopted a poison pill strategy to ward off takeover strategies. shares of the stock are down more than 60%. trading higher solar city on the news that tesla could be nearing a merger agreement. they have had a rough road to

this 2012 -- four investors who got it right, shares are up more than 230%. let's head over to london with mark barton. mark: abigail stocks rising. we all know what all -- will know what happened on june 23. we rose for the second consecutive week last week. that was the best winning run since may 27. the stoxx 600 is 2% below the close. love this chart, we have had 24 weeks of outflows from european funds according to the bank of america, merrill lynch. the stocks are not exactly popular in europe. even though they are not popular, but in the levels of cheapness on evaluation basis. cheapest on records. the dividend yield on the stock 50 versus the bloomberg eurozone sovereign bond index, also the

widest since records began. love that chart. ryanair today, shares falling as much as -- shares rising as much as 7%. it is europe's biggest discount carrier surprising investors by reiterating its profit forecast. it did warn that target has come under pressure because of brexit , because of terrorist attacks, shares up over 2%. this berg is stepping down. he has overseen a slump in the stock price after intensifying competition. he is in phase that he is facing investigations over his business dealings. john, alex, david. david: we're going to go back to that verizon yahoo! deal. alex sherman broke the story. you have been on the forefront of this and we have been talking about it, what is the latest?

alex: we know theoretically official. you never know because the deal -- verizon buying yahoo! for $4.8 billion. they have been deemed as the most likely buyer. little pieces of information we non-coreay, there is a ip component of yahoo! that is going to remain within the yahoo! holding company for the time being that will be sold off, but not for another month or so. yahoo! will maintain its stakes in yahoo! japan and alibaba. business and real estate goes to verizon to be lot -- to be combined with aol. david: can he gives a timeline between now and closing the deal and what obstacles there might be? alex: there will probably be relatively few. this is a similar deal. in many ways, you can look at this deal as a sort of years after the fact merger with aol.

instead of the rise deal, you could see this as an aol deal. tim armstrong will run this combined company in theory. aolo! acts as a python for advertising technique -- as a platform for aol advertising technology. you can use a wells at technology, therefore you have more reach. the kospi give tim armstrong, we spoke to him earlier. >> you are going to go everywhere from mobile video, incredible content from the nfl and nba come all the way through we will be -- serving over one billion consumers with some of the best brands, some of the best partners, some of the best ad tech in the world. what brought this to

pass? you thought verizon had the inside track. what gave them the advantage? alex: they just outbid everybody . some of the private equity firms took a look at yahoo! and they may have come on strong with high bids and then over the course of looking at the assets, they realized there were more problems with yahoo!. it was a declining asset and they had some outstanding contracts that if they fired more revenue, it will go away. verizon sort of stuff to their bid. some of the others hold back and therefore verizon was left as the last man standing. david: alex, think he so much. he has been reporting on this throughout the weekend. marissa mayer will be joining us. -- $243: joining us now billion in assets. charles, great to have you with

us. had a couple of tech deals and wonder if there are two specific stories? what do you think? charles: companies are thinking through how to play their capital and build a company for the next five to 10 years and when you look -- at 23 years, you're going to have a company that is going to have revenue close -- revenue growth and irrational balance sheet. alix: i am an oil person so i think it summers -- think of somerset halliburton. there was helping to drive their bottom line. are you seeing that kind of distinction? >> the verizon deal is insignificant for verizon.

assets that are antiquated for the hope of delivering something for the next generation. we in gauging companies that are only putting capital to work in large amounts, giving the -- given the backdrop of low interest rates. david: where do you find those companies? which companies do you identify that are taken their capital and putting it to work? -- that you put two together and you have a $15 billion market cap. you drive 18% growth. the other ceo is looking to manage more assets and you get an efficient company, three to five years. it comes to the fundamental analysis, understanding the environment. ceos are struggling with this environment because the balance sheets are very rational and the

cash is very little. an environment where you have to be very careful. you look back five years from now and you will say they really change the dynamics of their business and there will be others like what were they thinking? why did they take cash and earning nothing in turn that into a negative rate of return? jonathan: we have seen that a lot, companies taking advantage of low rates but not to buy companies? to buy themselves. charles: the verizon aol deal is sovereign. dealis so cheap, earnings than 10%t get you more on the capital user plan. as verizon thinks about spending $4 billion acquiring aol, is a believable that off a tax basis, they are going to earn $400

million three to five years from now. that is a very different dynamic. the role of the activist has been to provide a measured voice in the boardroom against the -- andge or c is a be carries a very low rate of return. david: charles kantor, you'll be standing with us -- staying with us. taylor? taylor: the democratic convention gets underway in philadelphia and hillary clinton and yourself behind in a new poll. the survey has donald trump clinton 44% to 39%. and in fort myers, florida, at least two people were killed and 60 wounded in a shooting in a nightclub overnight. the victims ranged in age from

