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tv   Bloomberg Markets  Bloomberg  June 20, 2016 12:00pm-2:01pm EDT

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markets. from bloomberg world headquarters, good morning. alix: here is what we're watching at this hour. a strong start to the trading week as global stocks soared and sterling surge after we control suggested the u.k. u.k. is more likely to remain in the european union. scarlet: donald trump has severed ties with his campaign manager. a divisive figure on the trail as he tries to recover from weeks of falling polls. alix: and m&a lawyer joins us on my big companies are actively praying on their debit competitors. scarlet: let's go over to the markets desk julie hyman has been watching the action. julie: what's interesting, as we
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look at the brexit haunts, -- odds, what groups are affected by it. take a look, we have the major averages of five better than 1% off the highs of the session but definitely reacting to this risk on sentiment that is due to come at least in part to what is unfolding in the united kingdom. if you look at the gains we are seeing, a pretty broad-based rally. utilities is the only group down. consumer discretionary, industrials, financials leading the gains with the cyclical groups leading the gains in today's session. leading the s&p to its best gains the best one-day gain in three weeks time. automakers is a big part of the rally today. this appears to be what is going on in the u.k. this group is very currency sensitive. because of all the volatility
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that has been attached to the possibility of brexit, that has not been good for these guys. bouncing back our shares of tesla, rising today. rbc wrote today it is more confident in their ability to ramp up production after a visit to its production facility in california. auts companies are also rising. there is an auto-parts retailer which carl icahn owns a partial portion and has made an offer to get full ownership. that is feeding into ownershipit. alix: early leaders are the banks, that was my happens when you have this risk on day. julie: in the u.s., we have seen banks, of their highs. the s&p 500 banks index taking a
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leg lower. this is something we have been seeing in recent days where the u.s. is so reacted to what is going on in the u.k. then when the european markets close, we see a fading of that. interestingly in the banks, it is the regional that are now leading the gains. that is not what you would think. you would think the global banks are reacting more to what is going on. some of the current later is within the bank index. scarlet: julie hyman, thank you. alix: let's check in on the first word news. mark crumpton has more. mark: republicans are expected to vote to block two democratic proposals to expand background checks and then gun sales to suspected terrorists. they say the amendment from the rights of gun owners and are offering their own alternative which democrats are expected to block. the votes come after last week's
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filibuster led by democratic senator and other allies. the supreme court has once again decided to stay out of the growing debate over the also weapons ban. justices refused to question also rifle bans in new york and connecticut. they left intact federal or peels court ruling that said the bill complies with the constitutional right to bear arms. new york and connecticut are among seven states that outlawed weapons similar to the one used by omar mateen in the massacre that killed 49 people in orlando, florida. hillary clinton could lose millions in contributions if she selects elizabeth warren as a running mate. that is according to a report in politico citing a dozen interviews with democratic donors on wall street. there is bad blood between warming and industry between her attacks on the financial services industry. a disturbing report from the united nations.
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65 million people were displaced last year, a postwar record. continued conflicts and persecution fueled a 10 percent increase in the total number of refugees and internally displaced people in 2015. global displacement has roughly doubled since 1997 and risen by 50% since 2011 when the syrian civil war began. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. back to you. scarlet: it is time for the bloomberg markets deals report. every monday, we deal in on the m&a business and insight from the big players behind the deals. today we are focusing on how the u.k. referendum is impacting m&a activity. alix: we want to bring in jeff mccracken. joining us is also frank aquilla . he is engaged in several high-profile deals.
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frank, what is happening to deals in the u.k. with the referendum around the owner? >> i think it is affecting deals beyond the u.k.. the m&a market really dislikes any degree of uncertainty. this is huge uncertainty. it is affecting the forex market, equity prices and it is not just affecting equity prices in the u.k.. it is affecting prices all around europe and the united states and elsewhere. scarlet: if you come inside the bloomberg, this is the function where you can see the drop off in volume and deal count. obviously there is a big decline from the end of last year.
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we are not just dealing with brexit. we are dealing with uncertainty with what the federal reserve does as well. alix: is this a longer pause? >> in general, the chart shows it has slowed in the last couple of months. we have talked about this a couple of times. last year, it seemed like there were one or $210 billion deals, and that has hit a wall. i would expect later in the summer or fall we will see more deals, whether it is technology or energy. a lot of people are waiting for the brexit. then we will get the u.s. election, which may impact emanate. alix: we have seen a lot of volatility when it comes to sterling. i have a great chart. this comes to us from that winkler. this is the implied volatility in one month and 12 months. the blue line is 12 months, the white line -- one month, the white line is 12 months. that seems to imply that investors are freaked out one
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month from now but much more stable 12 months away. jeff: the short-term change which is more fed by traders, is much greater volatility. longer-term, i think there will be much more stability. scarlet: are the comparisons unfairly difficult? 2015 saw a lot of big takeovers royal dutch shell, bge. was 2015 an anomaly and how big it was and 2016 is more of a return to normal volume? % thisjeff: it is not like all the really big deals have died. it is just that we have gotten away from that 18-month run from 2014 until the end of last year where we had $50 billion deals happening every week. alix: what part of that is due
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to currency? frank: that certainly affect cross-border deals. i don't take it affects u.s. domestic deals. there are other factors affecting u.s. domestic transactions. scarlet: with the pound falling in value this week, that means they are cheaper. to what extent are european, asian multinationals taking a fresh look, getting ready to perhaps make bids once this brexit referendum is passed us. frank: often, you will borrow in local currency, so there is that actor. one of the big reasons you want to buy a u.k. company is you have a company that is very much like a u.s. company but is a gateway into europe. often times, it is a gateway into emerging markets that u.s. companies don't often have. jeff: is there any particular industry where people are going
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after in the u.k., the u.s.? what are the priorities? frank: consumer products certainly in the u.k.. a lot of consumer product companies in the u.k.. also health care is another big part of the uk's economy. scarlet: jeff mccracken and frank aquilla, thank you for being with us. we have more to talk about including what is called forced friendly's. ♪
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alix: you are watching bloomberg markets. if there is one thing we have learned in the m&a business keeping up with the competition requires bold action. consider honeywell's pursuit of united technologies. most recent example is buyer's $62 million bid for monsanto. these are known as forced friendly's. let's bring back jeff mccracken and frank aquila. jeff: you are working on bayer -monsanto, so you will be reluctant to speak about that.
