european trading day. from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is "bloomberg markets." guy: in brent, we are seeing a significant decline in the price of crude, down by over 6% now. saudi mayrfaced that get the facilities damaged by attacks over the weekend on stream than many were anticipating. is certainly moving. stocks are not. a reasonably quiet bond market today. equities feel like they are in very much pre-fed range. that is probably going to be the dominant theme over the next 24, 48 hours as we await that decision out of the fed. vonnie: here in the u.s., we are seeing the s&p 500 just a little bit lower, but no major moves. down a point. plenty of stocks moving, though. the three-month yield at 1.9 and

percent. talking earlier on nash at 1.99%. -- at 1.99%. the fedearlier on about injecting some liquidity and trying to settle the market. we will wait for announcements out of the fomc meeting tomorrow. at the moment, we are seeing the three-month yield rise. that could be because the market solve thiso indigestion we are seeing in short-term markets. newmont mining is the best performer in the s&p 500, up 3.8%. we were just speaking with the coo about meeting production targets for the year, and interested parties in red lake, a potential divestiture. the stock has been rising. new york crude, wti, down about 5.9%, keeping with that brent move. it's been a wild ride the last two days.

paul sankey confirming from his sources what we are also confirming, that saudi could have production back up and running into to three weeks. guy: let's get the latest. the reports seem to suggest that saudi will be able to restore some 70% of oil production lost after this weekend's attack, much earlier than the market was into spitting. yousef gamal el-din joins us from riyadh. give us the latest. being: at the moment to the operative word, because in the last few hours, we have seen reports speculating what kind of announcement we could get in the coming hours, and how quickly an output recovery could take place. this is absolutely key for investors around the world. later this evening, we are expecting a press conference from the energy ministry. they are going to outline more details on the damage that has happened to some of the energy infrastructure.

we could be in the offing as well for a tour of some of those facilities. that is on one front. the other front is the political front, which is also moving fast. you had earlier on in the day the iranians saying we are not going to talk to the americans on any level. then you have the saudis come out and say we are going to respond strongly to this latest aggression. they also made it clear that they have briefed the king on the "grave impact" that the latest attack has had. then you have the yemeni houthis in the south saying the united arab emirates could be a target as well. those are the pieces to the bigger puzzle that are going to keep this trade very volatile. yousef, thank you very much indeed. yousef gamal el-din joining us out of riyadh. vonnie: we are joined by arend kapteyn, ubs head of economic and strategy research.

tell us what you are mapping out in terms of an acceptable response on the part of saudi arabia. it can't ignore this, can't it? -- ignore this, can it? it clearly isn't. that come from our perspective, is what we need to know until we figure out what is in line for global inflation. the move we have seen so far, it looks like largely just noise, and we are quickly moving on. vonnie: at this point, we are restoring previous levels in terms of price. does that mean that even the likes of gasoline is unlikely to be impacted? arend: imagine we had sustained this 10% move. clearly it's been a reaction at the front end of global breakeven curves, so we've seen a strong response in the u.s. and europe, but the curve is very backward dated.

it tells you there is a shortage near-term that is going to get translated to prices. the market is saying we think we are going to see that show up in petroleum prices, but it is not perceived to have any longer effects. quitegoing to ebb away quickly, so that is a price effect. from a production perspective, that is a big deal. it is not like these are going to produce more production or investment. the market is really trying to look through it and say this is something that is very temporary and will go away quite soon. guy: at the moment it feels temporary, but the problem is no one saw this coming, and it is very hard to extrapolate from here. we are into the realms of geopolitics. clearly tensions are being ratcheted up in the region. you have to wonder whether or not a higher g applicable premium will get put into the price -- a higher geopolitical premium will get put into the price. if that is so, even a few bucks here and there could make a

