Transcripts For BLOOMBERG Bloomberg Go 20160713

Speaker, i had meetings this morning. Other than one meeting with her metastudent queen, the diary for the rest of my day is remarkably light. Other than one meeting with her majesty the queen. Thank you very much, mr. Speaker. The Prime Ministers congratulations to Andrew Murray and all the other winners. May we thank the Prime Minister for all his hard work and his leadership. And particularly his commitment to the union and to Northern Ireland visiting in auckland and swimming to working with the next Prime Minister. Im told there are lots of leadership roles out there at the moment, at the english football team. Top gear. [laughter] even across the big pond a role that needs filling. But if i can go to my pet subject, brexit really threatens Prime Minister cameron in your own time. Brexit threatens the unions. Will the Prime Minister work with his successes to ensure we have somebody that is going to pull together all the countries of the union and the overseas territories and make it all so that we all work and thrive together . Prime minister cameron let me thank the Prime Minister for fascinating suggestions for future jobs, most of which are harder than this one. I do believe northern is stronger than it was. The full people leash and of justice and home affairs delivered under this government, the sample report, and a record investment in creating jobs in Northern Ireland. And the saville report. I care passionately about Northern Ireland. We do need to make sure that as we leave the European Union we work out how to keep the benefits of the common travel area. Withwork is being done Civil Servants in whitehall and and the republic of ireland and that pace needs to quicken. Mr. Speaker. To pay tributeke to my friend the hard work he did leading this country. My honorable friend will include supporting the kurds bravely fighting daesh. Front nine,ed the amid our airstrikes and weapons and training are crucial but reduced with additional equipment like body armor, respirators and frontline medical facilities. We could possibly provide some beds in our hospital in birmingham for the most seriously injured. A small investment that will make a huge different to our allies and our fight to defeat the people of terrorism. Thankminister cameron you for this kind remarks but he is absolutely right the kurds are brave fighters and are doing viable work in iraq and syria. I will look at his suggestion of using the birmingham hospital. It has excellent facilities for battlefield cashel disappeared our army is providing medical instruction to help them deal with the situation. Lets be frank. 45 of thes lost territory at once held. Its finances have been hit. 25,000 fighters have been killed. Desertion has increased and the flow of foreign fighters has fallen by 90 . This will take a long time to work in iraq and syria but we must stay the course. Jeremy corbyn. You, mr. N thank speaker. Could i start by joining the Prime Minister in paying tribute to the british winners, andy murray, Joanna Watson . And i think it would be nice if we congratulated Serena Williams on her achievement as well. That is only right that after six years as Prime Minister we thank the right honorable member for whitney for his service. I have often disagreed with him but there are some of his achievements i want to pay recognition to today. One is helping to secure the release of from. Guantanamo bay. And legislating to receive equal marriage. Im sure he would like to a knowledge that it was labour votes that help to get it through. Expressalso let me for a moment expressed some concern at the way that for theness is written past six years and looks like it is going to continue to rise in this county. Prime minister cameron ill in paying tribute to Serena Williams who has now not steffi grafs amazing records of 22 grand slams. I thank him for what he said about that was a case the government raised with the u. S. Government and we are pleased it has been resolved. Id thank him for what he said about equal marriage. There are 30,000 gay people in our country who have been able to get married. I think that is real progress. Ill never forget the day at number 10 when one of the people who worked close to the front door sentiment, im not that interested in politics but because of something your lot have done im able to marry the person i loved all my life this weekend. There are many amazing moments in this job but that was one of my favorites. Aass for homelessness, it is 10 below the peak we saw under labour. The key is building homes. We have built 700,000 homes. Now we need to quicken the pace. The key is yes, programs like help to buy, but they new key is a strong economy. Rbyn i have been listening to what the home secretary has been saying, and she said it is harder than ever for young people to buy their first house. So, does the Prime Minister think this because of a record low House Building or his governments apparent belief that 450,000 pounds is an affordable starter home . Prime minister cameron let me say at the dispatch box how warmly i congratulate them home secretary on becoming the Prime Minister. To women Prime Minister, i am pleased to say pretty soon it will be 20. Not a pink bus in sight. Of housing and homelessness, as i said, 700,000 homes. He asked about this issue of affordability which is absolutely keuy. When i became prey minister because of what it happened to the mortgage market, firsttime buyer needed to have as much as 30,000 pounds to put a deposit down when i became Prime Minister. Some people are now able to get on the housing ladder with a deposit of as little of 2000 pounds. The new houses where building, we are making progress. That was the Prime Minister addressing the cabinet for the fight the parliament for the final time. He will hand in his formal resignation to the queen in several hours time, to be replaced by the conservative leader teresa may. Number 10ng in at downing street. You can continue to watch the Prime Ministers questions on life go. Outside of downing street, the theater is in the house of parliament. The formal arrangement for the next Prime Minister will roll on for the coming hours. Talk us through the process to begin with. Anna absolutely. You get to see the questions, a regular weekly event, the last one being hosted by David Cameron. It usually last half an hour. That seemed to be more jovial and politer and funnier than normal. But as far as things go, as things unfold today, David Cameron is busy at westminster. He heads later on today to see the queen. His intention to resign as Prime Minister. Then, within the hour, we have may, might see her in the pictures behind David Cameron in the house of commons. Over as primeke minister, the second u. K. Female Prime Minister. Queenll go to the see between 5 00 and 6 00 in the afternoon. She is asked by the going to form a government which is called the kissing of hands, which i am hearing involves a handshake. Jonathan this is the theater of british politics but the real story is going to develop in the coming weeks. If you are global investor, you want to know what the british Team Looks Like and where the negotiations begin with the rest of europe. To have any idea what theresa mays team is going to look like . Guy critical is who is going to be the next chancellor and who is going to be the brexit czar. Maybe even in the shortterm, it is more likely that people will focus on who will be the next chancellor. The authority had word from theresa may indicating she wasnt pleased with the austerity driven all smart approach. That whoever takes over from her may be slightly loosening the fiscal that have hung on the u. K. That will be one of the more interesting stories and how that new chancellor will also work with the man down the road, the governor of the bank of england, who has a meeting today and tomorrow and see exactly which way Interest Rates go. We have already heard from theresa may that she has been not as over joyed with the way that q. E. Has gone, some of the unintended consequences of that. It is going to be interesting to see how the financial relationship works between westminster and the bank of finland. Then how the brexit negotiation story is going to work out. The market is pricing in 25 basis points for mark carney tomorrow. What will happen on the fiscal front will be as interesting over the coming weeks. Jonathan to conservative parting getting its Team Together. The labour party seems to be falling apart in the views of many people. Can you update us on what is happening . Anna yeah, falling apart, it could very well be. Jeremy corbyn is fighting for his political life. We will hear more details about the process to carry out another vote for leadership in the labour party. Jeremy corbyn found out last night he will qualify to be on the ballot. He does not need to get the support of 61 labor mps. That could have been a challenge for him given the noconfidence vote he face. All of this could be crucial, if we see the u. K. Heading towards another general election. Thats not perhaps necessary. It is not in the script right now. Theresa may talked about how plan. Asnt in her she wants to go on until 2020. If for some reason that is triggered late this year, then party would labour be able to fight the governing conservative party and gain p ower . I spoke to one prominent political commentator in the u. K. This morning. Many have been saying that we could see the breakup of the labour party. And that could make it very difficult for them to take power once again in the united kingdom. Jonathan a special thanks to the team in london. Enjoy the quirks of british politics, you can continue to enjoy it on the bloomberg terminal at live go. P alix what happened if congress is that feisty . We have a historic day in u. S. Politics. Wane joining us on set. Ok, so we have may saying brexit means brexit. Sterling 1. 32 against the dollar. Does the market believe that . At the moment, it has to. Even the British Population would not accept that the referendum could be renegotiated. Knows it isyone going to take two years when we hit article 50. Theresa may will be in no rush. The british do not have currently the technology or the Team Involved to look through all the trade issues that we will face. So, we may take potentially, we can take six months to a year before we are ready to hit it. And that will frustrate your. Whathan you talked about could happen in the u. K. Before we get to eruope. The worries were that we could have a constitutional crisis. Some companies reference that when they downgraded outlooks. Neil i was in the camp that theresa may or somebody should have been in place last week are there should not been this till october, David Cameron sort of hand to hand government. I think the fact we are done. In place. I disagree with guy. They should keep George Osborne in place. We are already relying on the favor of the international if we couldhat 9 or 10, have a sterling crisis. I think the u. K. Has had post rather than austerity. I think we need to focus on the fact we need to need to go within living within our means. I do think a lot of corporate end investors are going, i lik u. K. Assess because sterling has fallen but im not sure about the u. K. Economy. David we have one piece of uncertainty behind this, you say, but a lot ahead of us. How do marcus discount that . How do they crunch all the numbers how do markets discount that . what you have seen on your screen is the market has priced in a recession into the domestic u. K. Investments. Even in the u. K. , the flight to safety in gitlslts. But i think we have seen is the International Earnings are seeing sterling we can. In the short term, i think the lens is sterling. What is difference between greece or the u. K. Is sterling can take the strain. The consensus in the markets is it going to 1. 