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is it that day companies are not concerned there is no growth out there? what is pushing these company to do these proactive deals and convincing the other side to do the deal with them? frank: essentially, when you're in a low growth environment like we are, where gdp growth will be from half a percent to 2%, the only way you are going to get growth is by making an acquisition. particularly after the last two years where companies have cut a lot of waste and fat the way to bring money to the bottom line is by adding revenue from another company. alix: what is the distinction between forced friendly's and outright takeovers? frank: you really do not acquire a company in a hostile may put your hostile bid or unsolicited bid out there, but
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ultimately you end up with a friendly deal. that is what happens in almost all of these situations. there is a lot of back-and-forth, pressure put on the board. then you reach a friendly transaction. scarlet: does it stay friendly do they have to make it public to get the other side to move? frank: in a lot of these situations, it never goes public, that is it is unsolicited. most of the transactions that i have worked on where it is unsolicited, we have gone to the other side, made a proposal. jeff and his colleagues have not picked up on it, so it stayed private. and ultimately, it has been a negotiated transaction. jeff: some of the deals that alix was noting earlier, we got lucky enough to disclose what was going on. does that help to deal get done does it end up being a negative
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that make the deal less likely? frank: some weeks it is harmful. potential buyers will move away from the deal because they don't want to be seen as doing something unsolicited. other times, leaks are helpful because they move the stock into the hands of arbs and hedge funds, putting pressure on the board. it can cut both ways. scarlet: can you give us an example in which they were henan -- friendly and helpful and moved along? frank: this goes back a number of years, but when my client in bev was making its bid for anheuser-busch, the leak that came through those probably -- in retrospect at the time it was a bit of a disaster -- but in retrospect it was probably pretty helpful. alix: is the bayer-monsanto
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thing going to happen? frank: we think so. alix: monsanto has been looking elsewhere. can you give us more explanation on why the deal makes sense? frank: i really cannot because we are representing bayer in that transaction. we are very optimistic it will happen. jeff: we talked about pharma, consumer products. you were in one of the largest consumer product deals with heinz and craft. how does that affect the rest of the consumer products space? how does that deal push others to do big deals? frank: that isn't adjusting sector because the retailers in that sector are changing dramatically. supermarkets, at one point put out of business the mom-and-pop stores. themselves, they are being pressured by walmart, sam's
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club, costco, whatever. so, in turn, they will be putting more pressure on their suppliers, the pn&g's of the world to cut their cost. the morning bowl -- the more nimble consumer goods packaged companies are the ones that are going to drive. that means that you will have many more transactions in that space. jeff: you expect somebody like campbells or kellogg's to become a target, will be they the ones to roll of other smaller food companies? frank: these companies will have to decide whether or not -- they will realize status quo is not sustainable and they will decide, am i going to be a target or consolidate or. some of them will decidedly want to roll of the industry and they
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may be too late and wind up being a target. alix: this is reminiscent of what happened on monday when microsoft went to buy linkedin. the second that broke was that it would ignite other tech markets because of the guys would have to get in and do it. scarlet: twitter shares shot up shortly after. when you talk about suppliers consolidating. does that put pressure on distributors to make a deal strategically as well? frank: i think it affects the whole chain, if you will. certainly, the folks on the logistics end of it probably are going to be affected as well. jeff: when a big deal happens, how does that impact the board level? does it come up at the next meeting did you see so and so do this, where they already looking at deals before? frank: clearly, it depends. the best boards should have been out ahead of it, talking about these issues and potential
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transactions well before they hear about a transaction from a competitor. there are some boards where it is a wake-up call. the next few board meetings, that is all they focus on. on the other hand, there are boards that say, that is them we are different, we have a few iconic products. we are going to go it alone. those are the ones that will not win in the end. alix: in the next six to 12 months, where is all the action going to be? jeff: i would go with the tech space. the conversations we are having with people on the west coast, i think google and facebook, i think that is where we will see something. alix: the big guys mauling debt buying the smaller guys in silicon valley. jeff: i would say tech and health care. frank: those are sectors where they are always reinventing themselves. there will always be new tech companies, new health care companies.
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they are products of research and development. the big guys become out of date relatively quickly, they have to buy new technologies. it is true in pharma, biotech true in technology. those are the ones you will see continuous consolidation in. alix: very interesting, guys. thank you, frank aquila, jeff mccracken. scarlet: up next our mystery stock of the day. today is a slam dunk as another one of its stars dropped the ball. alix: it is never going to happen, i am out. it is on you. ♪
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alix: we have breaking news on walmart. julie hyman has more. julie: according to a report in
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"the wall street journal" walmart will be selling part of its china business to it is in discussions at this point, but it looks like it could sell 5% -- excuse me, walmart would own 5% of jd sales -- shares after the sale. jd was up on the day but took a like higher after the report. there was a report out on saturday from a business news website in china that jd had reached the final stages of negotiation to buy a business from walmart which was a website it owned in china. unclear if this is the same business, but we will continue to track it. walmart shares, in the meantime, rising on the day along with the overall rally we have seen in the market.
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up 1.5%. not seeing the same magnitude of gains. it will be interesting once jd opens backup and we get details on what exactly does the deal is. scarlet: in the meantime, as we promised, our mystery stock needs to be revealed. alix has already bound up. today's mystery pic is a slamdunk, even as another one of its big stars dropped the ball. obviously, something to do with sports. i want to say nike or under armour. julie: who lost last night? steph curry is sponsored by under armour. he lost, but the stock is up today because of a callout. the stock is down 30% year to date. it is higher today. -- 13% year to date. pricing will stabilize in the fourth quarter.
