as a conjugate -- conduit for illicit activity. today, treasury's financial crimes enforcement network has sent the bank to be a foreign financial institution of primary money laundering concern under section 311 of the usa patriot act. >> the treasury also designated to does chinese individuals and a chinese company linked in north area is weapons program, and to continued violations of un security council resolutions. president trump will meet with russian president vladimir putin at the g-20 summit in germany next week and it will be the first meeting for the two as heads of state. no specific agenda has set for the meeting but mr. trump will reportedly discussed the u.s.'s withdrawal from the paris climate accord and make a major during that part of the trip. president trump will also meet

top leaders from germany, new mexico, and asia. will be a focus one south korea's new president meets with president trump for the first time today. he prefers dialogue to get deion on yang to drop its nuclear weapons program. the president is under present -- under pressure to get tough. commander --army city of moles of that was heavily damaged -- we interact because we want to take you to the president now beginning to speak at the department of energy. let's listen in. i want to thank everyone on stage. they are a terrific team. i have some of the real winners in the audience i can tell you, some great people. i want to thank vice president pence. as always, he is right there and he has really been a help to the administration and we have eight things happening today and very big example over the next month. i guess probably i can say over the next eight years, i suspect i could say that. [applause]

here witherful to be and visionaries from america's great industry. ofant to think the leaders great energy companies for supporting our efforts and joining us today to bring true wealth and prosperity to our people. [applause] that is true. give yourselves a hand. you deserve it. you have gone through eight years of hell and actually i could a little more than that. you deserve it. i want to express sincere gratitude to the labor union .eaders and members thank you. the skillrs embodied that is oh is been the true source of american strength. they break through the depths of

the earth and reached through the ocean floor to bring every ounce of energy into our homes and commerce into our lives. our nation salutes you. you are correct -- brave and great workers. thank you very much. [applause] before turning to the topic at hand, i want to provide a brief update on two crucial votes taking place this afternoon on the house floor. very important. the bills are vital to public safety and national security and i want to thank chairman bob for his efforts. bob has been working very hard for a long time. first, the house will be voting on kate's law, legislation named for kate, who was killed by an illegal immigrant with five prior deportations been a lot of

bad things on his record. the second is the no sanctuary for criminals act, which walks federal grants for cities that release dangerous criminal aliens back into the street, including the vicious and disgusting and horrible ms 13 gang members. we are getting them out. they are going fast. general kelly and his whole group had gotten rid of 6000 so far. we are about 50% there and liberating towns like long island, where i grew up. we're liberating towns. those people are so happy to see our guys and our guys are a lot tougher than the ms 13 characters, that i can tell you. liberation. put theling on all to safety of american families first. let's passed the bills through the house and through the senate

and send them to my desk. i will give you the fastest approval, the fastest signature you have ever seen, right, mike question mark we will get that signed so fast. we get back, the first thing i will do is how did we do on the vote question mark i expect good as other wasn't probably would not be talking about it right now, to be honest with you. neitherlike losing and do you, folks. every member of congress -- of congress should vote to save american lives. great members of congress are here with us this afternoon, some great people, great, great people. thank you very much. not only are they working with us on border security but they share a desire to unleash american energy. i especially want to thank secretary perry for his tremendous leadership in this department.

he has really done a terrific job and he is off -- also a cheerleader. i watched that in texas. he was always saying how great texas was. if you don't say it, i don't know. you have got to say it. doing it right now with energy. along with secretary of the nepa -- and epa administrator -- scott pruitt. the world is starting to say, i think they are right. they will find out. we have no doubt but all three of them strongly believe in putting america first, which is what i believe in and why got elected. make america great again is what we are doing. here to usher in a new american energy policy, one that unlocks millions and millions of jobs and trillions of dollars in wealth. for over 40 years, america was vulnerable to foreign regimes that used energy as an economic

weapon. american quality of life was diminished by the idea that energy resources were too scarce to support our people. at the time, that was right to think. we did not think we had this tremendous wealth. many of us remember the long lines and the constant claims the world was running out of oil and natural gas. nationns were told our could only solve the energy crisis by imposing ciccone and restrictions on energy reduction. big,w know that was all a beautiful myth. it was fake. we love that term, fake. what we have learned about fake over the last little while. fake news. cnn. fake. [laughter] [applause]

the camera just went off, looks. [laughter] .ou can come back i promise i will not say anything more about you. i see the red light go off. the truth is we have near limitless supplies of energy in our country powered by new innovation and technology, we are now on the cusp of a true energy revolution. country is blessed with extraordinary energy abundance which we did not know about even five years ago and certainly 10 years ago. we have nearly 100 years worth of natural gas and more than 200 50 years worth of clean, beautiful coal. we are a top producer of petroleum and the number one producer of natural gas. we have so much more than we ever thought possible. we are really in the driving seat.

we don't want to let other countries take away our sovereignty and tell us what to do and how to do it. that is not going to happen. [applause] these incredible resources, my administration will speak not only to american energy independence that we have been looking for for so long, but american energy dominance. we will be an exporter, exporter. [applause] we will be dominant and we will export american energy all over the world, all around the globe. these energy exports will create countless jobs for our people and provide energy security to our friends, partners, and allies all across the globe. this full potential can only be realized when government for most energy development, this guy right here, he will do it ofter than anybody, instead

obstructing it like the democrats. they obstructed. but we get through it. have obstruction. we have to get out and do our jobs better and faster than anyone in the world, certainly when it comes to one of our great assets, energy. wealth does not belong to the government. it belongs to the people of the united states of america. [applause] yet for the past 80 years, the federal government imposed massive job -- job killing barriers to american energy and development. since my very first day in office, i have been moving at record taste to cancel these regulations and to eliminate the barriers to domestic energy production's like never before. killing regulations are

being removed and vital infrastructure projects are being approved at a level they have never seen before. i approve the keystone xl pipeline and the dakota access pipeline in my first week. thousands of jobs, tremendous things are happening. thought i would take a lot of heat. i did not take any heat it i approve them and that was it. i figured we would have all sorts of protests. we did not have anything. whether it is protesting are not come i have to do what is right. people celebrate those two transactions as opposed to protesting. sometimes you have to go out and just do it, and you find out, whatever happens happens, but you have to be right for the american people. [applause] thank you. i'm dramatically reducing restrictions on the development of natural gas.

i canceled the moratorium on a new -- you know what was happening. federal lands were being so terribly restrictive. thenow it will be open and land will be left in better shape than it is right now. is that right? better shape. [applause] we have finally ended the war on coal and i am proud to report that here with us today, just opened a brand-new coal mined in the state of pennsylvania, the first one in many years. stand up. come on. congratulations. congratulations. [applause] we are putting the coal miners back to work, just like i promised. just like i promised when i went to ohio and west virginia,

wyoming, all of the different and i see bob back there. congratulations, bob here it he is in great shape. good shape right from the beginning. good. you just take care of yourself, all right? are ending the intrusive epa regulations that kill jobs, her family farmers and ranchers, and raised the price of energy so quickly and so substantially, in order to protect american jobs, companies and workers with john the united states from the one-sided paris climate accord. [applause] believeget into it, but me, that really put this country at a disadvantage. we were not playing on the same field. it kicked in for us and it does not kick in for others, the money that we had to pay was enormous, it was not even close. maybe we will be back into it

some day but it will be on better terms, fair terms, not on terms where we are the people where we do not know what we will see what happens but i will of itou we're very proud and when i go around, there are so many people that say thank you, you saved the sovereignty of our country. you saved our wealth. because we would have a hard time getting to this newfound wealth and it is not going to happen with our country. [applause] i am proudly announcing six brand-new initiatives to propel the new era of american energy dominance. we will first begin to revive and expand our nuclear energy sector, which i'm so happy about, which produces clean, renewable and free -- omissions free energy. this will help us find new ways to revitalize this crucial

energy resource. i know you are very excited about that. the department of treasury will address barriers for the financing of highly efficient overseas coal energy plants. ukraine already tells us they need millions and millions of metric tons right now. there are many other places that need it, and we want to sell it to them and to everyone else all over the clerk who need it. all over the globe who need it. the construction of the new trillium pipeline will further exportserican energy and that will go right under the wall, right? have it go down a little deeper in the one section. right under the law. fourth, just today, a major u.s. company signed an agreement to begin negotiations for the sale

of more american natural gas to south korea and, as you know, the leaders of south korea are coming to the white house today. we have got a lot of discussion to do but we will also talk from them buying energy the united states of america. i'm sure they will like to do it. they need it. thank you. [applause] states department of energy is an avid today they will approve two long-term applications to support additional natural gas from the terminal in louisiana, it will be a big deal, and a great announcement. and in order to unlock more energy from the 94% of offshore under theopment, previous administration, so much of the land was closed to development here we are opening it up in the right areas and creating a new offshore oil and

gas program. americans will be allowed to access the vast energy wealth located right off of our shores. beginning, just the believe me. a golden era of american energy is now underway. i will go a step further. america is nowof underway, believe me. [applause] and you are all going to be a part of creating this exciting new future. we will bring opportunities and new prosperity to our inner cities and new infrastructure all across the nation. when it comes to the future of america's's energy needs, we will find it entry met and we will build it. will powerergy

ships, planes, and cities. hands will bend the steel and pour the concrete that brings the energy into our homes. thishat exports incredible, newfound energy all around the world. american grit will ensure that what we dream and what we build will truly be second to none. we will be number one again all the way. we will make america great again. andk you, god bless you, god bless america. thank you. thank you very much. [applause] ♪ >> that was president trump finishing his remarks of the department of energy, announcing six new initiatives to expand the u.s. energy policy. talked about this deal signed

for natural gas in south korea. talked about constructing a new petroleum pipeline to mexico to further expand energy exports and revise the nuclear energy sector along with creating a new offshore oil and gas leasing program as well. quite see also noted approving two new -- national -- natural gas. point was made about that underne to mexico going with the wall. he got in a mention of the law, hitting on a lot of the commenting we have heard from this resident within that energy. click six new initiatives, regulation, which many would argue can be a focused p let's move on to health care. we cannot go too far without talking about this. bloomberg has learned of a proposal by senator ted cruz which would let insurers sell cheap plans as long as they also

sell policy that meet coverage standards imposed by obamacare. will this ease the health care lockdown? that is the question. bloomberg's political reporter on capitol hill. what about the moderates? >> conservatives like the idea because it would essentially allow healthier people to choose policies that may be cheaper and probably are skimpier and do not cover as many medical coverages but conservatives believe they should have the option and not pay more for a more robust policy if they do not think they will need those. moderates do not like this because they believe it will got pre-existing conditions protections and remove protections like a lifetime spending caps for sick people. it is the latest microcosm of a very real and intense struggle from republican leaders to get 50 out of 50 members on board for the health care of the when the spectrum is so wide and there are so many disagreements.

>> is a feeling this proposal has a decent shot or a reasonable shot of helping mitch mcconnell get to 50, and if it ted, how wild would be that cruz, not known as a dealmaker or a peacemaker, would be the one to make it happen? >> he is certainly trying to reinvent himself as a dealmaker in the trump era, a huge contrast from what he was all about in the obama era, but to your point, it would certainly help unlock a number of conservative votes. four conservatives came out within an hour claiming this does not do enough to lower premiums. there is ron johnson and mike leigh who have made that complaint. rand paul as well although he seems like a tougher get her to his complains are more far-reaching than anyone thinks. i think it would unlock more conservative votes but with the moderates stand for it? the question for mcconnell is does he take the gamble?

house speaker paul ryan decided he placated enough conservatives. fall in line because -- and get behind the proposal? it worked for ryan and they voted for it even if they don't like it appear for mcconnell, it is a tougher gamble. they seem to be driving a bit of a harder bargain. >> there is another highly relevant angle for many of our viewers here. what about the idea that the health care obamacare repeal might not include as much as the obama -- unless -- as much of the obamacare rollback? >> it is something republican leaders are talk about p my colleagues and i on the hill have been reporting about this. senator bob corker suggested this morning that he expects that to be taken out of the bill. i spoke to senate republican leaders about that. the final decision has not been made yet so it is not officially codified but we are talk about a 3.8% investment and -- surtax on

investments for people, making more than two at $50,000. it would save $172 billion for government if it that. it is a lot of money. the theory being if mcconnell has that put toward health care, he can win for those who want more medicaid and do not want to cut subsidies by as much. >> they want to keep the focus on policy but the russian investigation and all of the storylines around that including whether there are any tapings, keeps cropping up. you have an instance where the intelligence committee has sent letters to the white house. could you give us more details? >> sure p or moments ago, democratic and republican leaders of the committee running of the russia investigation there, sent a letter to the white house saying the white house did not fully comply. they had bent earlier on demanding evidence that the may have about comey

tapes as well as memoranda or documents. the white house essentially responded i saying we refer you to the president's. in other words, he is saying he did not ursuline record comey. asked for really enter -- any information the white house had. they sent those letter saying the white house needs to come force -- come forth in a more full way and if not, they will seek a more compulsory way to do that. >> all right. thank you for that instant analysis. joining us from capitol hill. we are five minutes from the close. the tech sector sparking a selloff in major indexes with stocks in the worst decline in more than months. our stocks reporter for bloomberg news and oliver, on any day were you see declines across major indexes, volume is heavier than usual. that is where we are today. >> that is something where you usually see it --

today, definitely the diversions volatility markets. of course the vix is up to 14. what is particularly interesting, it is this idea that there is volatility in the market outside of it. the top panel is looking at nasdaq volatility in the blue and vix in the light. the bottom panel is looking at the ratio between the two. that shows you just tell volatile tech stocks and nasdaq has been in the past. if you were to look at the ratio, the current level is 66 standard deviations. means isbasically 99.5% of the time, this does not happen. this is something that is interesting. joe: just the other day, we talked about tech stocks having the low sector as well. >> that is true. there is a disparity between the

volatility happening and keep in mind one of the sectors is actually expecting the most fundamental earnings growth. this is probably a little bit about valuations and a little bit about companies getting bit up but it also might be about some of the economic data. a lot of the companies rolling over, if you look at the worst losers today, it is semiconductor stocks. >> fantastic perspective there. in terms of looking ahead, we have got earnings drawing to a close. nike is reporting results. a lot of questions about consumers here. will we see more pain to come for these consumer companies? >> extremely important question. you have to watch the data. that is why semiconductors are important. they are ubiquitous -- ubiquitous in just about everything. >> thank you so much. joe: the market closes next. look at the major averages with less than format is to go. this is bloomberg. ♪

scarlet: is it the tech wreck relapse? dumping tech. with bonds and stocks selling

off, our central bankers at fault? what woman to happen for policymakers to return to a dovish phase? we are seeing a jump in volume as we get ready to close out the second quarter. with our market minutes. twitterto welcome our users who can catch us streaming every day from 4:00 to 5:00 p.m. is on higherand it volume, but not as broad of a selloff as we saw earlier in the session. one thing that is notable is that the fix has increased quite a bit. it is up to a whopping almost 12. joe: i think it was higher than 14 at one point. , butarkets off their lows

at least more interesting than it has been. atrlet: let's take a look how the sectors are faring. the financial sector up by .67%. on yields rising and that is part of the story, but financials basically all got a green light from the federal reserve to go ahead and that raising the dividend and announcing share buybacks. stocks off by 1.8%, so that selloff continues in tech names. for a while, people were thinking the drop off was temporary and we would ounce right back. that has not happened. we are talking they book, amazon, netflix, google, or .lphabet, as it is now known they certainly are down quite a bit. i want to mention three other companies. , and spread.te aid

walgreens scrapping a takeover of rite aid. more of an asset purchase instead. spread, which was supposed to get some of the divested stores, now is the odd man out. you can see it has dropped by almost 23%. the ftc worried about the store locations between the companies, and they want to maintain competition is best they can in that sector. at thet's take a look bond market. the other big story around the world is the extent to which government lawns are selling off everywhere. a bid onnot catching this risk selloff, which is very interesting. 10-or he'll come up to 2.20. it was under 2.13 just the other .ay ireland one of the big movers today. i want to take a look at romania theuse that is kind of

different story. new finance minister in romania. gotromanian assets really -- i'm not sure if i have ever talked about romanian stuff before. julia: looking at what is going on and currency land as well, interesting despite what we're seeing in terms of the broader market. the dollar is weaker versus the wouldd the swiss, but you expect to see more flight to safety, and we are not seeing it. isould argue that the euro stronger, training and a morenth high, reflecting of the hawkish central bank plus tone change.

showing you the one-month chart, as you can see, this is the best-performing currency versus the dollar so far this month. canada trading at a four-month high versus the dollar. finally on commodities, let's take a look at gold selling off a little bit, which is interesting. oil up modestly. i looked at this yesterday or earlier in the week, but let's look at a one-your chart of spring leaf. later in the show, we are going to have a whole block on's ring leads. theet's get more --scarlet:

global cio of guggenheim partners joins us. he oversees 260 million dollars in assets. he is also a member of the new york that investor advisory committee. we talk about the selloff in stocks, but equally important if not more is the selloff in bonds. feels like we could be at a pivotal point. is the question. is this the titanic shift we have been waiting for? central banks talking about potentially tapering purchases. my own feeling is that we are probably getting a little ahead of ourselves. i did not read the statement on anywhere near as bearish as the market is taking it. i took it the other way. i think it was a signal from draghi that even if there is going to be further tailwind from the economy that the central bank is still there, still buying, and that the

kuroda comments which came yesterday basically doubled down on it. i think what we having here is a bit of a selloff after all the strength we have had. the last time i was on the show about a month or so ago, we were talking about the 2.31 level as being the important support. bill gross had mentioned it. among other people. here we are back there, and the trend line is still in tact. the key is going to be the next couple of days to see if i'm right, but i think ultimately, we will turn around and rates go back down. i'm glad you mentioned central bankers. do you think we're getting some kind of coordinated move up in rates? are they working behind the scenes to say that we need to focus on asset price rises? are not think they nearly as coordinated as we think they are. i think the sort of ham-handed

thing that happened here with draghi -- on wednesday after the tuesday comments, the ecb was right out there walking back the statements. i think draghi was a little taken off guard by how the market reacted. there is an issue here i think we have to be concerned about. as the fed begins to shrink its and the other central banks start to consider tapering, i think we are vulnerable, given where asset prices are, but for the moment, i think we are probably fine. julia: when you see a pullback , it actuallyates has an impact on u.s. rates as well. as the sensitivity something we need to be careful of, or is it something -- is it just because u.s. rates have gotten to such extreme lows that there is that

kind of reflective response? scott: i think we can all agree .hat bonds are not cheap a lot of where we got to hear central bankh purchasing of bonds around the world, so the market is sensitive. the minute they see any sign that this is going to be reversed, which, obviously, i'm saying i don't think is happening right now, but the minute they start to see this reversal, we are vulnerable. joe: you look at the scoreboard today -- not a massive selloff -- i do not want to overstate it, but it is a selloff. tech really leaving it on the way down. you connect the dots here between some of this agitation in bonds and what we're seeing in equities, and furthermore, if we can get a selloff in risk assets and what we see as safe

haven assets, where do we go to hide? scott: that is a great question. one of the lessons we should all have learned is central-bank purchasing drives up all your assets. all the stories out about bonds down,down, stocks going it's not working. i think that the correlation between risk assets and bonds is continuing to rise, so when the selloff comes because correlations have become so tight, the selloff is going to come across the board. one of the questions we hear people ask is who is right, the bond market or stock market, but the way your putting it, it is simple to explain why they would move in the same direction at the same time. or i: it has to be simple

cannot explain it, but the reality is markets have been driven by liquidity for so long that what we have is a giant global liquidity trade going, and that's why the market reacted so badly to draghi's comments today. scarlet: you talked about low rates, high asset prices and destabilizing bubbles. the assetd you rate prices? scott: i would probably say depending on the market -- let's take stocks for a minute -- we are probably in the neighborhood of seven or eight. the work we have done shows that based on where the market capitalism -- the market capitalization stocks is relative to gdp would indicate that the forward return for the next five years is historically about 0%. that is interesting, but, you know, over the five years, you would not call that a bear market. we just went nowhere.

i do think we are reaching a pivotal point, and that is in , the lastof economics wave of a bull market is called a ponzi market. it is not based on valuation anymore. it is based on the theory that someone will be there to pay you a higher price tomorrow, and those markets are very speculative. remember when we reached the same place in 1997, the tech andet doubled between there 2000. speculative markets can be very interesting. maybe too interesting, but very interesting. minerd ofcott global cio partners will be sticking with us. from new york, this is bloomberg. ♪

mark: it's time now for first word news. president trump livered remarks at the unleashing energy event this afternoon. he said his administration is ushering in a new era of energy to unlock trillions of dollars in wealth. >> with these incredible resources, my administration will seek not only the american independence we have been looking for for so long, but american energy dominance. we are going to be an exporter. we will be dominant. we will export american energy all over the world all around the globe. mark: the president added his

administration will revise and expand the nuclear sector and create a new offshore oil and gas leasing program. the house intelligence committee is again asking the white house to respond to its request for copies of tapes or memos of president trump has conversations with former fbi director james comey. the white house has referred the committee to the president cost tweets on june 22, which say mr. trump has no idea if there were tapes or recordings. the committee says the white house did not fully response because it is still not clear if such recordings or memos exist. in germany, chancellor merkel of given a combative preview the g 20 summit. she dismissed brexit and said efforts to fight climate change are irreversible. she also took a swipe at mr. rhetoric,erica first saying nations turning to protectionism are making a

serious mistake. nato has agreed to send more troops to afghanistan, despite winding down its military operation. the move is in response for a for up to 3000 troops to train alongside afghan forces. this is in addition to the 4000 forces america is already expected to contribute. 24 hours a day powered by more than 2700 in oversts and analysts 120 countries. i'm mark crumpton. this is bloomberg. scarlet: breaking news -- nike just coming out with results, reporting first-quarter earnings per share of $.60. that beats the consensus of $.50, and is higher than most bullish estimates of analysts we surveyed. revenue coming in higher as well. $8.7 billion versus anticipated $8.63 billion.

there was no mention of orders nike put out. nike mention it would reference worldwide futures orders on the earnings conference call as deemed appropriate, so not even a promise that would happen. the stock rising almost 2% in after-hours trading as a result. we are joined now by a u.s. retail senior analyst from bloomberg intelligence. still with us, the cio of guggenheim investments. nike, of course, under pressure. they did make announcements with regard to strategic positioning and changing the management around. that is not going to help in the short term. >> as we know, they are cutting 2% of the workforce, which is about 1500 employees. they are consolidating their .ivision, going from 6 to 4 all of that is a help to

margins, but in the near term, the focus is all on top line. scarlet: nike has also been adidas, which has been doing really well with some of the old school sneakers. how do you see nike responding that -- responding to that? it is reducing some of its inventory as well, isn't it? >> it is. it is cutting back to focus on what works for them. i want to ask about the amazon in fact because we know nike has signed a deal with amazon as well to sell their products online. a really important part of the dry in the business going forward. >> absolutely. that's where people are shopping, on amazon, so nike can

get control of its brand on amazon versus having it sold group third party vendors. that will allow it to grow its top line. leg.n gives it another to gauge thetry health of the consumer, how difficult is to adjust for this secular shift from physical to digital, when you look at companies that typically were very sensitive to the health of the consumer, but now, the base ? eroding around them scott: we're looking at a complete evolution in the way the consumer looks and feels. s has shown much less interest in branding. brands do not necessarily have the same clout. at the same time, we are seeing more and more competition for the consumer dollar, even with the affordable care act, an increase in the amount it takes

to pay for medical care and health, so i think it is a much more competitive landscape overall in that world. great point. is a is there a company that encompasses or really reflects what the consumer is doing? a consumer brand or consumer company that really showcases the consumer strength? >> you have tj maxx, ross, burlington. they've been doing really well the past 10 years and will probably continue to do so because they hone in on what the consumer wants -- value, and experience, something new every time they walked in. thank you so much. scott is sticking with us. we will discuss the central banker effect for more. i just want to be cap nike results, reporting $.60 earnings per share.

analysts looking for $.50. revenue topping estimates as well, but no mention on future orders. from new york, this is bloomberg. ♪

joe: -- julia: welcome back to "what'd you miss?" i want to get that to what we were talking about. we discussed equity markets, valuations, the bond market, and the fact they are undervalued at this stage, too. what is the achilles heel when you look at the market? scott: i do not want to beentate it -- it has not that volatile, but it feels volatile. we are living in this environment where people are becoming more and more complacent.

valuations are cheap, so there's not a lot margin for error, so you wonder what he's of news is going to come out of the dark and get things upset -- what piece of news is going to come out of the dark and get things upset. this part of the year is traditionally the most turbulent and difficult to get through. it is statistically proven. the question is what can happen, and the number one place we are vulnerable to is unexpected news around changing policy of around central-bank policy. we've already been plainly told by the fed they are going to start shrinking their balance sheet, but everyone is counting on the fact that japan and the ecb are still moving forward aggressively. if they start talking about "we might want to taper as well" the market may not have enough liquidity to survive. boelet: the boj or ecb or

will be the source of this instability? scott: i think so. the minute they realize they have created instability, they will back away and we are right back to the central bank put, which is what we have talked about for so many years. will. we assume they scott: we assume they will. if they do not, we are in trouble. i'm very interested in portfolio construction and the idea that if everything is liquidity driven, so the traditional ideas of what hedges what do not really work, how do you construct a portfolio? scott: as i have commented recently, it is probably not a bad time to raise some cash. i could come up with all these cute phrases like nobody of her lost money by taking a profit, but the reality is the idea that having some dry powder in place -- you know, what we were just

talking about with the central bank put, if we do get a turbulent period in the second ,alf and risk assets fell off it's going to be a good opportunity for people to step in because the central banks are .fraid of the consequences the last thing the federal reserve wants is to go back to zero interest rates. they are going to be biased to trying to avoid that. scarlet: was this message reinforced when you are at the new york fed for meetings? scott: i did make the point that i thought they were hesitant to level, thehe zero reason being the political consequences, right? the political consequences of qe they have gotten a lot of flak for. qe,hey have to go back to

politically, i don't think they want to fight that battle. toia: we keep going back this point, and financial conditions are not tightening, then surely now is the time to raise rates. fed gotook at what the away with in the last meeting. not only did we get away with a rate hike. we got away with shrinking the balance sheet. that was pretty amazing. but i think that goes back to the point i made earlier. markets are very complacent. they have just seen this trade so many times, and i think that is making us more vulnerable. scarlet: we are in a little bit of a red here. guggenheimd, from partners, iq for joining us. for joining us. from new york, this is bloomberg. ♪

crumpton.mark it's time now for first word news. the state department approved and arms sale from taiwan worth a total of $1.3 billion, the first such deal with the self-governing island since president trump took office. lawmakers have 30 days to object. the sale comprises seven items including technical support for early warning radar anti-radiation missiles, torpedoes, and components for the sm to missile -- sm2 missile. ben cardin says the travel ban, which goes into effect at 8:00

ushering 10 time tonight, is a reflectand does not american values. the senator discussed it with bloomberg television. senator cardin: i'm joining with senator feinstein in a letter to the administration to ask them for more common sense methods. we hope the court will hear the case shortly and clarify this, making it clear that america will not impose a religious test as to who can come to the country. mark: senator cardin added he would like to work with republican lawmakers to improve the affordable care law to focus on making it better, not on repeal. toudge has been appointed lead an investigation into the london high-rise fire that killed at least 80 people. he will examine the start of the fire, its rapid development, and

future prevention. >> the inquiry is going to be independent. it is essential we hear from anyone who has information who might have bearing on the task i have to report. residentseting with and local people, it's quite clear many of them will have evidence to give that will be of great value to the inquiry. mark: following the blaze, more than 130 government-owned failedgs in the u.k. tests. pell is therge highest-ranking vatican official ever charged in the catholic church's long-running sex abuse scandal. he denies the allegation and is taking a leave of absence. he will go home to estoril you to fight the charges. global news 24 hours a day powered by more than 2700

overalists and analysts in 120 countries. -- he will go home to australia to fight the charges. i'm mark crumpton. 27rlet: the dow off by points. the nasdaq, the big loser again, down by 1.4%. it did come back a little bit as we head toward the close, but still, this is a decline at a pretty broad decline at that. joe: we have been talking about bonds selling off. no place to hide today. julia: thanks very much. "what'd you miss?" a report on a drugmaker alleging its lead drug is not better than standard chemotherapy. one man who did defend prothena

joins us now from our san francisco bureau. thank you for joining us. you say there is nothing new in this report. they suggest investors are being misled by the data. what is going on? >> that's a great question. thank you for having me. the question that has arisen, -- this drugthat has been around for quite some time, actually, since 2014. the company has provided evidence to the contrary at major medical meetings among other things. in addition, when we talk to physicians, they are quite pthprised by both the de and effect of prothena's drug.

specificallyked about the benefit between the drugs and if the data suggested the chemotherapy some of these patients have already received is having a benefit. just listen in. >> i think the street is way too bullish on the data. the street seems to think the data shows that the drug is efficacious. we do not think the trial data shows that it is efficacious. in fact, we think it shows results that are consistent with prior treatments of mostly chemotherapy that the trial patients underwent. .ulia: you refute this a face three trial -- a phase three trial is going on. tell me why you believe that is

wrong. >> in terms of the benefit we are seeing, the benefits actually double what you would expect out of current chemotherapy. secondarily, the company is testing the benefit in two ongoing trials. one would indicate cardiac benefit in the patient, and the second is based on mortality as well as hospitalization, and that is the thing that is really key to the fda. at some of the patients that get diagnosed, about 1/3 of them cannot even tolerate the chemotherapy, so this would be a great opportunity for those patients to be treated. furthermore, i could -- i should highlight that the phase three trial includes an additional drug they expect to work well together. julia: is the company being cagey about the results of its phase three trial?

if it were, this is the one that would ultimately receive the permission and that it could get under the phase three trial. >> i think you are referring to presenting an interim look at phase three. there is a really important facet, and that is that they have a phase two trial that is ongoing. serve as ay going to better interim look asterisk if this drug is effective or not. it would be beneficial for shareholders to see that data versus the interim from phase three. julia: let's assume carson is right about this drug and it is useless. is there value in this stock beyond that drug? in their other potential drugs going forward as well? >> absolutely.

these people are pioneers in the approach they are taking with parkinson's, and we will see similar data in alzheimer's disease trump other pioneered approaches they have taken. secondarily, they have a pipeline of asset that can drive value in the company as we see further data readouts in 2018, 2019. suggestion that has been made by carson is that insiders at the company are selling out, selling their .nterest i think that would be a critical concern for all of you if this were the case. are you hearing anything on that point? >> there is an important distinction that needs to be made. was spun out of another company. the management team does not have what is known as founder shares that typically they might have received from more traditional ipo route.

as a result, it is surprising to us they do not have a ton of shares. they do, however, have many options. julia: do you think this is a company trying to make a fast buck, talking about a stock and not being accurate? >> i think most of my interactions with the company and most investor interactions with the company see them as a group that spent many years bringing these drugs -- julia: i apologize, i'm talking about muddy waters and what they are suggesting. >> yes, i think there are a lot better places to go rather than print.

-- rather than prothena. julia: in certain cases, this has saved lives. let me show you the direct quote i got from muddy waters. ' ownsaid muddy waters research has proven over and over to be correct. this is in response to some of the criticisms that perhaps they are being fed information from sell side analysts. is there anything you could have missed here? this is the point ultimately muddy waters are making, that .ou guys are being misled could you be missing something? you have covered this longer than anyone on the street.

>> that's a great point. what we do know is that the company and the trial designs and scientists involved have taken every precaution to give this drug its best chance of success, and we will see that in our first look at least in the second quarter of 2018. julia: we shall see. thank you for joining us. scarlet: coming up, prices for spring wheat are surging. we take a look at why the higher prices may indicate a rebalancing in the agricultural market. from new york, this is bloomberg. ♪

oe: "what'd you miss?"

agriculture rebalancing may have gun and's ring wheat may be leading the charge. demand for bagels and pizza crusts are starting to defy gravity. strategist joins us now. so thrilled to have you here. first of all, what is spring wheat? why is it called spring wheat? >> because it is print -- planted in spring. joe: simple enough. specter,really that north dakota, south dakota, but as you mentioned, it does have the highest of all wheat futures in the u.s. we do have this chart showing the spread between spring and winter wheat. what is really driving this divergence?

commodities, certainly in agriculture, a year ago, it was one of the shortest commodities out there. we will be getting a bit of normalization. trout is doing it, but to me, it is this more normalization centered on an area that is a leading indicator for bigger crops like corn and soybeans. i look at it as normalization weather in a market that was leaning more to the bearish side. joe: i read some quotes from analysts something like shorts were having a cigar party in the gunpowder room. explain what you mean by leading indicator for other parties. >> generally, wheat has grown and grown everywhere in the world. the first one that is really harvested, winter wheat, oftentimes can lead markets, and it has.

wheat was the first market to really take off, so it is starting to look like that as well. that is when grain markets almost doubled in value. wheat is a leading indicator and is doing that now. the bigger picture of what is happening in agricultural markets, they are way overdue for some rebalancing. do want to mention the drought real quickly because the usda drought monitor has a very helpful map. you can see right in the areas mentioned, those northern midwestern states seeing extreme drought, but you say there's a bigger shift going on and the weather is only part of the story, and i think you brought us a chart that talks about a bigger rebalancing. what is going on? two months, july

and august, which are really going to matter for supply, but what is happening, because prices have dropped so far, demand is picking up exponentially. the place you are really seeing this is exports. agriculture is low hanging fruit to help reduce u.s. trade debt. this chart we are looking at here. >> what i'm showing you is the total estimated production, at least now, of u.s. grain production this year. 565 million metric tons. thecally 14% above five-year average. that is the white line. it is very extreme. the risk is that it reverts back to the more normal. joe: how does the market

ultimately come into balance again? clearly, there is an unexpected balance. what will it take to bring the ratio back to something more resembling normal? >> generally, higher isis. joe: -- generally, higher prices. joe: what is the mechanism through which the markets bring higher prices back? >> exactly. we are already at a multiyear extreme. production will not be as high. the trickle ups factor to the rest of commodities. starting with soybeans and corn and then maybe to the rest of the company. joe: fascinating stuff. thank you very much. scarlet: it is time now for the

bloomberg business flash, a look at some of the biggest business stories in the news right now. home capital selling discounted shares to warren buffett, assuring stakeholders the investment credibility and boosted profit in the struggling provider. berkshire won approval to buy a 20% stake. the stock has since nearly doubled to about $13. berkshire could eventually take a 38% stake. billionaire carl icahn easing up on his demands for an aig breakup after the insurance and hired assets new ceo. after opening higher, blue apron shares fizzled in the trading debut, lowering its ipo price to $10 a share from an initial $17. of $15 to

the news said grocery stocks tumbling. that is your business flash update. shareholders celebrate the birth of the iphone 10 years ago, but can the company protect its cash cow? from new york, this is bloomberg. ♪

scarlet: "what'd you miss?" today is the 10 year anniversary of the iphone, so we wanted to show you a chart that highlights applef the challenges of 's entry into the smartphone

market. basically invented the device, although you could make the argument research in motion did. presidedistention is a over the high-end markets. everyone else can battle over the middle range while the chinese dominate the low end. the high selling price get the market fat and juicy. the premium smartphone unit sales fell about or 10%. you can see the drop off in the blue bars in the low end and midrange phones became more accessible. apple did launch a cheaper phone in 2016 to continue to build on share gains, but it has not really captured the imagination the way the original iphone did. the big picture is these 10 years. do you remember 10 years ago, people on the motorola razr?

i just cannot remember life pre-iphone? scarlet: how did we do work on our phones? we had blackberry, but was not the same. julia: even looking down the street, you can look at a million different aspects of how the smart has changed our lives. if you think economists are bad at predicting the future, it's fun to go back and look at the comments. desk someone talking about talking with the ceo of palmpilot, saying it was going to be a that -- i saw someone talking with the ceo of palmpilot, saying it was going to be a fad. chewing gum sales are

falling off a cliff, and they are citing it as a result of iphone sales. i wonder if that extends to tabloid magazines as well. you can see it on your iphone. you don't need to buy us weekly at the newsstand anymore or at the market. and a reminder you can get all the breaking news right on your terminal. check out tv on the terminal. here i am earlier, just a minute ago, talking about spring wheat with bloomberg intelligence analyst michael clone. scarlet: pull it up. pull it up. of great stuff. it really is the best way to

watch tv. there is that chart. interactive. you can send us complaints, anything you want. coming up, what you need to know for next week. ♪

scarlet: "what'd you miss?" a selloff in u.s. stocks kind of

abated in the midafternoon half an hour before the close. close off our lows with the nasdaq once again the leader, this time to the downside. what's coming up? a data dump day. let's start with asia. a slate of japanese inflation numbers and china manufacturing. julia: i'll be watching at 5:00 a.m. eastern time. traits watching very closely, never mind the central bankers. joe: i will be watching u.s. pce, the fed's preferred measure of inflation. julia: if you have not heard already, spend your july 4 with whoooo. you're searching for something. like the perfect deal... ...on the perfect hotel. so wouldn't it be perfect if there was a single site where you could find the right hotel for you at the best price? there is. because tripadvisor now compares prices from over 200 booking sites... ...to save you up to 30%...

...on the hotel you want. trust this bird's words. tripadvisor. the latest reviews. the lowest prices. alisa: i'm alisa parenti from washington, and you are watching "bloomberg technology."

report by the cbo predicts the federal budget deficit will 690 $3 billion this year, $134 billion more than it predicted in january. the house votes today to ration federal funding for so-called sanctuary cities. state and local governments that have policies restricting cooperation with federal officers. a house bill will increase penalties on people attentive to enter the u.s. if convicted of felonies or after deportation. discuss theected to u.s. withdrawal from the paris climate accord and make a major speech in poland before the g-20 summit. travelnt trump's revised plan takes effect in three hours focusing