In the markets, it seems, right now, after we had some investor relief the last few days, but that is not holding up today pit we see the nasdaq leading those declines, down 1. 1 . The s p 500 also reversing four days of gains to lose 9 10 of a percent. The dow jones also down. 8 . The s p 500 is coming off of todays lows of 2081, still hanging in there, 2083, down 9 10 of 1 . If you look at the imap function on the bloomberg, you can see the sectors that are losing the most, and those include commodities and also financials. Financials falling one point 9 . Remember, they were some of those stocks that saw the best recovery from a 22month level in february. They are down again, and not surprisingly, energy down 2. 4 . Of course, crude now headed for its biggest fivemonth drop. We see a trade below 47 a barrel. 46. 71 for crude we heard last week from american shale crude. We heard last week from american shale drillers they added the most oil rigs of any week this year. Concerns of ample supply playing into the markets. Lets look at the biggest. Ercentage drags because of oil you have seen southwest energy down. Down more than 11 . Followed by Chesapeake Energy down more than 7 . Take a look at Government Bond yields, because, of course, that safehaven theme playing into the markets. 10year currently at 1. 36 , after falling to record lows, 50. Unprecedented 1. 37 7 we are talking about bond yields across the world, including australia, japan, germany, the u. K. , and so on. Vonnie a few other notable lows today. Shery we have to talk about apple we see news from Research Analyst first of all, citi saying they are cutting their estimates for apples Third Quarter and fourth quarter. We see the stock plunging 1. 1 , falling the most since june 24. It is the immediate aftermath of the u. K. Referendum. We see cities saying that apple tofacing more challenges due the vote for the u. K. To leave the european union, and now we see also apple suppliers, of course, falling, because Pacific Crest is now saying feedback from asia indicates iphone 7 units are expected to be down 15 to 20 compared to iphone 6ss when they were released. Apple has been taking a cautious view. Pacific crest has cut from a market wait to an overweight. It is losing 6 . The other suppliers also taking a hit. Vonnie pretty notable, those drops. Thank you, shery ahn. Lets check the headlines on the first word news. Rainy in a sense you has more. Y we are waiting for president obama and Hillary Clinton to speak at any moment charlotte, north coletta. This comes after the director of the fbi says the department will charges, but in a News Conference james comey strongly could assess the likely president ial nominee. although we did not find clear evidence that they intended to violate laws information,s five that classified information, there is evidence they were very careless. Was the did say there judgment that no reasonable prosecutor would bring a class against clinton. Reince priebus says the Obama Administration never plan to prosecute Hillary Clinton over email use, and the imagination is counting on her to deliver her there failed agenda for the third term. In london, theresa may has won the initial round of voting to lead the countrys conservative party. Andrea leadsom was second with 66. Michael gove tallied 48 votes for third, with Stephen Crabb with 34, and liam fox at 13. Fox has been illuminated for the cigarette eliminated for the second round. Oscar pistorius may return to jail tomorrow. Rescued is want him to be handed at least a 15year sentence. Global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. Vonnie bond yields touching historic lows and gold keeps on rising. Do . Tos an investor to brexit markets, we bring in michael holland, chairman of the holland company. Now, michael, whenever we see events of this nature although i am not sure you can compare this to anything in the past you say wait it out for the longterm, ride this out, but this is potentially 10year horizon event. Do you really not want to make some changes to your portfolio based on what just happened . Mr. Holland funny you should ask. I have more cash than i have had in years, and i have been building it up over the last several months. Not to say we are headed into a worldwide recession, a 10year bear market i have lived through most of those through both of those and it is not fun. Grudging growth in the u. S. And china. Europe is a wildcard. Interestthe germans to not have things going to duck soup. I think we will muddle through economically. The market is a different story. We talked about china many times in the past. Their markets have been just crushed. Evaluations are down. People who invest over there for us are not so sanguine as they used to be. Having said that, the prices are way down. Here in the u. S. , as you report every day, we are close to alltime highs, and we have a valuation that is substantially above where it has been since 2008. So, that is not a great time to take a lot of risk. Isnt the rally that we are seeing here in the u. S. Whether you are talking about stocks or bonds isnt that partially a function of only so many places to put your money where you can expect any kind of return in this environment . Mr. Holland sherk. Of course sure. Of course. For the stock market the answer is a definitive, loud, yes. For the bond market, you have had since 2008, governments around the was manipulated the markets. It is their own word, not mine. You have artificial prices. Some people are beginning to say the cause of this has been a contributor to this slowing down of peoples risktaken around the world, rather than having people take more risk, which was their goal. So, if that is the case, maybe were getting to intrastate levels, some people would say, Interest Rates levels that some people would say makes sense. To me, it makes no sense. I was reading on bloomberg this morning over one three of government Government Bonds 36 are trading at negative yields. If you get the answer right, i have a dollar in my pocket 96 of all Government Bonds yield less than what . Vonnie 1. 