To it. But it is a mess. Alix this morning we are looking at the gulf of oman. We have two tankers under some kind of attack. About how or by whom. There are questions as to what it actually means. And who has the military capabilities to do that . Alix that is where you had those two vessels on their way to singapore, but a month ago we also had saudi tankers attacked, leaving questions as to who in the region would want that kind of attack and who would be able to carry it out. That is the real turning point for the markets. David oil was really on its way down before all this happened. Alix thats right. Yesterday oil prices really took it on the chin. A 3 rally on this kind of geopolitical risk right next to the straits of hormuz is kind of nothing at the end of the day. Part of that, to me, is still demand worries. Opecs monthly report lowering demand for the first quarter. Says, youre right, trade tensions and demand dont go handinhand. So we will see. David and had they set the date for the meeting . Alix not that i know of. In the markets, you can kind of see all of this playing out. , p futures off by 13 points not having the risk off field you might feel with all the turmoil. Down by 2 10 of 1 , despite the fact that bankers dont like the overvalued currency. Yields in the u. S. Pretty much go nowhere. Crude up over 3 . It could have been more. Now it is time for bloombergs first take. We are joined by Sarah Ponczek and vincent cignarella. Sarah, when traders look at Something Like this, daytoday volatility, are they trading that . Do they like that . Sarah volatility is good for them so they can trade in and out of it. However, like you said, it could have been more. Many like commerzbank are looking at the rebound and saying it could have just been that we see this rebound because of the extent of the selloff that we saw yesterday. It has just been such a roller coaster ride for oil. It is pretty amazing. Weve also really seen oil prices affecting the trade across markets as well. Tracks howi actually macro affects the other markets, particularly equities. Now oil is the most significant influential macro factor, according to their data. David you are our resident for to trader resident former trader. We dont know what actually happened. We dont know whether it will happen again. As a trader, how do you trade that . Vincent a couple of things. Oil has been leading markets since last october, so folks getting on the bandwagon now, welcome to the game. Traders have known this for at least six months. There are two factors that influence oil, supply and demand. When supply factors are hitting the market such as this situation, that is essentially an oil specific issue. You really shouldnt trade cross assets on that. If demand wanes, risk assets fall. Two trade risk assets in a positive or negative way on supply issues, i would fade it as a trader. Buying equities on this issue is the wrong trade. Alix not to mention the fact that overall commodities in relative value to u. S. Stocks are at the lowest level since like the 1950s or 1960s. Vincent oil has been in a big selloff this entire week, and i suspect that when this passes, if it passes, we will be back into the selloff in wti will be testing 50 a barrel again. David it is time to get to china and the trade dispute. We learn something important yesterday. The president says there is a deadline for how long hes willing to be patient with china. The problem is we dont know how long that is. Pres. Trump i have no deadline. My deadline is whats up here. We will figure out the deadline. Nobody can quite figure it out. David well, that is really reassuring to markets. Nobody can quite figure it out, and yet the whole world is waiting to find out what happens with china. Sarah right, very reassuring. You have the minister of commerce and china put much saying that china will fight till the end. This is kind of discouraging for investors because so many investors still do believe that there is a possibility to get something positive out of the g20 meeting, may be a potential push out further of those rising he 5s on that 300 when billion of goods. People are still optimistic that the informal deadline has to be a few months before the 2020 election. When you put the argument out there that a deal has to come to fruition, the argument behind that is that we have an election coming up, and people cant fathom getting to that point without a deal having been made. Alix what is striking to me is that the market does not seem to price in the fact that this might not happen at all. We are basically a penny throw away from record highs for the s p. Vincent and hearing the president of the United States saying i know something you dont know is not very reassuring. Alix and a secret letter from mexico im not going to show you. The things that developed yesterday, with the president saying china will make a deal because they have to, trying to push china into a corner, is not a good negotiating strategy. It is more likely than not to blow up. With the situation in hong kong potentially coming up at the g20, it is the elephant in the room. You cant just not acknowledge it. That is certainly not going to help the negotiations. I think where you see the 2020 election coming into play is more capitulation perhaps on usmca, getting a win in that area, perhaps getting a win with germany on auto tariffs. Dont