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tv   Bloomberg Markets  Bloomberg  May 28, 2015 11:00am-12:01pm EDT

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-- more signals a rate hike will come later this year despite a less than impressive run of economic data. betty: the fit bit is moving from your wrist to the court -- they are revealing their trade secrets. pimm: and what is life really like in greece these days? a country that is bankrupt in everything but name. betty: we start this hour with breaking news in the oil markets -- crude inventories are out a day late because of the holiday this week. julie hyman is in the newsroom with the headlines. julie: we are seeing a bigger than estimated drawdown and inventory, down 2.8 million barrels according to the energy information administration. than doublee more
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what was estimated. we are also seeing a bigger drawdown in gasoline inventories and this to let inventories actually seeing an increase of 1.1 million girls. what you have behind me is the oil price on the intraday -- we are seeing it bump off of the lows as we see the bigger than estimated drawdown in inventory numbers. on a downhas been trend, so we will see if this turns around. there is a longer-term perception that even if there is a drawdown in inventory, it might the a short-term one and that might continue to put downward pressure on oil prices. julie hyman -- a little bit of upward pressure on oil prices. pimm: let's get to some of the top stories in this hour -- there has never been it bigger deal in the technology industry.
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the takeover continues industry trend of consolidation. in company is based singapore and was once part of hewlett-packard. broadcom is based in southern california and is the against maker of wi-fi chips. it looks as if the head of soccer's governing body will survive the corruption scandal for now. president is up for reelection tomorrow and likely has the support of enough extend his 17 year rate. he has not been charged in the bribery scandal. still in an exclusive interview, one of his aides said he made bad judgments. -- if you will give away the rights for one dollar in
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exchange for awards, maybe it's not corruption, but it is serious mismanagement. pimm: the head of the european soccer history had called on him to quit and so did british prime minister, david cameron. there was a big jump in american signing contracts to buy previously owned homes. it rose to the highest level in nine years will the increase was almost four times more than the median forecasts of economists surveyed by bloomberg. low interest rates and a stronger job market are helping to support the industry. a drugmaker is paying a big price to settle a controversy over generic drugs. they say they unlawfully protected a sleep disorder drug with agreements with generic drugmakers. a top apple executive suggest cars will be the company's next frontier.
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the apple senior vice president is the ultimate mobile device, isn't it? bloomberg has reported apple is pushing its team to produce a car by 2020 but the program could be halted. and it sounds like sony pictures is saying a low hawk to its day movie, aloha. blocking move, sony is reviews of the movie until hours before the public can see it. recs agreed to the embargo. sony's recently departed chairman did not care much for the film. months ago, she e-mailed colleagues saying that it makes no sense. those are our top stories is morning. coming up in the next hour, getse's i/o conference underway. sightsompany with its set on driverless cars and
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virtual reality, people are looking for progress. to thewill take you newly opened one world trade center observatory. among skyscrapers. pimm: another signal a federal reserve rate hike is imminent, the san francisco fed president saying today in singapore "i expect the fed will be raising rates later this year. the u.s. economy is moving well and we are moving toward our goals." his comments echoes those of janet yellen. the market ready for a rate hike? that is the burning question. theing us to discuss it is head of macro credit research at rbs. i know you have done research yourself and surveyed your -- surveyed stop your clients.
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almost 100% of the people you surveyed do not expect a rate hike in june. in q2 there is a slowdown and volatility in terms of wages. imagine two scenarios -- we have 25%growing at 3% and growing at zero. we are close to the second scenario. the inequality is an issue, so this prompts the fed to wait longer. we think the hike will come in september. betty: we have a graphic here that shows 40% of those surveyed believe we will get a hike in september. generally, across investors, there are hopes there
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would be no hike this year. that's why there should be some volatility when the hike actually happens in september. after that, it will become clearer that this will be the slowest hike cycle in the history of the fed. the vice president fisher a couple of days ago said the plan is to hike to 4% in four years. nobody knows what happens in four years, but this gives you the idea that we are looking at 1% per year, a very reasonable hike cycle. the: i want to start with european central bank and quantitative easing europe. tell us your take. a veryin europe, we have different situation. in april, we had a selloff in global bonds starting in germany and a lot of people were worried whether european qe would and sooner than the planned date. there's no chance that's going to happen. european qe is very strong.
