The monday session could stocks are rising after falling. These currencies are falling against the dollar with yields rising in greece and portugal, and switzerland. Manufacturing expanded the strongest pace in over six years. Factories across the region taking on more workers to deal with surging orders. Growth rates improving in most of countries including france and italy. Signaling expansion since the last time in 2015. Signaling that the recovery in the eurozone a strengthening after years of subdued activity and muted inflation. Bring on the next ecb meeting. German 10 years inching higher, up 48 basis points, levels we have not seen since march yieldsng the big in from those hawkish comments from draghi. All the volatility, that included what is being called a for sigma move four do sigma being called a four sigma move. Some traders are getting excited about bonds. Star beforeft their inflation between the 2 target. Mark says went 10 year yields did break higher, the moves were sustained for a few weeks, leading to significantly higher ranges higher rates as you can see from the green and yellow arrows. Showingayment Services Interest from potential bias potential buyers according to a Statement Released saturday. Firm hasivate equity shown interest, according to people familiar with the matter. Private equity firms are looking for opportunities to take publicly traded companies private, or carve out units from larger business as a way to invest mounting hordes of cash. The biggest rise since that ipl. 90 minutes into the trading day in the u. S. It is looking a bit mixed. We have a tale of two stories, the down s p 500 nicely higher. A Beautiful Valley for both being held by banks and energy. But look at the nasdaq. It is down 2 10 of 1 . Session lows. The nasdaq had been up six tens of 1 . An ugly reversal there. Lastly, the nasdaq was down 2 on the week. Its worst week of the year, so investors are selling tech. The worst directs on the nasdaq include amazon and nvidia. It will be interesting to see how this holiday shortened day plays out. Taking a look at it and thats getting a record high, the dow transport. It is at a record high, look at that, up 1 10 of 1 . Hittingelta airlines record highs. Built up 1 . Estimates are rising, helping shares of Airlines Across the board. Fedex higher by more than six tens of 1 . Numbers are going up the right way. The bottom line is expected to grow 14 this year. Isquestion we have to ask are the transports the new tech . We happen to the bloomberg and take a look. Time the nasdaq hit a record high, it was all the way back on june 9, almost a month ago. Look at the transports in white getting that record high. Investors really seem to be going toward some of those transportation shares. It will be interesting to see if technology will get a bit of july goes on, right now, not so much. Vonnie it is good and interesting start to the month good abigail doolittle, thanks so much. Goldman sachs is reviewing its business according to a person with knowledge on the matter. It is said to be off to the worst to star in a decade. Joining us is Michael Moore. Are happy to have the in the new york studio. Michael, this is a change for all the banks, but goldman in particular. It is a business that is in their dna. A lot of people of the top of the bank started out in that business. They have been the most vocal about sticking in that business over the last two years. We have had a lot of regulatory changes, both on the capital side and what is permitted has made thech business less attractive to a lot of the bank, but goldman was saying things were going to pick back up and there will be fewer players in that business, so we will grab more of the share. But that is not played out so far. I think that is why you are seeing them take a look at what they can do. Vonnie theyre pulling the trigger awfully fast. Have they decided this is something that is definitely happening . It is more at the review stage at this point. Theyre not decided anything going to our reporting. It is coming up at the board level. How can we improve this business . What does the size of the business need to be . But they have not decided anything at this point. If you have a multiyear slump the way this business has had, and has not believed come back, that question of cyclical versus secular rears its ugly head. Mark give us a sense of the commodities business. It has boasted a leading franchise for what has been decades. How has it fared in recent months relative to the good times . Michael certainly, the whole industry is down significantly years, and goldman in particular, used to think over 3 billion in that business. That is down significantly from where they were before the crisis. Vonnie Michael Moore, you have to keep us updated. This would be a fascinating turn of events. That is Michael Moore believes are u. S. Financial coverage. Mark lets stick with commodities. A big want to bring in rebound in oil. What are we on . Eight days of gains . Bouncing from those low 40s we reached a week off . So ago. What next for crude as we enter the second half of the year . Not sure it will be at the 40 mark, but we have seen a dental reversal in the market from the gloom that permeated in the middle of june. Slowly we have seen prices ramp back up. That is driven by a number of factors, but most recently, investors took encouragement from the market that showed the number of rigs employed in the u. S. Fell from the first time in many weeks. Perhaps a sign that lower prices have started to cool the shell the shale industry that declined at the start of the year, a sinopec will get some grip a sign that opec will get some grip to the market good to the market. Mark i spoke to someone and said opec has no control over the market anymore. What is the mood at the moment . Member outside of the agreement sought its production rise. Whatnegates a lot of others have been doing. It willple dont think have a huge impact in the second half of the year and a break about the supply and demand balance in 2018, there are others who think slowly, that the supply and demand balance will come back. Vonnie can i ask you about other commodities . We have a great chart on the bloomberg. I really want to show people. We are down very far from the peak. What is the outlook for other Commodity Prices . Are we in secular decline for commodities now . It is been a difficult year across the year across the board for commodities. There are signs of life in some commodities. You mentioned agriculture prices there. Wheat has come back in the u. S. Because of damage to crops over the winter. They had been in the dull drugs for years they had been in the doldrums for years. People have started to talk about copper. Copper prices have been a good gauge. They have come back in recent weeks. It is not a gloomy picture. Overall, prices are down this goldman is expected to have much higher stock in prices. Does it depend on china in chinas growth, both in population . Will it remains the most important factor in global Commodity Markets for sure. They use most of the worlds copper. They are the bigger source of growth and energy alongside india. Absolutely. But the strong Global Economy around the world will helpfully will hopefully help the market. The level of demand which has been healthy, needs to stay healthy if we are going to see any of this rally sustained. Vonnie thank you so much. Vonnie . Vonnie i think i mightve been wrong. Lets check in a first word news with courtney. Courtney Emmanuel Macron is promising to prevent terrorist attacks without pity. To liftthat he wants the state of emergency that has been in place since 2015. He plans to toughen permanent measures fighting islamic extremism and other threats. Both the white house and downing street every get reports a President Trump making a quick trip to the u. K. After this weeks do 20 summit. We cant do 20 summit. In germany, at least 18 people were killed when a bus carrying a Senior Citizen group rammed into a truck and burst into flames. People saying another 30 people were injured. The accident happened in bavaria. Its finaldelivered response to the coalition that is cut diplomatic. And transport links the group has accused qatar of terrorism. No word on whether qatar will agree. Day. L news 24 hours a im courtney. This is bloomberg. Mark thank you. Coming up on the close, former barclays executives make an appearance in court facing fraud theges going back to financial crisis. We will have the latest. This is bloomberg. Live from bloomberg headquarters in new york, im vonnie quinn. Mark and life in london, i mark barton come accounting you down to the european close i mark barton, counting you down to the european close. They are facing fraud allegations dating back to the 2008 financial crisis. Susie is outside of the court in london and joins us. What happened in court today . Hearing thatwas a the charges read out to the defendant. The judge decided that both Roger Jenkins and tom loris much pay 12,000 must pay 12,000 pounds. Risk. Is a heightened they asked to indicate a plea that is not a formal arrangement, but indicated that they will plead not guilty to the charges. Vonnie what is the background of this case . Susie this dates back to 2008, the crazy time when the banks were in chaos. Raise moneyided to itself, which they did so with a number of investors and i would be. Number of investors. Were 20,000 pounds that were called into question. That is the subject of the charges and these four defendants were key in a raging those deals. Mark what are the next steps from here than . Susie there are two lower courts that they have to deal with for the allegations. Sent to aas been Higher Criminal Court in the u. K. For a hearing on july 17, h Case Management mark thank you. Outside of the westminster magistrate court. Vonnie still ahead, emmanuel ofron makes a rare speech both sides of parliament. What did he say about his what did he say about his vision for france. This is bloomberg. From bloomberg World Headquarters in new york, im vonnie quinn. Mark can live from london, im mark barton with the european close. President Emmanuel Macron convened with two houses of parliament with a special congressional. He gave a speech laying out his vision for a french renaissance. Special is a Congress Like this . Why did he choose to do this now . It is very rare and france. In the u. S. , you have the state of the union, but in france, congress is something that a president does only to allow the country to join the you e. U. In times of crisis. Once during the height of the financial crisis. Doing this in front of 900 lawmakers in versailles in the palace of the monarchy, in animal crown was to show Emmanuel Macron was to show he wants to be above the political fray to set priorities for his mandate. There are dangers with this. The first is to overshadow his prime minister. He was supposed to give its own speech tomorrow. Is he wase nicknamed jupiter. But the front page of the he isper, saying that the king. Vonnie caroline, he wants to reduce the number of lawmakers. He told my hundred lawmakers this. What kind of chaos will this unleash in the districts . He has always, said, even during the campaign, he wants to accelerate a lawmaking process to make things simpler and to implement them faster. This is a way for him to say that, to simple by the political process in front. He has also said that he is you he said that he is ready to use a referendum. If the far left wing in the far left wing dont agree. He wants to introduce implementation of parliament to make it transparent for the french to understand better the institution. The other big announcement and this speech is he is planning to lift the state of emergency that france has been living in since 2015. He is planning to lift the state of emergency by the end of the year. Other than that, no major announcements in his speech, apart from the fact that he reminded everyone that european and france are crucial after brexit. Mark and corporate news, the french oil groups finding signing a big deal and are on today sunny a big deal in iran today. Total is not taking a big risk. They say it is a calculated risk. Initially, this project is going to cut 2 billion in the first phase of of the project. This is a gas field that total was already involved in before 2009, and before the sanctions on iran. This may sound like bad timing because of the diplomatic tension between iran, some of the neighbors in the region, and donald trump in the u. S. But in fact, this is not a surprise because the initial deal was assigned in november, so surely, the u. S. Administration was already aware of it and there may have been contacts with total executives already. Officials these same said total is thinking longterm. This is a 20 year contract. In fact, analysts were telling me that gas the man a longerterm is going to grow faster than oil demand. So total, by being the First InternationalEnergy Company to make a move and return to iran since the sanctions were used. Also want to get a reward from the iranians in the future with more projects like this. Mark thank you for joining us. Carolyn conan live from paris. Quick look at the business flash. Chrysler are the top japanese automakers posted betterthanexpected u. S. Sales. That was a bright spot following months of industry declined like trucks were the big sellers. Bymissed estimates, falling 4. 7 . Direct Marketing Firm red ventures agreeing to buy bank rate for fourpoint billion dollars in cash 4 billion. Rate have several websites to help consumers find banking, credit, and other related products. That is the Bloomberg Business flash. Take a look at where european equities are trading as we head to the close and a matter of four minutes time. Stocks are up, biggest gain since april. What a start for the new month. This is bloomberg. Live from london and new york, this is european close. Stocks finishing up the monday session, most Industry Groups gaining. In june. Gain the biggest monthly drop since june last year. Todays gain the best since april 24. New quarter, new dawn. A data point of interest today was manufacturing, slower than forecast. Uncertainty hitting demand and raising doubts about the outlook for the economy in the second half. The pmi falling to a low of the, adding to evidence inconclusive general election in early june and the start of talks are weighing on households and companies. Sterling falling for the first day in nine. We had an eightdate winning streak. Sterling enjoying its best quarter in two years when it rose by 4 . Itsman sachs sticking to call for sterling to fall to 120 over the next 12 months. 120. Also going to survey, 127. Recast a 2 drop from the current levels of 129. Investors posting a six to 5 probability of a rate increase by the end of the year. The last meeting in june, that probability was 7 . How things change. Other data of interest today, further away. The Japanese BusinessConfidence Survey improving for a Third Straight quarter. Exports continuing to drive the longest economic expansion in a decade. Large manufacturing rising to 17 from 12 just three months ago. Todays data overshadowed by the election result in tokyo in which shinzo abes ruling party lost which might not bode well for the national elections. But still confidence among large manufacturers, moving in the right direction. How is it looking there . To point out the 10year yield in the u. S. Even though we have thin volume trading, you are seeing the 10year yield up. Yield. Increase for the i did want to point out a weaker dollar benefiting other currencies. We will get to that in a second. Stocks around the world including france where macron is making the speech is higher. The turkish lira weakening again today. The japanese yen. 9 weaker versus the dollar. The index is up. 5 from a low level. Lets get to abigail doolittle. She is looking at stocks as we kick off the Third Quarter any second half. Abigail so far, it has been bullish for stocks in the u. S. All three indexes higher on the year. The small cap higher. The dow and s p on pace for the best year since 2016. The nasdaq up about 14 on pace for its best year since 2013. We have had some tech selling recently. It will be interesting to see whether that lasts. The russell 2000 lacking. Small caps are considered to be a leading tell. The fact they are underperforming could be a signal. Something to keep an eye on. As for the s p 500 and technicals on what could be next, this is a oneyear chart. We see a beautiful uptrend. The s p 500. Is holding the uptrend in blue. Minor resistance in pink. Testing the p 500 50day moving average in orange. If the s p 500 stays above that and rises above the minor resistance, we will see it up above 2500. Below the moving average it would not be surprising to see the s p 500 moved down to where yellow. Dat averag in keep an eye to see whether the bulls are the bears or the bears are in control. There is no upside left. This is a threeyour chart. In blue, the s p 500. Forecast the average of strategists on the street. They plateaued at 2200 and took a jump up. Is there more upside left . Time will tell. Right now, the street has to get more bullish or the first half of the year is as good as it gets for the s p 500. Mark thanks a lot. What is driving the bull market is the unusual correlation of high equities and high bonds. According to muhammad elerian, it is not strong fundamentals. He spoke earlier. Liquidity has been critical. We entered the year hoping policies and global reflation would take us higher on risk assets. Duecies have disappointed to what is happening on the political side. The global reflation is not as strong as hoped. Ultimately, it has again been about liquidity. On stocks, investors have done great. Theyve given up too much by being invested in bonds. Liquidity continues to be the main driver. Picture, Market Drivers have changed. The critical sustainability handoff has remained elusive. Talk about what you mean by that and how critical it is. Liquidity can take you higher for a while, but you need continual influx of liquidity and that is hard to achieve, especially if Central Banks have been the main determinant of liquidity injections. What investors need longterm to make the gains sustainable is validation. It comes from economic and corporate fundamentals. Look for how economic and corporate fundamentals are doing. Unless we get the policy response on progrowth measures, that is going to be hard to achieve. Focus on fundamentals. Ultimately, that is what validates asset prices, not liquidity. Piece, oneg to your of the sources of liquidity are increased profits of corporations. Companies make money by selling things and making profit off of them. Isnt that indication there is positive growth going on . Although there is a lot of liquidity in the marketplace, we have not been getting more liberal monetary policy. It has tightened and yet companies are making more money. Yes. That speaks to this phenomenon which is profits as a share of gdp have gone up to record levels. There is a limit to how much you can squeeze the labor share. We are starting to see the political consequences of squeezing the labor share too much. Can profits continue at this level of gdp . If they can, companies will continue to generate cash. Some of that will make it back into the marketplace through share buybacks and higher dividends. The politics of very high profits is starting to get complicated. David when they get complicated, doesnt that mean you have to pay the workers more and they have more money to spend and you are better off because you have Consumer Spending going on . Yes. That is what you want to see. That improves fundamentals. There is a lot of leakage from the spending on the consumer side. When companies do more buybacks, higher dividends, that immediately goes into the marketplace. The transmission channel to higher wages is better longterm, but there is more leakage shortterm. Jonathan talk about other market signals. It is confusing for many people. If you were long risk and saw what was happening in the bond market, historically that would not have made a lot of sense. That has become what you guys have called in the past the new normal, the bonds and equities can outperform. That is confusing for many people. Make sense of it. A there are three elements. What matters for investors is how much money did i make, how volatile was my path, and the correlation of different asset classes. We have had high returns, low volatility, and unusual correlations. One of those is what you mentioned. Equities did really well and bond yields came down during the first six months. We started the year at 244 for the 10year and ended at 230. That should not happen according to analysis. It happened because it is liquidity and not fundamentals that have driven markets. There has been a lot of liquidity entering the bond market from the bank of japan and e. C. B. J j over the last week, we heard from seven central bankers who want to introduce some twoway risk to financial markets. Do you anticipate that will it evolve more and maybe we can break down the new normal in the markets . That correlation can break down . We have had signals that point to Central Banks getting more worried about future financial stability. I dont think it is orchestrated or coordinated. I prefer the word i learned from my former pimco colleague. Correlated. Because they are seeing the same thing. I think investors are underestimating the evolution in Central Bank Policy response. They will remain the markets best friends forever. They are evolving to something that is different. But they are doing it in a very careful and measured way. Speakingamed elerian earlier today. Vonnie it is time to check in on the first word news. Poland wants assurances from washington when President Trump visits this week that u. S. And nato troops will remain on the ground as long as russia remains a threat to their national security, according to the a. P. Citing polands foreign minister. President xi jinping has complained about a negative turn in its countries relations with the u. S. The president called him to pressure him on sending north Koreas Nuclear program. The leaders are set to meet this week at the g 20 summit. Wonapan, shinzo abes party only 23 seats in the election for the assembly. The worst performance ever. Hurt his scandals has support. Global news 24 hours a day powered by more than 2400 thansts in more 120 countries. Vonnie coming up, oklahoma is suing drugmakers over opioid marketing. What kind of restitution is oklahoma seeking . The states attorney general joins us next. This is bloomberg. Mark i am mark barton. Vonnie i am vonnie quinn. This is the european close on bloomberg markets. As the Opioid Epidemic spreads, of statendemnation lawmakers against companies that make the painkillers. Says the advertising is partly to blame for the crisis. He joins us with the attorney general of oklahoma. Kevin . We are joined by attorney general mike hunter from oklahoma who on friday filed a lawsuit against Big Drug Companies joining ohio, mississippi, and missouri, other states that have been similar practices. You filed the suit against these companies. Why . Job on february 20 of this year. One of the first things i became in a very unfortunate way was the extent to which our beset by aneen th incredible oversupply of opioids my pharmaceuticals. We began to look at this matter in a very thoughtful and elaborate way. What im calling oversupply of these drugs is deliberate and pretty coldblooded. We are going to hold these companies accountable. We have a couple of decades where these companies, as far as we are concerned, have misrepresented, fraudulently marketed these drugs in our state. Misrepresented to doctors the addictive qualities. The consequence is we have had almost 3000 opioid Overdose Deaths in our state in the last three years, and it is going to stop. It is not a problem unique to oklahoma. I want to ask you in particular, he said the Drug Companies had been misrepresenting to doctors who prescribe these bills to patients. 2015, the lastn federal government numbers we have available. New numbers being crunched now. What role do doctors have to play . Do you think they have any legal liability at all . By and large, the medical community is doing its job with respect to how it treats patients. Unfortunately, there is a sector of the medical community who is not. But our focus is to hold the pharmaceuticals accountable. We think they have misrepresented to doctors the addictive qualities of these drugs. And they have done so in a conscious, coldblooded way. The goal is profits, not patients. We are focused on the pharmaceuticals. But when we find doctors who are in a deliberate and criminal fashion giving these drugs to patients in a way that is not theirtent with the law or doctor patient responsibilitys, we are prosecuting them. We did that a little over a week ago. Doctor in central oklahoma with four charges of murder. We are still building our damage model. It could reach into the hundreds of dollars. Don lawenforcement, rehabilitation for folks who become addicted, it is a massive outflow of taxpayer dollars that we are focused on recouping. Flex this is not unique to oklahoma. The new york times, the attorney general reporting the leading cause of death for people under 50 is drug overdoses. Washington is debating a health care bill. Fortor rob portman calling 40 billion and a Bipartisan Group of lawmakers. 2 majority plan only has billion. What can washington do to help your cause . Epidemic has got to be approached on multiple fronts. I think the pharmaceuticals have to be held accountable. Their marketing techniques have to be stopped. That is part of the goal of our lawsuit read there is a rehabilitation element to all of this. The federal government can definitely help. Addiction is an illness. Dealing with demand is going to be an important part of this. If we can get people to help they need, that will affect supply. That is fundamental. There is also a lawenforcement piece. We have to have more boots on the ground, better cooperation between the states and federal government. I hope washington can help. Lastly, we have to have a National Effort to educate young people. We have got to start where these problems begin, and that is young people making bad decisions. Lawmakers in washington have an opportunity to do something about this. Lets see if they do it. Attorney general mike hunter of oklahoma, we appreciate your time. Back to you. Vonnie our thanks to kevin. We did reach out to the Companies Named in the suit for a response. History said it has a of supporting and continues to support the safe, responsible use of Prescription Medications including opioid medications. Purdue saidon for in part mark coming up, they square off with shrinking bank revenue from commodities. This is bloomberg. Vonnie it is time for our global battle of the charts. We look at some of the most interesting charts and what they might mean for investors. You can access these on the bloomberg by running the function featured at the bottom of your screen. And shorteruieter day in the u. S. As we gear up for july 4. There was a piece of news that caught my eye this morning. Goldman sachs is reviewing its commodities trading business after the worst start to the year in more than a decade. Take a look at this chart. You will see why. It shows for the biggest bank, commodities have halved since 2011 down to 4 billion last year. From 3an terms, billion to 1 billion. We are told the outlook for this year is significantly lower. Why does this matter . Could we see Goldman Sachs going the way of Morgan Stanley and Deutsche Bank who have cut back or exited commodities trading . That would be a big change for goldman. The c. E. O. Began his career in commodities. Happened imagine you to notice that during our show because we featured that in one of our stories. Mark are there clouds building . That is a big question today. A string of companies had to alter terms on planned debts. A gauge of highyield energy bonds has plunged along last months slide in prices. This is our barclays highyield index coming below 10 in 2016 to just below 6 . J. P. Morgan and chase are among those losing enthusiasm for this asset class. Deutsche bank strategists are recommending selling highyield energy bonds. Citibank said theyve gotten used to it. We are near the lower 2014. Said it doesent not take much to start the spiral panic we saw in 2016. Vonnie a genius is inflation presentation. I will award the chart tries to emma. Well done. Emma always a pleasure. Vonnie tune into bloomberg tomorrow at 8 00 eastern for the boston pops spectacular. It is noon in new york, 5 00 in london. Welcome to bloomberg markets. Scarlet we are live from bloomberg headquarters in new york for the next hour. Here are the top stories. Is the honeymoon over . President trump escalating asia tensions ahead of his hypercritical meetings with russian president Vladimir Putin and german chancellor angela merkel. Tesla will start production on the most affordable vehicle this week. Can elon musk meet his ambitious monthly target by the end of the year . Goldman sachs may be breaking up with commodities after its worst start to the year in more than a. Ecade t u. S. Markets close in about an hour. Early close because of the holiday tomorrow. Lets check on where stocks are trading with abigail doolittle