Furious about what he considered an illegal leak by mr. Comey to reporters. The state of michigan is suing flint for endangering the public. The flint City Councils failure to approve a longterm water plant with the public, already troubled by a water crisis, into new danger. Instead of going with mayor waivers 30 year plan, the council okd a shortterm extension with the great lakes water authority. President emmanuel macrons cabinet today took a major step to loosening of the countrys labor market. Ministers approved the plan to negotiate reforms with unions and business groups. They want to make it easier for companies to fire employees and for companies to negotiate their own wage deals rather than rely on industrywide contacts. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Julia live from bloombergs wild worl world bloombergs will is in new york. Scarlet u. S. Stocks having a winning wednesday. The question is, whatd you miss . Scarlet policymakers sound a more hawkish tone. A finale results from part two of the annual exercise. Blue apron slashes its ipo price range. The company says amazons recent bid for whole foods is a reason for cutting is target market valuation. Julia lets look at where the average is down. Abigail we are certainly looking at a rebound rally for the major averages today after yesterdays selloff. 500 all nasdaq, s p up. The nasdaq is on pace or close to erasing yesterdays decline. Impressive trading after some of the bearish action yesterday. Based on the fact that the nasdaq is outperforming the other two averages, you would think tech is the sector today, but look at banks. This seems to be a bit of a sector rotation. This is the third day up for the financial sector. This ahead of the third releasing the second part of the stress test results when we will find out whether the big banks can distribute loss of capital. Some are saying 122 billion, much more than last year. Yields rising for a second day in a row with the banks trading up in sympathy. Investors think that will help the lending activity. A lot of strength in tech with the nasdaq trading higher. Apple, facebook, microsoft, these are some of the top gainers for the nasdaq and the nasdaq 100. Bloomberg equity analysts and strategists told me earlier that what is happening here is there is really solid growth for these names. If you are bullish, you need to go back into these names. That is happening today. There does not seem to be anything from a mental behind this just as there did not think to be anything fundamental behind the selloff yesterday, but apple has been below its 50 Day Moving Average for 13 days, the longest since the election last year. It is the biggest waiting to the nasdaq and s p 500. That is bearish. You want to see that recover. There could be some more bearish activity ahead. This is a fiveyear chart. It is the protocol ratio on the qqqs or the nasdaq etf. Lot of talk how the qqqs sliced below the 50 Day Moving Average, something the nasdaq did not do. It almost touched the 50 Day Moving Average. Today, off of it. Qqq did. It is not a fiveyear high. There is bearish activity going on. One expert told me earlier this probably reflects the big put by action earlier this month. Is this a hedge or outright short activity . There isee whether more selling activity in the nasdaq or if todays rebound continues. Julia time will tell. Thanks. Joe whatd you miss . With him us on set to become more powerful thanks to its planned acquisition of whole foods, they are growing interest in the economic impact. A diversionary force in the economy that is thwarting the feds goals. Are covers the fed for bloomberg news. Neil, i will start with you. There is this meme going around the last few weeks. Isld it be that amazon having a meaningful effect on the overall inflation rate . Neil i think they are. A lot of this, if you look at whole foods in particular, lets think about that. You have the intense competition in the food Retail Industry. I think it is a little bit overhyped because it is amazon. Fresh direct. These things have been out there for a while. Lets say there is a lot of competition in the Retail Industry and at drive down prices for food at home or Grocery Store inflation. It is not immediately clear what that does for wages. To me, that is a boost. In time, people will allocate into different areas. For example, look at what happened in the 1990s when you had the opening up of the global economy. You had this secular decline in court commodity deflation. Ultimately, we saw a relocation into other areas of the Consumer Price basket. Joe headline inflation, however, continues to be undershoot where the fed like it to be, raising questions of, aer some of thesre some of these mos broken . Is there a financial rethink that is broken in light of structural changes in the economy . What do you see on that front . The amazon and whole foods deal comes at an interesting time. We got the news at the same time we got this unexpectedly weak inflation data. It is coming a lot of questions on the feds or model, the way they look at the economy and set Interest Rates, the phyllis kerr we have heard so much about. If you take a look at the phillips curve, it is extremely flat right now, which means there is no relationship. Joe this is obviously quite obligated. Walk us through what we are seeing, what dot plots are, the red lines. This plus them, a quarterly basis for the last 17 years. On a rate is on the x axis. Changes in the core inflation rate are on the y axis. There is no relationship between the two variables. The red light on the left is what the fed thinks is probably going to happen. That is why they are raising rates now even though inflation has been so disappointing. This is basically what policy looks like right now. The question is, and this is why some people like