vonnie: we are going to take you from new york to berlin and cover stories in new york, washington, china, in the next hour. let's go straight to our markets ru, julie hyman. julie: existing home sales fall a month over month, 5.30 3 million, a decline of .9%. the estimated number had been 5.50 4 million. this adds to the weakening data we got earlier in the week on housing starts and building permits. 0.9% decline in existing home sales, by far the largest part of the housing market to the annual pace of 5.30 3 million.

that was an unexpected decline. year-over-year, sales advances. 7.3%. year-over-year, 5.1%. $240,200. is this having an effect on the market? not yet. gains after the federal reserve held study on and indications that december is more likely than not in terms of what we could see for the future pace of interest rates. in terms of what we have been watching on the fixed income side, take a look at bloomberg for the 10-year over the past three days. what we have seen is a decline in yields, perhaps not

surprising giving the message from the fed. not a sharp decline in yields. adrift lower over the past -- a drift lower over the past several days. we have a few months to go , asre the time and the fed always, is a data-dependent. if you look at oil prices combat is the other asset you want to watch. the dollar has been trending lower. down by 5%. we have been -- actually, that is five points. we have seen it coming lower over the past couple of days in line with what we have been seeing on rates. one of the things that has been helping oil, rallying for four days straight. helped by the unexpected drop in the weekly inventories number. -- for for the bgi wti. 1.8% the stoxx 600 down by

biggest gain since september 2. this is the three-month experience we are seeing here to you mention oil. is june 29. every single industry group is rallying today. it is a broad-based rally. up by 3%. it will split into 2 companies. this is the biggest conglomerate . three months strategic. maersk mark shares -- shares versus the brent crude price. the maersk price has not followed crude upwards as much as anticipated. one of the reasons we are seeing the split of the 2.

company,french mobile is considering additional cost-saving measures on top of the 5000 job cuts it already announced. this is the french mobile group improve margins in a competitive environment. down by .9%. forecaster,accurate according to the bloomberg --veys -- what it is having saying for sterling versus the dollar. why that is interesting -- before, it was very bearish on sterling. long-term.bearish 2018, is thend of brakes and negotiations risk deterring investment in the u.k. in the short-term it is not as

bearish as it was before. vonnie: wondering how long it would take to see some effect. let's get to " first word" news now. >> syria president bashar al-assad pointing fingers at the u.s. for the collapse of the cease-fire in the war-torn nation. in an associated press interview, assad rejected u.s. claims that u.s. or russian warplanes attacked the humanitarian aid convoy and dismissed the u.s. assertion that an american attack on troops was an accident. it was thessad: warplanes that attacked for more than one hour. you don't commit a mistake for more than one hour. it was definitely intentional. said his enemies alone are responsible for the on the six years of civil war in syria. the uk's planning to hire 1000 more spies by 2020, according to

the bbc. it says the intelligence recruits are needed because the development of technology and the internet. they would work for the british secret intelligence service known as an micex. in charlotte -- known as mi6. in charlotte, north carolina, police fired tear gas and angry demonstrators could one man was shot and critically wounded, but authorities say he was not shot by police. the state governor has declared a state of emergency. in tuesday's shooting, police say a black man ignored demands to drop his gun, but some neighborhood residents and he was holding a book and not a fire on. republican presidential momen commonly donald trump says he wants to reduce black on black crime in america. his plan, expand the controversial practice of stop and frisk. he said in a fox news townhall that stopping minorities on the streets worked well in new york. trail, an the campaign

new poll shows democratic presidential nominee still leading donald trump. the survey, by nbc news and "the wall street journal," has clinton ahead 43% to 37% in a three-way race. a majority of the voters view clinton negatively but trump's negatives are even global news 24 -- are even higher. global news 24 hours a day in more than 120 countries. i am alisa parenti. consensus fed chair janet yellen has worked hard to maintain among policymakers showed signs of strain yesterday. voting members including the boston fed president and esther george all dissented from the majority view to hold interest rates steady. sinces the most dissents 2014, plus sign up into alan

