david: live from bloomberg's world headquarters in new york over the next hour, covering stories out of seattle, chicago, and beijing. stocks around the world dropping, the dow on track for its seventh straight decline, the longest in a year. the s&p 500 index seeing its biggest drop since the aftermath of the brexit vote. a look at what seems to be -- spooking global investors. president obama saying that the republican nominee is unfit and urging gop leaders to disavow his candidacy. will rising tides inc. all homes ? if sea levels continue to rise, 30 u.s. cities to be white by the end of the century. we have an exclusive look at the company's latest report. markets close in about two hours. let's go to the markets desk,

where julie hyman has the latest. julie: i don't know about how -- homes, but stocks are sinking. once again the s&p 500 was down by 1%. this beautiful -- this would be the first time we've seen it down at the close of trading in 17 sessions. the stocks have been bumping along the lows all day long, the s&p having its first back-to-back declines in about five weeks. it is now a seven session losing streak. the longest in about a year. so, we have not seen a day like this in quite a while. take a look at the s&p over the course of the day. it's been in a tight range recently. it looks like it has broken out of that range. 21-50 had been the lower bound. at one point it gift below that and it is still bouncing at that level. what is putting pressure here? a lot of it a stock driven reagan

the bank of japan did not inject as much stimulus as anticipated, but you also have individual stories, like apple falling as samsung introduces its new phone one month before apple. pfizer, coming up with earnings that beat estimates. sales of its biggest medicine came in below estimates. facebook sliding along with this general decline in technology that we are seeing today. we got a pullback, a sort of mixed bag, delta coming out passenger revenue that fell last month by 7%. nordstrom falling on some analyst commentary rising concern over retail sales. royal caribbean report -- reporting earnings overall the the estimates but analysts are expressing questions over the quality of it. we have seen a lot of different company news that is disappointing. absolutely.

lo and behold, the safety trade is back. seems to be. gold, classic safety trade. the fix is also getting a big bounce, the biggest we have seen leave theu.k. vote to european union. on the flipside oil prices are taking a sharp leg lower today. we have had, particularly in our options segment for quite some time, many options traders calling for a return to volatility and now it looks like folks are betting with their money, not just talking about it. take a look at the bloomberg, this great chart was created by dave wilson. this looks like the differential between the six-month fix futures and the current fix -- vix futures and the current vix. really anticipation that the volatility is going to bounce. now let's get a check on first word news. mark crumpton has more.

mark: thank you. president obama is challenging republican leaders to withdraw support for donald trump, saying that he's unfit to lead. during a joint white house press conference with the prime minister of singapore, the president said "trump does not appear to have basic knowledge around critical issues." trump later responded saying "mr. obama and hillary clinton single-handedly dismantled the accusedast." he also them of sending america's best jobs overseas in order to appease global interests. the ceo of the democratic national committee has resigned in the week of it -- the wake of an e-mail hack that embarrassed the party on that even of its nominating convention. that's according to the associated press. chairwoman already resigned due to the political scandal.

in other news, the new york city police commissioner has announced his resignation. he will stay on the job until september. he has twice served as new york 's police commissioner and is the only person to serve as top cop for new york and los angeles. inreally plans to take a job the private sector. james o'neill wilson seen him. a weather system that has already caused six deaths in the dominican republic has been designated as tropical storm beryl. -- earl. it is said to be bringing high winds to mexico, honduras, and belize. news, 24 hours per day, powered by 2600 journalists and analysts in 120 countries. i'm mark crumpton. david, back to you. mark. appreciate it, turning to metals, platinum is making a bounce, losing against

gold, the most expensive compared with gold since november, but gold has had quite a run this year, up 28%. i want to bring in tim evans, from longleaf trading. let me just ask you about the run that i just mentioned a few minutes ago. do you think that gold has priced in all the volatility we have seen over these last few months? absolutely not. i think that gold is really just getting started. the risk landscape, we have seen a variety of different markets benefit from that so far. we have seen u.s. stocks obviously do well, treasuries do on a persistent basis has outperformed but in the long run basis its underperforming. as the opinion of the market begins to shift and look at the u.s. as not as safe as we were looking at it even two months ago, i think that gold is positioned to do very well in the environment. driverwhat is the major

of gold doing well? the uncertainty of interest rates? tim: and the u.s. dollar. the u.s. dollar has held levels around the mid-90's for some time. basically because there were really no good other options for currency. as the market begins to question whether the fed is even going to raise rates and make it on board the global trend, which is , i thinkg to cut questions about dollars stability will come into play. i want to talk about demand as you look at the price of gold. seems that investor demand has been affecting the price. is that worrisome for you? that it's not the physical good itself, but it's the demand? tim: anytime we see exponential moves higher, demand has driven it. looking at the first half of

