Transcripts For BLOOMBERG Bloomberg Markets Americas 20170707

Hours time. Lets get a check on where stocks are trading with abigail doolittle. We had a selloff yesterday but are recovering today. A nice rally for the major averages, the dow, s p 500, and the nasdaq are all higher. They had been on a pace for weekly decline, and now pacing for weekly gains. That is an impressive turnaround based on that betterthanexpected jobs report. Bloomberg did break the news that there are scheduled talks for a potential sale, and this chip designer has been up 8 , for his best date since 2012, now on pace for the best date since the beginning of the year. A Bloomberg Analyst told me moments ago that this is a pure play on i. T. Technology. The technology is the big winner today, with the nasdaq outperforming the other two indexes. Apple and microsoft gaining amid kleins yesterday declined yesterday, and Applied Materials receiving a top pick mention analysts raising their price target to 60. And lam research doing positively at Morgan Stanley. Quite a bullish like today. Lets look the market that is less bullish today. Oil down about 3 , taking another leg lower. The Baker Hughes Rig count did come out not so long ago, adding 12 rigs to the u. S. Fleet of 952. This after a bullish department of Energy Report yesterday that were looking at. Lets take a look at the influence of the rig count on worry oil, one more for investors. This is a oneyear chart. In blue, we have oil. In white, we have the rig count rising. This is a big piece of the u. S. Inventory productions that is weighing on oil, not being offset by those opec cuts. This is important to keep an eye on this. Julia abigail, we will see you shortly. Lets get to the latest on the g20 summit in homburg, germany hamburg, germany. The meeting with Vladimir Putin and donald trump lasted for two hours, and ended in an agreement for a ceasefire in syria. This ceasefire has been in the works for a lot longer than those to our talks come but we also got a denial from prudent putin on election meddling as well. An interesting two hours. An interesting result as well. Wouldms like a ceasefire take a lot more negotiation than sot a twohour meeting, maybe this was coordinated. They could have some positive results. They were both optimistic about coming out of this meeting with positive results before they met. It is also interesting to see the mutual admiration at work before they went in the meeting. President trump said he was honored to spend some time at finally meet in person Vladimir Putin. Putin, for his part, addressed trump as your excellency, mr. President. And now they are believe they are listening to beethovens ninth symphony. Scarlet can you give us some more color into that meeting . Doing know if there were any other officials president do we know if there were any other officials present, secretaries of state, that type of thing . Rex tillerson was the only other u. S. Official present. Sergey lavrov was the only other russian official present. It said it is said that Vladimir Putin prefers to have meetings with a small number of people and finds it easier to operate that way. But the each had translators, because even though president does speak english, he has only been learning it in the past decade reportedly. To whether the confrontations that may have happened there. We knew President Trump would talk to put in about syria andn about syria and crimea the Defense Agreement with north korea and iran. But we did not know a few was going to address the hacking allegations in the 2016 if he was going to address the hacking allegations in the 2016 election. Donald trump took that denial in good faith, and they moved on at that point. It is not clear if this means he believes putin or is just trying to continue negotiations. Julia but the good news on this is that russia and the u. S. Have agreed to a bilateral working group. They are excited about that, without any level of skepticism at all. That as amazing as well. Talk about having a wolf in the henhouse. This is a Bilateral Commission. It is important to remember that the g7 agreed in sicily, and the g20 acrobat agreement, and code echoed that agreement, to fight cyber terrorism. It now seems as if they will have a Bilateral Commission and the Trump Administration, or russia and the u. S. I think you will see a fair amount of skepticism on this. What i spoke yesterday to the russian sherpa, he said listen, there is no evidence of russian meddling in the u. S. Elections, and we do not have any evidence of that hacking. But u. S. Intelligence officials testified before congress that they did have good, solid evidence of that. So we need to draw your own conclusions there. His excellency matt miller reporting from hamburg. Thank you for that. Next, we sit down with a man whose extensive resume ludes secretary of state former u. S. Ambassador to the united nations, John Negroponte. And we will talk about her little bit later. Scarlet seating arrangements, body language. Aside from g20, lets look at the first word news this afternoon with jessica summers. 100 20 more than countries approved the first ever treaty to ban Nuclear Weapons. The u. S. And other Nuclear Weapons boycotted the vote in the united nations. The u. S. Has said they wanted to strengthen the Nuclear Nonproliferation treaty. Mitch mcconnell plans to produce a new replacement bill for the Affordable Care act in about a week, but he is also leaving open the possibility of a plan b if the effort falls short. They could take action on the private Health Insurance market. Other republicans have suggested a smaller bill to help insurers and consumers. This secretary is traveling to the middle east to attempt to end the crisis in qatar. John smith is trying to get them to go along johnson is tried to get them to go along with an effort to end the tension. And the annual running of the bulls kicked off today. Were innd two americans the initial run. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im jessica summers, this is bloomberg. Scarlet . The fedsoming up, conundrum continues. We have jobs, but where is the wage gain . Theirom ever core isi, top economist joins us to discuss the latest. At the g20n summit. We will let you listen to that for a brief moment. From new york, this is bloomberg. This is Bloomberg Markets. Im julia chatterley. Scarlet and im scarlet fu. Julia the jobs report for june. 2200 2000 jobs, 220,000jobs, jobs, the most in some time. Something example of for just takes time discouraged workers to come into the workforce . This is not what i would have expected three or four years ago, that we have had this many jobs and not much inflation. I thought it was the goldilocks. Cool,o warm and not too and that is what the markets are responding to today. Julia what about for the fed . They are as relaxed as you or i am right now. They could keep tightening. That could keep them in that direction, but because the inflation is not there on the wages, there is not much inflation anywhere. I think that will change. Two years, six months, three years, we will get inflation at some point, but we have to get wages first and we not getting them so far. Seen a we have significant slowdown in the average yearly earnings over the past six months. It is like an elixir. The best thing that you can drink. You can have your cake and eat it too. Because you do not have inflation, i look at it again the end of every cycle, every economic cycle, bull market is after inflation has picked up. I thought average yearly earnings would be up 3 ,. 5 . They are up to 3. 5 . , two point 5 . That is what people are responding to. Scarlet and they are taking off on that. You were talking about the outlook for the fourth quarter, s p 500 earnings of 138, which is pretty optimistic. That has been holding up. What could trip that up . That is coming from you. That is coming from the bloomberg estimate. Figures 30those minutes ago, and they update them once a week, and they are 138. Holding to the this is the time when they cut them, and they have not cut them. About . 50. Them the Second Quarter looks good, but the answer to your question is first synchronized Global Growth. They are making money in peru, the u. S. , china, and now you have the dollar working for you as opposed to against you. Company thattional reports will have a positive part on the exchange rate. Scarlet a tailwind. Yes, when a few years ago it was a huge headwind. Julia you expected to see 3. 5 in one years time. Could be sixt months, three years. At some point wages will catch up. Is that something that will and surprise investors . There seems to be a nervousness here. And Central Banks that there is a risk that they are very quickly behind the curve. That is a u. S. Problem, australian, canadian. They take a lot of those numbers behind the curve away right now. I think we are in a Business Cycle. It is a slow one. Nine years, probably another five years to go. Julia really . It could be five months, i do not know. But i think you have to go through a long part of the cycle and thees are growin markets are up. The fed Interest Rate is 1. 25 , and this is the way it normally works. You have to get ready to get in the water, not sure if you can swim. We have not had them raise rates in a decade, more than that. But that is normally the situation, and what is going on now. You get some interpretations like this week, with the german bond yields. Scarlet and you have noted as well there is a correlation between economic surprises turning up and yields going up as well. That chart that you included. Economic surprises tend to bottom around june. It was said yesterday that this bond stock is just the beginning. Are we going to see the 10 year yield moves toward 3 by the yearend because of data . I think it is moving up. I think the bond yields might move to 4 , 5 over a long. A long amount of time. I looked a minute ago the city surprise index, and both global and u. S. Are mean reverting series. They go all the way appear and. Tart to move back up iron ore has moved up some, oil is down some until just now. Our work on the economy shows us that the economy is improving as well. It looks like it is all moving together. Scarlet ed hyman, chairman of evercore isi. He will be sticking with us. Up next, this bridgwater thinks thatys he the federal bank party is coming to an end. Tois it time for investors head to the exit . From new york, this is bloomberg. This is Bloomberg Markets. Im scarlet fu. Julia and im julia chatterley. Scarlet banks are about to takeaway the punch bowl of stimulus, and the Bridgewater Associates calling an end of the central bank era. They keep dancing, but closer to the exit with a sharp eye on everything. Topranked is economist at hyman ed hyman from evercore isi. Even though the fed is talking about reducing its Balance Sheet, the averages are still seeing the line move higher. It is pretty stunning. How does that change how you position yourself, and how investors should . Money is for that free. They do deals all the time. Andnch of deals today, rates and bond yields are at about 50, 60 basis points. The twoyear is 50 or something. Might bojnd doj might extend the Balance Sheet, but when they start to reduce that, it is easy Monetary Policy. One of my dear friends will have a good, long dance here. [laughter] i wanted to ask you about complacency in the markets as well. It ties back into the central bank story in this. They were suggesting that perhaps they were trying to eat back a little bit. In your notes, you have 16 points of caution that investors have given you, concerns they have. I wonder how that ties into conversations about the level complacency in the market . Are investors complacent are arent they or arent they . Ed my experience and observation shows there anything but. Is acting completely tranquil. It goes up a little bit, the vix is very low, but we have 40 hedge funds that are slightly defensive. Data i gotome some data again this week, and since 2008, individual investors have taken half 1 trillion out of equity and put that into bonds. Will survey investors about where they think the market will be at the end of next year, and the survey this 2480, 3 higher than where it is now. I think investors are worried about valuation, fed tightening, china, and other things to worry about. Thought was what i adjusting about that list of worries is that policy uncertainty does not rank very high. That is near the bottom. Ed the list was not ordered. Scarlet but there are a lot of persistent risks that receded the last year or two. Ed i think on anybodys top five list they would put trump policy uncertainties on the list, just because you do not know what is coming down that side. As usual, there is a whole host of geopolitical risk, like right north korea is at top of the list. That could make the market go down 10 any week. Have an expanding global economy, easy Monetary Policy, and earnings are increasing. And that extends to other parts of the world as well. You have a Company Serving surveying european sales, which has shown it writing. Country orter which what specifically does it matter which country specifically is driving that . The Business Cycle is expanding. We had easy money here, they have easy Monetary Policy there. The Balance Sheet is still expensing expanding. Ima bottomup observer i am a bottomup observer. Tell me thatstor business in europe was really good. In addition to that, we surveyed 28 companies that do business in europe every week, and it is very clear there. Julia do think perception among investors is still too concerned . Are they missing the underlying proof. Proof here . Thathe inside insight is europe is doing better. Who know thepeople motions of europe are thinking now. Julia and you kind of suggested they were ahead. Ed i did not mean to say that, really. Wordofmouth, go over there, listen to the companies. Europe is improving on that survey as well. And Europe Market data is remarkable he good. Julia great to have your on you on and get your wisdom. Hyman, evercore isi chairman. This is bloomberg. These days families want to be connected 24 7. Thats why at comcast were continuing to make our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. World from bloomberg headquarters in midtown manhattan, this is Bloomberg Markets and i am julia chatterley. Commodity markets are closing for the final time this weekend we start with oil, ruth dropping as much as 2. 5 today. It is on track to end the week by more than 4 under 45 a barrel. It is just a bench i of 3 now. In metals, gold is getting beat as well. Ttom route investment is weakening as the investors are speculating that the fed could raise rates. Sinceon the longest slump december. Sticking with pressures, jumping as much as 10 overnight laying on a flat finger trade made a comeback, but it is up more than 3 on the day and 7 on the week. As you can see, it is down 3. 3 . Scarlet . We are turning back to oil right now. Talking about cuts are being isolated from some of its neighbors could impact business. [indiscernible] we do the best of the job in each country. If you can observe what happened in the middle east, there is a disconnect between the political tensions and the economics. Trying to the tensions. We are still working. Symbol of a bridge like a country like qatar can build. So we are going to guitar is because we have a bit qatar anduse we have a business, like i was in a run this monday to sign a new contract, i would country like qatar, we are there to build villages, not walls. You signedcontract with iran this week. Are you concerned about the new u. S. Ancient coming on the country . Sanctions coming on the country . The contract is signed, we are following international rules. [indiscernible] but this contract will produce gas for that missing market. I think this is exactly the wasit of what the agreement that we signed on january 16. I hope we have a good evolution in the right direction. That was the total ceo speaking with caroline connan. Lets check in now with jessica summers. Ed andica President Trump president putin met for the first time. President trumps position on trade for medically different differed of other dramatically from that of other country. G20 host Angela Merkel arrived at the hall for a show and dinner with other world leaders. The german chancellor said the countries must Work Together to solve the worlds problems. There areknow challenges, and that time is short. Therefore, positions can only be found if they are ready to compromise and we approach each other. But also, we need to end the year without giving up too much, because there are differences as well. Jessica jessica also said that most of the g 20 nations have back to paris climate accord. President trump announced last month that the u. S. Will plot of the accord. The g 20 in hamburg continues today. S continuing as well, 22 people injured after falling off a wall. Global news, 24 hours a day, powered by more than 2400 journalists and analysts in more than 120 countries. Im jessica summer, this is bloomberg. Scarlet we have some breaking news. According to reuters, a rival bid is being explored for encore oncor. Initially, Berkshire Hathaway oncor, butore now Elliott Management is putting together a rival bid to counter that of Berkshire Hathaways. Lets get back to todays top story. The g 20 summit and President Donald Trump meeting with russian president Vladimir Putin. Joining is now johnny grubb ponte, former u. S. Ambassador to ,he united John Negroponte the former u. S. Ambassador to the united nations. He joins us now from washington. Thank you so much for joining us on the show. I wanted to ask you whether you think the meeting between the two president s of russia and the United States was successful . First of all, the fact that it took lace was important. Secondly, they seemed to have touched many of the relative topics relevant topics. Lets not forget that with a two and a half he or two and a half hour meeting, you have to divide that by two because of interpretations. So they met for about an hour, which is not much time to cover the large agenda which should exist by nature between two countries like the United States and russia. I would say this is a good first step, but there need to be more meetings. I would assume that one of the things they discussed was the possibility for followon meetings in the fall. Julia makes total sense. One of the things that the press and others were very focused on is what kind of discussion took place about election meddling in the 2016 election . The foreign minister of russia saying that donald trump excepted prudent with the assurance lieutenant how the assurance that there was no putins assurance that there was no russian hacking. I think it was important that the subject was discussed. Some people were concerned it would not be discussed at all, which would have been a less desirable situation. But as far as what has actually happened, this is a matter under investigation by a special counsel. It is also being looked at by a few different congressional committees. So i would like to look at that process before pronouncing some of you on this particular situation. Julia and it is something scarlet and it is something that donald trump does not need to delve into anymore because it might undermine the legitimacy of his presidency. I also want to look at these reports, which were levied after russias actions in the ukraine. Can there be any movement on the sanctions without addressing ukraine in great detail . Is this something you think the u. S. Has any appetite to do cap go do . Knowing that speech the president made in warsaw yesterday, he talked about russias behavior and concerns about the ukraine and the fact that russia has been exporting instability. So for the moment at least, it would appear that he is still onside with the other european allies countries and allied countries to the fact that these tensions sanctions will have to remain in effect until there is some resolution on the ukraine issue. I would also note today that i saw an announcement that the president and secretary of state would be announcing the appointment of a special envoy to the ukraine to deal with these issues. Obviously that is top of mind at the moment. Scarlet lots of things are top of mind, as is north korea. I want to get your take there because russia and china solution forjoint north korea. What is the scope that russia can play here and convincing in convincing north korea to halt the Nuclear Missile program . Russia was one of the countries that was part of the socalled Six Party Talks that took place under the george w. Bush administration ministration. Japan, north, korea, south korea, and ourselves. They are not far away from north korea, so they have a stake in this. But i think it is an international problem. We need to have some kind of meeting of the minds of going about persuading north korea to abandon its nuclear ambitions. This is the most serious security problem doubling the world at the moment, and the in battling the countries i just mentioned, and progress has been elusive until now. Julia we have seen a path donald trump has laid out to increase pressure on china, whether it is an arms deal with or movementstaiwan in the south china sea. And nikki haley suggesting that anyone who trades with north korea will not be traded with by the United States. Is this the right way to handle china on this issue . Secondary sanctions are one of the issues people have talked about. Not only sanctioning north korea but sanctioning countries that trade with north korea. I do not know if that is the best approach. I spoke with the Chinese Government officials a lot when i was deputy secretary of state. I was in charge of our political dialogue with china. They expressed many of the same frustrations with north korea as we have. They said look, these are not the easiest people to deal with in the world. They do not listen to everything we have to say, and sometimes you overestimate the influence that we have. That being said, i think we still need to increase our efforts to find a solution to this problem, because one of these days if we do not find some solution, something very, very calamitous could happen with those rockets that they are developing and the Nuclear Weapons that they have got. Youa you just said that have often spoken to the Chinese Government. How will president xi be taking this . Will he react positively or negatively . He is a senior statesman. I suspect he will take other leadersnts make in his stride. Luckily we have multiple channels of communication with china through our embassy and through various officials, through our secretary of state. This will be a subject that will always be as long as it is not resolved it will be part of the u. S. China dialogue. U. S. China dialogue. Julia thank you very much. Former ambassador to the united nations, John Negro Ponte there. Negroponte. Nte markets mberg julia this is Bloomberg Markets, im julia chatterley. Scarlet and im scarlet fu. Lets check in with abigail doolittle. Highera shares popping in during the day, and also on the assembly line, plenty of other positive news from the company. The fact that they are developing one of the Worlds Largest batteries. In addition, they have dissipated be in the your rating disappointing sales unit. The stock was on a disappointing secondquarter sales production or delivery view, but they ameliorated that a little bit, and here is something to take in mind. We see a beautiful uptrend for tesla, the stock doubled more since the election. So we are seeing some healthy consolidation, even though it is of 100 . Context that is somewhat healthy. And the stock is in support of the 100 day moving average. It is above 300 dollars, and the recent fall is probably healthy consolidation. There are a few things for investors to be positive about. Investors are usually tearing apart the fundamentals, but if we take a positive view in this chart, this is all the way back to the companys ipo in 2010. In blue, we see revenue in 2010. Y growing 28 million dollars. Nd now it is at 2. 7 billion a good reason for the stock to be rising. And a great chart representing k done at the u electric finance team, and showing tesla and yellow and other big vehicle makers and other colors. Look at 2021, absolutely dominating the electric vehicle market. A rough week for tesla, but a lot of factors to be positive about. To an we will be talking analyst at Morgan Stanley about the road ahead for self driving cars. Switching years to the u. S. Jobs report. On bloomberg real yield, we hold a roundtable about the weakness in wage growth and how that relates to the direction of treasury yield. A Global Growth recovery, and we are seeing that today with the headline numbers supporting that further. That is what is driving this broader easing of financial conditions. To beg as that continues the case, the fed will continue on its path of normalizations. Further to the question of wages specifically, it is true that we saw a tampered numbered come , butgh on Wage Inflation this is a median number we are looking at. The San Francisco fed did a study last year were they looked at what has been the Wage Inflation for fully employed, continuously fully employed employees, and it has been insistently above the rate of inflation and came in at Something Like 3. 5 in 2015. So maybe what we are catching individuals entering the force on a parttime basis, which might be depressing that number somewhat. There are a lot of questions about productivity and how we are measuring it. So we will see those price pressures and Wage Inflation so far, but as long as the conditions are stable the fed will continue on its course. That whatever date has been set by treasury it has been historic for you guys. It is funny, but bonds are winning and rates are up the past year. The fact of the matter is all of this discussion of wages and those and the fed are already tearings. The fact of the matter is that youre supposed to have real wage growth. The fact that we have not is really exceptional. Shadow, a supply of excess labor, the Global Competitiveness that is out keepingat is really inflation below target around the world. The fed is having an argument, and this number makes a difference. The argument is should we run an Unemployment Rate that maybe is low, or should we risk inflation later on . With the number like this, it is no. Bring on the jobs, we need to get the employment to population ratio much higher. , thisand financial crisis has a long way to run. If there is a bad spot for bonds, it was the last 12 months and we are coming into the second half. Rates have been hit with the ecb and the market is reloaded. Let me defend that. The funny comments are really ise from inflation than it from robert, and he has a 30 year track record that he has been right on. Effectively, we have been looking for inflation to come back ever since the financial crisis. Nothing, nothing. Therefore, the burden of proof really is on the people who look at the data 15 different ways and conclude that someday, somehow, we will end up with inflation and that is what we should be trying to protect ourselves against. Wants moreorld than anything else is a good bond. And i think that is the driver of yields more than anything else. I think that this whole idea that the inflation argument is starting to keep the fed from doing what they are saying they are going to do, which, in addition to hiking, is reducing the size of their Balance Sheet, is not going to prove to be an effective argument. That is going to continue down this path, and there is a lot of complacency about what the affect of the reduction of the Balance Sheet may have on the market. If you look forward one year in the fed is reducing, and there are a potential view more hikes 50s,l is in the 40s or and you now do not have the appetite for al ative yield bond in euros i think all of those factors will continue to push bond yields higher, irrespective of what that inflation number is. Ferro with hisan roundtable on bloomberg real yield earlier today. You can catch that every friday at 12 00 new york time on bloomberg. Out of new jersey and long island, what you can expect and where you can find information on the bloomberg about the amtrak nightmare. This is Bloomberg Markets. Im julia chatterley. Scarlet and im scarlet fu. Station has been penn station has been everything but a smooth journey for the past few months, and Governor Andrew Cuomo says that transportation will be the summer of hell as they move forward on a new project. This will be for a long time. The first two months will be the worst. If the new york governor is describing it as the summer of hell before it even starts, that does not bode well for everyone. We are talking about 650,000 people who come through penn station every day. This is the busiest transit hub in the country. Scarlet and it will be more crowded than that. Fortunately for bloomberg customers, there is a way to access information on this summer of hell and their ,ns, and it is on penn and you can find information here, including frequently asked questions. Julia there have been 3d realm ands since april, so we can be annoyed perhaps by the inconvenience here, but this is critical but there have been three derailments since april, so we can be annoyed by the inconvenience here but this is a Critical Infrastructure restructuring. It will be interesting to see what the ripple effects are great we will r. Well see how it plays out. Are there more people choosing to drive . Do more people work from home . Companies open to people working from home . Area what kind of delays we talking about . I read over the past couple of we could sees that delays up to 90 minutes. You are talking about people whose trains are going to stop on the other side of the hudson river and they will have to get on a different train or a fairy iserry, so that dramatically altering the time it will take and the methods by which they get into the city. Scarlet you mentioned three derailments, but there was also an issue where sewage water was leaking through and parts of penn station were not available for people to walk through. For anybody who commutes through penn station already, i would tell you it is not awesome to begin with, even when it is perfect. In the story we have today, the head of nj transit saying even when it is working the best, it is only 90 on time. When all of this work is done, we are not looking at a pristine story here. Julia the summer of hell, wow. 3 billion of Infrastructure Spending right away, now. We will discuss this between president s donald Vladimir Putin. This is bloomberg. Whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if there was a single site where you could find the right hotel for you at the best price . There is. Because tripadvisor now compares prices from over 200 booking sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Julia it is 2 00 p. M. In new york, 8 00 p. M. In london. I am julia chatterley. Scarlet i am scarlet fu. Markets. Bloomberg in Bloomberg Live World Headquarters in new york over the next hour. Your other top stories we covering on the bloomberg and around the world. President donald trump making a ceasefire deal with russian atsident Vladimir Putin their first meeting, but he denied having a role meddling in the u. S. Election. Mixed signals in the u. S. Labor report. Bill gross tells you what it means for the fed. And driving innovation with autonomy head of Auto Research at Morgan Stanley tells us which investors will get a boost when people dont have to drive anymore. So long, chicken wings. Not sure about that. More now on the close of trading. Abigail, what is it looking like . Abigail nice friday rally on our hands. S p 500 up. 6 . Betterthanexpected june nonfarm payrolls report. What stands out for the s p 500 and the nasdaq, before today, both those indexes had been on pace for a weekly decline. We have had gains and losses, lots of volatility. Right now the nasdaq is eking out an ever so slight gain of. 2 on the week. Lets see if it holds into the close. You will not be surprised that technology is the top sector today. This is what is helping the nasdaq make the weekly gain. All of the bank stocks trading higher. Still down 5 since the beginning of the tech fullback after the nasdaqs last intraday record high on june 90 netflix is the first to report on july 16. Another sector helping today is the homebuilding sector. 3 homebuilding index up from hitting a record high. We do have a record high on the day, and some of the homebuilders are driving these gains. Holmes did report record high monthly closings. We did have the betterthanexpected jobs report to the worst sector on the day, energy. Oil down once again, nearly 3 , despite the bullish report yesterday on u. S. Inventories. Builtors may rigs again and investors may be eyeing that as well. Lots of energy names down, including chesapeake. Energy worst on the year. Cant get a break. Scarlet pretty ugly. After, have a government 136 minutes, President Trump wrapped up his longawaited meeting with Vladimir Putin with a big ceasefire announced on syria. They discussed russian meddling into the u. S. Election in november. Joining us is john micklethwait, who interviewed putin last year. Obviously, there are some things focusrump wants people to on and other things not so much. What struck you . John it is easy to go into a meeting and say, mr. Putin, i want to complain about the hacking, and move on to other business. Trump, every president has done that with putin, you complain about things and then you discuss this tough you want to talk the stuff you want to talk about. Deal, the last ceasefire, it went on about a date before it went wrong. This went on for a long time. It is interesting, the russians will probably think they got probably what they wanted. Broadly what they wanted to they got treated as a peer. Is toole point of putins make russia great again. Scarlet one thing we should add as well it may have been 2 hours, but there were translators involved so it was probably an hour conversation. Julia do you think it is the situation we had in the run up to this the fact that they spoke for one hour, to hours from whatever it is, foreign minister lavrov said that trump accepted the assurance of note electoral hacking. My favorite headline the Cyber Working Group john a bit like al capone and the corleone family agreeing. Both sides are trying to do cyber warfare against each other. You look at these things and they are partly about longterm gains to be had by both sides. On putins side, it is interesting. He wants to be seen as an equal. He wants to be part of the conversation. All of these things are coming his way. From that perspective, it was more broadly helpful to him than trump. Julia they made it clear they want the removal of sanctions and they have been asking europe and the United States for this. The United States has made it harder for donald trump to do anything about this with the senate vote. John i think it is very difficult. This is the problem with putins success the more he is seen as a person responsible for hacking, the less easy it is to do the normal business of diplomacy, because it is difficult for him to do a deal with putin that is not have democrats in congress shouting, this is because of the hacking, you are helping your friend. There are logical reasons to do it and various areas around the world to do it. Some people in the Foreign Policy establishment and they say it is more difficult to do a deal with putin than before. Julia it is slippery. John its a slippery, because the way he is perceived by Congress Trump still in that brought republican senators who are backing him. Scarlet the senate voted 982, so it is pretty unanimous. John nobody wants to be seen the Republican Party is not traditionally the party fully in love with the russians. Scarlet i want to get your thoughts on putin the person. You had an interview with him. He spoke to him before the cameras were turned on. What is he like as a person . John he thinks the same way as an agent does for us by. He looks at people as an agent does or spy. He looks at people in terms of strengths and weaknesses. You ask about Angela Merkel and justll list threeyear listed the heiress he thinks she is weak, and he is ruthless and that you ask about Angela Merkel and he will list the areas he thinks she is weak, and he is ruthless in that way. He is not very strategic, putin, beyond the general aim of making russia great again. Increasing this right of his influence. Increasing best way of his influence. Russia is a country that is almost uniquely you could argue america is like this a defines power by territorial control. For some time there was relentless territorial expansion. Then suffer this setback during the collapse of the soviet union. Putin is about trying to increase that influence. Scarlet the land graham. Landgrab. Julia when they are fighting some sort of enemy or threat. John putin is a nationalist, and a nationalists trade on that. Donald trump also trades on it. There is a synchronistic way between them. Everyone in america is ruthlessly focused on trump and putin could end the background have something that could prove much more substantial, the appearance of a breakdown of trade. They are trying to come up with terrible language along the greatof free trade is except when it comes to steel, or something along those lines, and this is reminiscent of what happened on climate in a lovely, when trump in italy, when trump marched out of the agreement. Julia probably a gross understatement at this stage. It became harder with a comments from nikki haley at the u. N. Over north korea and the perceived threat of restrictions on china if they continue not to be helpful over north korea. John i think this is dangerous because you have xi jinping also going through a political transition. He has his meeting at the politburo, he has got to decide to some extent whether he stays next to five years beyond the five years he is expected to do. He is not in a position where the threats are going to be useful to him. You have this rather unequal balance you might argue they all happen to be man putin, xi jinping, and trump, all of them trying to appear as a strong and macho as possible, and defending the interests you might argue that she should bring is a chinafirst president , putin is very much russia first, and donald trump, and Angela Merkel julia putting Morehead State other. Butting more heades together. Scarlet how torture do you think the communique will be come or will it be short . John my guess it will be tortured and short. [laughter] scarlet lets get more on first word news. Rose 222000 and versions to the april and may reports added 40,000 jobs. Rosenemployment rate. 1 , 4. 4 . G20 post Angela Merkel arrived at a concert hall in hamburg for a show with other world leaders. During the first working session of the summit, the german chancellor said countries must Work Together to solve the worlds problems. Chancellor merkel we all know the big global challenges and we know that time is short, and therefore, solutions can only be found if we are ready to compromise, when we approach each other, but also that me make this clear, without giving up too much. Erkel also said most of the g20 patients back the paris climate accord. President trump announced last month the u. S. Will pull out of the accord. Three years after a Russian Missile brought down the Malaysian Air flight, families of the passengers killed are still waiting for justice, as russia continues efforts at the u. N. To block an international tribunal. Paul volcker isnt worried that the Trump Administration will undermine the financial ruled that bears his name. He says if they can find a more them. L way, god bless treasury secretary Steven Mnuchin has proposed the rule be simplified. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. I am jessica summers. This is bloomberg. Julia thanks so much, jessica. Will the june jobs report sway the feds decisionmaking . Bill gross gives his take next. From new york, this is bloomberg. Scarlet this is Bloomberg Markets. I am scarlet fu. Julia i am julia chatterley good time for the biggest business stories in the news right now. 300 million is being invested in 111 capital. The former head of propriety trading at societe generale, the sole investor in the fun come which will focus on stocks and derivatives. Elon musks tesla has won a contract to supply what he calls the Worlds Largest battery, backing up australias power grid. The electric carmaker promises to provide the 100megawatt storage by december 1. A bank plans to sell half of its 20 billion package of nonperforming loans to pin code and fortress investments. He spoke on bloomberg tv, saying the deal will close in the next few weeks, and the bank is moving to divest the rest of the portfolio and failure is not an option. There are no more systemic issues for its highend banks italian banks. That is your business flash update. Scarlet the United States added 222,000 jobs in june, smashing estimates. But wage growth was weak. Is it enough to justify another Interest Rate increase . Spoke onbill Gross Bloomberg surveillance. Bill well, they have been Interest Rates and the effect it depends on how much they raise. I dont think, despite this rather strong jobs report from the standpoint of the jobs gain, not necessarily from wages, oneh is what the fed has hike, perhaps, left in the year and that is probably in december. Defense, as ive mentioned it depends, as i mentioned in prior discussions with you, significantly on what other Central Banks do. They tend to change their policies and the fed must not respond, but as a leader, as the central bank global leader, they have got to be cognizant of the currency levels. Pot at the same time and your question about the fed is important but it is also important with other Central Banks around the world. Tom with what we have observed in recent weeks and the rising rates, and we will get to bonds in a moment, is the idea of a fed that is coordinated and at the same time constraint. How are the Central Banks and how constrained is chair yellen because she is limited by other global activities . Bill yeah, i dont think they are coordinated at all. In the last few weeks there have been hints from the ecb and hence from the bank of england hints from the bank of england that they are on the move, or potentially on the move it, point 12 to 18 months down the road. But they are still a long way back from hi we started to raise shortterm Interest Rates. They will begin to be coordinated from the standpoint of philosophy, perhaps, but not in terms of timing and magnitude. Ultimately, that does have a significant impact, or will, on currency levels. Central banks want to keep his currency levels relatively static. Admittedly, each wants to lower their currency a little bit so it gives a push to the real economy. But they have got to keep things steady, so the future ordination is important. We are sitting a bit of a race to the top of the hill. I wonder if you put a flag at the top of the hill to say that we are entering a bear market. Level fromar market six months ago is not really applicable anymore. 265. I looked at the longterm trends since the early 1980s, the Interest Rates on the 10year have fallen by 20, 25 basis points a year since then. Is that technical mumbojumbo . Is an not, because it indication of what the economy needs in terms of lower Interest Rates in order to keep going. Ultimately, although we are probably 235 at the moment, the 265 level is a critical level for Interest Rates going forward. Do we get there in the next few weeks . Probably not. We have had a 30basis point increase, or 20basis point increase in the last few weeks due to the bund taper. I think we are moving higher. Tom for Bloomberg Television i will show this chart and go to twitter as well. For the first time in ages im showing the bond price. Germany 10year down we go. Bill, as you know, looking at your munro trader, down 3 on full faith and credit, higher yields. Did you know this, bill . Higher yields, the work on prices. N does it begin to her, hurt, bill gross . Bill bunds up by 30 basis points when does it begin to hurt . I think it begins to hurt at the margin here in the United States on mortgages. Ultimately, it begins to hurt this is an and observed fact by the street that Interest Payments as a percentage of expenses, corporate expenses, are significant. Perhaps 30, 40 . It begins to hurt lower yielding corporations, junkbond corporations, when they tried to roll over their debt in 2017, late in 2018 early. As Interest Rates rise early and the spreads widen, the hurt begins to affect the lower quality corporations and individuals who want to buy a home. Scarlet that was bill gross speaking on bloomberg surveillance. Still ahead, options inside, and the etf xlk. From new york, this is bloomberg. Julia this is Bloomberg Markets. I am julia chatterley. Scarlet im scarlet fu. Time for options insight with abigail doolittle. Abigail kevin, thank you for taking the time. We were talking about how we have seen a bit of a return to volatility after a lack of volatility, especially for technology. We have a great chart to show g btv 96. Technology has led the market returns this year. Technology is leading the volatility returns going back. If you go back to much, you can see that the volatility of the nasdaq 100 was below s p 500, which is telling because all of his constituents in the s p 500, and the s p 500 has defensive sectors in it itself. Inherently it should be less volatile. Now you are seeing a flow out. It is about 17. Why is that . Volatility, vix, as well as nasdaq 100 volatility, is 30day forwardlooking indicator. Technology earnings are going to be here and everyone is going to be focused on those and that should lead volatility going forward. Abigail you have an interesting call on volatility overall. We saw this back in 2015, sense of the vix is dead, some said the vix is dead, and then we saw a big spike could kevin then we saw a big spike. Kevin history does not repeat itself but it does rhyme. They ended up raising Interest Rates later in the year but they held up because the chinese devalue the yuan because they were worried about the risinginterestrate environment. Less than a few weeks later, it blew up to above 50 and threw off calculation engine for the cboe. Ax cannot be calculated for halfhour. Comesatility gets low, it back in big spurts and it is episodic. We saw it go from 10 to above 50 and break the calculation engine. Abigail thats amazing. Can you quickly tell us about the financials . Kevin what is interesting todays that the financials start the earnings season and options, four times the amount of calls were being traded vs. Puts in the financials etf. Andle are starting to go in be very bullish and one of the biggest trades was the 21,000 block on the purchase of calls. Pretty telling. Abigail wow. In less than 15 seconds, your trade on the slk . Kevin you can have all the upside so you buy the 55 call. Great stock replacement strategy, a way to leverage your position. The reasons you want to be detected as the dollar has been down so much so they have this tale would tailwind embedded in their earnings. Economics have done better there. Abigail great stuff as always, kevin kelly a recon capital. Julia thanks so much, abigail. Andl ahead, Driverless Cars the head of Auto Research and Morgan Stanley tells us what you should go along chicken wings. You heard me. From new york, this is bloomberg. Jessica lets get to first word news this afternoon. The longawaited meeting between President Trump and his russian counterpart happened today on the sidelines of the g20 summit in hamburg. The secretary of state said the president opened the meeting by asking Vladimir Putin about russias a legend election meddling a legend alleged election meddling. The president pressed president putin on more than one occasion about russian involvement. President clinton president putin denied russian involvement, as he had in the past. Jessica the meeting between president s trump and putin lasted longer than anyone expected. It was scheduled for 30 minutes but went on for more than two hours. The u. S. And russia announced a ceasefire in an effort to reduce violence in syria. Is revealinggon the