Pullback, but it feels like a mixed market because the dow has been flirting with gains, and right now it is a four point. It is not all red for the major averages, though the dow has trended lower for parts of the day. A sideways move here. We have volume lower as well. Why is the dow doing better less like the big movers. Mcdonalds is rising after mcdonalds japan started selling poking and toys. Johnson johnson is out with earnings that beat estimates, and the Company Raised its forecast for fouryear earnings as well. Trading higher making predictions about demand in india. Those shares are gaining. This gain in the dow notwithstanding, the s p 500 and the nasdaq are not holding up well. Lets look at the movers there. Netflix has been trading lower all session long after subscriber targets missed estimates. Microsoft reports after the bell. It has been lower all day in advance of that. Phillip morris coming out with numbers that missed estimates as well, being under pressure from the stronger dollar and declining cigarette volume. That is the balancing act we see in the major averages. Today, i should point out most of the groups in the s p 500 are lower today as well. A down breath we are seeing today. Shery with the selloff in stocks we are still seeing money going to bonds. Julie we are indeed, and it was a bold call that said we could see 1. 25 by the quarter of the year, than 1 for the 10year yield for the First Quarter of next year as he says gdp will be disappointing. Right now the 10year yield is at 1. 56 . Call by Morgan Stanley into perspective, take a look at the bloomberg here. This is simply what we have seen from the yield of the 10year note, and then you have this target here, 1 . What it isell below right now, and below the forecasters out there. This is an outlier. He has been right so far, so lets see what happens with this production Going Forward. Vonnie julie hyman, thank you. We will check in at the first word news desk. Mark crumpton is in the newsroom. Mark donald trump is hours away from securing the republican president ial nomination. Priebus toldreince a breakfast meeting the campaign now has a crucial task. Reince priebus if the campaign can get the private donald trump to be seen publicly, i think that he will when. Mark Reince Priebus also said he disagrees with the Trumps Campaign criticism of Ohio Governor john kasich, who is not attending the convention, even though it is being held in his home state. It could be a rough commute for drivers that he is the Tappan Zee Bridge north of new york city. A construction crane collapsed and fell across the span it is replacing. Officials say no vehicles were struck when the crane fell. At least two injuries were reported. South korea is accusing north a reckless provocation, following the test firing of ballistic missiles. Two were presumed to be short range and landed in the sea of japan. Jan josh japan launched a japan lodged a formal protest. In australia, turnbows government will have a majority of just one seat in australias house of representatives. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Imf lowering its out code outlook for growth this year by 1 10 of 1 because of the brexit vote. Schenker, is jason president and chief economist of prestige economics. He is right by bloomberg as one of the top economic forecasters. Jason, it is great to talk to you. Tell us, how does the imf prediction filter into your views of the market . Know,henker yeah, you there are a few different ways this is filtered into what you are expecting. A couple of things we did expect a lowering today. The imf is notorious for being a little rich in their forecast. We have seen now, as i think was mentioned earlier in the last show, four consecutive meetings where they have lowered their forecast, and the forecast that came out today, 3. 1 for 2016. That is equal to last years level, and the forecast was made before the turkish push happened. We have not considered what the impact of that could be for the global economy. We expect the numbers could be lowered further, the number could be 2. 7 for the year when it is all said and done. Vonnie what are you anticipating for the u. S. Most guests say the u. S. Will look better, but how much better will it really looked . At the end of february i had a book out called recessionproof vonnie there you go. Mr. Schenker that is right we think growth will come to a halt, and we think average growth will be 1. 4 with a recession next year. We see slowing. Concerned about the linchpin for all those being very critical for the u. S. Economy. See that slowing. Oil prices, we see moving lower, falling forward during the shoulder period. Those are critical. Oil prices going over could be good for an economy, to some extent. How do you see compression when we have job growth month over month . Mr. Schenker if we look back to last year, november 5, the fed, the fbi oc, issued a warning, and at that point it was a letter to the banks from the fed and other regulators saying dont loan any money to oil and fed,arelessly, love the essentially. That is because oil and gas bad debt had gone up almost 400 in the course of the year, and the day they issued the warning, the 23. 