2016 we saw $1.5 billion flowing into the gold backed etf's. saw $4 billion flowing to treasuries in the first six months. if there begins to be questions about stability of debt, stability of currency, if a small fraction of that capital flows from treasuries into metals, obviously that can support an exponential move higher. i think it just reflects normally what we see in gold during times when gold is making a nice move higher. you mentioned the nice flow into etf's, it has slowed, yes, but the you see a risk term? it will bek cyclical. it's very difficult for a market maintain record levels week over week, month after month. the market will look for headlines to justify another move higher. you will go through periods

where you will see a lot of buying, the market will cool off, then headlines will come into justify another leg higher. that's exactly what we've been seeing through the calendar year of 2016. david: i mentioned platinum. you look at silver. do you see more value there than in gold? tim: i don't. actually one of the market ideas that we are active with is looking at the spread differential of gold to silver. gold has a tendency to get ahead of silver. silver will in effect by catch up to gold. but gold has been the leader and we expect it to continue to be the leader. given the fact that silver on a spread base has half caught up with gold and in the near to intermediate-term out run silver. david: what does that ratio tell us right now? in periods of up people you will see the relationship move.

right now we are trading at a multiple of 65 to one. silver tends to perform better when the multiple is lower in favor of silver. when we are going through periods of economic stability and growth, silver kind of has a dual personality of trading as a fiat currency. as well as an industrial metal. trading more of the fiat currency, positioned to do much better and that's where we are now. david: i was reading a note from michael purvis. that laterhis note summer has a history of seasonal strength for precious metals. do you expect we will see the same seasonality here as we go into the summer? not only seasonal, but a regular strength from here on

out. you can see that year-over-year on a simple price chart, but the environment that we are currently in we will ultimately see the seasonal effect, but gold will continue higher based thise fundamentals of unique time. if you are in the type of environment where you have a bullish seasonal affect backed by underlying fundamentals that are strong? you could have a very strong move as we look at it and we feel that that is exactly what we are looking at right now. david: always great to talk to you. that was timothy amit -- timothy evans, joining us from chicago. unveiled aafter aig new business strategy, previewing their numbers next. this is bloomberg. ♪

this is "bloomberg markets are go time for the bloomberg business flash -- markets." time for the bloomberg business flash. out for that plans to sell bonds for the first time in two years, looking to repay short-term debt . they plan to sell 10 year notes as soon as today according to a person familiar with the matter. moving 8/10 of one percentage point above treasuries. platinumselling to equity, and dealing the value at $10 billion. they agreed to sell their motor 1.2generator business for billion dollars. the emerson ceo says he wants to focus on more profitable units. gamestop is buying 500 at&t

wireless stores, heart of its attempt to reduce dependence on video games. no word on the purchase price, but officials say that it was the bulk of the debt offering raised earlier in this year. flashs your business update. turning to earnings, american international group is out with its second-quarter results after the bell and was surveyed for aig profits on june 30. my next guest says that this report is critical for the insurance giant. josh stirling is an analyst at sandra bernstein. you write that they offer a very attractive risk reward. we are six months hence from this business strategy. what will you be looking for today and tomorrow? josh: thanks ray having me here. i think it's a critical role or because, as you said, it's six months on since they adopted

their new strategy. if you care about the quarter, we think it will be a beat, but it's always a mess at aig with catastrophes. david: nature of the business. josh: sort of. and it will be until they get the earnings power that they need to deliver. the really big things that we looking for in the quarter are all of the sort of fundamental long-term stuff, which is three things. first, operationally they bought themselves time from the activists and shareholders as they promise to reduce expenses. if they continue to show momentum like they started to last quarter, like they promised they would, that would buy them some time. those are table stakes to continue at this point. second, strategically, a promise that instead of doing a full breakup, they would pursue modularity, trying to put out that idea of one flawed aig with a similar approach to these companies in the portfolio, let's run them well.

