>> from bloomberg world headquarters, good morning. oliver: we will be covering stories from rock -- rio de janeiro to los angeles and washington, here's what we're watching. sufferingconomy is from the same old problem, sluggish productivity. we will talk about monetary policy makers. scarlet: u.s. stocks edging higher, putting the s&p 500 on track or another new record. corporate earnings are lifting health care and tech shares. oliver: a big one we are watching after the bill is disney. all profits be crimped by lackluster shanghai opening? while eisner -- bob eisner will join bloomberg tv later.

scarlet: halfway through the u.s. trading day. julie hyman has been tracking the moves and after it caused, yesterday, it looks like the s&p could be making another record. the dow not quite there, but also major averages are up, will not being used gains on a daily basis, but enough to put stocks at fresh records and this is the song i've been singing. the s&p 500 going back to july, that is when we began this run of records we have seen. we have also been tracking by how little the s&p 500 has been moving on a intraday basis. this is the 22nd straight session in which the s&p 500 has not moved at least 1% by the close unless something crazy happens before the end of the day.

it does have to do with earnings as companies like and a pharmaceutical as well as news corp. are rising. going the fix conversely down, which is what you would expect in a period of volatility. what is interesting is even as we have a little bit of risk on activity, with stocks rising, we have buying of treasuries as well and the yield is going to load at lower, 1.57%, so that is normally something you would see move inversely. we do have the bloomberg economic surprise index going and some federal reserve officials recently saying that investors are underestimating how many federal reserve rate increases there could be, this year. that is not helping with the direction of bonds. oliver: we are looking at a new

high, but also some laggards. julie: retail is the group that is doing the worst. this is something we saw last week, a lot of week is in retail. losses afterg the sales fell 4%, 14% decline at banana republic. target has not reported numbers, but cleveland research says it's sales were weak. wayfarer, the online retail furniture -- online furniture retailer out with weakness. we are really ceiling -- seeing selling across the retail spectrum. scarlet: thank you so much. oliver: let's check in on the bloomberg first word news. mark crumpton has more from our newsroom. has ahillary clinton double-digit lead over donald

trump in the latest national poll. according to the survey, clinton leads 55% to 41%. the gap shrinks in a four-way race clinton edging trump 43% to 38%. libertarian party candidate gary johnson gets 10%. green party's jill stein has 4%. delta airlines still struggling to come back from that computer failure the ground lights for several hours on monday. the airline says it is reducing the morning schedule so they can reset. than 300 flights are being canceled after thousands were canceled, yesterday. for airine is paying differentials. the senate will begin voting tonight on whether to -- accused of breaking the budget laws and expected to lose today's vote which requires only a simple majority. proponents would only need a two

thirds majority. president met with vladimir putin in st. petersburg, calling code in his dear friend, saying turkey is ready to implement a natural gas pipeline project with russia, as well as a deal to build turkey's first nuclear power plant. president putin said the flow of russian tourists to turkey will resume. it had been halted after the downing of a russian jet in turkey in november. young americans overwhelmingly favor lgbt writes for employment, health care and adoption. those are the findings of a new gen forward survey. 92% of young adults suggest -- support hiv and aids prevention. 90% support equal employment and 80% support lgbt adoption. global news 24 hours a day. scarlet: the productivity of

american workers unexpectedly declined for a third straight quarter and well productivity trickyn weak, it is a problem since productivity growth is a key factor behind rising living standards and wage growth. how was this data along with other sluggish indicators factor into the fed's decision while hiring remains robust? let's talk -- thank you so much for joining us. segregation in productivity is worse than we previously believed. how do you go about isolating the reasons behind this bump? that slowdown in productivity is worrying. at the end of the day, we can't pay ourselves more than we heard, so productivity is low, living standards will increase at a slow pace.

is a lower portion of gdp than it used to be, so companies are much more cautious about hiring people. 20 years ago, the guys who retired in the labor force will replaced by younger people with much more higher standards of education. par,ays, it is par for there is not an upgrade in the educational standard. i think there is a lot of regulation that is making the world grow more slowly. maybe an aging labor force is making people less adaptable. oliver: that sounds like a very -- giving three positive lens to some extent, but how many of sort of numbers can we give before people rethink this rebounded gdp expectations? >> we are bound to get a big rebound in gdp in the third quarter, because the soft growth in q2 was due to a rundown and

inventories. that will not happen again. we will see a big bounce back. productivity in the third quarter will be much better. the fact is that the fed keeps talking about that maybe the equilibrium liberal -- equilibrium level of interest rates is lower than they felt before, and they keep revising down and down, that terminal value for interest rates. it is going to happen again in september. --re they used to say it was that 4% just is not what possible, with the bond market trading at one point, the bond market is saying the top interest rate is going to go to about 2% over the longer term. one of the reasons it is going to go up his productivity is going to stay maybe half a percent trend. that compares with maybe one and a half or 2% that we used to have back in the day. scarlet: we also have a chart

that shows productivity compared with core pce because people pointed out that the fed should be more confident that upward pressure on prices remains muted as a result of this week productivity -- of this weak productivity. that has huge consequences, doesn't it? >> people are being too coremistic about how much pce would rise because employment is falling. there will be a gentle rise, but tiny. let's face it, we don't have to worry about too high inflation. that is a problem of 20 years ago. let's knife fight the last wall -- let's not fight the last wall. you mentioned corporations and companies being a little bit hesitant and that when you think

about productivity and how this could potentially rebound, what are they all -- what are the other inputs? this chart looks at wages versus productivity and it is not perfect, but that white line is looking at the earnings -- hourly earnings changes were the blue line is looking at productivity that we saw to date. we are getting this departure. >> this is putting pressure on corporate profits. moreare paying people because the u.s. labor market is tight. they are not able to raise prices because inflation in the world is pretty low and the dollar is strong. pricing power is constrained by global conditions and wages are being pushed up by domestic conditions. they conflict between those two means there is a squeeze on profit. that squeeze may have abated a bit in q2 and may again in q3,

