Transcripts For BLOOMBERG Market Makers 20240622

From one year ago. Investors are waiting to hear what janet yellen has to say about Interest Rates and other things. A couple hours from now, the fed share goes to the capital for the first two day of testimony on Monetary Policy. It will probably last week, they said it would probably best to raise interest but they may not raise until early next year. You can watch it live starting at 10 00 eastern time on Bloomberg Television. The Prime Minister of greece is counting on opposition parties to come to his rescue. The Greek Parliament is in session and set to vote much later today on a deal that would be to another bailout. Matt Alexis Tsipras faces a revolt amongst members of his own party. Obviously, he does not like tax hikes from his television address yesterday that they have already committed to the reforms. Tsipras said greece was left with only two options. We were made to go against the most powerful people in europe and we had two things on the table. First, specific request or go bankrupt. [indiscernible] matt blackmail and supplication. A warning from the imf that greece needs more debt relief dan has been considered. The creditors may have to take deep haircuts on the value of greek debt and we will hear from hans nichols who has done this for a long time. The fight over the Iranian Nuclear deal hasnt shifted from vienna to capitol hill. The agreement would prevent iran from building a Nuclear Weapon but hours after the announcement, House Speaker john boehner called the deal unacceptable and president obamas fellow democrats want to take a closer look as well. I think preventing iran from becoming a Nuclear Weapon power is critically important for the safety of that region and for u. S. National security interests, so therefore, i hope that i would like to reserve judgment until ive had a chance to review the agreement. Matt congress has 60 days to review and president obama says if they reject the deal, he will veto. He is holding a News Conference at 1 00 p. M. Eastern time and you can watch it on Bloomberg Television. In baseball, mike trout of the Los Angeles Angels made history at the allstar game. Talk hit the first inning home run to help the American League beat the national league, 63 and selected as m. V. P. Trout is the first layer to win that allstar m. V. P. Award two years in a row, so there is a historic record for you. Erik mike trout is one heck of a baseball player. Matt did you watch the game . Erik neither did i. No. Matt neither did die. Because it is. I dont need to sit through the whole game unless someone is bring them a beer and hot dogs. Its not really worth it. Erik we will begin with the obvious, chinas gdp expanded by 7 in the three month until june. This is according to the National Bureau of statistics. That is an important caveat chinas government figures. I do not want to jump on the bandwagon, but chinas gdp matt there is a bit of a bandwagon when it comes to skepticism around Chinese Government figures. All government figures. Erik more so in china. Seven is an important number. [indiscernible] matt he wants to get about 7 and he got what he wanted. Erik there you have it. Matt lets take a look at markets right now. Number 2 no, greece. Thats number two. The Greek Parliament is debating a bailout of up to 95 billion. We will head out to berlin where hans nichols has reaction from creditors. Some of them hans is saying, they are going to need more money. Hans this has long been the position of the imf. There is it is been clear that there has been exploit in other countries that you will have the overall fire greases that. The latest projection in two years, debt will be 200 of gdp. Just this morning, we have the European Commission jump onto that and the figures are astounding. We have a full screen that explains how crippling greeces debt will be. Germanys response and solution to this is called is basically when you lock the maiden up in the tower and the hair grows down long enough and she can escape or someone can rescue her. That is what germany once you do. They want to have this debt pushed out and have forgiveness loans all the way out and in 30 years extend. That is their solution. I dont know if anyone else is calling it a rapunzel solution maybe you guys can run with it. Erik that is the longterm debt problem greece faces but they have a much more serious shortterm financing. I wont say more serious because that longterm debt problem is going to be there for many, many years but lets talk about the shortterm issues they face. Hans what is 7 billion among friends . That is what basically the conversation is in brussels right now. They have a shortterm of anywhere from seven to 12 and it looks like they will use the European Fund which means all 28 countries, not just the 19 that use the euro and they will try to get some kind of bridge financing to get them through the next 46 weeks because negotiating this 86 billion bureau, excuse me, package will take at least four weeks. They need the bridge and they are not very at. It seems like there is political will in the bridge aspects of they will figure out how to get there. Erik thank you very much. Hans nichols live in berlin. Number three, we returned to china but that is because unit group is preparing a bid for micron, the memory chip maker that could be announced as early as today. Micron is trading up and rose in yesterday at this time and up in premarket trading. We are talking about this potential deal and they dont want to call it a deal because there is no agreement yet but if there were any Technology Company that the United States would allow the chinese to buy, this could be it. Because memory chips matt i dont agree with you. Erik memory chips commodity i technology. Matt i will disagree with you. Erik it is my con, not buying intel. Matt it doesnt really matter so much because it really undervalues the company in terms of Historic Deals for memory chip makers. You dont really see many that are four times, most of them are at this size and you are well over five times, erik including the possibility of coming in at a higher bid. Matt thats true but we are hearing reports about 21 per share. Closer to a 40 company, so they may just be floating to see if you are right that the u. S. Government would go along with this kind of thing. Erik at a certain point, that will have to happen. Number four, fed chair janet yellen heads the capitol hill of the first of two days of testimony on Monetary Policy. Matt this is Humphrey Hawkins it is always fun to watch. A lot of times our own u. S. Politicians seem less informed than we would hope for them to be. Sometimes it is torturous but this is the kind of pain i like to watch. Erik we tend to get better questioning. Matt it is entertaining. Erik we tend to get but a questioning out of the senate. Matt a low bar though, i will say that. Erik god you are a cynic today. Matt i woke up a little cynical. I need a little kick in the butt. Erik julie hyman is in washington and Janet Yellens remarks will be publicly released and we will know from julie what she will say one sheet talks at 10 00. Matt i always find it entertaining to watch. Erik lets move to number five, everybody. We are in the thick of Financial Services earnings. Bank of america reported and so did lack rock. Like take of america more than doubled largely because of Legal Expenses fell and expenses fell to the lowest level since 2008. Like rock balckrock rose. Michael moore back for another tour of duty on Market Makers. Look, bank of america started at a low base and has been for a long time so it is easy to register improvement but doubling projects is worthy. Michael this is kind of showing what you can do when you do not have to pay 4 billion in legal costs. They had a much lower number almost 200 Million Dollars and they sent nro a target of 1 this quarter and they got. 99 , so they are almost at their target and the question is, can they do according to quarter and not just when things fall right . Erik anything you have seen thus far in jpmorgan, wells fargo, and bank of america that tells us or instructs us what to expect from citigroup and possibly Goldman Sachs and maybe morgan and stanley on monday . Michael it is kind of two different stories right now on the commercial banking side urc loan growth, you are seeing had interest margins finally start to turn around after what could be a bottom in the First Quarter. You are even see mortgage production hold up pretty well in a quarter where bank of america erik they are making positive for marks on new mortgages. Michael it is 40 up from a year earlier. On the trading side, a little bit more negative. Down 9 and jpmorgan down 10 yesterday. That would be less good news for