Alix we did text. Julie i am sure. I am just talking about the content. We are seeing a bounce. The dow gaining more than 100 likes as it looks investors shake off the jobs report from friday, trying to figure out the feds next move. They hope janet yellen will give them direction when she speaks in about half an hour. Though she may not give much direction. A commoditiesled rally. Oil prices bouncing. Our cultural commodities also on the rise. Up 15p 500, a big leg minutes after the open. It has remained steady ever since. Volume is low again. Down by 13 below the 20 day average. That is something to keep in mind. Going flipside of what is on with stocks, we have selling in treasuries. The yield on the 10 year going to 1. 37 area mostly declining yields as of late, so it is interesting to see a bounce. Prices are working their way higher after the head of Economic Development in abu dhabi says oil prices could barrel. 0 per alix hope or reality. So what are the gainers . Part of it is the oil stocks. Apple also a bound. Jpmorgan, representing the banks to the financials hit hard after the jobs report. So we have a rebound. Percentage wise, similar group. Transocean up 10 . Those are the three top percentage performers. Scarlet julie hyman, thank you. Alix lets check in with the bloomberg first word news. Mark crumpton has more. Mark Hillary Clinton the tories in the puerto rican democratic primary victorious in the puerto rico democratic primary. The Bernie Sanders campaign is denying claims it sought fewer polling places in puerto rico, saying the allegations are completely false. Criticizing the way primaries were run. Insurance executives are meeting with government officials in paris to assess the cost of flooding as the seine receives from his highest level receipts from its highest level in three decades. The resident of turkey and the king of jordan have joined the line of war leaders, religious figures, and superstars set to speak at mohammed alis funeral friday. Billy crystal is one of the names on the list. Everything we are doing was requested. He wanted a Memorial Service to reflect his life and how he lived. And the fact that he wanted everyone to be able to attend. He was the peoples champ. He wanted the Memorial Service to reflect that. Mark former president bill clinton will deliver a eulogy. The dalai lama sent regrets he would be unable to attend. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. I am mark crumpton. Back to you. So far, 2016 has proved a tough year for the m a market. Consider all of the deals that have come undone. Staples, office depot. Their deals. , politicaltility uncertainty, and repertory risk are among the challenges. Scarlet so we are watching Bloomberg Markets report. We will look at m a deals with insight and analysis, from ceos to the biggest dealmakers. So we have someone constantly reporting scoops led by Jeff Mccracken, the global head of m a here at bloomberg. Great to see you. Lets start with a bloomberg function. Go, look at the terminal. You can see the fall off we have seen in the last few months. The deal count is under 5000. It was over 7000 at this time last year. What is happening . Tof deal volume is down 20 30 . It is even worse if you look at the average weekly deal cap. It is the deals getting bought. Blocked. In general, a lot of companies that were consolidating have pulled back, trying to see if their deals can get past regulators or get approved by regulators here or in europe. Scarlet when it comes to the size of deals, is it the size of the sector . Jeff i think a lot of it is size. There are four big Health Companies coming together in the u. S. Inma, anthem they will be front of regulators this summer. A lot of Health Insurance companies are looking to figure out if those deals will get through and get approved. Alix for more insight, lets bring in one of the biggest rainmakers in the m a market. Gregg lemkau is a cohead of m a at goldman sachs. What is the single biggest reason you think m a volume is down . Down from record levels last year. Volume is down 20 year to date. Lackiggest factor is the of big deals. We have seen 13 transactions above 1 billion this year. Last year, it was more like 21. The question is why. , a have market volatility challenging Regulatory Environment on big transactions, and less equity market receptivity. Almost any deal announced last year, the stock and buying would go up. Jeff we have had a lot of deals blocked. Regulators seem like they are applying more scrutiny than previous years. Is that slowing down deals or pushing back really big deals . Gregg i think it is. Regulators have been more proactive than in the past. Whether specifically around taxes there was some specific tax registration in that pfizer allergan. So that was blocked. In game consolidation, and these transactions make sense. Reason, those transactions have regulatory overlap. Regulators have pushed harder and with raiders scrutiny. Greater scrutiny. It has made ceos and boards more reticent. Jeff do we have an environment look at deals and lawyers say strategically it will make sense but it will get locked blocked . Is that going on now . Aegg it has been going on long time. Antitrust lawyers are getting more conservative. The biggest risk is what will happen if the deal does not happen. Baker hughes and halliburton is an example. It was in limbo a long time. For some, there was a break up fee, but in reality, some companies are out 12 to 18 months with a lot of uncertainty. Alix those companies then put in cost cutting measures. So you put off things you do to compete. Scarlet is that a sign the m a cycle is topping out . It is not clear it is topping out, though it is less robust than last year. The factors of volatility are still there. You still have limited organic Growth Opportunities globally. You have companies with a lot of capacity on the balance sheet, either with cash or to borrow money at certain rates. Think