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tv   Bloomberg Bottom Line  Bloomberg  June 30, 2014 2:00pm-3:01pm EDT

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>> from bloomberg world headquarters in new york, this is "online," the intersection of business and economics with a main street perspective. today the supreme court narrows a contraceptive coverage requirement and health care law. argentina faces its -- faces its second debt default in 13 years. gm says they will pay all claims related to ignition switch flaws. to our viewers here in the united states and to those of you joining from around the world, welcome, we have full coverage of the stories making headlines today.
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payill reportedly play -- all claims from the deadly ignition switch flaws. michael mckeon covers argentina, on the brink of another default. we begin with megan hughes and the u.s. supreme court's decision on contraceptive coverage under obamacare. what is the fallout? >> the big which are here, the decision extends the religious look right granted to toividuals in 1990 three corporations. this particular case, very controversial, ringing rally errors are him pro-life and pro-choice camps to the steps of the court today. of course it was the pro-life groups who had reasons to cheer. a big hit to obama supporters womenguably a big hit to employees at companies who want all of their contraceptive options covered. companies can choose to opt out of the birth-control coverage of worker
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health plans. justice alito said that for-profit companies should have these safeguards to protect the of theus liberties humans that own those companies. of course we are talking about hobby lobby, a multibillion dollar chain of craft stores. the owners of those companies believed that to specific types of contraception were a moral -- immoral. ruth bader ginsburg worried that this could open the door for employers to object to the morality of all sorts of things. today major pro-choice groups echoed that. at the same time we heard from the lawyer from hobby lobby, calling this a narrow ruling. they have opened a pandora's box and set a precedent and we just don't know where the road ends, which is why every single american should be disturbed by this decision. >> justice alito's decision said
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that this did not grant those rights and that oath cases could come later and that they decided later it would not be read into something so broad here you today's decision was narrow and careful. >> i am hearing from sources that senate democrats may be considering a legislative fix here. the white house spokesman weighed in this afternoon, saying that the administration disagreed with the decision but would respect the ruling. the court is now adjourned until october. >> thank you, megan. for more on the ruling from the high court, karen from the columbia high school gender and sexuality law department joins me. welcome, thank you for your time. >> happy to be here. >> the first amendment to the united states constitution is clear, congress shall make no law respecting the establishment of religion or prohibiting the free exercise thereof. weren't the plaintiffs in this case just exercising religious freedom? >> i really don't think so.
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it depends on how you define religious freedom. one of the things that is clear in this case is that the burden claimed by the plaintiffs is very attenuated. although they were being required to do was provide contraceptive coverage that might or might not be used down the line by an employee in consultation with a doctor on their own moral or health needs. it is not the direct exercise. it is not about how they worship or anything closely connected to their freedoms of religion. >> how does this expand the rights of for-profit companies? >> we will have to see how that plays out. the majority opinion said that it was leaving those decisions to the future but that it did open the door, so now we know that corporations like these companies in question have religious exercise rights under the religious freedom restoration act. the opinion did not answer the
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constitutional questions, so we don't yet know if that would be extended to other corporations with shareholders or what other kinds of religious burdens are being claimed or might be allowed or not allowed. there is still a lot up in the air. >> my colleague, megan hughes, was just telling us about the dissent from ruth bader ginsburg , who took it as a right to read the dissent from the bench, saying that the court has ventured into a minefield. does the decision open up the door for employer objections to other types of health care coverage? is there a chance that religion will be part of a publicly traded companies employee benefit plans? >> it is a pandora's box. even though the majority opinion left a lot to be decided, the questions are now open. the publicly traded question is a separate one the court did not reach, but the logic of the opinion that certainly extend to health care coverage, coverage for vaccines and blood transfusions for people with allegis objections to those
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kinds of services, it could open the door to other kinds of objections some other kinds of workplace regulations that , lgbt amployee safety quality, job discrimination, that kind of thing. >> speaking with tara loewen the impact on women, this decision? >> it will depend a lot on how congress reacts to the decision. one of the things the supreme court said was that the accommodations offered by the administration to religiously affiliated nonprofits where they can certify that they object to providing this coverage, the insurance company then has to cover it at no cost, that was an alternative. one thing we will have to see is how the administration react. will that be extended? will they provide this themselves? it is a big economic burden. birth control can cost hundreds
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of dollars per year. some of the best kinds are covered by today's decisions, like intrauterine devices. studies show that when women have access to those options, they prefer them, but it can and a thing 800 dollars $1000 up front. >> we have a little bit less than a minute. does itruling, how reshape the role that religion plays in a secular society? >> the important take away is that it gives enormous rats to religious business owners to decide what counts on a burden -- as a burden and what counts on religious exercise, showing a thing that most would not think of as part of your religious exercise, like the health care that you cover in your insurance being up for debate. i think we might see a lot of resistance to other forms of health and safety regulations and discrimination regulations. x thank you for joining us in the newsroom. i appreciate it. >> thanks for having me.