12 to 27. three people have been taken into custody and police are looking for others who may have been involved. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. i am taylor raikes, this is bloomberg. alix: u.s. producers increasing production. -- oil is headed lower. it is under 30 minutes after verizon's deal with yahoo!. mercer mayer will join us. -- marissa mayer will join us. this is bloomberg. ♪

alix: it is the thing dragging down oil prices. morgan stanley with a bearish note saying austerity to $50 range for oil and this part tells the story. this blue line is global gasoline inventory for 2016. the green line is the average from 2011 to 2015. a huge difference between the two. curly whereas 2040 one million -- currently we are at 241 million barrels a day. demand is a little bit soft. that oil then backs up and is added to crude inventory, maybe even crude -- oil. that is what is -- morgan stanley saying refinery driven correction is upon us. joining us from the cme in chicago, alan do you agree?

alan: the fundamentals are starting to weigh on the markets. the u.s. is technically driven from an oversold situation. it is interesting here that most of this is probably the dollar. the last time the dollar was at this level, crude oil was at $40. there is a downside potential but it has been a slow grind. alico to receive 30 -- alix: do we see 30 before we see 40 again? alan: we are getting to the midpoint of the actual $32.52 from the rich rewards standpoint , i would be a buyer leaning on that. the markets really decoupled from the stock market as well. there hasn't been a whole out of positive looking at crude in the last couple of months. right now, at this level, we traded sideways back at the end

newpril, broke down these 10 week lows. let's see if we are over $42. allen, -- governor quinn, -- moody's out with a warning saying for most your days are numbered. details next. this is bloomberg. ♪

david: the shift toward passive investing is not temporary. this according to a new report by moody's. , i suspect you have a different viewpoint because you are active. charles: it is not an either/or. we are active. one of our strategies, long short strategy. it is all about providing a

.rack to adjusting returns when you go to passive, it does -- it doesn't incorporate sound advice. at different peaks in the market, you're overweight in the passive strategy the thing you want to own least. deskck to 2000, s&p's 2007, the sector weighed -- 2007, the sector weighed, financials. you haven't got paid to be risk manager. we look at the risk adjust returns out of all of the benchmarks, they are astonishingly high. you had no volatility. i would come back and say if you want to be quarterback, good luck. don't forget fundamental investment matters. this is going to be environment where what you on matters with correlation at three-year lows.

stocks are behaving the way they should against fundamentals. bet no one would deny that fundamentals matter. but at what price? when you have a passive fund that is really low on cost, that gives you a buffer on yields. >> i think that is right. you've got to believe in sound advice. are having to think through what you would pay for sound advice. when you go to the doctor, lawyer, other service providers, and you need to think that through an asset management as well. if you want to take on the responsibility of the being the quarterback, then the passive strategy works well for you. you think about managing your most important assets and that is your own wealth, and most people tend not to believe they can do that all themselves. it is about designing strategies that make the most for the individual.

every passive strategy is supported by set of security. we believe that it is going to be an environment where what you on matters and risk management is going to matter, because future returns are going to be lower and volatility is going to be higher and therefore you are going to require a strong fortitude to stay the course. david: -- jonathan: what does this mean for market functioning? with a load of money going passive and fewer going active, what does that mean for price discovery? >> the market has never been -- but not mispriced never been less realistic in terms of what individual prices are suggesting for valuation. that is because it is about the influence on the margin of the buyer -- the marginal buyer which has been the etf. the etf -- we had a situation

where one of our companies was $.50 --ivate at $28 and $20.50. one week before the stock closes, -- it was a very large allocation and a discretionary etf. the person was getting inflows and until that people want away, they were lying it at a price -- they were buying it at a price that was not rational. you've got to understand the exposures you are willing to take. it is very true to say i own a passive strategy. we come back and say you need to understand the risk in that environment. can that be believable five years from now? less likely, because future returns will come with more volatility and less return. knowing what you own will be increasingly important in getting sound advice at a

reasonable price from people that you trust will be increasingly important. 4% of stocks.bout what is their power? been 40% to 50% of the marginal flow into the market. works in terms of how much they actually own, it is not as much as you think. charles: their role in terms of governance will become increasingly important. the passive strategy is the free rider. you cannot have a stock market without one fundamental security selected. maybe we go to one and then we adjust. i doubt that will happen but the passive is a free ride. as they become more of the marginal buyer, the opportunity for the asset manager, and folks who understand the own will

continue to improve. it is on us to deliver. it is on us to deliver. we got to execute and provide risk adjustment. jonathan: charles kantor, great to have you with us. thank you very much. here is the financial scorecard for you. we are negative on the down -- on the dow. not even a point negative on the s&p 500. in frankfurt, it is the dax outperforming by .8%. this is bloomberg. ♪

