tv Bloomberg Daybreak Americas Bloomberg September 17, 2019 7:00am-9:00am EDT
today we got a lot of oil, we got a lot of gas. alix: president trump in the market remain calm. the headlines are not. saudi aramco says it could take weeks to get back online. please, fed, we want some more. the fomc meeting kicks off today with the market pricing in one cut. how many more will we get? work could push back its ipo roadshow after pressure from softbank. yesterday we come in, it is all about geopolitical risk. what do you price in, where, when? today, equity futures off just a touch. oil down almost 2% despite the headlines that continue to ramp up between the west and iran. euro-dollar goes nowhere.
yield actually lower. still seeing a bid in the long end, but nothing dramatic appeared to what you would've thought when headlines broke saturday. let's get the update here. time now for global exchange, where we bring you the market moving news from around the world. joining us from riyadh is yousef , and michael mckee here in new york. we begin in saudi arabia, where aramco tells customers certain deliveries will be delayed, especially in october. yusuf, give us the latest -- yousef, give us the latest. yousef: we are waiting for a firm response from the saudi government. the foreign ministry made it clear that they are going to treat this aggressively. they will defend the land, and we expect a press conference from the energy ministry as well to outline the day
in a bit more detail the exact damage to the infrastructure. bloomberg even understands a tour of some of that damage could be in the offing, but at the moment, saudi aramco scrambling a little bit to get those oil barrels to their customers. alix: in the meantime, the rhetoric heating up in some ways. we heard from the supreme leader of iran. tell us what he said. basically, he made it clear that at the moment, it is not possible to negotiate with the united states on any level. he made that unequivocally clear. with that, it raises the question of where can these conversations go, either between the u.s. and iran, europe and saudi arabia. it is all a bit in flux. if anything, one top businessm -- one top businessmen on the ground, and the conversations i have had, was clear.
iran denies doing anything related to attacking saudi infrastructure. alix: thank you very much. in europe, apple is fighting back against the eu's $14 billion tax bill. maria tadeo is live in luxembourg. what can we expect? maria: good morning. this is the european commission against apple and the irish government to cut -- government. to cut a very long story short, back in 2016, apple was allowed to pay artificially low taxes for many years in the irish republic. apple was told to pay back 13 billion euros. what is striking is apple didn't want to pay, but the irish government didn't want to claim the money back, so the two have decided. to appeal the sentence today we heard -- have decided to appeal the sentence. today we heard from the lawyer
that the ruling "defied all common sense," and appeared to hint that a lot of this is driven by politics. this echoes comments from ceo tim cook, who said this was just "total political crap." it has become a point of tension between the united states and the european union. president trump has had many times that the reason behind this is because the minister behind this hates the united states of america. of course, this is something the european union denies. they say everyone just needs to pay their fair share. tadeo from bloomberg. in london, prime minister boris johnson's brexit strategy compete news to be -- strategy continues to be under scrutiny. in frontnson appeared of cameras to address the latest
in brexit negotiations. in theson: we are now stage where we have to start really accelerating the work. that was the agreement today with jean-claude juncker and michel barnier. aarons has more in london. tony: today we have the biggest supreme court case in london since the last time the supreme court looked at brexit two years ago. so far this morning, lawyers opposed to a so-called no deal brexit i've really been hammering the government, particularly boris johnson come on what his motives were behind suspending parliament at this really critical time in the run-up to the brexit deadline. alix: thanks so much. we will be looking for that throughout the next days in london. and new york, the fed is set for its meetings today. the market surprising in a 25 basis point cut ahead of those meetings.
michael mckee has more. michael: the question is, what do they say about what they do next? the other question that has arisen in the markets, what do they do about repo? a problem has appeared on the horizon. repo is the plumbing of the financial system, and it has bigger than even bank deposits. there's a problem there. banks and other financial institutions and companies have a need for short-term cash to pay suppliers or meet regulatory requirements. they get it by borrowing in the repo market. they put up collateral and promised to buy it back at a slightly higher price and a couple of days. the repo market keeps the world of business moving. as you can see from that chart, the interest rate that borrowers pay has become a lot more volatile, in part because of new bank regulations that require them to hold more cash at year-end. you can see that spiking january, in part because the fed has been cutting back on its qe. it has been cutting back on its
balance sheet, taking cash out of the markets, and as a result, it's become a lot more volatile there. market for dispenser asking what happened yesterday. . big spike there was a tax payment for companies that may have can to be did. also, the idea that the fed is not putting as much cash into the markets. they could attract cash away from the fed funds rate, and you take a look at this next chart that i'm going to show you, if i can get it called up, you can see what happens to the fed funds effective rate when money flows out. it starts to spike. you get less stimulus for the markets. so the fed may have to cut the interest rate on excess reserves on excess reserves again as it cuts interest rates to keep stimulus going. a problem with the plumbing in the market that a lot of people may not really focus on. alix: right, but all part of the fed conversation over the next 48 hours.