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under armour, like other brands, have been pressured by the bankruptcy filing and liquidation from sports authority. that is putting pressure on this retailer. the stock is up 3% on this call saying better pricing will lead to improved margins. margins and under armour are still pretty high but have been trending lower. these are the trailing 12-month margins. this is a adidas, nike. this downward trajectory is one of the things that have pushed shares lower this year. scarlet: thank you, julie hyman. alix: the gloves are off. what kind of negative advertising you can expect from hillary clinton and donald trump as they battle for the white house. ♪
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okay, ready? whoa! [ explosion ] nothing should get in the way of the things you love. ♪ ♪
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get america's fastest internet. only from xfinity. get ready for the rio olympic games by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you? x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. alix: live from bloomberg world headquarters in new york, i am alix steel. scarlet: i am scarlet fu. this is bloomberg markets. let's begin with the headlines.
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mark crumpton has more from the newsroom. mark c.: thank you. vice president biden plans to tear into the donald trump's views on foreign policy. he speaks today to the center for new american security in washington. the vice president is expected to deliver a point by point response to his ideas. mr. trump suggested on cbs face the nation that profiling muslims in america may be necessary. there has been a shakeup at donald trump's campaign. his manager is out. campaign staffers have said there was growing tension between him and the campaign chairman. nbc reports that man aiport will take over as campaign manager. prosecutors investigated lewandowski but decided to not press charges.
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he remains chairman of the state convention of delegates. let's get more on this story. i am joined in washington with kevin of bloomberg news. is this a bombshell or something that a lot of people saw coming because of the tension we spoke about? >> this comes as trump's campaign is looking to reboot after a series of missteps over the past couple of days, to be quite candid with you. i just spoke with two senior officials who told me this is part of a broader effort to restart dry. earlier this morning, there was a top campaign meeting with members of donald trump's family as well as other senior officials where they gathered to discuss how to pivot from a primary type of campaign strategy to a general election. lewandowski has been with the campaign since the very beginning but clearly, he was a divisive and polarizing figure
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not only with members of the media but rnc officials, campaign officials, trumps own family members, and of course potential donors. alix:mark c.: this move, is it something that campaign was pushed into doing, something mr. trump decided himself? >> obviously, donald trump is going to make all final decisions. i can tell you that the sources i happens begin with today as well as the past several days has been sick to me that some type of shakeup would be in that . of course, donald trump has to abide several times -- before he has to take on hillary clinton. we had a pull out last week
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showing come down to hillary clinton 12 percentage points. he needs to reboot, pivot back and get a strategy together. he has been working more closely with the rnc. they have not had the best relationship with corey lewandowski. this is a campaign that is hungry for a relaunch. it will be interesting to see if the new cycle is enough to give them that fresh start. mark c.: talk to me about mr. maniport. is this something that they see as smoothing over relations in the media and the campaign. there was that big dustup. is he the type of person to move into general election mode? >> he is a veteran political strategists and has been. this is something that people truly trust. someone who is willing to confront donald trump when he believes he is wrong on political strategy.
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that is a very different strategy than corey lewandowski deployed. he had the motto, let trump the trump. i think they are signaling to me that they will be announcing new hires in the coming days. donald trump will make his first foreign national visits in scotland his first traveling trip abroad. tomorrow, he hosts an evangelical conference with dr. ben carson. a lot of developments. mark c.: was this donald trump telling corey lewandowski that he had to leave or was he falling on his sword for the campaign? >> this was donald trump telling corey lewandowski he had to leave, facing pressure from his closest advisers to exit the campaign. mark c.: as always, thank you so much. >> thank you.
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global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. back to you. scarlet: thank you so much. let's stay on politics. the heat is getting turned up on both sides of the campaign trail as trump and clinton turned their attention to the election. they are poised to unleash full-fledged ad campaigns to dismantle each other. alix: how negative will it get? how ugly would be when they go negative? >> i think if it were a movie, "there will be blood." clinton's campaign has already reserved $20 million in tv ads and the super pac already has $100 million in the books already. the question is whether donald trump will run ads as well. scarlet: hillary clinton bernie
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sanders did not go the negative route. they were fairly respectful of each other. why was that? >> really unprecedented especially in a presidential campaign. hillary clinton did not want to be perceived as attacking bernie sanders. he ran a campaign that would insinuate or looted things saving his toughest jobs for speeches and interviews. alix: good point. on the flipside the presidential nominee race is very different. it seems like every candidate that went out and tried to attack trump got eaten. is that dynamic something we will see when it is clinton versus trump? >> we are already saying it to some extent when the super pac back a hillary clinton said they would spend $100 million in video ads. he released a cheaply made video
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on instagram with a young bill clinton smoking a cigar -- a pretty tough ad, something you don't typically see on tv. scarlet: but the idea of the ad is nothing new. it is hard for donald trump or anyone to come up with an ad that would hate hillary clinton in a light that we are not familiar with. perhaps, is that an advantage to hillary clinton or disadvantage? we already know her dirty laundry. >> the republicans would argue that since she weathered a primary that did not to find her, they have an opportunity to really hit the hard points i can't remind the american public perhaps what they do not like about her. alix: does that mean when they go negative it would impact hillary clinton more than donald trump? >> that is the question we are waiting to see. republicans would argue that donald trump, there is more room to defined him since he does not
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have a political career, he is still undefined. scarlet: give us a sense of how he has changed his tone in negative political ads. as you mentioned, he really saved his jobs for the debate. his ads, when he does run them, tend to be a little more low-budget instagram, instead of traditional television ads. >> the level of free media he has been able to obtain -- more than $3 million twice as much as what hillary clinton has received. he can go out and get free attention and level his attacks whereas clinton or others have had to pay for that. it is a different dynamic. alix: can we expect ads that have more to do with bill clinton and hillary clinton's relationship or more ads focused on her actual policies? >> i think donald trump has
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already signaled that the past scandals of the clinton family will be fair game this time around. i think the instagram ad is an example of more to come. alix: what is the voter's ability to stomach those ads for some things that happened 15 years ago? >> i think that will be the big question. if you do polling of people they are essentially tired of the negative ads. the reason that people do these ads are they are somewhat effective in turning people off a certain candidate. they help to define the narrative going into november. alix: thank you very much. you can read all about it in a business week article you do not want to miss. there you go. i saw the kids getting made up in the makeup room. scarlet: the kids are cute.