20. The bear case with political and sterling political uncertainty, with the dollar there are lot of london assets that look attractive. London has fallen out of the world. A lot of international people, i but people will want to look at assets there. As sterling weakens, some parts will benefit, even if Corporate Investment wont happen. Alix 82 of a rate cut tomorrow by the boe. Does that actually work . Can you do it when you have sterling weaker . I personally think it is the wrong strategy. He behaved badly and the runup to the election, talking about armageddon. This is our governor of the bank of england and it sounded like he was on the other side. I think we wait to see. The economy really suffers as we run through the end of this year or next her, keep that powder dry for more q. E. Getting sterling lower, lets see what that happens. The lower sterling goes, we have bought 62 of what we eat. Inflation is going up. If we go lower, inflation will go up more. We could end up with him looking very challenged if we have 4 inflation by the end of next year and he still talking about q. E. And cutting rates. Thathan we have got playbook under governor mervyn king. Its a transitory move. You allowed to happen and focus on growth. I would argue it would take a long time to reconfigure the u. K. Economy to do more for itself. Unlike your scenario where we inflation, this could be sustained, more like the 1970s or the 1980s. A lot of investors are worried about the level of the equity market, but they are looking at their money markets and their bond markets and saying, i am not goingnot getting a return. You used the word safety when you referred to the gilt market. In u. K. Context, it is clearly safe. One message im leaving with my american clients is dont forget how attractive to Global Investors u. S. Fixed income markets are. The u. S. Treasury, 10year, 1. 4 , that is a bargain if you are swiss investor with 70 basis point on their 10year. Trade everyone is hated so far, but the world is looking at the u. S. Treasury with very very desirous eyes and rightly so. Alix historic moves. E will be with us because we will talk about where the next European Crisis could be. More up next. This is bloomberg. This is bloomberg. Youre looking at live pictures of the houses of commons to be precise in london as David Cameron faces his final questions time this wednesday. You can watch full coverage of that on live go on your bloomberg terminal. Neil dwane, he has seen it all before. The theater in the house of commons. Lets talk about the theater of europe. We face the reals profits of a French Election and a german election and may be an italian election next year as well p you think you rae more concerned about Political Risk in europe. Walk me through that. Is takeneel like it two weeks but the u. K. Political risk is settled with theresa may in the government moving forward. I think the brexit decision has rocked europe and i think the lens to International Investors now as we have the constitutional in italy in october and the austrian president ial election and the hungarian vote on the e. U. Migrant solution in october. We will go on holiday, come back and go, we have got many events before we get to 2017 when you have the dutch election, the french and the german elections. Not that i think that we are going back to the 2010, but i think they are movers in october if renzi moves. He has called a referendum on the government. We know the party are looking strong. And one of their key policies is to renegotiate their membership of the European Union. I think that become sort of where where we have been in the past in 2010 with greece. Hasd without a doubt encouraged the populist parties to speak up and talk more. Initial reactions after brexit seems to point the other way. The spanish election came out and some of the polling indicates is it possible that brexit will frighten some countries away for more radical solutions . Clear at the moment that the posture of the European Union with the germans is they are going to play hardball with the u. K. There is an element of a threat that we do not know what the prospects are. It is to an a half years down the line and the u. K. Looks like it is having a holiday on the back of leaving, that is not going to look very good. Where would lead you on spain is you have to remember, they only lost a fascist dictator in 1975. Their knowledge of the past is a very dark one. And. Therefore, anything that looks european is full of light and hope what they have in the past, the british have got 1000 years of history behind this decision. A lot of european governments like the greeks they have, to democracy in the last 50 years. Jonathan what does this mean for an investor . I look at the situation in europe and it can paint a very uncertain picture. 2 . Ian 10years 1 where do you price in risk . Where should we build in the risk premium . Because it is not happening with sovereign debt. Is it bank stocks . Neil i think you are seeing it in a bank stocks already. One of those faultlines has opened up. The Sovereign Bank link is very profound. I think no one, everyone in brexit priced in the sterling risk. They did not price in the euro or yen risk. A sensee start to get of the gravity of the italian decision in october, i think people will start to think about the risk. The flipside is that we know the flight to safety has driven most of the bund market be on the purchases of the ecb. They are below the negative deposit rate. Uying truckloads of spanish and italian. Therefore, i think at the moment, the ecb has the tail risk of it under control. So, i think what we have is different for the u. K. Or the u. S. On central bank. At the moment, the bond markets are not prepared to take mario draghi on. They get ado when closer sense of the Political Risk of merging later this year or next year. My point is for all of us, we could talk about this for the next 15 months. If we get to italy, we have got holland, then france and then germany. For europe, the hunt for income will become even harder because of the ecb. For International Investors, they might go, the u. S. Looks ok china is stabilizing ill come back europe when i have got a better sense of what is going on. It makes International Investors less secure. Theyre just not going to navigate the policy. Jonathan we could talk about it for the next 15 months. Next up, the Brexit Impact on the u. S. Economy. E jon from new york city, this is bloomberg with David Cameron addressing parliament for the final time. Lets get you up to speed on Global Markets. We are treading water in equities. A fifth straight day potentially of gains and european equities. In the fx market, the euro is stable. Its a marginally stronger euro. Looking at the cable rate, four Straight Days of gains and a little bit of stability for sterling as the conservative party is forming a cabinet. Wti got a little bit softer. Brent is at 47. 69. Its ugly for treasuries in the u. S. 30 years are coming to the market today at 20 billion worth. The yields are lower, down five basis points. The german tenure auction earlier, selling with a negative yield for the First Time Ever. Lets get to the headlines. R David Cameron went to the house of commons to answer questions for the final time. I had meetings with ministers and others. Other than one meeting this afternoon with her majesty, the queen, the rest of my day is remarkably light. At the meeting with the queen, he will submit his resignation. She will ask the new conservative party leader teresa made to form a new government and one of her first moves will be to name someone to supervise the u. K. Departure from the eu. China is not backing down from its claims over the south china seas. It came out with a new policy paper one day after the International Tribunal determined it had no legal basis for its claims. Has sovereignty over much of the south china seas and it opposes other countries illegal claims and occupations. Congress is not been able to agree on funding for the zika virus and is likely to delay support. Lawmakers are starting their sevenweek vacation. Bill is a 1 billion zika that would also deny money for planned parenthood. David now to the morning must read jeffrey gunned the lack gun the luck Jeffrey Gundlach said it seems like a reasonable position and bill gross is emphasizing that sovereign yields are dangerous. Tom there is no question the alarm is there. The why of this is very clear. Its not a mask psychosis but it is not a mass psychosis. The liquidity in the system is making a huge demand with the price up and yields down. Make isinction i would how we unfold this. If we say we are here and that fear that you hear from a sophisticated bond pro is the idea of whats next. David is there a soft landing to this . The yields dont go down forever. Tom there was a page written in the 40s out of over lynn college which is about dampening functions. Will we have the fixed income market and the Financial System b eight dampening function or you get a jump condition with leads to fear . Hugeunflach looks at losses for hedge funds. David they become risky at some point. Tom save haven becomes risky but i woulds suggest there are different kinds of safe havens. Switzerland is a geography of a safe haven. The u. S. Makes the rules with that perfect dollar. Is japan a safe haven . Abdicationabout the of the emperor, where is japan in five or 10 years . Im certain that it is not a safe haven like switzerland. Obviously, the yen has been a safe haven. I talked to Major Players in the industry who say why is the yen a safe haven . They said im not sure. We spoke with Robert Feldman earlier on this, its the idea of the flipped. Its a move from being a amer surplus nation trade surplus nation over to a current account deficit nation. Its ever so slight but the dynamics in japan are changing. That goes back to the idea of this massive bid up in price. David if you look at the fundamentals in japan, they are not so pretty. Tom there is no question. Believer in demographics and cultural economics. That is true in every nation including america. Certainly, i would suggest the island nation of japan is very different than the demographics of the island nation of David Cameron and the u. K. David thank you very much. Tune in at 8 00 a. M. Per bloomberg surveillance. Jon the Federal Reserve bank of minneapolis resident spoke at a town hall event in michigan. The u. S. Economy has been growing more slowly than we would all like. I think thats safe to say but it has not been terrible. It is not been great. As you look around the world, the u. S. Economy has done well compared to europe especially given brexit and the uncertainty about the u. K. And what it means for the eurozone. joining us now is laura rosen. The fed speak seems to change. Its true, fundamentals especially in the u. S. Are not the focus right now for investors. People are still very much fixated on brexit and the consequences and also other developments in europe and japan. Demonstrates the fact that we had a monster payroll sprint in bond yields move lower on the day shows exactly what is going on. Alix you have one of the most dovish calls for rate hikes either this year or next year. Exactly, we are more confident in that. The buildup in hiring last month was a little reassuring but the trend has slowed and we think consumption and income will slow. Jon these are live pictures of the Prime Minister David Cameron leaving parliament for the last time as Prime Minister. He is getting a round of applause from all the mps. How can that situation in that room right now mean that we have an aggressive repricing of fed funds futures to the extent we are not pricing in a rate hike for the next two years . The negotiations between the people in baton rouge and the governments of the European Union is wanting. With an states Unemployment Rate south of 5 warrantonly 2 , does it rates to be where they are for the next two years . The issue is that the bond market is global. The u. S. Treasury market is a Global Financial market and there is a lack of assets to invest in. The fact that we are getting more easing and more concern demandlly is increasing for assets that actually are yielding something positive. Demand for u. S. Treasury securities and driving them lower. It is not really fundamentals which are driving u. S. Treasury yields. Alix what is fundamental is the slow grind higher we have seen in inflation expectations. Chart, this is u. S. Consumer expectations for longerterm inflation. It is actually the highest level we have seen since last august. Small businesses are also seeing prices starting to rise. Much longer can the fed how much overshoot does the fed want to see before they have to act . I think we need to see some but we are still far away. Core inflation is at 1. 6 . That is 40 basis points below target and has been for 50 months. It has been a long time since we have seen anything close to target. Its not just in the u. S. We see it around the world. Bind of see any severe inflationary pressures. We are close to full employment but we are not seeing any symptoms of that translating into higher price pressure. Im sure you spent a lot of time in the bond yield. 