greenspan -- a positive sign according to alan greenspan. the thing i did want to convey is that the fed had a single point of view and it was no discussion going on. vonnie: joining us is the chief monetary economist at cumberland advisors, and the former research director at the atlanta fed. three dissents. is this just an fomc that is ramping up for an actual increase? >> there has been evidence for some while that there has been a divergence of views among participants in the fomc. we saw president bullard coming out with statements around the jackson hole time. president williams has expressed views as well. a reflection of

the fact that there is a diversity of views, and i agree with chairman greenspan that is is not a negative situation. when you are in uncharted waters, and there is no experience to guide you, reasonable people can and should have different views as to how policy should be formed and the fact that he will feel free to dissent communicates that there is a healthy discussion. i think it is correct. vonnie: the also said that we are really in the worst of all possible worlds. stagflation is imminent, as well as inflationary pressures building. i think as far as the united states is concerned, it is sort of study as you go. i am not in the camp of being concerned about a recession, for example. the economy is growing. the puzzle is productivity, and

as long as productivity is low, we will have growth in the 1.8% to 2% range, as far as i'm concerned. the rest of the world is a different issue. they are trying to struggle and come out and now with a change in markets it is fitting back to us in interesting ways as it relates to financial markets and the way the interest rate flows go. mark: robert, let's talk about the market reaction. stocks rallying, bonds rallying, the dollar decline. that doesn't tell us investors think it was a hawkish hold, does it? does it tell us that investors are expecting or read about the rate hike this year--worried about the rate hike this year? robert: i think the fed pretty much communicated the fact that if things to going the way they are come and i don't think there is strong as the fed is trying to communicate in its istements and chair yellen's

conference yesterday, but i think it is a case where there is a difference in time horizon. more concerned about today, tomorrow, next week. now that things have been pushed off to december, it is in this intermediate period of time. the fed is taking a longer view in the markets are saying, ok, no move until december. business as usual. that means it is bullish for stocks. mark: you are suggesting you don't chair janet yellen's viewpoint on the economy right now? does that mean we might not see a rate hike in december? robert: well, i think you can fall back on the statement that they always say, it is going to be data-dependent. i don't think, for example, we saw the housing data earlier on the program -- there is a lot of factors suggesting that the

third quarter may not be as strong as some of the expected, and of course, the fourth quarter we don't know anything about yet. i believe that what you are seeing here is actually something that is manifested more in president rosengren's rationale for why he dissented, is quite different from the rationale cited by president george. president rosengren was concerned about the prolonged nature of low interest rates and dislocations that might go with it. it is not that he became a hawk at all. he is just concern about dislocations. i think that is part of what is playing on the minds of the fed people now. they want to get back to normal. vonnie: well, yesterday didn't help because we have the 10-year yield get 1.2%. i wonder where you see it by the end of the year.

robert: i think the effects on rates will be dependent not only about what markets think will happen here in the u.s., but what happens in the rest of the world as well. there is a great arbitrage opportunity that has been set up when you have the bank of japan and the other central banks having 10-year yields as the target at negative and your your choicefor -- is either investing in negative spreads in japan or positive spreads in the united states. that is going to bid up prices and put down pressure on overall term structure, particularly on the long end. this is not only what is going on in the u.s. and what people think about markets here, but world market effects as well. senbeis, thank you for joining us on "bloomberg markets." treasury secretary jack lew is

testifying on capitol hill in front of the house financial services committee. they are holding a hearing on financial stability, and he did say it was a mistake to repeal some of the laws that have been going into effect including dodd-frank. there you see matthew waters speaking, representative from california. he is talking about -- maxine waters speaking, representative from he's talking -- from california. about as the managers, products from how that is continuing. on can see this on live go your bloomberg. mark: you certainly can, vonnie. the bank of england warning interest to stop cutting prices to win business. this is bloomberg. ♪

vonnie: live from london and new york, i am vonnie quinn in new york. mark: i am mark barton. you are watching "bloomberg markets" on bloomberg television. lloyd's of london today announced profits of 1.40 6 billion pounds. lloyds says premiums continue to be under pressure due to the challenging environment to market is operating in let's get more on these results from chief executive inga beale. thank you for joining us today. to extent does the specter of brexit overhanging worlds oldest insurance market? inga: it's interesting, the profits are up 22% on the same period last year but the big impact on that is the change in