but this chart you were showing is really what you get at the end of the cycle. profits start to get squeezed. it is difficult to raise productivity when unemployment is so low. let's think of the guys you are hiring at the margin, the guys who have not been hired in the last eight years. fantasticrobably not and skill sets, so they will be relatively low productive workers. scarlet: meantime, the federal reserve or is -- federal is still early in the cycle. there has been a shift at the fed. policymakers sounding more agnostic and increasingly disinclined to provide clear guidance, headwaters will see less benefit in-- less statements and speak -- speeches

and paying more calls attention to the incoming data. how does this disappointing productivity data influence the fomc? see --q2 data we will everybody expects that gdp in q3, so the atlanta fed, which is not the fed in d.c., but they're tracking estimate of gdp in q3 is almost 4%, it will be a lot better. its productivity, weakness in q2 was exceptional and will probably bounce back, and to be honest, i think they will pay more attention to the payrolls than to anything else. now, howa big question strong are the payrolls after two great months one after the other? will we get a third? with theords you stand data that is coming in on rate hikes? >> i think the market is way too complacent about where the fed

is. i think the market thinks the effect -- election is going to stop the and i don't think that is a consideration. scarlet: are you sticking with a rate hike in december? >> september. scarlet: pretty hawkish. thank you so much. oliver: coming up on bloomberg markets, what to watch for in disney's third-quarter results. the latest on its theme parks and tv networks as we await earnings in an interview with the ceo, bob iger. ♪

oliver: you are watching bloomberg markets. scarlet: uber found out the hard

way what many other u.s. tech companies realize long ago, china is an alluring trap. most american lit companies are either banned from china or have flopped their and their odds of success are only getting slimmer. -- permanently give up on china. >> no u.s. with company has cracked china and it's time they stop trying. google, facebook, amazon, microsoft, all of either been shut out or are barely treading water. the latest is uber, which sold its chinese operations after it lost billions of dollars in the country. apple has done well, but has struggled recently. why can't american internet companies succeed in china? titans ares web

unimaginably big and broad, making it tough for foreigners to compete. alibaba's e-commerce website handled more online sales than -- on and ebay combined and two, china's laws and government interventions favor local companies. for example, facebook and twitter are banned in china and google pulled out a few years ago because it was the target of massive cyber attacks and it did not want to comply with censorship rules. three, chinese technology has become really good. local companies make smart phones good as iphones but with features tailored to chinese taste like guessing your age from selfies and chinese tech ideas are being copied elsewhere like facebook turning its chat app messenger into a version of wechat. there tech prowess and government help has hardened china into an online economy where locals rule.

china seems too big to ignore, but it's also too hard to crack for america's web powers. -- you canat was read more of her columns and other commentary by going to -- one other stock to keep an eye on, disney come out with earnings after the bell. make sure you turning -- tune into our interview with the ceo, this is bloomberg. ♪

scarlet: this is bloomberg markets. disney reports earnings after the u.s. closing bell, remain things to focus on, theme parks, movie studios and tv networks. let's dig into all of them. you have the theme parks with a lot of fanfare, the ceo opened

shanghai disney in june, adding to their already impressive arsenal of art -- of parks. shanghai alone may attract 3.5 million people through the end of this fiscal year. the shanghai park is critical to disney in helping boost its international business. disney has not reported a profit on its international park investments since it started breaking out of that part of the business in 2004. disney could see a record box office this year. you are looking at its film operating income which jumped 27% last year thanks to a star wars induced boost. reporting season, finding dore, captain america civil war and google book could provide big boosts. cap that america is the number one movie internationally. another star wars movie due for release later this year as well. in the meantime on the store --

small screen, espn and cable networks are big profit for disney, making up 45% of their total revenue, last year. on the one hand, cable advertising growth is expected to rise well subscriber losses at espn are still with -- weighing on affiliate fees. espn has lost almost 2.4 million strivers since the start of 2016. that translates to nearly 10 million fewer customers than in 2013. because of the high demand for a live sports program, espn charges a high affiliate the. the problem is disney is boehner bolt to people unbundling their cable packages or cutting the cord. we will be looking for numbers on these fronts and disney results cross after the u.s. closing bell. oliver: at least one analyst says the house of mouse will have trouble topping itself. barton crockett has recommended disney as a buy for four years, but recently he downgraded his

call to market perform and he explained why, earlier. >> i have been recommending disney for four years and for most of those years, it has been a tremendous opportunity the at the country has resized its studio business with successes like frozen and star wars and they have had very good momentum in their theme parks and i think the tv business has been very durable. the story with disney from here is one of difficulty topping this tremendous performance that they have already put up in the studio. have 22%, they will share of u.s. box office, domestically. that is an all-time high for any studio and it will be hard for them to grow from there, but they should be able to hang around this level and continue. the theme parks business has benefited a lot from the shanghai launch, but there is a little bit of worry and concern, domestically with a lack of

american pacific -- attendance to the orlando park. i think the tv networks, espn had a great quarter, i think banks to the nba finals and ad revenues from that, coming forward there will be some cost pressure from rolling in a new nba contract. i don't see disney growing a whole lot you -- next year and that makes it difficult for me to recommend, even though i think it is a great source of assets, but i don't know that it necessarily outperforms this year. >> you have really summed these things up. is there one in particular or a couple that you will be particularly focusing on windows earnings come out, that might change your view? am verynk where i interested is what is happening in the theme parks. i think the shanghai launch is going to be terrific. be the mostto

profitable part when all is said and done. it will be the most profitable disney park, globally. pricingped world structure with a developing world cost structure. out inattendance flatten the first quarter of the year, and what is happening now with the weakenings, macro situation in latin america which is an important part of that market. i'm very interested in their ability to tell us what is happening. crocketthat was born earlier today on blue -- bloomberg today. scarlet: always looking ahead to what disney is going to say for the coming quarters. the red line shows the adjusted third-quarter eps estimates and the white line shows the stock price and you can see that it is not very often that disney does

not catch up with the stock price. whenever you had earnings estimates come in a lot higher or at least on a relative scale, the stock eventually catches up. last summer was the turning point for disney stocks. seeer: typically when you with expectations is that the stocks move pretty closer and's analysts -- closer as analysts revise their expectations. scarlet: disney will be reporting their earnings after the bell. bob iger will be speaking with david westin at 6:00 in new york. ♪

oliver: live from bloomberg world headquarters in new york city.