people are more cautious than a year ago. Scarlet what do you look for to signal the coming end of an m a cycle . Gregg a more prolonged drop off in activity. A slowdown to note in the pipeline. We have not seen that. Dialogue between companies and ceos are there, but they are not pulling the trigger as fast as last year. Alix does it not matter why these companies are getting involved in m a . You are the Eternal Optimist on m a. You were talking about costcutting and Global Growth could you are seeing a shift. Gregg the trend we have seen has been a focus on top line growth. The area that has had the most activity yeartodate. We have seen 12 transactions for Cloud Computing since february. The shift, if you look at the transactions last year, they were cost driven. Semiconductor companies coming together to take out cost a what we have seen this year is higher growth. Software business getting acquired. That is a perceptible shift that companies are driving topline growth, which is a shift from the bottom line. Jeff why the shift from semiconductors to enterprise . Last year it was about big Semi Conductor deals. This year we have deals like salesforce and others that have been acquired. Why the switch . Buy growthability to drive growth more cheaply than last year. Software companies are now at five or six the ability to buy significant topline growth the way they have not seen in past years. Software, ig about look at our function to see where there has been action. Chemicals, pharmaceuticals, and Software Deal count volume have been the winners. Software in particular. Deal counts over 700 to the volume is at 36 billion versus chemicals, which is 79 billion in the deal count. Scarlet all of those deals, are those transformative or just incremental . Gregg i would say between incremental and opportunistic. We have not seen big transformatives in software. We have not seen anything larger than a billion dollars. And we have seen private equity software. Jeff pharmatech. One of the deals is this so no be situation. Gregg biotech will always be hot for m a. G pharma the egg bi the have infrastructure for the drug. Once the get the drug near or past approval from the fda, it makes more sense to plug them into a date big pharma company. If you are big, you can save money by getting someone else to do rmb r d . Bigg it is risky on the companies to rely on m a, but efficiency with best of the efficiency with developing these drugs, it is worth considering. Scarlet thinking about valeant, you wonder alix is that kind of model dead, with what happened to valeant . Gregg we do not know if it is company specific. Some of these companies that were high flyers and active wire acquirers. It was across the pharma landscape. It has driven the lack of receptivity in the market. Jeff what is not hot. How is oil and gas . Alix energy. Jeff we have not seen a log of activity there . Is in the Energy Market massive need of consolidation. The question is what form of that takes. Via bankruptcy . Or does it take place via regular m a. The hope a year or so ago would be regular m a. The fear this year was it would be bankruptcy. As the oil pressure covers, we are hedging our bets. Alix everyone is telling me fall. Do you think mna will happen in the fall . Gregg if you have stability in oil price through the fall, you will have m a. Gregg lemkau, cohead of m a at goldman sachs. And Jeff Mccracken stays with us. Examinep, we will chinas appetite for acquisition. More from gregg lemkau and Jeff Mccracken. Alix you are watching Bloomberg Markets deals report. U. S. M a activity has gone off to a slow start. But a bright spot is in china. Alix still with us, Jeff Mccracken and gregg lemkau. You recently traveled to china. When we spoke last, you said a china outbound m a was the hot theme. 20 ofchina m a is global volume, a massive pickup which was set up 10 four years. For years. 10 you had chinese clients showing up how to do it out bound mna. M a. They try to diversify and find assets. Jeff why do they want to buy into the u. S. And europe . Do they feel like this is a good time to use their currency, which may be overvalued . What is the rationale for these companies to look to the u. S. And europe . A focus to help diversify away and look for investments outside of china. It was a trend when they invested in the metal and Mining Industries in australia and africa. The focus now seems to be to the west from a diverse location standpoint. Brandere is a focus on and technology, and taking brands and technology and technology can be no how. And then try to monetize against the bigger market. Jeff are they getting support from chinese banks and the government . I assume chinese banks are aggressive and lending. Gregg a number of these are state owned enterprises. Whether it is stateowned or private owned, there is support from chinese banks and also international banks. There are wonder if comparisons between the chinese buying spree, or at least interest in buying u. S. Targets, versus what the japanese did in the 1980s. Do you see parallels . Gregg it is a parallel the house been drawn. A little more vanity driven, with the benefit of hindsight. This is more focused on core operating assets. There was a German Robotics Company that a chinese manufacturer bought. They wanted control of the business and technology so it could drive its half the ability profitability in western europe but also bring the information back. Last time that the chinese may not be sophisticated yet in its m a. We saw with the marriottstarwood deal, a chinese player came in the last minute. Then five days later im out. Scarlet and we still do not know how it would fit in with a strategy. People got the sense the Central Government was not happy with what they were doing. Company did ae smaller deal in canada, moore and their core space. It was on all the way up all the way around. Gregg these companies are still trying to do outbound m a. They have the cash in u. S. Bank get the, you can records were people for a lot of u. S. Company boards, they do not know who these companies are. They have to establish credibility. There have been stumbles, so the bar is higher. Is there a higher bar to clear for Chinese Companies interested in u. S. Companies given the political environment . Gregg seems to be. There is a challenge around Anything Technology oriented. There is a specific review above and beyond regulatory reviews in the u. S. Chineseions that need rail soria approval, there is a higher bar because there is a concern there is a state owned enterprise and that the state could block the deal. We have seen deposits put into as her that have helped mitigate the concern, put into escrow that have helped mitigate the concern. Plus d. C. 10 billion acquisitions into our country or europe . Gregg i do. There is a big appetite to do things. If there is strategic targets, theywill, after them will come after them. There anything that pboc can do to disrupt the outbound trend . Gregg uncertainty in china could drive it more outbound or slow things down. Jeff do they were do they prefer the u. S. Over europe . Alix or canada . Gregg not necessarily. The u. S. Equity markets are 40 of Global Equity markets. There are more targets and businesses, but there is no pacific desire to go to europe. And Chinese Companies have had a better chance of getting approved in europe. To see you. Thank you. Gregg lemkau, cohead of global m a at goldman sachs. Jeff mccracken, executive editor of m a for bloomberg news. Scarlet we are moments away from fed chair Janet Yellens comments in philadelphia. We will bring you those comments live. Scarlet we are awaiting comments from the fed chair janet yellen, of the World Affairs council in philadelphia. This is her last chance to offer insight to the fed thinking before a media blackout takes place. Lets take a preview lets get a preview from mike mckee. Mike he just came back from vacation. Relax. Thelet janet yellen and fed scheduled this speech late to give her flexibility if she wanted to signal anything, right . Mike it is paying off but in a different way than we thought last week. A are back to a 4 chance of rate increase before fed speak started pushing the idea. The question is did they really move out to december . Organist janet yellen try to walk everyone back. I suspect she will be dovish, because she wants that option and flex ability. Suppose there were outlying numbers in the main payrolls report. The first of july, we get june and it is way up you want to back on track. So she will probably not be too specific. Alix you spoke with the atlanta fed president. What did you clean glean . Still of the he is believe that you could do three rate increases this year. He favors two. But he thinks the july meeting could be live. We have five meetings, including the june meeting next week. There are enough meetings to conceivably, if the data justifies it, to go to three moves. But i am inclined to think in terms of two moves between now and the end of the year. It dependsat on how the economy performs. We are data dependent. He says that it is a problem for the markets. We do not know what the data will be assured we have to make a forecast decision. So it is hard for them to figure out where the fed is going. Scarlet did he shed light on the bed thinking of the main jobs report . Mike he said there could be , problems problems with issues the way the economy is moving in terms of it being harder to find workers. He did not think it signals the economy is slowing. Alix if you have june off the table, they have july, september, and december. They will not move to meetings backtoback. Mike they do have one in early november. The week before the election they will not move it at that one. I asked what the political danger is, going that far. He said what you would expect we will not let politics interfere. If we need to raise rates, we will do it. Maded the point has been that the fed is not tied to a political cycle in their rate raising schedule. So they could conceivably raise rates november 2. Question being what data do they need in june to july on the table . Been seeinge had until friday. The numbers were generally good in the runup to the jobs report. It is just the headline number. Underlying numbers were not bad in terms of hours worked or wages. So do we see payrolls were bound rebound . He seemed to suggest he was looking to that when i asked if july was a live meeting. I do not personally see a lot of costs to being patient to the july meeting. Fed is behind the the curve in the view of inflation. Myself,t speaking for but i think we can be watchful and see how things develop. This week, we really dont have any data to speak of. You get into the cost data, and for the end of the month, we will have the gdp numbers. Just before they meet, we get the Second Quarter gdp numbers. Someet we ask a have headlines out from janet yellen already, from the prepared remarks. She mentions brexit, china as well, and that Monetary Policy is not on a preset course. Alix she also says that she believes we are close to eliminating the labor market slack, though she said that the labor markets report for ing. Was disappoint at the end of the day, if we are approaching for employment and the flak is getting down, maybe this is as good as it will get. We only have the headlines, and they seem to be pointing more in a hawkish direction. The economic positives outweighing the negatives. The report was disappointing, but we are close to a limiting slack and gradual rate hikes are appropriate if conditions are met here the party line is leading positively. Scarlet the stance is quote unquote generally appropriate. Julie hyman is at the market does now and has been checking in on this. Julie i want to do a twoyear you can either look at it on the bloomberg, or, here you go. Im not seeing as dramatic of the spike as im seein