mark: welcome, this is first word news. president biden and vice president harris celebrated the safer communities act the white house today.the president told survivors and family members of recent mass shootings that the first major bipartisan gun legislation passed through congress and nearly 30 years will save lives. he also renewed his call for congress to ban assault weapons. >> i'm determined to ban these weapons that hold 30 rounds and let mass shooters fire hundreds of bullets in a matter of minutes. i'm not going to stop until we do it. mark: the president said he wants to expand background checks and an act safe storage

laws that make an owners liable for not securing their firearms. a heat wave in texas today is expected to test the state's electric grid. residents and businesses are being asked to conserve electricity. the texas power rid means under scrutiny more than a year after the system collapsed during a winter storm. the french finance minister is warning that your eyes prepare for russian gas deliveries to be shut off entirely in retaliation for sanctions. he called it the most likely scenario. he said the french government is trying its best to avoid energy shortages. u.s. energy secretary we use talks with nations including india and japan to push for support for new effort aimed at capping prices for russian oil. she set to meet with their counterparts from the nations which include australia and the

talks will touch a clean energy technologies. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton, this is bloomberg. ♪ jon: i am jon erlichman. taylor: as you can see, we had a three year bond auction and it was solid. we were worried about the front

and of the yield curve and there is a big focus on some of the cpi data we will get midweek and we are looking at the 10 year yield as well. what is interesting in a risk off day like today, you are saying this flight to quality come back. jon: very true and you see that looking at the various stocks that make up this market whether it's energy names under pressure with oil names under pressure, travel related stocks and airlines are under pressure. you got the uncertainty on the covid front in china which is impacting the las vegas sands and technology is under pressure. staying with tech, twitter shares right now are down more than eight percent and it looks like this story will now play its way out in the courts. the news over the weekend with elon musk walking away from this

deal and the twitter team ready for legal action to stop we want to get a perspective on the road ahead. thanks very much for being with us. everybody is trying to figure out the road ahead and you have mapped out the different options of where things go from here. >> the course leads directly to twitter filing a lawsuit if not today or tomorrow, sometime this week. you are likely to see a legal battle play out in that court over the rest of this year. this is a court that decides cases pretty quickly. some have suggested this will lead to litigation that last forever but i don't think that case. you can see this play out on a already fast timeline. one of twitter's first request will be to ask to expedite this

case. you can see it decision on this case by november or december. taylor: they have been writing about the binary options that maybe elon musk or twitter is facing. there could be a billion-dollar breakup fee. what are the options you see here? >> as a legal matter, the parties have decided to cap their damages at $1 billion. the real driver of the leverage and the key to this fight is that elon musk agreed that twitter has the right to get specific performance and force the company -- and force him to buy the company at $54.20 per share. what that really does is structure the negotiations of settlement. when we do that math here, it looks like shareholders could be

affected by $15 billion. we think twitter has a 60% chance of winning. then you wind up in a category of 5-8 billion dollars but i think elon musk would have to pay if he wants to walk away. jon: let me ask this slightly differently from the vantage point of what elon musk has put on the table. there is so much focus on spam. how strong do you think his case is? >> he made his case on friday and he set out three points to suggest that twitter has breached its side of the agreement. i am not persuaded that any of those reasons will be compelling to a court. first he said that twitter is not complied on sharing information with him about these

bots. while twitter does have a duty under the contract to do that, is not unlimited. they get to make reasonable judgment about whether that will harm it competitively and what -- and whether it would violate the law and even if twitter breached that agreement, only a material breach would let elon musk walk away so i'm not sure the judge would buy that and that's probably his strongest argument. his argument that twitter has been ripped desmet -- misrepresenting his bots will not prevail. it's hard under delaware president to prove and he criticizes twitter for hiring and firing the last couple of months. the contract let's twitter act reasonably in the ordinary course. i'm skeptical whether a judge can use that to allow him to walk away. taylor: we appreciate it. thanks for breaking it down. it's an ongoing saga.

let's look at the overall markets with the doubt going positive the first time today. it feels like volatility is indeed the talk of the day. what do you make of these volatile markets coming off of a decent rally last week? >> i think volatility is about to start again. vix levels are high but they have still underperformed in markets. we look at where rates have developed in that ratio has been at an historic high. as we going to earnings season we start to get more information , there's more to go on the upside. jon: we will be busy getting our

hands on a series of banks reporting earnings this week. in terms of where you could see more of the earnings related volatility, what would you say? >> it's interesting that the sector has not been stratified. in terms of financials, it's leaning fairly bullish. you are saying concern and home builders and concerns and material and concerns and a lot of the bond proxies. not so much in financials. even though we've had these moves, we are heading into earnings season. jon: taylor: taylor: what if the

vix cannot touch 40? what does that tell you? >> we've been spending a lot of stories on why that is the case. it has to give us the un-for -- underperformance. part of it is that many people have de-risked and it will beast -- and it will be picking up similar to last earnings season. it could hit that 30 level after and i think you will start to see that on the beneath the surface levels and beeping -- if you think back to what walmart did. they have ups -- substantial implied moves. it does not weave into the overall index levels. jon: i am glad you brought up

netflix. i guess it was april, they came out with quarter is -- quarterly results in the stock has lost about a third of his value and continued to trend lower. i think we are about a week away from netflix earnings, if there is a different sentiment this time around? >> there actually is. when you look at the options skew on netflix, compared to last quarter, the skew is low so essentially there is little for downside protection which was the flipside last quarter. the stock is also down substantially so often times, the landscape happens because there is less downside to hedge. right now, options are implying a 13% move. i think it will be july 20 and the average historical move down is 12.5%.

i think that is probably a little too low. we saw a 35% move on 11% implied and the stock traded down after that step even with elevated in implied volatility levels, it's good for -- investors to own those implied moves. jon: a lot to digest as we head into earnings season. coming up, you're up on edge, a key pipeline shut down for annual maintenance but could russia make the temporary home permanent next. this is bloomberg. ♪

taylor: this is bloomberg markets. nord stream one, the pipeline the carries natural gas from russia to germany is shut down for annual maintenance today. it actually may not come back online. are those fears justified? will that take away all of russia's bargaining power? >> i think there is a fear [indiscernible] russia might just use this [indiscernible] they were already running the pipeline at only 40% capacity.

it has calmed down because [indiscernible] i think there's a little more calm in the markets. taylor: jon: it's been an unbelievably huge story in canada. the canadian government caught in the middle to ensure that the pipeline parts get back to your because of the great concern over gas supply. ukraine was so vocally against those actions and it ignored its owns sanctions. it feels like we're entering new territory when it comes to measuring the sanctions in place versus the supply issues, particularly on the energy front. >> the argument the germans made

referring to russia [indiscernible] it was preventing germany and the rest of europe tilting up stores. -- building up stores. i think that's why they agreed to it in canada. [indiscernible] jon: thank you very much, lots to watch for as we continue to see the supply concern in germany. europe's common currency is edging toward parity with the u.s. dollar with energy concerns and risks of recession are looming. let's look at the fx market.

it's been remarkable to watch what's happening with the euro against the euro was dollar. there are concerns of being on the front lines of russia's invasion of you rain but the ecb behind other central banks and catching up an interest rate hikes. >> and there are several elements to this story as we have highlighted. there is that unique european position being exposed to various russia risks and their proximity to russia and the conflict is still going on. there are risks related to russian supply of gas in europe. that will be waiting on the currency and then there is the ecb story of how the ecb policy compares to that of the fed and as we hear from policymakers from each side of the pond, you can see the stark difference in the approach of the ecb which is

very much a slow approach much as the fed where we have several policymakers emphasizing the need for those outside rate hikes and multiple outside rate hikes. jon: it's not just dollar strength against the euro weakness but dollar strength against the south african rand weakness going through the 17 level. how much of this story is about the fed and recessionary fears? >> very much a big part of this story. you are pointing out that it is this runaway story reverberating across a number of different asset classes. emerging markets are very much at the forefront of an asset class that gets hurt by a stronger dollar. what is interesting and unique at this juncture is that

usually, the emerging markets would have a capacity to out hike the fed when it comes to keeping pace with policy tightening because they have more room in terms of interest rates. then of course inflation is perennially a problem in emerging markets but with the fed upping the ante, even emerging markets usually have more room to go and are suddenly finding get hard and we see that when it comes to the south african rand. jon: before the break, we were talking about what's happening in the options market ahead of earnings season. in terms of the bets being made in the market now, what starts to happen when you've got a conversation around parity and how many potential bets are based on that line holding? >> right now, it's a one-way bet. the flipside of that is dollar

gain. it's hard to stand in the way of that. just bring the conversation back to the implications for equity markets and companies specifically. dollar strength is an issue that was highlighted by a lot of blue-chip companies last earnings season, microsoft among them. we are coming up next earnings season and will it be interesting to see how many highlight dollar strength as a potential issue. if we start seeing that real company pain during earnings season, that would be 12 watch. jon: taylor: we will have conversations if they are happy or something more fundamental.

coming up, turning back to the currencies, the result of a new survey from bloomberg seeing bitcoin facing another 50% drop. this is bloomberg. ♪

jon: this is bloomberg markets. time for what it's worth and today come up wall street expectation on where bitcoin goes from here. our survey finds that where you see bit coin going, the majority sees 10,000 as the more likely option for the crypto challenges

are front and center as we've seen the risk of sentiment. taylor: maybe we just love round numbers. the next slide down would be 10. that would be a long ways to go. a lot of calls on bitcoin which is interesting. jon: you've got a moment in the history of crypto where you have the retail and professional investors who are surveyed and at the end of the day, the survey also asked them how would you characterize your feelings? the large majority said open-minded but skeptical. taylor: it sounds like a relationship. we try not to get too far off track. we are down one half of 1% with

technology leaving the losses. the dow is trying to poke into the positive but yields are lower. this is bloomberg. ♪ this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes.

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mark: here is the first word. the vice president and vice president celebrated today at the white house, the president telling survivors and family members of recep mass shootings at the first major bipartisan gun legislation to pass through congress and nearly 30 years will make a difference. >>, because of your work, your courage, lives will be saved today and tomorrow because of this. mark: the president says more needs to be done and he renewed his call for congress to ban assault weapons. senate democrats hope to pass a bill better plan before recess begins on august 8.