stay with bloomberg for all the latest. we will bring you the latest policy decision, followed by chairman powell's news conference. what i am watching is wework, the company signaling it is putting off its troubled ipo. they now expect to complete the share listing by the end of the year. we work's valuation and business drospects have raise concerns. now it is expected they will be valued at less than 1/3 of the original valuation. coming up, more on your morning trade and analysis in the markets in today's first take. this is bloomberg. ♪
trade and analysis of the markets. sassower ofs damian bloomberg intelligence, and vincent cignarella. let's kick off with oil. we have oil down 2%. what is happening in the market? what are the traders thinking? ncent: the complacency in the market is totally absurd. perhaps algoy that s don't trade with emotions. everyone is thinking they will get the supply back on the market. it is not so much the supply shock. it is whether or not they will be another attack. what will trump's response to this be in the long run? now we have around saying we are not talking under any circumstances. this really up to the level of anxiety in the middle east, and the markets are not reflect get at the moment. fx.an: we seen that across most of the currencies have all
come up, but if you think about what this means for emerging markets, we've seen rate cuts priced into the marketplace get completely priced out. this economy needs stimulus to get growth back on track, and they can't do it with oil prices going up and the risk of inflation living lower. alix: we see the same thing with not only central bank cuts, but also stimulus plans. will that be the next shoe to drop? damian: absolutely. south korea was going to have to cut rates in order to stem elite growth. i don't think they will be able to do that. we have indonesia thursday. they will be a response from the trump administration with regards to this attack. that looks like and how it impacts the geopolitical risk premium makes a difference. vincent: absolutely the poison pill for emerging markets. if you take away that ability to lower rates and stimulate growth , at a time when we are seeing
slower global growth because of the trade issue, and you put inflation into the mix, careful what you wish for. alix: when it is the wrong one. heads asiaway, who coverage for us for bloomberg, we were just talking about what it means for central banks, etc. what are your thoughts about that? one of the most interesting things is i've seen someone talking about asymmetric warfare, which is basically what we just saw in the middle east. these direct, surgical attacks that are hard for saudi arabia or its allies to actually counter. these talking about the only solution is fiscal stimulus on the scale of a marshall plan for not just the middle east, but also emerging markets, especially in asia. you can see some people in the market are definitely starting to look at fiscal stimulus as
the only solution to what we are seeing. damian: but if you are talking marshall plan, you're talking debt forgiveness. a lot of creditors aren't going to be happy to hear that. are absolutely right, emerging markets have real issues. i hate to get too technical, but the volatility across most of these currencies has flattened considerably. what that means is you don't see any urge or need for people to own those currencies. rallysically saw this on little volume and nothing to show for it, so i think you will see a lot of that snapback. alix: you're making me worried. vincent: you should have a little anxiety. [laughter] you had one analyst at jp morgan way in and say, "those trades worked well until the rotation started, and now we are in the middle of collapse. this eventually leads to the
capitulation of short value beta trades." is that a good thing or bad thing? i genuinely don't know. we were so over positioned, maybe it is good you get the reversal, but i have no idea. vincent: a lot of this has to do with rotation out of dividend stocks and into some sort of value stock. if we see the response from the fed tomorrow that is not what the markets want, we see a backup in yields, which i think is a real possibility, we can see that rotation back. this whole value momentum trade i thing is a little more conversation than reality, personally. damian: the shift from growth to value is not going to happen unless manufacturing bottoms. we are not seeing any evidence of that globally. the gap between manufacturing and nonmanufacturing pmi's is almost at a record wide. in order to see that shift from defensive's into cyclicals and , you justo value don't see evidence of that yet. tracy: to victor's point, since de are waiting for the fe
meeting, you have to wait for the fed at this point. now they have this oil price shock. not only do they have to figure out whether it is going to cause inflation to spike, and for how long, but they also have to figure out whether it is a negative for the u.s. economy. i'm not entirely sure is that anar given that the u.s. is exporter of refined petroleum product. we know jay powell doesn't have the best history of managing market expectations. he has had a few communications errors. i think this week could be interesting, and i think it is going to be a difficult one for him. vincent: that's the key, the communication. he hasn't done it well. when using about the three points we are going to make tomorrow, one is that it is eight when he five basis point rate cycle -- it is a 25 basis point rate cycle. longer a is it is no
midcycle adjustment, and this is some sort of end of the tightening cycle, which markets will absolutely embrace. the three workof against you, so there's a big possibility we see a spike in the dollar and a spike in yields after the statement comes out. the 25 basis point rate cut is going to do anything -- isn't going to do anything. everyone is looking for it. i'm just saying the asymmetric risk is that because two out of the three things powell can say on aching medication basis are going to work in that direction. say on a communication basis are going to work in that direction. damian: to have a 600 basis point move in the front end of the curve, that is in an emerging market, not a developed market. alix: what do you make of that? tracy: we've been talking about funding pressures building over the last couple of years, but it seems to not go away, and it seems to get worse in a way the
market doesn't necessarily expect. eg happening in a week when we don't have that quarter into pressure -- that quarter end pressure. in the meantime, everyone scratches their head and goes, well, this is unusual. you also have the stronger dollar whenever we have a bout of risk off appetite. that in some tightening overall conditions, so we are getting a sort of feedback loop in the international and domestic funding markets. vincent: at almost feels like they are trying to tell the fed, stop managing the fed funds rate and manage the day-to-day liquidity issue, which is what the fed did before greenspan. the fed would either add or subtract liquidy from the market depending upon the give-and-take of the day. i don't see any reason why now the fed should not be doing the same thing and providing short-term liquidity when it is needed, especially since we are not talking about bumping up
the balance sheet again. you watch what happens to the fed balance sheet and what they are going to say. they will have to have a response to that. alix: great stuff, you guys. really appreciate it. , cignarella -- vincent cignarella, tracy alloway. coming up on this program, big tech under pressure. we'll take a look at apple's eu court battle. this is bloomberg. >> splitting a company in two and having two people doing the bad things, that doesn't seem look a solution. ♪ look a solution. ♪
by activist investor dan loeb to sell or spin off several of its businesses. sony plans to hold onto its semiconductor and financial services units. sony says computer chips are the key to growth. retaining financial services will enhance the company value. disclosedhs ago, loeb a $1.5 million state in sony. inbev is said to raise up to $4.9 billion for budweiser burrowing to price shares next week. amazon reportedly changed its search algorithm in ways that's its own products -- in ways that boosts its own products. theany lawyers argued attract attention
of antitrust regulators. emilyjoining us now is rowland, john hancock investment management head of capital markets research. what do you do when there are these hearings with billions and billions on the line that could set precedents for other tech companies? what does that mean for you as an investor? emily: this is likely to be a nonevent in terms of apple and our view. the company continues to be in a strong position. buybacks were made supportive. as lots of cash on the balance sheet. apple and other tech companies have really good margins, which we think is absolutely critical in terms of navigating and doing well in this light cycle environment. one other thing to point out which is interesting is just thinking about the composition of european equities. when we look at the u.s. market, it is almost like a giant tech etf. -- look at the msc i.e. for
, only about 5% of it is exposed to tech. alix: it does raise the question of the regulation going forward. if there is one person who's going to know about it, it is bill gates of microsoft. bloomberg asked him about tech regulation. >> splitting a company in two and having two people doing the bad thing, that doesn't seem like a solution. set of pretty narrow things that i think breakup is the right answer to. are very big,s very important companies. the fact that governments are thinking about these things, that is not a surprise. alix: but emily, what do you do with that? do you still like tech companies here? emily: we do. tech regulation certainly isn't
going to go away. these are powerful business models. they are in a secular growth pattern today. if you look at late cycle it really does well, we want to gravitate towards quality. technology companies really exhibit a lot of those quality metrics that we are looking for margins, low, good earnings variability. these are a great light cycle play and a way to take about quality growth -- a great light cycle play -- a great late cycle play and a way to talk about quality growth. microsoft, names like mastercard and visa are all big components of that quality that we are looking for today. alix: is it not going to be the amazons and the googles because evaluation, because they are too