scarlet: this is bloomberg markets. let's begin with the headlines. mark crumpton has more from the newsroom. residents in some 5000 homes in san bernardino california may have to evacuate as firefighters battled the latest wildfire. plumes of smoke have been rolling all the way across the mojave desert to las vegas. migration to europe has dropped sharply this year. the international organization for migration says 263,000 refugees and other migrants across the mediterranean to the continent. deathsre were more and route this year than last. scotland is blocking for new offshore wind farms. wo ministers will appeal.

republican donor henry sloan is breaking ranks and endorsing hillary clinton for president. he served on the national finance committee for john mccain, mitt romney, and john kasich campaign. in the statement, he writes, as a businessman, a man, a father, and conservative, it is clear to me that hillary clinton is the right choice in this election. donald trump is heading to florida to meet privately with 700 evangelical leaders. he will face questions about making the country more conservative.

hillary clinton will not attend. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. this is bloomberg. back to you. scarlet: we will stay with politics, as you know, yesterday donald trump outlined his economic policy. the speech covered everything from tax cuts to energy to childcare. one of the things mr. trump proposed was an overall scaling back of business regulations imposed by the obama administration. earlier today, trump's top economic advisor spoke to bloomberg . >> equate proposal is to have the cabinet work to reduce regulations. all of the cabinet will be asked to lis lift regulations that do not support growth. that whole point is to get growth going and wages up. goal, you havehe cutting back on regulations, what are the other key elements,

from your point of view that would get it going? >> each part is critical. for tax reform, you have to bring down the tax rates. rates to beton once higher, it is hard to see how that will help the economy grow. economy wereling you need new policies. you need lower rates, broad t based. this is what ronald reagan described in the 1980's. it worked well. mentioned ronald reagan. theave a chart that shows ratio of federal deficit to gdp as a percentage. the red portion there goes on plus2 years is reagan george h.w. bush. the blue is clinton, and the red

is george w bush. president reagan cut taxes but the federal deficit went of. payis mr. trump going to for this, particularly when you have a lot of republicans the deficit.ut >> circumstances are different. in the 1980's, you were recovering from a high inflation rate. also, you were at work, beating the soviet union in terms of the cold war. circumstances, i think you could do a better job on the spending side. one of the critical things we're lacking now is any actual debt limit. look at the problems they have had over the past four years, fighting about whether debt should go up. there is no regulatory process. i have written about the need to redo the debt limit so we

actually have some kind of spending control going gone. >> if your timeout cutting spending -- costs.cutting, cutting government spending is going up really fast now. if you had any kind of workable allocation in spending, he would get a better result from the spending side. we have to have a stronger fiscal side for the government. >> specifically, if you're not , won'tg as much money that actually be the opposite of stimulus? >> no. business looks at that and says, the government is operating more effectively so now is the time to invest. thatnnot be the case government spending attracts private-sector spending. we saw a test of that in 2009-2010 when president obama did adjourn on this amount of -- a gigantic amount of government

spending. >> that goes to the question of productivity. how do you get business investment? is the reason we're not getting the amount of investment now is because taxes are not low enough? people can borrow at a remarkably low rate. why aren't they borrowing? >> they don't see growth. they don't see a system of policies that support growth. critical to that is the regulatory morass that the federal government has created. businesses don't want to start up. business formation has been low, costing us millions of jobs. really great jobs. they face a morass of regulations that they cannot get through. >> you are senior economic adviser to the trump campaign. have people penciled out how much this will cost? will we get numbers and see how

much this will cost and how we will pay for? bedown the line there will scoring, but i am skeptical as to how that scoring will be. i think we are underestimating america now because we have been so many years in slow growth. if you speed up the growth you will get more business investment, more tax revenues, and it will be easier to do the spending reforms you need to get done. scarlet: that was seen it economic advisor to the trump campaign. oliver: let's stick with politics and what could be a tough road ahead for donald trump. the challenge comes from an unsuccessful and place. olds a 63 year grandmother. me a u.s.tly beca citizen so that she could vote in november. she is not alone.

she is with us now from mexico city. thank you so much for joining. this was a great story yesterday on the bloomberg. i want you to set the stage here. who is this woman, and what movement does she represent? >> thank you for having me. she is 63 years old and she came from the dominican republic to the u.s. over 17 years ago but she did not get her citizenship until just last month. she decided to go out for naturalization because she wanted to vote. she says she wants to vote against trump. what we were looking at is a trend of citizenship drives across the u.s. blossoming. we went to see what affect is having on applications for citizenship.

we looked into the numbers and they were pretty astounding. 252,000 new applications for citizenship alone in the first quarter. a year a 20% rise from earlier. when we looked at swing states such as florida, we found even higher numbers. , 41% inskyrocketed citizenship requests in the first quarter compared to the first quarter of last year. we thought it would be interesting to highlight this trend and talk to someone like her. a profile of that. scarlet:scarlet: given all tha e station shi -- citizenship telephone little more about that. is the mexican government

involve? >> mexican consulates in the u.s. have been hosting citizenship clinics, they call them. any immigrant, any resident, can come in and sign up for citizenship. the mexican government has is in place in several consulates around the country. officially they say they are not tried to intervene in an election. they are not saying, go ahead and vote. they do not even help to fill out the forms themselves, they have community organizations that come in and do that. the effect is these consulates are places where people want to come in, sign up, and eventually vote. oliver: i imagine this is not an incredibly fast process to get naturalized. is there enough time between now and november to continue doing this, or have people already started doing this since trump

took center stage? >> it could take about six evens to get approved, or longer. the people who signed up in the first quarter have a much better chance to get their citizenship to vote. if you start now, you probably will not come out with your citizenship to vote. scarlet: a quick question, do we know who she will vote for? did she say? >> she said she will vote against trump. that is how she put it. oliver: thank you so much for joining us, in mexico city, looking at ramifications of different groups of people. this is bloomberg. ♪