city and goldman which are big on fixed income areas. Equities has been up quite strongly so maybe a balance there. Matt is that less good news going to translate into more headcount cut headcount cutting and firing . That seems to be the next step. Michael you saw with take of America Today with the headcount down quite a bit. I think on the Investment Banking site they have taken and wait and see approach to see if they can get a couple the First Quarter had momentum and it seems to tail. A bit in this quarter, but i think they are going to wait a couple more quarters on that front. Erik i quickly want to touch on blackrock only because we have not had too much time to go through the earning statement but one thing jumped out. They declined. They also fourth a quarter trillion assets under management that it does not happen very often. This is only the third time in two years more than two years, i think nine quarters where we have seen blackrock drop. I wonder if it is something about the appetite for etfs which has had been a huge growth or at fort investors are cashing out and stockpiling cash on the sidelines waiting to see what happens in this very unclear market . Michael i think this quarter had the most chatter about the timing of the fed and maybe that has played into investors wanting to step back and say when the fed actually moves. Erik thank you very much. Michael moore covers fostered for bloomberg. Coming up, fixing americas road. Matt speaking of my cynicism, u. S. Infrastructure. Funding is about to run out. Once again and it surely was not high enough to begin with. Stay with us for look at that. Erik you recognize that building . It is the Parliament Building in athens where it is for past 3 00 in the afternoon and debate set to begin any moment. The Prime Minister Alexis Tsipras reached a deal with the european creditors over the weekend and time for our other top stories. Families probably will not spend as much as usual on backtoschool shopping according to the National Retail federation which is predicting a 5. 8 decline in spending. We usually view it as an indicator for Holiday Shopping rushes. Disney has unveiled its new 5. 5 billion themepark in shanghai. We give at the announcement and it will offer a raft adventure rise adventure ride and the largest parade of any resorts. Disney shanghai will open next spring and it is the companys largest Foreign Investment ever. A probe zooms within a thousand miles of the dwarf planet pluto. Bhutto was thought to be cold and icy but there are hands that there is too illogical activity. Nasa staffers cheered us that when the probe finally phoned home 13 hours after the driveby and it has traveled about 3 billion miles since it was launched almost one decade ago. Those are some of your top headlines at the hour. Matt 24 of the bridges in america are structurally deficient or nonfunctional according to a National Transportation Research Group called trip. The funding for bridges and highways will dry up at the end of this month. The former secretary of transportation and the cochair of building americas future Bipartisan Coalition focuses on infrastructure, investment and thank you for joining us. I have read various reports that put our infrastructure needs well over 3 trillion between now and 2020. What are the chances we will get a drop in the bucket at the end of this week to replenish the funds we need just to keep our heads above water . We dont even seem to be there. There are two crisis, one is the funding for transportation is dried up, run out because the Highway Trust Fund is broke and we have no transportation program. We are in the middle of the construction season right smack dab in the middle of july and their is not much happening because there is no transportation bill. Congress needs to step up and provide a little vision, a little leadership, and a lot of funding. That does not seem to be happening. Trust fund goes broke at the end of the month and they will slop some money from general fund over to the trust fund and we are going to limp along. America is one big pothole right now because it because of brutal winters and no money to fix the roads. Matt mr. Secretary, why is that . It seems that there is nothing politicians in washington agree on more than that we need Infrastructure Investment yet we do not get it. August the the federal level does not receive the most spending for this kind of thing but why does that washington do something about this . Ray frankly, it is not a priority. Frankly, it is not for lack of knowing what needs to be done but it is for lack of money and the Highway Trust Fund, which is paid through four the gas tax that we paid the pump when we buy a gallon of gasoline is broken and there is no money there. We need congress to replenish that fund. We need an increase in the gas tax, index it and we are on the way. The gas tax has not been raised for 20 years. You cannot tell me anything that has not been raised for 20 years. A dozen of eggs, a gallon of milk, on and on and on. Everything has been increased but the gas tax has not and that is why america is one big pothole right now. Erik secretary lahood, you are familiar with the colloquial definition of insanity, doing the same thing over and over again and expecting different results. That seems to be happening with infrastructure. People publish figures on how much money needs to be spent to bring infrastructure up to a global standard and yet nothing has been done. Shouldnt we be doing Something Different to get a different result . Ray lahood well, what we should be doing is what has made america a great country. What we should be doing is replenishing the Highway Trust Fund which built the interstate system, built the golden great bridge, built the era cannot built america. We are no we are no longer number one in infrastructure. You go to china, asia, what is happening . They are exploding with them for structure, exploded with new roads, providing people with jobs. Best number this money does not stay in washington, they goes into our friends and neighbors who are building the roads in america and this is a wingwhen winwin. If congress would fund it, a lot of americans would go to work and that would the largest segment of unemployment is in the building trade because there is no money. And no leadership. Matt i think we would all agree on that. You see public construction and the share of gdp falling drastically every year since 2000 nine. Secretary ray lahood, thank you so much. We have to take a break and we will be back in a few. Matt welcome back to Market Makers. Time now for futures. Gold has fallen the last four days and little change this morning as traders seem hesitant to act before testimony from janet yellen. It is down 2. 5 percent this year and trading near a three month low. Joining us now to find out gold next move is joe bloombergs base metal reporter. Very good to see you. Barclays is warning that q3 will be the weakest quarter and theyre saying that it looks formidable as they drop below the 1100 mark. What do you think about that . Joe i think there are a lot of analysts out that have been calling for much lower prices. You hear people talking about as low as 1000 an ounce and right now its like talking to the traders and analysts and different folks in this base that there is very little upside. At the same time, as you said we are about flat this year. It seems at this moment, even though people are worried about when the fed will raise rates, prices have been stuck in a tight range. Ramy lets play through some scenarios, if the fed raises rates by a quarter basis point sometime this year, what is a forecast for gold . Joe it seems like most traders do believe that if we do see a rate of. 25, yeah you will probably see prices pull back a little bit, but i think one of the discussions is how much will gold pull back . Everybody knows this will happen this year or there are betting right now that it will happen this year. The question is when . If the question is glad, you might see a lot of this for the price of gold. If gold continues to fall, lets look elsewhere to put our money. Ramy what i do some of your favorite Investment Vehicles . Joe we, personally, im not sure. But people have been pulling out of old for quite some time. They have been going into stocks and other asset classes, but right now if you were to ask host of these people who are treating the market, they are telling you they are just not seeing a lot of interest binding to gold at this moment. I think a lot of people are waiting to see when the fed raises rates and what will be the result . Ra what ismy happening with gold demand around the world . For example india is a Huge Consumer and also china playing a factor and we have been