the foreign exchange rate from sterling to dollar. that, of course, was driven by the outcome of the referendum. that could have a bit of a windfall. we have a few other factors come into play. we have seen our investment returns improve and actually triple over the same period last year to 1.8%. the brexit topic, that is distracting at the moment. we are having to reallocate resources. all about making sure we can continue to accept the continental european market. what are your contingency plans if the initial services lose access to the single market or if rights are no longer available? inga: ideally we would like to end up with passport and rights. in all 27 countries in continental europe, about 4% of

the revenues would be directly impacted if we could know longer -- we could no longer access those markets. one is looking at a potential subsidiary, looking at a very unique structure we would have , and then we could passport into the other countries within the eu. the other option for us, perhaps burdenore administrative because we would have to get branch licenses in each one of those countries in order to do this. 4% of our revenues directly being impacted. subsidiary you talk about which eu country might it be placed in? inga: too early to tell at the moment. we have big groups of people

looking at it, advisers on board as well. several different options. each registry regime has their own peculiarity, offering something more suitable to the lord market structure. -- lloyds market structure. on the have more news likely direction of the end of the year. mark: only talking about paris, frankfurt here? inga: all of those are in the mix at the moment. mark: can i talk about the bank of england? yesterday the boe said the lloyds insurance market shouldn't keep cutting rates to ensure business because it may not be adequately the pricing -- adequately pricing the risk it is taking on. firmsrm's-- are

adequately managing exposure? inga: you can see just by s marketat the lloyd' results that the percentage we don't want to increase the combined ratio percentage. there are three factors in there. one is the large claim activity and the big one for us this year so far was the tragic wildfire in alberta, canada. the cost 400 million pounds to the market. losses, a up all the billion each year and because the premiums have dropped those losses are bigger percentage of that remain -- that premium. that went up two points as well. then we have the point increase in the acquisition cost. again, that is also driven falling topline. mark: chairman john nelson says reinsurance should target broker

fees as the industry seeks to cut costs. do you concur with him? inga: we have seen a steady rise in those commissions five years. the year on year -- for this year, first six months, over the previous six months, that went up .6%. it is having an impact on the underwriting profitability. mark: inga beale, thank you for joining us today. chief executive officer of lloyd's of london. vonnie: later today we will have an interview with jeff weiner, first on bloomberg. emily chang will interview him on the day of their full product launch. 1:00 p.m. eastern, 6:00 a.m. london time. this is bloomberg. ♪

vonnie: you are watching "bloomberg markets." i am vonnie quinn in new york. mark: i am mark barton,

live from london. vonnie: let's get straight to the market happenings. julie hyman is with us. julie: we're looking at the movers we are watching. home furnishings and office furnishings. bed bath & beyond, more in the home furnishings industry, going in the opposite direction. coming out with a forecast ahead of some estimates even after the second revenue was below estimates. herman miller, in contrast, that company sales forecast, below estimates. order levels have been softer than expected. it did show improvement towards the end of the period. it follows on the heels of hni, another company that disappointed. bed bath & beyond fell after reporting results late yesterday. the company shares recovered

after people look at what the company said in the statement. it reaffirmed the forecast for the year and the comparable sales to relatively flat to up 1%. athnology -- we're looking this company, falling, not coming out with detailed fiscal 2017 guidance. also running to potential market share loss. forecasted did beat estimates. the company is boosting its forecast. mark: thank you very much indeed could still to come, an interview with blackrock chairman larry fink. he says political uncertainty will lead to a selloff in the markets.

vonnie: live from bloomberg world headquarters in new york and london, i am vonnie quinn. mark: i am mark barton. let's get to " first word" news.