10 years issued with a negative yield for the First Time Ever in germany. Ofking at the auctions monday and tuesday and a 30 year bond auction today. Be bigas not going to Foreign Investment there. Demand sinceest 2009. Are we starting to reach a point back the yields will snap but are we finally finding some kind of flaw in terms of appetite for treasuries around these levels . Its possible. With the stock market levels which continue to reach new highs, something seems unsustainable right now with the current Market Pricing. If the economy is fine as the stock Market Pricing suggests, maybe the stock market should take the possibility of a fed hike more seriously. Should we see the s p 500 making new highs . On the other hand, if the economy is not fine which is our forecast which is why we dont have any fed hikes, should the s p make new highs . Its not clear. Alix that leads to a kind of data point with the fed need to see to have the market be convinced that a fed rate hike will come sooner rather than later . I think we would need to see sustained resilience in the labor market. Alix we had that except for one month. Not really because if you look at the threemonth average, the u. S. Economy is adding half as many jobs currently compared to just six months ago. There has been a slowing. We have had shocks to the global economy. To the u. S. Ppen consumer in the second half of the year . Will we see things accelerate or slow down . We think is will slow down. Jon great to get your insight and thank you. Coming up, egg Bank Earnings are on deck and we will look ahead to those coming through they Bank Earnings are on deck and we will look ahead to those coming through in the next hour. Prime minister David Cameron is making an exit for the final time as Prime Minister. E his way from parliament to the buckingham formalto hand in his resignation and then the queen will invite teresa may to form a government. We will renew full coverage. This is bloomberg. Alix this is bloomberg. Coming up, blackrock equity strategist kate moore joins us for the 9 00 hour. David we start the second order Bank Earnings this week starting with jpmorgan tomorrow and citibank and wells fargo friday. For a preview, the global director of research joins us now. Provides Banking Services to a wide range of Financial Services company, welcome back to the program. Lets start with earnings. We only have one week of brexit post so how much will it tell us . It will be good news because we had some volatility in the last week which helps the numbers. The Second Quarter for the bank should be fine. The issue is the bond yields and whatt postbrexit management will say about whats going on. David what happens to Interest Rates . They say it will be lower for longer after brexit. What will you be looking at as the banks report their earnings . Quarter, we took all Interest Rate increases out of our estimates through next year. We cut estimates on 90 of 250 banks. It includes all of the large banks. Were we right in terms of the numbers we got . Our management will say we can make more money than we think we can in a postbrexit lower rate world. David how will they make more money . By lending, loan growth is holding up well. If we continue to have a good economy, loan growth can help. The other issue is mortgage banking which is why we like wells fargo. There should be quite a bunch of refinances. Alix do you feel the banks can earn that riskadjusted return they did in the last cycle . That is totally over. Tangiblehad 1. 5 equity prior to the crisis. Now they have 10 . Do you feel the stocks have rerated to account for that lower to longer rate environment . We have been stuck in the same roe for the banks for four years down for four years now. We are way below book ratio. Thats because roes are down have come down and they reflect on a global basis where we are. David you mentioned wells fargo because of mortgage but what about citibank who is dependent on credit cards. You have Goldman Sachs involved in trading more. How do you break at what you expect from the banks . That look at the banks have been able to earn the higher returns over time. We think you have to stick with a stronger one like wells fargo and jpmorgan and to some extent Goldman Sachs if you get the trading call right. Citibank and bank of america are still struggling. They have been trading below tangible book value for five years. How will they break out of that is the question. Does the decision about allowing the banks to return to capital shareholders which is loosening up. They are paying more dividends but how does that affect the stock price . The big banks who are more constrained, traded lower values. If you draw a line between the small, midsize, and large banks, the valuations are lower on the large banks because they are more constrained. For the big eight banks while we are getting relief, its not much compared to the small banks. Alix i want to know about the energy loans. Asidecome in to put money to write off energy loans. Is that part of the cycle over or is there more to come . With some regulatory pressure we saw in the First Quarter, there are big reserves in many banks. Quarter,l depend this have the unused lines get drawn dow . David what about commercial real estate . There was a warning two days ago for especially smaller and regional banks. Is there a concern there . There is a regulatory concern for small banks. 300 of capital and 50 growth on small banks and whether or not you exceed that. Coveragery small bank has exceeded those of the regulators are looking at this carefully and we will see growth constraints on the smaller banks. Forced toanks be consider some kind of negative deposit rate for their customers . Money so badlyke that the demand might not be there in terms of their loans. What creative ways do they have to think about the next cycle . If you have m a maybe not as juicy because of brexit, what do you do . The banks in europe have not been able to produce those reduce those deposit rates. The result has been tough profitability in europe. Its a hard thing for the banks to get behind. We have not seen a good solution yet globally. This is mr. David cameron who is still the Prime Minister of Great Britain. Hes about not to be. He is going to Buckingham Palace . And ae will make the trip little while, its about a mile away well he were where he will hand over his resignation and the queen will invite teresa may, the new conservative leader , to form a new government. David thank you. It is an historic day. Banks, talk tohe us about costcutting. If they cannot get the money out of the Interest Rates than a lot of the banks are forced to look for costcutting. Much more is there to cut . There is a lot to cut. If you look at the branch is in the United States, we are 2 below the alltime peak. How many people use a branch . The big banks are also having to invest in things like Money Laundering which is a big expense. There will be a lot of cost opportunities for cutting over the next couple of years. Alix you can cut costs and one in but they are raising wages on the other end. You can get a big raise but then you dont have a job. Thank you very much for being with us. Coming up, stimulus is not generating adequate demand in japan but could helicopter money be the answer . We will discuss that next and this is bloomberg. Jon the attention of the political world is on london as Prime Minister David Cameron is making his trip from the houses of parliament to Buckingham Palace to visit the queen to hand in his formal resignation. U. K. From one area of the to japan, the big question for japan is will we see helicopter money . Isapanese newspaper says abe considering this but its already happening. This comes from the cohead of global Macro Markets research at Goldman Sachs. This is a central Bank Ownership of government debt. Its how much the Central Banks own of government debt. This is their estimate for the end of 2017. Japan could be to 50 . Its about 30 now. Central banks are already buying 90 of all the issuance of the government. The next chart shows how they wind up financing over the longer term. This white line is the average maturity of bonds. The orange line is where they are issued, the average maturity. Goldman sachs estimates this will increase to 7. 5 years over the coming time. That means there is a really long time the central bank is holding these bonds. They are not canceling the debts but allowing so much money to float in the system for a long time. Jon thank you very much. Hour, thein the next equity strategist at wells fargo will join us. E id changing of the guard David Cameron closes out his final hours of Prime Minister and teresa may prepares to take over. Japan cuts their forecasted growth as the government considers another stimulus package. Flight to bonds seems like madness as there is a negative yield for the First Time Ever. David welcome to the second hour of bloomberg. We are watching history being made in Great Britain even as we look at the largely risk on markets. Jon a new year as David Cameron prepares his resignation as conservative Party Leaders and teresa may is prepared to take over as Prime Minister. Alix we have a market that takes slowly higher. Day are going for a fourth of gains and we will be joined by the wells fargo chief economist strategist with her outlook for the rest of the year. Market to start with the but not a lot of movement today. Jon it is treading water a little bit. The ftse is up marginally. Their work record high closes in the u. S. Yesterday. The s p 500 are up about two points. Looking through the other is comfortablen but flat. Cable is trading at 132. 78, the fourth straight day of gains. Yields are pumping higher monday and tuesday are a little bit lower. There are disappointing auctions in treasuries over the last couple of days. Alix the german 10 year bund yield is negative and thats historic. Checked in for indepth coverage of all of our stories. Scarlet fu is live from 10 downing street. Guy johnson will have the latest Market Reaction as teresa may get set to be the next Prime Minister and Oliver Renick on another record win for stocks and a slew of fed speakers. Jon lets start with london. Outside number 10 downing street, the formalities and the change of the guard, talk us through it. Thats right, david withon held his final pmq other lawmakers today and that has wrapped up. It is verbal jousting in sparring, the kind of thing he thrives on. Leadership he to the opposition about the leadership crisis. David cameron addressed what the u. K. Would want out of the eu postbrexit. Something of a renaissance in manufacturing particularly in the automotive sector, some of which is in the backcountry. It is vital for that industry that we have access to the single market. This will be one of the things we have got to focus on. I want automotive, aerospace, highquality manufacturing firms to go from strength to strength in our country. Our access to europe will be vital. He is due to return to number 10 downing street which is the home of the Prime Minister. Time, he will take a six minute car ride to Buckingham Palace where he will speak with the queen and offer his resignation after six years and 62 days in office. At 49 years old, David Cameron will be the youngest Prime Minister to leave office in 200 years. He plans to remain in parliament but because he does not have a government office, he is not the opposition leader. He will be a rankandfile mp, known as a backbencher. Jon those are the formalities in the british quirks. For Global Investors, i guess they want to know what does the teresa may Team Look Like and what is the approach with the eu and when do the formal negotiations begin . Guy those are key questions. Thing that people will be looking for is the makeup of her cabinet. She has not had long to put it together. She is trying to figure out what she will do. Next door toy number 10 downing street, the chancellor of the exchequer and the question is who will be the new one . George osborne is the incumbent but will he vacate . She has difficult work in the next few days. Maybe she will move big supporters to her office. Who will be the brexit czar . What kind of a role will that the . Much authority will it have . Who will fill that role . Thats where George Osborne could go. Who will be int those key roles and how exactly they will operate. Also, the relationship of the bank of england. Theyxpectation is that will deliver a 25 basis point cut. Jon thank you very much. An historic moving u. K. Politics is happening with historic moves in u. S. Stocks. Record rallyher that happened yesterday and futures are off the highs today. Oliver there is a lot of stuff going on. This is coming from sectors were not the ones that normally lead in the bullish economy. Many think it will be slow growth and Utility Companies and staples are growing and we are looking at whether these Companies People are going into because they like them for fundamentals or they are going to them as a momentum play. Basically, there is a group of companies that wall street analysts dont like. These are analysts that Rate Companies on momentum and price reversion but also fundamentals. Looking at utilities, it has been one of the best performers in the group. They are the least favorite stock on wall street. It makes you wonder what will happen of this rally starts to break down and people will want to stay in those companies and any kind of reversion will have an effect on the broader market. We have not seen it yet. Had utilities re rated, they would have to decline by 1. 