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>> this monday, argentina is on the brink of default for the second time in 13 years, expected to miss a bond payment today. a federal court locked funds from being distributed until they settled with creditors from the 2001 default. mckee ede now, michael koch afforded kamsky -- katya p ortekanski. what does this mean? >> the judges hope was that they would use the 30 day grace. from today until the end of july in order to negotiate a settlement. argentina has said that they are willing to talk under the right conditions. the singer's group has said that they are willing to negotiate. according to, as you said, the singer people right now, there are no negotiations underway. >> michael used the phrase right
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conditions. what are the right conditions for argentina? >> they say they want to be able to do this under fair treatment and fair negotiations. they don't want to rake the right to future offer clause in the restructured debt, which says that they cannot make a extending thehout offer to everybody. if they are going to be going through these negotiations in a way that does not trigger a whole bunch of other litigations . >> is argentina trying to make its case in the papers here? yesterday they took out a full-page ad in the new york times. >> they are never at a loss for words. they took out ads last weekend as well. make itinitely want to seem like they are getting their arms twisted in this whole thing and that this is not voluntary at all. >> not voluntary, but michael, what does this mean for argentina? will there be some instance where they can negotiate their
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way out of this? >> it is up to them. it looks like they can negotiate if they want to. for one decade argentina has been saying that they will not pay the holdout. they would have to climb down from that ledge and have to .void triggering the clause they have to figure out something, if they go into default it is bad news for an economy that is already on sand. inflation is at 30%, the peso is getting tremendously undervalued. at this point, they need to do something to write the ship economically. default is not a way to go. >> what about taking this someplace else? argentina saying they might go to the international court of justice to seek relief? >> they made that threat, the question remains if it is a credible threat. they are coming off of this high from having pursued this, when
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their ship was seized they went to the international tribunal of the sea and decided to disagree with the court and allowed argentina to take their boat in ghana. iny have that as a precedent which they can seek refuge elsewhere, but they decided to issue the bonds under new york law? they have to deal with new york law. >> one minute left, a question for both of you, what is the president's next move? >> that is open to question. the real question at this point is -- what are they saying for domestic lyrical consumption to negotiate behind the scenes without upsetting the argentine people? remember, there is an election coming up. >> all politics is local. what does this mean for her? >> she does not want to get carried away on a helicopter like in 2001. she wants this to go smoothly and well. leaving with the same conditions
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in which her former husband came in would not be good. >> do we have any idea that the people are behind her? what are they saying? are they support this? >> there was a poll that came out to show that argentines just want this to go away. the overwhelming majority of them think that the debt should be paid and that they should put this behind them. the question is, when addressed by vultures versus holdouts, they get on different sides on that. >> what is really interesting is if you look at their stock market, it has been going up and the general feeling is that that is because of people invested in stocks want default to clear everything out and rebuilding the economy. thank you both so much. before we go to break, we have breaking news to tell you about.