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fed was buying around one dollar per dollar, so almost twice as effective on the market. in europe, the transition to the real economy is impaired because the banks still have a lot of problems. the european banks still have a trillion euros of underperforming bad loans. the transmission mechanism in terms of limiting fed it -- credit growth is slower. what it means is qe in europe keeps credit and bonds in the market but if you look at the real economy, the recovery is a lot slower. about the real economy and how it relates to greece. are they going to leave the eurozone? think they stay in the eurozone, but remember, you could have a default. you could have a missed imf
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payment. the next one is on the fifth of june and there are payments until the 19th. we are dancing close to the edge of the cliff here. but remember, even if there is a default, the ecb will give ric banks andthe b there could be a cyprus-type situation. there could be a political crisis with the government having to reassess what they need to do. in the end, it is a political problem. 60% probability of an agreement, a 40% chance of a political crisis, but the greek people want to stay in europe -- in the euro. betty: thank you very much. we will get an insider's look at the fed's rate decision with the st. louis fed president.
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you can watch that live at 3:00 right here on bloomberg television and listen to it on bloomberg radio will stop -- bloomberg radio. tom: coming up, we are going google's development day and find out where are the big products and services. and more on the fierce battle between fitness trackers. that's next. ♪
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betty: welcome back to the bloomberg market day. pimm: let's go to julie hyman
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with a look at what's happening in the markets right now. julie: we have been talking about the huge deal in technology today with avago agreeing to buy broadcom. because it falling spiked to above the offer price yesterday after there was a report to deal was imminent. if you look at other semi conductor makers, there's speculation about whether there will be dealmaking in the rest of the sector. there has been talk about intel making a deal for all terra. bloombergk at my terminal and you can see the proxy for that, the philadelphia semiconductor index. aboutn see it has climbed eight point 5% for the year and is trading at its highest in about 14.5 years. in addition to what we have seen
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happening, it has let a lot of people to say are we in a bubble when it comes to semi's? this is essentially a scatter plot. on the bottom, enterprise value da.ebit you have qualcomm, which is showing sales growth. done at 24l is being times where it is trading at the moment. in other words, it is off the graph entirely and that illustrates why there are a lot of questions about the valuation being paid for broadcom and evaluations we are seeing for deals in this industry. climb weined with the have seen in the semi stocks, you can see why one investor
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today called it frothy perhaps. frothy and publishes -- licious. also interesting to note that avago was part of hewlett-packard. the jobless rate is approaching the fed's definition of full employment. billionaire david tepper's getting behind a hedge fund providing seed capital for the first time in his storied career. he is giving capital to eric kohl's to start a firm the next year that would invest in global credit. he joined appaloosa after joining the trust -- distressed
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sales. most of america is a buyers market when it comes to housing. buyers still have the upper hand in 59% of the companies. realty trac says a buyers market is where the home sells for less than 100% of the estimated value. the observatory at the top of one world trade center opened tomorrow. take in the view will cost about $32. david: get to the top of one world trade center takes 47 seconds. this is the fourth tallest building in the world. but the tallest buildings don't necessarily have the tallest observatories. this one isn't even among the
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top 10. in dubai, there is the world's tallest building, but it's observatory is 1000 feet lower than that. tower opensnghai later this year, it will be the second tallest building in the world but will have the tallest observation deck. skyscrapers compete for visitors and tickets are not cheap. in dubai, to go to the top, it costs $136 and $.13. there are lounges and boutiques at the top. here, there is a bar, cafe and steakhouse. this will be the third big observation deck in new york. the other two are top of the rock at rockefeller center and the empire state building. visited newurists
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york every year, but it's estimated that number could grow .o 9 million one world observatory expects to see between 3 million and 4 million visitors every year. you be going to something like this? betty: yes. pimm: $32. betty: it's not observe it in -- it's not absorbent. goingit's much more like to an airport, it's like going through security at the airport. you need to spend a lot of time before you actually get into the elevator and you feel that there's a lot of security that goes on and the cues are quite long. you can book in advance for more money and so on. betty: they do the same thing they do at airports. they walk you through the duty-free shops. the ropes are set up to
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make you feel like a mouse. betty: and they charge you high prices. ahead, we going to san francisco ahead of google's big developer day. plus john boehner sues fit bit -- more in the fit -- the fierce battle of the wrist. -- job own sues fit bit.