4 . Our u. S. Stocks priced for a perfect earnings season . Oliver they are priced pretty high in an earnings season that will be medium again. People put estimates for companies that will probably be easy to beat. If we continue to see Companies Beating like we have in the first couple of days, got that could lift stocks higher. Stocks are doing fine without great earnings. Alix good point, thank you so much. You have the beige book coming out in a few hours. David exactly but lets turn back to the fed. Cadonna, beige book is coming out so what about this plethora of fed speakers we will have . Thin the fed speak is cap relatest and in brexit our sense of recovery from post brexitand the Financial Markets. The Financial Markets have almost entirely recovered. A betterthem to context where we see the labor market. There may be some of that uncertainty we were harboring over the health and labor market heading into last fridays jobs report. What are you looking for in the fed speakers . L we have two nonvoters today. They are both on the moderately hawkish spectrum of policymakers. I am watching to see how much they are pushing against a much. Ore dovish market the market is taking a sanguine approach to rate increases. They might not even be looking for a rate increase by yearend. Some of the more hawkish policy leaders seem to be keeping a hike as a possibility early fall. Who iswhat about mester normally a dove and she said everything is on the table . Carl she is a middleoftheroad candidate. She seems like someone who is unlikely to dissent. Overnight, she said she did not dissent at the june meeting because of the brexit concerns which shows her maybe more hawkish than some folks supposed. Maybe she is considering dissenting later this summer. She paid lip service to the july meeting. These policymakers can say july is a live meeting but thats not the reality given Market Pricing and what was a good june jobs report but an economy that is still milquetoast at best. David thank you so much. Jon coming up, u. S. Equities are going for a fourth day of gains with the dow in the s p 500 at record highs as we enter earnings season. Could a decline in Quarterly Earnings throat cold water on the bull market . Gina martin adams will join us with her outlook when we return. This is bloomberg. Julie on from new york city, this is bloomberg. At are at alltime highs. At the moment, futures are firm, up about 1 10 of 1 . In europe, a fifth potential straight day of gains. Here is the situation in the other Asset Classes dollaryen is very neutral right now. Monday andare up tuesday, the worst two days for treasuries so far this year. You may have record highs in stocks but what is leading the gains . Utilities, Consumer Staples, low volatility stocks. The s p 500 versus low volatility stocks. They are not supposed to correlate with a lot of risk. The white lane is this a white line is low rate and its outperforming the overall index. How does this make sense question mark Gina Martin Adams is joining us. Thats an unbelievable chart. Outperformanceat of lowvolume stocks continue . All year sontinued longer than i think investors would like to see. In our opinion, it continues as long as there is a lot of uncertainty in the lower economy. Investors are getting dragged into the equity market for dividend yield. The result is low volatility and low beta, high dividend yield stocks leading the rally. Over the last few days, we have seen some better performances on cyclically oriented stocks like energy, materials, and industrials doing better. We might be at a transition point. Unfortunately, this potential transition comes at the beginning of earnings season and we are not expecting a whole lot of great news out of the earnings season. I would expect the volatility with low yields to continue to pull in investors into higher yield and lower volatility stocks to shelter their portfolios for whats in uncertain climate. David what will we see in the earnings season . Sector by sector, where do you sector where do you expect over performing an underperforming . Companies and analysts have reduced their expectations in earnings season. Most companies will outperform expectations. Quarter ase the last a good example. In hindsight, Companies Beat estimates in the First Quarter which was a bad market climate. Companies will most likely beat secondquarter estimates. The one sector that looks to be at risk more than others is financials. Its not because of secondquarter estimates as much as forwardlooking estimates which seem far too optimistic considering the climate of an extremely flat yield curve and slow economic growth. I think thats what matters during earnings season. The other thing to keep in mind is that investors are focused on the top line area what happens with sales across the indexes is important because we need that sales growth or some recovery in sales growth to substantiate forwardlooking forecasts. Very high price to earnings ratio within the s p 500 so what will help it move higher if you dont get real Earnings Growth . Ratios forhigher p e the s p 500 with bond yields so low . I would say no, but the market is working against that. P e on theays the market is high already at 18 times earnings. Max whichking at 17. 5 is justifiable given fundamentals. Over the last couple of weeks, you have seen the market rerate higher on p e alone. Its because there is no word that global Central Banks will ease more and the fed has pushed back tightening prospects. The liquidity is continuing to fuel the market gains in the low prices and the bond market are important for the stock market because they allow companies to issue debt in order to fuel buybacks. The equity market is somewhat dependent upon liquidity and low prices. N you have people coming into the bond market. Yield, thet relative bond market is sexy. Right now. Lets talk about valuations, how messy can that get . It can get very messy especially of earnings do not recover. As long as the earnings environment starts to improve over the next foursix quarters, the yield traps are not as important to worry about. We talked about this earlier this year with oil prices falling. We were looking at a nasty economic environment. The yields look artificially high when prices have been depressed. You have to be careful. A sustainable yield is important right now. This is why investors are flocking to these low earnings Volatility Companies with high dividend yields. Alone,t dividend yield investors want low volatility and low beta stocks. They want sustainable earnings even of its slow Earnings Growth with a high yield. Alix there are four things we keep hearing about. We will discuss the relative valuation between europe and the later, will commodities follow the pattern of second half the kleins. Last year was a big deal in we will discuss why 2016 commodity rally might be getting started. This is bloomberg. Alix weve got three big movers this morning and we will start and minors in europe particularly glenn corp. Up 3 and rio is up almost 2 which is a big rally across the board in copper, zinc, and nickel. You had stronger imports for Raw Materials for china. Burberry, a rally in that stock with it rising its highest in three months. You had sales beating estimates with a boost in u. K. Demand. Uighur sterling will help retailers sell some stuff. The company says the plunge of sterling would boost fullyear profits by 90 million pounds. That stock is up 7 . Rounding it out with a hotel company, the Biggest Hotel operator in europe will separate its hotel invest unit and sell majority stake. It basically freeze up some funds for the company to grow and invest. The stock is up by almost 4 . Martin adams is with us from wells fargo. We were talking about u. S. Equities which is your specialty. Lets compare that with europe and other places. 500blue line is the s p area this is adjusted for cyclical variations and the white line is european stocks which diverge. If we put the em stocks, the they would diverge more. What accounts for this . A lot of it is risk tolerance. You think about when the diversion started to occur, it was when investors became more riskaverse when economic ,onditions had not improved when investor risk tolerance has generally been fairly limited. The u. S. Tends to benefit from that kind of environment. Brexit is a good example. U. S. Stocks sold off significantly less than the rest of the world and have bounced back to new highs because investors are inherently defensive. They are willing to pay up for that sort of stability that is available in the u. S. David talking about whether people lying equities or they dont like the alternatives, doesnt that increased the risk factor . Its not based on fundamentals. Is there a risk premium priced in for that . Its something we struggle with every day. When you try to find a fundamental value in the equity market, you find yourself torn between what the fundamentals are telling you and what the technicals are telling you. The technicals are telling you you want to buy u. S. Stocks. They are breaking up higher and fundamentals set aside, the charts look good. When you look at the pure fundamentals, we are in a relatively overvalued market. The sector that has done the best so far this year which you would buy in a technical basis are the sectors that are the most its pensive. Dennis a better the most expensive. Tend to be more indicating. Day, a fewn the months ago, the energy guys wanted to become credit guys. The fixed income trade has become an equity trade. I imagine you spend more time with the fixed income team and trying to work out what happens with equities based on whether the highgrade part of the fixed income market will set up shop. Its not likely anytime soon. Investors are gobbling up all of the supply available in the highgrade market and have for most of this year. The fundamentals of high grade you would argue to not look very good either. The fundamental cases tough to make in highgrade. This is a market that trades on supply and demand largely. As long as investors are willing to gobble up the supply the comes to market, its in good shape. We are focused on this as it mean. It matters a lot to equities. When you talk about buybacks that continue to fuel the equity market, those buybacks are largely coming on account of that. David thank you so much. Up, or eurobond rush, will highyield emergingmarket debt see an increase in demand . This is bloomberg. Jon this is bloomberg and lets get to Global Markets. United states markets are at alltime highs. In europe, a potential fifth straight day of gains. Tyhe ftse is looking stable. We are getting that transition in the u k with a brand new Prime Minister. In the fx market, the dollar is down about 10 . For thebeen range bound dollar for a number of days. The market has not been range bound is the root is the bond market. Very good auctions monday and tuesday in terms of demand for the three year and the 10 year. Its the weakest demand since 2009. The 30 year bond is coming to market today. Note yields are low yields are coming back in. The yield right now is negative seven basis points. That auction earlier got alix steels attention. Government bonds in germany had a negative yield for the First Time Ever. Lets get to the headlines outside the business world. From now, Great Britain will have a new Prime Minister. The queen will ask the new conservative party leader to form a new government. Teresa mesas one of her first jobs will be to name someone to supervise brexit. Parliamenton went to to answer questions as premised are for the last time. After this, i congratulate the home secretary on becoming the leader. When it comes to women Prime Ministers, i am pleased to say that soon it will be 20. Taylor Margaret Thatcher also was a member of the conservative party. The First Anniversary of the Nuclear Agreement with iran, republicans in Congress Want to derail the deal. The house will vote this week on three proposals that would impose various sanctions on iran. Last year, iran agree to curtail its nearly program its Nuclear Program to ease sanctions. Funerals begin today for the five Dallas Police officers killed last week. President obama called the killings in active racial hatred. He praised the police for saving more lives than we will ever know. News, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Alix thank you so much. Crude oil is trading at 46 with a big boost in metals. Lets hear what key banks are looking at. Eric lee is looking at the commodity moves. Your report on sunday night ruined my weekend, 160 pages on what will happen with commodities later this year. Will we see the sell off we saw last year . More are looking for constructive markets for commodities overall. That is recognizing that there on risk of macro risk off which means it will be choppy. If we look into next year, we are looking for continued supply to terrell curtailments give an upward lift to these markets. This astill looking neutral in the mediumterm getting ready to move into alix woolwich. You are bullish on gold, silver and so i. It was the same story last year. We thought we would wind up seeing a sustained rally in commodities especially oil but it did not happen. Why will this time be different . To some extent, its a matter of time. Its also a matter of whats going on around the world. Oil, we see 1. 