we caught up with morgan stanley's ceo james gorman.started by asking him about the strength of the world's largest economy. james: everybody is adopting a wait and see in that is part of the positive market and part of what explains the lack of activity. the administration came out with a very bold agenda. obamacare,replace introduce major tax cuts, redo naftanegotiations across and china and the european union, reassess nato in defense spending, reassess climate change and the imprecations for the u.s., encourage companies to bring jobs back to the u.s. rather than off shoring, this is a world of legislative and regulatory change potentially. four aprisingly them a new administration, it has been tough sledding. they have had to get their own house in order and i think the disappointment of the replacement to obamacare, the fact that there was more work done on the repeal than on the replace has set back the agenda a little bit. for the broader economy, we hope the administration can polson of this stuff together because we need progr

mark: we spoke exquisitely with the morgan stanley ceo, james gorman. administration came out with a very bold agenda. repeal and replace obamacare and introduce major tax cuts and redo trade negotiations across nafta and china and the european union. reassess nato, reassess climate , encourage companies to bring jobs back to the u.s. is a world of legislative and regulatory change, potentially. not surprisingly for a new administration come it's been tough. they've had to get their own house in order, so to speak. the disappointment of the replacement to obamacare, the fact that there was more on the repealed in the replace has setback the agenda a bit. for the broader economy, we hope demonstration can pull themselves together. we need progress on some of these legislative programs. >> are you concerned about the u.s. economy? james: no, i'm very encouraged by the u.s. economy. u.s. economy is doing just fine. employmentlmost full , 4.6% unemployment. there's very little inflation, .ut we are seeing early signs we have done to rate increases and expec

ceo james gorman joins us from the morgan stanley multicultural leaders conference melissa? ch, kelly and james. i know you're busy on a day like today with the conference going on. >> great to be here, melissa, thank you. >> let's talk about the markets. we had seen a sell-off we closed off the lows of the session. but what has happened in the week or so as you know is global bonds around the world have been down for three straight days yields have been higher. do you think that that is the cause of the market jitters that we're seeing right now >> there's obviously some connection with what's going on in the equities market and bond yields we've had incredibly flat yield curve. i think this is now beginning of the perhaps more normalization it's a small move in the greater context, but it's been a move. >> and it's been a move, pretty startling move in just the past week, when you think about the standards of the bond market to have the u.s. ten-year yield go up by 10 or 11 basis points in a matter of days is a pretty big move you had hawkish commentary coming out from the

plus, more exclusive from james gorman. this is bloomberg. atum will positive direction. >> let's bring you some live pictures. be an been saying it will immense of the damaging process and says the eu must possess the patients punish the u.k.. he says the eu needs to be radically reinvented. the man who made a few pennies sorting the pound a few years ago. the company says 85% of global transactions. everything in good shape? some of current >> absolutely. reallyk we made some solid progress on our strategy. we had a good set of financial results. . the process here -- what can you tell us? >> i can say too much. we have the contract here in the u.k. to provide the british passport. we are proud to work closely and the british government it is an iconic symbol. we will be working with the british government. >> how valuable is that to you? >> it is a large contract. should not overstated. we work with 40 countries around the world producing passports. a close relationship helps us in the market. more credibility. met is not for me to decide.

we focus on comments from our conversation with bally ceo james gorman. w with one my colleagues in asia where gorman joined jpmorgan and bank of america, cautioning second-quarter trading revenue is on pace to drop at least 10%. he said investors are in a wait-and-see mode. about dallas fed president robert kaplan. he said he's sticking to his outlook for two more interest rate rises this year. he even acknowledged that the inflation. against unwinding thet balance sheet in conjunction with its rate policy. x i still believe the fed funds rate be the primary policy tool and letting the balance sheet runoff should be happening basically in the background. that, i'm sensitive that in the early stages of this , there will be a lot of market sensitivity and will have to take that into account and manage the choreography of how we manage the fed funds rate as well as the balance sheet. in simonat's bring french who is still with us. another voice getting us ready to lock in. and 87.5% probability for a rate hike. so where we are in terms of probability for jun

