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tv   Bloomberg Markets  Bloomberg  May 12, 2015 3:00pm-4:01pm EDT

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deal is mainly about ads. aboutt: mcdonald's is all burgers and fries spirit we will tell you why it will soon be about kale. alix: global bonds launched forge a 56 billion dollars in about three weeks. traders on high alert in the free world. ♪ alix: good afternoon timeouts still here with scarlet fu. let's get a look at the markets with less than an hour to go until the closing bell. take a look at the nasdaq and the dow supporting losses now. points.500 losing 4.5 we really have not gone into positive territory all day. >> we deftly made up some of the losses we saw a earlier in the day. the global bond route we have seen here taking a pause in the
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u.s., you are seeing a little bit of a bid on the treasury trading. route stillthe bond in play here. he see the 10 year well over 2.2%. scarlet: people worried about it because it has more to do with technical reasons than any kind of fundamental strength. that is the question. is it being put on the table or is it just technical trading? bank of america thinks it has different reasons. we have much more coming up on stocks and bonds. some of let's look at the stories making news at this hour. verizon is now expanding its footprint in video and online advertisement. buying a low for $4.4 billion. the share price is $50 per share. a 17% premium to a low's closing price. a collection of international news sites. the deal gives rise in aol's programmatic ad technology, which uses high-powered machines
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to buy and sell advertising space. coming up later today, we will talk to the aol ceo tim armstrong at 4:00 p.m. eastern time. scarlet: charter is working on an acquisition of the competitor bright house. it was contingent on a comcast time warner deal being closed. charter is now pursuing a deal because it were make it easier for financing for an eventual cable. time warner the sixth largest cable provider in the u.s. the investment group is raising its offer, worth about $2 billion. it turned down the original offer and the new beta $7.5 per share higher. the ceo tells bloomberg he believes they will eventually succeed. it is a much superior firm. we're closing them 157.5 billion u.s. dollars of cash with certainty, which is by far superior for all shareholders,
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of which we are today the largest, having applied more than 9% of partnering for employees. alix: at sign holding company is increaseor a deal to exposure scarlet:. less a 50 miles from the city. more than 1000 people are injured. a u.s. military helicopter carrying six marines has now gone missing or no word yet on whether there was a crash. the latest quake registered magnitude 7.3 with 500 miles away in india. top already damaged buildings and triggering landslides. still reeling from the quake late last month that killed more than 8000 people. greece is hurting for cash
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but managed to make a debt payment to the imf today. the finance minister says the country could face is a clady crisis in a couple of weeks if there is no deal for bailout aid. european countries are refusing to release more of the money. issue is aidity terribly urgent issue. this is common knowledge. let's not pretend otherwise. to me from the perspective of the timeframe, we are talking about the next couple of weeks. alix: finance ministers insist greece come up with an economic aid.m plan before more a proposed revamp of the dodd-frank bank reform act is called a work in progress. unveils proposal to toughen regulation of the federal reserve. disclosents the fed to more information about monetary policy. the bill would also remove some of the tougher restrictions from fall and medium-sized banks. showtime and hbo getting a world championship belt in the
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mayweather fight pair the company said today that a record 4.4 million people ponied up around $100 or more to watch the bout. than half $1 billion. that is just for a tv proceeds. that is what they call a championship fight. richard branson's virgin group says the new enterprise will take a run at what it calls participatory fitness events like running and cycling. you probably heard of the ceo because she currently runs the group behind the new york city marathon. the firm will be headquartered in new york. alix: unprecedented price for artwork at auction. a painting by pablo picasso brought a record $179 million last night here in new york. the spanish masters woman in algiers depicts a group of seminaked courtesans and was brought -- bought.