♪ watchingou're bloomberg. nayra: this is your global business report. reboundsal production in june. it is not all good news. investigators raid amazon's office in japan. questions about the company's dealings with merchants. what officials may be looking for. nayra: and, thailand's democracy is in turmoil. will the army live up to its promises to hold new elections? vonnie: we begin in britain where more data suggests the economy lost momentum before the

price it flow. industrial production barely grew in june, manufacturing inll for a second month a row. transportation, the biggest loser. nayra encouraging economic: news in china though. improving conditions for manufacturers. consumer prices jumped 1.8%, matching estimates. helen child is chief economist at merrill lynch and thinks people will be encouraged by what they say. >> my perception is it looks reasonably ok. in aprobably would not be hurry to introduce more easing

when they are concerned about an overall leverage ratio. nayra: in japan, a fair trade .ommission searched amazon' the antitrust agency is looking into whether amazon tried to make deals that gave the more favorable conditions than other e-commerce companies. amazon is not commenting. coach,handbag maker, reported another quarter of positive sales. they are currently remodeling stores. vonnie: welcome back to time now for our bloomberg quicktake, where we provide context and background on issues of interest. , but hashas prospered also experienced a dozen of coups in the past decades.

with intervention from military and polarized population, what are thailand's odds for a true democracy? here is the situation. a referendum introduced a new constitution that would strengthen the army's influence over future elected governments. saidcs of the new charter that voters may have voted simply to hasten a return to democracy. power -- the took army took power. now, calling for polls in late 2016. thailand has had one dozen coups 1932, when the country turned into a constitutional monarchy. the country has proved resilient, bouncing back from

crises over the past few decades. the worst outcome could be a up of the country, or even civil war. they reject the idea that they are thwarting democracy, saying the political system needs to be swept clean of the former ministers influence. ofers say the political goal unity is unrealistic. you can read more about thailand and all of the quick take on the bloomberg. that is the global business report. head to bloomberg.com for more stories. ♪

oliver: this is bloomberg markets. i'm scarlet fu.

let's get you a quick check of u.s. equities right now. we are now on par, or encores, for the s&p 500 to make a record high. however, it is only up to points. when you look at the volume, it is right up to almost nothing -- 23% below forut the average. oliver: absolutely. -- theking at share shares function. despite the fact there was so much falling at the beginning of the year, you typically see that. that has not been there. let's go now to abigail doolittle, live at the nasdaq to talk about stocks. abigail: another day, another record here at the nasdaq. here.record intraday high

is whether orere not this record is ahead of a string of more highs to come or will the nasdaq do what it did a record high. as for today, we are looking at alphabet,trength with microsoft, and facebook. sales. reported microchip confirmed the quarter view. norwegian drag, s is down.e lowered thehey

full-year profit forecast for this year and next year. they are saying that brexit was to europe around terrorism has hurt results, as has weakness with the pound. noit time to look at preaching cruise line investments? we see no region cruise line is underperforming. is that a buying opportunity? it looks like the answer is in 2017, what will those bookings look like? we do not have the answer yet. maybe time to stay on the sidelines with norwegian cruise line. scarlet: thank you so much. public pension funds are constantly decoupling from hedge funds. institutions are questioning whether it is worth it.

charles, we want to pull up a chart that shows hedge funds are the worst performance in the massachusetts public fun. in short, what is happening? out a chart for one year performance, three year five, and 10. in almost all the categories, hedge funds bring up the rear. it is certainly not unique to the massachusetts fund. hedge funds have had a tough decade. oliver: when you talk about these funds, and pension fund specifically, they have a different mandate. why are they going into these hedge funds? how much of the portfolio was in the fund? >> in various fund the fund.

willll, hedge funds provide more volatility. ideasare all sort of good in principle, but over the last 5-10 years, hedge funds have not been able to simply keep up to stocks and bonds. scarlet: that has been the theme for a while. are these pension funds adjusting as a result? issuet will be the big going forward, what is a realistic return? in the short run, as you put it, decoupling new york jerseycalifornia, new have all cut their allocations to hedge funds. we do not know if this trend will play out or not. oliver: there is a time of money in this group of investors. if they are not happy, what is

the effect of that? will hedge funds have to reconsider what they are charging? >> that is simply what massachusetts is doing. they're not getting out of hedge funds but they are sharpening their pencils and demanding more discounts. maybe the top-performing hedge between the two and 20 that traditional hedge funds have gotten. very not see these numbers often. a lot of it happens behind the scenes. scarlet: thank you so much, joining us from boston. we want to keep you posted on disney shares. the ceo will be joining us wendy company reports. this is bloomberg. ♪

scarlet: welcome to bloomberg markets.

from bloomberg world headquarters in new york, i'm scarlet fu. r: we are covering stories from all over the world. scarlet: traders a reacting to the bombshell that was today's productivity report and it's the longest stretch of the kleins since the end of the 1970's. oliver: valeant surprises and plans to sell $8 billion worth of assets. the indian prime minister gets his biggest win yet and why national business boost comes in time for the rupee. oliver: let's go to the markets desk where julie hyman has the latest. julie: we are seeing records

today for the s&p 500 and the nasdaq. the nasdaq has a lot of movers helping boost the index. we are seeing a little bit of a giving up of steam in this rally. the s&p 500 has touched an intraday record as did the nasdaq. let's look at the nasdaq performers. charter communications is out with earnings. it bought time warner cable and networks and is now the second largest cable provider and beat estimates. microchip technology is out with its numbers and earnings per share and operating margins. it beat estimates and bloomberg intelligence says their apnel ision of app now paying off sooner than expected. is a top for and is out

with its earnings after the close of trading. amidst the talk of records and incremental gains, the volume today is down pretty sharply. svs. is the new in the middle of this screen is dayvolume versus the 20 average. it's down by about 17%. and technologye volume are down in the only place where there is an increase is within health care today. came out with earnings so despite these records, if you are a bull, you want to see confirmation of higher volume but you are not scarlet: scarlet: getting it today. in terms of individual movers, anything under the radar? there are smaller companies out with earnings. jacobs engineering is one of them. they beat earnings estimates on the company is saying a lot of it has to do with fiscal discipline.