day of the first half, we'll check in on where we stand with a look at winners and losers and james gormaneighs in on the f.a.n.g. sloelff his exclusive comments to cnbc just ahead a baby's skin is never more delicate. ♪ what do hospitals use to wash and protect it? ♪ johnson's® the number 1 choices in hospitals. >>> good morning, is a bounce back coming? dow futures are pointing to a higher open after yesterday's triple digit decline. >>> and nike soaring in the premarket after confirming a deal with amazon full details ahead. >>> can you believe it it's the final trading day of the week, the month, the quarter and the first half of the year what's on tap for the second half we're breaking out your full playbook it's friday june 30, 2017, you're watching "worldwide exchange" on cnbc. ♪ >> this is not new music this has been on the charts forever. welcome back to "worldwide exchange" on cnbc. i'm sara eisen >> i'm mike santoli in for wilfred frost. happy half time. what's your takeaway on half time so far? >> better than expected, but showing signs it might get jumpy. >> futures are indica

organ stanley trading is slumping -- morgan stanley trading is slumping according to james gorman. we will have more of his bloomberg exclusive interview later this hour. glencore ceo ivan glasenberg tells bloomberg what he thinks of president trump's policies toward china and the outlook for chinese commodity consumption. trading day the here in the u.s. this thursday, it seems like a quiet thursday, but the boards don't say that. >> we are seeing a bounce back. we are seeing a bit of an extension of earlier gains, material stocks, health care shares leading the gains that we are seeing today even as we are still seeing volatility remains subdued. health care is doing well today. oftedhealth group in some the insurers higher. the presidents begin at a conference today saying health care is in a perpetual state of change. he says he sees "very strong topline growth across the business in 2017." those shares up 1.5% and cigna and aetna also on the rise trade we had auto sales reports earlier today. automakers are rising, but so is goodyear tire in a good -- big way. up by nearly 6%

it's it true with the fed or james gorman? >> i am more in james gorman's camp.he economy is doing fine. we all know there are problems with q1. if you take a longer view on the economy, you see accelerating growth, a consumer that's in pretty good shape, the prospects for more investment going forward. all the concerns about administration, i would rather see a tax cut next year than this year. one of thehave longest cycles in history. we can expect that cycle will continue. when it begins to wane you might get a tax cut. lining up to be a long-term positive growth experience. companies want to invest. they have the money to invest. larry fink yesterday said ceos should actually look to europe. to be the trigger for money to actually start being put to work? >> i wouldn't look for policy certainty to be the driver. if you live in an environment long enough what you find is that people become used to that environment. policy uncertainty is unimportant. trend growth in the u.s. is probably higher than the fed thinks it is. productivity has probably been restrained

julia: that was our exclusive interview with the morgan stanley ceo james gorman. let's check in on the first word news with mark crumpton. >> the us trillion prime minister joining the u.s. and calling on china to rein in -- the australian prime minister joined the u.s. and calling on china to rein in north korea. they say they must be curtailed. >> china has the greatest leverage of north korea and with the greatest leverage comes the greatest responsibility. brushedrime minister aside questions about the reliability of president trump as an ally, saying australia's relationship with the u.s. is in the best of health. the israeli prime minister says the u.s. decision not to move its embassy to jerusalem as for the prospects for peace with the palestinians. in a statement, his office said that it believes all embassies should be in what it calls israel's eternal capital. the statement says that despite his appointment, israel appreciates the president friendship and commitment to moving the embassy to moving the -- to jerusalem. soldiers wounded after a mortar att

james gorman sizes of the trading environment. >> there is enormous uncertainty which would breed volatilityand it is not. speaking their minds about u.s. policies. >> it may be important for the u.s. but not for russia. >> this is bloomberg. ♪ do think the hedge fund industry is in a permanent decline? >> no, i don't. it is tougher for the smaller guys. the business has become much more institutionalized. i think the fee structure may have to change a bit, but there will always be the need for high-quality investors. >> when you say fee structures might have to change, what do you mean? and 24 a fund that is matching what is happening in the s&p -- be chargingy funds two and 20? >> there are some out signing the rest of the group. there has to be some flexibility going forward in that fee structure, but it is very tough for investors to look at it and 20, butill pay two and you are barely beating the s&p. is that worth two and 20? lip falconewas phil in a rare and exclusive interview with betty liu. our colleague erik schatzker traveled to st. petersburg, where he set down with several of r