big? or is there better value elsewhere? emily: looking at things like roe, margins, earnings variability, we are gravitating towards more traditional technology names, although there are opportunities elsewhere. alix: thank you. emily rowland of john hancock investment will be sticking with me. aye fomc begins its two-d meeting today. what will they signal about the future? will it be a midcycle adjustment or a late cycle adjustment? the markets completely ignoring the oil today in saudi arabia, looking forward to a potential rate cut. this is bloomberg. ♪
and europe, down 0.4%. that is idiosyncratic. if you look at btp's, you will see why. former prime minister matteo renzi broke away from the democratic party, so there is more upheaval. you are seeing selling in btp's. yields moving five basis points higher. the lack of reaction in the -- in the pierre-hugues -- in the crude market. harsh words from the supreme leader in iran and from the u.s., and complacency in the market is what many are looking at this morning. the fomc will begin its two-day policy meeting today. the market expects a 25 basis point rate cut tomorrow, looking for clues on future policy easing and keeping a close eye on that dot plot. still with me from boston is emily rowland of john hancock investment management. give me or call for tomorrow. emily: i think markets are
widely expecting that 25 basis point cut tomorrow. what will be interesting for us is what happens with that dot plot. if you think that the fed target rate is going to be somewhere 200 basis5 and points, that is what the fed already said it would be throughout 2020. got to see how wide this dispersion is, and some of the language out of powell to see if this is really a midcycle adjustment or the start of a more prolonged easing cycle. alix: the real wildcard is going to be what they do and how they talk about oil. if you come inside the bloomberg, this is oil versus the 5-5-year breakeven. they tend to track pretty well. as you saw oil rally, you saw the five-year come up, too. what do you do? emily: what and -- one thing
is the oileresting was already priced. what is interesting about this is inflation expectations, we expected them to skyrocket coming into work on monday, and we really haven't seen that. if you look at fixed yields, we haven't seen that play out. we thought bond yields were back up in a big way based on higher inflation expectations. as you mentioned, the market has been quite complacent. in our view, that means this event as it relates to oil has actually had less to do with inflation and more about adding to the pile of geopolitical risks that investors are dealing with today. that could actually prove to be deflationary in the long term taylor: that is a great -- in the long term. alix: that is a great point. it is another asset classes, when you see oil down and you don't see that huge move in bond yields you might have expected
over the last 48 hours, why? [laughter] emily: all eyes are certainly going to be on the fed tomorrow. investors may be waiting for that. we are looking for more around that. we are also looking for the leading economic indicators, which comes out on thursday. that is our best recession monitor that we use to make calls about the cycle. we are looking at an environment o prints of seen tw 1.6% year-over-year. recessionother mini that can actually be re-accelerated by deficit by policy, or are we in for an environment in which we are headed into the next recession? some of these data points are going to be really critical. alix: robert schiller was on "surveillance" earlier. here is what he had to say. >> what scares me is there is so
much talk about recession right now. if you look at google trends, which allows you to look at what people are searching on google, you see that there is a huge spike in recession queries. infact, almost as big as 2007. alix: that has bigger ramifications because it people like my mom are looking that up, is she actually going to go spend and buy stuff? that's where you get rotation into consumers. the economy.into of my timeend a lot speaking with financial and whors -- financial advisors are somewhat optimistic, but the clients are not. i talked to one to set client coming in saying, just give me the bad news. tell me how horribly we have done this year. and obviously that hasn't been
the case. the sentiment is really quite negative, which is another reason why we could see further gains because we are not seeing those levels of excessive optimism. marco of jp morgan say last week you will see more of a rotation ask wants -- rotation s want -- rotation as you seeet on board and a capitulation of the short value of beta trades. is that the right play? do you see that? you look at the performance of growth versus value, growth has absolutely crushed value. there could be an opportunity here for investors who failed to rebalance into value to kind of fill that hole today, but what we look at is the economic
growth backdrop is still accelerating. ,ou look at pmi data globally 20 months of a downturn here, so we don't think now is the time to permanently devalue until we see the global economic backdrop autumn out here. it is to cyclical, particularly with financials, but a neutral allocation is what we look for today. alix: what would the bottoming look like to you? emily: we look back at the leading economic indicators. if we start to see that tick up, we seen it with the inflation picking up a little bit. cpi surprised on the upside. the fed's preferred measure of inflation, we haven't seen it back to that 2% target, so it does look like the shorter-term trends of inflation are starting up a little bit. for us, that is a key piece of data we are looking at, as well as the lei's. alix: emily rowland of john
hancock investment management, thank you so much. we will have the fomc news conference tomorrow at 2:00 p.m. now viviana hurtado is here with first word news. viviana: the impact of the attack on a giant saudi oil processing plant may be worse than originally thought. they could face weeks or months before the majority of output is restored. the strike knocking out half of saudi arabia's production, about 5% of the world supply. saudi aramco told customers that deliveries will be delayed. tokyo warns any deal must include assurances the u.s. won't impose tariffs on japanese auto exports. striking.tors is
uaw negotiator says the business must resolve 10 issues. it is estimated the walk is causing the automaker $50 million a day. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. if you have a bloomberg terminal check out tv . you can watch us online, interact with us directly. coming up on this program, unclean. health.an bill of how the health care sector contributes to the global health crisis. , health care without harm founder, will join us next. this is bloomberg. >> that volume drives the learning curve, and the prices
viviana: this is "bloomberg daybreak." coming up in the next hour, chris watling, longview economics ceo and chief market strategist. now to your bloomberg business flash. billioneet may get a 40 dollar reprieve from u.s. regulators. bloomberg has learned they may get of a rule that forces banks to set aside billions of dollars for swap traits.
the rule was imposed after the global financial crisis. banks arguing the requirement is redundant and put them at a competitive advantage. oracle unveiling an operating system that runs without the need for human oversight, part of software tools that is meant to make the transition to cloud computing easier. oracle is trying to revise sales growth after years of almost stagnant revenue. facebook once again defending libra, the cryptocurrency it plans to rollout. the social network rejects fears libra could replace sovereign currencies and threaten the role of central banks. regulators all over the world have pushed back against facebook's plans. one argument, the company should by trusted to cancel -- to handle sensitive financial information. i'm the ve on our todo. that is your bloomberg business flash -- i'm viviana hurtado. that is your bloomberg business
flash. alix: thank you. today we will look at health care's global climate footprint. more --g's, chandra has bloomberg's emma chandra has more. one science journal calling it the biggest global health threat this century, rising temperatures and sea that willre extreme increase the spread of disease. the health-care industry is itself contributing to the climate crisis. the industry footprint could have lent to some -- could have led to some 4.4% of global net emissions. that is equivalent to the greenhouse gases released by more than 500 coal-fired power stations every year. 71% of those emissions come from indirect sources. the production, transportation,
and disposal of health-care goods and services. 50% of those emissions are related to energy use. if the industry were a country, it would be the fifth biggest emitter. as we take a look at this chart, the u.s., china, the european union combined the biggest emitters when it comes to greenhouse gases linked to the health care industry. the report finding there is a strong correlation between a country's health spending and its health sector climate footprint. generally, the higher spending, the higher the per capita permissions. alix: thank you so much. if the global health care sector were a country, it would be the fifth-largest greenhouse gas emitter on the planet, according to a report by health care without harm. joining me is gary cowan, health care without harm founder. walk me through your findings. what were your big takeaways? gary: we collaborated with an
international consultant and looked at emissions across 42 , as well as around the world. we found that health care, the one sector of our economy that he is healing as its mission, is itself a large polluter, contributing to the very diseases it is trying to solve four. alix: where is the most pollutant come from? gary: its reliance on fossil fuels is the largest contributor to greenhouse gas emissions. weanresponsibility is to itself from reliance on fossil fuels and chemicals to renewable energy to run its facilities, products, the food that it buys. fossil fuels are really at the heart of this problem. an evif this like buying ambulance or putting solar panels on hospitals? what is the low hanging fruit?