internationa flavors and fragrances are out with estimates and transdyne, that company is raising its forecast after its numbers beat estimates and we are watching some of the health care companies. they're are not out with earnings but this has to do with the lung cancer treatment. came out with disappointing results for its experimental lung cancer treatment friday. it subsequently fell 20% over two sessions. of thes saying the rest company is strong and it's a buying opportunity. astrazeneca came out and said a lung cancer medical this medicine it has been testing is not successful and license that medicine from another company whose shares are trading down sharply. it had been in a position to get royalties. astrazeneca says it will not be material to its results. scarlet: let's check in on the first word news with mark crumpton. 538.com is predicting

hillary clinton has a 75% chance of winning the presidency in november which increases to nearly 97% if the election were held today. driving her numbers are strong showings in south carolina and georgia both traditional republican strongholds. the parents of two americans killed in benghazi libya say hillary clinton is responsible and they filed a wrongful death lawsuit. mrs. clinton was secretary of state at the time of the september. negligentt says her and reckless use of a private e-mail server compromised security. house republicans have blamed the obama administration for loose security but not mrs. clinton personally. tota airlines a still trying come back from a computer problem that grounded flights for several hours yesterday. reducedines as it today's morning schedule so it can reset which means more than 500 flights were canceled after

1000 or canceled yesterday. changeline is waving fee's and fair differentials were passengers whose flights were delayed or canceled. in brazil, the senate will begin voting tonight on whether to put suspended president dilma rousseff on trial, accused of breaking the budget law. she is expected to lose today's vote which requires only a simple majority. opponents would need a 2/3 majority. the u.k. thatng relations between the two hang on the fate of a nuclear power plant. china has a minority stake in the project. ambassador in london says cancellation of the power plant could affect trade with great britain's's second-largest trading partner outside europe and the british government says it will decide next month whether to build it. global news, 24 hours per day, powered by more than 2600

journalists and analysts and more than 20 -- in more than 120 countries. scarlet: thank you. the rally. in u.s. treasuries has had a time,one for the first the yield on the ten-year treasury is now trading above the average year and forecast. the blue line is the tenure treasury yield and the white line is the average analyst estimate. if you look at what we have seen, it's a big move up since a record low a month ago. is this a pause returning point? is our nextore guest. many analyst made it clear that they do not like what they see in the bond market and are warning of a bubble. you are not as worried? >> you have to think about what growth looks like and inflation. the bubble may be growing but

we're not there yet. there is no need for it to burst. the one in six year and forecast is reasonable. it's very low returns but i think that's just the world we are in. scarlet: part of that is because foreign buyers are coming over given the record low yields in the u.k. where thegilt has been surging today. cannot fiveengland -- find an up longer dated bonds to expand its q e program. oliver: there is a lot of action in the u.k. they are trying to figure out bo theseee will implement programs. last time you were on come you said you would not sell your bonds. is that still the case? on, that'se i was what i said. is not selling

bonds. the yield will go lower in the u.k. and spreads will go tighter for credit in the u.k. and it will draw investors into the u.s. market. our investors over there are reporting already that it's difficult to buy over there. i'm not inclined to let them have them yet. oliver: where are they going to go? dryhere a certain liquidity up that will happen or will they have to extend their maturities? he was trying to buy 15 year market. the gilt it's an area where people are hunting what yield is left. you have to extend out to the area of the curve to get anything. it is where all the ldi investors are. that's a difficult area to get a lot of bonds going quickly. to take his time. we will see what happens next couple of days when he goes shorter with those purchases.

he is more likely to get the size done there. scarlet: this is an illustration of it. on the 30he yield year falling to a new record low. we thought we had seen the low after britain voted to leave the eu with brexit but it sinks lower. looking ahead, how embarrassing is this for mark carney that he cannot complete what he needs to do in this expanded qe program? >> i guess he will say it's early days. we will see what happens. i would not be surprised to find newiltshe agency issues to satisfy the demand and give mark carney more bonds to buy. i think he will get done what he needs to get done but maybe not so easy in credit. that will really test the market in september when he starts getting toward the 10 billion target he has a buying credit. it's hard in gilts,

to buy on credit. oliver: if they extend the bond , where willam investors go to get the yield? will they continue to come to the u.s. or take that money and go elsewhere? >> we are calling this the halo effect. grade is thent first port of call and then you will look at u.s. high-yield and emerging markets a and esoteric instruments liket-1 bank debts. this will pick up and be bought by investors hunting down yield. we have seen this out of asia and awful lot the last couple of months. aen in europe, we are getting lot of mandate to pitch for the u.s. team. if you want to get ahead of this move, you have to think a bit like chess. you have to think two or three steps ahead.

buying just u.s. investment grade is probably not going to cut it. ecarlet: when the b of extends their corporate debt, that could change. could that ease up? >> we have already seen it. the first few days under this new regime, we have seen some with hsbc and others. they seem pretty normal for the u.s. investment grade market which has been busy with issuance. we have had nothing for a long time. we will get a deluge to help with that supply problem. somei would like to see is u.s. investment-grade companies into the u.k. market. it's a cheap placed for them to issue at the moment and it will diversify the kind of companies we can invest in and that's nice but that's just me with wish fulfillment. scarlet: it depends on a more rate, right?ge