. >>> coming up, we'll be speaking to ceo james gorman, his first interview since the stress test.'s a lot to talk to him about what is going on in the market and the economy and how much banking regulations should be rolled back. >> that sounds like all of the things that we talked about at the beginning of the show, melissa, and there are issues raised in the wake of the stress test kevin o'leary was negative on how much regulation is on the banks and whether or not it can provide the wd-40 to the economy that's so necessary. >> there are certain ratios that treasury officials, fed officials are already talking about sort of softening which could unleash trillions of dollars into the economy that could help banks and their earnings so that is all of what we'll talk to james gorman about later on. >> also, we'll review wd-40 shares. >> it's not that the banks are suffering. >> there's so much money, they don't know what to do with it. >> they are making plenty of money. >>> let's get back to dominic chu. >> check out what is happening with the s&p because we just turned negative f

james gorman sizes of the trading environment. >> there is enormous uncertainty which would breed volatilityd it is not. >> and speaking their minds about u.s. policies. it may be important for the u.s. but not for russia. >> this is bloomberg. ♪ i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. do you think the hedge fund

and as financial stocks limp through a nervous week, morgan stanley's james gorman sizes up the trading. >> there is enormous uncertainty which would breed volatility, and it is not. alix: and straight ahead, -- speaking their minds about u.s. policies. >> it may be important for the u.s., but not for russia. alix: this is bloomberg. ♪ these days families want to be connected 24/7. that's why at comcast, we're always working to make our services more reliable. with technology that can update itself. and advanced fiber network infrastructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. ♪ >> do you think the hedge fund industry is in a permanent decline? >> no, i don't. i think there is a tremendous amount of capital out there. i think it is tougher for the smaller guys. the business has become much more institutionalized. i think the fee structure may have to change a bit, but there is always going to be the need for high-quality investors.

and as financial stocks limp through a nervous week, morgan stanley's james gorman sizes up the tradingment. >> there is enormous uncertainty which would breed volatility, and it is not. alix: and straight ahead, interviews -- speaking their minds about u.s. policies. >> it may be important for the u.s., but not for russia. alix: this is bloomberg. ♪ >> do you think the hedge fund industry is in a permanent decline? >> no, i don't. i think there is a tremendous amount of capital out there. i think it is tougher for the smaller guys. the business has become much more institutionalized. i think the fee structure may have to change a bit, but there is always going to be the need for high-quality investors. there is no question about it. >> when you say fee structures might have to change, what do you mean? >> do you pay two and 20 four a fund that is matching what is happening in the s&p -- >> should any funds be charging two and 20? >> there are always guys that will outshine the rest of the group. there has to be some flexibility going forward in that fee structure, but it is very tough

and as financial stocks limp through a nervous week, morgan stanley's james gorman sizes up the trading>> there is enormous uncertainty which would breed volatility, and it is not. alix: and straight ahead, interviews -- speaking their minds about u.s. policies. >> it may be important for the u.s., but not for russia. alix: this is bloomberg. ♪ ♪ >> do you think the hedge fund industry it is in permanent decline? >> no i don't. i think the business has become much more institutionalized. i think the fee structure may have to change a bit. but there will always be a need for high-quality investors. >> what do you mean? >> well, when you pay for a fun thathappens what -- a fund matches the as and p. ofe will outshine the rest the group. there has to be some flexibility going forward but it is very tough for investors to look at it and say they are going to pay two and 20 when you are barely beating the s and p. hedge managerrmer philip falcone back in the game following a five years. st. petersburg economic forum this week. sitting down with several of russia's political figures. here are

organ stanley trading is slumping -- morgan stanley trading is slumping according to james gorman.re of his bloomberg exclusive interview later this hour. glencore ceo ivan glasenberg tells bloomberg what he thinks of president trump's policies toward china and the outlook for chinese commodity consumption. trading day the here in the u.s. this thursday, it seems like a quiet thursday, but the boards don't say that. >> we are seeing a bounce back.

be sure to stick around for "closing bell" later on today when james gorman will join us teiehe cnbc exclusive inrvw. more "squawk alley" right after this >>> 20th accept try fox. >> thanks, carl. we hit this around 9:30. real briefly i think this requires a little bit more explanation this morning because on the face of it it may not have looked as a positive for 21st century fox to have a deal to acquire sky deal, but it does appear to be helping it move closer towards that goal it could still take a while. let's tell you what the news was. the secretary of state for cultural sport said she is, quote, minded to refer the fox offer for sky to the competition and markets authority. now if that occurs, that could require another long review for the deal, but most importantly perhaps, the secretary of state also said she considers there are no concerns about broadcasting standards which would justify a reference to the cma. it's on other areas that she might want to reference it that means that fit and proper tests that had been a kerp for sometime for fox as to whether they would pass