difference. how capable is the global economy of sustaining a higher oil price? to $75 brents $55 range, it is, from a global perspective, irrelevant. producers and consumers cancel out. you've got about 1/3 of the world now a net producer, including the u.s., and 2/3 a net consumer. that, soeak out of let's say this is a much more sustained outage where prices go much higher, to $80, $90 and above. then what happens is the incremental benefit you get from more production online diminishes. there's not a lot of additional production you can bring online, and the consumer starts to dominate. then it becomes negative. you need to see oil at least $15 above where we are now for those effects to start to kick in. guy: it is not uniform and its

affect either. the u.s. demands for saudi crude has been falling, while others have been steadily rising. the chinese data over the last few days have not been great. you've talked about some of the price ranges. is that for the global economy? is that for china? arend: that's for the global economy. the rule of thumb for china is that every 10% for china takes off about $10 growth. the analysis is quite tricky. historically, it has not proven to be that sensitive even though it is a huge consumer of oil, obviously. vonnie: what should we enter the big the federal reserve will do and say tomorrow? arend: our expectation is it is sort of a repeat of the july meeting in the sense that you will have a roughly similar number of fomc for dissidents not wanting -- of fomc

participants not wanting to cut. we think 25 is basically what is going to happen. the difference versus the july meeting is that the data in the run-up to that meeting has been materially worse. investment data, employment data, and escalation of tariffs. the factors cited at the last meeting, uncertainty about global growth, uncertainty about trade, that has all increased. so i think it is putting much a done deal we get that cut. there will be a small minority arguing for 50, but we don't the that will happen. guy: stick around. plenty more still to come with you. arend kapteyn, ubs global head of economic and strategy research, is going to stick with us. vonnie: let's get a check on markets now. here's have a guilty little. abigail: mainly a risk -- here's abigail doolittle. abigail: mainly a risk off picture here in the u.s. the russell 2000, however, the small-cap index down more sharply. the other index is down closer

to what the s&p 500 is. a little bit of a risk off tone. investors treading water here in germany. in europe, the dax down 0.1%. take a look at the emerging market index, down right now about 0.9%. on the lows, down more than 1%. that's because the emerging markets are further out on the risk continuum. the shanghai composite was down sharply. that tells you investors are moving away from risk, even though declines in the u.s. are relatively small. overnight, we had an explosion in the overnight repo rate market. this is when banks lend their securities, treasuries and other securities, and exchange for money. when they pay back the next day, this is the rate they were paying for that overnight swap, essentially. an issue perhaps with liquidity, prompting the new york fed to do a repo today. $53.2 billion of

treasuries and securities in ago.option about an hour this is somewhat worrisome since there were some factors of this happening back into thousand eight. during the financial crisis 2008hing to --back in during the financial crisis. something to remember. take a look at brent crude. the consolidation of yesterday's huge gains, as it is thought saudi production will come online faster than expected. haven bonds stronger-than-expected around the time of the u.s. fed funds. take a look at the movers on the day. the leaders in the laggards. american airlines up 4.3%. airlines rebounding today from yesterday's selloff. crude oil is lower. cne higher after being initiated with an outperform at citi. corning cut their outlook, and j.p. morgan and other banks falling. vonnie: thank you for that.

much appreciated. remember the function gtv on the bloomberg. you can browse all of the charts featured on bloomberg tv. also, catch up on key analysis and even save your favorites for future reference. that's gtv on your bloomberg. this is bloomberg. ♪

♪ live from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." let's check in on the first word news. here's ritika gupta. ritika: president trump says the u.s. and japan have reached an initial agreement on tariffs. he says there will be what is called in a dish -- what is

called an exec of agreement -- butxecutive agreement, japan says any deal must include an agreement that there will be no new tariffs on japanese exports. uaw workers striking at gm. nearly 50,000 gm workers are on strike. it is estimated the walkout is costing the automaker $50 million a day. bill gates tells bloomberg it is time to take subsidies away from wind and solar energy, and should put them into new technologies instead. some of that subsidization has helped drive that volume, which drives the learning curve, and the prices go 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. gates: dates cochairs -- cochairs a global group of leaders looking for solutions to climate change. 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 ritika gupta. this is bloomberg. guy: thanks very much indeed. boris johnson's brexit strategy goes to the supreme court. u.k. judges have finished the first of three days of hearings on his decision to suspend parliament. joining us from outside the court in westminster is bloomberg's sebastian salek. we are done for the day. what happened? sebastian: we are done for the day, but certainly not done out here. there are hundreds of people from both sides of this debate coming here to make their point. now we hear from the other side. today we talked about the losers