25 . 2 . Holland the stocks you mentioned before all yield more than 2 , and these are copies that have better Balance Sheet than the government. Julie what im saying is doesnt that mean there will be underlying demand for u. S. Stocks, particularly highdividend yielding u. S. Docs, even if there is a decoupling and the economy goes south in some way . Doesnt that, at the very least, provide a floor for some of these stocks . Mr. Holland the quick answer is yes, and in a severe bear market, should we have 1 i have always been ready for anything. I do think it is a high probability. They would go down far less than other things. If you made the case for some company that has johnson johnson, microsoft, exxon mobil go through the list of 2 and threepercent 3 yield yielders, they will increase their dividend overtime. You have deflation and a large multiple. These are low multiples right now. Vonnie we will talk more about this in a moment, but briefly, how many assumptions or how much of your worldview changed once britain decided to exit . Cobbe there are so many uncertainties, but im a for example, it seems like the fed has been put off. Em countries have seen a great boost, at least for the moment. Overall, are all of those assumptions different for you now . Mr. Holland not all different, no. It was something of a surprise because we were told by the experts it would not happen this way. David cameron certainly do not expect it to happen this way. Having said that, we have talked about allwhether portfolios could i like to sleep well for myself and for my clients. There are possibilities things could happen at either end, and in the middle, where is the value . Looking at it that way, what i expect to happen in the eurozone is something that milton friedman, the nobel winning prize economist, at the founding and 1990 1999 the eurozone said at the first sign of crisis this union will disappear, disintegrate, because you cannot have a Monetary Union without a political union, and we are beginning to see some of that happening. I think it has been a possibility from the outset because it has been a grand experiment. It looks like it is maybe began to fail. Vonnie britain has never fully mr. Holland they were never fully unit. France,people like scotland, Northern Ireland people are talking about getting away from this, people do not like the way the world is today. Julie i guess he did not predict how long it might take it we will keep you here, mike holland, for the moment. We will be right back with more of this discussion, but we do have some breaking news in the meantime. Stephen crabb already withdrawing from the u. K. Tory leadership conference, saying he is supporting theresa may for tory leadership. This is after we saw liam fox job out because he did not get enough votes in the first round of votes to determine who might be the new Prime Minister of the u. K. Vonnie this is fascinating, because this means thursdays vote might decided all can we had five, now we have three, and a many to eliminate one more. No small, we could get a decision sooner than later. The firsto awaiting campaign. Hillary clinton and president obama. Youre looking at live pictures. This. This is bloomberg. This is Bloomberg Markets. I am vonnie quinn. Julie and i am julie hyman. I want to bring back in michael holland, chairman of holland and company. We did not get to this quite yet, but you have been looking at valuations in the u. S. Market. You are seeing them go to above the historical norm for sure. Is that, alone, a reason to sell, or how does valuation factor into your investing equation . Mr. Holland it is only one input, but it is a very important input. If you think growth is going to be accelerating in the future you would say look at a stock like amazon. How can you justify owning amazon . The only way you can justify it is you believe you could have continued growth in revenues and someday growth in earnings. In the case of markets around the world, i would look at china, for example. They are going to have some growth. It wont be easy, but it might be 3 , 5 growth. The companies in our portfolio out there are doing just about that, but they have the lowest valuation may have had in quite some time. When you look at the u. S. Market, which is 20 higher on a pe basis than it was a year ago, and bloomberg is reporting that next week when we start the earnings season, earnings will be down by 1 overall, that is not a great recipe when you have near historically high valuations and not a good earnings outlook. What are you selling in terms of u. S. Docs, or are you just holding on to what you have . Mr. Holland the stocks i have, as we were talking about in the last segment, we have some earnings that could keep them from going down less should we had a major decline, but on the one hand, it is across the board. I dont have to own a rethink that i would sell a little bit of everything because i like what i have. Julie speaking of what you have, lets talk about your picks you mention a couple of them a few moments ago. I made a chart of their forward pes because i was intrigued by your talk about forward valuation. These are mikes picks. The pink line here at the top is exxon mobil. We have seen valuation, at least on an estimated pe basis go higher. We have microsoft as the white line. Chubb is the aqua line. Jpmorgan, all the way down there is the, sort of, purple line. Mr. Holland with the lowest multiple. Julie we have seen a languishing of bank multiples. The one that stands out to me is exxon mobil, as you would imagine. The dividend yield is relatively high, yes, but it is trading at a premium to the market and its