welcome to bloomberg markets. bloombergare live in world headquarters, covering stories out of washington, philadelphia, and beijing. president says that a rate hike is possible. he is optimistic even after a report shows second quarter growth was weaker than expected. vonnie: oil plunges, plunging global a barrel on new glut concerns. how low will he go and why? david: we have an exclusive interview with the uber board member bill gurley. let's go to the markets desk where julie hyman has the latest. julie? 500 hit a record

intraday and then it fell. david: 11:14 a.m. julie: wow. you are keeping track. that has paired into earlier gains -- a lot of that has to do with what is happening with oil prices. if you look at s&p 500 oil, you will see intraday -- we do not have exact times on your, david, but youize -- 11:14, can see the trajectory of stocks. we had the intraday low in a pretty short time over the course of the day. indeed, it is energy stocks pulling back the most. you have energy shares down the most by 3%. materials are dragging -- although it looks like a mixed picture overall. energy, however, is not mixed whatsoever. this looks at the daily returns of the individual members of the s&p energy index. you can see none of them are

higher today. a broad-based selloff. interms of individual stocks that group, we have a diverse group. murphy oil, transocean, energy, transocean falling as it is buying out a stake in a joint venture. that is adding to a negative tone here. obviously oil is a big part of the story. david: absolutely. a lot of read behind you. what has been gaining today? julie: right, all of that said, the s&p is only down fractionally, .2%. health care -- biogenic and his are announcing --t a drug they developed this could be a billion-dollar drug for these companies. they are rising and you see other biotech stocks up as well.

celgene, interesting that it is up. filings are showing the company allegedly donated to charities that help patient support higher-priced cancer drugs. a scandal brewing there. right, julie, thank you. let's check on the bloomberg first word news. mark crumpton has more from our newsroom. mark: the clinton campaign got the post convention bounce it was hoping for. the cbs poll has hillary clinton to 39%.donald trump 46% after the republican convention, a cbs survey had the two candidates side. unfavorable views of mrs. clinton have dropped six points to 50%. some gold star families are in a letter to mending an apology from donald trump for critical comments about the parents of a muslim war hero killed in iraq. a say in the letter "your recent

comments regarding the khan family were repugnant and personally offensive to us." of cap 10, the father whom i and con -- donald trump said it is about radical islam and the united states. a tank and other vehicles in libya targeted -- the pentagon press secretary says the airstrikes were requested by libya's government of national accord, also known as g&a. >> they felt that there were -- specificl capabilities we could bring to bear. one of the things we are able to do is to conduct rescission airstrikes in an urban area like this, reducing the risk of civilian casualties. mark: the airstrikes were the

first on the u.s. since february. has issued a weather .lert they advised small vessels to return to shore as the storm was moving west with strong winds and heavy rain. the u.s. national hurricane center says the system has engine up to 45 miles per hour and appears to be on a track toward central america. if the system strengthens, it could be upgraded to tropical storm beryl -- pearl. global news 24 hours a day covered high journalists and analysts and over 120 countries. back over geo. vonnie: mark, thanks. could the fed be revising its goals and inflation figures?

here is the dallas fed president and what he told tom mackenzie in beijing. >> one thing i have learned in this job, one thing you learn about data releases is they are going to be revised, at least more than once. what i will do in response to this is basically wait for more data, try to assess -- certainly on balance of the dallas fed, it causes our gdp forecast for the year to probably still be a little less than 2%. we still believe the consumer is going to be strong in 2016, but it makes us also be very watchful for the next number of data releases to see what trend we are on. comment aboutuld this gdp report, the consumer was strong in second-quarter gdp. there was an inventory adjustment. sometimes those inventory

adjustments work themselves out as the year goes on. i will be watching for that. is thesis still for 2016 consumer is going to be strong in the united states and i think that thesis is still in tact, understanding we will have to watch for more information. tom: the markets seem to be pessimistic about the possibility of as many rate cuts -- >> rate hikes. hikes.te are they being overly complacent? >> are they being overly complacent? i think time will tell. our next meeting is not until the timber. we will have more data releases between now and then. it's too soon to jump to a definitive conclusion. we will have to see as the economy unfolds. tom: given the uncertainty around and building up to the