watching the economy there, what kind of factors are we looking out outside of the u. S. . Joe the u. S. And western europe odyssey, that is not wear a huge amount of demand is coming from but we are still seeing oh report cannot in may that we do still see buying out of china and india. These are places that by physical gold and use that as an Investment Vehicle whereas here a lot of it is paper traded or traded over exchanges. The analysts do still see interest out of china and india and there are some who we have spoken to who think that that is something to focus on the next 2, 3, 4 years to sue in the market goes back to the way it used to be traded before the 2008 financial crisis. Rmamy thank you very much. Matt thank you. Time now for our top stories. In greece, the parliament votes on a deal that will determine whether the country gets a new bailout. Prime minister Alexis Tsipras will have to count on members of the opposition to get through numbers in his own party. Last night the Prime Minister says he agreed to the deal only because he had a knife on my neck. The result of the euro summit and the result of the eurogroup was the result coming from the pressure put on the country and put on the people who have decided in a democratic way. Matt meanwhile, the European Central Bank Governing Council makes a decision tomorrow on how much of emergency aid to give to greek banks. Banc of america says secondquarter profit more than doubled, beating estimates. The of the expenses tell to the lowest levels in 2008 at for the most part, they have put their legal and mortgage troubles behind it. Or so it looks for now. The mortgage portfolio fell by 37 . Delta airlines plans to do something about falling airfares. Erik delta lowcut growth and Seating Capacity to the lowest rate in more than one year and analysts have been urging airlines to rein in capacity so they can strengthen pricing power. I should add that there have been complaints to the government about collusion between the major airlines. A solar powered plane making its way around the world is grounded. It was suspended earlier in hawaii because of the damage caused by overheating batteries and they could not be fixed so it will remain grounded until at least april. They set a world record of 1800 hrs in the air. Matt i want to break it with Producer Price index. Again of 3 10 of 1 in the number of export and energy, the probably the most important to economist. We are looking for a gain of only. 1 of 1 , so on that level, the base number produced a price index and final demand is a gain of. 4 and we were looking for a gain of. 2. Tpi is broken into three tractions erik as our viewers can see at the bottom of the screen, big headlines are breaking right now. Janet yellen is going to begin her semi annual congressional testimony at 10 00 this morning. Julie hyman just exited the fed lock up with the news of yellens prepared remarks. What issue going to say, julie . Julie she is going to talk about what is going on internationally and this is something she did not mention in february. She said all the that recovery in the euro area appears to have gained firmer footing, the situation in greece remains difficult and china continues to grapple challenges posed by high debt property markets and volatile financial conditions. She says Economic Growth overall could also pick up more quickly than observers generally anticipate, providing Additional Support for American Economic activity and she said it might snap back more quickly. As is the goal of yellen she gives both sides, the negatives and positive outlooks of the u. S. Economy. She says in terms of the labor market, we have seen improvement what she says, however, there are indications that there is slack in the labor market and that too many people are not searching for a job but would likely do so if the labor market was stronger. And she says although there are tentative signs that wage growth has picked up, it continues to be relatively subdued. She is talking about not maximum employment as of yet. The fed mandate has to do with jobs and inflation. On the inflation front, she says the recent low readings on total pce inflation, the preferred measure of the fed, it reflects influences that are likely to be transitory. She said if you look at the examples of Energy Prices, we have seen the higher effects of Energy Prices has been relatively transitory and Energy Prices has stabilized. She says my colleagues and i continue to respect that if the trend dissipate, inflation will move gradually back toward our 2 objective over the mediumterm. In terms of timing of Interest Rate increases, she reiterates what we heard in the last statement and also reflected in the last minute, if the economy evolves as we expect Economic Conditions would likely make it appropriate at sometime this year to raise the federal fund rate target, but again, she hedges. Let me emphasize again, these are projections raced on the anticipated cost of the economy and not statements of intent to raise rates at any particular time. Finally in the summary she continues to say we continue to anticipate it will be appropriate to rained to raise the rate when the committee hasnt seen further improvement in the labor market and is reasonably confident that inflation will move back to 2 objective over the medium term. In her remarks, really highlighting both the strength and the challenges that remain for the u. S. Economy and interesting that she does mention the international challenges. Along with the testimony, we get something called the Monetary Policy report. The fed releases that are within that the fed, not just janet yellen but the Federal Reserve talks about liquidity in the fixed income markets which has been a huge topic of discussion among Market Participants and she says the Federal Reserve is watching related developments closely, but at this point, a variety of metrics do not suggest the deterioration in daytoday liquiditys. The fed not yet seen or hearing alarm bells onto liquidity front. Erik julie, you cannot see them but i know youre curious to know how Financial Markets are responding to this testimony. The balanced view on growth seems to be reflected in equity futures and they are pretty much unchanged since the headlines cannot. There has been a slight tick down in the twoyear treasury said the yield rising slightly on the back. The headlights are janet yellen and have prepared testimony, julie hyman has the actual thing and it begins at 10 00 this morning and we will hobble coverage on Bloomberg Television and we will have full coverage on Bloomberg Television. Janet yellen testify before congress. Thank you, julie hyman. Also later today, president obama will hold a News Conference at 1 00 p. M. Eastern time and expected to take questions about that agreement on iranian nukes. As president obama announces his Historic Deal with iran businesses are ready to make a move as a new market is set to open. Matt details ahead. Matt check out five pictures of the big smoke and the millennium bridge in london. The hazy afternoon there in the capital of england. The capital of great britain. Irans landmark look nuclear deal copper reduction in economic sanctions for the country opening up the possibility of this is growth. We go to london because mark martin is there and has been looking into the potential impact from the deal on european companies. Mark, which other Companies Set to benefit . Mark the obvious one, Oil Companies like world dutch shell, bp and these companies have expertise and iran with this really want to use as they are the fourth biggest colder of oil reserves. They have been exploring ways to take advantage of this breakthrough with the energy rich state. The caveat is that they will want to make sure any return to the country are better than contract. Have a look at this, the oil Company Total is down by 10 in the last year and could be among the first crude majors the benefit from the removal of sanctions because it would allow it to resume construction of a 2 billion cubic feet a date liquefying natural gas export facility. Total, bp, and boil dutch shell are the Oil Companies you need to watch because of the nuclear deal matt . Here in the u. S. , there would deal. Matt here in the u. S. , they would probably be some moral deals with investing in iraq, i take it in europe those are fewer and less and . Alix when mark when you look at the luxury industry there are rules that you cannot advertise on the streets of toronto of tehran. What theyre going to do is there going to try to title it from iran to more liberal countries like europe and that should benefit the likes of, get in here. By the way, they have had the good did come up by 30 in the last 12 months. Analysts say the Luxury Companies to watch out for our review tar, armies, and project as well as gucci. On a moral stance, what about Tobacco Companies . A great stat for you matt 52. 