forget, you see the president talking about about nor stream two. Alix lets get to the third area, and that has to do with tech. If you come inside to bloomberg, the nasdaq had its worst day yesterday in about a week. We do see overall nasdaq stocks outperforming the s p for the whole year. The move, though, came with facebook yesterday. When investors look at tech stocks, how do they start to value that conversation . Sarah it is a very good question, and one i havent been able to find a straight answer to. When i ask investors how you are dealing with the overhang of antitrust as it relates to these probes and the doj, many are saying it is probably going to last years, so why worry about amazingwhich is pretty because these names have been in the spotlight over the past week, the past two weeks, ever since these headlines really started rolling out. We have not seen really any serious damage. Theyve been holding in just fine. Yes, facebook yesterday dragged some of the names down, but that was also after headlines andrding privacy concerns things on the semiconductor front. So a lot of the big internet names you would expect be facing issues right now are still hanging in there. David and it proves there are bigger things than even the government. On the other hand, it sure feels like the tech guys are asking for it. Vincent leading with their chin. When you talk about what could happen in the 2020 election and a Democratic Party running on, for lack of a better word, a socialist agenda, this is the Oil Companies back in the day when you talk about what plays to the american public. Amazon has long been thought of as the big behemoth that has put Small Business under pressure. For Political Parties not to run on that agenda and try to get that groundswell vote behind them would be silly to not take advantage of, and i think tech is in a bad place at a bad time. David i think you can count on that. Bloombergs Sarah Ponczek and then cinderella and vincent cignarella, thanks for being with us. You can see the charts we used and more by browsing gtv under terminal. Coming up, more on oil, trade and technology with federated io manager. Portfol this is bloomberg. Alix trouble in the gulf of oman. Two tankers hit in a suspected attack. With us is annmarie hordern. Walk us through the last few hours. Annmarie a lot has been happening. There are unconfirmed reports that maybe it was a tornado maybe or two pito maybe a torpedo. Both of these vessels were s,ansporting Petroleum Product one to eight taiwanese refiner, one to singapore. We do see a spike in the Oil Price Due to the fact that this is inflaming tensions already in the middle east. Last month, four vessels were attacked. Iran, but iran has denied that. Alix you had the iranian president mr. Rouhani saying this before the issue with the tankers. Not beouhani we will starting anymore in the region, even with the United States, but if they wore wants to start, we will give a crushing response. Alix it raises the question, why . Why would iran do this . Who might be to blame . Annmarie i think many people would want to point their fingers to iran. One strategist at bloomberg iran isntn if to blame, they will likely get the finger pointed at them. But right now they are still suspected attacks. Even if we look back at what happened last month with those other four vessels, we still dont know who was responsible for them as well. It is a very fluid situation, and we are going to continue itnitoring it, but is likely to up the rhetoric between the u. S. And around. Mex which strikes because oil is only up 3 . I wonder how much of that has to do with demand worries in opecs report. Basicallythe price is where we were two days ago before we saw the drop with people worrying about demand. That, andning about talks about the trade wars and ighed on has we demand. This is what i heard from executives last week ats beef at spieth. It is Global Demand growth that should be higher, and it is not. Alix thank you very much for mth for that. We are with federated investor portfolio manager. What do you think . Guest our view, prior to blowing a cup to blowing up a couple of tankers, would be that you would sit in a similar range. You have production cuts at opec and these disruptions in places like venezuela and iran. We will see how that plays out. I think what youve got is that opec is talking their book a little bit on demand. This gives them pretext to continue to keep those cuts in place right now. Ultimately, as we get to the end of the year, demand is going to increase if we get some progress on trade. The last 48 hours probably pushes that a little more. David that, for me, is the tricky part, how to separate what is specific to oil and what is more generally applicable to local growth. Im going to put up a chart that really struck me. If you compare the commodities index overall to the s p 500, it is the lowest it has been in 50 years. Is that telling us something about growth that investors should be paying attention to . While the outlook is stronger because of real productivity, nominal growth is falling. The reason is because you are in periodflationary globally. It has to do with commodity intensity. The newthat parts of economy are less commodity intensity of commodity intensive. That is probably not bad for growth, by the way. Probably not bad for the planet, either. I think we are just in