in the previous cases because remember, we are reconciling what we heard in an english court and what we heard in a scottish court. in the scottish court, they said the order was to stymie parliament. in the english court, they said this wasn't even a matter for the judiciary. boris johnson has said he is feeling positive about this. i spoke to the scottish national party mp earlier that is bringing the case against the government. here's what she had to say. >> i am reasonably confident that the majority of supreme court justices will follow the reasoning of the scottish court. it was very good to hear my colleague in english case a buys them to adopt the reasoning of the court. sebastian: big talk therefrom joanna cherry. there is talk around what boris johnson would do if you were to lose this case. they stopped short of saying parliament will be recalled immediately, but the have to

give a written answer, so a bit of pressure on johnson and his legal team to get. vonnie: great reporting there. bloomberg's sebastian salek. guy: still with us, arend kapteyn, ubs global head of economic and strategy research. let's talk a bit about brexit. it seems to be increasingly the central case of many that i hard brexit is ultimately what we are going to get. we will wait and see exactly what happens. if that is the case and it is an acrimonious, hard brexit, walk me through the applications for the u.k. economy and the european economy. arend: it is very similar to a tariff shock, except that we also have nontariff barriers that are more expensive. upher than having tariffs go 3.5%, you have them up 10%, 15%. that is your first stock. we think you go down about 200 basis points in growth in the

first year. half of that or so for these nontariff barriers. but then we get relocation effects. what we think is going to happen is industries like cars, where you have that in percent tariff, you are going to see that industry -- that 10% tariff, you are going to see that industry partially disappear. that is going to take a while to play out. financial services will relocate to some extent. then you basically get a big sterling move. that is going to help exports at the margin. you're going to get monetary and fiscal stimulus. net numbers, you would have a recession in the first year. sort of goes away in the second year. after three years, all of these effects subside, and what you're left with is some very small reduction in potential growth because of the productivity and openness reduction because of reduced competition under higher tariffs. all highly uncertain. huge confidence bands around these estimates. you are also making all kinds of

guesses about people's behaviors. these traditional russian ships between currency and how the economy will respond may not hold -- traditional relationships between currency and how the economy will respond may not hold. highly uncertain, but near-term, net negative. guy: 200 basis points economic drawdown. that is quite a big effect. that is probably going to spook a lot of people. let's talk about what else is spooking people, including the fed, and that is this move we've had in terms of the funding markets. they have coming this afternoon to damon that down -- to dampen that down. in terms of the effects, can you quantify that? arend: it is not a systemic shock by any means, but it is a signal that some thing is wrong. this is a perfect storm of treasury options, corporate issuance had to be paid, so it

was a lot of demand for cash. the problem was i think the dealers are up to their neck in collateral. there was a reluctance to provide that anywhere a day before the fed meeting. basically, rather than do an overnight operation, a lot of the providers of cash wanted to lock it in for a week or a month. the overnight repo spiked much higher. i think the fed got spooked by this because, and we will maybe find out tonight, there are two applications. twois the fed -- implications. one is the fed might say, look at what happened to the fed funds rate. the bigger issue is whether they now think that they've run down their reserves too far. they are running a stable balance sheet right now, buying treasuries to keep the balance sheet stable, but because circulation is going up, they are running down excess reserves. we may be getting to the point where that is affecting market rates. if that is the case, rather

than wait until next year, they might bring it forward. buyingght start $3 billion a month. vonnie: if that comes out in the communication tomorrow, that there was even a conversation about it, nevermind doing something, how does the market react to the fed suddenly expanding its balance sheet again? arend: i think it is well telegraphed that this is the ultimate game plan because at the end of the day, once they reach some equilibrium level of reserves in the system, they will need to expand the balance sheet to keep face with the growth in currency and circulation. the expectation was that would be some point next year. it is always a guess as to when exactly you reach that point. if they decide that point is now, it just means we need to bring forward a little bit the treasury purchases we had expected next year.