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pimm: google's annual developers conference begins in san francisco today. previously, google's cofounder managed to power chute onto the stage while larry page held an impromptu question-and-answer session. so what can we expect
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this time around? is at the event in san francisco. can we expect any kind of antics like this this time around? what they are going to announce here is something at the keynote presentation that's going to begin in probably another half an hour. things have not really kicked evenet it's -- it's not 8:30. amazing features will than android operating system have? better security, it's most to work faster -- not really groundbreaking stuff. but if you are one of the tens of thousands of people who work in this business, you will need to be here to do the meetings that meet the people you might work with in the future or start the kind of business deals that might happen. for that reason, 8500 people are
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gathered here and they will attend some of the events and take some of the meetings. iterative.ements are a lot of these things have been preannounced, so the news of the moment might not be huge, but it's a time for these people to gather and be here in san francisco for that. pimm: you seem a little bit underwhelmed by the potential for announcements from google. what can you tell us about the self driving car initiative? it's something they've been working on for a long time and something they used to give a splash when the transportation secretary shows up in silicon valley. these are long-term of elements google has been working on for years and years. there may be a dog and pony show with that today that no significant announcement is expected. there will be a plethora of
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announcements about minor developments here. also hear about some of the other things they have talked about in the direction of virtual reality. security in mobile and the universe around that. that will be the real focus of this event. betty: i want to switch over to tack andide related to google and the development of new products. , anbit and jawbone interesting rivalry -- it has taken a new turn with jawbone accusing fit bit of plundering its employees and stealing its trade secrets. it is really interesting stuff. think about this in the context of google and android. here are two start up companies.
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fit bit is a few blocks in that direction and jawbone is about a mile in that direction. while they are feuding, they are trying to hire the same engineers and salt that same technological problems. according to the lawsuit, fit bit went gaga trying to hire anyone they could from jawbone. trying to solve the same problems around measuring people's steps and sleep patterns. somene is accusing employees of taking information out the door that they should not have taken. -- there's athings lot of innovation happening with companies that are not google, place, sansame francisco and silicon valley, when the money comes flooding in and the ipo is about to happen, the fit bit ipo is an amazing document that shows what a
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dominant business it is and jawbone is a smaller competitor trying to stave off fit it from becoming a juggernaut. when the money comes knocking and the ipo is at the door, jawbone wants to get a piece of that as well. we are looking forward to getting more reports from the google development -- google developers conference. how about an app that lets you know when you are getting sued. that would sell out on wall street. i'm going to say goodbye here. still ahead, the back-and-forth discussions on greece's bailout have dominated headlines, but what is it like on the streets of athens? ♪
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pimm: welcome back to bloomberg market day. i'm pimm fox. the semi conductor sector has
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been consolidating, but there's never been a deal like this 1 --avago technologies has agreed to buy broadcom $437 billion in cash and stock, it's the biggest technology deal ever. is based in singapore and will take the broadcom name once the deal closes. this spring home selling season had a big april. pending sales of existing homes had a nine-year high and rose 3.4%. that's almost four times the median forecast from economists surveyed five bloomberg. embattledard from the president of soccer's ruling body. he presided over the opening of the fifa conference and discussed the investigation that led to the rest of nine ofcials. individuals bring shame and humiliation on
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andball and demand action change from us all. we cannot allow the reputation of football and fifa to be dragged through the mud any longer. pimm: the head of the european soccer organization has called on him to quit, but he is still favored to win reelection .omorrow as the head of fifa amazon will now offer free same-day delivery service to -- amazon prime customers in 14 cities. delivery used to cost $5.99, but now it will be free for orders over $35. amazon customers will have a choice of more than one million products. those are your top stories of the morning. the markets are closing in europe.