a disinflationary period. David markets tend to overreact in general. What are the chances that markets are overreacting with trade concerns, china concerns . Steve when you look at relative to the oil price, the oil price has stayed in a relatively tight range. It strikes me as a pretty fair range. You got u. S. Production on the upside, youve got enough craziness around the world to keep a floor on it. Could we test either end of that . Yeah, but i think it is more likely we will test the highend of that range rather than the low end. Alix why are we supposed to record highs in the s p . Steve we were a little bit surprised by this. We thought mexico and the threat of tariffs were going to have a more meaningful impact on the market to the downside. Clearly the market has responded area positively to the support by the central bank. I think it is appropriate for the central bank to be entertaining cuts. I am surprised at how strongly and quickly the market has reacted to the upside on that, given that we still dont know what is going to happen at g20. Youve got some issues geopolitically, and growth is slowing, so we will just see how it plays out. I dont think we are out of the woods yet. The fed meeting in june is going to be very tricky because if they dont cut in june and they choose to do that in july, what do they do with the dot plots . How do you bring those in a meaningfully if you are not cutting in june . The fed really has to navigate things in a not so easy way, but ultimately, with mexico on the sidelines antichina deal as the major Thing Holding us back, if we get progress there, you could see markets reach new highs again. , can the a nutshell fed backstop the president on trade . It seems to be a tug and pull between fed cutting at the president saying ominous things about trade on the other. Steve i think the fed is in a tough political position. If they cut before g20, does that embolden the president to be tougher on trade . There is a potential feedback loop. I think they need to not engage in that process. I think what you look at is where the longterm Inflation Expectations are. The idea that we would tolerate 2. 5 is laughable. The fed needs to maintain credibility on longterm Inflation Expectations, which is ultimately why they need to choose to make a move here or not. Alix which also relates back to oil because the correlation has been picking up between the two. Steve chiav arone will be sticking with us. We have more coming up on the Capital Markets and how ipos raise equity in this kind of environment. David youve got a perfect day for commodities for commodities edge. Well done. Coming up here, tech stocks take a hit after outperforming the s p so far this year. More on that next. This is bloomberg. David tech stocks has been leading the s p 500 for most of the year, but the last few days have been tougher. We can see that by a chart ive got coming up, led by trade concerns with china, and yesterday facebook got hit hard by a report that Mark Zuckerberg personally knew about privacy problems. Rone of federated investors is still with us. Take a look at this chart. You can see beginning in june, tech really got a big hit. That is trade, i think. Yesterday facebook got hit by that report that Mark Zuckerberg knew about privacy problems. Is this trade . Is this regulatory overhang . Steve i think it is both. You dont want the word big in front of your industry. If it is big banks, big oil, big tech, big tobacco. That is a bullseye on your back. What the market is trying to contend with is how bad is it. If you would have bought big tobacco right after the got regulated, that wasnt a bad time to buy the stocks from a price perspective. These are large companies. The question becomes, will regulation have teeth and hurt their business model, or will it lock in their advantage relative to Smaller Companies that cant meet the Regulatory Burden . In terms of pricing, trade aside for a second, these companies are monopolies. There is no question. If they are, they deserve higher multiples than they are getting today. Theres a risk that they become regulated utilities. If they are, then they deserve a lower multiple. I think the market probably weighs those two and tries to come up with a price. It doesnt really increase the risk that they will become regularly utilities become regulated utilities. David at t took a while, but they broke it up. Microsoft, it slowed them down. Are we talking about a month, a year, five years . Steve you also have to look at the business model. Apple almost sells privacy as much as they cell phones at this point. When you look at those thing names, youose faang need to be able to distinguish between those that engage in questionable privacy record his privacy practices. Alix how do you not own tech . Steve you were going to have exposure to these faang names. Do you need to have as much as in the index . Theres all kinds of wonderful Growth Opportunities in tech in secular themes that you can access outside of that group. Theres opportunities within the semiconductor space, theres opportunities within business services, software and services. Theres all kinds of opportunities around Digital Marketing that dont just rely on these companies as you move throughout that sector. Youve got to be able to balance those. Alix steve will be sticking with us. Coming up, President Trump lashing out at