04. Wti was we are close to that price right now. They madea point regulators very nervous last year from a credit standpoint, and i think there is plenty of reason to be nervous. Plenty of reason to expect more layoffs, defaults, bankruptcy. Goingl see more of them forward, and that could affect the credit cycle. Shery jason, of course, affecting oil the price of where the dollar is heading, which today touched a sixweek high again. If you go to my terminal, you can see it surpassed the 200day moving average, and it is an overbought territory, not anymore, but it is at the bottom bottom panel of the terminal. Where do you see the dollar going, especially after the imfs renewed predictions . Ourschenker we said in report this past sunday we saw the dollar going higher as a result of the lower imf forecast, but Going Forward we see the dollar moving lower because we believe credit concerns around oil and gas, subprime auto loan pressures, slowing auto sales from high police fleets these will cause slowing in sectors of the economy, so by the end of the year we will see a weaker dollar as the fed shifts gears to add accommodation to the economy. Vonnie jason, how serious will this be will we see bankruptcies en masse, and where will the price of oil and up . Mr. Schenker it depends on what region you are in. I am concerned about oil and gas where you cem he, Oilfield Services moving forward through the end of the year and next year. Mixher thing to add to the is our on the election i have a book electing recession coming up next month, and if you look, 13 of the 14th last recession cap started within 13 13 of the last 14 recessions have started within the first 13 months of a presidency. See spillisk you can over into other sectors as you see credit constricted, and you see other risks gradually increase from where we are in the cycle. Shery jason, what is interesting is we have seen gold also you are a top forecast forecaster for gold, too we have seen it rally since the beginning of the year, and investors we saw pulling more than 700 Million Dollars out of etfs backed by gold. Why is that happening is it a stronger outlook for the economy, and where is gold headed . Mr. Schenker the price of gold fell. We did expect it would pull back. It has pulled back. A few Different Things are driving that. Strong,arkets have been except for the nasdaq, which has not hit new highs and has not broken a trend of lower highs that we have been in for over a year. We think that its a signal there are still problems in the equity market, and you can see the price of gold be higher. We expect the price of gold to be between 1400 and 1500 an ounce. Vonnie jason, you got another plugin for a book that has not come out yet, electing recession i want to ask, doesnt matter who gets elected . Mr. Schenker in some ways, not really for where we are in the cycle, things are baked in. Come has also historically, since keeping track of the records, there has never been a time where you have had three consecutive president ial terms without a new recession starting. Now, the last recession started at the end of bushs second term, did not have one for the first term of obama or the second one so far, so we will probably get one near the end of the term, or at the beginning of whoever gets to be president. Vonnie thank you, jason schenker, from boston. Real estate markets are hitting records in some major u. S. Cities, but are we back in bubble territory . Shery then in the options and said, our trade is paypal. The company will report earnings on thursday with the stock up about 9 this year. And wti crude has fallen below 40 a barrel after climbing above 50. We look at what is behind the pullback. This is bloomberg. Vonnie and the sun has come out there in midtown manhattan. Bloomberg markets. I am vonnie quinn. Shery i am shery ahn time for the Bloomberg Business business flash. The Justice Department may try to prevent to takeover bids in the Health Insurance space according to a person familiar with the matter who says antitrust of issues are looking to File Lawsuits to block anthems takeover of rival Health Insurance insurer cigna. A final decision could come this weekend will be made by the end of this month. Vonnie european stocks fell from a threeweek high lead by minors after rio tinto posted week iran or figures. Iron ore figures. The worstle, is among performers in em currencies. Bonds across europe also declined. Shery a brazilian judge has blocked nationwide access to Whatsapp National third blackout for service in the nation. The move comes after the application failed to hand over information requested in a criminal investigation. Aatsapp is also facing 15,300 a day fine until it complies with a judicial order. And that is your business your business flash update. Vonnie with home prices hitting record highs in some u. S. Cities, it raises the question, are we in a rising bubble. Patrick clark has been looking into that. Are we headed down the same road as 10 years ago . Patrick certainly, it is not the same road as you look at the conditions present in the lead up to the last house loose credit, lots and lots of construction of new homes, cheap homes we dont have those things happening today. So shery but the last time we said that it probably was not a bubble, it was a bubble, and it burst. Patrick right, sure. It is uncomfortable writing a story saying it is not a bubble because i am aware 10 years ago people wrote those stories and looked stupid a couple years later. Vonnie lets forget about the word bubble, because you never know until it is over whether it is or isnt, but our home prices austin . In places like patrick theypatrick may be too high, but the high prices are being fueled by a lack of inventory of homes, and not by really easy credit, and probably not by home flippers speculating that prices will continue to rise. There is some of that going on, but nothing like 10 years ago. Second, third, and forth homebuying. Patrick not as far as we can tell. Shery will we see new homes coming on the market . Patrick at some point, sure housing becomes too expensive, even for people coming really good salaries in really good job markets. Give up. Le may we have seen there is some amount of tech companies, for instance, looking to move people to cheaper markets. That might mean going to austin from san francisco, denver, portland, or seattle other cities where