alisa parenti is in the newsroom in new york. alisa: in venezuela, a recall vote against president nicolas maduro could be held as early next year but officers are not happy with the conditions. they must collect 20% of signatures at the state level as well as nationwide. u.s. troops in iraq may have been targeted by an outlawed agent. the lab is looking at fragments from a rocket fired at a joint u.s.-iraqi base in mosul. in chicago, mayor rahm emanuel will offer details of a new, more comprehensive public safety plan could today's speech comes as the nation's third-largest city endorse a troubling spike in gun violence and an investigation of the police department. the plans include expanded use

of body cameras and mandatory de-escalation training for officers. repair crews are working to restore electricity to puerto rico's 3.5 million people after a fire in a power plant blacked out the entire island. the government canceled classes at public schools and universities and hospitals canceled nonurgent appointments. most government employees have the morning off. ispical depression carl expected to grow stronger in the atlantic ocean. the u.s. national hurricane center said that the depression is centered 625 miles southeast of bermuda and moving northwest at 60 miles an hour. further east, tropical storm lisa is expected to weaken. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am alisa parenti. this is bloomberg. vonnie: the ceo of the world's largest asset manager, blackrock's larry fink, says

political uncertainty and the lack of physical action will lead to a global market selloff could he spoke earlier today with erik schatzker in new york. if we have more of the same for the next year, the markets are going quite a bit lower. quite a bit means what? larry: 15%. erik: if we have more of this unconventional policy -- larry: and we see aberrant politically with a referendum in europe -- erik: with fringe parties. larry: but if you have more political certainty -- let's say in our country up to november whoever wins the presidency focuses on fiscal policy, if the prime minister of the u.k. focuses as she understands brexit to be a big problem on more fiscal policies, you could the ways of reigniting

economic conditions of the world. point,at this pivot which is quite binary. my worry is the market is more binary. erik: in other words, we don't bump along with the s&p 500. is either down 15% -- larry: were up 10. erik: the pivot point happens when? larry: welcome i don't think there's ever one pivot point. erik: there is going to be more certainty regardless of whoever wins the election -- larry: but hopefully with more certainty -- we need politicians worldwide to address the anger. the anger gets worse. the anger doesn't go away with the election. that is something people are missing. brexit was what, 52-48? look at the polls here.

we have divided countries across the board. it is very emotional right now. i've never witnessed worldwide more emotion about different sides -- erik: that is the man on the street level. you mentioned that ceo's aren't hiring -- larry: i think the fourth quarter is going to be slower than the third order, that third-quarter, from what i hear. there is no reason to invest until you have uncertainty. erik: we're talking about revenue, profit, gdp growth? larry: gdp growth. gdp will be weakening in the fourth quarter. second, as we enter the realm of the sharing economy, the sharing economy allows you to do so much more without purchasing. if you are in manufacturing you don't have to buy the equipment . if you even have the man, you are going to be renting.

across the board, whether it is tractor,mputers, the something related to construction, you are meant test you are renting. i hear this across the board, the decision for capital expenditures has been slowed down but that doesn't mean they are not adding capacity to renting. erik: bad for hiring but good for productivity? larry: productivity is going down worldwide. one of the leading finance for two hours that is what we talked about this week. productivity in every part of the world is going down. it is the fact that we are under investing worldwide. it is the great uncertainty. white this does -- why businesses are not investing as much. mark: that was blackrock ceo larry fink in an exclusive interview with erik schatzker.

more from the blackrock event. investing in high-yield debt. don't miss it. this is bloomberg. ♪

vonnie: you are watching bloomberg. i am vonnie quinn. mark: i am mark barton. this is your "global business report." we will hear from the bank governor. vonnie: a lifeline for a troubled company getting millions to help unload stranded cargo. mark: and a look at the consequences of deforestation in .ndonesia

vonnie: the central bank of norway's is a key interest rate is be tuesday .5% -- to state .5% the next two years. >> there is always uncertainties around any forecast for interest rates. you preferward, if to the present path, it is relatively flat. .5% with aent level, long time. maersk will split into separate transportation and energy companies after a three-month tj constructional review. fired its chief executive in june and said it was considering a split. hanjin shipping is getting as much as 100 le dollars of

additional funds -- $100 million of additional funds to resolve a crippling cargo crisis. a credit line of $45 million will help the shipper unload cargo stranded offshore. the announcement comes a after the korean airline approved a $54 million loan to the troubled ocean shipping line. chinese company is close to an agreement to making movies with sony, running to a person familiar with the matter. could finance up to 10% of some sony films. vonnie: time for our bloomberg context on" with issues of interest. deforestation in indonesia. the nation has become one of the world's worst polluters thanks to forest fires.