november election, is it right that most market watchers now, i think it is around 20% are now factoring in the minority are factoring in any kind of rate hike in september. is it right that it is really unlikely, given the volatility going out to november? >> i would not say that. no, i would not say it is unnecessarily unlikely. i would say september is very much on the table. we have to see how things unfold. it is too soon to jump to a conclusion on that, and i have learned, one of the things i have learned as a central banker is you have got to be patient, and we have got time to make a judgment as we now and the september meeting and i want to take advantage of that time. we have two reports between now and then and i want to get that information before commenting. tom: we hear the central bank and other policymakers here

saying the needs to be greater global coordination when comes to monetary policy? do you agree? >> let me make two comments. as a central bank are, i will speak myself and the dallas fed. in our job, central bankers need to be sensitive to the currency impact to what we do to the strength of the dollar and the ripple effects that needs to have on other countries, but in terms of a coordinating aspect, at think it is more appropriate for janet yellen or other government policymakers to speak to that, and i think that is a subject that is more appropriate for others to talk about and not as appropriate for me to comment on. tom: would you comment on potentially a need for the federal widening scope to look more widely at the international environment? does that have an increasing play? do believeaid and i

strongly -- to be a central bank today in the united states, you've got to think locally. it's not optional. what happens in china -- which is why i am here visiting -- can transmit not only to the underlying economy, but very quickly to the financial markets as we saw in january and resultedwhere turmoil in the global tightening of financial conditions. we have got to be aware of policy divergence and aware of what is going on around the world. it can affect the united states much more quickly. that has got to be a key part of our jobs, even though we understand our primary responsibilities as the central banker to the united states. fitd: that was the dad to -- the dallas said president. this is bloomberg. ♪

david: this is bloomberg markets. i am david gura. vonnie: and i'm vonnie quinn. time to look at the bloomberg business flash. are going for ceo gary kelly to be replaced. they say that he has kept them criticalsting in technology, leading to cancel flights and stranded passengers. last month, their computer systems crashed. joint ventureng a to treat diseases.

glaxo will invest $17 million over the next seven years if r&d efforts meet certain goals. denton filed for personal records the protection in new york. hulk hogan won a $144 million verdict in an invasion privacy -- invasion of privacy lawsuit. david: we are seeing record levels for stocks and equities -- bond yields reaching all-time lows in some cases. let's bring in casey nelson, the lead portfolio manager of dry house long short management here in chicago. good to have you with us. that decline any yields, the rise in the s&p 500, what do you make of the environment?

how do you process what we are seeing? >> obviously there has been a huge compression in yields, and that has been a big driver the hind bond returns, and as you can see from the chart there, yield is hitting lows and you do not usually see that when the s&p 500 is hitting record highs. i think that is fairly telling. of what hasat a lot driven s&p 500 returns, it has been the telecom staples, the telecom stocks. i think there is a lot more duration in investor portfolios than they realize. let's get to your thesis -- investors are showing diversification at exactly the wrong time. you are a bit of an outlier making that claim. >> yeah, this is not too dissimilar from the late 1990's. a lot of people were chasing had hadwith stocks that

absurd -- upon reflection absurd multiples.evenue there has been $60 billion of inflows into fixed income. whenis coming at a time yields are at or near record lows across the curve. if you look at fixed income, where is that investment going? fixed bond funds, core bond funds, municipal bonds. investors have a false sense of security, oh, i am diversifying because i hit a couple of these categories, but if you look at the correlation, the correlation are all .8 or .9. you are not that diversified. they are just giving you various degrees of rate exposure. david: i will put that charter. these are flows into alternative anything basically going negative. what does that tell you principally about where things are going right now? carol: a couple things. -- guest: a couple things.

it tells me that investors are doing, oftentimes, what they intend to do in the past, a lot of rearview mirror investing. what has worked for me the past month, the last two or three years, that is where i put my money. as we have seen time and again throughout history, that is exactly what you should not be doing. that hight have duration, that high sensitivity to interest rate that your fixed income side does. so, i'm not selling any investors they should dramatically go and decrease their fixed income allocation, but what i am selling them is you have to know what you own. if it all moves the same and you have had very similar returns the last six months or two years, that's an indication you're getting a lot of the same exposures.