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we have breaking news, an update on what we were telling you about earlier. and walmart have confirmed a report that they will be teaming up in alliance across china. j.d., will take control. their shares were halted in trading. just before halting, they got a pop. as for walmart, their shares had not moved that much. they were sliding a little earlier. they continue to move in that direction. alix: the ceo of walmart says they are excited about teaming up and the potential that this creates for customers in china and the need to grow is huge. coming up on bloomberg markets it is the most popular sporting
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event in the world, and also one that has been filled with corruption. how fierce competition to host the world cup could be tainting it. scarlet: we call it soccer. for non-americans, football. ♪
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scarlet: you are watching bloomberg. alix: i am alix steel. this is your global business report. scarlet: nigeria's currency conundrum. we take a look into its drop. alix: apple sets its sights on india. what it could mean for the tech giant. scarlet: and, five importance plan to sell part of the crown jewels.
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we start in the u.s.. the fec has dealt a victory to the idx, clearing its way to create a new stock market. >> we do not pay rebates. we are not paying people to send us orders, which means we have to earn those orders a different way. part of that is trying to understand the execution quality on ie x. the process has been helpful. we've had better execution quality. i think it is time for that message to set in. it will take some time, but we are confident we can become one of the largest markets. alix: nigeria's currency plummeted for the first time in d oil-producing nation. there was a massive shortage of
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currency exchange. apple may be closer to opening stores in india. they eased policies on buying components locally. they can have a grace period between three to eight years. no word yet on whether the qualify. fiber put in is deciding on stakes in selling crown jewels to india. it is estimated a cell could bring 11 billion dollars. in japan, exports have fallen for the eighth year in a row. shipments all slums. the slowdown in the global economy and the floor yet have made the products less attractive overseas. scarlet: it is time now for our bloomberg could take.
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no sporting event is more popular than the world cup. almost half of humanity, more than 3.2 billion people tuned into the 2014 competition in brazil. since it is only held once every four years, countries compete off the field for hosting rights. here's the situation. a corruption scandal -- fifa suspended its president over corruption. then, hotel was rated where senior officials were arrested and charged in parts of an investigation which they called rampant corruption in the sport. the investigation eventually cleared. here is the background.
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since 1930 there have been disputes on where to hold the world cup. recent history shows there is little if any financial benefit to hosting the world cup. here's the argument. spreading it around the globe drives development. people said it pushed the tournament into new lands to give countries the chance to showcase their culture. countries like brazil might spend the funds in other ways. while fifa says they want to change the plants, critics say they have not gone far enough. that is your global business report. for more stories, visit alix: coming up, facebook shareholders gather today for the annual meeting. we will tell you what to expect. plus, shares are still halted.
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scarlet: you're looking at a live shot of the cleveland cavaliers arriving in cleveland. of course, they beat the war years in game seven of the nba finals. of course, they were doing it in california. this is the first trip home since lebron james led the team to the first championship ever. the cleveland cavaliers, the reigning champions, arriving home. alix: now, let's go to abigail doolittle with the latest on tech. abigail: we do have a nice rally here, the nasdaq up 1.5%. as for the nasdaq 100 expedia -- as for, shares are
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halted. going into the halts, of short up sharply. now, halted on news that and walmart will join in alliance across china. they say they will open a flagship store in will take particular in particular platform assets. walmart will take a stake in the class a shares. that will be perceived as a positive. we will watch as the day goes on. another top today ebay, having their best in two months.
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50 percent of revenue came outside of the u.s.. we are probably seeing a higher data reaction. a former paypal executive will be helping to run payments and risks. some believe that she could really help enhance the platform. as for another top performer, symantec up on an upgrade. and analyst saying that the glucose acquisition has mitigated concerns and should help to drive favorable near-term financial optics, also known as numbers going in the right direction. scarlet: thank you so much. at the guild doolittle reporting live from the nasdaq. alix: facebook is holding their annual shareholders meeting later today. >> this is very consistent, or very similar to what google did about 6-7 years ago.
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what they did is give extra economic and voting rights to the majority shareholders today which is essentially mark zuckerberg. what this allows him to do is give away some controls without changing voting control. as he does his presentations overtime, he will retain the b shares. >> this is a time when shareholders at facebook are happy. shareholders have done well. in general, people don't like these sorts of structures. have any institutions come forward to raise questions? >> i'm sure they have. we have not seen anything specific. if you wanted to be a one vote a to raise one share, one vote shareholder, you should have never gotten involved in
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facebook in the first place. at the margin, this is an evening night rather than a day night change, giving slightly more control over the company. you have always had dual class structures in the stock. >> how much of the proposed change is driven by the zuckerberg's plans for their fortune? >> i think this is almost entirely treason by that. he wants to give his stock away overtime but maintain control of the company. he is very transparent in saying that. as for shareholders, that is what they are getting the chance to vote on today. it is really do think he has done a good job, should he have extra rights in the future, i think most will agree with that. they already agreed when they bought the stock in the first place. this is just an affirmation of that. >> what are the other issues likely to arise at the
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shareholder meeting today? >> one is all of the border of directors are of four and will. there may be some controversy around peter teele. it seems likely that almost all will get extended. the other one that could come up is this company has laid out a fair amount of cash and equity for its acquisitions. what'ssap oculusp and there will be questions on the return of some of those investments. they put out 20 billion dollars-20 $5 billion for these equityies. when do we see the returns on that. that issue will be increasingly important each year at the shareholder meetings. >> is net the nature of the way they run the company to lay out a timeline, or do they just say,
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trust us? >> they have been very thoughtful about laying out guidelines and timelines. that's not meet however that we will see the results in those prescribed timelines. these will take many years to play out. messaging was one of the big focused areas of the developer conference two years ago and also the conference held one year and two months ago. so far, there is very little traction. this will take years to play out. investors overtime will want to see the returns. that was a lot of cash they put out for whatsapp. that was bloomberg earlier today. alix: we will be right back.
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aí v >> it is 1 p.m. in new york 6 p.m. in london, and 1:00 a.m. in hong kong. >> welcome to "bloomberg markets."