5 years of low prices and we have seen cuts in upstream investment in the space and thats starting to kick in. In your report, you mentioned that oils bear market is over. What will be the trigger point . Weve got to get through a tricky summer. Of driving height season, markets are relatively soft and refinery margins are not great. Part of it is the gasoline demand story that is there. The supply is also there. Has beentory overhang processed by refiners into a product so theyve got sizable gasoline inventories. The crude supply cuts will support the broader market. Alix how much more downside do you see there . We are looking at a choppy market. You can see below 40s but we are looking for a return to the low 50s in the second half of the year. Alix definitely more of a rally and you were talking about the product inventory. Over the longer term, we have a huge amount of overhang. Ea indicated that as a risk to oil and how long will it take for that to you wrote . Road erode . We are looking for these industries to start to pull down. We are getting a slow but slightly but steady drawdown in the u. S. In inventory. Youve got very broad structural crudeift as nonshale supplies are pulling back around the world. Of choppyve a lot supply risks to the up and down side. The u. S. Is the weird swing factor. You see 50 by the end of this year. What is the supply response in the u. S. To that . I think it will be significant and may outperform expectations. Thats because the oil rigs are starting to come back a little at these levels. Its a little bit of a slow off that could slow that down. There are uncompleted wells and michelle sector as well. In the shell sector. Shale sector. We think there is room for u. S. Shale producers to grow. Report, i read it sunday night at 7 00 p. M. , thank you. Jon joining us now is stefan wy ler. Great to have you with us. We have had a series of guests this week and i asked them where i can get a diversified asset . They say go to em so demand is building. I want to know the type of issuers from emerging markets that will come to market and take advantage of that with supply . Thank you for having me. The supply is been primarily growing in the sovereign space. We have seen some big transactions out of argentina dhabi that and abu set some records. Looking forward, you can expect emerging markets growth will probably still come from the sovereign space where sovereigns are looking to fill the gaps that are left in budgets from the lower oil prices. The the issue is will be trends dominated by oil and gas like in the middle east and also the cif. Into next year, you probably also see a pickup incorporate borrowing. About 200 billion of maturities from emergingmarket corporate sandbanks next year is what we could see. As well as three years after that which are large amounts. Its reasonable to expect the majority of these bonds will be refinanced in the bond market. When these issues come to market, do investors like the coupons . I think its a mixture. Environment, the coupons are attractive. Its difficult to find income anywhere. Emerging markets is one of the places that offers a decent return. There are definitely investors attracted i the yield dead by the yield. By the yield. On the fundamental side, we are seeing fundamentals have stabilized and current deficits have narrowed in many of the key markets. Oil prices have stabilized. Em seemsfundamentals, to offer a Good Opportunity now. Of 2016, youre looking at issuance of 127 billion for em sovereign bonds, 120 billion for next year. Is this net issuance going to be raised . Its a good question. To give you an historic perspective, sovereign borrowing has been around 80 billion per year. Go to 130 billion this year is a big jump. This has been driven by the jumbotron actions like the middle east and argentina. You can expect, assuming Oil Prices Remain range bound and not go back above 100, you can expect the borrowers will continue to borrow and establish a history of transactions. Alix when you have this issue is coming to market, is there enough demand . Wanted to raise 5 billion but raised 9 billion. Does this change the timeline for these big guys at all . To some extent, thats true. Market conditions are extremely constructive now for emerging market borrowers and the demand is high. We see this when we announce pricings initially and where we fill in the gaps between pricing points and are growing. There is a tremendous amount now. Interest rates are very low with tremendous demand. Looking forward, you never know. Emerging markets have seen some volatile times. Windows can close and looking ahead, there are a number of volatility points that could emerge in europe, the elections in germany, france, u. S. Elections later this year. We see a number of borrowers being prudent and trying to accelerate their borrowing. Some of them dont have any funding requirement. They do this opportunistically, repaying debt early and swapping dollar debt into euro debt which is lower yielding. We have a lot of activity in the sovereign space and we expect a lot more for the rest of the year. We think another 50 billion euros will be issued from the amount currently placed. Next year should be similar. Noticed that a lot more asian banks are getting mandates on em deals and qatar had three japanese banks working on their deal. How important is it to involve asian banks . To be honest, its not as important as it may seem. What you are seeing is that asian banks are trying to move into the emerging markets more aggressively through extending loans. These are lending relationships are being rewarded. Emterms of distribution of credit into asia, it is relatively complementary. The core Investor Base for emerging market credit and particularly sovereigns, are from the u. S. And the united kingdom. Jon great to get you inside, thank you very much. Coming up, the trump the stakes had ap high. We are talking politics next. This is bloomberg. Jon this is bloomberg. Coming up in the next hour, the chief black rock expert kate more joining us. David the Republican National Convention Starts next monday. Donald trump may be on the verge of naming his running mate. Several republicans are on the short list including Chris Christie, nude gingrich and governor mike pence of indiana. We go now to our politics reporter in cleveland. What do we know about what mr. Trump is looking for . What do we know about what donald trump is thinking about anything . We know he is looking for someone with washington experience. We know he is looking for someone who will defend him on the trail. Listr, he has narrowed his to three top contenders. Are on about five people the shortlist and he is trying to whittle it down. The three you mentioned are at the top. David Chris Christie does not have washington experience. Is that a demerit . Was head of the Republican Governors Association and has a religious that is just as good as anyone else on that list. He is good at fundraising and he is a good campaigner. He has done the president ial has the before and charisma and personality i think donald trump is looking for. I think that makes up for any sort of washington experience he lacks. David it seems we are talking more and more about mike pence. What would he give donald trump that the other contenders would not . Mike pence is a safer choice. He is a conservative from the which is a key region for donald trump if he is going to make up ground in the electoral college. Ne that he can throw to conservatives in the republican party. David when do we expect to hear . By the end of the week, i believe. Of the week, i think we will know who donald trump is choosing. David on the democratic side, there was a big moment yesterday for Hillary Clinton in New Hampshire where she got the endorsement at long last of Bernie Sanders. Did that go as well as she hoped . I cannot imagine how it could have gone better. There was some tension in the room. There were a lot of Center Supporters who were chanting things and protesting and maybe walking out. This isnd of the day, Bernie Sanders standing on a stage next to Hillary Clinton, tying her to the policies he has been advocating for. He noted some of their differences but at the end of the day, he is on the trail advocating for Hillary Clinton can only be a good thing. He gave a good performance and i think the Clinton Campaign is happy about it. David there is a quinn and yet there is a quinnipiac poll on swing states. Should we give importance to that . There is a lot of National Polls that show clinton leading. This is a statebystate election process. The state polls is what we should Pay Attention to. It donald trump keep closing the gap in the state polls, it indicates a tighter race. We need to watch that closely. David thank you so much. Its going to get really exciting and next couple of weeks. The dow and the s p 500 are at record highs. Nasdaq look at the currently on a fiveday winning streak topping 5000 for the first time this year. It did not in any help from amazon yesterday. The shares fell by nearly 1 on their prime day with sales not meeting expectations. Lets check out amazon over the last five years. It has really helped push the nasdaq above 5000. We will see if the tech heavy index can join the other indices in record territory. There is not too much to go if those momentum names can propel the nasdaq. David we will show you how the u. S. Dollar is influenced the agricultural trade balance. This is bloomberg. Jon its time for battle of the charts. Matt miller joins us now. What have you got . Matt today, this is not just a charge. I am dedicating this to hillary in the control room. I dont think she understands the significance of it. Let me walk you through this. Using a financial and from it we use every day but we dont understand that this affects real peoples lives in america. Its the dollar and the real people are farmers. This is ag trade, the white line, either surplus above or below. Right now, we have the biggest farm trade deficit we have ever had in history, the monthly deficit. We are buying more stuff from overseas than our farmers are selling to people in other countries. And its the third consecutive month in a row we have had a farm trade deficit because of this strong dollar. Farmers cannot get rid of their product of foreign buyers but the consumers are buying more from foreign buyers. The situation is so dire that if it continues we have a deficit for the year, it will be the first time we have had an ag trade deficit since 1959. N are you stealing alix steels time . Alix absolutely. David bar once, youre not exaggerating. Alix i have the story of the year. This makes the case of why you want to go by european stocks. This white line is the euro stocks dividend yield. The blue line is the tenure german bund just turned negative for the First Time Ever. The spread between the two is about 400 basis points. Its the widest it is ever been since we started tracking this in 2002. Equity about how investors have to become Bond Investors and Bond Investors will become Equity Investors and this chart is why. Why would you not by european stocks . Volumes to speaks whats happening in this historic market. The euro will probably continue to fall. David you had me at real people. A chart about real people gets to me and this could have political ramifications. The farmers of america feel the crunch, it could have a real effect on the president ial election. I will go with alix steel because thats whats happening in Global Markets. You have a debate over which one is effectively priced whether it is bonds or the dividend yield needs to be adjusted. We have a tie and that goes to the control room and they are screaming matt miller. Alix this was rigged from the first moment. Jon matt miller is winning and thank you very much. Coming up next, the blackrock chief equity spat expert joins us for the entire hour. A little over 30 minutes ago on till u. S. Markets open. Futures are firmer. Market,ighs in this from new york city, this is bloomberg area and. E jonathan this is bloomberg. Lets get you up to speed on Global Markets. U. S. With record highs in the cash market. Futures a little bit firmer ahead of the cash open. The ftse 100 up a third of 1 and the stoxx 600 approaching a fit straight day of games. Fifth straight day of gains. Its a little bit of risk on, but in the bond market, and was a cel it was a cell of treasuri. 