gary: the low hanging fruit is the energy efficiency hospitals can use. we need health care institutions to be the safe harbors in the storms and rising seas of climate change, so energy efficiency is a key thing. they can change their use of to reduce carbon oxide. they can invest in renewable energy because it actually saves them money and locks in price energyees, as well as guarantees. gases, transportation, changing the way they buy food to buy less and better meet and support sustainable agriculture. it is a large part of our economy.
alix: so how much would that cost? say i was ceo of a hospital, and i was going to retrofit it. can you put a number on it? gary: it actually turns out to savings. there may be upfront investment, but within a few years, you are starting to save money year after year. many of the information's -- many of the interventions we recommend to move health care to a renewable energy future will help save health care lots of money directly, but also when it comes to addressing the health impacts of climate change. we know that air pollution kills millions of people every year around the world, more than combined.ria, and tb if we can move health care emissions to zero net, we will actually reduce many diseases driving up health care costs. a huge positive benefit for the rest of society. see about, i can
overtime, it is going to be profitable and help these hospitals, but can give me some numbers behind that? what is the payoff. like, you have to invest $50 billion, but in five years you make that money back. what are the calculations? re somehere a investments. take one hospital, gunderson. within two years, they got their payback and were making $1 million a year in savings. that is one small hospital in wisconsin. if we roll up the entire health care sector, there's savings of billions of dollars over time. also, there are now many mechanisms that allow hospitals to not make any investment up front. they just have to be a guaranteed buyer for that renewable energy assets, which could be located in many different places in america, so
they have a guaranteed purchase of that, and that provides the owners of the asset with a guaranteed return. it's called a power purchase agreement, which hospitals don't have to invest in at all to move forward in this strategy. alix: gary, i appreciate you bringing this to light for us. gary cohen of health care without harm, thank you. coming up, we speak with the cofounder of one of the world's largest cannabis firms. if you are heading out, tune into bloomberg radio, heard across the u.s. on sirius xm channel 119 and the bloomberg business app. this is bloomberg. ♪
the past year. we are joined by bruce linton, kennedy growth corporation cofounder. growthlly -- canopy corporation cofounder. you really could have retired, but now you're coming back to help other companies. what are you doing? really smart person would have been fired, like i was, with $5 billion in the bank of the company, trading at 80% plus of the two week high, left and never come back. instead, i spent the whole summer looking at a bunch of companies because i wanted to play some more. what i wanted to be able to do was join companies that were looking after animals, thinking about other psychedelics, focusing on a brand, and really creating different things. i spent a lot of time digging in and looking at them, so i made this great shirt to announce it. one of the areas i didn't finish
yet is silting and, limiting -- is selecting and implementing a multistate operator. the private companies can't sell their stock, obviously, but if they are public, they have to lock themselves up as principles for at least one year. stockby some luck the went up today, good news, but you have to work hard for a year. alix: it seems like innovation is not the problem. it is profitability, right? that is what you came up against him canopy. where do you see that going? that's not really what i think investors only want to hear. what they want to hear is i am going to be dominant and run the business with rigor, meaning i will show you examples of what could be a great, profitable business. onh canopy, we were focusing how do we show canada as a preferable enterprise so that everyone can say, there is a good example? we know there is a great
business, and we want it to be dominant, more like amazon. amazon took a long time to be profitable, and it is working out ok. alix: does that mean the mergers andy biggs take out -- mergers and the big take outs, is that happening too soon? bruce: the dance partners are different heights. what i mean is that the , it is notoming in profitable, but they want the cash flow. we will talk more about adjusted ebitda. is this business really on track to be a big success? somewhere in the middle is going to work. the companies i'm getting involved with i think are oriented toward science productive outcomes, stable, quality products. i think you will see through
2020 what people are going to gravitate to our quality and reliable outcomes. if i use this product and want to sleep, will it work? that's what i'm looking at. alix: should this companies either stay private for longer, --should they not yield with not deal with a takeover target and m&a? bruce: it depends. one of the companies looking better is looking at animal care. they have an underlying business that is just a dog food type of business, and then they are going to put research money in to get great outcomes for dogs. they have a way to be stable and they don't have to say to someone, can you please save me? no, we've got a great business, and we are going to use our money to make it even better. some of the other ones should go public, like gauge, set to be the dominant player in michigan. michigan is a very good market. you want that one to become public, but what you don't want to be is totally greedy.
how many times on this network has people talked about the disappointment and performance of, whether it is an invisible line to scare product or we work? really, i think it is not public-private. i think it is being inclined to make everybody make money. nobody is selling stock in the first year. alix: and they listened. bruce: these guys are on. alix: appreciate you coming back, catching up with you. bruce linton, canopy growth cofounder, thank you for coming on. watling,, chris longview economics chief market strategist, joining us. this is bloomberg. ♪
at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity.
september 17. i'm alix steel. u.s. and japan have reached an initial agreement on tariffs. president trump says both sides have a deal on digital trade, but japan says any deal must include assurances that there will be no new tariffs on auto exports. about 49,000 gm workers are on strike. it is estimated the walk is costing the automaker $50 million a day. saudi arabia faces a disruption to oil output, with few options for placing losses. it may take months to bring the damaged oil processing facility back online. meanwhile, president trump says the u.s. is in good shape when it comes to energy. pres. trump: a few years ago, they would have been in a panic. today, we got a lot of oil.
