Transcripts For BLOOMBERG Bloomberg Go 20160608

Borenstein. Amanda lets check in with our Bloomberg Team for indepth coverage. Miller in berlin as german low, andp to a record andr current enda curran simin demokan. David we begin in london. Mario draghi and company have begun buying Corporate Bonds. Lets bring in guy johnson. What do we know if anything about which bonds they are buying . Guy they are looking for the most liquid bonds. This is a new phase for mario draghi and the ecb. It is looking to step up its program, boost its Balance Sheet, trying to get money in different areas of the economy. It is buying the most liquid names in the corporate sector there, anheuserbusch. They have been buying spanish telephone companies. Liquidig names with big pools of Corporate Credit that they are stepping into. The Bond Buying Program has been rippling into other assets so you see it affecting the equity market. Affect also. Year buy aroundoking to 5 billion each month, and we will find out where. That the market has been front running the ecb, will the ecb the actually able to buy in the kind of size that it is looking for in order to have an impact on the euro zone economy . The programnow is has started and they are targeting some of the biggest names out there. David guy johnson. Amanda german bund yields dropping to a record low. Matt miller is in london with the latest. Fascinating this morning with guy johnson to watch the yield just drop down on the bund, down to as low as point 030 . 31 hundredths of 1 is what you are getting paid. Michael leister, an analyst with the number one ranked primary dealer with the ecb says he sees the bond dropping to negative territory, zero possibly within this week. If it goes negative, it will add to the 2 trillion worth of european debt that is already there, and germany joins japan and switzerland as far as countries that have debt that goes all the way out to a decade in maturity with negative rates. As investors run for cover, to have all of these concerns about the slowdown in job additions in the u. S. To the brexit vote in europe. Amanda matt miller in berlin. David chinese exports stabilized and imports hint at enabling demand. Curran. Eak with enda what are people finding encouraging in these numbers . . Chinese exports are not getting worse. We saw better shipments from germany and better car sales in the same month in china, may hinting that consumers are holding up quite well. When you take it all together, the chinese trade data is not getting worse but is still quite sluggish against the global backdrop of a week demand of chinas to chinas goods. Manufacturing remains in the doldrums. The infrastructure side of things, to get the real estate going again, we are not seeing stimulus effects flowing. On import design we continue to see fake invoices coming out of hong kong and that is linked to this story to get capital out of china by a licit flow. Now to a developing story, a massive explosion blew the front of a fivestory Police Headquarters in turkey. We go live to istanbul. Simin another day, another terror attack in turkey. A few hours ago a huge blast occurred in turkeys southeast region. We are hearing it occurred in front of a Police Headquarters and as you said, it ripped the front of a fivestory building. Three confirmed dead and more than 20 injured. Comes one day after a terror attack in istanbul which killed 11 people. No one has claimed responsibility for either attack but after the attack in istanbul yesterday, president heard one blamed the president blamed the pkk. More than 240 people have died in terror attacks in germany related to the Islamic State and pkk, and the markets are showing a reaction. The lira appreciating for a second straight day. Amanda thank you. David Hillary Clinton has declared herself the victor in the democratic nominating race, becoming the first woman to run as the candidate of a Major Political party in the u. S. It feels like this is over. Bernie sanders did not quite get the memo. A historic night for Hillary Clinton as she declared herself the Presumptive Democratic nominee. You are right in that Bernie Sanders does not appear to have gotten the memo, vowing to fight on through next week. Hillary clinton emerged with the pledged delegates. She has won a majority of the states and population, and she is the candidate the Democratic Campaign is going to have to rally around. There are talks between the camps of how they can choreograph a graceful unity strategy of the party. Will they be able to combine the momentum from Bernie Sanders with the discipline and policy agenda of Hillary Clinton . We saw a very different donald trump last night. We saw him scripted. We saw him not express remorse controversial remarks he made about a judge. We saw a man that was on the leash and making perhaps an olive branch for the republican establishment that has so sharply criticized him. In a Campaign Cycle that we look to be vicious and brutal with deeply personal attacks, it is going to be fascinating to watch how this plays out. David that is our d. C. Bureau chief megan murphy. Lets get an update on the markets with julie hyman. In the stock market in europe, whether you are looking market, wes stock are seeing pullback in stocks. European banks are down. Utility shares are up as we see the ecb buying Corporate Bonds. If you take a look at currencies, you have the dollar index lower by about one third of 1 . The yen has been gaining. Andboj has a policy meeting will be announcing changes to policy coming tomorrow. If we can skip over to commodities, crude oil prices, brent rising well above 50 a barrel, wti also above 50 a barrel. We heard from the Petroleum Institute that there was a drawdown of crude. We get the official numbers this morning. We will see confirmation of the direction or reputation. Amanda still ahead, the feds impact on the wages and market. Have they paved the way for the third market collapse . Our next guest says wall street is about to collapse. David this is bloomberg. I am david westin with amanda lang. The race for 2016 is finally set, Hillary Clinton versus donald trump. Does donald trump have what it takes to win over the republican establishment . Thomas friedman wrote, if a party could declare moral bankruptcy the Republican Party would be in chapter 11. Startsly, someone please a new Republican Party. Joining us to react is david stock in. Stockman. Before anden on expressed some displeasure with the direction the come the country is taking. Trump prefer donald because he is willing to change so much . David last night was a milestone for hillary but if she were did it would be a millstone for the nation. Yearsnot stand for more of hillbama. We never got out of afghanistan. That was her doing. I think donald might reverse it. Subject, that specific if anything donald trump has been more belligerent on what he would do to affect the Islamic State. David i am talking about the fact that we tried to destabilize the country, we have said assad has to go. Who appointed as policeman of the world . Trump knows we are bankrupt and cannot afford it, and cannot accomplish it anyway. Domestically, the fed is out of control. The Obama Administration has packed it with lunatics taking us to 90 months of zero. It shattered showered wall street with the greatest bubble in history. Obama care is a ticking time bomb. It has to be reform. Amanda you are about as on partisan as tom friedman. Lets talk about what trump would mean because some Market Participants are very nervous about what a less globalized, less free trade friendly, would mean in the white house. David i will admit that trump is a flawed and at it. Amanda that is not a hard thing to admit. David his virtue is he is not schooled in 20 years of washington delusions and policy. They say his problem is he does not know anything. The problem is imperial washington knows things that are not true or have failed completely, and i think we need a disruptor. This election is defining, establishment versus antiestablishment. It is about the bicoastal elite and the bubbles on wall street and silicon valley. Thats what it is about. David lets say donald trump is elected and you are on a Transition Team in charge of economic matters. What is the one thing you advise him to do . David the incoming president is going to face a recession, there is no doubt about it. It will be 90 months long the day the next president is sworn in. We have headwinds everywhere in the world. The idea that yellen said china is fixing it self and we do not have to worry is totally wrong. If you look at the bls report last week, which is a lagging indicator, this economy is finally running out of steam. When that happens, wall street is going to panic. David what does President Trump do . Weid he has got to say have been living in a bubble. That is why this huge bubble in and we are not as wealthy as we think we are. We have a deficit going back to the trillion dollar range. So you were not say fiscal stimulus, you would say fiscal restraint . David s. we cannot, we are broke. Amanda some would say that is an argument for a great depression. David s. it is a continuation for the Great Recession that never really ended for 90 of america and we have wall street trading a stock market at 25 times earnings that are declining is something that is sustainable. It is not. The great thing about this election as i said, it is a defining moment. Establishment, antiestablishment, politically correct, politically incorrect. I do not know what trump will come up with. Today is very incipient, undefined, but at least he is starting with a clean sheet of paper. He is starting without all the delusions, and i think he can leap to the left of hillary and go after wall street that has not really been fixed, go after the fed that is crushing favors. There is much to do he can bring in those sinners voters and realign this though sanders voters and realign this election in the way the antennas the establishment does not see. They have a new kind of election underway that will be wild and woolly but maybe it will make a difference. David that is david stockman. He always you always know what he thinks. Through theexit eyes of a Prime Minister, the only labor leader to win three straight terms. John micklethwait said down with tony blair in a bloomberg exclusive. Amanda i am a mandalay with David Amanda Lang with david westin. John micklethwait sat down with the former u. K. Prime minister tony blair about his concerns for the economy. Mr. Blair i think we will remain but of course it is a referendum. If you look at the opinion polls it is very close so you have got to be concerned about it. That mostyou worried of the polls show that the old are the ones who want to come out and they are most likely to vote . Mr. Blair yes, but i believe we will have a big tarmac turnout. It could have serious economic consequences and i cannot believe people will shuttle this one off. I think we will get a substantially higher turnout than a general election. John so it will be more similar to the Scottish Referendum . Mr. Blair that is what i think because it is one of these decisions where you would have to be pretty small minded not to understand its importance. On the assumption that people realize whether you remain or leave has got consequences not just for the country but you as an individual, i would expect people to come out and vote. Anduse of the nature simplicity of the decision i think you will get a bigger turnout. John are you surprised about the fervor of the brexiters . Mr. Blair i think it has always been there but there are a large number of british people who are trying to figure out what it is all about. Remember, when you look at the issues that dominated the last general election, europe was pretty far down the list. Even though there was actually a substantial difference in the labour and conservative parties, it was not the issue that made the difference for the conservatives getting into number 10. I think there is a relatively small group of people who care absolutely passionately, but now the debate has been joined. John what is your advice to David Cameron . I remember in 2005 you went on what people called the masochism strategy, allowing people to attack you. Do you think he has done enough . Mr. Blair yes, and i think he has fought the campaign we have expected. Puts Prime Minister, he has arguments out there, and has taken a strong and clear position. John boris johnson, do you think he has gone too far . Do you think he is fit to be Prime Minister . Mr. Blair i think that is not dependent on this vote. I just find it hard to understand how someone who has been the mayor of london can seriously think it is not going to be economically damaging if britain leaves the European Union. One of the things i find strange is when people say, i have to agonize over this decision, i am not quite sure but now i have come down on the side of remain. This is a decision you should rather, if leave, you are absolutely clear. John and you are not convinced he is . Mr. Blair if you look at some of the things he has said in the past he thinks it would be wrong for britain to leave the European Union. Now he is frankly the most out there campaigner of the leave campaign. I think it is a strange position to find yourself in. If you have been in government and mayor of london, you are in some sort of situation of how bignt, you know this decision is with its consequences. If britain leaves, the day after you are going to get the beginning of what will be a serious economic shock for the country. You literally cannot dispute that because you will put on the table your entire relationship with the European Union, four decades of interlocking trade agreements,service all of that has got to be renegotiated or scrapped. Given that half of our trade is with the European Union, how can you not think you are at least going to suffer several years of economic concern . Amanda that was tony blair with john micklethwait. David the world bank sounds the alarm on Global Growth as business spending sacks. Overcome aes can stalled economy and thrive in the face of adversity. Futures,e a look at about two hours before the open. Futures are up somewhat across the board. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. David mrs. Bloomberg , im david westin. A quick check of the markets. This is where we put up various Asset Classes on your bloomberg terminal. We are going to look first on commodities. Commodities are in green. This week commodities moved into a bull market coming off of january lows. Pay attention to crude, holding firm. Both brent and wti above 50 a barrel. I want to point out the u. S. Dollar down somewhat, no doubt part of what is driving the commodities increases. Japan, the markets are closed but look at the nikkei index. Soy have new gdp revisions we have a risk on attitude in japan today. We are twocourse hours away from the opening how on wall street. The European Central bank new phase in its efforts to regions the euro economy by plunging into the Corporate Bond market. Sold 1. 4 billion of bonds in taiwan. Such debt offerings jump amid demand among insurers. Bloomberg first word news, here shery ahn. Shery president obama has signaled the race for the democratic president ial nomination is over, calling to congratulate Hillary Clinton last night. She will be the first woman to run as a president ial candidate of a major u. S. Party. States that of six had primaries or caucuses. Bernie sanders says he is not giving up and will meet tomorrow with president obama. David kamman focused on the economy in a tv special on the eu referendum, warning a brexit mean less investment and fewer jobs. He says British Foreign policy would be affected. In area after area after area, things that affect our great country we would have no say over. When we want to be strong in aggression, wes need to be with these organizations. Meanwhile, immigration was the focus of independent Party Leader Nigel farage. He agreed that immigrants contribute to National Wealth but there are more important things than gdp. Saudi arabia may impose a tax on millions of Foreign Residents as they try to lessen their reliance on oil revenues. Their status as a taxfree haven has helped attract foreign workers. There are 9 million foreigners living there. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. I am shery ahn. David thank you so much. Time now for the morning mustread, tom keene joins us. Looking ahead to the stress of brexit on the Global Economy. Central bankers are finding their policies gummed up by a potential exit of britain from the European Union. Immune tomies are not events elsewhere. Could join chinas slowdown and europes greek led debt crisis as barriers to a more robust economic recovery. What came out in 1939 was about closed economic systems. We thought we had the answer five or six years ago, but that is wrong that they are a more economic open economic system. With negative Interest Rates further grinding low rates, the South African gdp missed today. A commodity uptick a little bit. There really is no domestic central bank. David this is almost like the butterfly theory. Tom the butterfly is over in brooklyn this morning, or maybe last night. All the cliches are happening within a truly Global Economy. David does this mean that nothing will get done until june 23 . Tom that is a really important question and my answer is, markets get set up for exogenous shot shocks. The cardinal rule, this is so important, you never see it coming. You and i can think as hard as we want. Whatever it is going to be, you never see it coming. With this drive lower and Interest Rates, you just wonder what will be the shock maybe before june 23. David if you are a decisionmaker you have to preserve option now at you do not see it coming. How do you position yourself . Tom rhetoric is also a rhetoric of control. We saw that in the interview with tony blair, a proxy for the present Prime Minister. Maintaining control, maintaining. Ption alley optionality a great austerity of Different Levels and different opinions, but also the idea of degrees of freedom. How much degrees of freedom does chair yellen have or mario draghi . David you have to be worrying about what the other person is doing, not just what you are doing. On top of that we have the World Bank Report on Global Growth which has taken it down yet again. Tom i think one of the great mistakes, and this is true of all the media, we love to look at financial and banking dynamics, the fed and all that. Talkyou hear our guests about real economic effects, that is where the government is. That is what secretary clinton and donald trump are talking about. They care about the dynamics of the real economy. David that is so right and so wise. I could not agree with you more. Tom keene from bloomberg radio. Amanda, back to you. Amanda the world bank is cutting its Global Growth outlook as rich economies continue to stumble. You have the brexit, the fed rate hike, and volatility in commodities. It is not always external factors that stifle the healthiests companies ability to grow. Chris zook is with us. Deal on written a great profit and how to grow it. What specifically is it about a founders mentality. We found something that really amazed us, which is that when you separate the companies that are still run by founders or where the founders are involved, they performed 3. 1 times better in the stock market in terms of total shareholder returns. You could say it is all facebook, google, apple. We strip those out and even then it was 2. 5 2. 5 times better. It is not only the genius of these amazing founders, it was something else. It was three sets of behaviors and attitudes they infused into the company. Amanda tell me what those are. Drivengrowth is really internally. Your research has shown it comes from within. What are the three things the founder infuses the company with . Chris 94 of route causes of breakdowns on the outside come from within. It is like humans performing on the outside, there are route causes that could have been identified. Things that the founders all had at the very beginning and the companies can lose along the way, one is what we call an insurgent mission. Elon musk wanting to create interplanetary travel, Mark Zuckerberg wanting to collect connect the world. The second one is what we call a frontline of session, the intellectual curiosity the founders is bounded but as Companies Grow they often turn into bureaucracies. That is bad. I remember the ceo of the oberoi hotel telling me about his grandfather Still Holding customer comment cards sunday morning at 10 00 in the morning even though he could only see three inches. That is up session with frontline detail. The third thing is what we called an owners mindset. At its center is a set of deep personal responsibility to take immediate action, and a huge distaste for the creation of bureaucracy. Experiences, iy tom into cap cities and murphy was at the very top of the country company. He was willing to take a risk and the next generation became much more conservative. Did you see evidence of that . Chris absolutely. Companies that are built on variable visions and ideas is that the history of success creates a next generation of people who and that being managers instead of leaders, and the leaders gradually turn into custodians who run into the risk of turning into bureaucrats. In a fastmoving market if you are a bureaucrat, you are dead. Amanda what about the company like apple . Does it still have the founder mentality . Certainly, the return of steve jobs is one of the founder revitalization stories, infusing the founders mentality of an obsession with developers on the frontline. Now going forward, the big issue of will be what we have talked about, a willingness to take bold risks rather than innovating at the margin on products that have changed our life so profoundly. Apple could rest on their laurels but you are not allowed to. Visiond to have a great and that will need to be another big, bold set of bets may be around Artificial Intelligence or something of that nature that electrified the young people to want to stay and join the movement. David thank you so much. Duke. N kreuk chris amanda generating sustainable longterm value for shareholders. Pledged to herra investors. With sales declining, how will the nations largest automaker get back on track . Amanda this is bloomberg. I am amanda lang. In the next hour, Citadel Securities head of executions will be joining us in a bloomberg exclusive. Here is your Bloomberg Business flash shery here is your Bloomberg Business flash. Nissanves from to, and responsible for safety face a criminal complaint in japan. That is the first time it has happened in the companys home market. The complaint comes from a woman injured by a to cut a airbag. Airbag. A fiat says a venture with uber could be announced. They are also having discussions with other automakers. Va expects to be its 2017 target of 1 billion in sales. They plan to open about 190 stores in Mainland China by the end of 2019. Their Parent Company intends to go public in london in about four years. David yesterday morning, gm held its annual shareholder meeting. They have had strong north american sales and come along way since 2009 when they filed for bankruptcy. Joining us to recap some of yesterdays Brian Johnson, Barclays Research analyst who. Ocuses on the Auto Industry you have been following gm for some time. What do they need to do to sustain their profit trend . Brian there are legitimate concerns that north american profit were running about mid17, and were not going to get better. Have had a great pickup truck run and suv run. Even if margins come in again, is a stock that is trading at a five to six times de worth a second look . David they say they are prepared to lose some auto sales but they want to change their mix. They want to really increase the cadillac component because they make a lot more money off of those cars. Is that realistic . Potentially, but as they have said it could be a 10 year endeavor. What happens to gm and the next cycle . What is the Downside Protection . Coming out of that cycle, where is cadillac going to be in luxury and where do they fit into this new world of disruptive mobility . David i talked to the president of gm about the intersection of autonomous with ridesharing. We believe that Driverless Technology will fundamentally transform what we call the traditional rideshare Business Model if you like. David has point is it is not just rideshare, not just autonomous, but when you put the two together. Do you buy that . Brian absolutely. We went through an analysis about a year ago and we think the massmarket shift from owning cars to using mobility as a service. That could result in car sales going down 60 . Particularly in the mass Market Family sedans and suvs, we issued a challenge. Our oems going to be like kodak or liketo verizon . The steps that gm has taken with lyft and crews. I am not sure if the stock investors are willing to pay for that now but it should position them well for the next cycle. Amanda where does the u. S. Dollar which is likely to stay strong, play in for gm . Brian not a huge impact because on the one hand, it does help the japanese but on the other hand, the japanese are producing so much in north america and mexico it is not the same dynamic. Unfortunately the euros they do not make in europe, the dollar is not going to have that big of an impact. David what about jam financial, will that gm financial . Brian gm financial is transforming to become a boring lender. Boring is good in the Consumer Credit world so we think that will help fill in sales. We do not see the big swing factor on the upside and given that it had a sub prime heritage, that is one of the things investors were worried about. David that is Brian Johnson coming to us from chicago. Amanda time to check in with julie hyman. Lets start in europe and what is going on with these utility shares that we have been talking so much about. People familiar with what the European Central bank is doing is buying utility bonds, including an gsa and rwe. E. On is also going higher and earlier in early trading for us. Looking at fiat chrysler, this is of course the first major automaker to strike a deal with google on autonomous driving and now it is talking with uber about some kind of partnership on the same front. That could be announced by the end of the year although it is at a preliminary stage. There was also discussion it might be in talks with amazon for Driverless Cars on deliveries. Verifone, the stock is plunging 29 after it came out with earnings that missed estimates, cut its forecast. It says it is aggressively executing mitigating actions including cutting jobs and reviewing underperforming businesses. The stock got a number of downgrade. Up, u. S. 10 year notes are in the highest demand then in half a century, at least i one measure. Next on bloomberg. David this is bloomberg. I am david westin. Time for off the charts. Demand for 10 year u. S. Treasury high,is that a 50 year but why are investors flocking to treasuries . Julie hyman is here to tell us. Julie they think it is one of the safer places to go around the globe. We have been talking about all of the end certainties. All of the uncertainties. If you are worried about Global Growth and the uncertainties surrounding a brexit, one of the places to go is u. S. Treasurys. This is what is called the term premium, a new art fed calculation of the premium a new york fed calculation of their premium of what new yorkers are willing to pay for the 10year note. Negative,ing it at 0. 4 . This redline is zero. 1962, that is to the last time it was negative and the last time it was this low. This potentially presents a challenge for the fed because if you are cutting rates and there is a floor under treasuries because of a global demand, perhaps treasury yields are only going to go so low. David the main point as i understand it, investors are willing to pay more for 10 year treasuries than what Inflation Expectations would justify . Julie yes, and it is not necessarily shocking. In japan we have negative yields and in germany, yields are nearly negative. It is getting awfully close. David we are flirting with zero on a 10 year german bond. Julie everything under 10 years is already negative yielding. This expresses the enormous appetite dubai sovereign debt that is viewed as safer in this environment appetite to buy sovereign debt that is viewed as safer in this environment. People what people want what they think is more safe. David it helps drive the equity rally. If you are getting zero returns julie you have got to get somewhere. David that has got to be supporting the s p 500 in some part. That is off the charts. Amanda still ahead, we will examine oils massive run and what that means for the economy and stocks. Ge will be here in a bloomberg exclusive. E amanda Hillary Clinton versus donald trump. Hillary clinton is the victor in the democratic race. It will be a bitter battle. On because of history. The s p 500 is one point away from a record high. Unusual risks keep investors in a prudent state of mind . Amanda super mario fires the starting gun in markets in europe. Will that be enough to stimulate the economy . Amanda welcome to the second im hereloomberg , with david weston. We have another two hours filled with big interviews. David in the coming hour alone, we will hear from Steven Wieting. Filling aow he is summer full of question marks. And Jeff Bornstein will be here. The digitaluss investment company. Amanda lets go around the world. York. Murphy is in new will kennedy as the oil rally continues. Matt miller as we begin the corporate Bond Buying Program. We begin with the race for the white house. Hillary clinton has declared herself the victor in the democratic nominating race. Becoming the first woman to run in a Major Political party. We turn now to megan murphy for more. Megan, what comes next . We have conventions coming up. What happens in the interim . last night was a historic night for Hillary Clinton and a historic night for the u. S. As we said earlier, who didnt get the memo . Bernie sanders. Her rival is running a much tougher campaign than expected. He vowed to continue on through next week and even to the convention, where he has talked about trying to run a contested convention. Days, the clinton team and the sanders team will talk to each other to see if they can come to an agreement as to how to unify the party and how to put forward her operations and strength with the momentum and enthusiasm which has driven the sanders cap as far as it has. Have adonald trump toward week last week. Paulsenior leaders like ryan overtly criticizing him for comments they called racist. That was with regards to a judge who is residing over the case regarding a lawsuit. David going back to that point. Normally it would be too early to talk about the Vice President ial candidates. But this is not a normal race. Is there any progress on this front . Megan if there is anything that would be turning the page, it would be an announcement like that. The problem is, names who were nominated have come out against him recently. It is going to be difficult for him to turn the page. It is something he will consider. To launch aoing full frontal campaign against Hillary Clinton. David fasten your seatbelts. Thank you so much. That was megan murphy. Amanda crude oil is touching 51 a barrel. We turn to will barrel two will kennedy for the latest. Have continuing passages in nigeria. We have attacks on pipelines. And we also have a draw down yesterday with stockpiles from the u. S. , according to an industry body. At the big thing that comes into focus is the strength and demand with the intelligence administration. Reach a recordl this year. Something that people never expected to see again. And that is because cheap oil is driving people to drive it further. And the strength for local demand is driving this higher. Thisd the october high morning as now we are at another high. Confidence is driving Prices Higher and making it bullish. Amanda will kennedy, thank you so much. The first time, today, the European Central bank has plunged into the corporate market. Lets bring in matt miller in berlin. What are they buying and how much . Forh we have been waiting this data, come and it is finally here. So far, we know that from talking to traders, it is buying telefonica and demons seimens. They want to go into debt that is highly liquid. And whatant to allow they want to allow was to allow the market to front run these trades. So they are essentially making it possible for investors to get in on the deal before they get in on it. Will investors, be disappointed with how much they have bought . That we talked do say it should be around 5 billion worth of debt that it is not a huge universe. Less than 700 billion. The european corporate debt universe. They could make way as if they buy a lot but they could make waves if they buy too little. David great to talk to you in berlin, we wish you were here. Amanda we do miss him. The s p 500 continues to rebound from a february low. Oliver renick is here with us now. ,e were watching this yesterday it is getting closer and closer but every time we hit it, we pull back sharply. Oliver that level has been hard to get over. We are getting close and i think the question becomes whether or not the market is driven on some of the fundamentals that we have seen over the past couple of weeks with Stronger Economic data. A lot of Companies Beat butes but his visit is this a positioning rally . It is having to chase the market higher. There are lots of people who do track the amount that investors need to buy stocks that fall behind and i think it could be a leg up. But only talk about the election and political uncertainty, there is a question as to whether they will put a cap on things until november. So despite the fact that the june hike is out of the question, it is on the horizon still. Amanda monetary positive being stimulative, you would expect market to respond because the economy is strong but we got a mixed signal. Why are stocks still rallying . Oliver it was an encouraging moment the past couple weeks where we had the market responding positively to economic asia and to these prospect of higher rate but we are still higher. It comes back to the question of people who are bearish on the market. Hedge funds had removed the long position by the most in five years. So what happens is that we get to higher levels and at a certain point, you cant rely on a market to go down. You have to either add on the positions you have, or create new ones, and i think that is room for a leg up. But we have had a nice little move. In the past few weeks but now they are starting to get overbought. So we will see how individual Companies Keep this up. Amanda oliver renick. To julie hyman. Julie given the conversation you are having, it is notable that futures are trading higher even as european markets are going down. You see the swiss market, the german market, sweden all heading lower although not a huge percentage decline, the u. K. Has a little change. Is trading lower this morning as people pushed out rate expectations. The flipside of that is that we continue to see breaking in commodities. Old is coming back this morning. We see the bloomberg Commodity Index go higher. And copper is higher. Chinese import data is down in the smallest drop since late 2014. Is purchases rose and that helping to support some of the industrial commodities. Nickel and aluminum have been trading higher on the chinese data. Ti that is the next data point to watch. David here is shery ahn with the bloomberg first word news. The second time in two days, police in turkey have been the target of a bombing. An explosion blew off the front of a police car in turkey. At least three people were killed at 30 were wounded. Yesterday, a bombing in istanbul killed 11 people. Comics in the last year have been blamed on the Islamic State and kurdish rebels. David cameron focused on the economy in his evening special on the eu referendum. He warned that a brexit would warn against less investment. He said or in policy would be affected if the country leaves the eu. After area, after area, things that affect our great country, we would have no say over. When we want to be strong in front of putins aggression in the ukraine, we need to work in these organizations. We need to work in nato, the u. N. And the eu. Focus immigration was the he said that there are more important things than the gdp. Build aa plans to platform to hunt for minerals in the South China Sea. It is a project that could serve military purposes. Chinas claims over the South China Sea have raised tensions with vietnam and the philippines. Global news, 24 hours a day. Powered by our 2400 journalists in more than 150 news bureaus around the world. Amanda coming up, time to reach ahead. Stocks are raising to high levels. Whiting joins us next. Amanda this is bloomberg , Global Growth slowdown. Some of the worlds biggest economies including the United States Steven Wieting is a chief investment strategist. Thank you for being with us. You have just extended your outlook with the cycle. That is the big question. Cycles come to an end. What will extend this one . Steven what we have seen this year, stabilizations in a douple of things that harme the outlook last year. The extremes of the Market Correction created debt distress and this is clearly reversing. It has been stabilizing. The u. S. Dollar isnt surging against all the trading partners, but the thing that has thiseen recognized, all talk about the ineffectiveness of central banks. They have been remarkably effective in credit markets. There have been dramatic declines that we have had and it ,s not just credit returns we have had an 8 return in five months. That is lowering the cost of capital for firms. David it is lowering the cost of capital but is the capital being put to good effect in terms of long growth . Steven we want to think about this in terms of the financial market. It is lowering the bar. What we have seen in the past few years with the Unemployment Rate dropping one percentage point per year in the United States, the growth rate may be slow but you cant grow faster than your capacity to grow. We cant have the Unemployment Rate, as much as we would like it too, fall 20 . Fall to 0 . David to what extent are you concerned with productivity numbers . They have leveled off. Steven this is something we cant control. Economists should brave up to the fact that they cannot brave when technological change creates a breakthroughs in the economy that allows us to grow faster. We havent seen that. And the production weve seen in it was a sector level impact that comes off as production has fallen. So we have seen weaker productivity growth, and we the growth as if rate is adequate to employ everyone and keep us on an even keel then it is sustainable. Naturally, we would like to see a stronger trend growth rate and that involves things that Monetary Policy cant control. That is putting technology to work to create faster outlets. This is moving beyond the policy tools. Tools, speaking of those super mario is added in the bond market. I want to throw on the screen a look at the Balance Sheet which is looming. What is your sense of how successful this move will be . Certainly, anticipation effects are a big part of any Monetary Policy step. The announcement itself has a big effect. It has had a big effect in the u. S. Bond market, where relative value favors putting money to work in the u. S. Corporate dollar debt in a higher yield then we see in the eurozone. But you are going to have some success and we can alter this program. Whereare things that Monetary Policy lags. Where the ecb was four years behind the United States but it is now catching up. This should last for years. Is why a lot of the countertrend movements we have seen will be unwound, gradually. The ecb will be persistent with this program. David going from the macro to what doespecific, this create in terms of opportunities . How do you allocate your portfolio . Our highestave overweight in u. S. Investmentgrade debt. That has been a pretty highheeled, relatively speaking across the rest of the world. It has rallied a tremendous amount. We look at dividend yields which have not come down in lots of sector wise, it is important to note, that the Petroleum Sector globally has had a recession as deep as any in the last 30 years. And we have seen the decline in a Capital Investment in the global Petroleum Sector of 60 . That will create a rebalancing in supply and we are expecting. O see Higher Oil Prices what this has done for us is raising our correlation to petroleum sensitive assets. Years wecouple of purposely avoided petroleum sensitive assets. So things like latin american debt, we have gone to overweight there. Canada is tied to the oil price. The sector is a meaningful opportunity, it will not be easy money like it has been coming from the lows of january, but there are tickets gains to come. It is the one industry in the world that already reflects a beatendown recessionary condition with some opportunity to rebound. The s p 500 coming to a record high, what is your take on the valuation . If you look at any measure of the multiples, you can see that we are at pretty high levels here. With valuations. Is it justified . You can ask yourself, are treasury notes trading at 60 year high values . The answer is no. Does this mean that forwardlooking returns with u. S. Stocks will be as high as they had been in the past . No. But the world in which we have had improvement in credit markets, with lower return requirements mean lower return requirements in equities. So i think that we hold a high value when we have reduced future returns. There will be pullbacks and none of what i said stops as from having a 15 correction from the beginning of the year. We are not expecting this recovery to last forever. Had a lot of false warnings. And right now, the bulk of the evidence has come in to suggest can have some earnings recovery to support it as early as the second quarter. Amanda Steven Wieting, great to have you with us. That was his midyear outlook on extending the cycle. David coming up, has bullion gone bust . Has it fallen victim to expectations of higher rates . And later, it is not the general elected the General Electric you grew up knowing. Amanda this is bloomberg amanda . After a rough month of may, bullion is fighting back. Lets talk about the outlook here. How closely, at the moment is gold fortune tied to what the fed does . It is pretty obvious, it is tied to what the fed does. Once we saw that the probability that the fed would raise rates and drop below 25 last week in the june meeting and then drop meeting, into the july gold continue to swing. And the probability of rates moving in the Fourth Quarter are looking slim. Amanda what will keep moving gold higher . A currencyning into proxy . Joseph that is exactly right. I think it is. Because gold and all of the other metals out there are being dollar denominated, when you see a weaker dollar, it has basically allowed gold to continue to drift upwards. Theas been in a range over last few months. The dollar weakness recently has given it a catalyst but definitely it is a proxy. Amanda i want to jump to copper. Withve seen a big increase copper inventory. We are looking here at a chart of copper inventory. 28 spike in two days. How much of that is copper weakness and how much of that is china weakness . Theph if you look at latest imports from china, which has boosted copper in the shortterm, the imported quite a bit. But this is tied with the fall in the dollar, they are seeing an opportunity. I dont think that will be sustainable with copper and i think copper traders have to be careful on the upside now. I dont see the catalyst going forward. Amanda great to have you with us. Up next, becoming a 124yearold startup. Jeff bornstein joins us to discuss the massive change with ge. Okay, ready . Whoa [ explosion ] nothing should get in the way of the things you love. Get americas fastest internet. Only from xfinity. Amanda this is bloomberg amanda . On yourme to check in function in your terminal. We will pull up the panoply of those that are most active. With russia. The russian ruble has a nice bump to the upside. The canadiann stock market yesterday, anything related to oil is doing well. That is because inventory has fallen. We will get inventory readings at 10 30 to find out if it will continues. The ecb is in the market for buying corporate and we have the fed out with a new deal, but take a look at china because trade data this morning was sluggish. I have watching copper. A 28 jump in copper inventory the past two days. The upsideoving to and that may well be driven a little bit by the china data. In casewatch that one inventory numbers also send that back down. David we are a little under an hour away from the opening bell and here is what you need to go at this hour. The european entered a new phase. Plunging into the Corporate Bond market for the first time today. The International Energy agency has cut its gas demand for the fourth straight year. 1. 4 billion of in taiwan. S lets find out what is going on with the rest of the world. Hillary clinton can turn all of her attention towards donald trump. She claimed victory in the race for the democratic nomination, becoming the first woman to run as a candidate of a major u. S. Party. She won four of these six States Holding caucuses yesterday. Bernie sanders says he will not give up. But he will lay off a large number of Staff Members today. In michigan, Authorities Say a pickup truck slammed into a group of cyclists, killing five and or others were injured. Before the crash, police had received reports of the pickup Truck Driving erratically. S is getting closer to winning the election. Hisas a. 2 lead over rival. Father led the country for years and is now in prison. Global news, 24 hours a day. Powered by our 2400 journalists in more than 150 news bureaus around the world. David thank you. Havent caught General Electrics new ad campaign, take a look. Im proud of you. Premise is that the old manufacturing that ge groep with is now a new country. This transformation from old to ew is much more than a perception. We are joined now by Jeff Bornstein. 120do you take a fouryearold company and turn it into a startup . Jeff therein lies the magic. The biggest asset of the company is that it is the only surviving member of the original dow, we operate in 180 countries, the huge scale, it Aint Technology but they are also the biggest liabilities. The theme of Big Companies is slow and bureaucratic and what i think we need to focus on is making the company act and react with a sense of urgency. And that is what we have been focusing on. David talk to us about specifics. What does that mean . Jeff we think there is an enormous opportunity to get more productivity out of assets to get a better outcome. So getting more fuel efficiency out of a jet engine. We think there is an enormous Value Creation that help you run machines and systems more efficiently than what they have done before. Is thethink the internet way to get the data from the machines, it insights from analytics and drive different outcomes to customers. David how far along are you in the process . Jeff we are making very good progress. We will invest over 1 billion this year. Our view is that the next 35 in the spacerms will be determined and we want to be one of them. We want to create and to be one of the operating system solutions. David are you in the marketplace for selling this . Jeff yes we are. Today, we have 10,000 people developing and we launch the 2. 0 in the first quarter. There will be new releases throughout the year. 55 partners and we have signed up some of the biggest names in technology. Most of them are partnering exclusively. Company that 200 we take to our facility to show what we are creating has taken up the effort with us. The uptick is great. As a cfo, you look over multiple years. What portion of ges business will be represented by this . Jeff i need to say it differently. It will be pervasive across all platforms. This is the next generation of services for ge. Creating new productivity and value in the customer franchise. It is also a huge source of growth for our company. We are protecting our own company through this Industrial Operating system. I dont think there is a lot of middle ground. This will either be a great effort on behalf of customers and we will have more productive customers who will get more value out of our products, or this will go to the industrial internet and it will go way beyond General Electric. And the takeup globally will be huge. So i dont think there is a middle ground. It is ios or android. Once the world has a platform, that is the solution. It is successful, does it show up in the bottom line . Because of increased Pricing Power and market shares . Is all that. Increased productivity for ourselves and customers, higher market share because of differentiated products and services. Cases, itk in some will be Pricing Power, at least on the platform. The more people developing applications, the more money we will make and the more pervasive the platform. What so it is not only you are going to but also what you are coming away from. Where are you in the transformation, in getting out of that business . Jeff we announced the transformation of little over a year ago and on the day we announced it, there were for a Little People who thought we could follow the timeline that we said we could. A little over a year later, we are when youre ahead of the timeline we gave people. Maybe even further. Equity split off of the Credit Card Company and we have reduced the number of assets with the company. A values that we have unloaded the asset that is right on top of what we told investors we would be able to do. Absolutely ons base in terms of returning capital to the company. Effort andthat the the job of the ge capital team is doing right now, one of the largest corporate restructuring, it has been phenomenal. Because you are in that business it wasnt necessarily pleasant. There was one bank that came out from under that. We filed for d designation at the end of march. We have been working with the up stock. We are hopeful that we will be dedesignated sooner. We have donald the questions and doubly followup and we think we are positioned well. David if there hadnt been that regulation, would you have gotten out of the business . Jeff a great question. I think we would be smaller today. We have found ourselves in a companyse 60 of the earnings were in Financial Services. But we are really a technology company. Product solutions. Side to theive Financial Services had gotten out of whack. So i think we would have been much smaller and more focused. Valueocused on delivering versus just being a money over money lender. So i think we would be smaller but maybe not as dramatic. David the government plays a role in General Electric. How much of a factor was the government in that decision . Jeff the federal government . David state. , we evaluated up more than 20 locations. We ended up in boston for a number of reasons. Digital Industrial Transformation we are going through, we wanted to be talente that created the that could help us move that forward. The reality is that boston spends more on r d for capital than any other city. It has some of the best academic institutions in the world and importantly, it has the support ,f the mayor and the governor the city of boston and the state of massachusetts, it was a huge differentiator for us. They were all in and they worked hard to make it attractive. In boston, we put the pieces together with everything we wanted. They werent the city that offered the most Financial Sense but when you put the whole package together, including, accelerating our transformation, we decided boston was the right place to be. Is the biggest concern General Electric has going into the future . Back up untilo the crisis, the world enjoyed about 4 productivity. Gdp percent growth. Nobody should be surprised that we are at 2. 5 . Think advanced manufacturing, Artificial Intelligence, software they will be the source of the next wave of true productivity in the industrial world. And it will massively reshape how Companies Design products. I will put you on the spot. Your ceo, he gave a commencement address and he listed some concerns for graduates. And one stuck out for me in particular. Do you share that concern . This is the president ial election year, what can be done . Jeff since the crisis, the level of populism is not unique to the u. S. , it has exploded. People are massively distrustful of institutions. Not just government. Big businesses, as well. They are disappointed that the income gap continues to widen. We have a place a lot of jobs that were lost but they might not be the same quality of jobs. The most important thing to us is that we need a government, a leader of our government who at the end of the day, it is about being competitive. We have been focused on a lot of things in this country and a lot of it had nothing to do with creating jobs. Jobs are the great elixir. They supply wage growth. That is what we need to be focused on. David is that is the question, u. S. Competitiveness, does donald trump win . Jeff im not going to make an individual statement. [laughter] david i had to ask. Jeff bornstein, great to have you with us. Amanda coming up, and other bloomberg exclusive. Jamil nazarali joins us to discuss the state of equity markets. David this is bloomberg. I am here in the green room. Ing up next, bob michael bob michele will be up. We are watching u. S. Futures thriving this morning. You can see they are across the board. The s p 500 is heading towards the highest level since july. Expect bearishness at the start of the year. You can see this is a repeating series. We get close to the level and we pull back. , who go to Erik Schatzker is with jamil nazarali. Good morning. Thank you very much. We can think about equity markets in two ways. Look at valuations and the point at which the s p 500 about more, we can think them in a different way. How well are they functioning . The u. S. Equity markets are functioning incredibly well. They are better and faster and cheaper than ever before. But today, because of the efficiency improvements, Retail Investors save more than 1 billion a year compared to the cost 15 years ago. Why is very persistent narrative that the market is saying that the machines are taking over and the little guy is getting squished . That whent of it is things become more efficient, there are winners and losers. Lot of thely, a losers are pining for the days cents on theere dollar and intermediaries made a lot more money. Today, it works much better. Waver for thatag narrative, that story line, it is Michael Lewis, he published a book. Does it feel funny to you, sitting where you sit at citadel , that you are fighting against Michael Lewis . Me is what feels funny to that we have delivered enormous improvements to how trading is done. And the markets work extraordinarily well. And yet there is a narrative that does exist, which i think is really unfortunate. Markets work well, it is cheap to trade, lets take you at your word. I believe you are right in this case. It isnt perfect, however. What could be better . Jamil the s p has created an Equity Committee to look at improvements in the market. Some of the things we are looking at our individual stock Circuit Breakers. Well,enerally work fairly like the Circuit Breakers in your house. If there are three and four trips a day they turn on well but in a fastmoving, chaotic market like august 24, when you had hundreds breaking, they dont turn on that well. So one of the things we look at is making that much more smooth. Erik part of the problem is that the industry is always fighting the last problem. We are trying to fix what went but not what goes wrong be next time. Jamil partly true. I think the committee is being fairly forward looking and thinking about what may happen in the future. But the reality is that you cant predict the future. And it is hard to know what will happen. Erik where to sit and theyll sit with the rest of the industry, in as far as the evolution of trading . Jamil the markets work incredibly well, i do want to make sure that a lot of the improvements that have been made are not rolled back. That is really important to us. One of the things we are really advocating for is things like kill switches, mandatory kill switches at the exchange level. Happens,hen something that will actually be stopped early on. At the exchange level. Erik that is what you advocate for but you are fighting a few things. Like the application jamil we have been a big vocal component of the incorporation. We think it would be bad. The u. S. Equity markets function like a superhighway. The audubon. Thats delay will create a huge pothole in the superhighway, which, at the best of times, will delay everyones commute and of the worst of times, it will create huge traffic jams and pileups. Quite frankly, they havent advocated a single benefit for anyone who would post a visible order on their exchange. Has a different view. Talk to me about how much market share you think you could have, you have about 6 right now . With the exchanges included . Jamil on a typical day, we trade about 15 total consolidated. That means more than one in seven had Citadel Securities on the other side. We are continuing to grow those businesses. Some of the businesses we are looking to grow our in other Asset Classes, that are not yet automated. Fixed income Interest Rate swaps and etc. Erik people inevitably with the Parent Company that owns a hedge fund. Would it be a benefit to you and your business and its prospects and ambitions for it to be independent . For you to list publicly or separate further from citadel . We we are to siebert are two separate businesses. We are very separate businesses. Erik would it make sense to go public . Jamil that is above my pay grade. Erik would it help your business if people thought of you as more independent . Jamil i think a lot of us think we i think a lot of people think we are independent. I dont think that story has got through completely. Erik thank you very much. , we are here at the conference in midtown manhattan. Amanda, back to you. Amanda we have more bloomberg coming up. Amanda welcome to bloomberg. At the skyline of manhattan today. Lets take a look at how the markets are moving. Them trending higher in the premarket. We havent had much movement, right around these levels for most of the premarket. We are keeping an eye on the s p futures. Here are some across assets. We are keeping an eye on the u. S. Dollar weakness, that is giving us strength in japan. 3 , crude gaining oil also continues to rise. A great morning. Blair,we have had tony david stockman. Amanda a wonderful conversation. David they have made a lot of progress. Up next, we will see if stocks hit the record high at the open. Back to the conference for an exclusive lou eccleston. The European Central bank begins its massive corporate Bond Buying Program today to purchase debt from companies. The World Bank Lowers the growth forecast for the Global Economy. And after a massive selloff yesterday, shares of lending club are getting a boost in the premarket. The company is exploring potential takeover options. David we are under 30 minutes away from the opening bell. This is bloomberg. Jonathan ferro is off this week. Amanda we have three stories that matter to markets. Hillary clintons win yesterday makes her the Presumptive Democratic nominee. In china, exports begin to stabilize and here to discuss quite thes range of expertise it makes you perfect. Our top three stories are diverse. Lets start here with the race against Hillary Clinton and donald trump, expected to be a nasty one. Primaryyesterday in the in california where she beat Bernie Sanders and secured enough delegates for the nomination. Now, eating donald trump. Where do you place this . I have heard mixed views from people who manage money about where they placed the strength of the election. Some say it is just noise and others are very concerned. Im hoping the noise was the primary season and now that we are going to a general election, we will see concrete thoughts and policies come out of each candidate. It is interesting that we have the fed clearly backing away from monetary stimulus that is going on with all of the other central banks. They are trying to raise rates and get to a normal environment and that puts pressure on the fiscal stimulus side. That is what i would like to hear from the candidates. Is it going to be some sort of spend . Structural reform . How do they see that transition mechanism into employment . David what structural reform would make the biggest difference . Tax reform . Is it could be, but it incentive spending and investment. I know we will talk about the World Bank Forecast drop, but at the moment, there is a failure of businesses to invest and spend. Upry summers picked this with cyclical stagnation. So you need to incentive businesses to invest and spend. I dont know what those incentives will look like. Amanda so you are looking for clarity on some of the initiatives and the expectation is that now we can get candidates talking to each other . Has done enough. And they dont want to cross the divide into these radically unconventional policies, like buying debt in the market. Letting debt go to a negative Interest Rate policy. Theyre scrambling to get to something that looks normal. Case, we need to spend a lot of time focused on the fiscal stuff. Why havent we seen the market react more . Is it just a matter of time . Is that the real issue here . Bob i think the issue is the amount of liquidity that is all of thented by central banks. It is literally flooding the market. And it isnt only equities. , governmentu look bonds and aggregates are reaching new lows. And we are about to cross the negative yield threshold on. Enyear german bund so the weight of cash is inflating all asset prices and it is making the fed uncomfortable. With other central banks, it doesnt seem to bother them. Amanda that is a good segue to the second story. David the ecb is embarking on the next step to stimulate the economy. The central bank began buying orbit bonds today as part of a monthly bond purchase program. Some of the initial purchases varied from several European Utility companies to ab inbev. What do you expect to come out of this . Done somenk this has of it. I think when the initial program was announced, there was a lot of discussion about me having con 10wants to buy and a 12 cold and supply rose to meet demand. A lot of it is coming from u. S. Subsidiaries so i think this could be a case of by the room or sell the news. Nonetheless, we will wait to see how much is he be buying emerges. As somebody who participates in these markets, can you give us your review of how distortion error he this behavior is . Bob they are trying to jumpstart the extension. That has been one of the frustrations with the European Central bank in aggregate, they have lowered rate is, but Government Debt and they are not seeing the degree of the extension of credit through the system that they would like to see. The reality is that there is a lot of writing with the corporate debt because in the traditional rounds of it, they would buy them and resupply them into credit. So that method is in place. We have to see what companies are doing with the borrowing that is occurring. There is a lot more engineering than investment. It goes back to what we want to see from the candidates. David it does strike me that there is a transmission mechanism problem. Corporations have had a lot of and borrowo invest money and yet, that has not resulted in investment in productive assets. What is wrong with the transmission . Model, theou run the aggregate demand is not for you would expect it to be. There is a demand deficiency out there. It could simply be that the debt overhang from the last 20 years is so significant that it is just taking consumers and companies a lot more time to deliver than expected. Of aa i want to bring chart showing the volume of activity across sectors. O. Function here is tf l it shows that financials are off the chart. Utilities are dead last with low volume. Can you tell us what the market is saying about utilities right now . Bob you know, i think it is really just a stretch for the yield. If you go back particularly to mid february when we had the low in the market, it was really the and financialnted issues that became the cheapest. So everyone has been scrambling to cover the shorts that were there. I think there is an infatuation going on with bank issuers in particular because of the regulations. Are tellingons banks to hold much higher levels with anything that is risky and potentially could make a lot of money. They are simply raising capital and reinvesting it in government bonds. The thirdts get to story, positive news out of china. Exports stabilize in may following a 4. 1 in returns. Went down 4 , signaling an increase interesting demand. Characterized as still fairly sluggish. What does this say about what is happening in china . Bob we are watching china closely after watching the Central Bank Policy response. And how they engineer a soft landing is critical to us. Clearly, they are doing things that are working. To wheno back everything was falling apart, they embarked on another fiscal stimulus, more infrastructure and im interested to see what happens to the economy when that runs out. The other thing we should take from this is that the devaluation of the currency has had an impact. So i think they are going to be fully committed to the defective currency war that is underway. David to that point, as you look at the numbers, whether it went up or down is independent of to nominating the yuan or the dollar. The denominated dollars went up. What should we be focused on . The you cant disaggregate two. But looking at the policy response from , you have to look at the yuan. You arewhen you say watching closely for stabilization, one of the things they were talking about is how the credit growth of the company is slowing but the credit is in or miss. What is the risk in china spilling over . Is an dont think there asymmetric risk. There is a lot of debt, there has been a lot of ball or in a lot of borrowing. They have tried to rein that in. I think they have a lot of capital there with rational policies. The reality is, they have created lower growth as they try thehrink and contain lending and borrowing that has occurred. It is going to have a knocked down effect to other economies in the pacific area. We are seeing that, particularly from australia. David those are the three stories that matter now. Lets go to the premarket with julie hyman. Julie i want to look at premarket futures. The number to watch for the s p 2130, the record close from last may and it is the number we are getting closer to. This be higher indication morning, it is a commodity led rally. We will be checking numbers at the open. Lululemon, watching it came in with earnings after the close and shares initially fell because earnings per share of analyst estimates but they are recovering. The Company Coming out with sales that beat estimates, especially if you look at it in Constant Currency terms. They talked about the negative effects of currency and it was somewhat unexpected. Their phone is also a stock we are watching. Retail has been troubled. The share is down 30 after the company came out and cut the below what analysts are expecting in terms of the fullyear view. Lending club, lets take a look at the stock. Shares are bouncing 6 . Fallen 60 this year following the parts of the ceo. Before he left the company, he was speaking to companies about getting financing and since he has slept down, he has spoken to buyout firms about the possibility of trying to take over the company. I know you guys will be talking later about that in the show. Amanda lets get the first word news with shery ahn. Shery obama signaled that the race for the democratic nomination is over. He called Hillary Clinton last night to congratulate her on winning the delegates needed for the nomination. It was a historic night. Hillary clinton thanks to you, we have reached a milestone. In our nations be ary that a woman will major party nominee. Clinton won four of the six states that held primaries, including the biggest one in california. Bernie sanders says his campaign will continue, even though the elegant math is overwhelmingly against him. He will meet tomorrow with president obama. Blair says he expects Great Britain to stay in the European Union but he admits recent polls show a tight vote are a cause for concern. Earlier today, sitting down with an exclusive interview to talk about the relationship with britain and europe. Think britain i has been good for europe and europe has been good for britain. And the logic within the is profoundly related to our prosperity and security. Blair was critical of boris johnson, saying he should realize that this decision will result in economic uncertainty. Is not playing at the u. S. Open next week as he recovers from surgery. Ins will be the third time six years that injuries have kept him out of the tournament. The threetime open champion hasnt played since a tie for 10th place in august. Global news, 24 hours a day. Powered by our 2400 journalists in more than 150 news bureaus around the world. I am shery ahn. David coming up, concerns from a potential briggs it and oil prices have the global bank renewing its views. And coming up next, lou eccleston. David this is bloomberg. The world Bank Downgrades its outlook for Global Growth from 2. 9 to what it calls 2. 4 . For more, we have jacob us isaard and still with bob michele. Us into the report that has just come out. What is one of the factors that caused it to downgrade . Highlightsreport where the real problem in the Global Economy is. Emerging markets in particular and commodity exporters. The report says that commodities have failed to adjust to a low commodity price and they are now paying the price. To be clear, 2. 4 for Global Growth, that used to be a global recessionary level. This is truly an abysmal outlook. Amanda so it follows on what we have known, we are in a low growth environment. Is the expectation that we are low for long they fired shots across various economies, saying, get your act together. Any sign of improvement . Jacob so far, no. With thety is that potential expectation the potential exception of india, other markets are in deep crisis , or in china, slowing down dramatically from historical growth rates. So there really is no letup in sight. We know in the advanced economies, u. S. , europe and japan not in recession but certainly getting used to the new yield growth. So the sum is that global economies remain with low growth rates for quite a considerable time. David when you look at a report like this, how do you interpret it . Aside from the number, what about the direction . Bank comesthe world up with an estimate, it is going down. Bob i think that is an important point. When you look at fundamental has aics, the world growth slowdown and that is what the banks are responding to. If there is a disconnect with that and the financial market,hich in the last four months they have all gone up, and we listen to jacob, he is right. There is an underlying weakness in the economy and that is what the world bank is seeing. In thes talk a lot report, they talk a lot about the developed markets are not investing. I think that is a critical factor. Amanda we have been talking about that. Regardless of what centralbank policy has done, we are not investing, itses hasnt translated into what you would hope it would translate into. It is time for the fiscal side. It is time to start stimulating. Are you optimistic that we are going to get that . Whether it is here in the u. S. Or anywhere else . Be skeptical that any advanced economy would go down that route. Theysee the european have a stability growth pack and even if the Prime Minister abe postpones the rate hike, japan is close to the limit of what it fiscally can do. So i dont expect much of a boost from either of them. Want to ask about capital flows and trade flows. Those seem to be down as well. Is that because of reduced growth . Jacob it is certainly a function of reduced growth but there are deeper issues in place here. That is certainly the case that we have been seeing, even though since 2008, protectionism has not been a major issue like in the 1930s. But i dont think we should discard the protectionism we have seen. We shouldnt discard the fact somewith we had seen reassuring, supply chains have been cut down. Have seen trade flows go down so there are deeper, underlying issues at play. Quite likely, there will be a negative factor for gdp growth going forward. Amanda thank you so much, and jacob kierkegaard. And also, bob michele is staying with us. Lendingp, shares of club are up in the premarket after word of a possible takeover. Amanda another setback for lending club. Amanda shares slid 7. 4 in trade yesterday after news that it is delaying the annual shareholder meeting. The company is reeling from the surprise resignation from the ceo last month. We still have bob michele with us. Lets start with a turnaround for the stock today, because these reports out there is that private equityme firms working with the former ceo . Are putting stock in that. We will see how it does when the markets open. But investors clearly think that this could mean something to the company. So worked got out yesterday that the former ceo is working with have a bid for the company. David what happened yesterday . They started having a meeting . Jenny yesterday was a busy day for lending club. They abruptly adjourned the meeting and updated their proxy to say they were not ready to talk about the stuff that has gone on in the company. Prior to that, they announced that they would update their standards so they raised the Interest Rates by 55 basis points. Also the debt income ratios that they allow their buyers to have. Amanda it has raised concerns about this space. Do you consider this specific to one company . Or is it a model . Bob i dont think the model is in trouble. I think the space is evolving. And it is relatively new. This space i know well because as a bond investor, i am a lender of clients money to borrowers. I see there are digesting they have more defaults than expected. A want to tighten credit restrictions and when they do that, borrowers can go elsewhere. Amanda would you agree . Jenny i think so. Some of the lending club drama has weighed on lenders but overall, it is still growing. Thank you so much. Bob michele will be sticking with us. The opening bell is up next. Amanda we have been watching the premarket standing still on positive territory in the future spirit overseeing action has been week in those sections. In north america, we are seeing boosts to the upside and the dow jones still moderately popular. Lets have a look at assets here. We have seen dollar reaction to the fed pushing out to the point traction. Are gaining it has been a support for crude. Headlines crossing over from bp. Saying that is not a surprise. We are seeing the casualties in terms of bankruptcies in the industry. They also see the oil market starting to balance in the second half of 2016. This is the chief economist of the company apparently speaking in london. Looking at the headlines. U. S. Shale companies will return at a sustained 50 oil. Not quite yet. We have been there for a couple of days. Major averages are indeed opening higher. 500, we are in the s p 2130 82 is that record on a closing basis. Closer to 18000 and the nasdaq is gaining some traction as well. Lets get to the commodity related shares. Feel makers trading higher this morning as we have been talking about. Import data out of china that chose not much of a decline. Car sales rising for the ninth time in the past 10 months. Credits wes saying it is bullish on the u. S. Shale sector because of the supply and demand dynamic in the United States and credit suites is raising the price forecast for steel itself as well as being bullish on the steelmaker as well. We have been talking about what is going on with oil prices. We are seeing some gains. Holde both brent and wti above 50. We got the American Petroleum anditute drawdown last week it inventory will cease if is confirmed at 10 30. We are watching mining stocks because of the chinese data. Gold prices are rising as the dollar is falling. Newmont gaining traction. This is a theme we have been in the past few days that commodity shares amanda thank you. We have been watching valeant and it needs to struggle on the company talking latest earnings. The ceo tried to quell concerns about dismal sales numbers. This did little to comfort investors. Cynthia has been following valeant closely now. By michael is also with us. Lets start with what investors are looking to hear. It is a disappointing forecast that took people by surprise and what is the next leg of the journey . To win joe has to do now back Investor Confidence is ure out what is going on valeant signed the deal with walgreens and it was meant to create a distribution that was meant for them to create a pharmacy quite controversial. It turned out there losing money on some of the descriptions. That is a disconcerting in the development, in light of the fact the company has 30 billion in debt. They say they will be fine and in the realm this year, the real question is, do they have enough reading room especially with things like one of the top drugs having some icing pressure, talking about salesforce suppression, do they have room to remain compliant . What people want to see from the company now. This used to trade over 200 per share and now it is down to the 20s. People keep saying there is a real business, something of value. Any reports of kicking the tires on the purchase . There have been, but the reality is the buyers can name their price now. Thisanagement team knows and want to extract the best value. Businessa piece of the. It could be an attractive takeover, target as an entirety. But it does not that into Many Companies might well. They have different product lines. Drugs,strointestinal part consumer, not necessarily a perfect fit for anyone specifically, but they have been clear they are looking to sell drugs partsecific of the portfolio where they can get enough money back down for debt. To reconcile the price that they would probably be willing to sell at. I am seeing wells fargo worse can i get . Selffulfilling prophecies in a downside way. Can they remain financially that is truly analysts have been bearish on the company but he has called in terms of some of the issues that have been had and he went out on a limb a couple of months ago to actually there it out in terms of how it went for valeant. Close attention, how do they execute, how do they drive raise when they cannot aggressively. They have to be able to do this under a huge debt burden and they have to pay it back. That is what we have to wait and see. We come to a fork and the road on capital structure. I take it the equity is down a lot. As a bond investor, they are doing all the things they like to see. A lot of free cash flow. 600 million. They may sale sell some core assets here they are focused on bringing that burden down. Are looking for yield him a highyield market, everyone has talked about bifurcation. You cannot buy anything there. You are either buying companies at 4 or 5 or you are buying commodity Oriented Companies at 10 or 11 and taking it on energy prices. Here is the chance to buy an , on howal company at 9 it would move forward on capital. You did it, you found some good news. Well done. In the last hour, i spoke exclusively with Jeff Bernstein gettinghis take on ge out of Financial Services and transforming into a tech company in part because of regulations. We found ourselves in the place where 6 of the companys earnings were Financial Services. We are a detective knowledge accompanied. The relative size of Financial Services has just gotten out of whack here it i think we would still be getting much smaller and more focused on delivering value and differentiating industrial as this is versus moneyeing first party over money lenders. That was just bornstein joining us. Now, lisa abramowicz, bloomberg gadfly columnist. How important is this effort to transform . It is unique, transforming as a tech company. Company hasance come out and so as goldman sachs. We are tech companies. It is incredibly important for specifically Industrial Companies to transform in this way. The debt get back to market, where i focus, we have seen an incredible surge in industrial, corporate debt in the past eight years. Since 2007, the amount of industrial corporate debt in the u. S. Has more than tripled,. Ooking at one index our economy has kind of leveraged to these Industrial Companies, finding a way to grow away from industrial sectors that are not really growing anymore. To which the efforts by central bankers and regulators have influenced what companies are doing with Capital Structures and their strategies. Has that been driving what they are seeing . He expect specifically said that would have shrunk capital. If that if it had not been announced and there had not been any regulations. It did not reduce the possibility dramatically of the Financial Sector . Yes. In a word. Shorted upentially in very big flip side. Forces companies to reshape their companies into something else. The holy grail now. Which was part of the regulators. There are a lot of unintended consequences. Year, Corporate America issued joins of dollars in debt and we do not think we would see that and were already on pace with that. Funding,bout accessing maybe a tech investment or buildout, most of the funny is going to Corporate Finance type activity. Acquiring somebody else. This is a concern and im interested to know how concerned we need to be. A massive financing, a wealth transfer to shareholders from taxpayers in a way. By back dividend, is that good we are seeing a massive increase in corporate debt . I do not think it is bad because there is a transition mechanism of capital into shareholders pocket me, the bigger issue is the size of the issuance and a volume and the market is getting weary. Corporate leverage has been increasing steadily anyway you look at it in the u. S. Even down in places like europe. Is it increasing, but the revenues are also coming down. This is a problem. Shrinking its way to profitability and leverage is the way to do that. David thank you both for being here. Terrific. Amanda navigating market volatility and tricking trade ability. Stay with us. Lets go now to bloombergs Abigail Doolittle live at the nasdaq looking at two stocks. Shares the longest winning streak in more than two months. After channelde checks, and despite some longerterm concerns, also trading higher, shares of lululemon despite the company missing firstquarter earnings and getting secondquarter earnings down, he did the first quarter, saying strong sales shares of lululemon pushing up right up again really they had their work cut out and that is what is happening at the nasdaq this morning. Tmx group outperforming levels this year at the turnaround the Canadian Exchange operator. Globalhatzker is at the Exchange Conference here in new york. Bloomberg company of television. Erik thank you very much. Good morning. At 50. Ack if it stays there, what does that mean for tmx . It has not been good for certain parts of the business but we are a diversified portfolio. It has been very good for derivatives. The Derivatives Exchange in montreal has a couple of quarters in a row. At the royal comes back and resources come back, volume increases and equities as well. It will be good for the whole business, which is nice. You would like to see everything, of course, but the good thing about our portfolio is it can balance. Among the things you have tried to do to create more balanced and diversify is to promote the platform for tech stocks. Or, thea startup ceo Venture Capital backers of a startup ceo, what is the appeal to me . Classic about the echo system that exists in canada, from venture to senior exchange. There is nothing even close to it. Have been about six hundred 20 companies that have graduated to the senior exchange. Startedhe s p composite on venture. Think about that model being replicated in technology. Business thatan has historically been a resource. Saying Companies Listing from silicon valley, from israel, it is a unique model set of rules and policy. They have something similar, but nothing even close. Erik you think that holds enough appeal. You also see us reaching out with the campaign and all sorts of activities to support and expand the community. It is what i call expanding the capital community. Erik to what degree is the weakness an obstacle to that . The point is is the capital there . It has not been the dollar but really more of the capital pools and where they fit. There has been a shift now and in corporations than perhaps independent dealers in the past. That is the gap were trying to help close. Erik candidates in australia have traditionally been the Capital Markets for the Retail Industry but that was when the Exchange Business is more fragmented. You now have more giant companies, nasdaq, which has expanded. The next time we see the beginnings of able run resources, why should they want to raise money in canada . Classic was literally a global franchise. Look at the mining industry. Equity look at the capital raised. We are over 60 of every dollar raised here it is a global franchise. Unlike bricks and mortar and franchises all over, we are a withianbased Business Global franchise. We have Global Investors and the same kind of thing can have it was technology. Erik more broadly, how do you compete with these Exchange Operators . Why sweet do not directly have been a lot of cases, we work with mp or we are strong, like growing in technology. Watched a business around putting analytics data were looking for we are we are strong and bringing Foreign Investment into canada versus expanding out. More of those operators choose to do what nasdaq has done, saying there is a growth opportunity, i will just go take tmxs market share. It is one thing to say and another to do it. Strong franchise. By the time i walked in the door, we have been preparing ourselves to compete. We know it is coming and it will be there. Erik nasdaq is there . I would not be surprised to see more and i think we have got to prepare for that. We started changing the company from Infrastructure Provider to a Technology Solutions provider. You have to now be a Solutions Provider that happens to run markets and not just an exchange. You see that happen with different firms. With an asiange Exchange Operator like singapore hong kong . Anything you do like that has to be organically driven, meaning what does it do for your strategy and how does it grow your business . If it helps grow organic strategies. Business, then it could here to just have a franchise or another business does not automatically help your core business. How can it actually drive our growth . I would be more interested in looking for things that drive our information and analytics is is. Erik not matching or listing . I and just using one as an example. If you have won a could create a franchise in another part of world, that would be the business. Would you have better prospects if canada had a National Security regulator i do not think that changes prospects. It might impact how you do business and how you interface, for the issuers, there is no perfect system. Think about the lead regulator structure right now, it works or it it is not that you cannot work with it. Challenge would be, what is the process to get there , and it might not be easier on day one but down the road. Ecclestone. You, lou amanda, back to you. Amanda thank you both. In the next hour, an exclusive interview with the Global Trading and investment platform, prager. Him him keep your eye on the s p 500. Does not seem like a lot that 2130. We are watching it today. It is within a whisker and could easily get there. We are seeing a bounce around six or seven points higher. When it gets there, it has pulled back. That is exactly right. A look ahead at later today. The oil numbers and at 2 00 p. M. , we will have an interview with the enterprise ceo. That doesnt for us. Thank you for being with us. Coming up next will be Bloomberg Markets. . C sv is 10 00 a. M. In new york. Mark i am mark barton. This is Bloomberg Markets on bloomberg television. Vonnie we will take you from new york to london to washington in the next hour. Hillary clinton makes history as the first email presented no money for president and she wasted no time turning to the general election backing donald trump. Mark the ecb enters Uncharted Waters in an effort to stimulate the euro economy. We will get perspective on the central bank by some of the biggest companies. Anthe s p 500 setting alltime record without crossing 1800 yesterday. We will talk on where stocks could run from here. About 30