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2:50 pm, president obama is scheduled to deliver a statement on immigration reform in the rose garden. the associated press sites that john boehner will not set an immigration vote this year. the president is expected to request $2 billion for border security to make a new plea to pass comprehensive immigration. coming up, and outlook on the u.s. economy. why is the key question now the pace of growth in the second half of the year? bottom line continues in just a moment. ♪
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>> time today to look at the u.s. economy and get an outlook on where we are setting -- heading in the second half of 2014. my guest, the chief economist at ms. rowe financial, as well as another chief economist from rbs securities. ladies, welcome back. good to see you both. year to date, all of the major
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indexes are going to finish the first half in positive territory, but you think the markets are too exuberant? as a wise man once said, is it irrational exuberance? >> i actually don't even mean with respect so much to the equity market, which is what everyone wants to point to -- i am not suggesting that stocks should not be here or that liquidity dries up higher. i am more nervous about areas in the credit market. on the yields. the very low levels of bond yields, particularly for high-grade corporate's, where you actually expect to get a little more additional yield over the treasury. you have just got people buying things that they don't really want to buy, but the yield is so low they almost have no choice and i am ultimately worried about her that lead. >> the first quarter decline of economic activity at three percent, was that temporary and
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without solid wage growth for the remainder of the year, how can things turn around? >> part of it was temporary. there was a question about whether it was larger than we thought. they had also made estimates for the affordable care act that they had to scale back. even with a better second quarter it will still be a major deceleration and it is now looking like much more of a reach to get to the three percent we were hoping for in the second half of the year. the order of data is there, but not quite there on business investment. remember, employment data is backwards looking so we are seeing reflection of 2013, not necessarily good economics. >> should the fed be more concerned about rising and ration? are the markets concerned at this point? howe actually talked about in the spring we were going to see those year-over-year rates move higher. some things were put in, medical
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care costs, they took a big lay down last year because of the sequester. we knew that these rates were going to tick upwards and we did not necessarily think the market would get so worked up about it because we thought other people would see the trend as well. the bottom line is that after the uptick, going forward we think things will stabilize. i do think the fed should be worried about prices going up, but i am more worried about asset prices over consumer prices and i don't think the news will get much work -- much worse from where we are now. >> diane? .> i wanted to underscore that this idea that janet yellen came out to call this noise in the data, i think that they took it as her being an ultra dog but there are temporary factors that will do exactly that with ace affect in there and the market did not pay attention to it. that is a problem. --re is also this confusion
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2.1% on cpi is equivalent to 2.5% pce. it is still below target, meaning the fed has a lot more communicating to do, but we have to look at increases in inflation and oil prices as a tax on consumers that squeeze them out. >> the lack of volatility that we have seen in the markets, does that concern you? is the lack of risk are the reason we are seeing the increase? >> one of the things that concerns me, i think the fed has ifen us a very wish outlook, you will. the fed has been cleared to tell us that they are going to raise rates more slowly this time. even with that guidance, markets are pricing in less tightening than the fed themselves have suggested they would like to see and alternately, perhaps, that is feeding into the flow of volatility with complacency -- not that they will be so much more aggressive than people
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is notbut the market even pricing and what the fed has told you their best guess is. >> i agree, the high-yield is interesting is how the fed believes it can control those issues with macro regulations. it will be interesting to see, because i think the chairwoman believes that she can use regulation to rein it in. the question is who does it and financial markets have no idea what will hit them as the fed tries to deal with these perceived bubbles out there. >> i have to chime in as well, we have been talking about that a lot this year, particularly in the economic environment, it becomes much were difficult for the fed to talk about raising interest rates in the first half of the year. they will be forced into thinking about how to do these, they will not want to talk about raising interest rates. you are right, the markets are
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not looking at that at all. >> ladies, i have about 20 seconds. the june employment report will be out on thursday. what are you expecting? >> i don't think it will be much different from what we have seen over the last couple of months. >> diane? >> we had a lot of school closures that could mess up the education numbers and participation rates. we will have to leave it there. ladies -- thank you for your time. >> thank you. >> coming up, we will go live to the aspen ideas festival. erik schatzker will be seeking with robin rice, right here at the bottom of the hour. we will be right back. ♪
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television is "on the markets." julie, we have a wrapup on the last day of the or staff of the year? >> it is the sixth straight order of gains for u.s. stocks, we will talk about more about that in half an hour. today's session off the highs, such as they are, new home sales with manufacturing data missing estimates. in terms of individual stocks, devin energy is one of them. selling nearly 900,000 acres of oil and natural gas producing land for $2.3 billion. 80% of the land being sold as natural gas. we are also looking at the resortcompany with its
