From there in london. The markets appeared to be settling down and we are joined by outstanding guests today. Led by bill gates. He would join us to talk about biotech and drug pricing. Alix cromwell we be joining us more regulatory hurdles facing the banks. But first, we have a slight rally on the table for today. Jonathan features are firming up about. 2 and the ftse is an positive territory and raising all of the post brexit gains. He dax is up as well i want to talk about what is happening in other asset classes. Boris johnson does not run and cable jumps, the pound a stronger marginally. We will discuss why. 1. 52 . Unchanged at we are heading for the strongest quarter for crude since 2009. To wrap up all of the stories, lets go around the world and check in with our Bloomberg Team for indepth coverage of our top stories. Anna redwood is in london on the race to succeed Prime Minister cameron. Julie hyman in new york on the last day of the Second Quarter. Lets begin right here in london, anna redwood joins us. Lets begin with the just shock we had before the top of the hour. Boris johnson giving a long attack account of his achievements at city hall and as london mayor, and everyone, he said was waiting for the punchline, are you going to run question mark are you going to be the next Prime Minister of the country . Was noon, this was minutes before and this is what he said. Mr. Johnson my friends, you who waited faithfully for the punchline of this speech. Colleagues andd in view of the circumstances in parliament, i have concluded that person, cannot be me. Anna this moves the pound. I can think of many sitting Prime Ministers in office, in power who failed to move the currency when they intent to. This is phenomenal, to see this as you dont did, the boris bound. Jonathan i guess the why is something we need to explore. Anna i think people are thinking, if boris is not in the running, it is less likely the. U leaves the home secretary in the u. K. Comes with a great deal of experience, having run one of the great offices of state in the last century and she said, there will be no second boat, there is no staying in the eu. She was, or she that she is, or favorite. E bookies if she will be the one negotiating with brussels and she says we are leaving, it is done. If you are in the market and trading around the notion that perhaps the u. K. Might stay. Jonathan in the campaigning, she remained light. We knew she wanted to remain, but she was not making a big noise. And i think people were thinking, where is theresa may. He said on the record, he is not fit for the job. Anna i would not be the first he would haveht used the latin phrase. Just a couple of hours before Boris Johnson was scheduled to speak, michael grove makes an announcement that he will enter and divides the leave vote and then gives Boris Johnson the decision to make. That borise saying cannot provide the leadership or build the team for the task ahead, some scathing words. I took out, that michael gove wrote about article 50, he says there are other ways we can leave the European Union, not just by triggering that. Interstate to go back to him now, his name is officially in the ring. We will hear from him more in the coming days. Jonathan i struggle to keep up, it is a fluid situation. Delivering aey speech later today, do not miss this. It is at 11 00 a. M. New york, 4 00 p. M. Here in london. A speech from the governor, mark carney. Had you keep up, i am struggling . Used i use you coming i you. Our u. K. Finance team leader is joining us in london. By and large, the banks pass with flying colors, how big a deal was this for the banks . Certainly a show of strength for them and they that a lot of them past and past comfortably on the quantitative side, well above the minimum requirements. Morgan stanley had the conditional approval, other banks had to do that in the past, that is more about the process than it is about the numbers. It is showing a lot of capital strength in the test and because of that, they are able to raise the dividends on buybacks. David what does this mean for shareholders for them to get money back capital out of the banks . Said we the banks have are over capitalized a you to return some of the capital to reward shareholders and also help our hourly metrics. It is hoped it is hard to growingat when it keeps. It is a big day for that and the banks are not showing a lot of growth, so you need to have income if you are a shareholder. David are they making any progress . Michael i think shareholders would like them would like to see them make faster progress. They have failed multiple times and it is always on the qualitative side, the process side. The fed wants them to step up and improve. They have spent millions trying to do that to my but they seem to have a long way to go. On one hand, it is not costing them much because they are not trying to return a lot of capital from the u. S. Units because they have to build capital there. On the other hand, you would hope after two or three years they would have a better handle on this. David that is michael moore, our u. K. Finance leader joining us from london. The end of the Second Quarter really flew by. Julie hyman joins us now. Remember in april where s p was where we are now . A lot has happened since them. I found myself thinking, and if it had been a remain the vote, would we have three achieved the record for the s p 500 . We will never know. It is something to ponder here as folks out there are eating cereal. Lets take a look. I am focusing on the u. S. I will take a look at the return to globally. Here we have the s p, the dow, and the nasdaq. For the quarter, we have not gone much of anywhere. The nasdaq has underperformed. For the year to date it is the same situation with the dow and s p a little higher and the nasdaq lower here looking at the returns. I am looking at the various groups within the s p and how they have done quarter to date. We have tech in the bottom spot, down 4 pure it Energy Stocks have rebounded along with oil prices and i will switch it up and look at the year to date, the same groups here. It has been the defensives that have done better, telecom and utilities have outperformed energy. They have recouped the losses from the beginning of the year and at the bottom of the list is financially, down 5. 