>> this is bloomberg . i'm jonathan ferro, just moments away from the opening bell. financial score features

marginally negative. down two points on the s&p 500, dow futures down about 11. pretty stable as you hear the opening bell. switch up the board very quickly and i will go through the other numbers for you. pretty stable, unchanged from the session. the dollar yen -- down 11 full percentage point. we approach a boj meeting on friday. ahead of the fed on wednesday, that decision is a couple of days away. is sitting very close to a two-month low. that is the picture across, clarify sexson -- seconds into the market session. >> we are seeing some downward pressure a little bit after four weeks of gains for the s&p 500,

the longest winning streak since . down 1/10 of 1%. the dow down .2%. after nine days of gains, the nasdaq overseeing slight downward pressure. let's talk about the big news today because sprint released earnings, now of more than 5%. gothly subscribers, they 180,000 or two estimates of only 112,000, not to mention the average revenue or user was up more than one percentage. after they cut1% their estimates for 2016. sales will grow at the low end of the previous ranch 35%, not to mention they had negative affective that on sales. all down after a downgraded stock from neutral to underweight.

they are saying growing conditions have been extremely favorable, but they expect price gains to remain weak and downward pressure and profitability, take a look at just theat the lotus lowest since may 9. we are seeing downward pressure on these companies. also, the big news of the day, verizon is expected to buy yahoo!'s web access for more than 4.8 billion dollars. a downwardt of pressure at the open right now. alix, i know you have more on this as well. alix: yes, we will speak with marissa mayer, ceo of yahoo!. for more on the deal, we want to bring in mark who joins us from san francisco.

this is the latest in a string we have seen. take a look and i can help put this into perspective for you. all the way back through 2014, you can see it has not really been toward the hives we saw back in 2015. nonetheless, a steady decline so far this year. mark: i think there is more to come. obviously, the yahoo! transaction has been rumored and you look at the recent m&a transaction, microsoft trade and the m&at speaks about environment, you will see more as time continues. where might we see more? where might we see the action? latestlook at the salesforce.com filing, a letter to the board of langton was sent when they did not win that

transaction, talking about salesforce to actually raise the bid. it shows you how aggressive the salesforce was going to be. they were going to bet a large percentage of market cap to go after linkedin. has been a buyer. you see the buyout funds, which raised the most $10 billion and they are a big m&a player and software. there will be more for the rest of the year. waiting on the sidelines, is there a point when they have to to put it to work before investors say, what are you doing and where is my money? raising the capital because they have opportunities to put that to work. they have models they have to make work. money have been investing in the last decade and they made wonderful returns. they are very active when they see valuations go down. up, they get a little more quiet

here these people are disciplined and nothing will change going forward. >> fairpoint. will these be strategic and help find that organic growth or will it be more like in the past two years, cut costs and boost eps? >> you look at the yahoo! acquisition and i do not think a lot of people expect rison to take yahoo! to heights and look for new markets, we know where yahoo! is that. you look -- is at. you look at linkedin, a strategic acquisition where it is growing massively. that is where will we will explore. different results but very important. >> they certainly have the cash to be a possible acquirer. >> very busy with our core product -- core products, we

have not seen that since we have seen the ipads and the watch and everything. they obviously need to get into the new markets that are high-end and high-growth. about artificial intelligence, virtual reality on the tip of the tongue for everybody. the core products are getting a little tired but the growth is probably limited. i would expect them to go to where we just described. -- feel thereear is pent-up demand? >> i think we saw a piece of that last week. a billiongo from 2011rs, it was created in and five years later, you have a billion dollar cash taken out.