6 billion cigarettes are smoked every year in iran. It is the biggest middle east Tobacco Market according to British American tobacco. Bat already excels locally made cigarettes in the company and Bloomberg Intelligence think the Tobacco Companies to watch our bat Phillip Morris Japan Tobacco and imperial tobacco. Little change so this is the type of company which really once to see once to see the opening up of the iranian economy. Do not forget, this is an economy that has been starved of most western products for the last 10 years. It is not just about oil. It is an economy that is worth 317 billion and it is not just about oil. Votto, luxury, tobacco, and oil. Those are the second ors in europe that have affected. Those of the sectors in europe that have been affected. Matt we hope when they open at to western culture more, they wont quit smoking. It is very bad for you. Mark so they tell me. Erik up next, everyone, if you can be good at one thing, be good at lying because if youre are good at line, you are good at everything. Well we will be talking about the infamous gs elevator twitter account. Matt still ahead, we will discuss the company of 72 point billion dollar deal with biotech drugmaker. Recall that an acquisition of his at 9 00 a. M. Erik the citigroup bond thinker behind the gselevator twitter account and has written a memoir. A tell tale following a tradition of Monkey Business and he is here and so is Matthew Levine who did work at Goldman Sachs and spent more than three years specializing in equity derivatives. All of a sudden, something about this book. Matt also have to review for bloomberg businessweek. John come i have to begin with this question, the character who emerges from the pages of your book he is something of a debag, isnt he . He is delusional and selfconfident. Is this the person you were . The person you are . John i would say it was the person i was. Erik who are you now . John now i am a nice family guy with two kids who likes playing golf and lives in the suburbs of texas. Erik how do you make a transformation like that . John believe me, anyone who finds and reads this book will find some details surprisingly there be a outrageous, offensive, matt i woke up one day john i woke up one day and said each year i was expending in hong kong was probably taken five years off my life and i said, i have had enough of this and i will go back and live on the golf wars and take it easy. Matt i say, i am a fan of these kind of books. I love tell all, the fun life of bankers, especially expats and i feel like i know a lot of people who lived that life. But you have said, hey, i worked at Goldman Sachs and i did not witness any of this there. Is that because you think Goldman Sachs employees employs bank is a higher moral compass . Is it possible that you just worked in that side of the business . I think that is a possibility. As he said in the books, asia gets a little wilder than a lot of the home offices and you are further away from supervision. I also maybe think that you kind of focused on the worst aspect of banking in some ways and that the character in the book is to some extent the stereotype of what people want to hear about bankers. Matt hes not making the world a better place like everybody in Silicon Valley. Matthew there is a daytoday experience that was not mine. Matt i think hes kind of talking about the ageold battle between the kids who sat at the back of the class and the kids who sit in front of the class. You could say that perhaps i am an outlier. John i would say that unequivocally there is not a single fixedincome sales sales guy an agent who is not treated women and or drugs for business with their clients. And you talk about maybe Goldman Sachs being slightly different my counter [indiscernible] my counterpart there is a guy and i cannot mention his name lets his wife be a stripper. Matt you are in bonds syndicate, right . He is an equity derivatives. Maybe a different kind of group or class of people . John perhaps. I think that maybe one of the guys who had a nerf football thrown at him. [laughter] erik talk about the business. John you talk about highlighting the worst elements of perhaps thank you but there are a lot of substance of issues in there. Erik collusion, dissemination, giving bad advice on purpose, all those things. John one example, i talk about how my boss came to me and we had a deal that we were looking at doing in november but bonus numbers had gone in, so he said, hey, get on the phone and tell the client that january is a better execution window. That is kind of the mentality that we lived every day. Matthew i went to ask you about this because we were talking about these issues in the meeting this morning and i was like, what are we going to say . Doesnt everyone know that bank is collude . Obviously these guys are doing this kind of stuff. Does it really surprising that that kind of behavior not only exist but sort of runs the banking calendar . Matthew i think it is interesting to kind of see former bankers say it so directly. I think it is widely assumed that a lot of these issues exist that syndicate bankers tell people when deals are coming that managers fight with each other and dont necessarily put the client is interest first. Colluding on phase i found interesting. Erik matt use the word cliche and what you said is true. We all kind of roll our eyes when we hear stories about bankers behaving badly. John those certainly are not new stores, but what i think is particularly interesting about this is the vantage point. This has never really been explored before. From the syndicate that, i worked with Investment Bankers traders intel clients, and i did deals with every bank on every relative bank on wall street. What i describe is this pervasive deviant. It is not simply a function of saying, this is how i act and this is how i did what i did, i am talking about basically the entire industry. Erik in your opinion, its some of the stuff you document in this book and perhaps the stuff did not document john there were a lot of things i could not. Erik illegal . John yes, absolutely. Matt are you not afraid of that . Erik or is there not an element of selfdetermination . John max implied that would be the case and im more than happy to face whatever. Matt have you talk to a lawyer . Are the statutes of limitation of . John we edited very carefully with more than one lawyer. Matthew have you been contacted by security regulators . John not as of yet. Matthew do you think it will be . John they dont have my number but they know or to find me. Matthew right here. Erik what do you think about that . Matt you surely must have thought about that as well . As soon as i read about collusion of fees even though it is off the record. John i dont get into this with a great deal of specifics, but there were times when a bank would be in on a deal and very close to an issuer and they would select their joint book runners and we would get together and say, listen, do not show anything lower than . 20 or . 30 because of the client sees that, it is the lowest common denominator. Matt Michael Lewis has always said that he thought that large brokers should discourage people from working are wanting to work on wall street. When i read it, im sure the same as when you read it, i want to go and work there. You think this should discourage kids from wanting to major in finance or go work in a big bank . Matthew or is it a howto manual . John people with common aspiration only about emulating or looking up to this kind of elitist, sexist, racist misogynist mentality that the character perpetuates online. I try to write unapologetically without the kind of cliches of a tiffany and redemption because i think that is important. People can draw their own conclusions. Matt but that obviously happen to you. You obviously had a moment of epiphany where you are like i do not want to do this anymore. John but i do not look like on regrets on my career or the things we did. We had a lot of fun. Most of my friends and people in this book are still at the bank in senior positions. Matt are they mad at you . Did you change all of their names . John pretty much all of their names. I wanted to keep some of the names of some people but the lawyers made me change those too. Erik even your management. Chocolate all very senior people. All very senior people. These are short john these are stories we have been showing for years and years and we always had a great time sharing. As i wrote it i had a great time writing and hopefully that comes out because it is a fun read, but i share these stories with my banker friends as i wrote them. Matt i feel bad about myself for thinking, i cannot wait to read this book. Erik congratulations on that. Two are for coming. The author of straight to hell true stories of deviance and debauchery. Columnist extraordinaire Matthew Levine. Thank you. Matt lets get to remy for a look at the analyst action this morning. Ramy first up pinero bread panera has been that great from overweight to underweight. They raced their price targets from 140 and you can see in the premarket it is up by about 1. 4 and Piper Jaffray said that management is the bread a position to optimize the brand and Balance Sheet with a stable topline and store profitability. The stock is up 3 . The Car Rental Companies hertz has gotten a pull to and uphold from Deutsche Bank and they are up by four. They raced the price target from 24 to 22. Interestingly though, the year to date it is down by 31 . That is all the time i have back to you. Matt thank you. I just want to say that janet yellen is going to speak and Humphrey Hawkins has entertaining testimony. Really but q a session is more entertaining. Also a reminder, president obama will hold a News Conference at 1 00 p. M. Eastern and expected to take questions on iran, so that should be interesting and informative. Definitely tune in to Bloomberg Television or just leave it tuned in. We will take a quick break and back in two minutes on Market Makers. Live from bloomberg headquarters in new york. This is Market Makers, with Erik Schatzker and stephanie ruhle. Erik good morning. Nana clock in new york city. I am Erik Schatzker. Matt i am matt miller in for stephanie. U. S. Antitrust on the rise of archers and acquisition. Mostly acquisitions in health care and airlines. We are going to talk to a venture capitalist who invested i cannot speak right now invested in spacex on what he is betting on next. Erik lets have a look at top stories at this hour. Inflation at wholesale level, ppi rose last month thanks to higher pill prices. Up in june from previous months. Energy prices rose more than 2 by higher gasoline costs. Fed is on track to raise Interest Rates this year and that is what janet yellen is going to Tell Congress beginning one hour from now. Remarks prepared for the testimony, yellen says the prospects are good for further improvement in the labor market and economy. You can watch her testimony on Bloomberg Television that starts at 10 00 eastern time. Matt we will hear from president obama today as well. He will hold a News Conference on the Nuclear Agreement with iran. We will have live coverage at 1 00 p. M. Eastern time. The president faces a fight with congress over the deal. The Gaucher Disease say the deal would prevent iran from building a Nuclear Weapon. Hours after the announcement john baer called to john boehner called it unacceptable and fellow democrats want to take a closer look. I think preventing iran from becoming a Nuclear Weapon power is critically important for the safety of that region and for u. S. National security interests, so i hope we will get closer to that goal but i went to a jerk reserve judgment until i am at the chance to review the agreement. Matt congress has 60 days of president obama says if they pass a religion a resolution that reject the deal, he will veto the resolution. Fao schwarz is closing its doors. That means the brand will not have a retail presence for the first time in 153 years. The stores lease was expiring and the landlord wanted much higher rent. They were not prepared to pay that but they may reopen the store next year. Those are some of the top headlines we are following. Erik the European Central bank is awaiting a midnight signal from greeces they can grant liquidity. Hans nichols is in berlin and david, is in athens. Hans, the German Government said they cannot accept a significant cut in greases that in greeces that. What does that mean . Are they willing out all debt relief or is this contentious issue of the haircut that Alexis Tsipras promise the greek people back in january. Hans tsipras language has changed more tomorrow relief. To me when i first heard that, i thought that was a big change and could open the door for some sort of nominal that haircut which at this point is currently offlimits to the germans. Then they clarified and went even further in the other direction and said if you do with the imf is proposing of the three proposals timeout is talking about, a 30 year moratorium and have grace periods on any sort of interest, that would be a backdoor haircut that could potentially not be something germany could accept. Even though the imf laid out the proposals, either extend the maturities direct government to government transfers and that will never happen or it that haircut, germany is pretty sure that wont happen, at least on that most approach, germany is still saying no, that goes too far. I see germany really digging themselves in today. Erik before we get to david on the ground in athens, is it a foregone conclusion if the Greek Parliament approves of this deal that mr. Tsipras start with european creditors that the ecb will be there . That it will infuse the great banks with more liquidity so people so there is actually cash and people can continue to take out some money if not unlimited amounts from the atm machine . Hans it is getting close to saying a foregone conclusion but i do not know how much if they do do it through emergency liquidity assistance, they bring it back up to 95 or whatever the magic number is, remember greece still needs to have proper collateral to pledge against whatever a away is extended to. I am not so should that really changes the situation in the banks. You look at the size of the hole in the banks and they need a 25 billion euro theyll out. Even if they increase of five 4 billion or 5 billion, i do not know if that means you can immediately open the banks. They have a few challenges. Erik david is on the ground in athens, sticking a forgone conclusions, is it a certainty that graces parliament will Greeces Parliament will pass the measures and take that step toward the quiddity and ultimately the third bailout they so badly need . David everybody that i have talked to has been very confident that this will go through. It stretched out what the Committee Session in the parliament and we have word that in the next few hours we would get the whole parliament gathering. What we have had over the last 24 hours is a lot of talk about the plans chiefly by Prime Minister tsipras who sat down with an interview for a Television Interview and he had harsh words for creditors. He said they were coming up to greece after all of this an enumerated many parts of the clan and explain why he had to back the plan. We just heard from the Central Committee and the majority voted against the bailout plan and they call it a coup. He goes direct the goes against popular sovereignty and any notion of democracy, so a lot of people airing grievances outside of parliament as the day goes on. Erik thank you very much. David on the ground in athens and hans nichols covering the action in berlin. Matt company news, amazon turns 20 and for its breadth a comment they are offering up deals to celebrate but only if you subscribe to the companys prime service. Not to be left out, walmart. Com announced that it will also be offering sales with walmart. Com ceo fernando calling out amazon saying we have heard some retailers are charging 100 to get access to a sale. The idea of asking customers to pay extra to spend money does not add up to us. The bigbox store, so, walmart does not understand the idea of charging extra. There are a lot of companies that do that. Amazon took a fireback say well, we dont understand someone offering discounts only online and charging people more in your stores, so it was the first time he really saw this to pat and backandforth. Matt i find it much more interesting than what walmart is doing that the idea that amazon prime been the main vehicle for the company to make money. Our enough people members and is this becoming a thing . Shannon it is. The latest is there were 44 million prime members. Matt thats amazing. Shannon about half of customers in the u. S. Are private members. I walmart, despite criticism, they started their own primetype service of 50 a month which is less than amazon but you would get Free Shipping at you would not get streaming music and videos that amazon offers, but walmart is trying to get into this kind of primetype thing. It has taken walmart a while to sort of realize that internet is going to be a big thing. I think they definitely seem to have the confidence that they have a new Silicon Valley office of about 2000 positions and they have made some acquisitions and recruited top talent, Marissa Mayers is on the board, so they feel like they have some tech momentum. They be they are at the point that they can take on amazon a bit more. Erik tummy tuck about the deals themselves. I dont know how much of a chance you have. Kelly talk about the deals themselves . I dont know how much you have a chance to talk about that but how much business will they generate . Shannon a lot of analysts saying that they that other retailers would be moving business because everybody would be buying stuff on amazon but twitter which is now your Consumer Survey area, people on twitter are disappointed by the amazon deals. Erik underwhelming. Shannon he said i was less disappointed when my parents got divorced. Matt that gives you an idea of his russian ship with his parents or his relationship or their relationship with each other. Shannon they have a lot of different deals like dog treats or they were looking for bigger things. There are a lot of items that were sold out. I dont know if target and walmart will be losing their Business Amazon today like some analysts had feared. It could turn out that walmart overreacted a little bit and has given some big discounts and now they could have their margins are trying to could be with them as someone they did not have much to worry about. Erik kelly just take a moment to call out to fernando the ceo of walmart. Com that this notion that people should not have to pay extra to save money. I am wondering if he had met his colleagues who run sam clubs. Matt he does understand the notion but it is all fair in love and war. Erik shannon, thank you so much. Coming up the takeover frenzy in health care continues, particularly on the insurance side but also on the drug side. Selgi is bind receptors for about 7 billion. We will be talking to Robert Juergens about the companys big deal. Erik you are watching Market Makers and i am Erik Schatzker today with net with matt miller. Celgene has agreed to buy 47. 2 oh yeah and dollars. By receptors for 7. 2 billion dollars. The ceo and chairman bob hugin is here with us. Your company has been known for partnership investments. For example, why make an acquisition . Quite apart from that path . Rob this is an opportunity to leverage longterm growth. It is the key reported of the key component of the recep dose of the receptos proposition. Erik this drug is in phase three trials. Matt big number. Erik you must be incredibly confident about it the potential to exit phase three and become a commercially 50 product. Bob we feel great about it. We believe that we should do all three. And you cannot do any of them if you do not have great internal research. Standing internal research is fundamental to have a good partner acquisition strategies. We think having the best access to all the best opportunities in the world is the right strategy but it starts with great internal research and we think we will be able to and are building an outstanding idd franchise. Matt but this drug, first of all, it is meant for ms, right . It is the multiple sclerosis drug that should get 4 billion this explain dollars in annual revenue . Bob the mechanism seems to be very active in also provide us and that is what we are exporting in Crohns Disease, so we have multiple compounds back and have a dramatic transformational impact on patients in an area that is really so underserved today and it is millions of people around the world. Erik 46 million is when you estimate peak revenue to be . Bob that is our internal model and analysts have estimated that. Erik how do you break it down . How much do you think you can generate at ms . Possibly Crohns Disease . Bob it is really excited because you have some people who believe a High Percentage of that can come from multiple sclerosis and others think that our goal is to maximize both and others as we develop. The promise is exciting. Receptos has done a great job executing trials, so we will keep that Team Together and move it forward. Erik if it is successful treating both kinds of afflictions, in theory the sales potential is later . The potential is greater . Bob we believe that is the potential but weve got to deliver on it. Matt i was excited to read about the affect this direction have. I think it is an underserved market and the huge market if it works. They could be great for millions of people. What else do you see as an underserved market . What else is out there like that . Bob our company is focused on oncology and immune inflammatory diseases, so we are excited about those areas and we are committed to those areas. The technology and science is a balding, so we will continue to see great breakthroughs in those areas. Our hematology and ecology franchise is delivering outstanding operating performance. In fact, one of the things we did yesterday was an ounce that we pronounce the Second Quarter where our revenue grew 22 year over year and our earnings per share grew 37 year over year so we want to make sure people understood this acquisition is not out of the defensive nature. We feel good about operating momentum and the pipeline, and opportunities to really build for the longterm future. Matt thank you so much for coming in. Bob Hugin Celgene ceo. Erik it is caught a Cost Health Care in 2014, drugrelated acquisitions exceeded 200 billion dollars and this year could top that figure. It is keeping the department of justices antitrust division there a busy. I spoke to the doj assistant attorney general and head of antitrust bill there and he talked about the uptake and deals, particularly multibilliondollar deals in Health Care Insurance. We are well aware of not only what has been announced but went up has been reported in the press, and we have to go at this sort of been a dual fashion. One is, look at each deal on the merit. Ultimately, if we have a problem with the deal, weve got to convince to a judge of that deal is problematic. At the same time, a trend toward consolidation in the Health Care Insurance market is something we need to factor in and we need to be prepared to present that evidence to the court which at the end of the day is if asked to predict if this transaction likely to diminish competition in the Health Care Industry onto market . Erik bill, a lot of industries your division polices are dynamic. Conditions can change quickly. How often does the government find that a deal is declined and has ultimately led to anticompetitive behavior later . Bill it does happen on occasion. Looking back, we wish we had no then what we know today that there is not a lot of benefit to secondguessing a decision made 3, 5 years ago and beating yourself up over it. What you do is learn from that experience. Merger enforcement in particular is a predictive exercise and we are presented with a lot of information for merging parties, from third parties, from consumers, from customers. We need to make the call about whether particular deal is likely to diminish competition and most of the time we think we get it right. Erik is that what is happening with airlines today . Phil i cannot really comment on airlines other than to say that a couple of years ago, bill i cannot really comment on airlines other than to say that a couple of days ago we thought there was u. S. Combining that capacity constraint or slot constrained in airports around the country. We ultimately allowed that deal to go through but only with the vestiges that the National Airport here in bc and up in laguardia and down in dallas and as chicago, all places where the legacy carriers, the big guys had all the flights and there was no opportunity for the competition to get in the door. Erik i guess what im getting at is this now that time has passed, might it be worthwhile i will put it that way rethinking some of the implications but not just the americanu. S. Air deal but then northwest delta merger and the United Continental merger . Phil i think what one needs to do is learn from past experience and to factor that into how you view that predictive judgment we need to make as to the next acquisition. Continually monitoring where you have acted and the results from that as well as where you have decided not to act and factoring that into the next decision is really a key part of our job. Erik bill i know you are leaving the Justice Department investigation for Foreign Exchange and Financial Benchmark manipulation, has anything they do confident that the message you here at the top is going to find its way down to the bottom . Bill i have seen some impressive efforts to educate, to evaluate performance on an individual personal basis, which suggests there is a faith there to try and turn it around. As i said, only time is going to tell whether it is going to produce that change in mindset, but these banks are paid a lot of money have paid a lot