>> this thick blanket of smoke is known in southeast asia as ze. hayz the resulting smog envelops southeastern agers including singapore and malaysia. deforestation creates the same amount of greenhouse gas each year as cars, airplanes, and other modes of transport find. perhaps unsurprisingly, it has made indonesia one of the world's worst global warming offenders. here is the situation. the fires come from paper and plantations that use illegal/and burn techniques. indonesia produces about half the world's $50 billion palm oil crop each year, use the products like mayonnaise and makeup. there is good news about the rain forest, though. globally, reforestation per year as slowed by one third to 5.2 million hectares.

we have gone from destroying forests twice the size of um to twice the size of denmark. indonesia overtook result is the number one country for forest loss. environmental groups says indonesia needs to follow the lead of other countries that have slowed deforestation by strengthening the moratorium on permits. indonesia says the process of identifying those responsible will take time. it could take up to a decade to ause of theg bec haze. vonnie: and that is your global business report. head to bloomberg.com for more stories. mark: let's get back to blackrock's annualized fixed income event in manhattan. by. schatzker is standing erik: mark, thank you very much.

the division of investment is new jersey's $70 billion state pension fund and we are delighted to talk to kevin mcgrath. it was beginning to look like the end for the bond bull market and yet since yesterday's fed decision all of a sudden bonds are rallying again. in your opinion, is this a head fake, or, you'll keep dropping? >> well, they will keep dropping in the short term. i don't think they will do it in november with the election of week away, but december, we will go through this again. erik: do you think there is any risk that we will see it at 136 again? kevin: i don't think it will go that low. spreads?t about credit not the mostnow expensive they've ever been but they are far from cheap.

just under 6.5. there is a little room to run. the risk is definitely to the downside. erik: what would be the catalyst -- right now if you look at the economy and different views on the direction things are heading in, whether they come from the fed or forecasters, what will be the catalyst for the soft? -- selloff? kevin: any surprise. into the weekame with terrorist attacks and the markets were still firm. it would still be something unknown. the position here, the position with yields low. erik: it is more likely to be what people would trim and exogenous event as opposed to just a shift in sentiment in the market? kevin: i think so. the one thing you can say is that the high-yield people have a 14% return on the books and you could start to see people take profit. erik: as we approach year-end.

kevin: that would be a little bit of a sideways move. erik: given the fact that we are in this incredibly low rate environment, 25 basis points for the six straight meeting and have you found yourself having had to adjust your risk reward framework? kevin: absolutely. bb bonds -- people consider the defensive -- they are under 5%. in the rate back up that is what is going to get hurt. you have to be careful. erik: would you say you have to reach for yields? kevin: everyone has to. it is how you go about it. erik: how do you feel when you do it? kevin: you are taking a risk. shorter duration, the triple c basket offers a lot of reward. you can pick your spots there. erik: there is this widely held view that fixed income etf's in

particular have not been properly tested. during the period of prolonged volatility in the bond market, the flaws in these instruments are going to be exposed and investors are going to be hurt. what do you say? kevin: welcome i think the market has moved towards etf's being a larger player so the way we like to look at it is we like to be tactical with not only etf's but the underlying bonds, you're more liquid bonds. you want to trade that liquidity and really invest in the asset class and use that liquidity to trade underweight or overweight the asset class. erik: would you say you are employing etf's in a passive fashion or are you using them actively? kevin: we use them actively. alongside our cash bonds, you can add positions quickly and diversify positions. you can loan it, you get to borrow. you have -- just another tool in

the kit we can use. erik: what percentage of the money you directly oversee is allocated into etf's right now? kevin: it varies. you can go as high as 30%, as low -- erik: 30% of your high-yield -- seven internal -- kevin: internal field exposure. it can be zero. erik: what determines that point of view, whether you have a negative or positive opinion of the liquidity? kevin: we were discussing how we were at 640 and the risk is the other way we have a much smaller etf exposure right now than we did earlier in the year. given the fact that you have adopted etf's as an instrument clearly, why have