Charlie Evans are looking at this amazon stuff and asking, is our model broken . Heart of their Larger Forces in the economy potentially going on at work here that really explain inflation dynamics more than this relationship that seems to not exist anymore . Scarlet lets just tell you exactly what Charlie Evans said in his comments with regards to amazon and whole foods. He says you know technology is disruptive. It is changing a number of Business Models that used to be very successful, and you have to wonder if certain economic actors can continue to maintain their price margin or if they are under threat from additional competition, and that could be an undercurrent for holding back inflation. Jeff bezos but it typically when he said your margin is my opportunity. Hes looking to go in and take away margins from other companies. To the extent that companies can even raise prices with the economy the way that it is. That spells a longer period of low inflation. Neil companies have no Pricing Power but they are going on a hiring spree. Is that the argument . It sounds kind of odd. If i am a firm and i have no ability to raise prices, i am going to go out and hire lots of people . Because that is ultimately what the data is saying. I think the data is weak on inflation. Everyone is in agreement on that. The data is what it is, but what is the mechanism . The fact still has a model the fed still has a model of inflation. What is the alternative model . People talk about demographics. Immediately clear to me why demographics keep inflation lower because if you look at the price pressures for older cohorts, the prices for them rise faster than for everybody else. I dont know. I think you can make the argument about expectations being a little bit lower. Maybe that is the reason, but to me, it is ultimately an identity. If you are talking about a margin squeeze, one of two things will happen or a combination of the two things. Either Companies Start to lift inflation and raise selling prices, or the extract a little more productivity. The one where they can do that is by slowing the rate of employment growth, presumably, or aggregate hours. That has not happened. There is no indication of it happening because hiring intentions are up. Temporary help employment are up. Without tax receipts are up. Eld tax receipts are up. I would hardly call it a squeeze. We have been talking about the margins in the stock market for the last several years, and they are still kind of high. Julia i know you have a chart that looks at this phenomenon, corporate profits versus inflation. Do you want to explain what you see going on here . Matt neil mentions, what is the alternative model to the phillips curve . The answer is we do not know. It is interesting that if you take a look at this chart, it shows the correlation between corporate Profit Growth and core inflation. Up until the year 2000, this correlation was negative. When inflation went up, it would eat into corporate Profit Growth. Since then, there has been more of a positive correlation. It seems something significant happened around 2000. Now we have this correlation where when corporate Profit Growth increases, accelerates, inflation goes up, and vice versa. And really is important to focus on Pricing Power of firms in order to determine what is going to happen with inflation. We do not know exactly what is going to drive Pricing Power or the Profit Margins at the moment, but it seems like there is a relationship year that needs to be considered. Julia hystericals and making comments like that when they talk about the impact. Based on the information they have, the filibuster, the impact the curve, the impact, is the effect doing the best it can right now . Neil the fed has a very difficult job. I would not want to be in their seat. I would rather be here on bloomberg. Julia you are. Neil this is a single needle to thread. Their model, their outlook, versus what is going on. I do not think the fed should be speeding up the rate hikes based on Unemployment Rate coming down. I think they should take into account the Price Inflation data. Julia hysteria . Neil i think it is a mixed message. If you are talking about the retail competition, that is an upturn in productivity, which implies higher neutral Interest Rates, which would imply the fed should presumably chased those neutral Interest Rates higher unless they want to be policy even more accommodative. Scarlet neil and matt. Discusses phil knight his lessons of leadership with david rubenstein. Aced the preview of their conversation on a sneak preview of their conversation. This is bloomberg. Julia what did you miss . 2017 cap mark a year of change for nike. The company is cutting jobs and revamping as Global Operations in over to compete with the likes of adidas and under armour. Lets look at nike. The company has seen its Revenue Growth take a hit, slowing from the double digits advance we saw in 2015. Nikes new Strategic Plan may not accelerate sales in the shortterm. Investors and analysts will be watching closely for nikes 2018 fiscal year outlook. Nike is facing a resurgent adidas, which gained footing in. The u. S. When comparing the Revenue Growth of both companies which gained footing in the u. S. When comparing the growth of both companies, nike hold interestingly when it comes to margins hold an industry lead when it comes to margins. If more production is realized and speed to market is improved, it is not just revenue and margin that investors are concerned about here. Nikes worldwide futures will be a key number to watch. Those orders fell 1 in the first quarter, the first drop since 2009. 2 . S reducing headcount by the overhaul is an attempt to speed up development and refocus on key markets. This month, bloomberg reported amazon will begin selling nike shoes directly through the brands registry program. It would be part of nikes push to boost sales directly to consumers. And will be focusing thesee focusing on all of changes after the thursday u. S. Closing bell. Scarlet we will see nike knight talked about whether he ever imagined the companys success. When you first started the company in 1962, around then, you knew nothing about shoe design. You did not know about management. You did not have any money. Did you ever imagine when you first started this company in the early 1960s that it could ever be what it became . Phil sometimes when i get that question, i say we are exactly on plan. [laughter] phil but with you, i cannot be smart. You mean that was not original question . Scarlet he also asked how the iconic nike running she was born. David did you design issues yourself or were you the person who figured out what issues were going to look like . Phil we were in a hurry. It reminds me of they asked john kennedy how he became a hero. Oat. Aid they sank my b we were in a hurry. The virtues we did in office of tokyo, japan, over the course of a weekend. Scarlet that was still night speaking with david rubenstein. You can watch the whole interview tonight at 9 p. M. Eastern. Shares of nike are higher by 8 10 of 1 before the companys reports results tomorrow. It is up 5. 7 if you include dividends. Dow is up by 10 . Julia time for the Bloomberg Business flash. Central banks across europe and asia are exploring using virtual currencies. That is despite the influx of cyberattacks and the wild swings of crypto currencies. Dormant College Economics professor andrew evans told bloomberg Digital Currencies can benefit Small Businesses and consumers. Vietnam, china, and denmarks Central Banks are said to be considering options. Investors blame a Brokerage Firm on the regulatory inflation for the sudden plunge of hong kong stocks. Companies say more than 90 while 17 others dropped more than 40 , losing a combined 6 billion in market value. Hong kongs benchmark indexes among the years best performers. The selloff drop those enterprise markets, the most since 2015. 2015. Ce joe i wanted to talk a little bit about the hong kong crash. Check out this chart. There are two reasons i like this chart. One is you do not see stocks plunged 95 in a day very often. This is an umbrella company. You do not hear about publicly traded Umbrella Companies that often. Publicly traded Umbrella Companies in hong kong that are part of the big smallcap concern related to the brokerage plunging 95 in a day. Quite a story. Julia liquidity issue there. [laughter] scarlet engaged in the manufacturing sale of umbrellas and umbrella parts. H and the shaft. Scarlet a programming reminder, tune in on Independence Day for the boston fireworks live starting at 8 00 p. M. Eastern time. Alix steel and matt miller be bringing you the timehonored event. From new york, this is bloomberg. Scarlet some breaking news now on staples. According to dow jones, sycamore said to be near a deal to buy the company for more than 10 a share. Staples shares surging to a record high or a session high right now, excuse me. A session high. There is the stock price, up by 8 . Interesting. Julia private equity interests there. Scarlet yes. Another retailer being targeted by private equity. Julia yes. Scarlet lets move on to treasuries and the bond market. I am going to look at treasuries because we have seen them get back some of their gains over the last two days, but it does not change the fact that they have done very little this month. When you can see here is yields on the 10year note have actually fluctuated by less than sitting basis points in june. You have to go all the way back to february of 2006 for the narrowest monthly range that we have seen for treasury yields since then. Quite sometime. In the face of slowing inflation, basically joe or maybe signs of the market breaking out of its slumber here. Julia this is the interesting thing about yesterday. I apologize to scarlet, but what we saw was excitement in your that lifted yields, lifted the europe yesterday as mario draghi made comments. The whole market jumped on it taking it was hawkish. Then we got the ecb today going steady, back off. You can see the second part of the chart, the drop back in yields. The euro is managing to hang in there. Some false moves by the market or some central bankers. Scarlet if only the ecb says study, all. Hold they did not. They did not say that. Joe a selloff, even in asia. Australia, singapore, korea. These are 10 year yields. If we zoom in on the last few days, we can see increases everywhere. The theme right now in the markets is we heard it from marconi today and janet yellen yesterday and with a rate hike, central bankers trying to tap the brakes verbally a little bit, not have investors think they have free reign. We are seeing this back up in rate. It is not that big in the grand scheme of things, but it is interesting. Julia calibrating. We have been talking about this for the last few months. They are starting to at least acknowledge at some point this has to end. Scarlet moving in a direction. Julia yes, exactly. Very important yesterday. Scarlet that is a snapshot of what is going on in bonds. U. S. Stock market close is next. Take a look at the major indexes with less than 4 minutes before close. Technology and the nasdaq leading the way. From new york, this is bloomberg. Julia whatd you miss . U. S. Stocks hold a session highs, even a central bankers warned borrowing costs ahead are higher for bonds around the world. I am julia chatterley. Scarlet i am scarlet fu. Joe and i am joe weisenthal. If you are tuning and live on twitter, we want to welcome you. We begin with market minutes. We talked about how Technology Led the way down. By 1. 4 ,ch is up gaining more than the dow and s p. This, the nasdaq has erased