>> yes, stable politics and economics which we seem to be struggling to achieve. hopefully, we get into autumn and that should be more obvious. so far, there is rate, right? >> no pause in the issuance of sterling. the past month, your corporate bond fund has been beating a lot of the market. where should investors go to see return over the next six month question mark >> if they've got sterling credit, hang on to it. it's too early to sell. if you're looking for a new investment opportunity, get out be aur own home shores and tourist in chile or venezuela. you will have to hunt down the yield wherever you can. oliver: thank you so much. coming up next, valeant shares are rising but can the troubled pharmaceutical company meet its forecast? it maintained its full-year outlook. this is bloomberg. ♪

oliver: you are watching bloomberg markets. scarlet: shares of valeant pharmaceutical is climbing today. they reported second sales that -- second quarter sales that failed but fulfilled on their full yard gardens. -- full-year guidance. >> i am looking forward to spending more time talking about our products, improving patient lies, our growth trajectory and type line unless a better bank debt. scarlet: cynthia kunz was on the valeant call and she joins us now. the number one question for valeant -- the stock is rising because people were surprised by maintaining their full-year forecast but how realistic is that? they are baking into growth

in the second half and they will have to do a lot to turn the numbers around. they have to stumble losses and keep things where they are at and improve in other segments and that's why they say they can do that in the second half. they say there are some seasonality to their business and they typically have more sales in the second half. that's not typically the case with farm at they have some lines like in acne where there may be more sales in the fall because kids are going back to school. their issues like that but it's a knot of lumpiness and pharma sales. saying is we have gone through that and are working through that and we are moving into the next phase and this is what they are trying to unveil is a turnaround in the new business structure but they have a lot to prove. oliver: how can they give clear expectations for profit when they are also trying to transition into putting more money into drug development and

moving away from what made it such an attractive company for different growth investors for a long time? they actually give guidance on what is considered an adjusted basis. -- they have a lot of litigation and investigation and restructuring so there is a lot of stuff that will play into the bottom line and they say they cannot forecast to that level because of those issues. on the adjusted basis, what they are trying to show is that they have confidence they can turn around this program they have is newh walgreens which distribution which replaces the specialty pharmacy the got them into hot water late last year. they are trying to say we made modifications to the program and we think we can turn things around. on the last call, they said they were losing money on prescriptions going through walgreens. they are saying now that they see a future in that. scarlet: the update on walgreens is critical.

i find fascinating the brain drain they have been experiencing. that has to have an effect on morale. is that part of the reason why valeant has been struggling performance wise? >> it very well could be. they had salesforce turnover. said the salesforce started to slow and he says he's stemming that tied and putting effort into morale. things you can tell on the call. he tried to address more questions that management had in the past. he is trying to create a better morale environment. scarlet: thank you so much. this is bloomberg. ♪

scarlet: this is bloomberg markets. stocks are edging higher today. the s&p 500 had another fresh

has retreated fix to a two-year low but it does that mean investors are not worried. managing director at eaton vance and says managing market volatility continues to be their top concern. matt: thanks very much. thanks so much for joining us. let's talk about what the atomics is, it's the advisors top of mind index and you survey at time of financial advisors and ask them what is keeping them up at night. >> we look at 1000 advisors around the country and what they are worried about and what are their clients worried about. what you hear is that volatility is at the top of the list. it's the highest we have seen it but it's a bit of a disconnect. the rightght be measure but it's at an all-time low but their fear of what's about to tell -- what's about to come is at an all-time high.

when you look at that, you ask what's driving it. brexit is at the top of the list, the fear of economic uncertainty looking ahead. it's ironic that the fed came chattern though we hear about a rate hike. matt: in a meeting this morning, the vix index came up. scarlet made a good point. the markets care about the vix index but why is it at such a the advisorsout of you talk to, it's their biggest concern? >> it's crazy. there are two answers to the question. it's where people are investing today by looking out longer-term pricing in.e vix is they are looking out over the next year and what will happen with the election and the

brexit. 1-2 year time frame. cory: does that suggest that the vix is about short-term moves? do they expect high volatility longer-term? heightenedthere is a concern and more of the fear of uncertainty we're looking at going ahead which is driving people to this high level of uncertainty. although we claimants volatility, my thinking is its uncertainty. we don't know what's about to happen and we are worried. what are you doing about it? that's what we asked. there is greater diversification than ever before. that's a broad answer but there are times when we see specific investment in certain areas because of value. people are saying i will go wider and further diversify. i will look for opportunities for value like high-yield and floating rate across a number of categories.

for the most part, diversification is ruling the day. let's talk about the other concerns they had. is the election a big concern? is hillary clinton winning or donald trump winning a big concern? >> we asked about the election and what they thought. i think we are still early and it was divided. we asked what they think the impact on the market will be as a result of the election. it was literally equal weighting between she would have a positive impact or he would or neither. information great at what it tells you is there is more to learn as policies become clear. we will be paying attention to that. matt: if policy becomes more clear. you also found their concern over taxes was higher than it was in the previous quarter. what is that about? >> for a while, we thought that

was a laggard. gethink we are seeing folks on the game on the impact taxes have on investments. about 75% of advisors are doing something about it. that means they are doing tax harvesting and actually taking strategies that will help minimize the tax burden on clients. as you look ahead, the fear about what could lie ahead in terms of taxes is becoming more burdensome. what we typically see is we enter the end of the year and mutual funds have a tendency to distribute capital gains in the portfolios. q3 and q4,loser to that number will rise and people will take action about not passing those gains on to their clients. matt: it's not a huge ranking at 103 but it has come up a lot from 83. can people get capital appreciation? >> there is a fear there and

what they are doing in lieu of that is going for income. the growth of capital baseline, income is a concern. matt: thanks very much. the managing director at eaton vance. scarlet: thank you so much. i look forward to speaking more about the vix with you later. coming up -- disney reports after the bell and we will find out about shanghai losses and we will talk with bob iger at 6:00 p.m. don't miss that. this is bloomberg. ♪

oliver: live from bloomberg world headquarters in new york. scarlet: this is bloomberg markets. let's begin with headlines.

mark: donald trump is going to florida thursday to meet privately with 700 evangelical leaders. he will face questions about making the country more christian. the meeting will be friendly but expectations are high. hillary clinton was invited to the event but she is not scheduled to attend. sloan isn donor harry breaking ranks and endorsing mrs. clinton for president. he is the ceo of global equal acquisition and serve in the national finance committee for john mccain, mitt romney, and the john kasich campaign. a businessman,s father, and a conservative, it is clear that hillary clinton is the right choice in this election. whofather of omar mateen martyred dozens of people in orlando this summer attended a hillary clinton campaign rally on monday.