we got a lot of gas. a lot of oil and gas. alix: bill gates tells bloomberg it is time to take subsidies away from wind and solar energy and put them into new technologies instead. >> some of that subsidization has helped drive the volume, which drives the prices down. the tax benefits there should be shifted into things that are more limiting like energy storage, offshore wind, which still has a huge premium price. alix: and in the market, it is complacency. that is what i'm looking at. crude actually down almost 1.5%. equity futures putting much go nowhere. the selloff yesterday very orderly. euro-dollar putting much goes nowhere. not even getting a bid in safe haven currencies. you are getting a bid into the bond market that could see the beginning of the fed's today meeting and not a reaction to day meetingfed's two-
and not a reaction to the situation in the middle east. statesunited wholeheartedly condemns iran's attack on the kingdom of saudi arabia. attack on deliberate the global economy and the global energy market. despite the iran's -- despite are's malign efforts, we very confident that the market is resilient. alix: putting me now, ellen wal d, atlantic council senior fellow, and chris watling, longview economics chief market strategist. we not only had that from rick perry, but then the ayatollah saying we are not going to talk to the u.s. matter what. what is the reality on the ground versus what the market is interpreting? wald: i think the reality on
the ground is that production to be restored, but we are also seeing some hesitancy from saudi arabia in terms of going out and identifying iran as the culprit. the crown prince has said he would like to have a u.n. investigation. i think we are starting to see some de-escalation, whereas earlier in the week entering during the weekend, we were seeing quite a bit of escalation. alix: meaning the only choice they have is to get aggressive, so they are going to back off from that. ellen: the president has made it pretty clear he's not going to fight a war for them. alix: is that what is happening in the market, or is it something else can to beating to the complacency? chris in terms: of oil, what is going on -- chris: in terms of oil, what is going on is how
quickly is production going to be made up. issues,those of the key and it is looking like it could be quite quick. and supply was plentiful before this event. in terms of equity markets, people want to get long. they've been too short this year, two defensive. this move in bond yields, this big rotation in markets, people need to get long equities. any giveback is an opportunity to put some money to work. alix: i don't necessarily agree with chris that the market was awash in oil. it could go either way. there are some indicators that say the market is tight. some say there's oversupply. it is a similar conversation when it comes to stockpiles. how much do saudi arabia actually have to make up for their lost oil? dr. wald: this is a really good question, and in fact, we've actually observed over satellite that saudi arabia has drawn down
its stockpiles significantly. if this had happened in march, they would have a lot more stored oil. alix: i know it is a little busy, but this comes from citi, but it shows crude stocks in different regions across the point coming down from their levels over the last few months. they also have the infrastructure, the terminals, the export capacity to get that out. dr. wald: one of the other issues is the grades of crude they can offer. they are actually trying to swap certain grades they have more of an storage to her place what customers have actually ordered. alix: there's that discrepancy as well. if we take the second part of your argument, chris, regardless of having the coverage they have, do they need to buy energy stocks because of the broader rotation irrespective of what we've seen? chris: maybe trade energy
stocks. i wouldn't jump into them. i think what we observe from shale if the price keeps coming down, and the ability to deliver more and more oil keeps surprising to the upside. that is the other factor at play here. the more you push the oil price up, the more shale comes back on. it is a very different dynamic to the 1970's when there wasn't an alternative to the supply of oil a significance. there really is now. dr. wald: i think there are definitely a lot of happy frackers down in texas right now. but some of these companies, some of the smaller ones are on the verge of bankruptcy, and it is unclear if this is enough to stave that off. on the other hand, we have a lot of pipeline capacity coming online. even if we see bankruptcies, there's going to be more oil coming from the united states. it will be interesting to cf any seehose light crude -- to if any of those light crude grades can replace those.
chris: there's a lot of consolidation in the sector, so the big guys are really driving this. you've seen a lot of m&a in that area. dr. wald: and i think that will benefit the industry as a whole going forward. alix: if you wrap it into a broader market perspective, iran is the black swan. this was it. if this is the reaction in the market, what does that tell you about psychology, where investors are? chris: i think it tells you if you look at any sort of measurements in markets, people are incredibly defensive. june, july, august, september, the most crowded trade was overweight treasuries. i think what's happened in the last few weeks is what's happened to bond yields, the swallow dive to low levels in .he sharp backup bex: do you expect that to
all repositioning, or do you understand that as something a friend in fun, tolls? -- in fundamentals? chris: trump is beginning his move to where the election, and that is all about getting the stock market up, which is doing trade deals and keeping the oil price under control as much as possible, not going to war, all that kind of stuff. people are repositioning in response to that, and also i think there's reassessment on how bad the global economy really is. i would argue we are seeing early signs of reflation coming. , i'm sureng that on higher oil doesn't necessarily fit that thesis, if we de-escalate the trade war a bit here, what does that mean for the oil community when everyone has been ratcheting down oil demand forecasts? how does this event change that? dr. wald: i think that makes any news about a positive sign for a
trade deal will help buoy oil prices even more. we saw this big jump, but now we are seeing people call him back down and take a step back. back downple calm and take a step back. oil could definitely pop some more, and if we get positive news on the trade deal, i wouldn't be surprised to see oil gain even more. this incident has i think crystallize to the fact that the geopolitical situation is important, but at the same time, there is recognition that there is still a lot of oil out there. alix: all right, i note voted at the desk -- i'm outvoted at the desk. [laughter] ellen mold of atlantic counsel, good to see you. chris watling will be staying -- ellen wald of atlanta counsel, good to see you. chris watling will be staying with us.
alix: boris johnson's brexit strategy goes to the supreme court, the start of three days on hearings on the decision to suspend parliament. joining us outside westminster is sebastian salek. what can we expect over the next three days? sebastian: given the cheers and the cries here, a lot of rowdiness outside the court. we've got behind me those saying that this is something that should be undone, and they are greater in number this morning. the shouting is really coming from the other side. in terms of procedure, we are reconciling two previous cases,
one in scotland, one in england. it is a pretty important job now to decide which one comes out on top. we heard that the purpose of this prorogation to suspend this is something we've heard discussed today. one of the judges asking the appellate whether this is something for parliament, because at the end of the day, we have two votes on calling a general election, and those were declined. the argument goes that parliament has had its chance to intervene and declined that, so going ahead, we expect this to play out over the next few days. we should get a decision hopefully towards the end of the week. it will give boris johnson antigovernment some more certainty about just what his position looks like now. alix: i'm glad you brought up boris johnson. where is he?