63 . It is interesting, as we have seen the outperformance in the groups, rate sensitive yields have been heading lower pretty much all year. Of the huge amount action was focused on commodities, gold, and zinc, you name it. Julie indeed, and it has been a Strong Quarter which is that what you have expected in february. Alone, up byter nearly 30 and up more than 30 now year to date. Old is rising at the same time we have gold up about 7 on the quarter, 24 this year. Having the best year since 2010 and oil since 2009. 3 ,r is oma is only up up about 2. 5 on the year. T has been interesting the numbers do not fully capture the roller coaster that we have seen. Alix well said, and zinc is up 13 . David shery ahn is here with first word news. Turkey has made more than a dozen arrests in the airport suicide bombing attack. Turkish state media says 13 suspects have been detained and three of them are described as foreign nationals. The government there is more evidence coming out about the crash of the egyptair plane. Investigators say wreckage from the plane it shows heat damage and the flight data indicator suggests there was smoke on board. The plane crashed in the mediterranean last month. President obama says he will sign a bill aimed at resolving puerto ricos debt crisis. The bill creates a financial control board that will help restructure the u. S. Territorys 70 billion dollar in debt. They plan to default on more than 1 billion on a general obligation bonds. In more than 120 countries. I am shery ahn and this is bloomberg. Jonathan coming up on the program, defeating the odds. The s p 500 is on pace to round out the first half of 2016 in the green. We look ahead to the second half with bob doll. That is next on go. This is bloomberg. David it looks like u. S. Stocks may eat out slight gains for the first of the year eek out slight gains for the first of the year. Welcome back to the program, bob. Lets start with the first half. Lets look what happened that surprise you and look forward to the second half. What surprised you . The we cannot forget to january a low repeated in february on the back of china and oil prices and concerns about the session and we got the nice rebound and just as we were heading for new highs in the u. S. , brexit smacks us in the face and we go down and now we come back up. It is hard to believe with all of that, u. S. Equities are up. Does the s have a having disappointed in the first quarter, they will not be great in the Second Quarter. Alix you take a look at technical levels, we have butted up against the 2100. It seems like that level is something we cannot break out of. Bob somebody said to me recently, the start market has been flat for numeral six quarters and i responded, and earnings have been flat for six quarters. We have to get better earnings and there is a shot of that in the second half. David why would earnings be higher in the second half . Bob for starters, we do not have the headwinds of lower dollar. We are lacking the compares their. We need the u. S. Consumer to consider continue spending money, buy some new cars, new homes, existing homes. If they keep doing those things we will get modestly better earnings. Alix we do see a stronger dollar and analyst see lower prices in the 30s or low 40s due to oversupply. Does that thesis hold water . Bob the dollar rise here is if itule compared to is gone up this much compared to this much and oil prices, 40, we can handle that. 27 headed to the 17 that concerns people. David a lot of people seem to be holding onto their money, whether it is and a day and corporate investment, are you worried that that may deter Earnings Growth in the second half . Bob i cannot think anyone expected that, will it pull back a little bit, i suspect so. Capital investments are not very sure on, it is mediocre growth. We can get 2 growth in the back cap, that is all we can hope for. See a stronger dollar, you see wage gains at some point that out to eat into what companies actually have. David that concern the put a squeeze on the profit margin. It is more money in the consumers pocket. Bob i think there will be some of both, there were not be huge gains on the profit side without improvement in revenues because there are starting to be cost pressures. David you stepped up and said what you thought what happened did not happen, in terms of things like utility on the one hand and telecom on the other. Is and was that yield is very expensive. People bought yield up, utilities are a perfect example. 20 20 5 pe to the market. It is ridiculously expensive. We would then move into things that are cheap in cash flow terms. You find Consumer Discretionary names, technology names, health care is starting to look a little bit better on the valuation side as opposed to the hogs, ifks yield you will. When Interest Rates are essentially zero and 10 year treasures are 150, absolutely. X was on a my favorite cc thesis. Equitytwo european investors do they become u. S. Equity investors . Bob they have done that in the bond market, why not stocks too . Alix we will find him where he is putting money to work when he shares his strategy for the second half of the year. Of the bill and Melinda Gates foundation, bill gates will join go with his thoughts on drug pricing. This is bloomberg. From the city of london and new york, this is bloomberg. A 5100 that is up again, but only marginally. Former london mayor, Boris Johnson, pulls out of the race to be the next british Prime Minister. We are back with bob doll, the chief equity showed a just. Here in london and across europe, the market is certain to establish itself in the very idea that theresa may, someones that wanted to remain in did European Union. In michael gove, would be risk off. It is something weve boiled down to politics specifically . Michael the world is bob than world is the world is never that simple. There are more uncertainties than certainties of a will bounce all over the place. We do not know what brexit is, we know it is not lack or white, there are shades of gray. Speculation and we have to focus on what the companies will report in terms of their earnings, that will move the stocks. Jonathan it is very difficult for anyone investing cross asset because the political complexity and the risk nature driving yen to one of the strongest quarters since 2008. The correlation you would typically look for a crossed assets has not been there in a big way. I wonder what you make of that. Bob i think what is happening is the world is moving to all kinds of different cross turns and we do not get the traditional relationships. Look at oil and the stock market in the u. S. , for years they were negatively correlated. A very unusual bedfellows here in the weird markets. , itd early on after brexit appears the winners may be some of the u. S. Domestic companies who rely on the u. S. To mystic economy for the revenues. Let me pull up a chart that illustrates this. The people who have over performed since brexit have been domestic and the people who have underperforms have been international. Does that fit with the case . U. S. Growth has been mediocre, but nonus growth has been worse than mediocre. You layer the generally strong dollar on top of that and domestic earnings have outperformed international earnings. Under waiting the multinationals, overweighting the mystic companies has been the maker. Alix what is better, stocks or bonds of what is the return for both . Bob if you think the world will get better, which is the view i have come i think stocks will beat bonds. Ati can buy the s p 500 2000 with a yield over 2 and have a choice of that versus a 150 10year treasury. Alix you could buy the 10 year and then flip it because the yield is one and a quarter. See my view is, we will not 1. 25. I know a lot of smart people are saying that we will. If the economy does not improve and deflation does not run out of steam, we will go to one and a quarter, but i think we are on borrowed time with that piece of paper. David productivity is the big question come at you see productivity kicking in . Bob maybe that much if we are lucky. Late in the cycle it is hard to get productivity gains. We need revenue gains. Alix you are looking at a year and target of 2150. Bob we do not need a big number. If we can see green instead of red, that will be a happy day. David it is topline growth that 3 5 . Drive the three bob more jobs, making a bit more money, the Balance Sheet is in good shape, saving rates are up. Alix great to see you, thank you very much, bob doll, cheek chief equity strategist. Hurdlesp, regulatory facing the bank. He will break down all of the issues facing the financial. This is bloomberg. . C sv jonathan from the city of london and new york, this is bloomberg. Sterling is on the threeday gain, the first potentially since may 19. 134. 62. Rading but spring up the global scorecards to give you an idea where the market are today. What a quarter, it has been choppy. The s p largely flat over the last few months. The stoxx 600 bank in flex come on a five quarter losing streak. It has not been pretty. Quickly,he board very the cable rate is advancing, you have seen that already. A softer dollar on some of the trade. , 111. 41 is how we crude, potentially the strongest quarters since 2009. Of the world are on london, lets get you up to speed on the headlines from outside the business world. A study announcement today in the u. K. Former london mayor Boris Johnson says he will not run against to succeed David Cameron. you who waited thankfully for the punchline of this speech, having consulted colleagues and in view of the circumstances in parliament, i have concluded that person cannot be me. Thery johnson helped leave lead the campaign for britain to leave the u. K. The favorite to succeed David Cameron is theresa may. Francois hollande is backing the likely democratic president ial nominee. He says Donald Trumps rhetoric puts him on the same level as europes extreme right. To buyll have a chance the biggest diamond found in more than 100 years. The 1100 caret diamond failed to sell at a sothebys auction. The highest bid of 61 million did not meet the minimum price. The diamond is slightly smaller than a tennis ball. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. David tom keene joins us for the morning must watch. George soros has weighed in on brexit and his comets have caused quite a stir, lets take a look at what he had to say. The crisis in the Financial Markets comparable in severity only two 20072 dozen eight. 20072008. Brexit is accelerating it. David we have talked about george soros before, this is one of the most read stories in the bloomberg terminal today. He is a very new wants, cohesive thinker. We need to listen to what he has to say. We heard you say from larry fink and, it is not that big a deal. There seems to be a convergence. Keene he isr. Getting quite on in years, i will not that but that against him, but he has been known to make inflammatory statements. Is rap on the street is he talking his buck. I do not know if he is or not. It is one thing to be george soros investor and another one or ata leader at bmp jpmorgan or blackrock where you have a responsibility to give a public message that is more tempered. David pretty much everyone is talking there buck, it is just talking there book, it is just a matter of which book they are talking. Going out and saying he would go short the world, he thought we were headed for bad times. Tom to our viewers that do not know his history, he has earned the respect to be listened to that i am adamant about that. Again, he is an investor talking an angle and in this case, a more allegiant opinion. He does not have a public duty as a Financial Officer to have a more tempered message. In. Have it dovetailed a tempereder with mention tempered message about technology in europe. David i would put him in some way men with a vast amount of experience with connections ar