housing is still relatively expensive, but at the same time still much cheaper than it is in the bay area. Nie it is fascinating Jonathan Miller sends out housing notes and looks at manhattan real estate once a month, and found that renters are getting a little power back from landlords because there really was rent just got too high, and there is more available now. Heryss it is akin to s question will this correct itself . Patrick there is not enough housing to buy and enough for people to rent in some cities. Short of an economic slowdown, where there is less household where there is less demand and some of these places who knows . Vonnie that is a good answer and we dont use that enough because most of the time, who knows . Shery thank you for joining us, bloombergs real estate reporter, patrick clark. Still ahead, we will keep our ion global markets. Down onehe s p 500 is quarter of a percent. Shery money flowing to the bond market as we see treasuries railing again. Rallying again. There is how we are trading, 1. 56 . Declining yield of three basis points. We see the bond market also holding near its highest levels of the session. Vonnie next on bloomberg markets, our options inside report. We will take you to a particular stock and asking how can you cash in . This is bloomberg. This is bloomberg markets. I am vonnie quinn. Shery i am shery ahn. Vonnie time for options inside with julie hyman. In joiningk you, and me is kevin kelly, chief Investment Officer at recon capital. We have this draft after reaching records last week for the major averages a lot of earnings coming out. And i wonder if this is difficult during earnings season the use of an uptick in activity on individual stock options, and being down take on options is that something that happens . What is interesting about earnings season if you go back to 20 15 two now, you see compressed volatility. Right now we have a 12 handle on vix. The market is focused on guidance and earnings. They are dictating every move that happen in the market. Everyone is parsing the data. 30day indicator. What you see happen before significant, out is you see hedges, out. If we go back to last week, we traded. 00 put contracts we talk about this giant runup in defense ofs, and defensives, and that was at the 58. 51 strikes. That is what is helping this market stay right here, aside from the fact that we are at recordlowinterest rate and the cost of capital is so cheap. Earnings are worth more. That is what people are not worried about valuation. Julie interesting, and utilities tend to be a later wave of earnings, people looking to see if we will have this outperformance by that group. Speaking of earnings, you are looking out to paypal earnings. We have just started to get the trickle of earnings in tech specifically. It seems expectations are not superhigh going into the paypal report. You are hitting the nail on the head they were spun off three quarters ago. They have had a great analyst stay in may. They have Digital Asset properties that are irreplaceable. Apple cannot throw them off. Before they were spun off by ebay, they bought zoom, a Great International pay process taking on Western Union directly. It has been surprising they have been flat since their spinoff. They have one of the best Digital Properties in the social media payment aspect. One of the things we like about paypal is they are so underappreciated, and it is, kind of, like what happened with armed holdings. They were underappreciated. They had great golf. One of those names that looks pretty good. Julie interesting to what is the trade mr. Kelly you can go out interesting. So, what is the trade . Mr. Kelly you go out 10 days, sell the 37. 50 put, put at that price, and generate about. 5 . If the stock does come down on earnings, which is the 21st, you can buy it at a cheaper price. It is similar to buying a covered call right the stock or by calls against it, and one of the reasons they moved up earnings day, visa. Julie you would be a buyer if it goes down. Mr. Kelly correct, and if you if it goes up, you would gain in 10 days. Julie thank you, kevin kelly. Girls, that to you. Shery we are about 30 minutes from the close. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Scarlett from bloombergs World Headquarters in manhattan, you are watching bloomberg markets. I am scarlet fu. Shery i am shery ahn. Many punditshat once thought was impossible donald trump is better to secure the nomination for president of the united states. Youll be in attendance at the partys convention in cleveland, ohio, as two of his children take the podium 22 euro tiffany, and his eldest the son, donald trump junior. Also addressing the audience, Senate Majority leader mitch mcconnell, and House Speaker paul ryan. Hillary clinton says donald trump is not trying to unite americans and the proof can be found in his own words. The likely democratic president ial nominee spoke with bloomberg tvs charlie rose. Ms. Clinton he appears to the fears, the anxieties, and yes, the anger i was stunned when he was inciting violence at his rallies over the past year. He has it is very clear staked his political identity, and his future as a president ial candidate on dividing us. Mark you can watch the entire interview with Hillary Clinton on charlie rose, at 7 00 p. M. Eastern time right here on your bloomberg television. All lanes of the Tappan Zee Bridge are closed until further notice after construction bridge crane sell onto the old stand. No cars were hit. No word on what caused the collapse. Turkey has stepped up its response to last weeks failed coup and the government has fired almost 24,000 teachers and interior ministry employees. They were said to have ties to plotters. D coup almost 1600 University Deans were told to resign. Toldews host megyn kelly reporters