been growingve their company organically probably by 30 or 50%. we saw it coming out of left field when they recently had less than six months ago. clearly, i do not want to roll the dice, the election is really tight and maybe this is a place really want to see some m&a. growtht puts the apple -- what do they do without the next hit product? the apple watch will not move the needle? it is a why now question. collects boards and shareholders like growth and that is what they pay for. apple has not stalled or decelerated. it is earning more money but that is not an exciting stock for them. you look at facebook and amazon and salesforce.com, those companies are accelerating

internal growth. he look at what facebook has been growing half a billion users on instagram, they continue their move to the amazon web services. those are the growth environments where they continue to pay the multiples they are paying. we are clearly not seeing that with apple. in a wait and see holding pattern until we see different results. >> going back to the verizon yahoo! deal for a moment, that is a telephone company moving into the space. are looking or they for growth in challenging environments, the media. do you see any kicking of the tires for traditional media in the text race? doubt, verizon has a lot of people they fill every month. getting people to stay on that work and getting them to pay for a-line yahoo!, clearly for them to get more of those dollars. more of the traditional media

companies are trying to figure that out. this he is trying to figure that out and what they are trying to do with device, an exciting brand for the millennials and others. i do not think this will slow down. i think you are finding established media companies china to figure it out. the move to the cloud and the web and mobile, it is not decelerating whatsoever. you are saying u.s. equity markets are a haven? walk us through that. >> what you see in the u.s. exactly a cheap market but it is a market that is well valued. you are seeing growth with some of our best companies and innovation that is clearly second to none. , we havelearly seeing not talked about unicorns in a few weeks, but if you look at what we are seeing in uber and airbnb, some of the companies that have recently gone public, and there are very few of them,

the ones that have gone public a 30 or 50 percent. that kind of growth and innovation, despite all the rhetoric you hear from political candidates and despite what you see on tv every night, it is not slowing down. investment has accelerated. him it has not decelerated. innovation has not decelerated. i expect rates where they are, close to one and a half. that is outside the tenure of some economies in europe. look at the spanish 10 year, the italian 10 year. i am not sure that is a safe haven environment. i talked about as well as rates that are quite modest. alix: traditional correlations have broken down and s&p does not seem to be tracking what is happening in the oil markets, for example. the last few days have been a little bit of a different story and it has not caused a lot of havoc in the u.s. what is the correlation that you wake up every morning and look

at? >> we now have the new equilibrium. six months5, oil ago, if you would have told people instead of the 30 and 35 range, we are talking a 4250 range, most people would have said that is ok. i wake up every morning at fundamentals. that u.s. equities have not decelerated. in fact, the job creation has continued, the growth engine of modest but continual growth of the overall economy has continued and i think investors are still looking at the valuations of most of the companies and say they're not that sure if it they are not that stretched. >> thank you. coming up next, marissa mayer on her company's deal to be acquired by verizon. this is bloomberg. ♪

this is bloomberg . later today, tom steyer, next-generation cofounder. jonathan: this is bloomberg . nextg up at the top of the hour, it is bloomberg markets with mark barton and vonnie quinn. vonnie: we are excited to have him back this week. action moves to philadelphia this week. she will kick off coverage from the convention and the dnc. don on theak with

impact of the election-year on stocks. it will be huge for the markets on wednesday. later, we will speak with the hs ec european economist and we get important gdp data out this week from europe which should show -- that was the run-up to brexit here and we will be asking him what the implications might the. jonathan: thank you. looking forward to that coming up. marginally lower, down .2%. >> let's look at individual movers. -- remember,pany the real industry has in conflict with falling coal shipments. they expect revenue to fall 10%.

falling 3.8%. take a look today, it is surging almost a percent after they -- 4.99% and remember a dividend for each year of the stock. also take a look because second quarter revenue missed estimates. the stocks are falling 6%. hurt by spending cuts in the oil and gas industry and have now cut forecasts as well. these are the move is right now. jonathan: abigail doolittle is standing by. abigail: starting off with outer wall shares, best know for red box, shares are higher. they will be buying the outer wall $52 per share in cash.

this is taking precedence over two downgrades today ahead of the earnings report. also trading modestly higher, this on the news that amc has made the final offer from $1.2 billion, 10% agreeing to early march, two largest shareholders holding off on the deal. both are saying this stock is worth $14 per share. highly solar city off 3.4%. could be nearing a merger agreement in the final stages of due diligence. roads been a volatile since the december of 2012 ipo. for investors who invested all the way back in the beginning, they are probably pretty happy. shares 230%. back to you.

tech, but -- in one big company, nintendo, the stop on the exchange. so much in a little time. a fun chart that cap slates what -- the white is line is nintendo stock or the orange line is how many times pokemon go search for in bloomberg articles. happened to the nintendo stock, look, it would not be the booth originally expected. >> still up a long way from what it was. >> this is, you pay as you play the game. extra stuff, that is when you pay. a different situation.

>> i watch and his friends go around. >> there it is on the chart. >> nintendo has issues, other game competitors do not have. chart, this is nintendo versus its peers operating margin. intend operative margin is 6.5%. the purple line, the white line, the purple line is activision at 28% and the blue line, electronic arts at 20%. a handset business, 53% of the fiscal 2015 sales. pokemon go all you want but the sales are dragging operating margins down. jonathan: coming up next, marissa mayer and her companies deal to acquire horizon -- verizon. what is in store for her future? next day here. this is bloomberg.

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jonathan: this is bloomberg . horizont alexis on the yahoo! deal. we go to sunnydale caliph when you. the yahoo! is with ceo, marissa mayer. emily: thank you for joining us and having us here. we also want to thank our listeners on the radio listening in. first of all, what do you think horizon can do with yahoo! that yahoo! could not do as an independent company. marissa: tremendous things come together from all aspects. one of the big challenges we have had, we have tried to make yahoo! mail perfect for the phone and we are proud of where

that client is today. the same thing is true for news and finance. about eight cornerstones. we need more distribution. for us, distribution is at least one area. it represents a huge amount of opportunity for verizon. for the immediate future, the transaction is closing to q1. i have got two priorities and one is seem a transaction to the close, but also watching the value of our assets there. looking forward, we will ultimately figure it out. this is a little different, a

one-on-one acquisition where we spent a lot of time during the actual act and process leading up to the announcement. with marty andn tim and folks with verizon this week. i love yahoo! and it is important to continue to see the next chapter. emily: you came here with so much possibility and so much hope and he wanted to restore and newsth rightness and original content. how do you personally feel about the outcome? .arissa: i feel good about it yahoo! is a company that changed the world and very few can change the world. if you think about it, before yahoo!, the internet was a government research project and it is one of the reasons that search was popularized. that is amazing. how you take me,

all of those historical moments and influences and harness that in the paradigm shift to mobile? we look at the business and we are proud of the way we transitioned our users are in than one billion users each month on our properties, 600 million of those are coming, four yearsr the past because of the quality of products and investments we made there. to take the incredibly powerful transformational company that has changed the world and help see it into the new era is incredibly important and the transaction is not just about the future for yahoo! and also about unlocking value for the , so this was really an opportunity to kill two birds with one stone, so to speak. we feel we have achieved that with this outcome. emily: do you think having an activist investors made your job arder?

marissa: the company had various agendas around it for the past few years. to should always be open challenges and scrutiny. some become more of a distraction but the screen is not something i would shy away from. it is something that you have got to be able to stay focused through it and i could not be prouder with how the team has gone throughout this process and time of uncertainty. strategic review process we have been in. we have exceeded our goals for the first half of year and we want to keep the momentum going in the second half of the year into the future. emily: did alibaba make things easier or harder? marissa: they have been a tremendous asset

overall shareholders. we were very supportive of jack and joe and the whole team at alibaba. they rate big part of our story and we were a big part of their story. emily: if you have seven years, you could turn the company around, that you could do what do you thinkhed -- you could have done more if you had more time? marissa: i think the past has accelerated with verizon. we will gethat yahoo! back to growth on the revenue side. our user base is up by about 50% in the past four years. we have had user growth throughout. incredibly proud of the growth we have had. early intoed this

2011. we will be growing and overall i'm excited about the fact that there is a great acceleration to that effort. youy: thank you to all of on radio listening. is there anything you would have done differently, even one thing, when you look back? mercer: i prefer to be more focused on the future and opportunities. there are things that if you knew more about the back story, harder and easier to understand, but i think overall, all the experiences is -- are what make us who we are and i am proud of the team here and the accomplishments. there will always be a bit of a mix. it is a great day for the company and a great out come.

emily: what do you really want to do next? do you want to start something of your own? marissa: i love to be involved with companies that have the privilege of changing the world. i got that here again at yahoo!, and i love all phases of companies. google from tens of thousands, i purchase of thousands and i loved all phases of come these. the effort and the energy and the hard work and all of that is overall really exciting to me. about the ability to be part of the company that gets to transform culture and transform people's lives. emily: you became a mom come your decisions around parenting

were highly scrutinized for whatever it is worth. that is such a big accomplishment. how has motherhood changed you in a way in your approach to business? marissa: so much about yourself and having children. my children are amazing. motherhood is an incredible experience overall. you aren't a lot about yourself. had qualityat i time with my kids, but i love to work and have that impact and overall about it. my parents are visiting this week and i had to laugh because yesterday, my son came out and we were making plans for dinner and he said, you will do boring calls and i will kick the ball and then we will have dinners. my three and a half-year-old