peers, for that matter. Mr. Holland so how did i own it why would i ever owned it . Julie that does my job for me, mike. Mr. Holland it is one of the best managed copies in the world. I have been them with as an investor for many years. I have found that in times like this when they are under pressure because of the commodities crisis and what is going on in their industry they find other ways to pay upward. They have a 50year horizon. They think of 50. As a property, business, do i want to be an owner when the stock prices under pressure and im getting paid a decent yield . Yes. It does not mean when you talk about the next few quarters these are stocks i own. I have no idea what they will do the next three or four quarters, but i know i want to own them at these prices. On the listrgan is there, and you will continue to hold onto jpmorgan. What is your impression of what banks will do with their headquarters in london will they move, find some way to keep everybody happy . Mr. Holland early indications are among the things they have , will at, dublin, vonnie be a beneficiary. The crazy cities that are being talked about i think they would have trouble attracting a lot of the professionals from london or dublin to go to these other cities. So, i think when we look to europe, i think there will continue to be london and dublin. Vonnie you really think that article 50 will be triggered and there will be brexit . Mr. Holland that is a great question to we dont know. Greece had a referendum and they did not trigger anything. Some people are saying maybe they will not invoke article 50, let it drag on forever as greece has done. I presume that is not the case. I think David Cameron set the tone. I think they will. It is possible they want it i have no crystal ball that tells me any wont. I have no crystal ball. I am prepared for a lot of these things to happen. I think article 50, probably is a good that that it is going to happen. Julie whether it happens not, we have seen Economic Growth in europe slow down, and these companies that you are talking about on many them arent many of them 1 5 of the revenue is coming from europe. How much of a problem is that . Mr. Holland it is going to be a problem and if they do to growth in other parts of the world to offset it, it is going to slow. The mindset for investors today is growth is slowing everywhere, and we are looking at 5 earnings decline in the coming quarter. It is not as if we have people excited about the future. It is the opposite. E vonnie current, mike holland, thank you. Still had, the options insight looking at a trade involving apple ahead of earnings at the end of the month. This is bloomberg. This is Bloomberg Markets. I am vonnie quinn. Julie i am julie hyman. It is time for options inside. Shery ahn, what do you have . Shery it is my turn. Joining me is kevin kelly, the chief Investment Officer at recon capital. Thank you so much for coming in. With a question today is the volatility index, the vicks. It tumbled, what, 40 3 last week, and today we see doubledigit gains. What is happening here . Mr. Kelly another unprecedented thing happened and we have seen that over the last year. The largest week over week decline ever. It went from 25 to below 15 at about 14, and that is in a heightened environment where brexit was happening. One of the reasons we can see that is monetary policies, right . You had everyone across the ,oard from carney to the ecb out and say they are going to try to stabilize financial markets. That is what happened in the runup from 2012 to 2015. We saw financial that volatility compressed down and vix trade around the 14 level. Shery what do we see when it comes to your trade, because you are playing off a trade you made earlier. Yeah, back on may 23, i was speaking with julie a trade on apple p are we bought the stock and sold the september 100 call against it for about four dollars. The great thing is you can buy it back today for about 1. 50. You can make 2. 50. Keep the stock, stay in september, and what you want to do is sell the 90 put. You will get 2. 20 for that. It has trade that says not gone anywhere, but we want 7he runup going into the new 1 relief. Shery 10 by on a down day when it is down 4 . You mentioned a problem with apple in china when it comes to the culture there with encrypted phones. Explain that to us, especially when shares sales there of the iphone 7 might not be as high as some people anticipated before. Mr. Kelly apple has hinged the next phase of growth in china you saw tim cook say that two Conference Calls ago, where he expects the middle class to adapt, but the problem is they are encrypted devices, and the Chinese Government is supportive of that is a big issue. We see that play out with the copyright and trademark infringements, even on the latest model that they lost. Shery the fun with apple what else can they sell . Thank you for js. Investment, chief officer at recon partners. Vonnie shery ahn, thank you. Still ahead, has brexit put the nail in the coffin for a 2016 rate increase, or is one still likely in september . Joinsm lee of citi Bloomberg Markets next. A look at the majors. Julie all three major averages hovering around the low of the session. Volume on the s p today, about 6 below the 20day average. \] 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. Matt from bloomberg world headquarters, youre watching Bloomberg Markets. President obama making his First Campaign appearance for Hillary Clinton today in charlotte north carolina. That event was canceled due to the orlando shootings. You can watch the event on your bloomberg. Go and you can watch that event. Lets start with a check of the headlines on the bloomberg first word news this afternoon. The fbi has recommended no charges be filed against Hillary Clinton over her use of a , that hermail server aides were extremely careless but there was no