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for the latest, let's go to ryan chilcote in london. : mostly read, it was already just a short while ago, but the u.k. omx 30 has pulled through. portugal also just up on the day. some movement in the retail sector today -- people are still buying their sports stuff .espite all the trouble in fifa that's the best mover on the stoxx 600 today. biggest diys the retailer in all of europe and people are buying their diy goods. like for like sales are up. the national bank of reese is interesting -- lots of bad news for greece today. we heard the ecb talking about eurozone as athe
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result of those negotiations and you can see that right there with that stock. euro-dollar, the euro basically held its own today, but the same cannot be said for the pound which was down just a tad. the real story is gdp growth. it came in at .4% after the revision for the first quarter. .3, i should say. economists were looking for .4% and a punished the pound as a result. pimm: ryan chilcote in london. coming up on the bloomberg market day, nouriel roubini says he expects greece to find pots of money. will have more insights from the famed economist. and the flood of original content being created is called the golden era of tv. but is it proving to be too many choices?
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costco wholesale, the largest u.s. wholesale chain reporting earnings that topped analysts estimates, but the dollar hurt sales. g7 finance ministers are meeting in dresden, germany today. greece is not on the official agenda but it is a big topic. greek officials say they want a bailout deal done by sunday but the two sides remain fall apart -- remain far apart. is in dresden. why can't they reach a deal? hans: they're are so far apart on the issues. we got a little more from the international lottery fun, offering a carrot and a stick. -- international monetary fund. is if they do these things, they could potentially have some debt relief. that would involve a third rail
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out package. into thet that conversations taking place inside this castle here. most of the finance ministers and central bankers are concerned about levels of debt. they want to see structural reform to have organic global growth. the flip side is if you have high-level's of indebtedness, that's going to be an anchor on your growth. you could see how they might let the difference and say yes it is an impediment to growth, so what you need is to reduce the level of debt for greece, try to get them to make structural reforms and then have a path to move forward. seem quite a, they ways away. we have not heard any of the optimism from athens. they all seem to say greece needs to move a lot more and the ball is in their court. pimm: could you describe some of
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the political ramifications of the meeting? who is aligned with who, if anybody? we're not getting a anyt sense that there is big division here, but that's mostly because the greeks are not here. there is the film -- the familiar demand-side solution. i spoke with the canadian prime minister and he said there's tension between the german side who wants to push for structural reform and some of their counterparts, especially americans, who are pushing to stimulate more demand. that's why we get to this thorny question of how much demand can be stimulate it by debt. theoreticaling conversations here but the practical thing will be what happens in the next six or seven days in brussels. pimm: hans nichols in dresden,
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germany. now we want to look at what life is like on the streets of greece these days. unemployment is around 25%. our bloomberg reporter joins us from athens. what is it like to be a greek in greece right now? >> there is discontent and there is fear for what the next day holds. it really depends on what you are looking at because pensioners and civil service -- civil servants have seen their income go down, but if you work in the private sector, things are really hard. we have 1.5 million people unemployed during the last few years. the greek government is in arrears for about 5.5 will euros to its suppliers. if you work in the private sector, you might not get paid at all or not the full amount at the end of the month.