and is a proven, they can unlock value with asset sales. though, is that when the company sort of buys itself more time, they still very strongly said -- look, we believe in being one company. more importantly, we are happy to be regulated by the fed. one of the biggest activist -- one, ares here they too big to succeed? to, shouldn't they pursue placidity? .ur answer is yes and yes activists had a similar approach. now with activists onboard for six months, having had time to work with this company and for the board to hear both sides of the argument behind closed doors , we think it's time for the company to weigh in. six months have passed.

john paulson, carl icahn on the board. how much time do you get this company? josh: if you're asking me wasonally, look, my answer six months ago. but the mature and responsible thing is that if they are making momentum towards their cap -- their tactical goals, those goals are not in conflict with long-term strategic outcomes. the question is -- first off they need to make progress in tactical goals. when you think about the big nowsion of peter hancock, that we have seen that ge has actually been successful commodities, etc., and we've seen metlife be declared by the courts to not be iffy, it opens up the door for peter to say

that there is now an opportunity for us to rethink our prior position. in the context of the activists that want to see a big bang to went on their position, investors are sometimes different but need the company to finally outperform, it ultimately sort of seems like a tactic it without pressure, they ought to choose. david: this company says they will reduce expenses over the next two years, and how feasible and important is that for you? josh: there are a lot of ways to get here. i think that's super important from the perspective of most investors. you could have a debate as to whether reducing their massive amount of excess capital is more important or if whether or not sprawl is more important. the day, every time you see an aig television ad, they chose to spend that money on an advertisement. with a impact on how serious

management is with respect to how they can deliver. julie: always great -- david: wallace great to talk you, josh. don't miss betty liu , liveiewing peter hancock tomorrow morning from the stock exchange, 10:00 a.m. wall street time. still ahead, how the recent ruling on the south china sea could cost the u.s. and japan exclusive economic zones. this is "bloomberg." ♪

david: this is "bloomberg markets." i'm david gura. president obama talked about his administration's pivot to asia. complicated that has been a

long-standing dispute over territory in the south china sea. last month an international tribunal weight in on that. been looking into that in the most recent issue of the magazine. long, thisges decision. you look through it. you find some language about what could peter: that's for you have -- it's 200 nautical miles from your sure. exclusive rights to fish, drill for oil, and to subsea mineral exploration. very valuable. and it's huge. the united states has bigger exclusive economic zones in terms of square miles of ocean land in the 50y states. if that comes into question, it's a big deal and it's been mostly missed by the press. david: and it comes into question why? in this long report, this long decision, what did the tribunal

say about them? they interpreted the united nations convention on the law of the the, which has some language in it that has kind of never been closely analyzed that says that in order to claim one of those very valuable 200 nautical mile exclusion zones, the piece of land has to be habitable. has to be able to support human habitation, economic activity. or some of the islands, rocks, as you might call them, they have been claiming this, really i wouldn't call them habitable. importantly, the tribunal said simply having soldiers does notd on a rock define habitability. they are being supported entirely by provisions being brought in from outside. it has to be able to have fresh water. maybe calls available soil. soil.tivateable

japan, maybe other countries ared find that those rocks subject to challenge. david: china has said that they won't pay attention to this ruling. how binding is this? when you look at what is says and consider the context around the world, does it have anything in the way of teeth? peter: first of all, it's not legally binding, but because there were five eminent experts on the law of the sea, and because they went to great lengths to be exhaustive and their analysis, it will probably have a big influence on other tribunals and arbitration panels. lastly here, 30 seconds left, what industries might this fisheries, oil drilling, subsea mining of the

obvious ones. suddenly all of these claims that seemed pretty secure are up for grabs. i think that fisheries is especially important. the united states has done a good job protecting fisheries from overfishing. if they become subject to freefall, that could go away. david: you can hear from the magazine's reporters on the week's most talked about stories every saturday and sunday and on bloomberg radio. oils plunging into a bear market, crude now below $40 per barrel. next. this is bloomberg. ♪