stress tests are behind them >> i got a chance to sit down with chairman and ceo of morgan stanley, james gorman, yesterday. and we talked about the changing environment for banks. here's what he said. >> the banks are sufficiently capitalized. and with that came, in many cases, significant increases in dividends and buybacks so, you know, very healthy dynamic. you know, do the banks represent good value we increased that dividend again, a number of banks did so the yield now on these stocks is around 2% the yield alone, and then the trading, in many cases, is still a discount to book >> and here's an interesting stat, to sort of frame this. they're still trading at a discount to book the move over the past 12 months, so morgan stanley, for instance, is outperforming tesla over the past 12 months. that's how stunning -- that's how discounted the banks had become at one point in time. would you stick with the bank trade going to the second half >> yeah, i would and i'm long jpmorgan and schwab, which are two names i feel like i talk about daily they continue to work, and schwab in particular look

lots of questions around that company and the competition in that space >>> morgan stanley ceo james gormansell-off, and the bank stocks in an exclusive interview on cnbc he said thursday's big slide is no reason to panic >> if we have a healthy correction here that wouldn't be all bad, in fact, watching cnbc today a number of commentators talked about we do provide correction and you've seen what's going on in the so-called fang stocks and they're off again today and there's a rotation these are healthy adjustments to a market markets shouldn't be moving in a straight line. so no, am i concerned about this no am i surprised not at all >> pretty short-lived correction markets indicated higher this morning. gorman also talked about the bank's stress test saying that the banks are extremely well capitalized. he said everyone should declare a little victory here. more on yesterday's move and what to expect in the second half of 2017 coming in just a moment >>> meantime, james bullard is retreating further from his farmerly hawkish stance on interest rates speaking in london bullard said that w

speaking of the big banks don't miss an exclusive interview with morgan stanley ceo james gorman at 4b director on the senate gop health care bill and more dow is down pnt 23ois. ray's always been different. last year, he said he was going to dig a hole to china. at&t is working with farmers to improve irrigation techniques. remote moisture sensors use a reliable network to tell them when and where to water. so that farmers like ray can compete in big ways. china. oh ... he got there. that's the power of and. >> >>> welcome back we want to get to our john fort who is from the aspen festival. >> peter orszag talked about health care and how really we're not solving the core problem with the election that is trying to make its way through congress take a listen. >> the big shame of the fact that this is taking even longer in addition to the problems with the bill itself is that whole agenda has been put on the back burner and it is unlikely that we're going to see any significant movement towards a, you know, a morrow bust value based payment system while policymakers are consumed with

some of these proposals are very much the types of things goldman sachs would be in favor of. , james gormanhich lists which included things like making the stress test every two years instead of one year that is in this proposal. that are several things change on the liquidity that the have, therequired to supplementary leverage, which really only applies to the top banks. those things have changed so there is, in here, quite a lot for the biggest banks. and less important for the small banks. although they will be helped. david: bloomberg's christine, thanks for being here. wilson of morgan stanley will be here next. next, an interview with rand paul at head of attorney general jeff sessions interview on the capital. live from new york and washington, this is bloomberg. ♪ jonathan: eight minutes away from the open in new york city, let's get you up to speed on market action. futures are firmer, up 2/10 of 1% on the dow, positive one quarter of 1% on the s&p 500. in the cross asset situation, yields are higher by a single point. the two-day meeting commences today, the expectation is we wil

melissa lee will sit down for an exclusive interview with morgan stanley chairman and ceo james gormanany's multicultural conference on the "closing bell" today, 4:00 p.m. eastern time >>> okay, coming up when we return, acpa's energy secretary jack gerard in washington today. take a look at oil at this hour. we'll show you some wti crude right now at 45.21 as we head to a break, take a look at u.s. equities future we are in the green across the board. back in a moment >>> what do you think she's reading? reading down on times square on a lovely morning good morning welcome back to "squawk box" here on cnbc we're live at "the new york times" market site the merger between walgreens and riteaid has been called off. now instead walgreens is going to buy about 2200 riteaid stores the cancellation of that deal negates the sale of rite aid stores to another chain, fred's. the stock option is much more conservative than the knee-jerk reaction we first saw. fred's is down by 23% this morning. that's because fred's was set up to buy 865 stores. ed after this, that would have been had to be div