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outside new york city, new york is issuing a total of four licenses after approving las vegas style casino's last november. it will be interesting to see who wins the licenses. back in 30 minutes, more " online" is next. ♪
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>> welcome back to the second half-hour of "autumn line." i am mark crumpton in new york. victims of accidents linked to the gm faulty ignition switches finally got some answers today on how the automaker plans to take financial responsibility for what happened. planompensation administered by ken feinberg was unveiled this morning in washington. joins us now with more. this will be a long, complicated
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process. what are the key takeaways? --gm will send whatever it spend whatever it takes, according to ken feinberg, who has become quite the expert in putting a price point on tragedy. he outlined the basic right. on how the program will work. the fund is on cap, meaning they are not setting a limit on how much to set aside, gm will pay whatever he deems appropriate. purelypation is voluntary, but anyone who takes money will have to give up the right to sue gm. victims of accidents from before are eligible even if they have already been compensated. that is a big one. contributory negligence is a relevant. meaning it does not matter if the victim was driving drunk or was texting as long as they can prove the car -- prove the proximate cause that the ignition switch defect was
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behind the accident. approved claims will be paid within 90 days to 180 days. this is just the latest piece of the very costly ignition switch puzzle. there is no saying how much this might wind up costing the company. feinberg himself would not put a price tag on it. >> i have no idea. it would be pure speculation. a number of deaths? pure speculation. number of physical injuries? pure speculation. until people file a claim and evaluate the claim. we cannot make that speculative effort. we will have to wait and see. >> feinberg was cap by mary barra for this job, granted full independence and authority to sort this out. today she said that she was pleased that esther feinberg had completed the next step of the
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ignition switch compensation program for helping victims and their families. she said they were taking full responsibility by treating them with compassion, decency, and fairness, and to that end they look forward to him handling claims in a fair and expeditious manner. he will beginning -- will begin accepting applications on august 1. >> thank you. we have breaking news concerning general motors. gm will recall about 7.6 million vehicles involving six safety recalls. totals 8.5can recall million. they say they are aware seven crashes, eight injuries, and three deaths among the cars being recalled in u.s. models .hat run from 1997 to 2014 gm says that there is no conclusive evidence of a defect causing the crashes. we will continue to follow the
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story, of course, and give you more information as it becomes available. business leaders are gathering for the 10th annual aspen ideas festival in colorado. a professorh is now of public policy at the university of california berkeley, and his new film -- in equality for i'll -- "in equality for all," his latest book is "aftershock: the next economy and america's future." erik schatzker is with secretary reisch in aspen. good afternoon. >> mark, thank you very much. as you can see the wind has picked up, perhaps blowing fresh ideas into the ideas festival. there are some fresh ideas of right beside me in the person of the former labor secretary. thank you so much. as mark mentioned moments ago, the president is going to be making remarks in which we understand he will be directing his staff to ask for executive
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action to address the problem of immigration reform. the president possibly do through executive action to fix the problem? outt is hard to figure that right now. immigration is obviously very unpopular. obviously undocumented immigration is even less popular. people within the united states right now are not in the mood to do anything international, whether it is immigration, foreigntrade, or even affairs. isolationism is creeping in because the job situation is still bad and most people's incomes are still dropping. the president is a hard spot in terms of needing to take action on a lot of fronts without having any capacity through congress to do it. since i heard that he was going to explore executive action i have been trying to turn over in my head what he might do. one thing that he may feel
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compelled to do is to talk about the humanitarian crisis of a lot of children who are undocumented and crossing into the united states right now. it is a humanitarian problem that people have to see in those terms. cabinet, were in his would you advise the president to explore this on the front of immigration? it is not as though he has not come under enough scrutiny already. >> i think i would be very cautious, politically. the president does not have to run for office again. >> no, but there is precedent to be set. >> there is, but i was just going to say that we have a huge number in this country of undocumented workers, but very little pressure has been put on the employers and it seems to me that some sort of executive action that held employers more hiringible for
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undocumented workers who essentially cannot complain about working conditions that violate the law do not there. that might be an important step to take. >> the president's hands are tied when it comes to just about everything because congress is at a standstill. you care deeply about the issue of inequality. you made a movie about it. what could government possibly due to address and a cup -- address inequality without tax reform? >> that is part of it, obviously, also education reform. early childhood education is part of that. constraining wall street in terms of avoiding another too big to fail crisis that hurts the middle class and the poor, they paid a lot of that price. it is also very important to look to ways in which infrastructure spending could be used to put more people to work.