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a record 42 million held by frank it -- francis bacon with. took in more than 700 million last night and expect to sell as much as $1.3 billion worth of art this week. that is a serious number. scarlet: i like that skinny man. what happened to that? up to the next half hour alix: -- ket day a stock dropped the most today since 2012. tim armstrong will join us to talk verizon's purchase of a media company, a do not miss interview is coming up. 2% so far in 2015. the gains have come have investors try to figure out the next move in regards to interest rates. the blackstone group's vice-chairman sat down with betty liu and she asked him whether equities are being set up. >> i think we are long overdue.
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we have not had once his 2012 and i think we could have one now. some of theonvert investor optimism to pessimism, and at least concern, and set up a platform for the markets to do better later next year. >> for we are not overvalued, why do we need a correction? >> sentiment plays a big role in stocks. when everyone is optimistic and everyone has bought all the stocks they want to buy, who is left to buy? >> maybe there is a reason it is trading at this level and essentially right where the economy is at right now. classic you asked me how i would i would say market, fairly valued, not overvalued or undervalued. on the other hand, the prospect is for earnings to improve, maybe not this year, but certainly beyond that. look at it from an earnings yield point. sellingearns 120,
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around 2000, that is an earnings yield of five point 5% to compare that to a 2% treasury. preferred asset >>. >> the question is just because stocks are attractive fundamentally, it does not mean they go up here they go up because there are more buyers than sellers. if everybody is already invested, and there are more buyers -- >> chances they will go up next year? >> well i think this year. it will be a positive year. markets are a different story there. the bondt a tantrum in market, or is it the start of a bear market here in bonds question mark >> i think interest rates are going up and i thought that for a long time. i do not think they are going up a lot. a lot of liquidity out there is looking for a safe place to park. why you see is
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yields in europe lower than the yields here. me, there isble to not a european balance sheet at all like ours, except maybe germany. my view is european bonds are really expensive. i think they will raise rates in september. >> does it look justified to do that? >> i think the economy will pick up. this second, third, and fourth quarters will be a lot better. >> you have heard a lot of bond traders complain about this part of it has to do with the regulation, the dodd-frank rules that made banks hold onto their cash positions even more and that is creating a huge dislocation, they say, of a coming crisis in the bond market. do you share that view? >> i hear it myself. but i hear it's mainly in the high yields.
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i think you can trade all the treasuries you want. the high-yield and the liquidity is the problem. it is a crisis, but it is a difficult situation. back from itsme bottom. i think the wildcard there is iran. if we do a deal with iran and the sections are lifted, and they can sell one million barrels per day more than they are selling now, that could raise the price again. deal,ise, if there is no i think oil has stabilized at these levels. could oil continue another leg lower? >> a lot is in place for it to go lower. inventories are very high. speculation is high. her thes increasing for developing world is consuming more oil every year. the price of oil is
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headed somewhat higher. i do not think it is going back to 100, but i think you could see the mid-70's. alix: it is weird now that we wind up. anyone hundred thousand dollar call. scarlet: they do say it will not get there. course,e question is of shale is really the wildcard. ashley said it would get $200. scarlet: it is a really long list? i am sure it was several pages long. is our all the things that have to happen. hear mid rangeto no knows how to price it. coming up, one of the .resident's highest priorities democrats kind of got in the way today. we will have more with mark coming up. ♪
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scarlet: let's talk to julie hyman it would really did not get any kinds of games today. oh -- we were never really significantly positive. no. if you look at major averages right now, we started the day more significantly negative of course. globally thatloff spread to the united states and we saw selloffs in stocks as well. come almost full circle, still setting up for the second day of declines at this
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point. it looks like we will close new the highs of the session if things remain like this for the next 45 minutes or so. i mentioned it went on with the bond market and that is the key to today'session. it seemed that was driving trading, rather than equities driving the bus. if you look at the 10 year yield, we saw a lot of selling in the bond market earlier today, set off i what was going on in europe, as we have seen a longer buying spree that has turnaround more recently and then spread here in the united states. has changedt significantly when you look at the bond market. the dollar has not really recovered. it has remained lower today and that has in part helped oil prices, which have been rallying today. that it addition to opec, and that in turn has been helping energy stocks today, but not
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enough to get equities positive. scarlet: thank you so much. alix: a look at top stories crossing the bloomberg terminal. mcdonald's tried -- drive-through customers will have fewer choices because they want to speed up the ordering process. mcdonald's offers more items at a one dollar to three dollar price range, the latest attempt to combat sluggish sales. memory when it was just the dollar menu? >> a watchdog group says chris been $300,000 worth of meals while in office. an advance every year from the state budget and he has been in office for five years. his grocery bills have fallen since he had lap band surgery a few years ago.