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alix:scarlet: from bloomberg world headquarters in new york good afternoon. i am scarlet fu. alix: i am alix steel. here are your headlines. polls suggest that the possibility of >> it are slipping. scarlet: the reserve bank of india's governor announces a surprising departure after one term. alix: and an interview you will hear first on bloomberg. scarlet: first though, we will head over to the markets desk where julie hyman is tracking all of the moves. we are looking at gains of more than 1% in the s&p and nasdaq. julie: as we see, the briggs it pulling the ladies alluded to --
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the brexit polling the latest alluded to spreads over to the u.s. with a broad array of different groups benefiting from that. i have kept an ion volume today. volume for the s&p 500 overall running six -- six of -- 6% above. utilities and telecommunications have been trading lower as we have seen bond yields higher. the other groups, a mixed bag. seeing a boost of 30% each. we are seeing a push and oil going up and gold going lower, but the commodity index overall up about 7/10 of 1%. that is helping commodities produce and we are looking at oil producers in particular doing well today. marathon and murphy. freeport-mcmoran as well -- with
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gold pulling back, although it seems to be rising with the commodities gains. it's not necessarily stuff you would expect, right? we have been watching financials. analysts at wells fargo say that cruise lines in particular have been sort of the most reactive to what is going on in the u.k.. royal caribbean, carnival, and norwegian, perhaps the cause of talk of how it would affect european demand. and the currency effect. also online travel companies some of which have substantial operations in europe have a big boost. and airlines -- even though a lot of u.s. airlines at this point have mostly domestic operations, but enough
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international they are being affected. ual american, and delta all up. scarlet: julie hyman, thank you so much. let's check in on the bloomberg first word news. mark crumpton has more. mark: the fbi says that orlando shooter omar mateen was radicalized domestically. he told a hostage negotiator that the united states needed to stop bombing iraqi in syria. and three high-ranking new york police officials named in a corruption investigation. another person was also arrested. >> we allege two separate schemes involving the bribery of officers sworn to uphold the rule of law. in one, private citizens we allege got well over $100,000
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for all manner of official release actions and in the other, officers subverted public safety by putting hard to get gun licenses potentially up for sale. mark: a businessman who contribute to new york mayor de blasio's election campaign has already pleaded guilty. in venezuela, people are getting so desperate for food, they are ransacking stores. at least five people have been killed. venezuela is not able to produce enough food on its own and it cannot afford imports. tropical storm danielle has formed of mexico from eastern coast. the national hurricane center says maximum sustained winds have increased with slight strengthening forecast before the storm makes landfall. it is expected to have rainfall totals of six inches to 10
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inches, with isolated areas getting as much as 15 inches over higher terrain in several mexican states. global news 24 hours a day from our more than 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. back to you. scarlet: thanks so much, mark. the indian central bank governor shocks when he announced his exit plan on saturday. for more on what this means for india's monetary policy, we are joined by these south asia analyst at the eurasian group in washington. let's get this straight. you are saying that this does not signal a major shift in policy? betty: yet -- guest: yes, thank you for having me on. i would say it does not signal a change. two key reforms he had
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championed in recent years. alix: so is mr. modi will not commit to reform, the idea he will go with someone he likes who is safer, someone who will not target inflation, not knocked down ranks and deal with corruption -- that is wrong? sasha: i think the bigger risk is on the tone and enthusiasm with which a new governor would go about trying to focus on inflation and monetary policy and continuing to focus on banks. rajan has locked in both of those trajectories, both of those directions, but the enthusiasm of the new governor will be very important and how the r.b.i. goes about carrying out those mandates. they cannot change the mandate. they can change the tone and pace. scarlet: investors are looking at this with a very wary eye. here is what mark mobius, the executive chairman at templeton
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emerging markets, said when we told him about it. mark mobius: it is a big loss. everyone respected him. he was doing a terrific job. he was probably the best central bank are in the world. it is unfortunate he is leaving. a lot depends on who will replace him. believe me, there are many capable indians who can easily step into his shoes. the question is what decision the leading party will make. scarlet: was it rajan's policies or his persona, his fearlessness and shaking up the status quo that made him somewhat objectionable to indian politicians? sasha: his willingness to speak on issues well beyond economic policy and criticize the government while doing so certainly did not win him any points with the powers that be in indian politics. but i don't think that was --
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that alone could not have been the deciding factor in the government -- effectively the government's decision this weekend. rajan would not have announced he was not seeking another term unless he was very certain the government would not give one to him. alix: all right, who was on the shortlist? who do you think will get that spot? sasha: there is a huge spectrum of name and as you have rightly pointed out, there's a large number of people that could fill rajan's shoes credibly. on one hand you have safer options rajan's policies, like the current deputy governor patel and then you have current and former bureaucrats particularly the current economic affairs secretary and
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i think many investors would to see that the government does not appreciate the r.b.i.'s strong independence in recent years and would like to rein it in where as an appointment from someone from the r.b.i. who has greater distance from the current government would be seen as more of a signal of greater continuity. scarlet: what kind of response do you expect from the banking sector one-month out, six months out, a year out -- because there's $20 million of distressed assets that need to be reduced here? sasha: right, and the new governor cannot halt that. it's a matter of the degree of enthusiasm by which they tackle the balance sheet issues. the problems are so big they have to be addressed for the greater economy to grow. i think this is one of the areas where the government is very much on board. you see a lot of cooperation
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looking for ways to reform these banking sector, particularly the state banks. i think you will see continued progress. i think the areas to watch will be where the r.b.i. brings down the hammer, how it defines what can and cannot be counted toward capitalization requirements and relaxes previously announced timelines for baring all in the books, if you will. alix: sasha, say you are investor and you are interested in india because of rajan's policies, because he tackled volatility in the rupee, because he was so pro-reform. what do you do today with those assets? sasha: look around the world right now, india is by far the growth beacon. you may not agree with the government from numbers. many of our clients do not. still, i'm quite partial to
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something rajan said recently that india is the one eyed man in the land of the blind. i think that's a good analogy. you are struggling to find other areas of the world to put your assets and if you won a major growth market. scarlet: all right, thank you very much for your perspective. sacha: thank you. alix: slowing down frequency trading with a newly approved exchange. this is "bloomberg markets." ♪
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alix: you are watching "bloomberg markets." i'm alix steel. scarlet: and i'm scarlet fu. alix: a big win for flash boys,