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right now we still have a huge number of long-term unemployed. the united states is facing a terrible problem with regard to infrastructure that is crumbling with deferred maintenance. at the same time we can borrow money very cheaply. why not borrow money cheaply, put money -- put people to work and get our infrastructure to where it should be? >> you would agree with larry summers on that point? >> absolutely. it is a no-brainer. >> you mentioned wall street. >> i thought you would mention that. i saw your face. >> has wall street not been sufficiently reined in? what's the big tanks are still too big to fail, jail, and curtail. i think the size needs to be limited. i think we have to bring back glass-steagall. the volker rule is so ridden with holes, it is worse than
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swiss cheese. >> efforts to bring blue -- bring back class steagall would surely be just as riddled with holes. >> that is a defeatist proposition. >> or realistic. >> anything that we try will fail because of the power of the big tank. let me just say, the big banks are already being subsidized indirectly in terms of major depositors, major lenders assuming that they are too big to fail and therefore far less risky. that is it tangible direct subsidy that will make the big tanks bigger and potentially more vulnerable to failing. >> the word subsidy has not been used, but there is no question that it would appear that investors would benefit tremendously from the low interest rate policy of the federal reserve. is she making a dangerous trade-off by prioritizing
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inflation over employment? .> i don't think that she is the federal reserve board has two mandates under the law. price stability and employment. there is very little evidence of inflation are building up that is based upon price and wage bill that. in fact, if anything there is not enough inflation. when we get the kind that is based around economic roast, that is not bad, that is good, and she should not worry about that. >> thank you very much, bob. pleasure seeing you here. now a professor of -- now a professor of public policy, robert reisch. >> stay with us throughout the day for coverage of the aspen ideas festival. "bottom line" continues in a moment. ♪
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>> recapping breaking news, the out of -- automaker sees 700 million previously disclosed, gm says it is aware seven crashes, eight injuries, and three deaths. they said no conclusive evidence that the defect caused the beenes and the stock has halted on this news. stay with bloomberg, we will bring you more headlines as soon as we get them. time for today's latin america report. president obama held a bilateral meeting today, discussing a variety of topics including spying programs. the leaders set an announcement on construction, what was called a major solar plant that would become -- would be coming soon. acquiringies is
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kodak's. the deal is valued at $2.3 billion. they plan to fund it primarily using currently held cash and short-term investments. that is your latin america report for this monday. to settle a criminal investigation with authorities today, putting an end to an investigation that has gone on for seven years. phil mattingly his following the case and joins us now. final details are still being hammered out. what is the latest? x negotiations moved through the weekend. the expectation is the settlement will be filed today after trading closes. the top line is that $8.9 billion will be the largest fine by far in any type of sanctions case multiple times over. thely intense on negotiation side is the ban on their ability to work with
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transactions. some good news this weekend during the negotiations they were able to secure a six-month delay of the implementation of it in on theing business side, it is expected to .e about one year long >> the fine is unprecedented in a sanctions case. what makes their actions so much worse than say hsbc? hp -- hsbcook at the statement of facts from 2012, some of the actions that they took part in were particularly egregious. you wonder how bnp could be that much worse. i have heard, the issue is two things -- they came to the justice department and self-reported some instances of sanction violations a number of years ago. they still came back and violated more sanctions laws years later. the other mark on this one is that they could not get over this.