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>> fewer than 200 small banks are doing business with companies in the marijuana trade. big banks say they will not provide services to companies that engage in activities that are illegal under federal law. with a 200 million americans live in areas where it is ok to sell pot. alix: those are your top stories. scarlet: as a fast track measure fell apart in the senate, fast-track legislation could help obama close a deal and submit it for approval without any amendments. joining us from chicago, mark, what this means. it is a procedural vote at is not totally dead yet. classes hard to see how it will be revived. pelicans are blaming democrats. president obama will have to find a way to work with the democrats to get them to lend
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the bill in the senate. the problem is, as i said, even the pro-trade democrats would like adjustment, which may make the bill unpalatable to some republicans. >> when is the end date for this? at what point does this cut off? >> i think they will take a deep breath. they will have to try again in the coming days. the challenge is always on trade deals, you need votes from both parties. at a time with her is not a lot of trust for both parties, missed it -- make adjustments, pick up enough democratic votes, hard to find that calibration, particularly when you're dealing with the house and the senate were the politics are different. one of her opponents, bernie sanders, has been opposed to the trade deal per what does that say? >> a package she supported when
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she was secretary of state, it is probably a strange point of view, the weakest moment she had since she became a political candidate. she obviously does not want to take a position because of politics. tohink hillary clinton hopes get it without taking a position. if she were president, i bet she were as well. she does not want to take this put a couple position. we heard from an economist with de blasio and one talking about income inequality. it is really about policies and not economics. how do you think this will wind up playing into the presidential election? >> many republicans talk about income equality. they would like to see hiring costs and it has been something both parties have talked about the solutions being proposed by maier de blasio and elizabeth
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warren and others are pretty far to the left. in most cases, hillary clinton supports these things been i would suspect if they keep up the pressure, she will feel the pressure and make them a bigger part of her platform. on many of the issues, peel to the broader electorate. scarlet: what is the biggest distinction between how republicans look at this versus democrats? >> it is certainly the case democrats would like to see a higher minimum wage, more focus on the fort will care act and reinforcing that, and on things equity. on the republican side, generally, they would like to see lower taxes, less regulation, and their believe was not about trying to tinker, but to try to make the pie bigger. on the other hand, plenty of democrats are pro-as well.
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there's probably a lot of agreement. >> think you for joining us in chicago. you have got a big guest for us. talk to him about what is next in the trade deal and policy. we will definitely watch that. still ahead, stocks fell today by the most in 2012. the new venture centered on thrones of all things. ♪
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discount,s number two
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recent strikes in france will weigh on first-quarter earnings. ceo discuss all the benefits. >> he remember as you see the benefits, we are passing through. revenue, lower year on year. >> outside of earnings, a plan to check for airplanes for damage. take a look. >> we got to be millimeter perfect and what we do. i'm the head of engineering and maintenance. if we had a strike in an airport today, we would have a human being out there, or two human ,eings for eight hours a piece with this being done in minutes
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to make sure we get it back that much quicker. customersans is our will be subject to less delays and more cancellations. there are certain phases where we need to inspect the aircraft. we reuse two or three. is quite large, 3000 pounds is typically what the cost is today. the cost is coming down all the time. i would expect 10,000 pounds would be a ballpark for something like this. we carry our own costs. until such time as we have got a product, and at that point, we
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develop the product with that the partners. basically, it is a low-cost and cost-effective way of bringing new ways ofgy and doing things. it will ultimately benefit everybody. not only is this a big game changer for the industry but also farmers. >> on the path to more revenue streams. about up, we'll talk kayla mcdonnell's latest attempt to win back customers. ♪
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alix: welcome back to her let's get you to the top headlines. verizon is now expanding its footprint into video and online advertisements. for 4.4 billion dollars. the 17% premium to a well's is monday -- aol's monday closing site. aoldeal also gives verizon programmatic ad technology, which uses high-powered machines to buy and sell and use ad space. ther today, we will talk to ceo of a lull well, tim armstrong. you do not want to miss it. charter is working on an of competitor bright house, and it was a merger contingent on the close. charter is pursuing the deal because it will make it easier to get financing on an eventual bid for time warner cable. showtime at hbo are getting a world championship held for the pay per view.