i don't think it is a big deal in the sense of it be an unexpected, but it is a timing shift of food and we thought it would happen. guy: thanks very much indeed for coming to cs. eric -- coming to see us. arend kapteyn, ubs global head of economic and strategy research, thank you. this is bloomberg. ♪

♪ guy: from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." it's time for your latest bloomberg business flash. the value of wework bonds dropped by the most on record today after the company said it was pushing back its planned ipo. wework's junk-bond due in 2025 l more than -- 2025 fell more than $0.20 on the dollar.

nbc universal will take on netflix is its new streaming service peacock. the service will include reruns of nbc shows such as "the office" and "parks and recreation." peacock debuts next april. the ceo of jcpenney says her turnaround plan will be the one that works at the struggling retailer. she sat down with bloomberg nearly a year after she started, and she has closed stores, exited the appliance business. still, there is a lot of work ahead. sales have fallen for four straight quarters. that is your latest bloomberg business flash. let's get a check now of u.s. markets. the equity markets themselves are not moving around too much. several stocks are performing well and performing poorly, but overall, indices are pretty flat. the s&p and the next deck -- and the nasdaq up 0.1%, the dow down 0.1%.

the 10 year yield is at 1.80%. barrelil is below $60 a wti,ub uti, $59.71 -- for $59.71, as saudi says it is able to get production up and running faster than many thought. what ist is happening with the ftse 100 today. elsewhere, i think we are probably in this pre-fed kind of area, and i think the market is very quiet as a result of that. cac up a bit. dax unchanged. ftse relatively unchanged as well. this is bloomberg. ♪

guy: 30 seconds until the end of regular trading. we are now waiting for the fed. european equities going nowhere at a headline level at all. london market gray.

germany is gray. france's up a touch. italy is down a touch. the bait news this afternoon -- the big news has been brent. down over 5% at the moment. the reason is it looks like the saudi's will get back a lot of the production they lost much faster than many had anticipated. pricing that in. that has been affecting the london market and affecting the distribution of the stocks we've been seeing this afternoon. we will tell you where we are. volume is ok this afternoon despite the relatively low volatility. the ftse 100 flat, the dax flat. the cac up a little bit. luxury goods in focus. in terms of the sector story, we are back to this bond proxy bid story. you have the bond proxy, the big names in the food and beverage sector, the health care sector,

the household goods sector. this is where the money is rotating back this afternoon despite the fact we are seeing prices going a little bit lower this afternoon. high guilds picking up a touch. back to that more defensive build going into the fed. bottom of the market, we are back to the more cyclical end of the market, the selloff we have seen in the banking sector, the auto sector, all of those sectors once again this afternoon. bid,te value catching a that seems to have come to an end today. in terms of some of the individual names, nestle up 1.8%. dp down 1.3 on the back of the oil story. that is look at the european close. welle: oil it is here as with wti down 5% right now. the other commodity to watch is gold. , about $1500.

that is helping the gold miners. we will get to that in a moment. i want to point to the three-month yield. the fed trying to rectify the volatility we are seeing the overnight markets. it is trading at 198. likely money went into the short end of the curve to hide out while all of this get shorted out. 98.34, ar index, little bit weaker today versus the euro and sterling. let's look at some of the groups that are moving in some of the individual names. mining is one of the best performers in the s&p 500. it was up at the top. incoming, whoo, spoke to us, talked about the dividend, divestitures, many suitors for part of what it plans to divest. that stock is up 3.6%. according is down 8.2%. a lot of analyst reaction to the pessimism about

corning's future. 3g selling a little bit of his position. on the other hand you have the founder of 3g, the ceo, i should not say founder, the new ceo is buying some stock as are some of the 3g partners. the department stores index having a rough day, down 4.8%. nordstrom down at least double that. some of the department stores are getting hit hard once again. it is the story not going away. the story of retail. guy: tough times. let's get back to the oil story. dow jones reporting saudi arabia is increasingly confident iran launched the attack that took place over the weekend. attackort also said the involved low-flying missiles and drones that evaded detection, according to sources. we have also learned that it looks like the saudis will get