some new people in the money market dumped on them? can i say so many people, i'm also including in that camp some of the most sophisticated, experienced, successful by managers of all time. n: i think it is a change in the way things are done. they are becoming the source of liquidity as broker-dealers step back from market making to regulations. i think it is a chance that people have to adopt to. erik: i think one of the reasons that you hear negative views about etf's is that potentially they are eliminating inefficiencies and driving friction, for which people previously got paid out of the broad market. have etf's made managing fixed income cheaper? in the liquid part of the market, the more liquid issues in the etf's. erik: do you see them playing more of a role in the last

liquid part of market or is the nature of the instrument -- does it confine itself to the more liquid security? kevin: it is something that the etf's could look to add in the future. would that make the liquid part of the market more liquid? it might. erik: really nice talking to you. trader andth, portfolio manager at the new jersey division of investment. back to you. vonnie: wonderful interview. still ahead, the big impact from the brexit vote. bank of london said to be preparing for the potential loss of $570 billion of clearing for interest rate swaps. what could it mean for the u.k. economy? also, a look at how the markets are faring in the u.s. after the fed decided to hold rates steady. we have indices higher. dow up 141 points and, .8%.

s&p 500, .7% higher. yield, 1.62%. the two year yield is 76 basis points. 13.41s trading at announced. this is bloomberg. ♪

fort is one of the pillars

the financial industry in london but it is not the only one that it is a key pillar. while this is sometimes seen as a back-office kind of operation, there is a lot of collateral involved, a lot of capital operations-is is intensive business, and i think the concern is if you start to undermine that piece of the industry, would you begin to lose with it? does it at some when begin to undermine london's role as the financial center globally? investment bank executive's are basically telling you that it is going to happen and there is nothing we can do. is it going to take years and drive up costs for companies across the region? john: when you talk to the experts, that is one of the first things you hear. you hear that from hammond as well and theresa may's administration, that trying to

do something like this could make things more expensive. if it begins to splinter and break apart operations that it has formed somewhat naturally in london. yeah, the question is does it make things more expensive? it takes a long time. having to move people, having to move technology, having to find skilled workers in other jurisdictions, and also the legal work that has to perhaps to waste to rewrite -- two perhaps take place to rewrite certain contracts and the way the derivative contracts are written. that is not an easy task. it is a big lift. vonnie: these are all details, i suppose, of the plan to exit europe, should it ever actually come to fruition. it might have to happen. i was surprised with 39% of these trains actually carried out in london -- trades carried out in london. i would've thought it would have been more good given the currencies, the euro, they should have been in france and germany. john: right, right.

yeah, there is financial stability reasoning behind that. it is argued and policy documents that it needs to be able to protect its own economy and if you end up in a systemic crisis, arguably the ecb will be the only one that could do it. the only entity that could euros someompletely backstop cyber situation we would hope not to be in again. the ecb wants to be able to protect its own economy and wants the key infrastructure within its jurisdiction so it is pervasive to having to potentially bailout some very important entity outside of its own jurisdiction. vonnie: what are the major banks saying? have they shown their hands in any way? john: i don't think so yet. my colleague did some incredible on this. some of them are saying this was

inevitable that this will happen. this will not happen in a week and it is going to happen in time that we have to have some kind of contingency plan ties. -- in place. it sounds like that is the discussion that is rippling through the banks and certainly some of the important banks in the city of london. vonnie: yet another impact of the brexit vote. 3:55 in london. coming up on the european" we will dissect the fed's decision 3:55 in london. to hold rates steady and what the decision could mean for the bond markets. have a look at stocks 34 minutes away from the end of the thursday session. what a rally we are witnessing today. biggest rise since september 2. this is bloomberg. ♪

♪ mark: 30 minutes left in the trading day in europe. vonnie: you are watching the european close on bloomberg

markets. ♪ mark: we will take you from washington to copenhagen, covering stories of brussels, new york, africa. here is what we are watching today. threatellen and the leading rent -- and the fed leading rates unchanged. only a slight chance in december. biggestdenmark's company was split into separate transport and energy businesses. they will get one analyst's take on the historic shakeup. a nigerian billionaire says he wants to buy arsenal and annex four years -- in the next four years. could he carry ohe