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$100 or more to watch the bout. billion, that $1 is just for tv proceeds. richard branson's version group is getting a new gain. the company's new enterprise plans to take a run at what it calls participatory fitness events like running and cycling. she now runs new york road runners, the group behind the new york city marathon. the new firm will be headquartered in new york. those are your top stories. coming up in the next half-hour at the bloomberg market day, emily chang will give us details on the verizon-aol deal. tim armstrong will speak to me in the next half-hour to tell us why shareholders should like the deal. also, we get earnings from zillow and go daddy. is desperate for growth, unveiling plans to add
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kale to the many appeared it wants to snag customers who want healthy food but is this a real reversal for the company, which released an anti-kale add mocking vegetarians. joining me to discuss is mike and bloomberg business week's susan, who has done extensive coverage on the turnaround plan. what does the switch to kale represent? >> the ads were the predecessor's's. to createe an attempt mcdonald's as a modern order company. we do not know what it means, but kale might be one small part of bringing mcdonald's into the modern world of eating. >> kale is not in the mainstream market yet.
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it pales in comparison to let us and potatoes wheat so much of. what kind of incremental mover can this really be in terms of the bottom line? to doonald's will need other things outside of kale to get the sales turnaround. have beennows they struggling, but when people think healthy foods and they think healthy foods anything about kale, mcdonald's is not the first lace they will look. >> what gives? is it a done move -- a dumb move? classic could be a pr stunt. kale appeals to the one person in the family who wants to eat healthy and can veto a trick -- a trip to mcdonald's. this will not be what turns the ship around. you take a look at how mcdonald's can change this,
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the franchisees have to bear the brunt of some they like this, what do they think when they get this kind of directive? think they take everything with a grain of salt, so to speak. mcdonald's is trying a lot of different things on a small scale. they found a good place to try this and they are also talking about doing things, many of which seem contradictory. at the same time, they are simplifying the menu and creating your own burger. if you are a franchisee and are wondering which of these you are supposed to take seriously -- >> right. you can see how it is in comparison with lettuce that we wind up eating every day. at the stock'sok performance, the wendy's or the shake shack, it is a dreadful performance.