back much of the facility much earlier than anticipated, possibly with 70% capacity returning shortly. we are joined by a former shell oil president. he joins us from houston to give us his assessment on all of this. good morning. are you surprised that the saudis may be able to get this facility back on stream as quickly as some suggest? >> actually, i am not. i've been in saudi arabia and had connections, not directly but with the larger control room, the resilience the saudi's have put into the building up their infrastructure is quite remarkable. they do things very seriously. they take all of the precautions necessary and it is difficult to know where the strikes took place. it would be a national security secret how much resilience they

have built in. the fact they are coming back strong, let's hope they are, that is a good sign. the bad sign is if the iranians get away with an attack this easily with no consequences, then what is to prevent them from doing it again and again and maybe picking other infrastructure that saudi aramco manages, because the iranians are motivated to do whatever they can do to neuter the sanctions on iranian oil and also show a boldfaced to their own people, who are having a miserable life as we speak. case, youat is the think the oil market is underestimating the potential for further attacks and you think we need to build a higher premium into the price? ,ohn: i think the vulnerability now that we are back into hot geopolitics, the last couple of

years we have been coasting along with mild to cool geopolitics. now it has heated up. i have no idea whether this will continue. if the saudi's or the americans or whomever strike back at iran, it will only get hotter. i think we are facing a series of incidences that may well push the oil price even higher. that is what the iranians would like to see. they would like to see oil price closer to $100, because there nation is going bankrupt rapidly not being able to sell oil. would be an appropriate response on the part of the saudis? john: what the u.s. and the saudi's are probably quite capable of is not striking militarily, but further undercutting the economy and

cyberattacks to dismantle or disengage some of the iranian information management capability. i think there are ways, without using military force, to send a serious message to iran. get back in your box and live inside your box until you're willing to enter the world community in a proper manner. i think that is how they would respond. i do not know. i am not a decision-maker, but i could see it happen quietly, silently, but with great effect. vonnie: why would the uranian's have done this? -- why would the iranians have done this? they were finally starting to get back into the good books of u.s., and up until now europe had been quite sanguine on iran. on europe tobe actually do something about

iran's activities. john: from a historic standpoint , the iranian leadership has a sense of empire. thus they went to iraq, then syria, then libya. there is an empirical drive. they do not like people in their faith. the saudi's and the americans and the israelis are in their face making it difficult for them to do what they choose to do. there is an enormous hatred for what is being done to them. in their minds, i would say they are already at war. this is just a manifestation of another tactical play in their war. i do not think that will cure easily. i do not think a meeting with trump and the greater scheme of things, to them, is meaningful. i think they know and understand that the u.s. is not going to give on the issues until i ran agrees to do -- until i ran agrees to do other things.

instead, create this big drama and then go to the new york to the united nations meeting and have this big speech by the head of iran and try to get the world to pay attention. that is why they chose now, recognizing that it might cost a meeting with trump, which they did not want in the first place. guy: all of the talk in the oil market of late has not been about supply, it has been about demand. if we were to see a higher oil price, maybe even a few dollars, you think the global economy is capable of sustaining that? john: if it is a few bucks, yes. if it is a sustained 30% to 40% increase from the 50's into the 70's or the 80's, that would only contribute to a global slowdown. we did tolerate oil at just above $100 a few years back for a considerable time. it didn't slow growth, but it --

it did slow growth, but it did not stop growth. i think the economy is softer now, particularly with issues in china, venezuela, argentina, et cetera. it would have a big impact. even a couple of dollars would have some impact, but not a sustained one. vonnie: former shell company president. i am curious as to which of the candidates you are most on board with when it comes to affordable energy? administrationnt has done more for energy than any president going all the way back to richard nixon. they all promised energy independence from richard nixon to ford to carter, reagan, bush, clinton, bush, obama, but the only person who has actually supported the endeavors of the oil and gas industry is the