you do want to own a lot of these alternatives. why did people start advocating to begin with? the plane vanilla s&p 500 -- the vanilla s&p 500 sunk and they had bond returns down 10%, 30% and they said, oh, i need alternative exposures. that was the right call. post crisis, it would have been hard to produce an alternative return. but now, don't let the idea of diversification fadeaway. that is still a relevant call. when you have yields at all-time lows and stocks turning to new highs, you want to be aware of that and make sure diversification is live and well in your portfolio.

david: you are talking about going out month, years, as is going back decades. i love this chart. this was originally produced by rick wake at lake partners and we re-created it. is a sharp ratio? it gives you a sense of how much return am i getting for each unit of risk. historically if you can get to a level of one, that return is very good, very good. ratios back at sharp over 30 years, you can see a plain-vanilla investment in the index isaggregate giving you a sharp ratio of 10 over seven. what you can see from that chart is, the last five or six years, we have been well beyond that. we have had sharpe ratios of one and two. that is a big reason why people

hate alternatives, hate emerging markets stocks, and hate global stocks, real assets, they don't want any of that stuff because the return they have gotten from their plain-vanilla portfolio has been so off the charts, they figured, why do i need to diversify into that stuff. to me, it sounds like a lot of the investment behavior we saw in the late 90's. why do i need to bother with any of that stuff? i would just buy more of the nasdaq. i don't think that type of behavior will be a great by this time. time.reat buy this curious, what happens to your thesis when rates to go up? how does that change your strategy? guest: i am biased. as an alternative measure, i than like nothing better

for rates to start going up. that would be very helpful for what we do. i think the big question is can central banks raise rates. recently.d about that they can change the stated rate, but can they lift the market rate? if they can do that, the change to my thesis will be -- look, it is going to be 8-iron of pain across all of the portfolios. it will not be a traditional market move where the equity side of the portfolio will go down and bonds go up or bonds go down in equities go up. it will be an interesting time to see. david: appreciate you coming in. guest: thanks for joining us here in new york david:. david:up next, the s&p 500 declining.

this is bloomberg. ♪

david: this is bloomberg markets. one president obama was elected to the white house, many african-american executives expected few obstacles on the way to the sea suite -- the c- suite. that has not been the case. let's go to the data here, how greatly the number of african-american ceo's has diminished. s&pt: we have five in the right now. we are about to go to four. one is stepping down. david: the company split, right? in 20 oh was seven seven, before obama took office. vonnie: what does anyone offer as the reason for this? is a lot of mentoring -- is it

lack of mentoring? what is it? carol: two main things. blacks are still being channeled into staff jobs rather than jobs office.d to the ceo and the second thing is what is being called unconscious bias, where there is no intentional s, buts to exclude black there is a tendency when you're mentoring a protége, if you have two interns and one looks more like you, you're going to open more doors. david: speaking of the diminishment of ranks in the you are cultivating executive talent, that takes many years to do. seemingly and should be easier to get more african-americans on the board of directors. carol: it should be. we are still in a place where most people who go on boards are ceo's or former ceo if you want

more blacks, but it is surprising. economicallyeing beneficial to have more women in s, not necessarily as ceo's, so i would imagine it is the same with african-americans. are there any studies to disseminate or we should look at? carol: there are a couple of data studies. blacks have huge buying power. it was $1.2 trillion last year. you would expect her management ranks reflect your customer ranks, but so far that has not occurred. story and bloomberg businessweek. this is bloomberg. ♪

hohes w'oiithongestc ?estc .thlais hotas hkeca hyson' at' y llseg ca hke cwistomin biness rn fid , p cth bou e.juais hotas hkeca hyson' at' y ddstus azetomimeag y wiourofia'r eie esr a adylr - onheesev .or upde 'itrestn i, w c elanowp r ynebuss. u 'doe t eth dveryay oding uc pwiwiro fi hthatelroui david: from bloomberg world headquarters in new york, this is bloomberg markets. innie: markets are closing

new york. let's head to the markets desk an interesting day for commodities. julie: that's right. especially in oil. now barelylow $40, above that level as if all three point 5%. oil fundamentals have come back into focus here. we also see a little bit of a rebound recently in the u.s. dollar, although it has been declining. take a look at the bloomberg. we are watching the technical levels for oil prices. here is the year to date and you see it with its moving averages. we have the 50, the 100, and moving averagey and it has fallen below that level. that is the level some traders and commissions have been watching. we want to look at crude supplies, because we have seen a streak of declining inventories until last week when they

rebounded. we see crude oil supplies near a 100 year high. definitely a very high level. and then the last two chart i want to look at has to do with oil rigs. again we are looking at the oil price in blue versus the oil rigs, which it yes, have been stabilizing to some degree or climbing at a lower rate, but still going up. there is on going tension overproduction in the united states and is that production working down quickly enough for what has been this long-standing oil supply glut. those concerns seem to have been alleviated earlier in the year. but now it has come back with a vengeance. julie, thank you. julie hyman at the markets desk with the market close.

now turning to politics -- a new report by moody's analytics indicates a clinton president he would boost to the u.s. economy. the report finds under clinton's wouldic proposals gdp rise, there would be 10.4 million new jobs and the unemployment rate would fall as low as 3.7%. are auld say you registered democrat and have donated to the hillary clinton campaign, but this is a rigorous analysis by moody's. tell us how it was conducted. we have limited information from both candidates about their plans. how did you conduct of the analysis, mark? we did this for different policy proposals. we used the same model for evaluating candidate proposals. it's a little tricky because we have to clean what those

candidates are trying to -- glean what this candidates are trying to tell us. some of it is quite clear. some of it is not very clear. some of it is on their website. some of it comes from speeches. we go through that very carefully. ofhave to make a lot assumptions. think end of the day, i roughly speaking, we give you a pretty good sense of how the economy is going to perform under different policy proposals. vonnie: let's take a couple of conclusions and ask how you got there. you say her proposals will result in a somewhat stronger u.s. economy. somewhat stronger -- what is that, for example? mark: she is quite clear about her proposals. if you go on her website, it's well.ut pretty you get a pretty good grip on

that. her proposal -- typical of her proposals is transparency. there's a lot of proposals. there's a lot of moving parts. the key to stronger economic growth under her plan is really integration -- immigration reform. she has endorsed the reform plan passed in the senate back in 2014. and never got through the house, never got to the president's desk. that reform plan was very significant. it would add about a million illegal immigrants and have a million workers. that is a big boost to do the economy. the congressional budget office did an analysis of that. neutral,ts are very looking at the cbc. david: how about spending on infrastructure, mark? it adds to growth.

you get -- in the near term, you , because it means a lot of construction activity, a lot of construction jobs, jobs created, and that provides a boost to the economy in the near term, but more importantly for a boost to the competitiveness of businesses and the long run. lifts verdict of the growth in the economy. a decade,k back over it does add up. and i should say there is a lot of bipartisan support around the idea we need more infrastructure. it's a question of how do you execute on that? i think infrastructure spending is another positive policy step we could take. trump's campaign, i imagine, their proposals are not crystallized, but i met and they say, obviously immigration

will push down wages, will be a drag on services and so forth, and infrastructure spending probably would, you know, would not be that huge a part of the plan either. so, how much would a trump scenario take off economic growth according to your analysis? well, the truck plant has a number of negatives. first, it has a very different perspective on immigration. of easley mr. trump is not a fan of immigration. he would ask 11 million undocumented workers to leave the country. there is no plan for adding more immigrants. it's a very different perspective. thater aspect of his plan is damaging is on trade. adding terrapins on chinese and mexican imports and those are the two largest sources of imported goods in the country and that does significant damage. and finally spending, very large

tax cuts which by themselves are probably a good thing for growth, lowering modern -- marginal rates is a positive thing, but he does not show a way to pay for them. he in set with a much higher debt load four or 10 years out and that hurts the economy. it's not just one thing under his plan. it's all those things. mark zandi, we will revisit this. thank you. chief economist at moody's analytics. i want to get back to the markets desk though. julie hyman has a breaking news on wti. yeah, this is something that goes hand-in-hand with what we were just discussing. oil has technically reentered a bear market. you see here the intraday declines we have been seeing in oil prices. the longer-term the