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with approval to become the 13th stock exchange. scarlet: erik schatzker spoke exclusively with the leader of iex group. >> it has been entirely the industry's choice whether to connect or not. i think we have grown to the second-largest nonexchange eds and this is a way for us to grow. erik: explain to people why it is important to be an exchange, as opposed to what you were before, which was essentially a dark pool? guest: essentially scale. we now have no limit to how much we can grow. we are focused on serving multiple constituents, so we
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look at -- right now, i think our best relationships are with brokers and asset managers, but there are publicly traded companies that have expressed interest in working with iex. erik: you have a 2% of all equity trading in the united states right now. if this is successful, worship that number be a year from now? guest: it is really hard to predict. we do not offer the same it incentives as other exchanges. we do not pay rebates. we are not paying people to send disorders. we have to earn those orders other ways. i think people need to understand the execution quality on iex. large asset managers have expressed greater execution ploys on iex. it takes time for that message to sink in. we are confident we can become one of the largest markets. erik: brad your critics
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are vocal, powerful, and deep docketed. how do expect them to react now? guest: we have seen a lot of strategy. the strategy was to aggressively oppose. we are very thankful of the supportive we got from investors publicly, because i think that forced the opposition to be very public about why they did not support iex, despite our being backed by larger investors. part of it is about misinformation. we have read a lot of things that simply were not true. we expect that to continue. the good news is it did not influence the outcome, which is iex getting approval to become an exchange. in a way, the fax prevailed at the end of -- the facts velvet the end of the day. erik: nasdaq and others i may not be aware of have threatened a lawsuit challenging this. do you think that will happen? if so, how are you preparing for it? guest: it is hard for us to
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comment on that in particular. from our standpoint, it's ironic nasdaq is a company that actively pitches you know, the fact they are a technology company. they pitch disruptors in silicon valley, and this is their response to facing disruption themselves, a lawsuit. we would be surprised of it takes that path, but at the end of the day -- erik: you think it is an empty threat, in other words? guest: it's clearly a threat. whether it is empty or not, i guess we will see. but it's an interesting response. erik: how about this other potential response that other exchanges -- and there are 12 of them -- might set up their own speed bumps. you have the trigger 50 microsecond speedbump of euro in, which you hope will drop all volume to your exchange. what if they do the same thing? guest: 12 exchanges, new york on
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story, nasdaq owns three -- it's hard to set up on one exchange and set up to location on the other exchanges. to compete with iex in a genuine way, you have to look at what they do principally overall. is it about an investor protection, the things we have done with flow-through pricing in the order types and all of the other things question mark i think doing it on one of three or four markets i do not know if that will necessarily approach the investors. alix: that was erik schatzker with the cofounder and president of iex group. scarlet: still to come, how firms are keeping up with a new generation of consumers. ♪
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scarlet: this is "bloomberg markets." i'm scarlet fu. alix: and i'm alix steel. digital banking is triggering
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transformations and as tanks struggled to keep up with tech savvy -- as banks struggle to keep up with tech seven consumers, it is forcing them to innovate. scarlet: for more on this, let's turn it over to our bloomberg radio colleagues carol massar and cory johnson. take it away, guys. carol: right, scarlet and alix thank you. welcome to bloomberg radio. our next guest is the chief executive officer at sentelle and we want to talk about the perfect storm in the banking sector in particular. you work with a bunch of banks. how do you see it? what is the perfect storm? >> banks are dealing with a two speed world. one speed, the existing customers, liabilities and asset franchises they are trying to work through, not to mention the global environment they are living through, and the other is this digital-led innovation
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coming in from every part of the world from california to europe. digital lenders, payment disruption. they really have to find a way to manage this 2-speed world and a way that they can not only protect their business but they can innovate, trying to protect their franchises. cory: looking at banks and how they respond to the robo advisors, and a couple of cases, companies like schwab, they are out there with their automated fees and allocation. but they have clients shifting from the high revenue section to the low fee robo advisors. they are trying to adapt to a new world. is there a world for full seed banks when you have much cheaper, more technologically adept competitors? guest: keep in mind there are certain megatrends you can never
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fight. this is one of those. this has been going on for years in the industry, whether it is financial services or banking. this is a perfect storm because it combines digital innovation with automation. that brings up dynamics all banks are dealing with. it's not an easy place to be. but keep in mind, it can help expand the market. what they do with traditional human advice elements, they now have a wider reach as well as in segments of the market they were not earlier in. it broadens the market, but also -- cory: maybe with a little progress is what you are saying? guest: there is always that dynamic. you have to find growth and that is the way i see it. carol: to be fair and fully transparent, you work with bank center helping them adopt solutions for this new world order. i want to put that out there. you are working with them.
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where are they when it comes to adaptation and various technology needs, to bring them into the 21st 22nd century. when it comes to compliance they are spending an awful lot of money because they have to. guest: the two biggest areas of spend our compliance combined with digital if i can say that. they understand this 2-speed dynamic and they are working very hard to adopt new technologies and in some cases they are drafting these startups into their businesses. it will take a few years before it fully happens, but keep in mind. this is not something that just of the established, large banks are dealing with. even the upstarts the digital lenders have to go through this as well. they do not necessarily have the distribution and the reach and the access to funds. it's a very interesting dynamic.
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they will end up co-opting each other in the way that benefits them best. cory: do you think we will end up with something like the lending club on the auction block? guest: exactly. there has to be a better way of collaborating and co-opting each other. one has speed and the others have access and distribution of funding. i think we will see much closer corporation between digital lenders and traditional banks. carol: just quickly -- i think we got maybe 20 seconds here -- based on the working you have an relationship with other banks, are they getting up to speed? are they spending where they need to? guest: we are working with them and what we call -- i think they are making a lot of investment yes. carol: that includes the big banks? household names we talk about all the time? guest: absolutely. carol: we will leave it on that
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no. nitin, thank you so much. they are based in india, but in our bloomberg studio this monday. i'm going to toss it back to you guys. scarlet: thank you, carol massar and cory johnson. alix: coming up, briggs it worries impacting the global market. -- briggs it worries impacting the global market. we take a look, next. ♪
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alix: from bloomberg world headquarters in new york, you are watching bloomberg markets i'm alix steel. scarlet: and i'm scarlet fu.