he was seen by a local television affiliate. the clinton campaign said this individual was not invited as a guest and the campaign was unaware of his attendance until after the event the turkish president met with russian president vladimir putin today in st. petersburg, calling vladimir putin his dear friend. he said turkey is ready to implement a natural gas pipeline project with russia as well as a deal to build the first turkish nuclear power plants. president putin said the flow of russian tourist to turkey will resume. it had been halted after the downing of a russian jet by turkey in november. for grabsdals are up today at the rio olympics. american michael phelps and katie ledecky headlined the swimming events and the gymnastics team will be in will bend the medals issued in a variety of categories.

day,l news, 24 hours a powered by more than 26 hundred journalists and analysts in more than 120 countries. scarlet: thanks so much. morgan stanley chief u.s. equity strategist adam parker is still bullish on u.s. equities and says despite a complacency among investors as illustrated by the relative low point in the vix, there is an optimistic case for equities. we asked him how he negotiates his bullish outlook on the equity market. people have said i am complacent for a reason. every time i worry about something it turned out to be a buying opportunity for u.s. equities. if you list the things we have been worried about in the last five years, all of them were buy and that's what people are complacent. francine: your -- you want to

make the companies you choose have healthy profit margins, who are they? we arery to make sure not impregnating huge bets around weak dollar and strong oil. those things are difficult to forecast. around thoseading key macro factors. we are overweight utilities and underweight staples. we like biotech but not software. always be balanced to beat the index as opposed to making a huge bet on one factor. how do you factor in the currencies? >> our strategist normally has a strong dollar call so we try to make sure we don't have huge bets in machinery or in chemicals or select staples, select tech where. the strong dollar would hurt their earnings the most to make sure we are more balanced against that. it's hard to get away from the strong dollar call. cine: if you are a u.s.

equity strategist, do you care what the pound is doing? really, it's more forgetting tom keene bowties. tom: the davidoff cigar store and you go down three stores and the bowties store is right there. i want to talk to you about multinationals. you've got a great historical perspective. is this nifty 50 pricegrabber are we not there yet? think we could get there. you talk about spanish yields and you talk about below 1%. this was one of the pigs a few years ago. you have a 2% dividend yield any 2% net by back in a call option on earnings growth. is a 30 multiple doable for

a portfolio? >> i think it's possible. it sounds crazy but i did not know that it would be 15 bid to year for france. when you have a pile of money and you have to allocate the assets, you are like u.s. equities. tom: have we forgotten what a correction is or a bear market? great credit for never saying go to cash. ride and what an unloved bull market. what do you still morgan stanley producers and clients? >> our call is a simple bull call. you always sound dumber when you are bullish than bearish. call isle bull bottom-up earnings expectations are low the next couple of quarters and the u.s. looks like the best region the world. is really positioned for

the big up market no matter what you look at. i think that is a bull case. cine: the u.s.'s position to be the best region in the world but the fed has not started tightening yet. if they start tightening, it will be the fed versus >> the rest of the world? >>we think they have because they raise the front and last the but they are not doing purchase programs you see in the u k and europe and japan. that the people say fed is the dome people and they imply they are the smart ones. the market is at an all-time high. for the record, i was not suggesting the fed was dumb but it's pretty lonely in this cycle. you have everyone trying to transfer to cheap money. i understand the argument that

the fed has started tightening but they only managed one tiny little interest rate rise. divergence that could send the dollar higher and heard some of the earnings. >> it could. one of the biggest questions is if i get zero earnings in the u.s., well that's happening, i'm not afraid of and earnings collapse because they are generally gaining share. if i am guaranteed zero without fear of a collapse, i am good for a lot of u.s. equities. the european earnings are supposed to be below where they were seven years ago but the u.s. is double. that was the morgan stanley chief equity strategist. staying with equities, with the fed on hold when it comes to tightening monetary policy, the stem paid in the dividend paying sector continues. i want to look at what's happening with dividends and in

a couple of sectors. theot utilities which is goto talking point and reit but they don't get enough attention. sthey pay dividends but this puts it in perspective. the blue line is the dividend on the s&p 500. the purple line is looking at the reits. it has climbed and is now higher than utilities and currently pays 3.8% dividend versus 3.3% when you look at the utility sector. people want that, obviously. this is another chart that shows , the white isance the reits. it's up aboutr, 14% versus the s&p 500 which has been slack.

are and more investors looking for that regular return. scarlet: the outperformance is striking when you consider that the reit group's house within the s&p 500 financials group. the s&p is comprised of 10 industry groups and until friday, financials were the only toup within that first layer be down on the year and now have a raised their losses for the first time this year. this is where the zero line is. the white line is the financial index. the blue line is the real estate weex print the reason why are highlighting this is because starting next month, real estate will become its own sub index. 11re will now be 10 -- industry groups. double digit percentage gains this year while financials as a group is up only about 6/10 of 1%. when we think about what

happens with financials, they want the higher interest rates. if you are a dividend payer, quite the opposite. scarlet: it makes sense you would not have reits as part of the financial group. the s&p is on pace for another record close. today's mystery chart shows traders are relatively confident this run can continue. we will reveal why and what this chart is next. this is bloomberg. ♪

scarlet: this is bloomberg markets. oliver: let's go to our markets desk and julie hyman with our mystery chart. traders are relatively confident

that this run could continue. julie: we are looking at volatility today which has but noto a low level only hasn't fallen but traders are predicting it will continue to fall which implies that stocks can perhaps continue to go up. this is the net short and long contract on the vix measured by the cftc. here is the zero line. the next short is 115,000 contracts. that is the most shorts contracts since 2013. in other wars, we see traders bet on the lack of volatility continuing and that implies that we can continue to see a rally in stocks. there are different ways to look at this. this is dave wilson's chart today. you can get on his mailing list. this is the daily trading range

on a quarterly basis for the s&p 500. this is during the course of the bull market it the range has been getting smaller and smaller for the s&p 500. we talk about this when we talk about markets, it's the 22nd straight day with less than a move of 1% in the s&p 500. that is the longest stretch like that going back to 2014. this range of the tightest going all the way back to 1993. it's unusual. one of the casualties of that have been these leveraged volatility etn's. you can see the 54% plunge in the short-term etn which is the midterm one that leverages movements in the vicks. v --ix. relatedseen forvix ept's in the last month.