klein's 22%, 21.75% to be exact. david: julie, thank you so much. let's check the headlines for bloomberg first word news. mark? vonnie, quarter gov. rick scott says there are 10 new cases of the zika virus likely transmitted by mosquitoes. those cases are clustered in the same square-mile neighborhood identified last week in miami-dade. thes believed that transmissions are only happening in that area. president obama says no one has done more for american freedom and security than the families of those servicemen and women who have died for their country. during his speech to the association of disabled american veterans, he criticized donald trump, saying the u.s. must do everything it can to honor the families whose relatives have been killed in battle. president obama: as

commander-in-chief, i am tired of some folks trash talking america's military and troops. we have the most capable fighting force in history and we're going to keep it that way. [cheers and applause] no ally orbama: and adversary should ever doubt our strength and our results. mark: the president's comments as mr. trump uses bipartisan condemnation for remarks criticizing the muslim prayer and it's often army captain killed in iraqi. the israeli army has a new security threat -- pokemon go. the forcess banned playing the game on military bases due to security concerns. the game activates cell phone cameras and locations and could leak sensitive information. the majority of americans want college to be free, but they don't want to pay more taxes to fund it. a new poll conducted for the consumer financial company bank that 62% support debt

free education, but have to not want tax bills increase for it. ill or clinton has proposed free college for students whose parents make under a certain amount. news 24 hours a day powered by more than 2400 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. up, a bloomberg board member weighs in on selling chinese assets. this is bloomberg. ♪

david: this is bloomberg markets. i'm david gura.

vonnie: i'm vonnie quinn. -ide shares service - cory johnson from san francisco. he is standing by with the board member. cory: thank you. ubergurley joins me, and may be one of your biggest deals ever appear this is a big change for over here it it seems like the breast focused on the chinese market more than any other. also losing a lot of money there. >> i think the company uber has an immense respect for the market in china. caruse of a lakh of ownership historically as a percentage of their population, you may have something similar to a leapfrogging -- like you

had with cell phones versus lan lines. it's a really interesting market and one we were super excited to be a part of. but this outcome, i think, is something that is a win-win for both companies. i think didi is worth more because of this deal and i think luber shares are worth more today because of this deal. cory: what is uber's and involvement going to be. is uber going to participate in any way or they going to be an observer? >> a lot of our team will be working with the didi team and they will be working to serve that immunity even better. the companies will have a closer relationship in the past. cory: so, there will be continued involvement with uber -- is it active management?

or just employees are going over and communication will happen, but not any active uber management of didi? shareholderminority . we will be thrilled to be an investor behind them, but all i , because theng is relationship is closer, i think that there will be opportunities going forward. the things that came out on this, the notion that uber is not profitable. why is it so hard to get profitable in china? --st: there is fierce, and competition. we have been impressed with what they have done with didi, and they have probably been the toughest composition -- competition we face on a global

perspective. that tied into him a you know, the capital availability that has been out there, has led to aggressive competition that has led to requiring investment rather than profits. cory: right, right, right. his blogavis said in post, if you really want to serve the interest of the consumer long-term, profitability has to be part of it. yeah, it changes a lot of things. it's interesting the weight uber went into the markets are very differently. i always interview might uber drivers about how many rides they get, the average cost -- they take a different cut when uber is in a market, the price can be very low. it seems like uber takes a hyper local focus when it launches in different localities. is that fair to say? yeah, absolutely. every market is different. if you want to be successful, you have to serve that market in a very specific way. cory: another company trying to

do the same thing, of course, lyft, its competitor. lyft had a partnership with didi. what happens to lyft in that partnership? privy i have never been to the details of that partnership. i can't answer that. had to here is whatyft say. they said "we always didi -- d i have been involved with a few partnerships in my life. that is rarely a good thing. look, obviously the thing is the decision for didi and uber to team up to tackle the chinese market. that is what i'm focused on.