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let's go to bloomberg first word news. mark crumpton is more. mark: there has been a shakeup in the donald trump campaign. corey lewandowski has stepped down. there was tension between him and another member of the campaign. corey lewandowski has been a controversial member of the campaign. he remains the gop chairman. and the associated press cited an iraqi military commander, who said most of the -- cannot melt into the population or sneak into areas controlled by the islamic state. and a discussion about on
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whether certain workers deserve overtime pay. it involves a california bottle dealer who claimed that service advisors are similar to car salesman or mechanics, exempt from overtime requirements due to the fair labor standards act. three days before the u.k. votes on whether to leave the european union. prime minister david cameron is accusing opponents of trying to deceive people into voting to leave. it is the first day of campaigning since labour leader jo cox was murdered last week. the polls show the remain cap has gained the lead over the brexit supporters. the vote is thursday. global news 24 hours a day from our more than 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. scarlet alix back to you. alix: thank you. staying on the brexit campaign,
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the cofounder of the leave campaign spoke on bloomberg earlier and talked about one of the eu's newest members. guest: turkey, they have pumped a lot of money and getting ready for membership. and brussels clearly has intentions to bring turkey i i thinkn. -- bring turkey in. >> the campaign has gotten increasingly ugly on both sides. people of talked about a shift in tone. you still see an impassioned prime minister cameron. you say this would not happen here is the u.k. exited the european union. do think that tone is wrong? guest: i think is wrong to shut down immigration as a debate. when we poll people, it is the number one thing that people are concerned about -- 2, 3 and
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four schools, hospitals, services, which are proxies for immigration. reporter: do you think it helps? guest: i think it does. we would point out the situation with europe and the borders and immigration and what is happening, it's a major concern to normal people in the country. >> if you look at sterling, the ftse 100, it associates brexit with a risk. what do you say to investors who see just that? the overwhelming amount of money, trillions of dollars they see it as a dominant risk and you see the moves on the back of -- swing back toward the momentum, and what do you say to the investors? guest: first of all i have traded currencies and commodities for the last 25 years. i have seen swings up and down. but i would also say, but where of the polls. we are doing a hell of a lot of internal polling which is showing the leave campaign is
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very strong. reporter: what about parliament -- guest: when we first started this we hired a big firm in america. they have actually helped us with social media outreach and how we analyze things. and immigration remains the number one issue. reporter: and a post -- guest: the number one thing we are on the grapevine is it is strong to leave. but i don't think anyone really knows. if someone tells you they know what is going to happen, they are lying. reporter: going back to financial markets, you say that polls could be wrong. but our investors right -- our investors right to say there is risk? guest: you can report on this all day long. you have german bonds negative u.s. bonds at record low yields, interest rates are negative. something is wrong in the
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financial world. if it requires brexit to pointed out, i would say there's something fundamentally wrong with the old system. alix: that was aaron banks from the leave campaign speaking earlier on bloomberg . >> we are in a real potential crisis and the first job will be in markets -- i'm sure they have prepared various liquidity measures to ensure that the british government can fund itself and is soundly based. that is part one. what they do about interest rates, qe that sort of stuff, that has to await developments. i think there is difficulty. but we are being pressed to make policy more expansionary.
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i think there will also be a shock to inflation, which will go the other way. for the next two months, the key task of the bank and the government is to establish credibility with the international markets so they have a plan and can be trusted to stick to it. >> how much of a shot? you have emotions on both sides and a lot of people coming into this saying, it certainly will not be a shock like lehman brothers because it has been telegraphed for such a long time. guest: i remember hank paulson said lehman's would not be a shock because it had been telegraphed that investment banks could fail. i think that lasted about one hour. i think this will be a shock. the polls are evenly balanced. i think a lot of people and our creditors are assuming that it will come right. they are not ready. >> are you surprised by the
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polls being so close? is there something in u.k. citizens that is quite anti-europe? guest: i think -- i am surprised they are this close. i think they are starting to diverge again. i think margaret thatcher famously said about europe "no institution is perfect." but we have the imf on friday forecasting the potential negative impact on gdp if this country were to leave would be on the order of 5.2%. just to put that in perspective i think in 29, the depths of the recession, the falling gdp that your was something like 4.2%. -- i think in 2009 the depth of the recession, the fall in gdp was something like 4.2%. there is a strength and a merit
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in having communications where you come together with your neighbors and allies and work together to pursue things of mutual benefit. i think if you are going to join a club, you have to accept the rules. but we are absolutely not part of the union. scarlet: that was johngieve and lloyd their men. alix: this is a year today -- year to date chart. look at the volatility. it's not the level that matters but the velocity at which we got to these levels. it's unbelievable. scarlet: you see that big dip in february. it wiped out the 2016 declined two times last month because surveys suggested the remain camp was prevailing. alix: look at the spike we have seen since then. the leave the camp started to
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regain momentum. goldman sachs is looking at a depreciation of 10% on a brexit. these numbers get ugly. scarlet: so you have traders and investors buying protection against the possibility of a the klein. i have a chart on the bloomberg that shows the number of puts minus calls, and what you see really are the turning point in june. it closed the door on a fed rate increase in june and probably july to be honest. . at the same time it you had opinion polls that consistently show the leave camp was coming out ahead. of course it has since turned the tide a little bit here as the leave camp is raining momentum -- alix: still, it is huge unbelievable -- go ahead. scarlet: no, i was just going to say, this is the one that showcases everything. alix: we have seen a huge
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increase. we have a chart for you which is options puts minus calls and this shows the premium on one-month contracts to sell the pound versus the dollar and it peaked at 1.9% last week, the biggest premium on everyday prices since lumbered started tracking list, all the way back in 2013. but the euro as well, 3.3% last tuesday. ok, yen, swiss franc clearly you are seeing short calls because it is a safe haven. but also the brazilian riyal. that's a big sign of how scared traders are. scarlet: absolutely. one big point is, sure all of the bets are focused on the pound, but the euro is sensitive as well. if the u.k. does vote to leave the eu, it is at risk -- the euro, that is -- at people
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assessing their membership in the eu. alix: and we have a pickup on the pound, but not yet in the euro. it is spreading now. euro/yen is the currency pair to trade. scarlet: we will obviously focus on this the next couple of days. coming up, questions about a highly paid credit squeeze ex-banker. that is next -- credit suites ex-banker. ♪