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to the markets desk, julie hyman is keeping an eye on this. daye: it has been a tough for oil. the holes are still out there, but after the big decline that had an initially relief earlier in the day, we saw a sharp selloff down 1.4 percent. it's been there for much of the day. there wasn't seemingly a catalyst for that. several keyelow levels. 2447. you have this contract for oil, this amber color, then you've got the 50 day 100 and 200 day average. the last time you traded below all three was in february.

it is now below all three once again. we will be getting in this data after the close in the official data at 10:30, giving more direction and information to the oil market. now to the goal -- to the gold market, taking a look at what's happening there, we have seen a winning streak for gold. especially today, a pretty sizable gain as we have seen more investors concerned about the global economy, concerned about the central bank possibility to stem declines. we have been watching gold miners as well. citigroup coming out with recommendations on newmont. legal eagle, but that is rising with gold prices anyways. david: let's get a check of the headlines at this hour. mark crumpton has more from the newsroom. ,ark: a new york congressman richard hanna, saying that he

will cross party lines and vote for hillary clinton. in an op-ed published on syracuse.com, writes that trump is unfit to serve the party and plans to retire at the end of the year. voters have more confidence in hillary clinton to handle foreign-policy issues and donald trump. trust registered voters clinton on foreign-policy over trump. voters trust both candidates equally, 48%, to handle terrorism. italy says that it will evaluate any u.s. request to allow use of a sicilian airbase in the campaign of airstrikes against an islamic state stronghold in libya. in february they agreed to let armed u.s. drones take off from a base to defend u.s. forces targeting extremists.

competition between three top military contractors. whether they can afford to modernize their nuclear weapons. analysts inists and over 20 countries. this is bloomberg, back to you. david: thanks, mark. areonwide, 1.9 nation homes at risk of being underwater by 2100 according to a new report from zillow. if climate change causes sea levels to rise less of feet, florida has the most to lose. one in eight homes would be underwater, representing $400 billion in water -- in value. new jersey, new york, and south carolina are also rejected to lose the most.

svenja, good to have you with us. it says that based on calculations, actual water poses just as much of a problem as negative equity. summarize your conclusion as to how much damage this could cause. svenja: if you think of the total value of the housing stock close toillion, losing $1 trillion from water damage, that's an immense amount of money lost. definitely the level of the scenicputting more by access the oceans. david: you say that it's a conservative estimate. how did you put together these

figures? svenja: we looked at which areas would be affected by rising sea levels. going through the database of over 110 million homes, close to the entire housing stock of the u.s., we were able to pinpoint which homes would be underwater in which cities would be most affected. you're looking at a six foot rise. there's a less worse scenario of two feet. how much to the figures differ? svenja: of course they will differ significantly in the sense that if you go with only a two foot rise to levels, you have less money lost. if your homes are affected, states affected will remain the same. i think that if you go with what experts are predicting, it's not unreasonable to think that over the next 100 years we will cc levels rising by six feet. see sea levels rising by six feet. when you look at the

accuracy of this, how fluid might it be? >> it comes down to what we do over the next 100 years. only more homes, as i mentioned, but surely if you look at a city like austin, they are not going to let a whole bunch of their homes fall into the ocean for lack of a better description. we are going to try every thing possible to push back the ocean as well. that dataway, some of we will lose, unfortunately. however it's hard to say what will happen and which cities will be protected and which other ones will, of shipley, take a very large cut in land. you are a real estate firm economist. i wonder, the degree to which people are beginning to factor in climate change is something they think about. people still want to get houses, apartments, condos on the water. do you see or do we sense any sort of attitudinal change?

people becoming less interested in being close to the water should mark -- to the water? david: i don't think at -- svenja: i don't think attitudes are changing. as natural disasters hit and are affected, we are rebuilding nicer and more expensive homes underwater. but one thing that people are looking for is to put homes on stilts. how can we protect ourselves against rising sea levels? along with climate change in general, people are thinking about if they should install ac units. five years ago if you were building apartment opens in seattle, or we are based, no one would have thought to include ac . as temperatures easily hit 80's and 95 in the summer, people have to have it. these things are starting to enter mainstream in terms of how climate change affects how we live. david: it's an interesting, great study. great to speak to you, sonja.