'sest: do you think didi partnership with uber in the u.s. market -- does that change? do you end up with partnerships and localities outside china? know, that has not really been a real particular point of focus from the deal. i expect what you will see going -- it is the single largest ridesharing opportunity, and i think you will see us focus the majority of our resources on areas outside of china. what i'm really hopeful -- this cemented thetunity ability to work even harder at investing and making our product better for the consumers and drivers elsewhere on the planet. what is the biggest driver

for uber, uber black or uber x? think they are equally important, and i think you could think of it is always any company that serves high-end opportunity and a low-end -- as you suggested the high-end opportunity will have more profit per ride, but the vast majority of this business is at oh iner x price point, many cities half the price of a taxi. found, the more we lower price, it's a very, very price elastic market. demand tends to surge upward. consumers can envision themselves relying on this in more and more use cases in their daily lives. with products like uber pool, which are very obligated to deliver because of the complex algorithms you need to make that work efficiently at scale, you reach price points that compete nicely with car ownership.

i think you will see over the next five or 10 years uber will work all it can in the types of algorithms that allow us to drive those rice points down -- price points down. cory: it's interesting -- you told me a long time ago with uber -- numbers you do not want me to repeat, so i want -- to win over first came into the san francisco market, it was not just competing with the black car services. there were more cars on the road after uber arrived. it was not just taking market share, but changing consumer behavior so there were more rides being offered than ever before. are you seeing that and all of the markets you go into, or is that limited to big cities? guest: absolutely. i will share some numbers with you. the market in san francisco now is about 10x what the black car and taxi number was a year ago.

some people miss perceive this as a taxi alternative. this market is vast, moving to the point where we are competing with the notion of -- i think of it on a miles traveled basis. when you look -- especially going back to the china opportunity, you look at the fact that you don't have pervasive car ownership like you do here in the u.s., and this will be the way that you solve mass transportation problems. and it has the ability in the u.s., by the way, to create much more efficient cities. when you build a city for car ownership -- houston has three and a half parking spots per car -- you cover most of your geography with cement. cory: waterworld. guest: you can lower the cost of housing. cory: we've got to jump. bill gurley, board member of

benchmark capital, really appreciate you joining me. we will have more on this deal tonight, a great big story here. we will also talk to another guest about what this may mean on "bloomberg west" tonight, 3:00 p.m. the civic, 6:00 on the east coast. ♪

david: this is bloomberg markets. i'm david gura. vonnie: and i'm vonnie quinn. david: microsoft is planning its first trip to fund shareholder rewards. they may sell bonds as much as seven parts -- a person familiar with the matter says it may yield two percentage points above treasuries. bonds may be sold as soon as today. international

buying a 10% stake in inventive health. that would make it a co-owner. advent says it will not pursue a initial public offering at this time. mcdonald's is expanding its push for healthier food options. the fast food chain removing artificial preservatives in chicken mcnuggets, its most popular menu item and --oving-does corn syrup in high fructose corn syrup in some of his breakfast foods. that is your business flash update. vonnie: going to take a look of the markets in a moment, but coming up on the next hour, the florida department of health says there are now 14 cases of zika in miami. we will speak to the cdc thector thomas frieden on

latest on this mosquito-transmitted disease. -- the nymex crude oil futures in a bear market. just off the lows of the day. 75%. point percentear is 1.5 exactly now, as low as 1.46% earlier in the session. the 30-year mortgage is at a record low, 3.8 percent and the wider average is not doing too much today, but we see the the dow andven as s&p are down. this is bloomberg. ♪ . . .

david: 3:00 in hong kong. vonnie: welcome to "bloomberg markets."

david: from bloomberg world headquarters in new york, i am david gura. vonnie: i am vonnie quinn. here is what we are watching. the centers for disease control warning pregnant women or those thinking of getting pregnant not to travel to miami after it identified at least 14 cases of zika transmitted by mosquitoes. the director joins us on the latest. david: health care is one of the worst performing industries on the s&p 500 on pace for the weakest performance since 2010. we will hear from a strategist who favors the industry. vonnie: speculators are bearers on the pound -- bearish on the pound ahead of the bank of england meeting. the central bank is expected to cut rates for the first time in seven years. david: