that the north american free trade agreement timbered brought up to date. we continue to discuss modernizing nafta. we cannot sign a trade deal that automatically expires every five years, bmove forward. >> the sunset clause were and nafta unless the u.s. andico x tens it every five years. macedonia will also amended thousands is -- amended

willitution and citizens be listed as macedonians/ citizens of macedonia. the white house says president advisor afteric having what was described as a mild heart attack. president this past weekend to the g7 meeting in quebec. he is being treated at walter center.ical swedish prosecutors say he saw the same woman -- resulted --

assaulted the same woman twice. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. live from new york come on julia. we are 30 minutes from the closing in the u.s.. >> president trump comes to an

agreement with kim jong-un, but details are sparse. theyederal judge will rule on whether at&t can acquire time warner, ending a nearly two-year vital. jong-unt trump and kim concluding the -- there is sort summit. he joins us from washington for a great to have you with us. if you look at this in , he is made them more

of reality than the past. .> he comes out of the summit north koreans have wanted meeting with the u.s. president for decades. jong-un knew there would be sanctions. to thedid not expect u.s. to suspend u.s. military action. kim jong-un got big stage time. what the president got was a denuclearization which is much thinner. there's not a lot there.

the state department will follow up. so far, it is not sure what the u.s. cap in terms of denuclearization. we are not seeing missiles flying off. >> a lot of people are making the argument that you made, that kim jong- got all this stuff. that whatible lesspired gets north korea likely to include war or nuclear war. >> 't think it gives us ofn to the elimination nuclear wes. north koreans have a track record of cheating even when they do give specics. what comes out of it, but i have not seen it. theoes are -- fisa pause in

tensions. that is good for the peace of .ind for the japanese or korean know,s stage from what we not a lot there. not exactly historic except for the fact that the president did. >> mike pompeo said several times he wanted complete, verifiable and irreversible denuclearization. u.s. officials have been pressing for those. do we assume south korea, japan and also china are pressing for

those te >> the south koreans are basically happy to not be talking about war. they are unnerved by the presence statements that they want to get our troops out of asia which they did not see coming. chinese are happy. they do not want a war in the get a bit of a timeout. and, they saw the president radel our allies. the happiest is probably kim jong-un. wanted att of what he

this stage. >> what does he want going forward? if he can secure that some way, what does he want and what he be able to give up some of that leverage to ensure the survival of the regime and the country question mark -- country? >> kim jong-un is only 30 or so. the president showed him a deal.ech you could make an argument that what kim jong-un wants is enough cash and technology to keep his opportunities for

the elite, but not to open up, but to open up the way china did would mean the north koreans would realize that the kim family is not god. like opening the window of a submarine. the president is testing that and i hope he is right. we gave a lot. there.t analogy coming up, ian shepherdson joins us for the latest inflation data and what that means for the federal reserve. this is bloomberg.

>> a major week for markets is underway after consumer prices rose in may or the biggest increase in more than half a decade. the data came just in time for the federal reserve's today policy meeting. ian shepherdson joins us now from london. --nks for staying late and staying lats. on the surface, they look very strong, but if you dig in, it might be more recent. worrisome.

not risingsing, but very fast. probably next month it will go back down again. what is driving the fed's two raise rates, the path of inflation is the idea of the strong growth. that.re trying to preempt prefer gasey would .rices would not have shot up further thinking much down the line in where we would be a year from now if the unemployment rate continues to fall.

that is what is focusing their attention at the moment. >> how can the feds the confident when the unemployment rate has already fallen well meaningful inflation pick up? >> it has picked up, so the broader growth is at 3%. as a lott been as big of people expected. they have not really amended bigger raises to compensate for purity gas prices are higher and medical inflation has turned up again as well. suggests we will --

the fed does not tell us what the forecast is for. we don't know exactly what they're are expecting, but my guess is they are seeking to contain. don't want people to get to bigger raise. >> as sticky as inflation is to rise, it is also sticky on the downside. given point, any employers pay as little as they can get away with. what is different now is if they don't remain competitive and employees leave, then the firm

--t has not paid will have a the unemployment is now extremely low. they know the game is kind of up now. my guess is if the employees come knocking and saying productivity is up we need to get paid. i think it is reasonable to growth. will get wage thee're coming back to argument you havey your employees to say. tomorrow, whate has the potential to be the most interesting surprise? thing is whether

there will be a fourth rate hike. some people think they will end my guess is, so they probably won't. early. it is a bit too waitnk they can afford to and see what happens. weeks, they say inflation expectations are low and they say they're going to raise rates gradually. i think it is too early to see that. >> speaking of boxing yourself

into a corner, did the ecb do that when they said they will definitely discuss the beginnings of winding down the program? >> i think it would be quite a surprise if they didn't. so far, it has been pretty disappointing in terms of growth, but i think l ahead, they don't want to continue on the scale they have been. if they be surprised did not have something clear. thanks to each of for joining us from london. you don't want to miss our

coverage of the latest fed decision. former vice a chairman of the federal reserve. tesla says it will cut about 9% of jobs across the country. says a stock reduction will not affect his ability to reach production over the next the monster at mcdonald's making changes in the united states. eliminate itsll regional structure in terms -- in exchange for field officers. record any will second-quarter charge up to $90 million. says they should

top $1 billion. firm's fixed income revenue came in and top estimates for the previous years. that is or bloomberg business flash. , the at&t merger with time warner judgment is about to come to an end. that is ahead. this is bloomberg.

>> we are waiting a federal court's ruling on at&t and time warner's stalled merger. that consumers are

not faced with costs. you look at how the sox have been performing, it seems that at&t has suffered here because growth in wireless subscribers has slowed down while time warner has these media outlets. growth.is after that if you look at u.s. wireless, it is slowing rapidly. i think it caught some of the telecoms by surprise. they have been violating how to placing allizon is of its bets on 5g. it has been held up by the doj in a surprise move so the world is holding its breath waiting for this decision.

>> it would make sense with content and distribution. what is the counterargument run at&t? arguing it is a vertical merger. it is not going to harm the consumer. remains thess share same. therefore, no customer harm is done. as opposinging up to getting broader. they are vertically integrating. >> the fear is another cable

company could withhold or .rovide the of time warner someone else can decide ultimately. >> there may be remedies attached to this because the scale. is as you gain in . onould see the judge conditions with some remedies. a legal sloteen for the companies involved are it obviously, there has been a lot of changes.

change is the biggest there has been no change in the wireless market. no renewed first in growth. we are still waiting for deployments there. that is the next generation of wireless and frankly if at&t does not in a green i think that seehe past ago, but we will . >> from a media company standpoint, what is the next we are watching? front.ll put that out on telecomsay from a perspective which is a -- zontal merger

>> thank you's much. the market close is next. this is bloomberg.

julia: "what'd you miss?" the tech sector outperforms, and we wait for the fed decision tomorrow. if you are tuning in live on twitter, we want to welcome you to our closing bell coverage every weekday rom 4:00 to p.m. eastern. sky that: let's look at the major indexes as we close out : let'sesday -- scarlet look at the major indexes as we close out this tuesday. i like the word you used earlier -- meander -- because it's kind of what we have been doing all day. the dow really did not move very much from its peak to its trough and we are closing little change on the day. believe the i russell 2000 is at yet another record high -- indeed, it is -- for the seventh gain in eight days.

let's look at some of the other asset classes as well because kind of a snoozer in bonds. before the fomc decision at 2:00 p.m. tomorrow. thedollar firmer against yen and also against the euro as we head into the fed decision and ecb meeting as well on thursday. .2%. crude adding certainly a long way off from recent highs. for more on today's market bring inet's jpmorgan's asset management global market strategist. it's kind of the quiet period right now. we are in june and kind of looking for catalysts. willie fomc meeting provide any kind of catalyst for the rest of the summer, given that things ? ll be quiet >> think it's going to be a combination of the fed tomorrow and the ecb thursday.

a big part to me of the dollar strength we've been seeing of late is an expectation the fed will keep hiking rates this year, that u.s. economic growth will be fairly solid and expectation the ecb is on hold. we will get a little bit of a glimpse into the ecb playbook, so i think it's the juxtaposition between these two meetings and the differences and facts that arise out of them that stand tove marke e rm. joe: you sometimes hear the question of can stocks withstand higher rates, and the answer is if higher rates are a function of a strong economy, the doesn't need to be any conflict. has anything changed that would suggest that we cannot have both, that we cannot have a series of progressively higher policy rates, but given the economic that drop, not anything that would harm -- mr. lebovitz: i think a lot of people would say rising rates -- exactly what you said -- are indicative of strengthen the economy. that should be good for the

equity market. i think the stock market priced in quite a bit of the earnings growth we are expecting this year last year, and that's why moves have then more muted. we see more upside from current levels based on not only the outlook for earnings thyear but the outlook for continued earnings growth next year. that said, i think it will be a bit more of a volatile klein that it might be otherwise. we don't think we're at the point where higher interest rates will restrict higher growth for higher interest rates will restrict performance in the equity markets. to us, that magic number is somewhere between 3.5% and 4% on .he 10 year julia: you talk about the stock market continuing to make gains. how much more upside is there here? think there are a couple more percentage point of upside. i don't think it will be like last year where we finished the year with a 20%-plus return, but we do think high signal digits are a reasonable expectation for

this year, particularly if it clear thatreasingly earnings estimates for 2019 and 2020 have the potential of holding. that will do a lot for the multiple. that will give us more flexibility around rising rates and create more headroom for the market into the end of 2018. scarlet: we're keeping a inflation. correlation of different assets in the market right now, if its currency and equities and -- for equities and bonds. joe referenced it earlier, but how tightly correlated are things? >> what was most interesting for us was during the turbulence and volatility in february, march, into the beginning of april, you saw that correlation which most investors assumed to be negative actually move into positive territory. i think it is important to focus on the ailment rather than the symptom. a lot of pe stock/bond elations have turned positive. thiss really bad.

they did not understand that the stock market was a little bit uncomfortable because growth it sought and the fed was raising rates. the bond uncomfor inflation was expected to take up and the fed was raising rates. to me, that more traditional relatiks and ssert itself. i think the important thing is when you get to this point in the cycle, it is time for an x-acto knife, not a butcher's we need tk about less correlated asset classes, things like hedge funds, private equity, infrastructure, which can provide either diversification in an environment that could prove to be challenging for traditional public asset classes. joe: one area where there was no volatility was em. basically all red across currencies, ongoing weakness. whs your take?

are you starting to get enough compensation at this point to take some risk from a global perspective? -- p.m.vitz: i think in were is looking interesting, but it is important to not pai witbroad brush stroke southrkish lira and the african currency are to know of the dark spots from where we sit. is looking more interesting on the debt side as yields have backed up. written to think about the relationship between u.s. high-yield and dollar-denominated bonds, and things are tilted a bit in favor bonds, and we still like in equities. equity markets tend to be far more liquid in the manufacturing economies of southeast asia and we think that's one part of the global economy that could fare pretty well this year. we are staying the course with be part that em should of portfolios with anunderstande turbulence in select countries.

a globalking on worldview as well, but i would like to end of where we began, making the comparison between the european central bank and the federal reserve and tying it to the euro dollar exchange rate in particular. what has been the price as far as that is concerned, when we've had senior members of the european central bank talking about the prospect of at least making some concrete announcement at the end of qe, even if they are not talking about raising rates this session or for some significant time -- what does this mean for the dollar and the relative change rate? i think the dollar is key. currency in general tends to be the pressure valve in situations like the one we are in today. i think because the ecb has taken this measure twice, cut once approached since the double-dip in 2012 and 2013, investors are not as willing to buy the rumor and sell the news. they are actually waiting for the news to make a portfolio shift. if we do get a signal that qe will be tapered in september

through the end of the year and the halt of asset purchases at the end of 2018 and furthermore, we see evidence in the ecb forecast that they do expect inflation to continue rising, that could send a signal that the state of affairs in europe than a lot of people may feel, given the weak start to this year and that could release a li of pressure on the dollar. that could lead to some strengthening in the euro, and that could lead to a resynchronization of the euro. : as we wrap up our conversation, what's the number one question clients are asking you? mr. lebovitz: we're getting a lot of questions about politics. a lot of questions about italy and is this the next greece. we don't think that is the case. what we are really doing is encouraging clients to focus on the signal more than the noise when it comes to politics and really pay attention to the very healthy fundamental story that

we see playing out with corporate profits globally rising, growth in europe still above potential despite the re-rating we've seen during the first couple of months of the year and really keep in mind that there is likely still room to run before the end of this business cycle and with fixed income still not paying a whole lot, we think it pays to be overweight risk assets. julia: thank you for joining us. coming up, we awaiting a federal court decision on the at&t/time warner merger. we will bring you that the moment we hear it. this is bloomberg. ♪

are awaiting a court

ruling on the at&t/time warner merger. judge richard leon is expected to announce his decision any moment now. let's bring you more on what to .xpect great to have you with us. let's begin with you -- there are three options here. they say yes to at&t, yes to department of justice, or yes to at&t but with conditions. which do you think it is? >> if you've been paying attention to the trial, the judge has to rule in favor of at&t. the justice department put up a very weak case. thereaid competition, and is no competition. they only leveraged -- the only leverage at&t and time warner will with other distributors. they will make them take all the other time warner material and that does not impact the consumer. they have a billion dollar loss

that the government's expert economist came on with. it's not going to cost them five cents. it might actually save them money, as at&t argued in their case. scarlet: the government said this would be harmful to consumers. maybe the government's argument was weak, but is it that at&t made a better argument? did they make the case that the merger should go ahead? >> i think the chips were on thr side to begin with. president was on their side. it's a vertical integration, and there is a case out there, which is comcast's purchase of almost a, that is mirror deals what we're looking at. scarlet: and judge leon laid a role in that. >> played a role in that and put some the haverhill remedies on comcast -- put some behavioral remedies on comcast. this deal is no different than that and the world has changed dramatically with the advent of

netflix and comcast and -- netflix and content and facebook. judge did put se restrictions, and maybe the argument at&t made about having baseball style arbitration is going to be the clincher. joe: but these remedies would not be all that significant in terms of the merits of the deal? >> know, and there is a time limit, too. the comcast behavioral conditions expired this year. the other thing that is interesting is the chief antitrust justice department officer a year ago was on record as saying this combination of at&t and time warner made a lot of sense. it's going to be very interesting to see what the tweets from the white house had to say when this opinion comes out. julia: to be clear, it was at&t

that came up and said we will do this arbitration if we need to. you can understand the concern ultimately if you are kind of fighting a different cable company over time warner content. do you use that as leverage and say you have to pay more in order to get it, but then decide to let someone else make the decision ultimately? what else on top of that could be required by this judge? are you ultimately saying that that form of arbitration over any future disputes that could have financial implications -- >> at think the skeleton in the closet is not going to come from judge leon. it might come from the justice department. for an appealom and they ask for a stay, that could blow the at&t/time warner deal, which has close by mutual a staynt on june 21, and would take 5, 6, 7 weeks. julia: europe nothing time warner would allow for an extension? >> they might, but it will be a big problem for them.

the appeal could last another year or so. goeslet's say the deal through or they get the green light. put it in perspective, the floodgates. bankers are m&a going to have a heck of a summer if that happens. there's a lot of things queued up, most notable being 20 at century fox -- 21st century fox assets. comcast in particular is waiting to see how the ruling comes from this court if they, in fact, allow this deal, then comcast will feel much more comfortable throughbility to go with 21st century. then you will have a bidding war for that. and there's other media assets. what does that mfor cbs and viacom? whthat mean for discovery? companies try to get scale compete against some of the big technology companies. >> it is going to be a salami of

m&a in the media -- it is going to be a suit on the -- it is of m&a innami the media. at&t says it's not that they will dome market. th 800-pound gorilla isn't silicon valley's weather guys who will run the media going forward. scarlet: i want to pick up on something you said earlier, that the world has changed dramatically since they put the deal together 21 months ago. survive?maller players are they able to survive if they have to stay on thei own? >> i think the challenge for media companies in general, certainly smaller ones, is to have unique content, so discovery is making some big investments in some sports content, some european sports content. cbs, obviously, they have what they believe is the best network in the u.s., and it is showtime.

the second thing companies have to have is they have to develop a direct relationship with consumers. a direct billing relationship with consumers, a direct relationship where they can survive outside of this bundle, which does reward scale. even if you have those things, do you have enough content to break through some of the direct to consumer competitors such as netflix, and now what disney is doing, going direct? as a consumer, i watch a lot of tv, and i find that complicated because i sometimes don't know what show is on what network. >> here is one of the most interesting statistics that did not get into this trial. about three weeks ago, a survey came out. everybody under 35 years of age watches 80 hours of media content on their cell phones. at&t is in the wireless cell phone business. they know where the wind is blowing. the rest of the media industry has not caught up with that yet.

joe: speaking of which, even outside of this case, there has been a lot more rumbling about if antitrust action could be taken against some of the big tech players -- facebook, amazon . >> not with network neutrality rolled back. >> do you think that is something we will see more of a push on? >> absolutely. you've got amazon and google now in the media business up to their eyeballs. the only real giant that has a lot of money but no content is microsoft. i think one of the big companies like netflix for some of the other giants are targets for microsoft because they are going to get left at the gate. julia: i want to bring it back to at&t and time warner. we have made it a very minute possibility that here, but the department of justice did say that there is a way for us to

sanction this ultimately, and that is if at&t selloff directv or turner, and at&t came back and said it defeats the whole purpose of doing the deal. >> they said they would not sue if they sold off either direct or cnn. julia: what's the probability of the judge here suggesting that this is necessary in any way? >> not a prayer. this judge is too smart he's a lot smarter than the people on hill. think at&t investors would like at&t to get rid of directv, but the turner assets are really what at&t is looking at. that's the programming that is going to fuel all the wireless and direct to consumer assets, so i think that is what they really want. even cnn is an asset that they could certainly spin off that nobody would really care, but it is at a point of contention for the at&t ceo.

watch dish come racing into the m&a market looking for more content. scarlet: so many people just waiting at the doorway. we are going to continue to await these headlines from the judge on at&t time warner. from new york, this is bloomberg. ♪

: our guests are still with us. we were talking about this at&t/time warner decision, still waiting for the judge to wrap up and give his verdict. then there will be a surge of people running out of the courtroom on this decision.

of said that at&t have got this. >> that's my opinion, and i think i'm not alone. julia: what happens to the likes of comcast, disney share prices in response to this? disney could be in some sort of bidding war with comcast. >> that's almost axiomatic. comcast's ryan roberts has said .e is ready he has the capital. he has already been rejected very, but this would be a big moment for fox, and my guess is that rupert still wants to be the largest shareholder in disney and will stick with the deal that bob iger has put on the table. julia: what level of money persuades him otherwise? >> the comcast deal is all cash, so there's big tax and locations there's no prestige in getting comcast stock.

this is rupert's legacy. he is doing estate planning right now, wealth management and saying his family and his legacy is being the largest shareholder in disney. scarlet: where does that leave bob iger? how does he respond >> this is a critical deal for disney and for comcast. if you are disney, you absolutely believe you could be one of the remaining media players, maybe the only remaining media player that could compete head-to-head against netflix and directv, all the big companies. the question is he is committed to doing this, and i think they will do anything they can to get this deal done, and it really comes down to who will offer the most money and who can close the disneyt, and i think clearly can close quicker even though comcast may be able to bid a little bit more, but at the end of the day, i think disney's deal is safe.

that's who they went with first, the partner they brought to the dance, right? >> the same situation could prevail in the u.k. with sky, too. disney really, really, really wants that international footprint in europe and in india. joe: during the break, we were talking about core cutting. comcast shares have been under a lot of pressure, kind of a typical because it tends to be kind of a cyclical company when the market does well, does poorly when the market is doing poorly. how much is it about anxiety over deals and stuff like that, and how much of it is concerned core yousion of that could >> stock is down about 20% here today, but so is charter, which does not have any deal activity associated with it, but comcast stock was doing better before they started talking aggressively about disney, and i think people are concerned about the fact that they will lever of their balance sheet so much to get a deal done.

that's number one. number two is if they use their stock and shareholders are not happy about that. at the end of the day, disney stock has fared a little bit better than comcast, and i think that is simply because the disney shareholder is in disney recognizing that disney is in fact the company thats a shot to compete over t five to 10 years, and i think if you are a comcast shareholder, you probably bought into a different story, which is i like broadband growth and commercial business growth and mike nbc theme parks and stuff and i like the fact that they are buying back stock, and i'm not sure i want them to more the contentdown on business on a global scale. >> i agree all the way. it's going to be a real dog fight, but disney is going to pay up. i think bob iger has made his mind up. me how is striking to different this story is than, say, 10 years ago. people really thought that

content owners were going to be in a lot of trouble and it was tong to be really hard enforce intellectual property on the internet and it was all going to be free and stuff like that. >> new-media company has ever spent $8 billion a year the way netflix did this year, and amazon for amazon prime is doing 3.5 billion dollars. those are obscene numbers for content production. scarlet: and we really have not even seen the facebook numbers. joe: great for people that like to watch tv. scarlet: yes. i was telling you guys i watch a lot of television, and i get confused sometimes about how i would watch it if i do have a cable bundle. you have to go to the networks and figure out there service and it becomes to complicated with all the passwords. it is easy to pay one company -- >> they have apps for that. julia: we are showing you life pictures of the courtroom, still awaiting the at&t/time warner court ruling. the judge is currently speaking

in the case, giving his ruling. it has been total lockdown on the courtroom. even the windows have been blacked out to prevent reporters trying to live for the judge to get a decision. obviously this will be market moving, as we discussed already. once again the appeals process. you assume that if at&t do not get what they want, they will appeal. similar story, the department of justice and how the timing will work. >> the key thing here is the expectation is unless it is a super clear ruling that there will be appeals on either side, and this reportointed out the real telling moment is this june 21 eight, which calls for the closing of the deal and if there is in fact an appeal, they could close heading the appeal or try to extend negotiating, and that could, in fact, caused time warner to go back to the negotiating table with this and said it will not extend because they think they will get a higher price in this market place from someone else. that is, to the m&a market has

heated up, or if they do extend, they will want that are terms or a change in terms, so it will really be a bit of a sticky wicket. we'll have to see how it plays out. >> if you are a time warner shareholder, you have to be happy if at&t does the deal because they are offering $10 more than the current price. are awaiting the ruling from judge richard leon on time warner and at&t. in the meantime, let's get you some other headlines with first word news. trump says his relationship with u.s. allies is not in jeopardy, but he has to look out first for america's interests. he discussed the dynamic with nato before leaving singapore today after his historic meeting with north korea's kim jong-un. >> i have a goodelationship with justin. i have a very good relationship with angela merkel, but on nato, we are paying for .2%. she is paying 1% of a much

smaller gdp than we are. i'm in, anyone can say from 60% to 90% of nato, and we are protecting countries of europe, and on top of it, they kill us on trade. mark: president trump announced the u.s. will end joint military drills with south korea, but there will be any immediate relief for the north korean economy. world leaders continue to weigh in on that historic summit between mr. trump and kim jong-un. the european union foreign policy chief is among those praising the meeting. proves thatummit diplomacy and dialogue are the only way forward, in this case, toward lasting peace on the korean peninsula and beyond. is a clear sign that the diplomatic track is often challenging and often the most

difficult one to be followed, but it is always the rewarding one. >> the remarks were directed at the european union's ongoing attempts to keep alive the nuclear deal with iran. president trump pulled the u.s. out of the accord last month. israeli police today began evacuating jewish settlers from homes built illegally on palestinian land in the west bank. dozens of settlers protestedwitd after the holy spirit eviction, is really forces are expected to demolish the structures. the government says it will compensate residents and rebuild their homes on nearby land that is not privately owned. news 24 hours a day on air and that tictoc on twitter, powered by more than 2700 overalists and analysts in 100 20 countries. i'm mark crumpton. this is bloomberg. scarlet: let's get a recap of today's market action. sluggish trade with the indexes not moving by a whole lot.

the dow basically unchanged at 25,320. .6%.asdaq inching up by the russell, 2000, by the way, achieving another record high, so it does continue to power higher. of course, everyone is anticipating the federal reserve decision tomorrow and the ecb julia: i feel like we haves talked about every iteration get.ble we could what is the risk of a surprise here? >> when the interesting aspects is this is not just a media situation. there is a big lineup of health care companies.

cbs is looking at combining with aetna, the insurance company. 70se are $50 million, million dollars -- billion dollar ds not incidental. really are: tackling the question of a vertical versus horizontal merger and there are also the questions to be tied back to it. clearly, the judge has to way that, too. to what extent? >> we're very fortunate because judge leon is a very wise, very sophisticated observer of the financial market, and you could wish that some of the congressman adjudicating the net neutrality rules in some of the hearings that they had last month for facebook and google knew a little bit more about the internet and the digital world because judge leon is savvy. the rest of the government probably is less savvy. that point,arify on what kind of a chilling effect

could it have on the broader m&a market is indeed -- when we are asking questions about -- a a very frosty if this is negative verdict by the judge. it will really shape hundreds of entities. scarlet: obviously, judge richard leon is someone we will be watching, and he has .xperience talk about the personalities of the guys at the companies. in jeopardyn's job in any way if at&t does not get a good overall ruling? >> i'm not sure his job is in jeopardy, but clearly it throws his strategy into a tremendous amount of uncertainty because he has positioned this company to migrate from a traditional telecom communication services company into a global media company and to deliver that over landmines and

wireless, so that was the entire strategy. to the extent he's going to put up an 80 billion dollar transaction, so i don't know where at&t would give it to to the extent that they cannot get a content deal done. if you look at their landline business, long-term secular decline. business, very mature, very competitive even, and it will go down from four players to three with this sprint/t-mobile action which could be up for discussion, so i do not know where the move. i do not know where the ceo takes the company because they clearly made a big that on content, where is the rise in on the other hand has made very smaller bets by an aol and yahoo!, which at the time were seen as really not visionary as compared to at&t, but if this deal goes the wrong way, maybe verizon looks a little smarter. 1.1%time warner shares up after hours. still no verdict, but optimism.

julia: filtering into the post hours. scarlet: time warner has a collection of media assets that everyone wants. maybef was start to be the smartest person in the room by selling out at a relatively early stage before his business deteriorated too much. we have been writing some research that if this deal does not get done that the stock trades up because we think the valuation of time warner is actually increased. we think it is still a very attractive asset out there and that it would either trade higher on its own because it has some of the best fundamentals in the business today, and maybe it would be a likely candidate for takeover over since they have already indicated their willingness to sell. julia: in response to all those questions, sitting pretty i think is the answer. job ofhat a tremendous shrinking down -- he has done a tremendous job of shrinking down the nonessential assets.

microsoft actually spend 700 million -- several hundred million dollars on content for the xbox and did not realize that xbox users want to be gamers. they don't want to watch movies or sports or anything else. they bought the xbox to play games, and that was a disaster. bloomberg's antitrust senior litigation expert joins us now. about this decision and the fascinating environment in which the judge is giving his decision. >> it really is fascinating and so different particularly for an antitrust matter. i am out here talking to you because i could not get into the courtroom. i have had a line stand are in place since last night, but unfortunately, the courtroom was held long before i even got near it, so i am with you out here waiting for the verdict which

will come out any time after the judge decides to open the doors and let everybody in the hearing out. they were told once they went in, they were not coming out until it is all finished, and then the window was blacked out so that nobody could look in and we are all just standing here anxiously waiting for this verdict. joe: i love the detail that you gave that you had someone, a professional standing in live for you. gives some sense of what counts as exciting and washington, d.c., that people stand in line for. aside from the ramifications for investors, from the perspective whenlitigation analyst, you read through the long decision that apparently the judge is reading right now, what are you going to be interested in? >> i am so sorry, just as you work asking that, a siren went by and i did not catch it. could you repeat that? joe: after the decision comes out and you read through the entire thing i'm a what will you

be most interested in, from a matter of law perspective? >> i will be most interested in favoredowly or broadly this decision is. it could be so narrow that it really does not have a lot of application for other deals in the media space or even other deals that are vertical rather than horizontal like this one is. on the other hand, if it is more broadly written and has a this couldlication, -- julia: i'm just going to interrupt you because we are getting a result. judge leon rejects the justice department's request to block the merger, so at&t winning the other trust ruling. the question is -- are there any conditions attached? nothing coming through so far. scarlet: i'm looking at the share price reaction. at&t actually shot up in after-hours trading. i can bring it up on my bloomberg, which really

highlights the move. it had moved higher as we were awaiting this verdict, and then plunged, gave up its earlier gains, and is now lower. it's also full of time warner as well. joe: time warner the winner, rallying 3.5% after briefly breaking 100. julia: so exactly what you went is a paid. you said no-brainer as this is concerned. indeed thereis if are any conditions attached to this win. scarlet: do you think if there are attachments they will abide by them happily, or will they push back at the joe: no conditions. at&t judge imposes no conditions, so that question becomes instantly academic. >> i am not surprised, but i

think we have yet to hear from the white house. >> this is a real black eye for the department of justice. a lot of legal scholars from day one said this never should have been filed, and that if they want to go after vertical deals, there are other deals to go after, so that's why the at&t folks were so aggressive in pursuing this case. julia: we mean no use of arbitration ultimately if indeed there is some dispute echo >> no conditions. scarlet: jennifer reid, jump in here. we talked about how at&t has been cleared by the judge to buy time warner, create this media giant. now that the government has lost its case, what kind of legal recourse does it have, if any? if there are no legal recourse is, is there any way they can obstruct this if they wanted to go down that path? >> the department of justice does have continued legal

resource. if they choose, they can appeal this ruling, and i suspect a probably will. the issue is because the judge decided to us companies are free to close the deal. if the department of justice wants the party to be kept from closing the deal, they will have to seek and when an emergency injunction keeping them apart for a few more months, and if the past to times the department of justice has sought the cut of relief, they have lost. scarlet: the judge has said he would deny a stay if requested by the department of justice. to add to that, no conditions on this takeover of time warner by at&t. julia: explore that a second. we have the ftc as well, and they share antitrust jurisdiction. you just mentioned the last two. go back to 2004 and tell us how many of these kind of emergency injunctions have actually been won. know you have gone back to

2004. even if they try to use this .mergency measure >> the justice department has been backed into a total corner. they have very little to do, and an appeal is a waste of time. julia: is an appeal a waste of time? jennifer: first, it will depend on the opinion, but fwhat i heard from headlines, it sounds to me like an appeal may be a waste of time. to be very aggressive abouting trying to close this deal right now. it looks like everything kind of broke their way here. they probably feel like they have some momentum, so unless the white house wants to weigh in, i think if i'm at&t, i will as aggressively as i can to close this transaction. a note here, fox

shares surging after-hours. comcast shares down quite a bit. they took a dramatic leg lower. let's check in on disney, too, because all these other companies are waiting in the wings, potentially making it did . disney shares off by 1.6% in after-hours trading. you can see the knee-jerk reaction in other companies that are waiting as well. julia: at&t and time warner can now close this deal within six days. >> i think they will, and i feel very will progressive about that, and if there are any issues down the road, they will not wait is my sense. i think we will see comcast being very aggressive about their pursuit of 20th century -- 21st entry fox -- 21st century fox. scarlet: is at&t going to hold off on raising prices for consumers for the foreseeable future? >> cable prices? scarlet: you are right because

there's a whole bunch of different packages, but given that their argument was this will not hurt consumers -- >> well, no, but the leverage they have now with time war is all of the marginal channels that time warner tries to put onto cable, some of them, the cable operators would like to dispose of or not pay and time warner is going to say if you want cnn, hbo, if you want this, you will have to pay for all our networks. scarlet: does this accelerate the whole a la cart movement? >> i think so. that sort of market is going anyway. we are seeing the cord cutting is real. we are seeing obviously the success of netflix, so that's s of the worldney' of trying to figure out how they play in that market.

media company is a trying to figure out how to have more .cale, more content >> we say comcast diving. that say about investor anxiety about these deals that it's getting the instant thumbs down at the ? ocess -- the prospect >> it really shows how uninformed the general investors are because they did not bet one way or the other in a big way on any of these deals. it say investors do not like the strategy the management of these companies are pursuing, or does it say there's really no alternative, but it is risky? >> i think you are right with the latter perspective because it does not make any difference right now. so muchy, there's movement away from traditional legacy media to the digital world that nobody is quite sure

how it will all shake out. thea: we were just showing cbs. prices with aetna and positive reaction we can see. >> these are more vertical commendations in the health care field. there's one media lawsuit, though, that everybody should pay attention to, and that's les againstational amusement. dual trying to decimate class shareholdings in public companies, and that is now going a be a six-month trial in delaware court. he has a pretty strong argument that midst ofct interest, national amusement, and have 80% of the votes 17% of the stock, and he is saying they should only have 17% of the votes because that is all

the stock they own. that is going to influence hug numbers of public companies, facebook,ith google, amazon, the new york times, as well as cbs and viacom. julia: that would set an incredible president. >> it will. people think that is a law. it's not. it was something created in the 1980's by "the new york times." the sulzberger's did not want to give up control. julia: fascinating. another let's bring in er who has also been watching every step of this legal ordeal. talk a little bit here about what this means in terms of the deals in the health care space. obviously the reporter mentioned as well, but do we just assume cigna and cbs are not going to get any pushback? would the judge saying he deny a stay.

just want to mention that. >> ordeal is a nice way of putting it. we have followed this from the beginning. howalked endlessly about badly this is gone. what does it mean for other deals? if you are interested in doing a big deal already in the public domain, the department of justice -- it's hard to see how they go after another company with the steal. had they won, i think people would be very spooked. you would have a president in place which would worry people about trying these vertical mergers. when at&t and time warner proposed this deal 18 months ago, there was no precedent. there was nothing in this space that wicate that they would lose, that they would either -- even be a case against them. ,aving seen them go through having seen the justice department lose in this particular trial, if you are putting together did of companies that do not have

direct competition, you would feel pretty good about it right now. julia: i'm seeing other comments crossing the wire, comments from the department of justice as is the department of justice in paris as a result of this decision and the fact that the judge has said ify try and have a stay at this point, he will refuse it? >> the department of justice took a risk when they brought this lawsuit and they knew that they took a risk when they but this is something that the new head of the antitrust division felt very strongly about, and he wanted to take that risk. it is not good for him. it is a first loss in a big case and it is something that will shape antitrust laws going forward, so i think there probably is some embarrassment on the side of the department of justice, but they knew this was a risk they had taken when they brought this suit. scarlet: was the department of justice arguing against vertical deals in general, or this

particular deal in this particular space and these particular companies? >> it is almost impossible to separate because had they won this, it would have had ramifications for vertical deals in general. i think their argument was against this deal specifically. trump said on the campaign trail he would block this deal. he said under his administration, this will not go through. it was well telegraphed that he did not like it and so his appointment at the doj was not going to like it. had they won this case, you would be hard pushed to find a company who would want to put together a vertical deal. joe: trumpbly do not have very strong views about the merits of vertical integration. >> i think it was a cnn play. , no vertical deal has been stopped by the justice apartment. >> or even attempted to stop. >> you are right. the director has to

worry about what his next job will be because the white house will not be happy with this decision. antitrust chief for the doj isinted with the decisi>> you think he could be ? >> maybe he could be the next attorney general. scarlet: anything is possible. julia: exactly. what a world. you talk to bankers all the time. what is their five around this? >> the interesting thing is the arguments all suggested that there was not just us to trial, it went badly. ultimately, it always came down to one person, judge leon, and you saw that reflected in the stock. there were still seven dollars to be made in this trade. obviously, that has evaporated now. people did not know how it was going to go. bankers having seen this, having

seen the justice bond not just lose but lose comprehensively. they will feel very bold about this. i think there will be a state of deals that have been waiting in the wings that will come through and keep the m&a team extremely busy in the weeks and months to come. scarlet: give us a scorecard on deals overall. we have seen a huge increase in m&a announcements so far this year from last year. i think it is up -- what? 55%? >> m&a has been up anyway and if you look at situations with comcast trying to disrupt this disney/fox deal, the expectation is that if the decision with the way it has gone, comcast will jump in quickly, potentially even as soon as tomorrow and make that play for fox. >> but the conditions overall were also write for dealmaking. the economic cycle doing very well. factor was seen as a

potentially putting a freeze on things because they wanted that clarity. now you have that clarity. you will see an acceleration. julia: i think greg has joined us in the d.c. purer. not a prayer as far as justice department's hopes in this situation, and he was exactly right. >> this is a big blow to the justice department. consistent with what the judge had said during the course of the trial, some in some way, not a huge the prize, but the justice departmenputting a lot on the line by challenging this deal, and the judge, based on what he said, was rather dismissive of the case being put forward. what happened to theorrust chi >> he is going to have a much harder time going forward, particularly challenging vertical deals like this, where you don't have two direct competitors.

that was what was sort of groundbreaking about the lawsuit, the they were trying to challenge a deal that did not allow two direct competitors. that is something the justice department really does, and it did not work, so it will be especially hard to try to do that again going forward. joe: just to be clear, prior to this, there was not a particularly aggressive stance in the justice department in the antitrust division against vertical mergers, so it's not like this is some long-standing pursuit or policy that has now been set back. as i'm is very true, but sure you have been discussing, there are a number of vertical deals in the pipeline that they would have the potential to challenge or at least seek some concessions from, seek some changes to reduce what they would see as the harm to competition. thosehis decision here, efforts look like they will involve some uphill sledding.

julia: final thought -- lay out the path forward now. >> there's no evidence it's ever going to surface, but you have to think that politics played a little bit of a role in the 's decision.rtment >> just to follow on with that, the fascinating thing is what did doj see that made them go after this? nothing we have seen in the trial or subsequently gives us an indication there was merit to this case, so what was it they found? there was always going to be this smoking gun, and it has never been revealed. >> the president said that he was going to stop cnn. >> and lo and behold, his appointee comes out and blows the deal. done better? have >> of think it's hard to say they could have done worse. >> i agree. they could not have done worse.

>> thank you so much. all joining us for this at&t/time warner decision. success ator at&t, all levels, no restraints. share price reaction? has risen and gave back a lot ogames. time warner still holding onto after-hours games. julia: comcast, when do they come in with a bid for fox, and what happened to disney? so -- such excitement in the sector. that is bit for us. this is bloomberg. ♪

emily: i am emily chang in san francisco and this is "bloomberg technology." donald trump's meeting with kim jong-un produced a handshake and a promise to keep talking but was light on details. what does the summit signal for what's to come? plus, is silicon valley still the beating heart of tech investing? we will start to a startup ceo about the next chapter after a high-profile me too departure and their focus on international