The s p 500 30 below the 30 day average. It goes to what mike was saying about how a good jobs report lends to sector rotation in equities. Romaine we should point out that some of the other asset classes, we did see the dollar higher on the week, oil down on the week, and very low volumes today, but looking at etfs, volume was about average. We did see a lot of activity there. Joe small caps. Romaine thats right. Lets dive deeper into the action right now. Renita, get us started. Im watching iron ore, which sunk to its largest drop in about two years. It is ending the week actually up the most since june 21. Most Metals Commodities definitely took a dive. The bloomberg Commodity Index also lower and the dollar higher. Which makes commodities that are priced in the dollar more pressure than usual. Taylor . Taylor for me it is all about bond deals. We are taking a look at the price action we are seeing on bond yields. We are now rising nine basis points on the day. That is our biggest oneday move since april. At one point this number was looking like 9, 10, 11 basis points. At that point, it was a record. We are seeing a lot of diverging opinions. I was speaking earlier with kumar. He was saying the 10 year is now looking at 150. I asked a followup question. He said no way the 10 year is going to end of 2 . A lot of diverging opinions on direction. Todayasis point move certainly catches my attention. Romaine thanks, taylor and renita as well. Still with us is oliver as well as bloombergs michael regan. Youer, i want to go to first. Right now we are at about 2. 04 on the 10 year yield. Are we getting to some fair value consensus . Oliver i think the treasuries continue to be in a range. We havent had moves that are pretty outsized. Weve been around the 2 mark for quite some time now. Oront see it going to 250 150 unless something really remarkable happens. If you are a bond investor, you stick to the short end of the curve, high quality, and use it as volatility mitigating rather than anything else. High yield is up nicely. Return forretty good fixed income given where we are. Joe mike, i want to get your take on this. Everybody screams all day, cant believe these low rates and negative rates around the world, but they are still doing their job in the portfolio. Risk parity. Theyve done well. Even at these low rates, kind of fulfilling their word. Mike it is trickier in europe when you are basically betting buturther negative rates, the 10 year yield did pick up a lot. The twoyear rose more. That way off the lows of curve, but we still have the three month above the 10 year treasury yield. A lot of people i talked to, the main case for the fed to ease in july is to get rid of that inverted yield curve. , a little bit flatter yield curve. Mike, youve been paying attention to assets, treasuries, 1400,hich dipped below as well as some sectors that have looked a Little Pricey as of late. Mike that goes back to this idea of maybe there was some rotation today. One thing i looked at earlier was utilities that are now trading above 20 for the first time ever. That is a monthly chart. It doesnt show back in 2000. This is basically the most expensive Utility Industry since the Industry Groups were broken around 1990. It looks to me, people got very defensive in the stock market. It looks like a crowded trade above 20 for a utility. Romaine oliver, when you look at the market, what areas do you see more attractive than others . Oliver we like growth. If there is an absence of growth, if you can find companies that are improving margins, they tend to outperform. We continue to be a well basis as wellctor as industry basis. Theres some great values in europe. We are concerned about dollar moves as well as the economy over there. Joe i was just going to say, u. S. Seetside the value and the consistent story has been underperformance. Goes back tou. S. Winning. What ultimately changes that regime, where you get durable outperformance . Oliver economic performance. It is about gdp growth and earnings growth. Islong as europe effectively growth, is to 1 gdp going to be tough for european equities to outperform u. S. Equities. We like to look at equities from a country basis more as to where the revenue stream is. Total, the french oil conglomerate, gets more of its revenues from north america than exxon mobil. You want to keep that in mind. From a pure investment perspective, as long as the u. S. Continues to outperform on a gdp basis and as long as theres a strong case to be made that u. S. Based companies have better , theres fullh logic as to why they are outperforming. Scarlet i want to get your take, oliver, on technologies. Sonsre talking about sam preliminary results and how concerning that is, considering that it is a barometer for the Global Technology industry. How much do you read into Something Like that and what it tells us about trade tensions playing out . Oliver much like the earnings report, it is important to look at the overall trend and not just pick out a single data point. Technology has performed very well. It is the strongest performer year to date. There are still some areas that are growing rapidly. As a longerterm investor, there might be a blip, but the expectation is that over the next two years that continues to be a favorable area for investors. There are names within that one of them is microsoft. Romaine lets broaden this out. We havent talked about earnings in aggregate. Q1 came in better than some people thought. Q2 is sort of shaping up to be what . Mike could be negative. The estimates are pointing to a negative growth in earnings for the second quarter. Companies have a habit of beating those estimates. But i think the risk is that analysts are optimistic about the fourth quarter, expecting a bottleneck of growth. As those get ratcheted down, you might see some volatility in the market. Any sort of resolution on the trade front, people would look past any softness or weakness in earnings and get to the other side of the tunnel. Thatptimist would say todays jobs report suggests maybe we can get that pickup. , want to thank our guest oliver, as well as our very own mike regan. That does it for the closing bell and for me. Whatd you miss . Is up next, where the team will continue to focus on the jobs report and what the fed does next. From new york and from london, this is bloomberg. Romaine live from bloombergs World Headquarters in new york, im romaine bostick. Joe and im joe weisenthal. Romaine u. S. Stocks falling today, treasuries tumbling, on the news that u. S. Hiring picked up. Joe the question is, whatd you miss . Romaine jobs deliver. U. S. Hiring rebounded in june. Bank saga rolls on. The ceo presents a sweeping overhaul of the lender over the weekend. In greece, the election of a pro business government expected to extend the rally in the nations debt and equities, at least for now. Joe meanwhile, National EconomicCouncil Director larry kudlow speaking with bloombergs Jonathan Ferro, the question on everyones mind, what is the case for a rate cut . I dont think there is a phillips curve tradeoff between strong jobs and higher inflation and Interest Rates. I think more people working and succeeding is fabulous. I think the evidence shows that the inflation rate is rockbottom. Looking at some of the market figures on the way over here, not only do you have an inverted yield curve, which i think is troublesome for the longerterm, but the breakevens on the inflation, the fiveyear, jonathan, is 1. 5 . That the fed uses would be about 30 basis points less than that. So that is way below the feds target and what most people want and that is the reason i think they should take back the Interest Rate hike. Im not encroaching on fed independence. Im just reading the market tea leaves if you ask me. Im just saying i think that is the case. Economy,ak global taking out an insurance policy is not a bad thing. I think the debate is how lower rates will help, whether the price of credit is the problem in the United States or europe, and most people are answering no. How will a lower rate help address the issues you outlined . I just dont want anything to interfere with the strong prosperity cycle. That is my principal point. I think as market signals have been suggesting, the Interest Rate story looks unbalanced. It is not that im going to inject stimulus here. Im not looking at that old model. Im just saying that when 10 year treasury paper is trading well below the fed funds rate, i think that is a message to the fed that the target rate is too high. And i think they are looking at that. Im not sure that our views are much different from the feds views, but that is my basic point. It is not so much about stimulus as putting more balance into the Financial Sector and the yield curve. Joe that was bloombergs Jonathan Ferro speaking with larry kudlow earlier today. Joining us for more on todays jobs report, martha gimble, Research Director at the indeed hiring lab, and International Team of economists. Martha, thank you for joining us. Your take. Rious larry kudlow doesnt believe the phillips curve relationship exists between unemployment and wages. It feels like a lot of economists are coming around to that view. When you look at the data out there including todays wage numbers, is there a case that it is just not that simple . Martha i think theres been a lot of discussion about the phillips curve over the last two years and in some ways it is a similar story. Weve had so much room to grow. We are still waiting for wage growth to pick up again. We saw a lot of fiscal stimulus last year and that helped accelerate wages. We are seeing that starting to be withdrawn and that wages are starting to hold steady. Romaine do we need to see that wage growth completely across the spectrum . If you go into some of the ,ndustries that have lagged those industries do start to see some sort of wage growth. Im wondering why that gets discounted. Martha i do think there is always going to be specific factors in different industries. You have seen different wage dynamics in industries where there is a threat of workers quitting. That being said, if you look at wage growth in lowwage industries, high wage industries, in general you are not seeing that continued acceleration. Joe you tweeted out some charts today breaking down the report, some of them really caught our eye. I want to talk about the volatility in goods producing jobs versus services. Privatesector Services Growth is really steady. Goods is way more volatile. What is the approximate cause of this . Ofthat just reflection Global Economic weakness . Martha i think so. That is a sector that is susceptible to headwinds from trade war and was really outperforming last year. Seen sort of this resiliency in consumer spending, but we saw that one of the laggards was in the retail trade. Explain what is going on there. Martha retail trade has been struggling for a while. And a lot of that is the threat of competition from ecommerce. When you have a sector like retail that is struggling in an economic environment like right now, that is hugely different for workers. Despite the job losses, we havent seen a jump in the Unemployment Rate. Joe at the beginning of our conversation, we were talking about Larry Kudlows assertion that the phillips curve doesnt really make any sense. Before we can talk about whether that model makes sense, we want to have some idea of how to measure labor market tightness. The Unemployment Rate only gets us so far. At primes to just look age workers, people who arent at retirement age, and you are looking at prime age population employment and you want to see that going up, but it is not. Martha yearoveryear it is still going up, but the rate has been slowing down. That maybe suggests that we are starting to tap out on the people we can pull into the labor market. People this idea that are coming off the sidelines, is that not the case . People are still coming in off the sidelines, but there may just be fewer than a year ago. We had gangbusters job growth and at one point the labor market has pulled in all the people it can pull in. Joe i always hate when people caveat every report, but we did get a bad report last month. This month, a lot better than expected. At some point, do you just average it altogether and not get hung up on what anyone says . Martha if you look at the threemonth average, we are getting a clear message from the labor market that job growth is lower than it was last year. But we are still seeing very solid job growth numbers. Romaine always great to have you here. Always great to have your charts. That is martha gimble. Coming up, greece heads to the polls on sunday. How the pages are being turned on a popular experiment. We are going to talk about that later. This is bloomberg. Romaine greece is heading to the polls this sunday following the prime ministers recent defeat in european parliamentary elections. Meanwhile, the pages are being turned on a populist experiment. Lets bring in maria from brussels. I sort of understand why tsipras is falling out of favor, but can you give us insight into his main competitor and what he is bringing to the table . This is a fascinating story. Im sure you remember, this was a shock to the system. Greece almost tumbled out of the euro. Four years after, the greeks are expected to vote for im actually headed to athens. We interviewed him. This is as mainstream and establishment as it can get. He is from a political dynasty in greece. He is pro, centerright, and he said, i want to grow the economy and cut taxes across the board. The greeks are saying goodbye to the populist experiment and returning to the mainstream. Joe i remember when tsipras was first elected and there was a lot of anxiety in how he was going to play with the rest of europe. Assuming he loses, his relationship with the rest of europe is pretty good these days. Hes not going out as a major antagonist. Totally. Hewas seen as a rebel when held the referendum and im sure you remember varoufakis showing up to brussels, defying everyone. All that is gone. Someonehas now become who is much more tame and when you talk to people in brussels, they think hes just like another politician. In greece, that has kind of killed his election performance. A lot of greeks tell me there is no difference between tsipras and someone like mitsotakis. Frankly every kind of breakthrough that he promised, he has failed to deliver. Looking at the market reaction, the markets seem to be thinking that mitsotakis is going to be the winner. Youve seen a huge rally in equities and in the bond markets. Im wondering, is this going to be a close contest or pretty much a done deal . If you look at the polls it is pretty much a done deal. The question is whether this is that to be a supermajority sees him in power. In terms of the market, everything has been priced in. Mitsotakis has said, i want to cut taxes, to renegotiate targets, and attract foreign money. The question he may face is that the European Commission is already saying the greeks are lacking and they need to speed up. That could lead to some tensions, but that remains to be seen. Romaine thank you for joining us today. Coming up, democratic president ial candidate Elizabeth Warren is winning respect in an unlikely place. We will explain what that means. This is bloomberg. Lets get the first word. The Justice Department hasnt yet decided how or whether it will move ahead with lands to include a question about citizenship on the 2020 senses. That is according to a government filing. A federal judge in maryland has given the u. S. Until 2 00 p. M. Eastern time today to say whether it wants to include the question. The u. S. Was vague and offered little clarity. President trump is reaffirming his views that a fed Interest Rate cut would help the economy grow more quickly and says central bankers dont know what they are doing. The president spoke to reporters at the white house today. It would be like a rocketship. But we are paying a lot of interest and it is unnecessary but we dont have a fed that knows what they are doing. The comment came on a day when the u. S. Reported nonfarm payrolls growth in june of 224,000. That is the most since january. Stream of aftershocks has shaken Southern California following the strongest earthquake in 20 years. The quake struck thursday in the mohave desert, northwest of los angeles. Multiple injuries have been reported. Emergency crews are also dealing with gas leaks and reports of cracked roads. In greece, hundreds of firefighters are battling wildfires. Officials say a man has been arrested on suspicion of starting one of the blazes by burning dry weeds near his house. That is band from may through october. Global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Joe as the race for the white house heats up, joe biden beginning to draw contrast with his rivals. The 2020 candidate making his case following a fairly rough debate performance. Lets bring in kevin, a democratic strategist who advises the Democratic National committee. He joins us from washington. I think conventional wisdom is that biden is still the front runner, but a pretty damaged front runner after that debate performance. In your view, does he have what it takes to reset and strike back . Great question. Thanks for having me on. The debate performance was a little rough. He spent the next day kind of explaining himself in chicago and hes been doing damage control ever since. He is sitting down with chris cuomo. Theyve been teasing that interview tonight. Speaking about kind of coming back on the bussing issue. Question, you are seeing his polling take a dive as Kamala Harris and Elizabeth Warren are inching up on him in these polls. Romaine kevin, when we talk about some of the voters, particularly the black voters, there does seem to be a divide in terms of generation, with older voters gravitating towards biden and Younger Voters gravitating toward someone like Kamala Harris. Do you see either candidate being able to bridge that gap . Youre absolutely right. Biden is still leading among older africanamericans. In south carolina, older blacks are helping him stem the tide in the wake of the debates. They are with him when he defended the legacy of barack obama, when senator harris went on the attack with regards to immigration. He fought back. You are seeing them stay with him. I think Pete Buttigieg is an interesting candidate. 4 sorse hes just at hes got a long way to go. He can be a compelling candidate to bridge that generational gap. Joe who else do you think is in a position to rise . Kamala looks a lot better. She damaged biden. But is she in position to capture a lot of those voters . Inbernie has that locked 20 , 25 nationwide that are likely always going to be with him. There is a lot of diehard bernie support. He also has the unique benefit of having run for years ago. I will note that a lot of people saylked to him the ground cory booker and Elizabeth Warren are building the best efforts in that critical first state, not just locking in the people, but doing the real work, the doortodoor caucusing you need to do to win in a state like iowa. I think cory booker provides an interesting personality for building that organization and could make up some of that ground as well. Romaine at the start of this campaign cycle, there was talk about the Democratic Candidates having to veer far left to win the nomination and potentially beat trump, but when you look at the polling, the top candidates are relatively centrist leading, then you have Pete Buttigieg with that great showing with regards to his campaign fundraising. Do you think the party is going to have to gravitate further left or can it be a centrist party and when . Distracted with the twitter universe and how people are commenting online. We forget that half of democratic primary goers consider themselves either moderate or conservative. Pete buttigieg has that lane. Joe biden has that lane. This constant fighting towards the left might not be a Winning Strategy in early states when you have 20 candidates running. Romaine kevin, thanks. Good to be with you. Romaine coming up next, the massive Inflection Point for the crypto industry. That is what the ceo of circle is calling facebooks entry into the market. Why he doesnt consider facebook competition. We are going to hear from him next. This is bloomberg. Joe it has been a wild few weeks for bitcoin, but the cryptocurrency is still up more than 200 since the start of the year. Theyve seen some evidence of wider expect acceptance of digital coins. I think if we can get to the old standard this year, every bitcoiner will be pretty happy, but once you hit 20,000, it opens 40,000 and much higher. When i think about bitcoin, it probably has a 150 billion market cap. Gold has a . 5 trillion market cap. Bitcoin has a long way to go. Now, jeremy us allaire, founder and ceo of circle, a crypto finance company. He joins us from boston. So much going on in the world of crypto. Besides the price rise for bitcoin. The big event has been the sort of fascination and interest with facebook libra. Im curious how you think that does or doesnt have an impact on the existing world of cryptocurrency. Jeremy thanks for having me on. I think the announcement of libra and the libra association, we view it as a massive Inflection Point. I think it has an impact across the board. It is going to bring this into the limelight. It is going to help individuals and businesses that are interested in this have dramatically more visibility. And we think it is going to help ensure that billions of people are able to access the benefits of cryptocurrency within the Financial System. We think it is huge in terms of awareness, in terms of regulatory questions, and figuring out how crypto finance companies are going to work in this new round. Romaine what about the logistics of getting it done . Do you think this would have been a better idea if it had come from someone other than facebook . Jeremy the first thing to realize is that blockchains, public blockchains that are capable of supporting hundreds of millions to billions of users with mainstream applications in finance, those are really just emerging. We went through the first generation of blockchains with bitcoin, ethereum, and similar chains representing the second generation, and those today support tens of millions of users. Theres been this effort all around the world to design the sort of thirdgeneration blockchains which ultimately can provide the features and scalability needed to blanket the world with the benefits of crypto. The project that facebook has been introducing is one take, but it is not the only take. I think the Consortium Model is the right model around any new technical standards in crypto finance. Times,u said a couple the benefits of crypto. One of the benefits is decentralization, censorship free transactions, being able to buy anything without any middleman saying you cant do that. Circle has its own stable coin. Facebook is going to be regulated. What is the benefit of a crypto that doesnt really offer that censorship free transaction because it has to go through or interface with the existing Financial System . Jeremy we look at all this kind of on a spectrum. Our view is that you are going to have mass adoption of nonsovereign Digital Assets. I think bitcoin is the preeminent asset there and the need and desire for those assets is going to grow. You are also going to see growth in these stable coin assets that likely will have regulatory frameworks, but there is a key difference between stable coins that run on closedloop permission schemes, which is how libra is being proposed today versus stable coins that could run on the public internet. That is the model that coinbase and circle have developed. That is how it is growing in usage. There are variances in how people are implementing different models. Romaine when you talk about the regulation, creating National Policy and potentially some integrated interNational Policy, how do we get there when theres a lot of concerns about security, about the concentration of ownership of bitcoins, and whether theres market manipulation. Jeremy i think these have all been topics that have been explored and now i think there is even more attention on it. The policy issues range from, what are the standards for protecting from abuse by criminals or financial crimes type risk, or what are the risks associated with theft of Digital Assets, the custody of Digital Assets by intermediaries we havent seen any rules around that in any broadbased sense. And finally, a lot of the really exciting uses are in innovations in how people raise capital and create financial contracts using this. The standardization of the financial instrument side of this. Theres a huge amount of work that needs to be done. Advocating foren and i hope in some ways the introduction of libra brings this forward is the development of National Policy around Digital Assets. Our view is that crypto and blockchains represent the fabric of the 21st century economy and there is an opportunity to put in place policy that allows us to flourish in the same way the internet flourished and policy was vital to enabling that to happen. So far policy has been focused on the downside or the risk. How do we open this up so that companies can benefit from it . Hopefully we will see more of that. Joe jeremy, what is the dominant use currently for your stable coin . Coin, we. S. Dollar introduced it last year. As you noted, it is a dollar backed cryptocurrency. The primary use is as payment and settlement within the Digital Asset markets. These multibilliondollar markets where people are trading, investing in Digital Assets. Moveving a dollar that can at the speed of the internet, with incredibly low cost, where the transaction can be settled in minutes securely, is really powerful. That has been the primary use. We believe that the uses of this are going to proliferate to the point where payments and moving values, and people are using these to access a broad range of products. Romaine great to have you here as always. That is jeremy allaire, ceo of circle. Lets get a check of the latest business flash headlines. A Marijuana Company is speeding up expansion in europe. It is setting up a hub in portugal. The company says the focus of future investments will be on europe and the u. S. In china a new stock trading venue opens july 22. The socalled tech board is seen as keeping the next alibaba from choosing new york or hong kong to go public. Regulators are, looking into amazons bid to buy a fast growing delivery service. Authorities said the two companies have either ceased to be separate businesses or they are going to merge soon. In may, amazon said it would put 575 million into deliveroo. Joe . Joe coming up, the trouble at Deutsche Bank deepens. A hedge fund giant that Deutsche Bank had counted as one of its clients has reportedly been pulling money from the bank for months. This is bloomberg. Romaine troubles are mounting at Deutsche Bank. Renaissance technologies, the hedge fund giant that Deutsche Bank had counted as one of its largest clients, has been taking out money over the past few months. This as the Investment Banking head is said to depart, marking the First Official casualty of an overhaul. Here with more is bloombergs ri. Lets start with this Renaissance Technologies story. I assumed that rentech would be one of their most premier clients. The fact that they are pulling money seems to say a lot. If you are a giant hedge fund and you are seeing all the news coming out of Deutsche Bank, if you are not thinking about doing this, that would be a surprise. Rentech is one of the largest clients for Deutsche Bank. Prime brokerage falls within the equities division. It makes sense that theyve been thinking about pulling their money. They have been pulling their money. There is a bit of history between rentech and Deutsche Bank. The ceo used to run the prime brokerage at Deutsche Bank for several years before he joined rentech. Joe and this really kind of speaks to why when you are doing restructuring you should get it done fast if you are a bank. Everyone has been talking about woes and troubles forever. Why would you stick around . Hase fair, i think been actuated because of all the pressure. This has been one of the most difficult restructurings in finance since perhaps the financial crisis. With Deutsche Bank, we could see as many as 20,000 jobs lost. That is more than 1 5 of their workforce. That is not an easy process. Romaine in addition to clients potentially looking for some alternatives, we are seeing some really highlevel employees looking for alternatives. We got news today that Garth Ritchie has departed. And Garth Ritchie is the first big casualty. Hes been with the firm more than 20 years, but hes not been a fan favorite. Hes been head of the Investment Banking division. Hes also the highest paid employee. This,other window into look at the statement they put out. They said other Senior Leadership changes in Investment Banking will follow in due course. That tells you how we should be looking at the situation. He is gone, but we are expecting other highprofile names to leave. Weve had the chief regulations officer, the cfo possibly leaving the firm. It is going to be an ugly process. Joe this weekend is going to be a big weekend. Absolutely. Sunday is when the board meets. Everyone is expecting the official news to start trickling out. Leading up to this, weve seen reports about what kind of changes could happen. Starting monday it becomes official. Stock has been within the Investment Banking division. The fear is it could be deeper than some imagine right now. Romaine this has to be hard on a lot of employees. We are getting anecdotal stories particularly in the u. S. Offices. Understandable. If you just look back, 20 years ago Deutsche Bank embarked on this big wall street mission. Mid90s,back to the building into this powerhouse where they thought they could go toto with jp morgan and goldman sachs. Joe all right, thank you very much. Dont miss this. On wednesday, fed chair jay powell testifying before the House Financial Services committee, and we get the latest minutes of the fed meeting. Romaine Economic Data next week includes germany, china cpi and ppi data. That is all for whatd you miss . Bloomberg technology is coming up next in the u. S. Joe have a great evening. Romaine this is bloomberg. Taylor im taylor riggs in for emily chang. This is bloomberg technology. Americaob surprise as celebrates its birthday. We will tell you how the tech sector is faring. Plus, the Global Demand slowdown hits samsung. The biggest producer of smartphones. What