he was not at the press conference yesterday in luxembourg. where is he and all of this? sebastian: he is certainly not in parliament. we had a briefing from his press secretary early on. the prime minister himself is nowhere to be seen in the last few hours, or indeed this morning. i can't blame him for laying low after that disastrous outcome yesterday, where he walked out of that press conference. he's got a fair few supporters outside the court today, but it anyone contention as from either side of government would do well to keep their heads low. we had the shadow attorney general earlier on from the opposition, walking out to cries cheershand and from the other. if you are a politician, you want to leave this play out in the courts for a bit because the tension is palpable. alix: joining me here on set,
chris watling of longview economics. do you have a base case for brexit? chris: do i have a base case for brexit? i think johnson will get it through with a deal or even with no deal. i suspect october 31 is the deadline. they just want to move on. ike --emainers are l look, the brits are very practical. the british aren't idealistic. let's move on. i think if there was a referendum or general election, the majority would be quite clear for let's just get out. how many economies are shocked by something they've known about for three years? the answer is none. alix: is that why there's no volatility? i'm looking at the cable rates. chris: well, tell me something i don't know. it's been around for a long
time. alix: so you crash out october 31 with no deal, and the markets just take that. chris: we are going to leave perhaps, with no deal perhaps, or maybe with a deal, and things get sewn up quite quickly. got 8.9 billion pounds preparing for no deal. there's all these rumors about how poor the preparation is, but there are -- but they are somewhat misleading, in my opinion. if you think about it this much, you are reasonably prepared. on the otherill side. on the other side of the channel, they've been working super hard to make sure traffic flows. alix: that is interesting. is it an opportunity, then? chris: a huge opportunity. we were advising clients to buy sterling a few weeks ago, a couple of months ago, whenever it was, and we had a lucky
bounce. whatever is the big consensus, go the other way. even the dogs were saying cell sterling. it was that extreme -- were saying sell sterling. it was that extreme. the u.k. is not going to fall apart. the surprise might be the u.k. actually grows for a quarter after brexit because we now know. alix: so if sterling was a nice trade, where else on a fundamental level would you want to be looking at? chris: someone said to me if you could buy something for three to five years, put it away, what would you buy? i would buy u.k. assets because they are cheap across the board. for the u.k.,nges but the assets are really cheap if you look at the equity markets, commercial property market, and the currency, course. alix: at what point in the world
is there new trade issue is the question to be asked. chris: exactly. there are political issues within the euro zone as well. it is not only a u.k. thing. alix: chris watling of longview economics will be sticking with me. apple is the world's biggest taxpayer in the latest on the about a between the eu and tech giants. the battle between the eu and tech giants. this is bloomberg. ♪
viviana: you are watching "bloomberg daybreak." wework signaled it is putting off its troubled ipo. the startup says it now expects to complete the share listing by the end of the year. valuation and business prospects have raised concerns. softbank invested in the company at a valuation $47 billion. now it is expected wework would be valued at less than 1/3 of
that. the suggestionng by activist investor dan loeb to sell off its semiconductor and financial services units. sony says computer chips are the key to growth and retaining financial services will enhance the company's value. three months ago, loeb disclosed a $1.5 billion stake in sony. that is your bloomberg business flash. alix: thank you so much, viviana. some breaking news, wework bonds drop by the most on record as the ipo is delayed. not a surprise there. that was the rumor going into this week. the roadshow was supposed to start this week, but they are getting pushback from softbank. what this winds up meaning for shareholder pushback and corporate governance, those bonds dropping the most on on the more than $0.06 dollar, now trading at $96.50.
we are joined by bloomberg's sonali basak and sarah ponczek. first, ab inbev. sonali: you have one ipo that might not be happening right away, but another that will be the world's second-largest. ab inbev is raising up to $4.8 billion in its asia unit ipo. it was shelved earlier this year as they sold another unit for more than $11 billion. this is something the market might be excited to take on, especially in hong kong, which is quickly becoming one of the biggest regions for listing, even amid a tumultuous time in the region. alix: thank you very much. next, we take a look at apple. ?hat is up with apple sarah: apple's fight over alleged unpaid taxes coming on. david beard coming out and saying apple "follow the rules," and the eu is wrong to say that
iny should have been taxed ireland and not the united states. they say they have to pay out a record of 14.5 billion dollars, but apple shares really haven't noticed all that much. they are up more than 100%. alix: stick with me. also here onset is chris watling of longview economics. shares haven't really reacted when it comes to regulation in tech and finds. how is that possible -- and fines. how is that possible? chris: it doesn't really matter if you make money is kind of the joke. what you actually need to do is buy back shares. i guess apple has become a darling, hasn't it? i don't think net income has grown that much in the last few years, but they've bought back a heck of a lot of shares. alix: is that what this is? if you buy back your stock, you are good, even if it winds up becoming president for
amazon or google? sarah: apple has bought back a lot of shares. there's no denying that. i was looking at an index that tracks stocks that buyback a lot of their shares. interestingly enough, we have been seeing some of that price outperformance start to reseed just a little bit -- start to recede just a little bit. the ideology goes that if you do return cash to shareholders, you should see performance in the long run. this trend is still on track, but that the same time, we are seeing it coincidentally, or not, start to hold back a little bit. chris: in the last few weeks, i would say that is simply the rotation into markets. sarah: it is before the rotation. i should follow up to see where it is after the rotation, but this was back in august. alix: do you like stocks that buyback? chris: i think tech is a great sector, and typically they
buyback. services,t faang's, the chip sector, the cloud? chris: at the moment, i would be looking to buy value for a few months, but i think you should rotate back into the big caps others that are popular at the moment. primarily, i think into the end of this bull market, it will end theith the leadership being cap tech. alix: how well loaned is big cap tech right now? -- how well loaned is big cap tech -- how well-owned is big cap tech right now? sarah: big cap is still very well owned. if you look at active managers, names like apple, facebook,
alphabet are still heavily owned and very much loved across the spectrum. alix: sarah ponczek, thank you so much. chris watling of longview economics will be sticking with me. coming up, a 25 basis point rate cut is seen as a sure thing, but what will the fed signal for the future? tannenbaum, northern trust chief economist, coming up. it may be that the saudi oil disruption isn't as bad as we thought. markets in the red just barely. crude is down a bit into the open. this is bloomberg. ♪ here, it all starts with a simple...
is it complacency over the oil market? is it something else? not as much liquidity as the markets were hoping out of china? italian equities are getting hit the hardest, near .7%. your scene selling in the bond market with yields up six basis points. minister quitse the democratic party. could this throw a wrench into a potential italian government? the dollar-yen not going anywhere. seeing a little bit of movement in the treasury market. crude selling off despite harsher words from the east and the west. to be fair, many seem cautious about risk, but not taking it too seriously. it is all about the fed? the fomc begins the two day policy meeting today and is widely expected to announce a 25 point basis cap tomorrow. -- a 25 basis point cut tomorrow.