current administration. while there are many things about the current administration that raise questions in my mind, and some disdain for the behaviors we see, i think the policies are making a major difference in the notion of energy security in the united states. guy: you think you could band fracking? only with economic collapse as a consequence. why do i say that? if we stop rapping by some government -- if we stop fracking by some government yet, the price of oil would skyrocket good i am talking six to seven dollars a gallon if we stop fracking. it would immediately lead to major declines in oil production and we do not have an alternative to the internal combustion engine, whether it is for personal transportation, whether it is for freight, marines, the turbines for aircraft.

an administration comes in and thinks they will be all-powerful and condemn or stop the use of technology, which no one has found to be unsafe. that is one of the issues. it is not unsafe. it works. it has been working for 40 years or longer. it is only we have done horizontal that has made a difference in recent years. vonnie: we have to leave it there. currently ther, ceo of citizens for affordable energy. thank you. guy: a quick look at where the markets have finished. very flat. banks selling off. some of the more defensive names catching a bit. we are in fed mode. the cac 40 getting a lift. l'oreal is our shining star in that market. you can turn into the cable show at the top of the hour on dab digital radio. jon ferro will be in new york, i york, ijoining him in

will be joining him in london. this is bloomberg. ♪ bloomberg. ♪

guy: -- vonnie: live from new york, i am vonnie quinn. guy: from london, i am guy johnson. vonnie: toyota is moving its manufacturing in the united a $300 announcing million investment in an san antonio plant. the same day the u.s. reached a deal with japan that would avoid new tariffs on japanese cars. david westin joins us now with the top toyota executive in the u.s.. david: let's go to san antonio where we have the head of manufacturing in the u.s. for toyota. explain where this money will go and other jobs attached to it?

the 391 million dollars is meant as a boost in the flexibility and the ability of this rate toyota plant in san antonio to build comas and tundras. while there are no jobs attached to it, it confirms the 3000 team members that already work in our san antonio plant, as well as the 4000 employees related to our on-site suppliers who feed into the plant. we view it as a tremendous vote of confidence in texas and the stock market. david: you mentioned the two models built there. are there any plans to produce other models out of san antonio? christopher: it is always possible, but we have to look at consumer demand. consumer demand is at an all-time high. we had the best month ever in august for light trucks. we sold the most amount of to comas in august. we are looking at a growing

truck market. we are thinking as long as we satisfy consumer demand we are doing the right thing. right now we are able to do it with our great plant in san antonio. that is what that $300 million is supposed to guarantee. david: this is against the larger mosaic of trade issues with united states and japan and the united states and europe. how does this fit into the u.s. and japanese issues? does this relieve some of the pressure for toyota? christopher: we do not make these investment decisions based on what the current trade scenario is. our scenarios stretch out years. ofn we make this kind investment, we look at where the market will be 20 years from now regardless of what the trade lows might be under this agreement or that agreement. what the potential u.s. japan trade agreement does or the passage of the usmca will do is it create certainty. certainty is a far better environment for investment.

we are hopeful that is these trade developments calm everything down, it will create a better environment for more investment. we plan to make those investments. we are about halfway through a $13 billion commitment to the u.s. by 2021. we will continue to do that. agardless of tariff situation or trait situation b. usmca you suggested the may be more important for toyota's operation than the possible trade dispute. tell us about the likelihood of getting that past, and if it does not get past, and we end up with nafta where it is now, does it make a difference? christopher: who can predict what congress or washington would do. if i could or you could we would both be in different jobs. we are hopeful congress will see the wisdom of the usmca. we think there is great potential to increase the economies of all three countries and toyota is prepared to work

with that. if the usmca does not pass, we probably revert back to some form of nafta. it will require some adjustment, but we will be ok. the usmca would be a definite improvement and we hope the congress or the ministration can get together to get that done. david: turning to u.s. japanese issues, there have been reports we are on the brink of an overall deal that will include the auto issue. what you know about where the talks stand? christopher: we know the talks are ongoing. i am afraid we do not have clear information about what the contours of this potential agreement might be. we have to do what everyone else is doing and wait and see. david: fair enough. you are a labor lawyer in a prior life. give us your sense of what has been happening to the north american car markets because of the gm strike. is it affecting toyota at this point at all? christopher: not really. toyota customers will buy our cars. people will be attracted to our

cars regardless of a given labor situation with competitor. we are not seeing much of an impact. david: put this in a larger timeframe. talk about electrification. there is a lot of talk about the move to electric vehicles for all of the carmakers. how does your investment in san antonio fit with that? this is an internal combustion plant, right? christopher: it is. but if you look at what our goals are, 15% of our lineup will be electrified by 2022. globally, toyota plans to have an electrified product line of 50% by 2025. notice i said electrified. what that means is we are focused not just on internal combustion engines, but hybrids, fuel-cell vehicles, as well as battery electric vehicles. we think there is consumer demand across the array of these different kind of powertrains. it is our job to satisfy these demands. this plant in texas will give

the plant to meet the customer demands. david: you're responsible for north american manufacturing. how many of those electrified vehicles will be built in the united states? christopher: as many as we can build. the reality is if we want to build what we sell, and as consumers pull into more electrified vehicles, as that happens over time, we intend to build as many as we can in the u.s. to satisfy u.s. customer demand. david: thank you so much for your time and congratulations on that announcement. christopher reynolds, head of toyota north american manufacturing. vonnie: a wonderful interview. coming up, our global battle of the charts. this is bloomberg. ♪

here, it all starts with a simple... hello! -hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not?

how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. vonnie: time for our global battle of the charts. you can always see these on the

bloomberg, just run gtv . kicking things off is tatyana dari. it is certain the fed will cut rates tomorrow, but what is less certain is what lower rates will mean for banks. bank of america did some analysis and found lower rates do not necessarily support higher stocks, even if they go to low or negative. they say look at germany, which is what i have charted. steadily10 year yield declining in turning negative. that did not have a big impact on valuations. if you look at the dax, the ratio is hovering around the 13 or 14 level for quite some time. the situation is different in the u.s. and the likelihood of negative rates is still a low one, but morgan stanley also pointing out that even if current rates were just passing the point where lower rates can be good for stocks. you can find my chart on the terminal at gtv . vonnie: very nice.

excellent chart for pre-fomc decision date. guy: i will focus on oil and continue the conversation we were having yesterday and talk about how the saudi issue is much more of an asian issue than a u.s. issue. u.s. demand for saudi crude has been steadily falling, but chinese demand continues to be strong. japanese demand continues to be strong. indian demand continues to be strong. these are economies that are struggling and probably an even higher oil price is something that will be a negative factor when it comes to their global economic growth. the red lines are china. the yellow line has been japan. that is reasonably steady. the u.s. is the blue line and it has been fading. when we think about how the geopolitics will evolve, how the economic effect will evolve, focus on asia, not the united states. that is an overlap of the venn diagram story of what is

happening with the trade narrative. if you think about the trade story, which feeds back into the oil story and the focus of oils higher potential price on the asian economy comes together or gets negative, particularly for china. vonnie: i like both of these charts. i think i will award a tie. darie, congratulations, and guy johnson, congratulations. coming up, "balance of power" with david westin. he will be talking about the economy and iran. major indices are barely changed. this is bloomberg. ♪

david: from bloomberg world headquarters in new york, i'm david westin. welcome to "balance of power," where the world of politics meets the world of business.

on the brief today, vincent cignarella on the spike in overnight repo rate, and from london, the british supreme court review of the suspension of parliament. vince, we will start with you. this repo phenomenon. what happened? vincent: it is essentially a supply and demand issue. there is not enough cash in the system for the banks, so when they try to lend securities to the players in the money market to take cash, there's is not enough cash to come out. it is this particular story that has to do with tax payments by corporate who would move money from the banks and left them a little short. it was time to make coupon payments for treasuries. enoughrt version, not supply for the demand for cash going on in the last couple of days. david: we