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what is going to move that share price higher? >> re-franchising, taking off debt, that could help. investors will be a lot more comfortable with that if we have a good plan to turn around sales or maybe it is splattering things on their big macs. that might speak to consumers. you are still looking at a dividend of $93 billion. it does not need to move the needle there if investors have this dividend high-paying stock. a tough several years for investors. restaurant stocks in particular have greatly outperformed the s&p. enough tonot be
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satisfy investors. >> i ask because mcdonald's started adding dippers to the menu in august, and it was buying 54 million pounds of fresh apples each year, a huge disruptor for the market. >> absolutely. every time mcdonald's ads ingredients, there is a ripple chain.down the supply they introduced the mcgrath a mcwrapof years ago -- the couple years ago but it took them years to find a cucumber that could be sliced evenly. something like any fresh .egetable presents problems another issue mcdonald's has been struggling with has using highbile app
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technology. how does mcdonald's compared to a company like starbucks, which is the crimp to look for them when it comes to that? >> they are years behind. it is something they really ignored here they enjoyed a lot of successes. they sat on their loyal spirit as a result, pretty far behind chains like starbucks end of the gods, and even smaller chains like sonic. they have a long way to go. alix: what company is doing it right, that went from an underdog and is now doing really well? classic great question. the three at .2 is popeyes, sonic, jack-in-the-box. they know what their customers want. it is often greasy and fatty foods. jack-in-the-box splattered butter. the best conference since 2012. they know what their customers
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want and they give it to them. alix: thank you so much for joining us. goldman squashing the rally in a note this morning, writing, we view the recent rally as premature, calling the timing challenging in the short run. we expect evidence of the fundamental weakness in expected u.s. producer reaction to gradually materialize. it means get ready for more production and lower prices. oil market will be oversupplied by as much as 2 million barrels per day. companies are getting more productive 30 c averages rising in the permian basin, while rigs are being cut your you're getting more for less here it will also helps. least drill put out at
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250,000 redeployed over the next six months. the incentive might not be far away. all of that means more oil per not everyone agrees. here is what was said to erik schatzker and stephanie ruhle last week. back by yearme end. next year, i think by the end of the year, will be up $90. alix: both bullish on oil. forng up, rising for a move a well, we'll tie you why this changes the advertising market. ♪
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♪ alix: welcome back. markets. look at the 15 minutes before the closing bell. julie hyman joins me from the newsroom. we hit the low in the session and have been grinding higher all day. julie: we have been to want to movements. bigger the best performer consistently throughout the day has been the maker of filtration equipment. to does other companies listed
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suitors.the reported paul is having his best day ever and trading at an all-time high. also higher, having its best day in several months. one of the facts we will look at is one that made his move about midway through, itt educational services. exchanges,ies and also against the ceo and cfo, saying company and executives fraudulently concealed poor for performance -- poor performance. allegations. other education stocks are fallenng suit and have today. tech companies after the bell, one is go daddy which came public on march 31 at $20 per share. it has written -- risen since
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then steadily in advance of the earnings. online real estate company. those are down 1%. of 11%s estimate a loss per share. it seems like one area we will focus on today will be oil. it has really taken off and helped those stocks. julie: if you look at the trajectory of what we have seen, you will see the drop we talked initially, and in the coming back throughout the session. specifically,s they have been the best performers throughout the day rising to oil really spite after we got the headline. raising demand forecasts as well
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as saudi arabia, saying yes, raising production but pretty much neathe level where it had been to we saw on oil spike , and that, energy stocks that is when we also saw the long climb for overall averages. thank you. we now look at top stories this hour. the lethal drug supplier. to prevent death penalty drugs from foreclosure. the bill was a setback for groups seeking disclosure about who provides in the busiest death chamber. six convicted killers so far this year and a seventh to die this evening. cutting prices, announcing price cuts as much as 80.
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9% last month, chinese .utomakers have been increasing increasing the size of herds. prices for cattle and beef soared last year because of a shortage. in 2014 first time in eight years, the u.s. cattle herd actually increased. than two.much larger kind of makes me want some bacon. to eisen is buying a well move -- and the move intensifies to control multiple advertising. it comes as verizon plans to launch its own service. i'm joined by emily chang in san francisco. emily, it was interesting to siphon off why verizon really wanted a well and why now. >> aol certainly transformed itself into a real player in and digitaleting
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advertising. it has a very specific and evere ad technology in an more targeted way, as well as the ability to deliver high quality and streaming video. has quietly been amassing capabilities over the last few years. a company that delivers streaming video services on its own. the video is short snippets of video. potentially sports broadcasts and things like concerts. no one knows exactly how the video service will work, but it is a sign of verizon trying to reinvent itself. it sort of remains to be seen if this will indeed be a smart deal for her -- for verizon or if
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verizon could transform itself in the way it imagines. a critique i've heard about the deal is this is a big bet on technology paired an unproven technology in a new space and the question becomes, what happens to the rest of aol? emily: it is certainly unproven technology. terms of what it means for the rest of the ecosystem, he could meet a well and for -- and verizon trying to take on facebook, or a company like google. the true leader in digital advertising, both companies doing very exciting things in the middle -- in video. does aol have the technology to take them on? a well has always other assets like huffington post and the tech crunch. what happened to these, we do not know. have a pretty exciting
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show of "bloomberg west." emily: discussing the future of the company, a leader when it comes to strategy at samsung. there are a lot of questions about where samsung owes from here we have seen a china reversal of fortune at this company's smartphone sales, mobile accounted for 7% of profits a year ago. that is less than 60% or we have seen today a push into the internet of things. they're coming out with a platform for developers to develop things like a smarter washing machine, a coffin -- coffee maker. thing and canxt samsung be a leader rather than a follower? we will talk to him about that. also talk about what is going on in a smart phone market, where they seem the most drop-off. is it at the high-end, the low in the middle? samsung has a giant variety of handsets. should they be making all these
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different phones or make a strategy like apple that is more targeted? emily chang. at can catch the interview 4:30 p.m. eastern on bloomberg west and a top of the hour, we will talk to tim armstrong hurray do not miss it. stocks reacting to the run-up in global bond yields are to we will have more coming up next. ♪
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selloff islobal bond taking a pause in the u.s. bond yields are falling all across the curve.
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investors piled into the toy $4 billion option, the strongest hitting since 2009. bond volatility is on the rise, surging the most since the treasury flash crash. david, it is always a pleasure to have you on set. why are we seeing the pause? will it continue or is it a blip? >> this started in germany. that is it. the bond tantrum spread worldwide. and talkingn it about it, it is a worldwide phenomenon. pointsu move 60 basis to 60e 10 year treasury basis points. any economics that made a decision two weeks ago that made
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it difficult. alix: u.s. treasury yields are 2.3%. the 10 year0.7% on in germany, even after the catch him, as david called it. yield,till a high especially if the dollar will not lose much failure. a lot of central banks are coming in, flooding the option that just took place. could see had a second piece. you look at the american market. at fourgraded are tax-free. the 30 year treasury is at three. the last i checked, you pay taxes on the income in the forsury, and did not pay 100 basis higher. valuationabout metrics we're used to.
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it is volatility. what does that do for risky assets? >> if you are in singapore and you have to deploy sovereign fund -- plunges around the world, the united states of america is a great choice at the highest relative yields. you have got to own some of them. if you're in america and are one of the 20 million americans who like tax-free bonds, you are free for volatility. if you're trying to make a deal on the currency issue, you do not know what to do. volatility is very high. alix: volatility is a big concern. if you have increases or these tantrums or make the markets
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less predictable, people will charge more for companies, particularly the riskiest companies to borrow. you get some bifurcation in the the ones most speculative really have more and more trouble. to your point, i do think there is a longer-lasting effect, especially unpredictable volatility. we will have much more and we will talk about the credit market. thank you so much for joining us. i really appreciate it. we will talk to aol's ceo tim armstrong. we will about why his deal is the best thing for shareholders. ♪
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alix: we are millions away from the closing bell.
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this is bloomberg markets. i am alix steel. bell sounds] by 30 sevendow off points, the s&p off six, but let's put this into perspective. at one point, the dow was off 180 points, at its session low, and then it clawed its way back to finish lower by 37 points. taking a look at the treasury markets, the 10-year yield at a high, and bonds we are seeing coming to a little bit of a pod here in the u.s.. i enjoy now by our bloomberg markets managing editor, joe weisenthal. within the s&p, you saw energy have a big run, up by half of 1%, and we saw tell a conflict into positive territory, while materials and health care really lagged. : yes,


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