-- svenja. coming up, republican leaders being called upon to disavow the trump candidacy by the president. ♪

david: this is "bloomberg markets." time for look at the biggest business stories in the news right now. bank of santa and their, -- bank adding anantander, unit with 314 branches in a deal. added million customers to their u.k. operations. their version of the f 35 in the andforce is ready, limited its costliest program at $379 billion. it is still in development with flawed software. with combat capability for at least another three years. bottled water will be more popular than soda for the first time in the u.s. this year, thanks to its convenience, and fear over what's coming out of

the cap. coca-cola, pepsi, the snapple group, saying americans have switched from carbonated beverages saying that their products are calorie free and audible. another factor is crumbling infrastructure and let intimidation. that is your business flash update. now to politics and president obama, pushing republican leaders to drop some trump. challenging them to think hard about the party's nominee. president obama: the question they have to ask themselves is -- if you are repeatedly having to say, in very strong terms, that what he has said is unacceptable, why are you still endorsing him? david: richard hanna became the first republican member of congress to say he is with hillary clinton. and up at hero -- it's not enough to simply denounce his comments. he's unfit to serve the party

and must leave the country." we have a lot to talk about. let's start with mr. hannah's comments. he's coming out to criticize the comments that the minister -- that mr. trump made about the family of that direct or veteran. first, to repudiate the candidacy, but he is going to retire. do you foresee more of that? david: i don't think there will -- mark: i don't think there will be a lot unless he has a really bad first date. most republicans will take the low political heat of the summer and say -- let's wait and see. they are not on capitol hill getting asked about it every day my the press. this is an interesting situation. for a lot of the candidates and incumbents, donald trump is still very popular with voters. they don't want to make any moves. the whole already doesn't want

to repeat anything. the reason a lot of them got on board the one, the voters picked him. it wasn't a back room thing, it was a popular thing. the fact that he's retiring plays the biggest role. maybe we'll see no more until the fall. if trump is behind and has a bad debate, you might see more of it , but for now is a rational calculated position for them. are their chances of individual members keeping their seats greater say embrace trump lower? for now they think it's greater. david: are you surprised how long this storyline has continued? from the democratic national convention, to this interview with george stephanopoulos, moving into another week, donald trump seemingly not able to let it go. help us to understand the technology. he's talking about it now that he brought it up.

in pastthat controversies, maybe he has altered his decision a little bit. maybe he hasn't said it perfectly, but in this case you haven't really heard him give anything like an apology. you still haven't heard him on twitter or in an interview sort of lean in to what mike pence and his running mate and others have, a strong emphasis on honoring this family. that may be moving on to talk about other issues. still hasn't done that. i think that until people have a sense he gets why his initial comments were so offkilter, it will stay alive. as far as i know those comments have not been on today, but it is alive and well as well. david:ign as

well. how much of a fallout is that going to have a show mark mark: what we don't know our -- are these resignations from people at the top taking spots ability, or are there others showing culpability? the big change for the party, does the public really care about the democratic already, per se? the suspicion from the sanders campaign and martin o'malley campaign is that things like the debate schedule were not just the democratic party guessing what the clinton campaign wanted, but colluding with them. it's possible, possible that why these people were going was to bring the attention to them rather than let evil focus on the clinton game. if it comes out through leaks and other ways that the clinton campaign and the dnc were having regular communication that have heraiver the campaign over opponents, it might be a big story and rightly so. donald would say, seems like

a rigged system. clinton campaign, crowing about its latest round of funding. mark: she's done a remarkable job raising money in a , with theay fierceness. an awareness of the rules, raising money the campaign, for national and state parties, she's becoming a better low dollar fundraiser. the ability to go to beverly hills, the hamptons, having people max out, maximum at a $300,000 contribution, raising small dollar contributions on the web. perhaps the biggest moment was when she took to the stage in philadelphia. i wonder, to what degree should be -- is she going to be able to capitalize on moments like that going forward? mark: the latest round shoulder with a big lead as small and