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scarlet: this is "bloomberg markets." i'm scarlet fu. alix: an amount still. julie hyman as a look of the
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rally, the risk on rally underway. julie: yes, risk on rally, but also interesting smaller deals and potential deals, right? one of those has to do with anthem and cigna. that is a large deal. the question is, is it going to get done and on what timeline? "the wall street journal" reporting that investors have privately expressed concerns and are not sure the concessions ring offered are enough to make sure the competitions days in the market. we are seeing a little decline in cigna. anthem holding up relatively well. california also saying the deal is still under review and cannot offer a timeline under which it will be approved or not. "the journal" has reported the decision was expected by july 2. now it is expected by mid-july. we told you a little earlier, walmart wiring a 5% stake in
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bloomberg canada anchor pamela ritchie from toronto. what is the positioning lightheaded into thursday? pamela: what is interesting, alix, we are seeing canadian money stay at home. for a long time, the loonie has been low, pulled it down by the price of oil and we see investors looking abroad looking for exposure in other currencies. what we are seeing is 10-month lows on yields domestic money piling into that. it's an interesting trend as we see the risk on trade, some of the yields perhaps giving back a little yield to some of the investors today because, as you say, the pendulum has swung a bit into the risk on trade. this is a trend we have been watching for the last several months. scarlet: pamela, are there specific ways the canadian
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economy would be hurt if britain does exit the eu? pamela: trade is one of them. canada is on the verge of getting a free-trade deal with the eu ratified. it is expected to be ratified later this year and put into play for 2016. 90% of terex put on by the eu are expected -- of tariffs put on by the eu are expected to the gone and that's a great deal for canada. richard nesbitt talked about how this is a great deal for canada and brexit definitely would at least put problems in this overall picture for canada. >> canada has benefited mightily from free-trade and that's the case because small countries always benefit from entering into free-trade agreements with larger countries because it opens up much larger markets for our products. the free-trade agreement is something that would be highly desirable. it was already having challenges regardless of brexit
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. brexit is going to distract people for a long time to come, and that could likely slowdown that rosses. -- that process. pamela: on top of that, that is something canada is aiming for the european trade deal, as tpp seems less and less likely to get through the u.s. congress. alix: pamela, thank you very much. pamela ritchie, bloomberg canada anchor. scarlet: and there are questions about a highly paid credit suisse ex-banker. sergio is a relatively unknown figure, and as a matter fact we could not even get a picture of him. we are going to go to jessica price. alix: jessica, who is this guy? reporter: he is the ex-credit
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suisse head of fixed income. he left the company in april as part of job cuts. he is also the son of a politician turned oil executive, who has been a recent focus in a sweeping corruption scandal known as carwash. alix: yes, carwash. what is the expectation behind the oversized paycheck? jessica: that's the big question in the markets. everyone wants to know how in a market like brazil where we are facing the worst recession in a century, an investment banker could have earned that much money? investment banking fees tumbled 40% last year to a 10-year low. credit suisse is not saying anything. obviously they do not discuss employee salaries. and his lawyer is not commenting. he says the release of those tax
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statements was inappropriate. what we do know is the paycheck included deferred bonuses from years past and like i said, he worked for the bank for 17 years. under his watch, a big deal that did cause controversy here in brazil in 2013, credit suisse lent $1.3 billion, then turned around and sold that package to investors for a profit of $100 million in less than a month. scarlet: it sounds like the players involved are not commenting. can you walk us through how the documents were released? jessica: they were released as part of that corruption scandal. a trove of documents was released by the supreme court last week. the bulk of the documents relate to the testimony of his father the politician turned oil executive i mentioned, accused of corruption and reached a plea
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bargain. buried in those documents was this tax return, and the reason the younger sergio has been polled in to the investigation is because he held a fund in switzerland where some of these funds moved. scarlet: it always comes back to something like that. jessica rbice, great story. -- jessica brice, great story. alix: this is "bloomberg markets ." ♪
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alix: globalization is fraying and could be unraveling. the world's developmental cases been the worst in decades and that has been shown up in global politics. "what'd you miss?" looked at
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threatening globalization. >> the language i would use is globalization is fraying. it is stalling. it has not yet gone into reverse, but there are clear warning signs it will be next. what do i mean by that? if you think of globalization by the increasing integration of the world economy -- in some ways the world is still globalizing. more information is flowing than in any other time. some of the core things -- goods, capital -- the world has stopped integrating after two and a half decades in which world trade grew, the last two years, global growth has been sluggish, but world trade growth has been even slower. that is why the imf, the world bank have started to talk about our we had a peak moment of globalization? a peak moment of goods services, capital crossing borders? scarlet: and global trade has slowed sharply related to gdp growth.
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the turning point was the financial crisis, but, duncan there is disagreement on why. what you think? what is the most credible reason? can: you ask any economist -- duncan: you ask any economists, you will get different opinions. i think there is a structural change. a change in the way global supply chains work. you see u.s. manufacturing imports as a share of gdp after a multi-decade rise appears to have peaked at around 8% manufactured. what is interesting is the politics of this, actual protectionism. since 2008, there has not been a rise and protection -- not as much as feared in 2010, but it has been there. scarlet: that was duncan weldon, head of the global research
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group in london. alix: i want to bring in our "what'd you miss?" phyllis joe weisenthal. joe:: i think you have the chart there -- scarlet: the chart is pretty dramatic if you look at the possibility of brexit, and that is the white line. it came crashing down. meantime, you have the pound versus dollar spot rate and that has recovered dramatically today. joe: you cannot get clearer than that, could it? alix: volatility picking right up. joe weisenthal will be joining us right here at 3:30 p.m. and we will talk about many things -- india, brexit. ♪
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♪ anchor: it is 2:00 p.m.. anchor 2: welcome to "bloomberg markets." ♪
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david: from bloomberg world headquarters in new york, i am david gura. vonnie: and i am vonnie quinn. david: factors driving the markets. vonnie: a major shakeup is underway in a campaign. did trump wait too long to make a move? david: at speaking of donald trump, his opposition to trade deals has been a big part of his campaign. what about brexit? i will talk to representatives froman. reporter: we are up at least 1% or higher, and that is because brexit fear


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