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the latest research shows some people, around 50%, get paid with a five or six month delay on their wages. describe what it's like for the basic services of the country like garbage collection, water, sewage, things like hospitals and universities. that mucht have trouble in garbage and all of that. hit.tion has really been some hospitals don't have the basic equipment available. they are lacking in necessary medicine. the greek government said today it will not sponsor any further trips to student olympians. that is an expense of around 50,000 euros for year which shows the complete shutdown in government spending.
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circumstances, there's no road infrastructure working at all. is going onbe what in the tourism industry and are their jobs available? a huge surge in 2014 that helps the greek economy have a u-turn. this is threatened. the first couple of months of the year were encouraging that the last quarter, we have seen an increasing number of cancellations from expected arrivals. during the summertime, -- weally from germany, have the summer knocking at our doors and the greek economy is based on tourism. pimm: have you found it difficult to see a future here for greek young people? it is problematic.
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a lot of people have left the country, especially young people, because unemployment from like 18 to 25 years of age people, one out of two are unemployed. they are fleeing the country and that is a fact. i think we are at a threshold at the moment and we need to find a solution as soon as possible. hopefully by sunday when the level agreement is set by its creditors. hopefully we will make a u-turn in this country. pimm: thank you very much. still ahead on the bloomberg market day, nouriel roubini has a solution to the greek debt crisis. keep negotiating and find a compromise. ♪
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pimm: welcome back to the bloomberg market day. i'm pimm fox. we want to begin with the stories crossing terminal right now. oil stockpiles fell for the fourth consecutive week. still, inventories are near the highest level since 1930 and there's speculation the oil glut will persist. west texas intermediate crude was trading at the lowest level in a month. the justice department says it has tested a ring of chinese citizens who took college entrance exams for other people. 15 people have been charged and prosecutors say they used counterfeit chinese passports to poses the real applicants. billionaire stephen schwarzman says if he was 30 years younger, he would be an entrepreneur in
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silicon valley. he's the cofounder of the equity firm,te blackstone group comments is the technology sector has so much amazing value creation. those are your top stories. we were just speaking about today's european summit with thence ministers discussing greek debt crisis. nouriel roubini a -- nouriel roubini is there and we ask what the best ideas to emerge from the summit were thus far. situatione are in a that is the new mediocre. it is anemic and you have to work along many parallel lines. countries have to do structural reform to increase productivity and potential growth. but in most advanced economy, there's a slack in the labor market and a lack of aggregate demand.
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there is a debate ongoing any policy community about whether that should be occurring mostly through monetary policy and it has become unconventional like negative rates or whether there is room for fiscal policy. the pace ofbe fiscal consolidation was loaded. >> where are we on greece? they are closer to a deal with the imf. what's the conversation in the hallways like in dresden? how close is greece to striking a deal? the greeks are not here in dresden because it is a g-7 summit. hopefully greece will be one of the matters finance ministers
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will be discussing. the two sides are moving in the right direction. first of all, there's a dialogue and a proposal on both sides. there are differences, but they are differences that can be narrowed in both sides realize if there was a greek accident or miss payment, that is significant damage for greece and there's the risk of contagion for the rest of the world. it's not just economic and financial risk, but geopolitical risks are important to address. expect pots of money will be found in june to make sure and1.6 billion will be paid hopefully by the end of june, there can be an agreement on that. it will be a condition for closing the review of the second program and the basis for a third program that greece needs.