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neither did any of the new york state authorities. it has worked against the bank in a major way. officialspartment told me that the conduct during the case is particularly egregious. that is why the fine is as high as it is. >> phil, thank you very much. a programming note, the white house saying that president obama is expected to make a statement in the rose garden in a few moments concerning immigration reform. president obama is looking to the corner office for the person to lead the veterans administration out of scandal. more when "bottom line" continues in a moment. ♪
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>> welcome back. president obama is scheduled to make a statement on immigration shortly from the white house.
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our chief washington correspondent, peter cook, joins us now. what is the president likely to say? a >> he will have a frustrated president obama coming before the camera shortly to talk about the immigration issue. this is a president frustrated by the gridlock in congress on this issue and one that we can expect will be compelled to take , givention on his own what we have seen from the young .eople trying to cross the president described this as a humanitarian crisis. i think we will hear the president spell out specific steps he will take on on his own. among those steps whether he is directing the department of justice or homeland security to appropriate enforcement resources to bolster the u.s. southern border with more recommendations from his administration and other steps that he can take on his own to try to bolster the situation
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along the border. he is also going to express his frustration once again at the in action in congress. one white house official telling us that the president got word last week in a phone call that the house will not take up comprehensive immigration reform this year, there will be no up or down vote, we had banked on that in washington and that is the official word from the speaker to the president. expect to hear the president frustrated about that and trying to put pressure on republicans to change their mind about that. >> at this point, bob mcdonald at the v.a., what we know? >> the second announcement is coming later today, bob mcdonald, the former ceo of procter & gamble, set to take over if confirmed as the head of that troubled department. a lot of challenges in front of him, this is someone sort of surprise to be in the business community, spending a minimum
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amount of time in the army, but he is the president tick. >> another market check is coming up. ♪
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top oftom line, at the the hour, that does it for this edition on bloomberg television. i am mark crumpton. thank you for joining us. i will see you tomorrow. "on the markets" is next with breaking news. indeed, we have breaking news on general motors, adding to it already sizable recall this year . remember, they have already recalled 20 million cars in north america. there will be 8.5 million more recalled today. the company saying that they are
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, eightf seven crashes injuries, and three fatalities among the vehicles being recalled today. the malibu is 97 to 2005, the caddie is 2012 two 2014. they just resumed trading and it looks like they are trading lower as these issues continue to mount. broadening it out, look at where we are trading today, not seeing a lot of decisive change with a mixed market on the economic cap that we got earlier. taking a step back at the longer time horizon, the s&p 500 has climbed more than 4.5% over the last three months. joining me with a look at what has been driving the markets higher, are stocks editor, mike reagan. we had a streak of six quarters. when was the last time we had a streak like this?
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>> 1998, the middle of rally. it was off to a rough start on the quarter through mid-may, a pretty remarkable comeback. we keep talking about the streak of the. of time without having what, a one percent pullback in stock? >> if you are looking for technical corrections, it has been more than two years, which obviously has a lot of people nervous. it does not seem right that we should go so long without a correction. >> more and more people seem to be calling for that correction just because it has been so long. are there any more concrete signs pointing to it happening? >> it is one of the hardest things to call in the market.
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there was an interesting report last week that oil down every correction we have seen since the early 1980's. there have been only six catalysts concerned about the u.s. economy and the international economy with the most common reasons for corrections. things like geopolitics and ,undamental price to earnings 2002 was when the fundamentals were ahead of the market. as of right now there is never a shortage of people calling for corrections, but it is very difficult. >> we look back at the continuing run that we had and we look at what field it. you can pick economic data better, look at continued fed involvement. are there things to tell you that were the most important element? sooil prices rallying strongly because of the violence in iraq and the russian
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situation. energy producers were the biggest gainers in that quarter, about 11%. otherwise it was a pretty broad rally. consumers, technology, all about four percent or more. >> all right, mike. we've got to leave it there. "street smart" is next. ♪ >> it is the final day of the first half. it was a good six months for investors. bonds are up. how long can these asset classes rise together? i am trish regan. "street smart" starts now. welcome to the most important hour of the session. ruling thatcourt could cut off contraception co


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