joining us our carl tannenbaum, northern trust economist, and chris watling of longview economics. 25 basis points tomorrow. what you think? carl: that is baked into the cake. we will be watching the signals for what comes after that. i do not think the market will get a signal as dovish as they have been hoping for. the clear and present danger does not seem to be proximate. news in the u.s. on the economy news in the u.s. on the economy seems to be good. the gdp has been pretty good. there are not signs that the trade war is taking its toll on the american economy. in the united states, we are reliant on trade for only about 10% of our gdp, and manufacturing only makes up 11% of our gdp. we are better positioned to deal with the current circumstances. chris: what you think is going on? it seems housing is dropping in the states and adding underpinning to the consumer.
the housing market has been regulated, it seems to be speeding up this year. carl: low interest rates have also helped, but that has reversed itself. the creation of wealth and jobs is the thing that drives the housing market. because we have had a slow-moving pace for younger people who have student debt, the first-time homebuyer segment has not been present in the market. if you get housing adding to the picture more instead of subtracting, the fed decision get that much more difficult. alix: the ranch is oil. this is the five-year five-year forward break even. they tend to track each other. oil spikes, the five-year moves up a bit. is this stagflation in waiting? what do you think? carl: it is too soon to pendant certain if the situation in saudi arabia will have a long-term impact. i am sure the fed, with the new
so fresh, is likely to do the same thing. it may provide a boost to the united states because we are the largest energy producer in the world. if there is an interruption in supply, we may have the opportunity to increase our production. chris: one of the things that is interesting in the bubble economy and in the u.s. -- in the global economy and the u.s. is i wonder if the whole manufacturing sector was thrown by the trade war. there was so much stopping last stockpiled,hing was what we have seen in the last 12 months is that running down of the excess stock and not a proper shock that will translate. do you see any confirmation? carl: that is a fair statement. the other thing is the trade wars we are having have left services untouched. i like to point out that it is the uncertainty around what is happening around trade that makes it difficult for businesses to plan. that is why business investment
in the second quarter declined. the sooner we can get that cleared up, the sooner we will be back on the beat. wto: on that point, the warned that perhaps services will get drawn into the trade war. on the flipside, it was said of inventories get drawn down enough we will have to start producing more. carl: there is always the risk that if manufacturing falters that will carryover into the rest of the economy. the ism manufacturing index is a better leading indicator for the composite on changes in the cycle. the fed will wait and want to see the evidence that transition is taking place, that the services are being affected, before they take the next step. i know there will be people who dissent from the decision even to cut by 25 basis points which takes the odds of another cop off the table. alix: do you sell bonds? what do you do? chris: that depends on the quality of the statement. a lot depends on what comes out
from the statement. how much dovishness there is or is not. hasense is jay powell disappointed the market every time he has spoken. he is never as dovish as they have wanted. there are cuts priced in beyond this week. carl: i think he will have a big communications challenge. the forecast they're going to release will not have changed much since june. it will be hard to make the case that there is urgency there. he will probably going to the press conference with their having been a couple of dissents. some of thehough data holds up and he will have to come in and not be as dovish, on the flipside a guest earlier was talking about the psychology and those looking at recession indicators. here is what he had to say. >> what scares me is there is a much talk about recession right now. if you look at google trends, which allows you to look at what people are searching on the internet, on google, you see
there is a huge spike in recession queries. it is almost as big as in 2007. alix: is that a feedback loop? carl: you have to be careful what you say at this time in the business cycle. those statements can be self-fulfilling. there have been economist reluctant to use that term. the message that has to come from jay powell, and i am sure it will, is there is a lot of good stuff going on in the american economy and there is no reason to lose hope. chris: if you look at leading indicators of economic activity, the money supplies accelerating. i like indicators like that. you want to go the other way. it means everything is priced into the market. alix: so you sell? chris: i am not sure i agree with the idea we can talk ourselves into a recession. the central bank is dodging. everyone throws money at the
situation, and therefore we will not have a recession. if everyone is talking about recession, it is in the price, you by risk. alix: why even cut? the situation you are outlining, why bother with the 25 basis points. it will not do anything. carl: it is baked into asset prices, which we -- which form financial conditions. if the fed fails to deliver, tightening might have an impact on the economy. the market still several more cuts priced in, including one before the end of 2019. if the statements in the forecast come out, how much will conditions tightening based on the change in expectations. alix: not to end on something pretty micro, but everyone is talking about the reaper rate. there is early trading -- the repo rate. how will that affect the fed in the next two days? carl: on a micro basis. their having to manage the level
of reserves in the system. they are struggling with it for the past 18 months. one of the things we are watching is if they will do something different with her balance sheets do have better control? i think they will have to. bank demand for reserves, partly because of safety concerns, has exceeded their expectations, which complicates the exercise of monetary management. alix: appreciated. carl tannenbaum. chris watling will be sticking with me. tomorrow we have live coverage of the fed decision and jay powell's decision -- jay powell's news conference. this is bloomberg. viviana hurtado is here with first word news. viviana: donald trump says the u.s. and japan reached an initial agreement on tariffs. the president also telling congress there will be an executive agreement on digital trade. anyo of -- tokyo saying
deal must include assurances the u.s. will not impose tariffs on $50 million of japanese auto imports. bloomberg learning regulators may get rid of a rule that forces banks to set aside billions of dollars for swap trade. the rule was imposed after the financial crisis. banks are doing the rule is redundant and puts them at a competitive disadvantage. general motors and striking auto workers remain fall apart and there talks to resolve a strike. says a dealgotiator must resolve 10 key sticking points, wages for entry-level workers and the treatment of employees. it is estimated the walk is costing gm $50 million a day. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. wework's bumpy,
viviana: this is "bloomberg daybreak." i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up later today on "bloomberg markets," chris reynolds, toyota head of american manufacturing. now you're bloomberg business flash. oracle unveiling an operating system that runs without the need for human oversight. it is part of a line of new software tools meant to make the
company transition to cloud computing easier. oracle is the world's second largest software maker. it is trying to rebound sales group after stagnant revenue. the ceo of jcpenney says her turnaround plans will be the silver bullet for the struggling retailer. nearly a year after she started, she is sitting down with bloomberg. she has exited the appliance business and spruced up. pennies sales have fallen for four state quarters. madonna reportedly has a new strategy for her concert tour. the 20,000 seat arenas like madison square garden are out. instead, 2000 people venues are in. this according to the wall street journal. the catch, higher prices. the most expensive non-vip ticket will go for $750, more than price as much as he charged for her last four catch as she charged for her last four toward