take donors start to not trump as seriously. that night is going to produce a lot of donations. the question is august, in particular, always slow on fundraising with people on holiday, can they raise funding? she's going to do is like going to martha's vineyard, the hamptons, for wealthy people are on holiday. small dollars, it's a bit of a trick to figure out the right moment to push people for those. in james carvel's name, barack obama, joe biden, there are a lot of buttons they can push. david: lastly, turning to the top of the segment, barack obama speaking this morning. he's not been shy about the fact that he's hungry and eager to campaign. are we going to see more of what we saw? mark: we are. this morning was a great example of fact that although he doesn't like politics -- love politics,

he's got a great is that she's got a great sense of wedge issues. the realighlight dilemma that they find themselves in. stick with trump, there are costs associated with that. break from trump, there are costs associated with that as well. highlighting the fact that they don't have any good options. david: thank you for that, mark halperin. you can catch him today on "all due respect." breaking news about bio gender. julie? shoot -- shares surging. allergan, potentially considering a takeover. you can see the shares taking a step because of the initial shares halted through volatility . excuse me, thinking about trading again, they surged up another few percent, of over 9%.

we have already seen big, big activity within the pharmaceutical industry in terms of mergers and acquisitions. this would be yet another one .hat is up in significant size biogen, looking at the size of the company, a 71 billion dollar company. obviously whoever is doing the buying would be a big deal. david: a precipitous spike, thanks, julie. more coming up. this is "bloomberg." ♪

the facebook instagram apps seems to be taking a page out of snapchat hoss playbook, letting people share photos and videos that disappear. sound familiar? emily joins us from san francisco. i was struck by a line in this piece saying -- instagram copying snapchat. what are the similarities in these properties? an important and defining feature of snapchat, the content disappears. instagram is launching instagram stores, where you can share photos and videos and they will only last for 24 hours. of course, snapchat popularized this idea. the concept could disappear and it could be exciting and a different sort of use case.

is interesting, i spoke to the ceo of instagram a few weeks ago when they announced that they had 500 million monthly active test and 300 daily active 300 million daily active users. snapchat has around 150 million. if you look at pure volume, they don't compare yet, but snapchat is certainly taking we believe some mind share away from instagram. i asked kevin -- are you afraid of snapchat enough? are you doing enough to take snapchat on? take a listen to what he had to say. kevin: it's not our job to be afraid so much as understand what's happening in the world. we are competing against many different services for time and eyeballs. during to 100 million users around the world is a big feet. if 300 million of those are daily actives, 21 minutes per day? that's a big feet. we are absolutely not sitting

happy, thinking that that's going to last forever. we need to keep innovating and introducing products. low in themily: hold, a few weeks later they launch this. to his credit today and in the past he's been fair in giving credit where it's due. he told me that snapchat has obviously been a huge innovator and that they deserve the credit they have gotten for what they have created, but he says -- look, you could think of facebook as an all us disappearing seed, though -- disappearing feed. though it does that there permanently, they are taking their own spin on it. back in 2013 snapchat was something that facebook was looking at to acquire. i wonder what today's maneuvering tells us about the psychology of things. we heard a little bit about it talking about the fear factor associated with the growth of snapchat. as you sort of psychoanalyze this new product, what do you

think? kevin: -- emily: there are folks out there with think that facebook is going to stop until they eliminate snapchat completely. remember in 2012 they had a new app for you could share photos and videos for only 10 seconds. that didn't last. then there was slingshot, very similar, except you could draw on them. facebook is definitely been experimenting and now instagram is in the ring as well. david: emily, thank you very much. talking more about that tonight at 6 p.m. in the next hour of "root need joinsark burley us to discuss his company's better-than-expected earnings and the latest lawsuit trying to block the merger with humana. ♪

david: 3:00 p.m. in new york, 8:00 p.m. in london, and 12:00 a.m. in hong kong. welcome to bloomberg markets.

from bloomberg's world headquarters in new york, good afternoon. i am david gura. here is what we are watching this hour. global bond yields touched all-time lows in the last month, and that is making bill gross nervous. the bond king sets record low bond yields are not the risk. mark bertolini will join us -- his company out with better than expected earnings, but a better with the doj over a merger with humana could cause problems down the road. plus, the cofounder of american securities tells us white american-based companies are so attractive to him right now. one hour from the close of trading, let's head to the markets desk julie hyman is standing by. julie: we have the selloff. it is updating a little bit. the selloff also happening