0. 7 and a tenure auction in germany earlier with a negative the yield for the First Time Ever. And about 30 minutes time, we will have the open here in new york city. This is bloomberg. David we are just under 30 minutes away from the open in new york. This is bloomberg. On just howorore much this bull market has left to run. Then the all important feature of banking after the future of brexit. The markets feel very calm to day. Jonathan a little bit of worrying in the bond market yesterday. A couple of ugly auctions, so look out for the auction of 30 year bonds later. The demand on the three and tens the weakest since 2009. Lets get to our global team on the markets. Julie hyman in new york with a look at whats ahead of the open. Abigail doolittle in nasdaq and mark barton in london. Lets begin with julie. Im beginning with American Airlines as the stock soared. The Company Coming out with a jew update on traffic. June update on traffic. The company is narrowing its forecast for passenger revenue. That is the for the airline industry. It will fall 6 . The margin excluding items in view so theprior shares are up a little bit this morning as companies are not saying things are getting worse. Also looking at a couple of upgrades. Pandora upgraded to overweight after jeffries called it an Inflection Point for the company. Its on a positive outlook for music labeled negotiations and improving markets across its core radio business. Analysts calling about the upcoming release of an ondemand platform that could add 9. 2 million subscribers for the company. Yelp is down about 3 . That has been downgraded to underperform over at wells fargo because of challenges of meeting its longterm margin targets. The 2017 andng 2018 outlook because of competitive revenue and profit environment. Abigail another day with a big biotech share mover. The fda has lifted a hold on the study of a companys leukemia drug. Place lates put into last week on the tragic news that three patients died during that trial. On that news, the stock was down 30 . It recovered some of that today. Schmitz is the overhang has been removed and thinks it is a 60 stock. Trading higher as well on the juneau news is a smallcap biotech stock focused on the steeples tomies schrader saying he thinks the news removes the risk around the story. He sees a big upside with another big biotech to keep an eye on. It is not all sunshine for biotech as Gw Pharmaceuticals trading down on the news that the u. K. Based Biotech Company is offering a 150 million secondary. It is weighing on the shares today, but up for the year. Mark stocks rising for the fifth consecutive day since june 23. You know it happened on that day. Still 2. 5 below the levels it finished on. We are rising for a fifth day and i love this chart. Just today raised its losses post brexit. 7 t was a two day loss of that equates to 3 trillion. Low inhat three year february, it has rebounded by 16 , which equates to 6 trillion. Sterlings resurgence continues amidst political instability as we await the coronation of theresa may as Prime Minister. This is the longest winning stretch since may 19. I love this chart. This is the assets of the fed under David Cameron. U. K. Bonds up 50 and the ftse up by 25 . Sterling was looking for an unchanged position and then the referendum happened. Sterling under cameron since the referendum down by 11 , not a bad performance. Card. At a bad report we are going to stay in your lovely city of london. Today is David Camerons last day in office. For more on the transition of power to the incoming leader theresa may, scarlet fu is outside of downing street. Give us a sense of the scene over there right now. Wheres David Cameron and theresa may . What is going to happen next . Scarlet things have moved off awfully quickly, but now you have the formalities taking over. That will make up much of the next 34 hours. David kaman has returned cameron has returned to downing street and will make final comments before making his way to Buckingham Palace and offering his resignation to the queen. Theresa may will make up with the queen in which its more of a handshake as the queen will confirm theresa may as the 54th Prime Minister of Great Britain. Wise Queen Elizabeth ii involved at all . It is more than pomp and circumstance. The queen is the head of state. Theresa may is selected by her peers and she will be confirmed by Queen Elizabeth ii. Theresa may will be the second female Prime Minister and the u. K. After Margaret Thatcher. Under the queens reign, she has had 12 Prime Ministers starting with winston churchill. David cameron was number 12 and theresa may will be number 13. David we looked at the vehicle where David Cameron was moving from parliament to downing street. Ake us forward early of bit. Went to we expect to see some decisions, particular around her cabinet . Scarlet theres a lot of talk that perhaps chris railing might be one person that she taps for that job. He might be the chief brexit negotiator. Is other possibility going to come out later this evening. She needs to get back to work over the next couple of days. She is likely to say that she wants to get ready to work. She will name her cabinet as you mentioned and then she wants to slow things down a little bit. She does not plan to invoke or trigger article 50 through the end of this year until 2017 so she can make sure all the details are agreed to and clear before she takes that next big historic step. David we are all focused on brains it because this is why this is all happening. David cameron early onset he was appointing a team to start working already on brexit. Is that Going Forward . Is she going to replace that team . Has it going to work . Scarlet its not clear whats going to happen. She wants to put her Team Together and she needs to put gestures to make sure that enough are represented in that team along with people that she trusts and puts in place. What we do know is that a lot of the highprofile conservative lawmakers, like boris johnson, may not be involved because they have such a high profile and had a bit of falling out toward the end. Certainly she is going to stick with people she knows well. She also wants to put women in a position of power as well and may name women to her cabinet. We will find details in the next couple days. David scarlet fu reporting live in london, england. Alix lots of movement in u. K. Politics and u. S. Stocks. Dow jones futures off by record of 47 points. The question is how long can at last as the market is so unloved. Joining us now is kate more, the black rock chief equity strategist. It points how much everyone hates this rally. Look at Consumer Staples and utilities. They are trading higher or at the level that analysts think they should be, meaning that utilities got to the level that analysts think they should be at, they would have to default by 1. 4 . How do you keep rallying when everyone hates it so much . Kate some of the factors that led the rally post brexit are huge bond proxies. We have seen an additional flow into yielding assets around the world as everyone sort of reprices the risk and expectations for Monetary Policy. The most important thing is that we really focus on which sectors and which Investment Opportunities can offer growth in a lower macro growth environment. I wonder some of these more defensive sectors and some of the more bond proxy like sectors can really produce that growth. I think that is one of the reasons why pc disconnect between utilities and what analysts estimate for that growth is. Alix meaning they are not going to deliver what they need to see to keep growing, but youre going to find them anyway because bond yields are so low. Is it worth paying for them at the end of the day . Kate these bond proxies have reached an alltime high. Have aes, for example, two standard deviation value premium to the rest of the market. Its on a price to sales ratio. We need to be careful about rushing into some of these bond proxies even though we do believe that the search for yield will continue and that investors should continue adding additional assets to their portfolios. Up showingwinds analyst ratings for utility shares are the lowest since 2008. There is no growth, but were going to buy it anyway. David lets talk about what it requires to have that growth to be sustainable. You said basically three things. Really plausible sustained Earnings Growth, number one. Number two is restore credibility to the Central Banks. Number three is a reduction of political uncertainty. Do we have a chance of any of those . Kate those of the three things that are important for secondhalf Earnings Growth. Analysts have forecasted and are currently expecting a significant pickup and Earnings Growth not just for the u. S. But around the world in the back half of this year. I think we actually have to have policy certainty, a little less political uncertainty, and i think confidence in the growth story. We have they . Surround each of those things at this point. Marks aroundestion each of those things at this point. Itnathan we have a little b of policy certainty, but the fed is not going to do anything for the next years. Have we seen a fax from the fed that they are doing nothing now . On the stimulus side of things, it did boost asset prices. I do not see that in europe now or japan either. Kate we are going to get policy announcements from all the major Central Banks like the boe and boj and the fed. I think you are making a great point here which is that markets are not as convinced that Central Banks have the power to really affect growth and actually significantly improve sentiment on a sustainable basis. I think that is a fair question asked because this is not just about inflating asset prices. This is about changing behavior on investment and asset allocation. I do not know that hugely Stimulus Bank policy has been effective so far. Jonathan you are sticking with us. Thank you very much. Amazon prime day sales rose 30 from last year, but digging into those numbers, investors may find some disappointed details. Later on, what is the future of finance looking like post brexit . The head of germanys Banking Association joins us. This is bloomberg 16 minutes away from the market open in new york city. Are oil prices down 1 today and heres the commodity chart that explains wife and what you have to watch for that explains why and what you have the watch for at 10 30 a. M. This white line is u. S. Gasoline inventories. Just a few weeks ago, we saw at that spike a lot higher because this is a season that he would drive a lot. As we saw gasoline stocks spike, you did see oil prices come down a bit. You seen gasoline stocks move a little lower. What happens today . Will we see another spike in will that mean another leg lower down for oil prices . Watch as we to get inventory numbers coming out at 10 30 a. M. We want to get more into detail on what is happening in the oil markets who joins us now from the cme. D, what is the target youre looking at on the downside . Todd you have two different ways to look at this. You have the prebrexit look at oil and then you have the post exit look at oil. I use that as a line in the sand because all the markets have really changed and corrected since then. Oil has been no different except that oil is a two headed beast. Supply ando apply an demand and trades on risks and production, you name it could we. We have that low of 44 and change in crude. If we get below that, i think 40 as well within the wheelhouse here over the short term. Again, we have to wait until we have earnings coming out. We have a lot thats going to change all that and the longerterm. Alix what has dictated oil prices has really been supply. As we see supply come off, the focus seems to return to demand, leading to inventory numbers for gasoline. Inwe continue to see a build product prices, how does that filter to the crude prices . Todd when youre talking about the glut that seems to hit every headline when you talk about oil versus the lack of demand, which has been increasing but seems to have leveled off of it, i think that oil prices are looking now toward where is the next big move going to come . We going to make a shift from the 4050 dollar range or are we going back to the 20 range handles . I do not think were going that low. Oil will be stuck in a range until there is no event will trigger the move. That event could be any of one things. It could be an increase in demand, which is what the oil market is starting for. That will start with Global Growth which will not take off until the Central Banks get out of the way. Oil right now is kind of in a very static mode, 4050 dollars range. Whileve the once in a geopolitical spike that could occur at any moment that could change everything. Alix youre waiting for Global Growth to kick up, but we still have supply disruptions in nigeria and libya that does have the potential to boost oil prices to above 50. Todd they do, but those disruptions have been put back online. Nigeria is starting to get production back online and iranians are getting the numbers up. That supply will come back into focus until we see the numbers in china improve. Even though demand has been slightly higher in europe, i do not see that as a sustainable figure. Global demand is down. I dont care where youre looking at your data. We have yet to see Global Growth come back in line. Until that happens, oil will be stuck in a range. Alix todd , thanks for joining us for a much. Due to a hits a snag computer glitch taking a bite out of total sales, but just by how much . Those details next. This is bloomberg. David this is bloomberg. Amazons Second Annual prime day saw sales rise over 30 from last year, led by Strong International demand. Sales in the United States were hurt by computer glitches. Joining us now is shelley, bloomberg gadfly columnist. Im sure they said this was a win, but what do we know really . We do not know the actual numbers. Amazon said it was great and 30 of their thirdparty sellers have growth. We had this other tracker that says it was flat. People are saying to not trust channel advisors as they do not have the entire picture because they do not capture what amazon sells. David that measures the dollars coming into the door, but that is not the goal amazon has. What are they trying to achieve on prime day . Shelly sales are besides the point. Its about driving prime membership. Some numbers say they added 6 million prime members. That locks you in for at least seven years. The average prime member will stick around for around seven years. David how central has this prime membership become . I remember because i subscribe because i did not want to pay for shipping. How central has it become to their entire Business Plan now at amazon . Shelly i think its the most important thing. It is amazon secret sauce if he will. If they get people hooked on prime, they start going to the phone every time you think of something. Toilet paper, toothpaste, boom, youre done with a day. You no longer have to make a grocery list and go to walmart for the week. It is kind of habit changing that is happening. David some but he has to pay for the freight. Amazon has a rising cost center now on shipping. Is that going to excellent limit profitability going out . Shelly we saw that in the Fourth Quarter where they said that shipping costs have been rising. Amazon is not known for being profitable. Challenging for them to see how its went to shape up for them. David do they have any competitors, even on the horizon . Shelly you have seen other folks jump into the game yesterday. Walmart came out with their own version of prime. The question is are they too late to catch up . David want to bring you in on consumer discretionary. Where you see that right now . Kate consumption is one of the most important indicators in Consumer Spending growth. It is one of the most and port indicators were looking at over the next couple of quarters. Is there going to be a low bit of wage growth and the lower end consumer . Does that translate to more shopping and spending . And what type of shopping and spending does it translate into . Is it media and tech or more traditional retailers . I think we want to see the next wave of Consumer Spending really help drive the u. S. Economy, so any indicators we get out of these will be very important. David how important are the big bellwether retailers compared to online at this point . Shelly i agree with kate point in the sense that people do want to spend. The difference between looking at what an economist thinks and what a retailer thanks is where they are spending that money. People are spending, but are they going to amazon or walmart . We are seeing more people shift online. David are you seeing a lot of stress in the retail area . I hear that from people running retail companies. Kate there are winners and losers in retail. If you have a really strong concept in a very captive audience space, which is what you guys were talking about, and a consumer that feels really loyal to that brand or concept, you are in pretty good shape. Many options right now and just because some retailers are struggling does not mean the u. S. Is in bad shape and we should not consider opportunities in the sector. Yet to be more discerning and think about individual stories. You have to be more discerning and think about in tota individual stores. David thank you, kate more. You can learn more from shelly banjo, ar bloomberg gadfly columnist. Jonathan the stoxx 600 at alltime highs. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. Jonathan from new york city, this is bloomberg. We are moments away from the opening bell right here in new york. We said at alltime highs with futures ahead of the open. The dow up to tens of 1 . The equity market in europe has a fifth straight day of gains. The dax moving likewise. The little bit of it tipoff in the last 30 minutes or so in europe. This is how we trade in the fx market. The dollar yen is down a touch. 59. At 104 a stronger pound for a fourth straight session. Monday andare up tuesday, the biggest twoday loss and treasury so far this year. We sit on the tenure at 1. 47 . We are 25 seconds into the equity market trading session in new york. Lets get back over to julie hyman. Julie another record for the s p and dow no big deal. Are we tired of them yet . Not at all. It is indeed at another record. The s p is at 21. 55. At this point it does not take much of a rally to be at new record highs, at least on the closing basis because we close that way yesterday. The response of sentiment is in effect to some extent. Lets look at individual movers today. Teva is expressing confidence of the closing of its acquisition of allergens generic unit is immediate. The company is coming out with four women are earnings that are above what the company had preliminary earnings that are about what the company had been predicting. Allergan shares little changed today. We are also looking at gnc. There were various asian buyers interested in the company. We have not confirm this, but this has been reported. Buyers thattential could be very interested in gmc. I ispany called being acquired by a private equity firm for 19. 25 a share in cash. 30 premium to yesterdays close in the shares are up by 31 . Jonathan back for more on the rally in equities is kate moore. The financials and energy were like the ugly ducklings of the last couple of quarters. You are a little more constructive here in the u. S. Want to know why. Kate we think that financials are in ok shape and u. S. Banks are certainly the best looking banks on a global basis. That said, i think a significant leadership from banks would have to be driven by a repricing in a positive way this time of fed expectations. We actually se need to see more confidence that there is a normalization path. We have seen that it is really reflected this fed off the table for the balance of 2016 and a real question mark on whether they will raise rates anytime soon. It is hard to get excited about the stocks level even if we think the banks Balance Sheets are solid. Alix if the market is correct and we do not see a fed rate hike until 2018, what is the lifespan of banks in between that time when you do have the markets at alltime highs . Kate this is going to be tough because banks are huge percentage of the market cap not just in the u. S. But Global Equity markets around the world. U. S. Banks are in good shape. A number of our teams at black rock have done great work on this and feel confident in the health of Balance Sheets and the ability to continue to grow earnings a little bit. The question is whether or not those expectations match with what current consensus expectations are and whether or not the market is going to be able to have financial leadership. We are less constructive on european financials. I think that is one of the bigger drags to our less constructive view on the overall markets in europe. Europeanize that financials not only face stresses from the policy side but also have significant structural challenges. David is there any glimmer of light on the horizon for european banks . Do you see any path to getting back on the right path . Kate we are not overly optimistic of that that we will see a positive catalyst in the near term. As we get a better sense of what the ecbs next stage of policy stimulus will look like, either from a meeting next week or over the next couple of quarters, i think we will be revisiting our view on that. Alix we spoke earlier this week with a professor from princeton and this is what he had to say. Europe is cheap relative to the United States. Two capese it in the and you can see it by taking Comparable Companies like General Electric and siemens. Siemens sells at a priceearnings ratio of 14. General electrics price earning ratio is around 40. Alix we spoke to him earlier this week and this really brings a big debate growth versus value. Where do you go to find return in this market . Kate let me address some of the comments in that little clip which is that we need to diss aggregate the broad market valuation different trail from the opportunities in individual securities. There are Great Companies listed in europe that have global diverse sales that will whether a slower European Growth environment and slow growth environment by virtue of the strength of their own business model. That is a little bit of a heart of thing to say across the entire market. That european valuation metrics are significantly lower than the u. S. , but i think we have a backdrop andtha i think that sentiment and Technical Support u. S. Equities. We are more constructive on the u. S. Than in europe. The overall equity view is more neutral than we have been in the past. Jonathan your point now is about the equity markets region to region and the fact that financials make up 20 of the european markets. What kind of drag to growth is this going to be . This is off the back of such a weak Financial System in that region written a. Right now. Kate if banks are really challenged and are having trouble lending and thinking about Business Opportunities quarters out because they do not know what policies going to look like or rates are going to look a regulatory requirements are going to look like, it is hard to make a bullish case that banks can drive the economy and the market in europe. What we want to say is let us be more specific and more discerning about the opportunities in europe at the stage. We think we are going to see significant downward growth estimates, not just in gdp but also potentially aggregate earnings. That may make some of the valuation differential less attractive. You might see that actually closer little bit. Alix what i feel like we hear a lot on the show is dividend cash. Stocks reap golden what is on the kate moore Shopping List . Kate we share the view that yielding assets will continue to have a bit in the near term and it will be important to own companies that can also produce a little bit of yield. In that case im not going to disagree with the consensus call that we should be looking at Dividend Growth opportunities. Dividend growth, not just top news that pay dividends because i think that is a important distinction. There will be companies that will not be able to weather the storm of Global Growth. We retain a quality by at this stage. We are more concerned on the macro and we think were going to see some earnings downward revisions and other parts of the world outside of the u. S. That will have to factor into our quality by. Uy. David where are the sectors that you can see topline growth . Kate that is the trillion dollar question and one of the easons we will take close attention to earnings coming in. Second quarter is backwards looking data, but the kinds of body lang which and the kinds of estimate promises and the kinds of guidance we get from companies is what we will see from them in terms of demand and what their expectations are. We are hopeful that health care and tech sectors produce sales growth, but it still underway. Jonathan we have a that says we are at an alltime high. We have guessed but come on inside by gold. Alix is what if you like we are heading towards. Jonathan you see headline after headline of alltime highs. Just to finish things up with you, why do you think there is this dislocation between where the level of the market is versus sentiment in general . Kate this goes back to one of the points we were making earlier in the show which is that s there is so much uncertainty whether it is politics or sustainability of growth. Theyre people from a pure time perspective saying the cycle whether it is the equity market or bull market or the Business Cycle is long in the tooth, and they are expected something that happened. Significant get a catalyst, but we are still very concerned about the amount of uncertainty and the effect it will have on investment and hiring. Back to the Second Quarter earnings, the comments we are getting from companies will be very important to help shape argue. Our view. Alix what returns more in the next six months equities are bonds . Kate this is a great dog fight to have. On folks like to say they are smarter than equity folks. Andee a big disconnect here everyone says it will have to close one way or another. In better question asked is this incredibly unprecedented policy and Monetary Policy environment, is this disconnect going to persist for a lot longer than most people would originally expect . Our gut says probably yes. If we hit more stimulus and the fed on hold plus solid but maybe not outstanding corporate Earnings Growth, you could actually see multiples rise a little bit. You could see bond yields continue to catch a bit. Alix yes to both. [laughter] kate the answer is yes to both right now. Alix thanks for spending time with us this morning. Kate moore, chief equity strategist at lak blackrock. Michael kemmer will be joining us next. This is bloomberg. David this is bloomberg. Im here in the enterprise green room. John augustine, later today. Coming up on the program, it is Bloomberg Markets. What have you got on the show . Mark were glued to downing street anne awaiting David Camerons final journey to see the queen. That will happen in a few hours. Ahead of that excitement, the chief marty marketing strategist will be here to talk about record highs in the futures markets. Credit is a major tailwind. Special treat, frank del rio, chief executive of norwegian cruise line. Aboard the seven seas explorer in monaco. Its Maiden Voyage is on july 20. And then the head of most multiasset in legal a general investment has a warning on policy. Today it is all about cameron and theresa may, the next Prime Minister. Jonathan i feel like we are getting a little bit blase about new record highs. Alix we are. Lets head over to julie hyman with a check on the markets and what is moving them. Julie when john said we, i think he meant we. We are never blase about record highs. The s p and the nasdaq are now little changed. There is actually a little suspense if you will about whether we are going to have another record close to the. Day. Lets look at some the individual stocks we are watching. The effort stocks we have food stocks moving today. Darden moving to outperform from wells fargo. The casual dining segment seeing comparable sales falling. All of garden is going all olive garden is going to see more moderate performance because of that. Starbucks having the kleins down 1 . Seeing declines down its from weaker than expected food and frappuccino sales as well as poor weather and cannibalization. That has been a longtime concern for starbucks. Alix thanks so much. We want to check in on the nasdaq as well. Recordell below its high, but lets keep an eye on that ground level. Abigail doolittle is live at the nasdaq . Abigail hear on the open, jetblue shares are higher by 3 as the company did report that traffic was up 11. 6 yearoveryear. Capacity of 10. 5 for the month of june. That is a positive dynamic as traffic outpaces capacity. Some investors may view this as a sign of the turnaround. We have American Airlines sort of flipping between small gains and losses. The bigger story here though and this is after the company did report slightly better measures of revenue for the month for the Second Quarter, excuse me. The bigger story is that turnaround idea. It was down more than 30 on the year with declining fares and rising wages. We see that she met this dropdown tremendous dropdown and the stop is rising for the top. There was the question of whether american had its best day since october of 2013. And analyst sees the stock rising to 40. This chart says it could happen, but the recovery may not be for long. Alix that is Abigail Doolittle live at the nasdaq. Jonathan what is next . That is the big question post exit. Brings Caroline Hyde joins us live. Caroline lets put that to the general manager of the Banking Association here in germany. Thank you so much for joining us. Are we going to see more bankers moving here . We hope this will be the final result, but we do not think there is a clear winner or clear loser. We of course regret the decision of the english and the u. K. We think another decision wouldve been much better, but now we try to make the best of it, but there is currently uncertainty and all these phases and projects. We have to wait and see how this is going on, but i expect improvement for frankfurt and maybe they get more work in places. Frankfurt is prepared on that. Caroline in terms of unforeseen consequences like uncertainty seems toentioning, it be slightly unfolding in italy in terms of the banking situation there. Is it systemic . Are you worried about the german banks . Michael absolutely not. I think this is not a systemic issue. Its an issue located in italy and has to be solved in italy. We have european regulations, which have made for such issues. There are current discussions on how to solve it. You can use the bailing measures or not to use the bailing measures. These are interesting discussions and they are important. I think they have to be led in italy and italy is able to solve its problems. Caroline should there be a bail in or bailout . Michael that is the 1 million question. I think in principle that bail and is the right solution but there are regulations and we have checked very carefully whether these exemptions can be used. In that case, it is not absolutely clear whether this is the case or not. This has to be done through the european organizations, through italy. Bail and would be the right solution, but you cannot exclude that in this case another solution is as good. Bankers becamen a part of unicredit. Have there been stress tests and work done to prepare the german Banking System . Michael i do not think that the german Banking Systems influence from a banking crisis in italy. Unicredit is the Parent Company strong but it is a region of banking in germany. That there is some influence from the italian banking crisis. The newest things i hear and see from unicredit the last funny four hours give some hope that the share prices increased significantly with the new ceo. I think we should wait and see. Its a critical situation and delete, but far away from a systemic crisis. Caroline taught closer to home about a larger institution, deutsche bank. When we look at contingent convertibles and capital, it has been under stress. The share price remains eroded for deutsche bank. Are you worried about the capital situation . Will they have to raise more shares and capital . Michael i do not think that. Deutsche bank is in a difficult situation, but they have made the right steps. Is one year in his office and i think he has made the right steps. We have to be a live it patient and give them some time a little bit patient and give them some time to fix things. Im really optimistic. Caroline what more can they do to convince the market . Michael i think they do the right steps in the markets are through brexit and high volatility. Theres a lot of uncertainty and then there are many rumors. I think we should not overestimate that if you look at development over the last days that share price has increased significantly. That is some high volatility. The situation is in general a little bit critical due to the brexit, but we cannot overestimate. Caroline if you would give marks out of the ecb, what would you give . Michael ecb policy is difficult for the Banking System. That is no question. Ecb has bought time for the state and for the government to make their own work. Some have not made their own were completely. We think the liquidity overflow from the ecb is something which cannot be sustainable, which cannot last years on years. Now the governments have to do their homework and they should be sufficient pressure on them to do it. And we are not very happy about ecb policy. Caroline from a skilled one to 10, what would you give it . Michael what was the question . Caroline what would you give it out of 10 . A 10 out of 10 . Five out of 10 . Michael for what . Caroline the policy . Michael 10 is the best and one of the worst, i would give it a five or six. Caroline think you very much. Wonderful speaking to you. He is the general manager of the association of german banks. He is here gathering together the members of Monetary Policy members of banks to talk about the future post brexit for frankfurt. See you in the studio. Jonathan he did not want to go there, did he . Next up, we wrap up these Global Markets and look ahead to the rest of the trading session. From new york city, this is bloomberg. U. S. Market still trading right around the record highs with the s p now 2151. The story is about the ship that we are seeing in u. S. Politics. David the u. S. Or the u. K. . Alix the u. K. Thank you very much. I wondered why jonathan did not get excited about it. Jonathan the bookies are ready to go and i always put a little asterisk. It could well be mr. Hammond. David has a working for the bookies . Jonathan not so well at all. That does it for bloomberg. Im Jonathan Ferro alongside david westin and alix steel. Up next is Bloomberg Markets. This is bloomberg. Vonnie it is 10 00 a. M. In new york and 10 00 p. M. In hong kong. From new york, im vonnie quinn. Mark and in london, i am mark barton. This is Bloomberg Markets on bloomberg television. Mark it is a huge day for u. K. Politics as David Cameron ends his tenure as Prime Minister. Theresa may prepares to take over, bringing a new era as sterling heads for its longest rally in two months. Vonnie investors are looking past exit with stocks continuing to recover after the brexit vote. Jeffrey sees a rush into bonds as madness. German 10 years in the negative for the First Time Ever. Mark is donald trump ready to take his vp . You will never guess where bloomberg spotted the gop presumptive nominee meeting with a highly rumored possible running mate. Vonnie