than twice as much as for her last four tours. alix: but will she saying on her head? an unenforceable volcker rule. the commissioner says it is close to impossible to enforce the revamped role. and fueling bill gates fortune. the strategy that helped at billions to his wealth. joining us is sin ali bostic -- basak and chris watling. you've been wanting to talk about this since 7:30 this morning. ali: it is pushed back. net debt fundraising is contingent on an ipo. if they are pushing on an ipo, what happens to their debt quick
-- what happens to their debt? chris: this is a machine that gobbles up cash. terrible governance, although they have been trying to improve it. jeep money has created bubbles in a lot of places -- the cheap money has created bubbles in a lot of places. this thing is effectively down on most 80%. it ipoed at $10 billion, that is almost 80% down from a $47 billion valuation. alix: can they come back? come back before december 31 and get the loan and get the $6 billion valuation. sonali: what was evaluated at $47 billion, that was even considered a stretch. to reach where they were at the beginning of the year, especially when markets are so much rockier will be a tough
sell. chris: we know the emperor has no clothes. that is the point. it is exposed. hadre it was softbank pumped all these reevaluation rounds. it is clear it is a real estate company. on that,should you put especially if it is not making any money? let's get to the next story. let's get to the next story. the volcker rule. we are still talking about millions of years later. this is part of the revamped role. sonali: now you have every agency weighing in. a democratic commissioner saying the rules are not enforceable. saying the rules are hard to understand. a lot of democrats say the rules are too loose for the banks and it opens a lot of rules for speculative trading. alix: why are we still talking about the volcker rule? chris: a lot of people do not want it. the banks do not want it. arts't they fine -- alix:
aren't they- alix: fine? chris: more capital and banks to make more money. banks cannot buy back stock, but that is not the problem with european stocks, buyback. areli: you are saying why we still talking about folklore? -- about folklore -- about the volcker rule? we are in a spot where the u.s. is getting wider and europe is getting tighter. chris: that is true, but the other reason is the european banks have not cleaned up their problems properly. if you look at the chart of european banks, it is bouncing off a 40 year lows. alix: our third story is bill gates and where he winds up investing. here is what he had to say in an interview a few weeks ago. defensivenot in some
posture where we are in cash or anything like that. investments is to be over 60% in equities. top? is that the sonali: there are a lot of billionaires. bill gates, warren buffett. these are people that can also pay millions of dollars to people moving to family offices instead of hedge funds and other asset management and can discern what they want to bet on within the stock market carried it is not all just passive. chris: you should have a lot of money in equities, generally good if you can time the bear markets and keep a lot of money in equities, you will do well in your pension fund. alix: where you see the passive conversation? chris: where do i see it? what a good question. i do not know. the problem with giving people
investment advice is it is horses for courses. that is the challenge. i like the fact that people can manage their own pension funds with etf. i like that. if you're good at picking stocks, great. growth stops are great place to be in the long-term. sonali: i want to put in bill gates's own disclaimer, he said the next 10 years will probably not be as good as the last 10. i thought that was interesting. alix: thanks so much. chris watling and bloombergs sonali basak. thank you. and staying with investments, we want to tell you about a new program. undercover"money hosted by lisa abramowicz will put the focus on investment. for today's off the beaten streets -- spice up your life. alix: the last time you saw this
man he was probably at a white house podium dressed differently. that is sean spicer making his debut on abc's dancing with the stars. he danced salsa while wearing a neon green pirate shirt. voting starts next week. he did not come in last. he got 12 out of 30 votes. there you go. i could watch that all day. salsa is actually hard, and i can imagine with all of the clothes it would be harder. future slipping on crude well treasuries advanced. more on what to watch in the market as we head into the open. if you're heading in your car, check out bloomberg radio on sirius xm channel 119 and the bloomberg business app. this is bloomberg. ♪
alix: the market looks to be complacent this morning. i am taking a look at s&p futures down .1%. italian stocks getting hit as there are questions about the government. in other asset classes, dollar-yen goes nowhere. crude off 1.5%. is this the right kind of trade? is there optimism or complacency? what are traders watching today? is complacency the right call or the wrong call? vincent: i think it is the wrong call. it persists. we see what oil does at the cash open. it is traditionally a very volatile point in the day between 9:00 and 9:10 a.m.
it was recently announced attacks were confirmed they came from iran. this lowland oil prices could ramp back up again. we have not heard the response yet from the administration of what they are saying. the sallies want an international -- the saudis want an international response. i assume that is what the administration will want as well. alix: do get a sense from traders they have decided not to hedge or their hedging differently? vincent: i think they are sitting on the sidelines waiting for the first move. it is a guessing game as to what happens next. it is a 50-50 probability. not where you want to be as a traitor. when i was a trader, i likes to be 70-30. if you keep your positions the same size and you run that risk ratio, you will be ahead at the end of the day. 50-50 is dodgy. alix: does the fed not play into what investors are looking at? notent: what people are taking into account is what the
fed can say. there are so many rate cuts built into the curve right now. exactly what the communication the fed gives us tomorrow is going to shape that next slope. we talk about earlier. there are two out of three scenarios which suggest the asymmetric risk of the fed would be neutral but seemingly hawkish. yields higher, dollar higher. we will see how that plays out. the only way it plays out good for treasuries is if the dollar says this is the end of the qt cycle. backdrop, the chinese delegation is coming to the u.s. to top trades. what is the feel on the street? vincent: that is low hanging fruit. i think they will just decide who sits where. the best outcome is the purchase of agricultural products from the u.s. that is always seen as the easiest to accomplish. there is way more to go on this. what china wants is a drop of all tariffs and they want the ban on huawei dropped.
thatater is not something will ever get through congress, the former, trump likes tariffs, so they will not get all of the tariffs dropped. likely this goes out for a long time. i do not think we will see a real resolution until the first half of 2021. chris: business -- alix: business cinderella. that wraps it up on bloomberg open. thisg up, priya misra on soggy trading day as the fed prepares to meet and oil does not spike again. more questions than answers when it comes to the west versus iran. this is bloomberg. ♪
jonathan: equity markets treading water as the fed meeting begins in washington. oil gripped by uncertainty. saudi arabia telling customers some crew delivery will be delayed. for now wework will not work in public markets. the company set to postpone a contentious ipo. good morning. futures negative four points on the s&p 500. down .1%. in foreign exchange, the euro firmer to 1.1026. treasury bill -- treasuries bid, yields lower 1.83 on the u.s. 10 year. a rate cut is all but done. show me the guidance. >> they will cut by 25. >> 25 basis points. game, thee of the rest point for wednesday will be what is the forward guidance? >>