that is one of the casualties because back in february, we saw people pile into the vix. this is 2604 and here is the s&p going up and here is the vix going up except for the spike in volatility earlier this summer. i am looking for the lows for the s&p 500 back in february where we had the spike in the vix at that time and people piled into the leveraged etn's. oliver: i love it, thanks so much. canadian stocks are surging to the highest level more than one year lifted by 13% spike in valeant pharmaceutical. of valeant are leading health care companies higher by reaffirming its forecast for the full year. it will have to substantially raised sales and profits in the second half of the year to meet its target in valeant is under pressure to cut prices and offer larger rebates. the detroit automakers

are opening a new round of labor talks with canadian automakers. it's the most important labor discussion for canadian automaking in a generation. the top reorders putting a stop to the flow of jobs and production out of canada and into mexico. jamie sturgeon joins us from tomato with more >> -- from toronto with more. >>these talk seven existential element to them. ownedl key assembly lines by gm, ford, and chrysler have limited production runs and face closure over the next two years if the unions cannot secure investment. theseannot comment on discussions until after they are over. they want wage and benefit concessions. workers are in

conversation and are a touch more expensive than their u.s. counter parts. you have seen canada auto output fall to 13% of american production and mexico has climbed to 20%. the car makers are likely saying to secure future be on the next couple of years, they will have to take reduced pay and benefits and pension. it seems like there is a lot at stake here. how did these typically go, these kind of talks? the future of the canadian auto assembly is at stake. you have a situation were there has been a steady flow to mexico. that has not stopped and you look at comments from donald trump yesterday talking about nafta. of this is that nafta has helped diminish the

canadian trade position with the unit -- with the united states because of moxa cut -- because of mexico. we are at the point where mexico is the bigger importer into the u.s. than canada and that happened this year. the detroit automakers have been winners to shift production into mexico. the broader manufacturing sector have not been as big a winner in canada. the concern in the canadian sector is nowhere near the level of the canadian union. experts say that it's hard to see the trend reversing even if nafta is reworked. if the aim of these talks to stem that decline we will have a better sense next month whatever comes from this collective agreement. oliver: thank you so much. coming up, the economic and political significance of the new indian nationwide sales

tax and we will is -- we will discuss that next. this is bloomberg. ♪

scarlet: this week, the india parliament passed a bill for a new national sales tax. we asked why the new taxes so significant. >> this goods and services tax has been pending for 10 years. of it happening now is the potential economic benefit that india could see some years down the line with full implementation. think it's like india signing a free-trade deal with itself. estimatesalyst disagree but there is a real potential for higher overall

economic growth in the years to come in india from this one reform alone. this is a huge victory for the prime minister because it signals how he can push through economic reform at what might we expect more from him? what is the doctrine of his economic policy? arguing atbeen eurasia group that this is the last big economic reform we are likely to see out of this government ahead of the 2019 national election. there are 15 state elections over the next two years that will be very distracting. government's national level economic reform agenda has been accomplished. you have seen dramatically lower barriers across sectors that have been well received and you have seen bankruptcy legislation that is needed to help banks address their problems with nonperforming assets. otherve seen administrative reforms but you have not seen progress in two

critical areas that investors are looking at, land acquisition and labor and we don't see any more of that going forward with the electoral distractions. matt: is that because of deals he needed to make to pass the gst? leaders werel backing the gst out of india and it's not often you have big industrial leaders backing a tax plans of must've gotten something in the deal. the gst is arguably the single biggest economic reform in its history. everyone has the potential to gain quite a bit out of the gst. several years down the road, once it has been fully implemented, you have efficiency gains to growth in terms of compliance and in terms of trade across state lines, you have the self enforcing -- self reinforcing compliance with increased government revenues. it adds value and you only get

your tax credit when your along theas pass that chain. it is self reinforcing in terms of compliance so the government stands to gain and most big industry stand to gain. that is only over time. the issue of getting it passed with state governments worried about losing revenue or control over revenue raising under the new system has been the real sticking point. the gst you have now is the result of years of compromise between the central government and the states. staying with emerging markets, we will be focusing on brazil at 4:00 p.m. brazil will vote whether to put suspended president dilma rousseff on trial. joe weisenthal is with us. brazil is the best-performing

currency, one of the top stock markets and have the olympics. everything seems to be going well so what are you looking at over the next 24 hours for this country? the performance and the currency and the stock market in terms of dollar terms gets juiced. bovespa is up 60% in dollar terms. everybody hated this market last year. 68% in dollar terms. they will be voting on the impeachment of dilma rousseff. it's an elongated process. looking at retail sales in brazil which came out this morning but are still down year-over-year but the cayman better than expectations and the trend is for improvement. in addition to progress to being made on the political front, we

are seeing progress on the economic front as well. scarlet: this is from a very low base. joe: scarlet: absolutely. you also wonder how much the new administration it has politically. he is facing charges that he accepted illegal campaign donations. concernre has been the that there is a mountain of corruption issues in the doma russo impeachment is just the surface. oliver: you guys will talk about this more. we will coming up, break down disney earnings which come out after the bell and be sure to tune into our interview with the disney ceo and chairman bob iger at 6:00 p.m. eastern time. this is bloomberg. ♪

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vonnie: it is 2 p.m. in new york and 11 p.m. in london. hery: welcome to bloomberg

markets. vonnie: we are live at bloomberg headquarters in new york. covering stories of los angeles, london and china. we are on record high watch with white volume. disney is set to report third-quarter results in just a couple of hours. we are raking down the strengths and weaknesses out of the company's tv, film and resort units. is making ald trump big effort to win over support after a major economic speech. but susan collins says she will not vote for trump. markets close in two hours. let's head to the markets desk where julie hyman has more. e: