Transcripts For BLOOMBERG Bloomberg Go 20160706 : comparemel

ceo of the alan company conference in idaho, we will have his take on the latest round of the bed for yahoo! will verizon make the big move? the story today around global yields of course. jonathan: let's get everyone up to speed. softer, up byle 1.5% here in london, the losses piling up and mainland europe with the dax down by over 2%. if you to the headline in the fx market. the lowest since 1985, down by cured all-time low yields, japan, u.k., u.s., 10-year yield down by 1.33%. crude softer at $45.98. gold at a two-year high. $30 right here, right now. let's go around the world and check in with our bloomberg team for in-depth coverage of our top stories today. guy johnson here in the city on the pound and the global equities and the current in asia, turning negative. yelena shulyatyeva in new york, and possibly more stress for the u.k. funds. let's begin in the city with guy johnson. he joins us with a check of the market at the top, the fx market shining bright red yet again. 28 and ahad a $1. earlier on. it picked up a little bit. the guild market is fascinating as well. the curve and saying -- where is it that the bank can buy? there is a definite story that the bank may be forced down the curve, and as a result, that is where you will see the biggest reaction this morning. jonathan: it is a risk of a long the assets, got. we are looking -- guy. we are looking at italian banks very much in focus. guy: absolutely. europe has something of a banking crisis underway at the moment. the question is -- is that something that we can start to correlate with 2007, 2008, when it all became so systemic so quickly? the rate of change will be very important. lorenzo is a guy who knows a bit about banking. he is the chairman of socgen. he used to be at the ecb. he is concerned that this could be the concern of something -- the start of something systemic. lorenzo: when there is a feeling it hasctation and problems some of the whole economy has problems, so in this situation, you need the tax there, fiscal policy, unit policy to step in and to intervene, but the quicker the better because it stops the speculation. guy: lorenzo bini smaghi speaking to me. he is concerned that italy basically should be given the opportunities, that the germans should not resist, that italy should take an opportunity out of a crisis and be given the green light to recapitalize its banks. johnson, the italian story that is not going anywhere anytime soon. another story is this one right here. this is a scene from the british parliament's in london, westminster. prime minister david cameron taking questions, of course, the topic of debate, an inquiry over the iraqi invasion. seven years in the making, commissioned by than prime minister gordon brown, criticizing this inquiry, criticizing tony brayer -- tony blair and intelligence as well. we will bring you the headlines as they come through right here on bloomberg, david. david: it takes is all the way back to 2003, actually. we turn to japan. government bonds have set another record. this?is there no end to i assume this is a flight to safety, but what is causing this? enda: look, david, there's no real and bring to this trend insight just yet. japan is feeling it just like everywhere else, and in fact, it is not just the 20-year yield that some of us are asked acting, the 30-year yield will dip over the near term. the u.k.the back of vote to leave the european union. it is worried over the european bank growth, the italian situation, china's own growth. a lot of the money has poured into japanese bonds. it is sending the yen higher. not hurting japan's exporters, hurting the margins, and of course it potentially will hurt to the economy, and that is why there are expectations that the doj, even as they are already are alreadyup -- hoovering up bonds, there is no end to the trend to buying japanese bonds in the real term. david: there is a lot of phenomenon around the world i could be causing this, but to what extent is this record low yield in japanese bonds reflecting the japanese economy, domestic issues? well, i think it is probably being driven more by the global issues at the moment. we cannot discount the brexit, the worries over the global however, there are expectations that the doj will have to step up over the coming weeks. they meet july 29 here. there is expectation that they extra government bonds, for example. that is part of the mix here. toexpect prime minister abe come forward. there is no doubt that japan's -- domestic factors are part of this, david, but we cannot overlook the global story. david: table i do what -- david: thanks, enda curran. alix: the 10-year yield in the u.s., the 30-year, 2.1%. joins us now.yeva what part of it is the global flight to safety, and what part of it is turning negative on the u.s. economy? yelena: i think it is a big part of it, global concern, and we heard from the new york president bill dudley yesterday. he mentioned if the contagion spreads out from the u.k., it could be a really big concern for the u.s. economy. we also have our own problems what they can sense about business investments. we heard it from the fed speakers, including chair yellen herself. so it is definitely both. for now, financial conditions in the u.s. are not extremely placed. it is not a concern as of yet. fomc today, we have the minutes from their last minutes -- last meeting before the brexit. what we learned today? yelena: it will probably be less relevant because we heard from chair yellen extensively. they were concerned about the brexit. so there will be a lot of discussion in the minutes about the brexit because it was upcoming, and they were discussing what cautions to have. we will also be looking for clues about what caused them to doubt grade -- to downgrade growth. dax downgrade as well. alix: thank you so much. if you want repercussions, you have to talk about the u.k. property markets. jonathan: yes, and we will spill over here. three of the largest u.k. real $12te funds have gauged billion of assets. i want to bring in jack sidders here at bloomberg. let's talk about how the dominoes fall. you just wonder the contagion effects and whether it spreads. one bright spot -- how many of these funds are there? which obviously does not look good, or member and what happened in 2007, 2008, i am really starting to worry. i think it is important to point out that it is a different landscape now than it was back then. ofo in terms of the position the market, so we are expecting more funds negated. we are expecting asset sales, but i am probably not at this point expecting anything like the values that we saw last. jonathan: standard life, one of the funds at standard life has negated. it had a cash flow of 13.1%, which is conservative already. my question to you is, do i go to the option credit lines, at what point do i pull the trigger and try to sell hard assets, real estate? jack: that is the deliberation going on right now. today, yesterday, they are looking at the game. if we have to sell something, what can we sell? clearly, the liquidity buffer that they have looks comfortable, but it obviously was not enough, which gives you the sense of how much it has shifted. haveld say that those two failures of london assets. they probably do not want to sell those because they are highly prized assets. that said, they are pretty liquid assets. the pound has dropped significantly. they should be attractive to overseas investors. those funds have a descent chance. london assets -- they should not be too worried. let's give ourselves a little bit of strength. those who have portfolios, i imagine they are looking at what other options they have an hoping they can save credit lines and so on. jonathan: jack sidders will be back very shortly as well. jack, thank you very much. that should wrap up what is happening in the business world and the markets as well. let's get across to emma. emma: thank you, jon. the reports of the u.k. chose to take half a million bases before options have been exhausted. government ministers, intelligence services, and the ministry. the biggest impact may be on the reputation of former prime minister tony blair, who was responsible for britain's involvement. in south africa, a global entity, oscar pistorius, has been sentenced to six years in prison here he was convicted of murdering his girlfriend. his lawyer argued that he was only guilty of being irrational when he fired four bullets through a bathroom door, killing reeva steenkamp. hillary clinton's campaign is the training a decision by the fbi as vindication. fbi director james comey said he would not recommend clinton be charged in the investigation of her e-mail practices as secretary of state. comey criticized clinton and her aides for being careless for how they handle sensitive information. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. coming up, the pound tumbling to its lowest level in more than three decades. stephen gallo, head of european currency strategy, will join us with his strategy in this ethics month -- this fx market. this is bloomberg. ♪ alix: this is "bloomberg ." i am alix steel. abigail do later -- abigail doolittle is here. abigail, global uncertainty is a key factor. abigail: that is pretty fitting alix,e market today, especially in europe, equity index is down sharply three days in a row, the largest losing streak. especially hit hardest are the european banks. the bank index down more than 20% since the brexit decision, so that is really pressuring stocks. we have a number of the big european banks sharply lower, including deutsche bank, ubs, and others. polo oilwith europe, -- shares are plunging this morning. this is the anglo-irish oil producer with lots of exposure to africa. involved in a $300 million convertible offering. it has a 6% interest rate, pretty high. expensive certainly to investors. lastly, we have melrose industries trading higher. this is a turnaround investment company in england, and they announced they are buying a fan $2.8 billion, a 39% premium. the stock is going to be almost double on the open, jon. jonathan: cheers, abigail. 1985, that is how long you have to go back to find a sterling trending at these kinds of levels. a fresh 31-year low on the cable rate as we trade at $1.2980. joining us is stephen gallo. goldman sachs out this morning, saying the three-month target beating the fx market, it feels like a one-way back or a weaker pound. $1.20 isi think pessimistic for the short run. andet to the negotiations, a completely break down and look like they're going nowhere. there is no flex ability on either side. having said that, this environment is very much driven y rather than fundamentals, so we may see a pound weakness in the short run. it is unlikely that we will have sterling, anrom aggressive, e.m. style capital outflow from sterling because it is willing to act, and i think they will start talking about asset purchases. advisers feel like the assets they have lined up on the -- the other factor as well, and i think this is important, we are in the middle of the in terms of the deal it is going to get done. at the moment, what you see is the market is squarely focused on the u.k. in my opinion, they are too isolated in that view. if the u.k. continues to deteriorate, the situation continues to deteriorate at this rate, it will pull the eu down with it. economically, possibly even politically. it is not in anyone's interest or eu side to have a punitive deal that comes from this. europei'm curious about -- not u.k., europe -- what happens to europe in the wake of brexit? dideld up as well as it because of under men -- underlying fundamentals? stephen: i would not get carried away with expecting match live -- expecting massive re-patch relation because i think we have seen a peek. -- a peak. what brexit is done is led to a convergence of u.s. and sterling rates with euro land rates, and that is providing some support to the euro. overall, our focus is people are focused too much on the u.k. right now and not enough on a medium-term political and economic risks for the eurozone. yields in the eurozone could still fall a lot further if the ecb even modestly affects of of the its qe program. what you do not get is the euro causingtrades, which is spreads to widen aggressively and the euro to fall sharply, but you do get some lower in the euro because of the ecb acting to keep spreads capped. so the risk premium gets spread to the bond yields, for a strange market, and the euro goes lower. $1.1160ur top trades is in the euro dollar. if you do see spikes that high, it is a firm sale. alix: the euro zone still has the current account surplus. it is going to leave. where is the attractive opportunity elsewhere? you are right to focus on the surplus, and our three-month target is $1.04. withink that is achievable the political backdrop and more ecb action, which is likely. -- reason we're enough the reason we are not forecasting is because of a current account surplus, but you see is less investment abroad. to answer your question, there will be less investment abroad, so periodically, the eurozone will not be able to recycle the current account surplus. this will lead to a euro-dollar that stays above parity this year. alix: really interesting. we will the euro, not the pound. stephen gallo, thank you again with capital markets. $12 billion in assets have been frozen. coming up, we will speak with mark dampier, a research director, who explains what is behind and what are the broad application for the market. ♪ alix: this is "bloomberg ." i am alix steel. we're back with bmo's head of european fx strategy stephen gallo. i am starting to hear a lot of had her about a particular -- a potential big devaluation down the pikes. stephen: emerging-market currencies are challenging, to say the least. what brexit has highlighted is that it is going to be a lot more difficult in this environment to get things like , whichade deals done benefit emerging markets, a number of emerging markets. so that is a factor. and then cross-border capital flows and cross-border investments -- it is a lot more nowicult of an environment because brexit has happened, and it was not a difficult environment already because of the global growth outlook and the global challenges in the space. so i think the near-term outlook -- it is challenging. there are no -- in the near term -- direct links on brexit on emerging-market currencies in terms of correlation trades. i do not think they are very strong. our view on the euro is bearish, and we think that as political tensions mount in the eurozone, emerging-market currencies will fall further. jonathan: is that broken down? stephen: the euro. before, foreign demand -- eurozone demand for foreign assets peaks around the time ecb started qe in march of last year. if you look at the 12-month rolling some of foreign asset purchases, it was already getting a peek at that time. the idea that over the course of 2016, so for the second half of 2015, there has been a persistence, increasing wave of euro capital outflows that has actually been incorrect in my view. does the conviction trade out in the fx market anymore? stephen: cable is a pretty high conviction trade, and people will be seeing rallies and cable, 41.30 -- $1.30. you will see persistent markets there. jonathan: stephen gallo. we will be staying in 1985 for a long time to come, david. david: the good news is we have a ways to go, yet. assetsup on "," fund have improved in three of u.k.'s largest funds. will be with us on the commercial real estate market. that is ahead. this is bloomberg. ♪ ?c+sv was june 27, 1985, in a very different city of london that the pound was this weak against the dollar. we trade at 831-year low. low. trade at a 31-year this is "bloomberg ." points,are soft, -14 over in europe, the dax, the benchmark in for inferred, germany, down by almost 2%. every single industry group on the stoxx 600 is in negative territory. oil and gas leading a loss, switching the board and commodity in those markets. crude $45.96. $13.75.wo-year high at all-time low yields on a u.s. -year, trading at 1.33%. the market headlines outside of this, here is emma chandra. emma: thank you, jon. president obama has a clear that hillary clinton is "overwhelmingly qualified" to be president. in north carolina came shortly after the fbi found that clinton was careless and handling e-mail as secretary of state, but the fbi director said he would not recommend filing criminal charges. a congressional commission said there is plenty of problems at the u.s. veterans affairs department. two years ago, there was a tsandal over how long ver had to wait for health care. they say there are still profound deficiencies in delivering treatment. a spanish court has sentenced lee and no messy to 21 months in messi to 21el month in jail for tax fraud. the barcelona soccer star is unlikely to miss games. in spain, people can avoid serving time for up to two years if they have no criminal record. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. david: thanks so much, emma. tom keene is joining us for the morning must-read. this is mohamed el-erian. we both like and respect him. looking at u.s. bond deals, yes, record lows. this is the quote we pull -- traditionally, lower yields are n strong indication of a approaching recession, and in this particular case, they would be signaling a painful downturn, yet that reason does not apply in this case. the treasury yield curve has been dropped and how flat the curve has become. tom, this is not your mother's or your father's recession. tom: 10-year yield, that is correct, by the way, two-year yield, this is what you have to focus on -- four outcomes, this thing,own, or which is what is going on here. withed el-erian is saying janet yellen, mario draghi and all of that, the 10-year yield is price up, yields down, making for that flatter curve. this is scary. david: also, it is less attractive. other, lower yields for assets. tom cole and most of it right now, just in the last couple of weeks, is the move from .90 percentage points, whatever, move the decimal, it is fear, just like you see a stronger japanese. david: if people are right to be afraid, is dr. el-erian actually wrong? this would indicate a recession is coming. the people will model likelihood that the probability of a recession -- i was at se the other day, they set a 60% likelihood. that is a parlor game. in, there iss come rationalization, such as dr. el-erian, and then it flips to a recession call if the data warrants that. we do not see the u.s. data yet with the jobs report coming on friday, to signal the recession. david: a critical jobs report we will be looking at. given this is math wednesday, give us a tutorial. it is one thing to fight in the yield curve, it is another to invert it. tom: absolutely, no question about that. the two-year yield is here, the 10-year is here, the 10-year comes down, a lower yield than the two-year index -- almost always associated with some form of recession. twomber, a recession is quarters of negative gdp, and there is some wiggle room on that over the last few years. david: and the effect of brexit. how much would that affect the u.s. economy? tom: i will say less than people think, but it is not just brexit. european banking, italian banking, and the challenges here . david: how much does the economic effects trickle over to the financial market? tom: no question about that. to the el-erian point, a flatter yield curve, there is a direct conduit to what banks do and do not do on their income statement. david: which could give us problems around the world. tom: in the immediacy, a fragile inking system that we see in the italian banks and the new lows at deutsche bank. david: i think i capped up. tom: we do more in november. david: tom joining us from "surveillance" radio, you want to tune in with tom keene and mike mckee. jon? jonathan: that is what the earpiece is for. there is no producer, i am actually listening to "bloomberg surveillance" and executing "bloomberg ." so far, three large property those funds that institutions have rose $12 billion in assets. for more on the u.k. market, i am pleased to say mark dampier, research director at hargreaves lansdown, joins us. mark, nice to have you on the program. if i'm not invested in the funds that have not been negated already, do i look and say you know what, i want to redeem my money, too? do you think more funds will be negated here? mark: i do, anyway. it always happens. once one starts, they all go. not from negating completely, but reducing the prices of the funds. a lot of the clients suddenly want all of their money back, and i will presume that they will follow on. than we hadot more in 2008 when the situation arose. jonathan: how much of a situation for you think it is? the second part of this question is the cast provisions -- cash positions at these funds, a 13.1% cash position. you go from cash, you reach the credit line before you start selling real estate. they don't, they start selling real estate, which is why they have gated the funds. the trouble with investment funds, meeting with assets, and property is just about the worst you can get. besides, what happened in 2008 was the commercial property was selling in a market where fund managers did not want to sell. it is similar now. the 2008 situation was far worse -- we had a global crisis, the u.k. one, and we are a few days after a vote. some investors are wanting to stay. they were actually selling these funds before the vote anyway, and we see a continuation of that. we also see a needless panic starts, theyone all start, and this is a lot of news, far more than in 2008. of thepresent about 5% commercial property market, so we should not get too wound up by it, but we are in a period of mourning in the u.k. people are so shocked that we voted for brexit. i do not think you can make any great prediction on what is going to go on for a while because we just need to get out of this period. we have also that a political vacuum. we are certainly not going to get any better until september who leaves theee converter -- the conservative party and be the next pm. are you seeing any evidence of distress selling in the marketplace in london? mark: it is too early to say that. commercial companies as well, they think it is overdone. a lot of the commercial properties, the commercial property market is quite high. across the region, a company i was told i am still getting 4% yields, why should i panic about selling properties? it does feel like a short-term panic. if you like the eu in the 1990's, with the prime residential funds. i do not know why we really want to buy illiquid investments. it does not compute. alix: there was a great piece on bloomberg to discuss it. asset, weery illiquid know that. it is spreading to the securitized market, and the ball keeps rolling. do you see that kind of scenario happening this time? mark: it is distantly possible. you cannot rule anything out, but at the moment, it feels like we have got a lot of rumors. journalists talking about residential housing and said what happens if all the eu residents leave, 2.8 million people? they actually thought we would drive 2.8 million people out of the u.k. calm woulderiod of do everyone good. i think the commercial property yields are reasonable. they are flat on their back in the u.k. they are not likely to rise until the end of this decade at the earliest. you do wonder where investors are going to go in the interim. i would go commercial property if you just be patient and enjoy the yield and stop worrying about the capital for a while. mark, headlining the bond market today, low yields, tb, treasuries,j yields across the curve, looking at commercial real estate, if you want yields, you go there. as a retail investor, you think you have got liquidity. i want to know given recent events. closed rather than open-ended. we had it in 2008, early 1990, -- i haveegulated been in the regulated business for a long time. we are a bit late in the day for regulators who want to join in. i do not think an open-ended investment is the right vehicle for a commercial property, and i've said that for a very long time. jonathan: mark dampier, great to have you with us on the program, hargreaves lansdown research director joining us from bristol here on the u.k. alix: great stuff. coming up on "," a treasury fund all-time low, global bond yields plunging, global 10-year plunging by 20 basis points. this is bloomberg. ♪ david: this is "bloomberg ." i am david weston. coming up later on "," aol's ceo from the conference in sun valley, idaho. ♪ emma: here is your bloomberg business flash -- apple is losing ground for chinese smartphone buyers. in chinaof phones sold in may, down from 12% a year ago. 17%inese company now has a market share. it is another record for the world's largest mutual fund manager. vanguard attracted 148 billion dollars during the first half of the year. that beat a record set a year ago. then go -- has been losing active managers to beat the market. and britain's melrose indices has agreed to buy nor tech, an american company that makes insulation fans. the price -- $12 billion, including debt. companyis an investment that works to benefit from the growth of the u.s. construction company. ask you, al-- back to you, alix. alix: later today, 2:00 p.m. new york time, the fed will release meetings from -- minutes from its june meeting. we have bricklin dwyer. to have togoing contend with the global bond yields are we have a great chart we want to show you. ae 10-year yield is phenomenal gdp growth. the gap is now 1.5%. or aremissing the train, we looking at investors potentially looking at lower nominal gdp for the longer-term? think it is acceptance that things are looking less positive in the future. we have had this discussion of lower potential growth for quite some time, but right now we are getting into the heart of it, which is that real growth is not very good, and these prospects are not very good, either. what that means is much lower, long-term yields. does that mean that when we go to 1.5%, that gap is really low, so it does mean that you have to rerate to meet those yields? is that your call? bricklin: that is exactly right. the issues of bond flows and everything else -- the real issue is that what we are seeing is much lower growth in the future, and that has really crystallized in investors' expectations. david: how much lower growth? in terms of gdp growth in the united states? our idea of potential growth and where the economy should be growing given where it is in the cycle is right at about 1.5 percent. that might not sound like a lot, but it is as good as it gets. it is actually pretty good. alix: that is a decline, david. david: you're are looking at 1.5% going out. to what extent are you looking at things like the jobs numbers that are coming out in two day'' time? how much will that influence your decision? bricklin: i think they are hand in hand. we should see lower job growth, consistent with the low gdp. this idea of 300 k payroll is way too much. we should see that reset at a much lower level. clearly productivity is very weak. i can think of a lot of other adjectives to describe it. the point is, without much productivity gained, we are relying on growth to drive economic growth. david: productivity is the key factor. we hear it from janet yellen and others. what is required to get the product of the growing? is a corporate investments? bricklin: a corporate investment would help, a little fairy dust, a couple of other things -- wishing in helping -- and hoping. productivity growth is the magic ingredient we all want to happen, but you have to invest in the future for that to happen. we have seen a doors of investment for nearly 15 years now for operations and individuals, using a home equity line of credit to start new business, so that during -- dea rth of investment is really holding back productivity gains. david: you just referred to 15 years ago. we had dramatic growth of activity in this country for many years, actually, and it seems to have really turned around not just in the last few months. what accounts for that? bricklin: demographics is a huge factor, too. we have an aging population, an higheropulation with a level of productivity. they are retiring or exiting the workforce. they are being replaced with lowerr people with a level of productivity. we are seeing a bit of a demographic effect with activity as well. alix: breaking news for you -- bill gross making some headlines right now in his monthly investment outlook, saying the central banks are relying on outdated models for policy. he said central-bank policies have not boosted credit growth, and a credit-based financial system is sputtering. what you ares is talking about. gross is saying what have central banks -- gross is saying what central-bank have done is not working. theklin: you have cyclical tools. monetary policy is meant to be a short-term solution to provide a buffer to get over a hump or a bad period. that is not fixing the heart of what is happening. alix: going to the jobs number, it feels like the market is anticipating a pretty solid number, but the fed is still on hold. what if we get a worse number than expected? bricklin: i think you will see more of that crystallization of what we are talking about, which is lower excitations for growth -- lower expectations for growth. we get the whole idea of japan again, lower growth, lower inflation. david: going back to the macro, is there anything the government can do this, or can the private sector pull us out of this slow growth? bricklin: absolutely. there is a question of ability and a question of willingness. david: assuming they are willing, what can they do? bricklin: it is always the same recipe, short-term goes to whether it be tax cuts and then more spending or things like that, and then long-term solutions to deal with that. has written a good paper about how exactly that would work, short-term spending could offset some of that long-term pain. alix: let's do your job call and get the numbers up. what are you looking for? bricklin: we are looking for 135k. it is a bit lower. margin of ever, the story that we are telling is that this is not a one-off. number, subtracting for the verizon effect, it is not a one-off. we have cindy -- we have seen the trend slowing. alix: thank you so much, bricklin dwyer, senior economist of north america. david: this is bloomberg. ♪ david: this is "bloomberg ." i am david westin. time now for off the charts. june 23 referendum in the u.k. had tangible impact on markets around the world. abigail doolittle is here to walk us through it. take me through it. abigail: this is a great chart. especially for hard-core finance guys and gals. 10-year corporate spread. this is the difference between the 10-year bond and treasuries. david: from up to way down. abigail: yes. the way your corporate bonds are selling off relative to treasury, it is really a good example of risk-off, risk-on. in blue, we have the s&p 500, trading in an inverse manner. on the brexit that you were just talking about, we did have a blowout just a bit. david: you see it spiked up, although not -- abigail: that is what is interesting. it did spike some, but nothing close to february. even though we have had this selloff in brexit, nothing close to february. david: at the same time, there is sell -- abigail: but nothing close to february. we have had a little bit of a rebound, but we refer back to february, we see a big period of risk up. we can see at re-convergence again, but this time, credit spreads going wide, and s&p going down. it's good suggest -- david: although initially it came back down again. abigail: but then it could come back up. david: it could, back up. we have time for the second chart? abigail: i would love to show it. this is the spread between libor and the overnight swap. david: it says how risky it is to risk -- for banks to lend to one another. abigail: it tells us that it could continue. david: thanks so much, abigail. coming up, erik knutzen. this is bloomberg. ♪ ?c+sv >> the currency market adjusts to a post brexit world. >> the $12 billion freeze. political uncertainty hits property investors. >> global bond yields plunging depths to the 20-year yield turns negative for the first time. david w.: welcome to "bloomberg ." i'm david westin with jonathan ferro and alix steel. jon: we will be talking about the fx market. where he thinks the currency is headed next. the consensus is lower, lower, lower. alix: saying there is no other way for the currency to go. is in sun valley, idaho. the future of yahoo!, as it faces a third round of bids. the story again is in the global bond markets. jon: and equities, as well. groups inustry negatives. futures, 19 minutes away from the cash open. it is risk off across the asset class. look at the bond market. all-time low yields. look at that for a yield. not much of one. we are down by five basis points. in the commodity market, softer. down by almost 0.9%. gold making an appearance on the cross asset board. lix: i want to bring in carl riccadonna. we have the 1.32. we have bill gross saying that the credit-based financial system is sputtering. is it? or is it the search for safety? carl: we are seeing a constriction. we are seeing challenges facing european banks. some credit constriction taking place. the u.s. economy and the global economy are both growing at slow and worrisome paces. any additional constriction is bad news. alix: what does that mean for the jobs number? number, so a jew what will not reflect the fallout from brexit -- june number so it will not reflect the follow from brexit. this is a critical data point because given the weakness in the labor market in may, this raises real questions whether that was a one-off anomaly or a downshift in the pace of hiring. downshift, that will have lasting implications for the u.s. economy. alix: what parts of the fed minutes might be relevant to us? carl: we have to be very careful how we interpret this. the fed became dovish before the brexit stuff came to pass. we have to look at what was driving the fed's increased pessimism in the broader outlook and add in what it must be in light of the brexit development. we have heard a little bit of a tug-of-war. the san francisco fed president said that the outlook is not changing in light of what we have seen in terms of brexit fallout, but the new york fed president bill dudley indicated that there was a risk of financial contagion and we are seeing that across the board. alix: good stuff. lots to watch. , bloombergonna intelligence chief. we've got to talk about the pound. another 30-year low. jon: the summer of 1985, good times. don't remember it. alix: you weren't born. jon: i'm going to bring in guy johnson. issues are not new with the exception of the fx markets. italian banks, record low yields across the planet, it seems that the brexit issue has shown a light on the things that are already there. guy: we've talked about this phrase, once the tide goes out again, you start understanding who is who. we'll knew these issues were around and we are beginning to focus in on the u.k. current-account deficit, the story surrounding the italian banks, all of these come in front and center. here you get a shift up. the delta has changed. the day after the brexit result, we saw this market reaction, then there was a few days of relative calm. now it feels like it is picking up again. the rate of change feels like it is accelerating. the markets are trying to figure out where there are enough bonds to buy. people are beginning to join a few more dots now. jon: isn't it insane? markets do not clear in two days. it takes weeks, if not months. sometimes it takes a good year. some of the spillover we are seeing is redemptions. redemptions in real estate in the u.k. -- 9.1 billion pounds. now is the message right from that particular situation? guy: the message is that the market was prepared for this in some ways. reserved had recently cash positions, but that people are going through that second realization, that second derivative of the brexit reaction phase that you go through. i think what it is telling us is that this has got legs and that we are now reaching into those liquid areas. people don't really want to be there and now they really don't want to be there right now. it is interesting to talk about central bankers and how policy has changed. central bankers have done all kinds of things and they have changed the models and may the markets feel very unreal. what you are seeing is that coming home to roost. monopolyhould all play -- apparently. people are turning their cash into monopoly money. david w.: sounds like fun. you know what else is fun? this is early july in the united states -- all the media moguls fly to sun valley, idaho for the allen and company conference. david gura is out there. he drew the short straw to be out in sun valley, idaho. i remove or 20 years ago, i got a week after sun valley, idaho sale.r that the disney david g.: there are deals we know about and those that we don't. the yahoo! deal is the biggest one. we will be talking to tim armstrong, the ceo of aol in the next hour. dan gilbert is expected to be here, as well. a lot of people are buzzing about the core assets at yahoo!. there is conversation about deals that could happen. media consolidation is what we hear about time and time again. there could be more consolidation. the former disney president and head of caa saying there is the potential to see in north-south arrangement for the first time, a silicon valley company buying a hollywood studio, perhaps. we will see what happens. david w.: that would be something. there is also a lot going on behind the scenes. what is going on behind the scenes? inid g.: the drama plays out the traffic circle in front of the sun valley lodge. we were waiting yesterday to see if philippe dumond and sherry redstone were going to have an encounter upon arrival. sherry redstone did arrive. she gave it wave to the cameras and went inside after getting out of her dodge charger. we saw her with les moonves and bob iger. the bob -- viacom drama is playing out. the disney drama also playing out. tom stacks arrived. the president of espn and ben would of abc -- ben sherwood of abc showed up. there are macro issues playing out, as well. brexit is a big one. here is what michael ovitz had to say about it. michael: all of the people we were talking to, they'll told us the night before the vote that it was going to pass. those people in that community did not know. the people that voted to doubt don't seem to be ready to handle it. players have already resigned. it is really a mess. david g.: those executives who did talk to us saying it is an issue they will be talking about. markets go up, markets go down, but this was a dramatic event. brexit is not all they will be talking about. the presidential election is also on the table and there will be conversations about national security, as well. david w.: it looks like they are all there. you've got them all gathered around you. terrific. congratulations. david g.: canadian prime minister justin trudeau expected to be here as well. david w.: thank you. that is david gura reporting. emma is here with some first word news. bring us up to speed. campaignlary clinton's by theraying a decision fbi as vindication. fbi director james comey said he would not recommend that clinton be charged in the investigation of her e-mail practices as secretary of state. he criticized clinton and her aides as being extremely careless with sensitive information. in south africa, oscar pistorius has been sentenced to six years in prison. he was convicted of murdering his girlfriend three years ago. prosecutors had asked for a 15-year sentence. his lawyer argued that he was only guilty of being irrational. inquiryial british called the country's role in the us-led invasion of iraq a failure. they chose tod take part in the invasion before all of the options have been exhausted. impact may be on the reputation of former prime minister tony blair, who was responsible for britain's involvement. inbal news 24 hours per day more than 120 countries. this is bloomberg. --: coming up on the program is brexit eroding the pillars of britain's economy? we have the real estate outlook and where there is opportunity. global markets -- a risk off day . this is bloomberg. alix: this is "bloomberg ." let's get a check with abigail doolittle about some early movers. abigail: pretty bearish call out of goldman right before the u.s. open. david kostin did say that we could see a 5%-10% drop in the s&p 500 in the near term. we take a look at a one-year chart of the s&p 500 to put this bearish call into perspective. we should be seeing right here, we do see that it could put the s&p 500 back down toward the bottom of a range. it is bearish for the near or medium-term, but it would take us back to the lows we have already seen. over the longer term, david kostin sees the s&p 500 returning to 2100 by the year's end. tesla shares are down in the premarket. this on the news that a tesla driver was injured using autopilot. that is according to the "detroit free press." an art gallery owner was injured , but survived when his tesla rolled over on the pennsylvania turnpike. this comes a week after a tesla driver was killed using autopilot. not surprisingly, tesla shares are down. netflix shares are down in the premarket. growth couldcriber be flatter than expected. if so, this is pretty bearish. it is the domestic subscriber growth that is expected to be pretty slow. it could weigh on any strength in the international subscriber growth. netflix could fall by about 15%, they say. david w.: thanks, abigail. global equities are retreating, but they bounced back after the shock of brexit. now.knutson joins us he helps manage $243 billion in assets. welcome back to the program. eric: good morning. david w.: brexit -- let's start right there. let's start with the epicenter of the u.k. and then we can work out to the world at large. what do you anticipate are the specific effects ongoing in the u.k.? eric: i happened to be in london on thursday and friday and the aftermath -- they would not let me vote -- i was there at that surreal moment at the edge of history. our first comment was that we did not think this would be a lehman brothers moment. we did nothing said it would immediately lead to distress in the system and that it was just another chapter in the low growth, low rate environment. have you been proven right in that initial assessment? erik: it appeared we were because markets sold off and then recovered. the transmission mechanism came through the pound, somewhat through european stocks, somewhat through banks. now you have these concerns around u.k. commercial real estate with the gating of the real estate funds in the u.k.. that could be a transmission mechanism for distress, but we don't think it is a big enough area to cause broader distress. david w.: you mentioned the ftse 100. the ftse 200 is a bit different. 250 is a bit more domestically oriented. you can see the orange line bounced back nicely. but the ftse 250 has not. there are concerns within the u.k.. erik: absolutely. locally oriented companies are suffering much more as they are in an increased likelihood or potential for recession or definitely slower growth within the u.k. alix: turning to the u.k. property market, take a look at the bloomberg. you think it is insulated, but this is a very striking chart. line is the price per square foot. as you can see, transaction volume has fallen off a cliff, but the prices are relatively high. the idea is that that rolls over and could cause a washout in securitization of the property market. how do you see that playing out? erik: if you can real estate prices fall and it is a reasonable expectation to think that -- they were elevated to start with -- what would be the knock on effects of that? you see the first impacts with the closing of these close down funds. that has had a cajun -- has happened on occasion. what is the is broader impact on the u.k. banking market or other pockets of potential distress more broadly? estimates from an article in bloomberg this morning are than 85 billion pounds of u.k. real estate exposure is in the u.k. banking sector, down from 150 billion pounds five years ago. there are a lot higher levels of capital in the u.k. banking sector and the bank of england has already said that they are offering significant support to the u.k. banks. there is much more of a playbook to deal with these levels of potential distress in markets right now. alix: talking about a playbook. you are modestly overweight the pound. why? erik: obviously, today i wish we were not overweight the pound. [laughter] erik: we increased exposure early in the brexit campaign, when boris johnson joins the brexit. we felt it was kind of overpricing the brexit premium, as it were. as the pound rallied out to 1.50 per dollar, we trimmed that exposure almost to zero. we hold that now. on the theory that this is going to far and that there is an overshoot and that is markets normalize and that is people reassess the relationships, that the pound has some upside. alix: great to have your perspective. erik knutzen of newberger berman. up next, where he is looking to make a move in the global bond market. that is ahead. look at that ten-year-yield -- 10-year yield. this is bloomberg. ♪ alix: you are looking at a relatively gorgeous, yet very hot day in new york city. the markets are not hot. the risk off trade reigns supreme. we look at the impact of brexit on broader financial markets. still with us is erik knutzen, the multi-asset cio at newberger berman. david w.: one way to look at the u.k. and the u.s. is the spread of banks lending in the u.k. versus the u.s. it has widened out quite a bit. does that indicate that it has not had that much of a contagious effect in the united states? erik: exactly. it shows there was probably too much optimism before the brexit vote and now you see the expansion. the markets think this is a localized phenomenon, so far. alix: the issue with localization is that it does spread to the global bond market and then it does spread to banks. the key question is how can markets be profitable going lowerd in a global your environment? -- lower yield environment? erik: out of the u.s. treasury be attractive at 1.3%? the german tenure bonds -- 10-year bonds are yielding negative. there are ways to make money out there. we would not say you should abandon treasuries entirely. we were increasing treasuries in advance of brexit. we just thought risks were not properly priced in the market and that markets were overly complacent. having seen gains in those positions, we are looking to trim eric treasury exposure and reallocate to other areas of interest rate sensitivity. we find tips more attractive. at 1.4%.tip breakeven that is lower inflation in the united states. we are looking for selectively -- we are looking selectively for opportunity in europe -- we think there are good corporate stories in those markets. alix: where in the u.s.? bank of america said hedge funds were buyers. erik: we are neutral on u.s. equities. to the extent where we are biased is toward value-oriented stocks, late cycle stocks, whether it be industrials or energy stocks, which should have better comparables with oil approaching $50. and down the cap spectrum, some smaller cap, more domestically oriented companies, where we still see a reasonably strong economy. we will get more information on that on friday. alix: erik, taking a little bit of risk on this wednesday. you don't hear that that often on a risk off day. jon: fantastic. thanks very much. coming up, sterling, pound -- 31-year low. the lowest since 1985. richard kachinas -- cochinos joins us next on how he is navigating the currency market. the pound is weaker and yields are at all-time lows. this is bloomberg. ♪ e jon: from london and new york, this is bloomberg. a beautiful city and a beautiful pound. you would have to go back to 1985 to see sterling this week -- weak. here is the situation cross asset class. 500.&p the dax down. the bank stocks getting hammered. headline in the bond market -- treasury yields. new all-time lows. this is how we trade on the u.s. 10-year. gold at a two-year high. those are some of the headlines across assets and markets. here is emma. emma: house democrats are sticking with their convictions that gun-control measures must be voted on. democrats want expanded background checks for gun sales and they want to ban sales to people on the government's list of suspected terrorists. donald trump had surprising words of praise for saddam hussein at a rally in north carolina. he called the late iraqi dictator a really bad guy who did a good job of killing .errorists the likely republican presidential nominee said "he killed terrorists, he did that so good, he did not read them their rights, it was over." a spanish court has sentenced international soccer starley and no messy to 21 months in jail -- lionel messi to 21 months in jail in a tax case. he is still likely to avoid serving prison time. global news power 24 hours per day in more than 120 countries. jon: thank you very much. to today's morning meeting, where we hear what key banks are looking at in the fx market. joins us ininos london. probably looking at sterling. another leg lower. i was talking with my colleagues about how long it takes markets to clear. we have not seen markets like this in a currency market for a long, long time. what does that mean for cable and how this trades in the coming weeks? richard: for the coming weeks, we are to the downside. the question is how quick do we get there? it is a matter of investors. that is what we have seen over the past week or so. central banks, sovereign wealth funds, it takes time to make decisions. how do you want to reallocate your portfolio? what exposure do you want to the u.k.? as those decisions go through, what is your next leg down? jon: the word i keep hearing is adjustment. i want to navigate through some of the forces driving sterling down to where it is. one of the big structural issues -- i just wonder, when is sterling fully adjusted to that structural reality that has been there for a long time, but overdriven or overridden by cyclical issues? we are trading on that. when we fully adjusted to that major structural issue? richard: it is going to be several years before we fully adjust. people look at this and say what is the fair value? we know it is to the downside, but you can't really go back and look at the 2000 or the 1990's and say this is where it should be. we are fairly confident that sterling should trade down toward 1.20, but that current-account deficit has to be met with inflows. either you are going to need weaker growth in the u.k. or much greater inflows from investors, long-term and short-term before the currency starts weakening. jon: the overwhelming consensus in the city is a weaker pound. the real debate is over the rate of change. the bank of england weighing into some extent. i had a note from bnp paribas and goldman sachs saying that they are still overestimating central-bank policy and how powerful that could be. what do you expect from the bank of england and what do they get out of driving a lower? richard: i think mark carney was clear about the rate signal and where we are going to be heading in the rates environment. the market is now looking at what goes beyond that point. cut -- is basis point that going to be sufficient? that is where the market is still uncertain, beginning to work through it. whether it is going to be quantitative easing or greater funding for lending schemes. the idea is that policy has to be expanded and it will go beyond these rate moves. jon: it's a fascinating market. the structural issues were all there. but as you navigate through these issues, whether it is rate issues,als, structural the other big issue is the political uncertainty. i still don't really understand the drivers of that. if you trigger article 50 earlier than expected, is that positive for sterling? what is the political driver for sterling to the upside or downside? richard: i would not say it is positive. i think it is negative. it is a trigger that you cannot back away from. you can't come back from it once you cross the line. it is still some uncertainty whether it will be triggered this year or at all. is onlitical uncertainty how much of an attractive investment is the u.k. currently right now with such i levels of uncertainty? it remains more of a deterrent than anything else at this stage. the knee-jerk reaction would be negative on triggering that, ultimately, that does create an environment where you see the longer-term impacts and you can position for that. jon: the hardest question for anyone on an fx desk right now flaw?t is the what keeps sterling supported? all the bearishness out there? richard: i think, to a large extent, it is that it is still seen as somehow limited to the u.k. and that it has not moved to global contagion. you have not moved aggressively back into the dollar. we do see markets reaching for duration, for treasuries, for anything with a yield perceived as relatively stable. if you see the contagion move outside of europe or the u.k. and become a global or emerging-market phenomenon, that is where the floor begins to get removed and the market will turn its attention back to the u.s. and back to the dollar. jon: it becomes a dollar story. richard cochinos, great to have you with us. the head of europe g 10 fx at citi. alix: unreal. as we turn our focus to the u.s., it has to do with the dollar and the race for president. and be a director james comey said -- fbi director said they will not recommend charges against hillary clinton. >> although the department of justice makes final decisions, we are expressing our view that no charges are appropriate in this case. alix: joining us now is washington bureau chief megan murphy. uncertainty about the presidential race front and center for businesses. what does this fbi decision mean? megan: it is a double-edged sword for hillary clinton. she is not going to be indicted, which comes as a huge relief. this was seen as the one thing that could end her campaign. on the other hand, in that stunning press conference yesterday, there was so much more revealed about what happened with her e-mails that directly contradicted so much of the defense her team had put forward over the past months and that is going to continue to dog her over the remainder of this campaign. you could a must hear the 32nd opposition at being cut as director komi was speaking -- comey was speaking. whether it was that she did use classified information, multiple unclassified servers. the bedrock of her defense was systematically taken apart yesterday. david w.: the thing that struck me was the response from the trunk side. they had two ways to go. one was to embrace fbi director comey and said, she may not be a criminal, but she exercised exceedingly bad judgment, which does not sound like much for a president to be. or to say it is all his fault, he is in cahoots. they seem to have chosen the latter course. their friend in the political debate? megan: i think how comey is going to play out is one of the interesting things. he is very well respective on both sides -- respected on both sides of the aisle. what you will see the donald trump campaign try to do is whether they will be able to stay on message, as you have identified, whether they will be able to say, look at everything he said -- even if he was not indicted -- she was not indicted, this is someone who showed bad judgment. has been thattack he is not fit for the presidency. director comey comments went to fitfact that she may not be to be in the oval office. with donald trump, the issue is can he stay on message? can he drive home the point? will he be able to see some the opportunity or will he blow it by making remarks that are inappropriate and, as we saw last night with his comments about saddam hussein, which are already tilting the news cycle back toward him? david w.: exactly what did he say about saddam hussein and why could it take some wind out of his sales? megan: he basically implied that saddam hussein was effective at killing terrorists. people have interpreted the remarks as complementary. that is something that no one quite expected him to say, but that is always the issue with donald trump. he always says things that are unexpected. that has driven his popularity in part, but it is a different theario when you are presumptive nominee. people expect a certain tone, a way of addressing policies. the biggest question for him is will he be able to harness the populace sentiment behind him, but also appearing presidential. dynamictly, in this new with the e-mails, will he be able to make any traction with a rigged system, crooked hillary or whether he has effectively had the sharpest part of his attack cut out from under him? david w.: donald trump does have some friends in high places, including the speaker of the house. just this morning, he is saying he will ask director comey up to the hill to testify on his decision. doesn't that help donald trump? megan: that does help donald trump. the ryan response really helps donald trump. see -- we were seeing if paul ryan would take the road that james comey is well-respected. we saw him say that he is going to challenge it. there are many people surprised that given the amount of evidence at we saw yesterday that there was no sanction or other formal process that is going to be taken. look, hillary clinton is not the most popular of candidates. only lowerables are than donald trump's. we will have to see how the polling comes out and whether it will hurt her with voters. david w.: leave it to the pesky lawyers. thanks so much for being with us, megan. coming up, what is next for yahoo!? the latest round of offers could come in later today. who is in the mix and what does it mean for the future of the one-time tech giant? that is ahead. this is bloomberg. ♪ ."his is "bloomberg coming up the next hour, tim armstrong, the aol ceo from sun valley, idaho. emma: walgreens posted quarterly profits that beat estimates. it was helped by rising sales of prescription drugs. walgreens is waiting for u.s. regulators to approve its $9 billion takeover of rite aid. it is another record for the world's largest mutual fund manager. vanguard attracted new client money during the first half of the year. it beat the record the firm set a year ago. it is known for low-cost funds that attract investors. month for the $32 billion hedge fund run by jim simmons. in june. 4.6% renaissance is up in the last month. it only trades u.s. listed equities. that is your bloomberg business flash. david w.: thanks so much. it was back in february when yahoo! put itself up for sale, starting an elaborate process that maybe coming to an end. today is the deadline for the third round of the bidding process that could lead to who is buying parts of yahoo!. cory johnson joins us from san francisco. as we go into this, i should start with the reason why yahoo! is a or sale. there at market share has gone down to around 2% or 3%. it is pretty dramatic decline. what do we expect on these bits? cory: i think the reason for the decline is the shift from desktop to mobile. yahoo! had great historic strength in desktop, which has somehow maintained overall these years. as this dramatic shift has happened rapidly over the last five years, we have seen this move to mobile and this move of advertising revenue to mobile. the business is so much bigger that yahoo! has been left in the dust. it was slower to happen. as the volume picked up over time, a left yahoo! in pieces. now it is going to be divided into pieces. the thing to look for is the way that yahoo! will be divided. whether it will be the content stuff, the home page yahoo! mail, yahoo! sports, yahoo! finance, those very popular things or it is the behind the scenes technology that serves yahoo! and other sites. the question is what are the valuable properties going forward? we might get a better idea as the numbers start to leak out. david w.: we have something in the bloomberg -- the social heat map. we will show it now. it is spiking up. that was yesterday. alix: i love that. david w.: people are really paying attention to this. let's talk about verizon for a moment. we thought that that was a leading candidate. tim armstrong has said he would like to have the yahoo! assets. cory: what is interesting about the verizon interest is that they telegraphed what they like by acquiring both with ale well and those handful of inquisitions -- aol and those handful of acquisitions. aol was acquiring lots of pieces of ad serving technology. they have the popular aol front page and service. they have the pulse, a news content service. they have a robust service for serving ads, digitizing them, spreading them across the internet, measuring their success, and providing real-time -- as you go onto a webpage, an option is taking place behind the scenes with limited customer data about you, advertisers are bidding on that in the ad shows up when the webpage shows up. that is all happening, sometimes using aol technology. important ad services, particularly with video, that verizon might want. want?ieces to verizon the specific things in their armor that they can fix with this acquisition. alix: felix this has been the story that just won't die. when is the hard deadline? cory: we don't know. [laughter] alix: it could be forever. cory: this is the great frustration for investors. even investors with positive things to say about marissa mayer and the cfo, the deal has not gotten done. marissa came into this job because yahoo! was losing its footing. there have been so many yahoo! ceo's. the alibaba stake had to be monetized. the yahoo! japan stake had to be monetized. the underlying company had a sea of value hidden by giant valuations of cash in the alibaba stake. they could not selloff the alibaba stake. for many years. meanwhile a lot of the cash was depleted through acquisitions that seemed to go nowhere, most notably the tumblr acquisition. meanwhile, the similar amount was spent by facebook on instagram. has done nothing. instagram has taken off under facebook's tutelage. the lack of cash and the waste of time our problems. david w.: thanks so much. that is cory johnson joining us from san francisco. coming up in the next hour, tim armstrong, the ale well ceo, weighs in -- aol ceo, weighs in. alix: coming up, it is alix steel versus joe weisenthal. we are going to debate. this is bloomberg. ♪ david w.: this is "bloomberg ." it is time for battle of the charts. joe weisenthal is up against alix steel. joe thank you, david. i'm looking at a fairly remarkable chart. this goes back a year. this is the yield on the u.s. 30-year treasury, which has been absolutely plummeting. this white line is the s&p 500 dividend yield. this is the straight of yield you get paid. this briefly happened during the financial crisis, but right now, once again, the 30-year treasury yield is below the s&p 500 yield -- extraordinary set of circumstances here. something you don't see very often. more evidence of people buying bonds for the capital appreciation and stocks potentially offering better dividend payment. david w.: pretty compelling. alix: no doubt, that is the story of the year, but if you are an oil nerd like me, you are going to dig this chart. i'm talking crack spreads before 9:00 a.m., which gives me some kind of points. the crack spread is basically what refiners make when they process crude and turn it into a product like gasoline. david w.: it is called cracking, the process. alix: this blue line is where crack spreads are. they were at $11 and they are now at eight dollars. the white line is what we had in 2014. this is where we were back in 2015. the green line is seasonality. the point being, we are below the seasonality, we are below last year, we are below 2014. at some point, if this keeps slipping, refiners are going to have to stop running as hard, they will stop making a lot of product, which means they buy less prude -- crude and then the crude winds up and storage and that weighs on price. the reason why the blue line is significant is that the thesis is what people were looking for the last year to happen and now it is starting to occur. this crack spread -- $8 is what you need to be watching if you want to know where crude is going to be heading. david w.: i think i understood that. but what is causing that crack spread to go there? why are refiners making so little off the refining process? alix: because they are turning so much oil into product that there is now a product glut. that is backing of the refining margins and backing of the inventories. is global inventory market being moved on storage, it is moved onto the product market. if you don't have refiners clearing that, you will have serious fundamental issues. david w.: joe, i'm going with alix. i'm kind of understanding it now. joe: wow. jon: i'm going to go with joe because the historic significance is huge. as a momentum trade in the bond arket, superlong debt, momentum trade, that is absolutely fascinating. david w.: hillary votes for joe, joe wins. alix: battle of the nerds. jon: coming up, the gold bugs are out. an international value advisor joins the program. ♪ e alix: sterling pounded. a 31 year low. the currency market just to a process brexit world. >> $12 billion freeze. three real estate funds hold redemptions as political uncertainty hits property investors. yields.bal bond japan turns negative for the first time ever. ♪ david: we are just a little bit under 30 minutes away the opening bell. this is "bloomberg . jonathan is joining us from london. alix: we have some wonderful guests for you. two from the annual conference in sun valley, idaho. tim armstrong of aol and maurice leedy, ceo of publicist. they really story of the day the global bond yields and the pound. jon: some big moves to get to. about 29 minutes away from the cash open in new york city. , downs softer in the u.s. about 5/10 of 1% of the s&p 500. equities in europe getting hammered across the board. time lows on the stocks. i see things of the bloomberg right now switching of the board very quickly. a 31 year low for the pound against the dollar. down another half of 1%. record low yields from japan to germany to the u.k. and the u.s. as well. we are down by two basis points. 1.36% is the yield on the u.s. 10-year. gold shining bright. at 1373. we are at a two-year high on the gold. alix: let's go around the world to check in with our stock reporters. julie is in new york with what is moving ahead of the open. live at theittle is nasdaq and mark is in london. julie, we had david at goldman sachs cutting his target by 5% to 10%. julie: he says we will see a dip in the short-term and they get to 2100 by the end of the year. he titles it "flat is a new up." that is the best you can expect in this environment. here is a one-year chart of the s&p 500. we have seen this sideways trade. andere looking for the dip a little bit of an increase by the years and. elevatedhere are valuations, scoring political uncertainty. that puts pressures on the upside and the supporters for the market is above trend. a cautiousgs growth, fed and a lack of investment alternatives around the world. that gives reason not for optimism, at least not for more pessimism. abigail: we have a couple of stories over here the nasdaq. starting with netflix. shares are lower in the premarket on a downgraded. the domestic subscriber growth to the flatter than expected. it can be pretty bearish. this is the second downgrade on netflix in two days. we could be looking at another report when netflix reports on july 18. teslas shares are also lower in the premarket on a report that a tesla driver was injured while using autopilot. the detroit free press says an art gallery owner was injured that survived when his tesla vehicle flipped over on the pennsylvania turnpike. this follows last week's announcement of the first known fatality using the autopilot. the proximity of these two reports could raise concerns about the issue. let's head over to europe. mark: stocks in europe falling for the third straight day, the longest stretch since 2014. down by 8%. sterling the big story of the day. down 13% against the dollar. the biggest nine-day drop since 1992. the 14 day rsi says it is oversold. let's get to the bond yield. record low yields of the u.k. also falling in spain and italy. let's get to the property funds. three of the largest real estate funds have frozen 9 billion pounds of assets. standsng, schroders, it heading -- since the brazen down by 13 percent and 26%. alix: unbelievable. definitely something to pay attention to. as the pricevest of shockwaves reverberate all of the market? gabrielle santos. when you have global bond yields so low and the strategist, how you deal with that? gabrielle: when we think about greg's it we think it is much more of a local u.k. issue entity has much less important, even as you start geographically expanding. the goods to the euro area, the u.s. it does not shift the allocation or view of u.s. and european investing. we have not materially changed in the aftermath of brexit. alix: i understand from a fundamental point of view it might not be hit, but it is through the transmission mechanism of the global bond yields and that affects your opinion about stocks or where to put money and find the risk. gabrielle: i think the anchor we have a u.s. yields is important. is not necessarily justified by u.s. growth but it places an anchor on yields and provides opportunities if you're thinking about u.s. credit. it's an opportunity to have yields so well anchored in the u.s. by all these external forces. david: the u.k. in another itself is not a major economic force globally. by financial institutions are. the u.k. and the european banks were already under stress before the debit. concerned about a potential contagion that it spread globally? aboutla: they can be financial conditions broadly speaking. you are right to point out financials., especially in europe there were questions about regulation, provision, negative interest rates. i think it is hard to see a financial and the broad indices rally and is what we have to see -- be incredibly selected outside of those headline levels in order to find opportunities. the jobs looking to numbers on friday, the key number i'm watching his wages. you have increased wages, you don't have the demand. at some point that will buy corporate profits and the will see some kind of issues with earnings. gabriela: it is such a goldilocks moment. we've been talking about when of a going to pop and now they are coming, and we are concerned about when did they start eating in the margins. as large as it comes like better economic growth that can help companies top levels and you can continue having profitable companies. do wages come along with a pick up in economic growth as well? david: and consumer spending in the united states. what indications are you seeing about consumer spending? whether it is growing or not? i think private overshadowed a bit of positive news we did get about u.s. consumer spending last week. it is now tracking for us in the second quarter at 4.5% for consumer spending. the dip in the first quarter is roaring back in the second quarter. i think we are seeing positive signs. alix: the assets you like and hate? u.s. in the euro area. we have a neutral balance of the equities and credit as both ways access the story. david: please stay with us for an update. emma> emma: and official british inquiry calls the country's involvement in the us-led invasion of iraq a failure. to reports of the u.k. chose to take part in the invasion before people -- peaceful options were endorsed. it criticizes ministers, intelligence services and the military. the biggest impact may be on the reputation of former british prime minister tony blair, to is responsible for britain's involvement. on capitol hill, houston mike trout's are sticking to their demands that gun control measures get a vote. to leaders of last months sit in on the house floor met with speaker paul ryan last night. democrats want expanded background checks for gun sales. they also want to ban sales to people in the government list of suspected terrorists. presidentialon's campaign is portraying a decision by the at the eye as vindication. director james comey said he would not recommend that clinton be charged in the investigation of her enough practices while secretary of state. he stoneleigh rebuked clinton and her aides, saying they were extremely careless with the way they handled sensitive information. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. on him and chandra, this is bloomberg. david: legal linda sun valley, debt the annual conference where. aol ceo tim armstrong will be joining us next. this is bloomberg. ♪ ♪ ."vid: this is "bloomberg executives are gathering at the annual allen and company conference of sun valley, idaho. david is there for the week and is joined now by aol ceo tim armstrong. david g.: let me ask you about your approach to this conference. you are a deals guy in their 70 people here, so many executives. what is your approach? tim: is a real treat to be here. what we try to do is fill up the dance card with it many meetings as it possibly can. important things come out of this conference. the verizon deal we did. there is a lot of opportunity to have intimate discussions with people. this week is really about that, listening and learning to other leaders and proactively we have a set of things we want to get done working with those leaders. allen and company for us is a huge asset and nancy is our banker. she let the verizon deal for us. we have a deep relationship with a lot of people here spent time with. it's a use of time -- good use of time so it's a win-win. david g.: people ask you about the yahoo! deal. where he thinks stand now? tim: internally we talk about this a lot. our focus has to be on aol and we have 2020 goals we developed with verizon. we are pretty much in the process of building our strategic plan that does not include yahoo!. we have to be able to operate on our own in the industry. from our focus standpoint we are really laser focused on delivering the value from the verizon deal and expanding to be one of the largest platforms in the world. anything having to do with yahoo!, status their decision-making -- that is their decision-making. they will make their way. we are just focus on getting to 2020 and having a meaningful impact on the industry. david g.: any lasting effect in the industry? tim: talk to the yahoo! people about it. from where we sit we have a full dance card of stuff we are doing. it is up to yahoo!. we have our mission and focus and we will take this test to take. david g.: your boss is referred he was a secret weapon. what is your particular gift? i think we are known as a company it is really taking on a lot of risk in chances. we have exceptional management team. the people at aol are good at both operating media, technology and advertising businesses. we are good at relationships. we are one of the only companies that has a relationship with every major platform in the world. we are looked at as more of a deal team. we bought the huffington post when it had 20 million users and taking it to 220 million users. we are good at finding growing assets and we have become a fairly large player. 700 million consumers use our services every month. that is up from a couple hundred million five years ago. i would categorize us as a real media technology platform company and we are good at it. david g.: you bring up the huffington post. are we seeing a shift from a focus on the add side of things -- ad side of things? tim: we were talking about france. one thing that is nice to see is we have been heavy investors and content for the last five or six years. i think content is the great differentiator. it helps people help their businesses get commoditized. i'm guessing that will happen this week is you will see a lot of silicon valley players on the first inning of investment and content and no will be the future differentiator from these content platforms. we are in the first stages of the content era for online and mobile. is the great place for us to be and you will see more and more deals in the next three to five years that will surprise people. g.: we have seismic shifts in television to internet-based consumption of material. how do you focus on monetizing that? tim: there are a few things that are important happening in the land right now. you are starting see people like the nfl bring their content online which will drive more eyeballs and advertising's will be interesting. it atve not seen scalability look at virtual reality and augmented reality. we just bought a company called riot that is working with the huffington post. when you see how they can get brought to life, consumers are going to love it and advertise wells -- advertisers will love it. $80 billion or $90 billion and will switch from thingstv to more online and mobile platforms overtime. you are at an early stage of another seismic shift besides the internet that will happen around video. it will be even better for consumers and advertisers overtime. in my be more expensive for advertisers that it will be better outcomes are everyone. david g.: you have facebook and google. i know you have been looking at ways to get around that, to gain a foothold. what are they? tim: google and facebook are juggernauts. they have done an excellent job operating in executing. it's great to be in an industry with competitors like that. in our standpoint we have been focused on looking at open platform. part of the reason we get the verizon deal is make sure have a lot of differentiated data. we all get differentiated content, 40,000 publisher relationships to bring to the table. you copy google and facebook is not funny get you anywhere because they are very strong in their physicians. we have to shift and we want to be the best company in the world of building brands. they are good as social and search. our business is about building people's brands through media, content, and through advertising. that is really the core skill set. us partner with some of the largest companies in the world. it's an exciting time because the shift happening in tv is starting to feel the entire media business. people are picking her heads up and saying, hey, where should add be? out of the innovative against them? it's a very exciting time. we would make an analogy to the beginning of the internet. it is that kind of creation period right now. we are in content and technology, we are culture and code. g.: we will be back with morris levy coming up on "bloomberg ." ♪ ♪ this is bloomberg. adjoined by maurice levy, chairman and ceo of publicist. they were talking about about content and the bullets playing at this conference and in the media landscape generally. have bigger role are you playing this year? maurice: content is definitely the big thing for the future. not only because people want to see content and they are interested in many different ways of communication, buffer building brands content will be key. theill probably take over classic advertising way of communication. we will need to create the type between the brand and the consumers and content directly to the consumer. david: people talk about the saturation, too much content. maurice: when you look at the history of communication, saturation should have happened since many years. i believe it is something which is expandable. people want to know, want to learn, want to communicate. content.t see all the they take what is interesting. this is where q medication and targeting is very interesting because instead of overwhelming them with a lot of messages, you see the right ones and you pick the ones that are interesting for them and linking with the brands. there is a very different way of communicating in our day. david: you are in paris about a week ago. looking at this new model of how they companies are working with smaller startups, i'm content is a part of that as well, why is that so important and taking so long to foster that relationship formally? tim: we had a relationship for many years, over a decade. maurice: jones say how many years. -- don't say how many years. tim: it started many years ago. how do you bring technology and targeting for content and chase away the advertising is done? last week in paris will be in his officewas seven months ago when he said i have a vision for building the ces of europe. last month we were visiting a conference that maurice came up with the idea for, executed against. 45,000 participants, 5000 startups there. i believe it was a great signal both in terms of the power that technology is bringing across the globe, but specifically in europe. i think the second piece is how the technology overtime is going to affect the difficulties involved in the content. week, read the event last he saw the largest content companies to some of the largest technology companies desirable the largest government agencies. and some of the most innovative companies. from a standpoint of being excited about the future of europe and france, last week was a watershed moment and a real credit to maurice. he was with the president of france for lunch in maurice was really an asset of france overall. i think your vision really came true and it was very encouraging. david: it was a competition for startups. when you are looking at a startup, what are you looking for? maurice: disruption. disruption with the dream of changing the world. if you have a small dream, it's very hard to succeed because you will just do something which will be nice but not disruptive enough to interest people. you have to be there he disruptive. the winner of the publicist contest is a small israeli startup. what they are trying to do is to detect their eagerly on skin cancer. there are 400 million people in the world who have skin cancer. that, if theydo can detect early on, then you reduce costs, save lives, and you have something which is fantastic. the need to dream big and one of aboutings i am very proud whether technology event is that we have brought together very large companies with small startups. the small startups have been challenged to disrupt the way large companies work. this was extremely, extremely interesting. there has been a lot of great ideas floating around. we had wonderful speakers. tim and others-- who have been able to share with people by giving some new direction, new ideas. what the future will be all about, etc. i think what we are witnessing today is really a changeable world. david: you save big companies working with small startups, you are big working with a fairly big start up in china. idea you brokered in the last few days. feel talking about the potential for advertising in china? maurice: we started with a small company because we started with one individual. we were outside. in digitalandscape is very interesting because when you look at all the big chinese, the alibaba, you see they are all started by copycats. they were copying ruble, facebook, or amazon. -- google, facebook or amazon. 10 and they brought. me services, new ideas, new invention and they are today growing extremely fast and they are redefining the advertising model. agreement is something which is quite unique. not only will you be working -- we the working with them but we are building an incubator together. we will be developing new tools. we will be able to use their data. when it comes to targeting, the ability of using the data of the big platform is something which will change the world. and the way you are communicating. they have a huge plan. by the way, thanks to the few people. they have acquired a majority stake out one of the biggest players in gaming. they have an ambition to move away from china. is very interesting. we are extremely proud of that agreement which is one-of-a-kind. we do expect for that agreements of built in china a different kind of relationship with the advertisers and to grow our business. david: to what degree do you look to china? he's talking about those of the frog. apfrogged.le tim: china has to be part of your radar. we will be going more and more in there and this is a great partner to think about doing this in a partnership with. thank you for having us this morning. david: tim armstrong and maurice levy. tossing it over to john in london. jon: think you very much, great discussion. back to the markets from london and new york. a couple of seconds away from the cash open in new york city. this is how it is set in europe. third day of losses. all 19 industry groups in the red in europe. negativeutures going 4/10 of 1%. you hear the bell ringing in new york city. i will review the headlines from the cable rate. fresh 31 year low. yields grinding lower globally, off the lows of the session. u.s. 10-yielded 3.17%. raising the advance of the last couple of days a little bit. down. is have a trade a two-year high on gold at 1367. hyman.ross over to julie a selloffsee continuing in u.s. stocks as a futures indicated. the nasdaq, as we saw the trend leading to the downside about half of 1%. a pullback nonetheless. we talked to david costa goldman sachs to talk about the short term of 5% to 10% pullback to a return to 2100 by year's end. the consensus forecast, the average of strategists on wall street is a little bit about that, closer to 2150. take a look at the injector he of trading overnight in the futures and over the past couple of days. we have seen this downward trend. been hugeude has not but definitely a pullback after the past couple of -- the last week and the big gains we saw in the wake of the u.k. vote. in terms of individual stocks and groups we're looking at today, we are looking of the gold miners. we do want to have a risk off environment. people looking to what they consider more safe. --miners rallying. credit suisse and julie yates over there is downgrading a couple of them. notably american as well as ual. she is downgrading american to underperform and ual goes to neutral from outperform. she says there is likely to be disappointing third-quarter unit revenue growth at the consensus forecast going into 2017 is too high. does a right couple of the reasons she is siding for her downgrades today. we are also watching utilities, the second-best performing group year today in the s&p 500. that pushed some of the evaluations higher. -- is making a mixed call. on the one hand raising pe multiple forecast for some of these companies. they are looking a bit expensive in some cases. we are seeing some downgrades. they are not really affecting the stocks today because we still continue to have this flight to havens. a mixed trade when it comes to utilities at the moment. david: we want to continue talking about the state of the markets. we are tall -- joined by charles of oh -- santos thisabriela from j.p. morgan asset management. welcome back to the program, charles. you are heavily into cash? , that was investor mean you find the value right now in cash. explain why that is? charles: business was we find the value in cash. we find it mostly in bonds around the world. still traded nosebleed levels. they are priced for perfection and i think we are reminded by brexit, somewhat unexpected, uncertainty as part of the investment landscape. moneyke sure not to lose which it makes you to buy stocks cheap enough. cash though also has a great attribute. not only can it act as a buffer when things go down, but more portly it is also the dry powder one can use to buy. the cash today hopefully will allow us to buy great things in the future or even last week we did some buying. david: what of the other things that be less than perfection and the near-term that might cause a risk. the overwhelming reason for caution is effective because of record low interest rates around the world, interest rates that are negative either in nominal terms or in real terms adjusted for inflation, combined with corporate profit margins. that expands with stocks and bonds are expensive. in addition, we find in listening to maurice levy arguing and talking about disruptions. we are amazed by the number of companies and industries disrupted a time of profit margins are high. we also worry about the excess of credit bubble in china. spoke to the wharton school professor jeremy siegel yesterday talking about the valuations of the stocks. thesis is that people will incomeng into stocks for that the bond market as we can see -- that is just not for the next maybe whole decade going to supply investors with sufficient income for their portfolios. -- as being-term the place and investors will go to. alix: sure, i will pay off for stocks because they will be less volatile than bonds. gabriela: we agree you don't always think about it with the capital appreciation part, but you don't have to go inside the expense of utility stocks or the very defensive high-yielding stocks. you can find good and growing dividend yields and other kinds of sectors the days in the equity markets. alix: and charles you don't agree? charles: i think he focuses on the demand for stocks. i think was stocks become overpriced you should not underestimate the possibility for this apply to be unlimited. prices go up too much or if it's rated too big of a premium to the underlying real estate, the supply of new shares issued is unlimited. toecially in our case we try deliver positive returns and minimize losses. the idea of overpaying for stocks has no appeal to us. david: i would about the professors point more broadly. you talk about equities. ? is often compared to what? and we had a chart of earlier. the dividend yield of the s&p 500 is up up with the yields of the 10-year treasury. is that the right valuation for it? the blue is the 10-year yield. the white assist the pure dividend play, not the appreciate of values of the stocks. charles: i think it's a relative argument. the bond yield is natural. if they are natural, maybe they are signaling another 10, 15, 20 years of inflation. it has not been a good idea to buy japanese stocks with a high ratio because they really 10%. the low interest rates for signaling a lot of deflation to come. low interest rates can generate over their capacity. -- overcapacity. stop?should i the returns on capital at all these businesses are about to dwindle. these dividends may be cut. some mlps etiquette dividends. david: i suspect jpmorgan is not quite as far into cash as charles is. what is your view on the risk reward right now in the marketplace? gabriela: there is certainly room for cash. for some help during times of volatility. we get concerned will be here are long-term clients waiting for perfection, waiting for uncertainty to subside taxes some cash positions and start investing. that concerns us. there is a well forecast of what to make sure we are investing because long-term that is what is going to help us of phil our objectives. we do you think it is a good both inard to look at, credit and equities. alix: you think dividends could be cut. it would be because forward the dividend yield is going to be cut. you mentioned mlps. if you're making a play for dividend growth, where you find that if you're worried about these cuts? charles: i am not sure where you find them. yield they seem modest, 2.1%, but the japanese bond yields -27 basis points and akoni only pays up 35% of its free cash flow. alix: do you agree there is little opportunity here in the u.s. to find those high dividend, high-growth stocks? we do see a lot of cash still on the balance sheet. we can't be reaching for very high dividend yield stocks as we talking about, for there is drive pattern for the company's estate in the dividend yield will further. david: we don't hear much about preferred stock, not quite a bond or a stock were yet guaranteed returns but you appreciate. charles: prefers still have some merits. of course have to be mindful that some of them are not to live -- not she with if. umulative. alix: thank you very much for joining us. gabriela santas and charles devoe. coming up you have gold climbed to a two-year high. specific stock picks and asset calls from charles. . this is bloomberg. ♪ ♪ david: this is "bloomberg ." coming up is called the governor john hickenlooper. ♪ this is bloomberg and coming up we're doing "bloomberg markets." vonnie: we will be keeping an eagle eye on these highs and lows the markets are making. yen threatening to breach 100 today. we will be speaking with stuart, the equity strategist. they will be speaking with guy monson of saracen asset management. are there lessons to be learned from 2008? sun valley, to idaho to speak with the governor of colorado. and speaking -- about the fed minutes. matt: vonnie quinn, thank you about 14 minutes into this session in new york. jon: a mature session heading towards the close. s&p 500 opening lower by about 6/10 of 1%. down and all 19 groups on the stoxx 600 in negative territory. deutsche bank trading at record lows to some of those stocks. the headline this morning is in the bond market. record low yields just off the level for treasury for the u.s. field of 1.36% on a 10-year treasury. a fresh 31 year low. a two-year high on gold at 1371. let's get back to some of the members of julie hyman. julie: we are down about 6/10 of 1%. if you look at the map here, not every group is down. it is broad selling across. utilities are higher but we see telecom services decline. that is usually one of the groups on the defensive category but not today. financials declining sharply and materials. . that's being hit by record the bond yields we're seeing around the globe in terms of individual movers, walgreen boots is on the list. -- shares are down to .5% 2.5% because of a mess on the march inside -- margin side. the retail sales of other items. . it's been trying to bring up the number walgreens talked about its partnership with valeant and set it is satisfied with that relationship. there having questions it was satisfied with the dermatology business. the shares took a leg higher in the premarket but now they have reversed that and lowered once again. we are looking at greenbrier this morning, a brighter goodman, rail corridor rail industry. the company cutting from the higher upper and of its full-year forecast and also raised this dividends. estimatesso beating but falling by 14%. car deliveries were 4300 for the quarter. mostly doctors offices and the company says it is going to be offering more shares. about 9 million of them in order to fund in acquisition of another company. they had been private equity owned. that striving down shares by 1%. jon: you talk about financials. here in europe the financials down by over to full percentage points. a lot of people focusing on deutsche bank. down six full percentage points. in all time low on deutsche bank. the conversation throughout the session as we had throughout the close here in europe. the financials very much a focus. that is the situation here in europe. talking about what you just it so eloquently, we have a bearish open for the nasdaq. basedsdaq is a bit more on the overweight the technology and the exposure to biotech. confirming this from across asset analysis standpoint, randgold resources is up 2.5%. they hit a record high today, up more than 30% of the brexit selloff. ourhe haven play, shares double this year, up 100%. pretty amazing as investors seek the safety play. of the u.s.res insulation company are suffering today. about a double on the year that melrose industries has offered by the company for $2.8 billion. jeffries says they would not be surprised to see a higher offer come through based on the firm's valuation work. alix: talk about safe havens, gold prices climbing to a two-year high. a huge run-up. charlesdevoe is back with us. us.harles devoe is with they say there is no value in gold. make the case for value in gold. charles: gold until recently was used as money. one of the values of gold is it is very rare. every year the stockpile of gold above ground grows at 1.6%, which is the rate at which the population grows. on a per capita basis in the same amount of gold as we had 80 years ago. people tend to associate gold as being take great against inflationary times. it is equally will during deflationary times. when banks went bankrupt and 2008 money market funds and be guaranteed. in this day and age now that we have negative interest rates in real terms or nominal terms to have gold, which does not have a negative rate is a positive. gold.ou are talking about i would own a currency like this was frank. much lower story. they top weaken the currency even though they are trying. make a case for gold physical. i believe you have to pay 75 basis points to maintain a swiss bank account. i believe that 10-year swiss government bonds yield -60 basis points. i love the swiss franc but i think gold is even more attractive. jon: i am talking about vaults. 1000 swiss franc is much lower than bouillon. they cost us large less than 10 basis points in midtown manhattan. if you're talking about cash under the mattress, nothing wrong. to have not easy hundreds of millions or billions of swiss franc's in cash under the mattress. alix: and you do have the intervention risk that you would not when it comes to gold. boj cominghave the jo in. charles: this with may decide to lower their rates even more. you would have to pay even more to hold swiss francs. at the same time ever member history. 1932-1933, american citizens were asked to surrender their gold. there is still a remote risk with gold that something that may happen. i like the fact that asia, chinese, indians are very fond of gold have an affinity for gold. i think the investment demand coming from asia is down to grow over time. david: why is there a different sort of intervention risk. if the fed raised rates right away, the value of gold in dollars would go down. maurice: i make a case that negative rates health gold and vice versa. againstgold as a hedge -- we don't know if the present gold will be higher or lower a year from now. we like the fact that more often than not gold is willing today on the rest of the portfolio lacks. have.onderful tool to david: so there you have the case for gold. charles devoe, thank you for being with us. more of "bloomberg " next. this is bloomberg. . ♪ ♪ this is bloomberg. david westin and alix steel. here is a picture of global markets for you. the s&p 500 down about one half of 1%. deutsche bank, all-time low. they are down. switch of the board very quickly. record low yields in the bond market today. that story continues. alix: you have gold popping up over $10. i think attention to what we are hearing from fed governor deal to reload today in washington. he says the boe decision to reduce u.k. bank countercyclical buffer could have a beneficial effect. you can go ahead and land. he said the fed is not raising interest rates but they didn't test them in the stress test this year. jon: i'm looking at ahead to four hours for no immediate the fed minutes. it predates the brexit. whether they reconcile anywhere near. david: that will do it for "bloomberg ." and wened for "markets" will see you back here tomorrow. ♪ quite :00 a.m. in new york. i am vonnie quinn. mark: live from london, i am mark barton. this is bloomberg markets on bloomberg television. ♪ going to cover stories from washington to san francisco to switzerland in the next hour. here is what you are watching. theout cowboys likened economy to a game of malala -- monopoly. mark: two investors around the world, they assess significance of the britain vote to leave the eu. sending wants to test bonds to record lows. vonnie: the future of the industry. this

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