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i'm positive we are in the right direction. why should an greece just put capital controls in place right now? the bailout money is no longer giving greece time to reform and restructure its economy. outflowsancing capital . at the controls in place now, stop that from happening and, as cyprus demonstrated, you can take them off at some point. for now, there has been some stabilization as thatiations are going into only if there was an accident. onyou have an excel ration -- or a run on the banks, that could impose capital control and if they don't have enough money to pay imf pension and wages, they might have to issue ious
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and those would be a parallel currency. ofditional on the progress the negotiation occurring and the pots of money to be found so the payments to the imf, radical decisions like capital controls, deposit freezes and ious left a lot of collateral damage not just financially but economic can be prevented. we are not at the stage where that's going to be operational. a it falls apart and there is miss payment, there's going to be a deposit freeze but everybody realizes at the beginning of a greek accident, there's lots of other collateral damage, not just for greece but contagion in the financial market. not just in greek and eurozone equities, but global equities and there will be other financial consequences nobody wants. the best solution is to keep
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negotiating, find the pots of it would be good for greece and for the financial markets. roubini,t was nouriel speaking with olivia sterns and erik schatzker. he's attending the g7 finance ministers meeting in dresden, germany, speaking about the consequences for capital controls and other financial measures designed to hold contagion in greece if the country does default on payments. still ahead, the golden glut of tv. programmers are pumping out more shows than ever thomas pending millions of dollars in the hopes of creating the next megahit. the problem? winning audiences and falling ad rates. ♪
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julie: we are approaching the top of the hour. let's look at the action on the street -- we have stocks pulling back to a degree after the gains yesterday. the s&p and the dow nestling back .5%. the nasdaq which closed at a record yesterday is pulling back about .4%. joining me for today's options insight is the senior equity derivatives trader at bml capital. unusual weekn compared to what we have seen recently because there have been
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larger moves. what do you think is going on as we get into summer? : it low liquidity, so it doesn't take much to move the market. uncertainty around when the fed is going to raise rates and a big opec meeting coming up next week. greece is coming down to the wire on a deal with their creditors and the release of a lot funds. there are a bunch of things culminating that present some risks in the market and its resulting in bigger swings than we have seen normally. risks does it provide toward options traders expectations of what the summer was going to be? does it blow up the view that we are going into this low volatility summer? max: i think so. the liquidity and volume we are seeing speaks to the summer slowdown, but the price action does not. it kind of creates a perfect storm for increased volatility when have low-volume, high price
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action and high volatility type environment. it creates an interesting time for options traders. trade has it lead you to -- to change your strategy at all? through thee get the next nonfarm payrolls number, which is next friday, i think we could see the volatility continue to be higher than normal. julie: i want to mention an interesting trade bloomberg highlighted today that was made several weeks ago on the vix looking for perhaps a return to more o-matic volatility levels. that was a pretty interesting trade. it was about five times the average daily volume on the vix. someone sold a july 17 called which normally one would think there's going to be low volatility. the may bought twice as many 23
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calls and that trade makes money of volatility explodes by a lot and loses if it only explodes by a little. it's a bet on a surgeon volatility, so there would have to be a large downward move in above the 23 go strike. and it doesn't make money if there's not a blowup. julie: it sounds pretty risky. this get to your trade for the day, which is in the airlines, which have been fascinating recently. the airlines entering a bear market and then rebounding somewhat. what do you think happens from here? max: the opec meeting will have an impact. the energy names have a higher volatility going in to the meeting, so the options market reflects this opec event. strangely, the airlines reflect that volatility.
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united, continental, delta, the ball is -- the volume is pretty muted. crude obviously affects their prices. we like the downside. it seems like the sentiment is pretty parish. there was a big pullback in the airline space on this lack of discipline and low fuel prices causing excess capacity. we think it is a bearish market. the put spread, you can get that for about $.40 and it looks like a great inexpensive way to get downside. julie: thank you for joining us. don't go anywhere. there's much more bloomberg market day after this. ♪
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pimm: good afternoon it's not a in san francisco. it is noon in new york. stephanie: it has been called the biggest tech acquisition
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ever. broadcom agreed to buy $437 billion. we will look at what is driving that big deal. pimm: dick fuld has been rarely seen for seven years. the former lehman brothers chief executive has been blamed for the investment bank's collapse. fuld is speaking today and we have details. stephanie: what is behind the glut of new tv shows this year? there are hundreds of them and not enough time or viewers to watch. pimm: good afternoon. i am pimm fox. stephanie: i am stephanie ruhle. we're going to get you started on a look at the markets.

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