of money to resolve a whole lot of problems over the last three or four years and it is in their interest, their shareholders interest to basically avoid getting into trouble in the first place. That is the most efficient way of dealing, avoid creating the problem. Erik that was filled that was bill baer. Mats, lawyers like theyll choose words carefully. I want to draw attention to the fact that when he talked about consolidation in the Health Care Insurance business, he used the word courts which is to say that the Justice Department is very mindful of the potential of the number of Health Care Insurance district dramatically. Weve got humana, and a number of other potential deals. It is going to be important for those deals to get an ounce and which one gets through clearance first because the others could potentially be trouble. Matt you want to keep more players to provide more competition. We will be covering Janet Yellens semiannual testimony before Congress Begins at 10 00 a. M. Today. Matt we are just a few minutes away from todays trading day. The editor is here with three things moving market day. I am site, tracy, im pushing the start of trading. Trading happens all the time and people always say the start of trading. Erik trading is a 24 hour business. Tracy i agree. Matt what do you have for number one . Tracy janet yellen testifying today and tomorrow which means she will be providing guidance for the market on Interest Rates, but she might also be taking a look at certain asset price bubbles. If you remember last year, she did a Monetary Policy report as an opportunity to sort of pinpoint biotech stocks. And a social media stocks as potential areas. In the report that was just published this morning, she talks about leverage those looking a bit weak and talks about Companies Buying a lot of bonds or issuing a lot of bonds, so that could be bad but that market. How successful has she actually been in popping these areas of propping us . Look at your screen. Smallcap biotech stocks and smallcap social media stocks, biotech stocks kept going up and up and social media had a bit more of a flat performance since yellens remarks. Next track record of success and we will see what happens with the leverage loan market and what happens after her comments today. She has the balance of this sting of have a low Interest Rates and not wanting to cause asset price bubbles, so that is why every once in a while she comes out and talks about markets sideways. Matt a big rod bubble is probably what she is looking for. And unpoppable bubble. What is number two . Tracy chinese stocks. Numbers were better than expected but the performance this morning is pretty lackluster and the shanghai composite is down about 3 . What does this mean . Matt well, they are suspended from trading. Tracy let me go out numbers. We still have 700 stocks halted on mainland exchanges and another 1200 raleigh by more than their 10 limit which means they get stopped out as well. That basically means investors are locked out of about two thirds of the stock market. Matt 1900 stocks. Tracy yeah, but on the other hand, maybe people are slightly distrustful. Erik i wonder if it is time for us to give it another name because it is not really a market anymore. Tracy that is true. What would you call it . Erik i dont know. Quite honestly, i welcome twitter suggestions. Matt i think that is a good idea. What should be call it . It is not a market in a command economy, what do you call it when the government shuts down almost all the stocks for trading . By the way speaking of twitter, we are hoping we can get some of these comments. She might take a look at te witter. There is a new paper that talks about it and google in leading indicators for market sentiment. They found that twitter and google searches performed better than a lot of incumbent sentiment indicators. Twitter is a leading indicator of investment interest. Matt there are stock hoaxes yesterday one where someone try to copy a bloomberg. Com website with the address bloomberg market. Com. Tracy it looked good. There are minor typos that could give it away. Erik there are typos on our website. Tracy you know that i added it. Edit it. Erik bots react to the news. Matt levine had a great column on this. Bots dont know to look where they had not found anything. Tracy if people are looking at twitter for sentiment indicators. The machines will see that and read that. Even if it is coming from a different area, it filters through. Erik is that ironic . No. We have more to do. For the moment, what is happening in the stock market. Early movers this morning. I want to head to meet johnson. It is down 5 . It cut its 2015 sales and profit forecast. The adjusted eps several cents lower. It is down 7 and this year they are expected to grow no more than 2 . One of the reason slowing china. It only got 24 . Yum brands is falling. It said that the q2 sales missed analysts estimates. It came in at 3. 1 one billion. The reason is china. It gets more than 50 of its revenue from the company. 10 quarter on quarter compared to an 8. 4 drop from the forecast. Finally, going to the air, delta is getting turbulence. Nearly 1. 5 . The airline is playing back on seats applied because there is a surge in capacity across the sector. The average fare per mile fell. Through tuesday, delta fell 11 year to date in part because of a Justice Department probe you may remember from a few weeks ago into what airlines were colluding to increase prices. Matt tim draper is a venture capitalist who is on a quest for a fantastic future. He is putting his money where his mouth is in a lot of companies that he thinks will stand the world on its here. He is the founder of draper and the founder of the draper university. He joins us from san francisco. Thank you for spending time with us today. I got pretty into the micro stats companies when i found that you are investing in them last week and i have been reading all about them. You have a major set company you want to talk about. Spacex. Let me ask you about your hopes for its future and your thoughts on the crash that we saw last month. Tim there are great opportunities in space, space is the final frontier. We are very excited. My partner let us in that direction. We love elon musk. They said that they were going to mars and they get the best engineers and they make great things happen. On the way to mars, an awful lot of great things. Great opportunities. Were thinking not only all of the microsatellite companies skybox, we sold it to google it is going to make it so we can see crops see other things from space. And we can predict if we have a potential natural disaster. A lot of fun and interesting things are going to happen in space over the next 1015 years. Matt there is a great story from jeff currans a few days ago. I love your farflung ideas, they get the most Media Coverage as well. When you say go to mars, how serious are you and hallowed to that pay off as an investor and how would that pay off as an investor . Tim the sky is the limit. There are so many opportunities so many technologies will get us to mars and the technologies are effective for new businesses and businesses that monitor the earth and could improve health care fitness, whatever. They could create a lot of different, interesting opportunities. Researchers you space to create new molecules. There are many opportunities. Matt back to spacex, the question extends to the other step we were just discussing. The most recent crash reminds us that this is still a risky business. How long until it is a mature enough company, not so risky company, that it can go public . As a venture capitalist, you do not mind you are prepared for some losses. Tim it is interesting. Space x launches a certain sized payload into one 200th of the cost that is that nasa spends for the same payload. They could crash a hundred 99 rockets for everyone that went up and they would still be doing better than the u. S. Government. Having one rocket go down is not a big disaster. It is a disaster for the rockets, but there are just as many rockets that went down when the u. S. Was working on it. Rockets are flammable, things could go wrong. But it is the kind of thing that pushes us forward that creates more progress to take chances like that. Matt spacex is incredibly successful. I wonder how you deal with losses in bitcoin. I have been following your progress through that, i am a bitcoin user myself. Tim it is coming back. It sure looks like things are starting to move back for bitcoin. All the countries where the citizens do not trust their currency, it is a great opportunity for bitcoin to come in. It is a great opportunity for the countries to get all of the bitcoin entrepreneurs focused on improving that countries that countrys currency, how they move money around. Matt what about being a bitcoin entrepreneur . Are any of the businesses that you are looking at right now on the path to making money . Tim quite a few are profitable. Bitcoin has been profitable for a lot of entrepreneurs. Some of the bitcoin exchanges there are quite a few. But the ones that are getting us so we can use and spend bitcoin more easily so it is like using your credit card, those companies are taking longer to get going. We will be spending bitcoin very freely within a year or two. Matt you are a Third Generation what are you teaching people, what do you instill that makes them able to find a new idea and invest in it and what is the one thing that you would pass along . Tim i think our society does not allow failure. Schools do not allow failure. One of the credo that students a is that i will fail and fail again until i succeed. It allows people the flexibility to try new things and see if things and see if longterm potential outweighs the risk you take earlier on. Having that perspective is quite a valuable thing. It has been very effective. They seem to be doing amazing things. It is a good way to live. If i fail and one way, i will learn and try something else. Matt thank you so much for your time. His daughter has a show, the valley girl show. Have you seen it, i recommend checking it out. Erik i will watch another show at 10 00 a. M. , the janet yellen show. Her prepared remarks have already been released. She stated her intentions and desire to raise Interest Rates. Dr. Jeremy siegel is a professor and professor, she anticipates raising rates this year. She says the fundamentals of the u. S. Economy are solid. Would you agree gekko agree . Guest i think the unemployment rate, all measures, have come down much more than the administration thought. We should to be growing faster given how many people we have been hiring with the payroll numbers. That has been the disappointment. Matt the conundrum. Guest to an extent. It comes out in very low productivity growth. Negative productivity growth for the Fourth Quarter of last year and the First Quarter of this year, the first time in 23 years had backtoback quarters of negative productivity growth. Economists do not really understand. There have been a lot of explanations. Our phones to so many things, when something becomes free it does not go into gdp, even if we enjoy it. Or maybe that is a been the biggest area of disappointment in the u. S. Economy. Tracy just wondering, we had professor krugman earlier and he said there was zero chance of the fed getting it right on Interest Rates, either they were going to go to early or they were going to move too late and we would have a Strong Economy i was wondering if you good time and on that could chime in on that. Guest i thought he was very supportive of janet yellen. Clearly, we do not have a crystal ball. To say there is zero chance they can get it right, it seems to me to be very extreme. I still think the fed is going to go in september and that is the data i do not think a quarterpoint increase is going to collapse our economy by any sense. I actually think the best dockings are going to come in the Fourth Quarter after we get an increase out of the way that everyone is so very scared of. Matt i think dr. Krugman was saying there was zero chance that they will get it exactly right. I do not think any fed share will get it exactly right. You were tapped to be fed governor and you declined under the bush administration. Do you think that she is too late to . Should we ask be at zero . Jeremy i believe there are strong fundamental forces driving Interest Rates down that go way bl beyond what janet yellen does on Monetary Policy. The effect of the crash seven years ago is still with us the desire for liquid assets risk aversion, aging population it has not disappeared. We see Pension Funds derisking their portfolios, going out of equities into bonds. We have very slow gdp growth. We have very low inflation which the fed has still not hit its target. These are all overwhelming reasons why we have had the collapse in Interest Rates. I actually think that euro store shortterm rates, two and a half at the 10 year, they are quite appropriate given where the economy stands today. I do not believe it is artificially pushing prices down. If they relaxed, it would pop back up. We live in a very different world. The impact is still being felt. Tracy one thing that amazes me as a market person even signaling the rate rise, the markets do not seem to believe it. Why do you think that poses a problem . Jeremy it is definitely true that the markets are much lower on Interest Rates. Basically when he look at the funds, only one increase this year, a one and done, september or december. Plots predict two, there is one in september and one in december. Theres a number of officials that say it may even be higher. The big disagreements are further out where the fed thinks that by 2017, we are back to 3. 5 and four and the market says no way. He gets back to the old argument, is the new neutral 2 . I actually believe that to be true, 2 is really gross mentioned it is going to be the long run. We may get a little bit above but i do not think it is going to be 4 . I think the dots the markets believe are much closer to the truth than what the fed officials believe. For this year, there is not all that much of a difference. The big differences are in 2017 and 2018. Erik thank you. And Tracy Alloway is with us. Janet yellens testimony in a little more than 10 minutes time. Matt lets get a check on the top headlines we are following areas rescuers and Eastern Kentucky are resuming the search for six. Away by massive four people swept away. At least 150 homes were destroyed and phone and Power Services were knocked out. A state of emergency is in effect. Make of america shares rose in the free market this morning after it posted results that topped forecasts. Earnings per share reached 9 cents more than expected. A new National Survey shows donald trump leading the crowd of president ial candidates. He is favored by 17 of likely primary this is for president of the United States of america. White house candidates already roast rose millions of dollars. That is amazing stuff. Erik and about six minutes time, done ill and will begin her testimony in congress and julie hyman is in washington. You were in the fed. Lock up this morning. You have seen the prepared remarks. I want to give people an opportunity to skip the beginning part of the testimony before that humanq a. Julie he will love to parse every word. They should tune in. To summarize, she is reiterating the view that we should see increases in rates this year. She notes that projections are not statements of intent. She always gives herself the escape hatch. This is what we expect to do but it is not what we sincerely are going to do. She also emphasizes that the initial steps are not what is important. She points out there are signs of slack in the labor market and that inflation is below the feds targets. She says the members of the fed committee are optimistic on both front job could improving and inflation getting to that target. She also talks about what is going on internationally. She says the situation in greece remains difficult and talks about the challenges china is facing. Interestingly, she says theres upside potential. It could pick up more quickly than observers anticipate. The u. S. Economy may snap back. Erik she is talking to the house Financial Services committee. I mistakenly thought she was testifying before the Senate Banking committee. If theres one thing the House Republicans are going to zero in on, what is a going to be . Julie an ongoing dispute over a leak of information. The chairman of the house Financial Services committee has asked for information from the fed. She says yellen and the fed are not providing information. Expects a lot of questions about the leak. Erik thank you. You will be see the testimony live next right here on Bloomberg Television starting at 10 00. Erik it is 10 00 a. M. In new york. Welcome to bloomberg market day. Janet yellen is on capitol hill and so are we. She will begin her today testimony before congress and we are bringing it to you live there it we are listening for any hints about her schedule for rate increases. Welcome to bloomberg market day, i am pimm fox. We are standing by, waiting to hear from janet yellen. She is testifying today before the house Financial Services committee. This is the first part of her testimony. She would talk about her outlook for the country and offer guidance about when the bank will start raising Interest Rates. Carl riccadonna, this is important because we want to know what will happen with interest r