germany, threatening sanctions over Angela Merkels support for a pipeline from russia. This might be one of my favorite stories. David it is wild. Alix basically russia is dumping lng into europe. David he doesnt much like Angela Merkel, i think it is fair to say. Alix we will talk about that next. This is bloomberg. Alix this is bloomberg daybreak. Im alix steel. The big news is what is happening in the gulf of oman, and two oil tankers hit. We dont know exactly what happened or who is responsible. You are seeing markets respond. European Energy Stocks getting a nice bid. Part of that is the rally we saw an oil. It is an idiosyncratic knock on effect. I did want to highlight what is happening with the swissie. I think that story is super fascinating. We are highly valued. Please stop bidding up my currency. David how far negative can you go . Alix totally right. Eurodollar is flat. Notndustrial production turning out well either, although you are still having some kind of support for eurodollar. Bonds kind of go nowhere. Get an auction later on today, right . David its been pretty quiet, as predicted, this week. Alix and oil with the geopolitical risk shooting up. David lets turn to Viviana Hurtado. She is in washington right now with the first word news. Viviana to tankers have been damaged in suspected attacks in the gulf of oman, the Second Attack in the region in recent weeks. One ship is described as being on fire and having a hole above the waterline. The owner of the second ship says it was damaged by a shell. Four ships were damaged last month. The u. S. Pointed the finger at iran. President donald trump ramping up criticism of germany. Hes threatening sanctions over chancellor Angela Merkels support for a gas pipeline from russia. The president warns he could move some u. S. Troops out of germany because he thinks it is not spending enough money on defense. The head of the Swiss National bank has little patience for complaint about the countrys negative Interest Rates. They spoke with bloomberg tv today. It is not our task to make the Financial Sector happy. It is our task to support the economy, and we are taking the decisions in order to see in order to achieve those goals. 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. Im Viviana Hurtado. This is bloomberg. David thanks so much. European Union Finance ministers today and luxembourg to discuss the budget and possible sanctions on italy because of its growing deficit. We welcome now bloombergs maria tadeo. Give us the viewers guide to luxembourg. What should we be paying attention to, that budget or italy . Maria certainly italy. It seems that this is almost a replay of the great standoff between brussels and the greek government, only it is now the italians. The Italian Government says the European Commission is actually too pessimistic. They believe the economy will Gain Momentum and that tax revenue will pick up, and that means the deficit will come closer to those targets set out by brussels. The idea is that the European Commission is not buying any of this. They think a financial penalty is warranted. This could really trigger a political crisis, and it will come down to European Finance ministers to make a decision. We are today from a number of ministers, including the french, that the rules must apply to everyone. They want to see real action. They think the Italian Government has talked and talked. Now they want to see figures and an actual plan on how you bring down this debt pile in a Sustainable Way under in a sustainable manner. Alix what is the progress on germany, with the u. S. Talking about pipelines and possible sanctions, pulling out troops. Maria this is another escalation, but not a surprise. Many countries, including the germans, think that President Trump has retrenched the International Scene and that europe needs to take control of its own destiny. This is why germany wants to continue to get this pipeline done because they think it is longterm strategic and it is crucial for them. Of course, President Trump has said it is a huge mistake. We could bring back troops from nato, but also impose sanctions on germany, which is very strange because it is an ally. It is not clear how these sanctions would work, but what is clear is that Angela Merkel and donald trump do not see i to i. And Angela Merkel say do not see eye to eye. Saying why merkel should we agree to this if the u. S. Backed out of iran and the Paris Agreement . Alix forget you, germany. Forget nord stream 2. Arone of federated investors is still with us. How do you look at this . Steve well, today is actually my wedding anniversary. David congratulations. Steve and i think we have a better relationship than donald trump and Angela Merkel. Youve got eastern europe, which is traditionally an area of strategic importance for the United States, and there is a concern that, through the pipeline, russia will exert undue influence on europe. Europe is trying to secure cheap energy. It is another example where interests have aligned for half a century are converging a little bit. To me, the most interesting thing going on in europe is this acronr game between m and merkel over who is going to lead europe. What hangs in the balance is who the next ecb president is going to be. Now that the german candidate for the European Commission is it is hard to envision a world where any kind of hawkish policy at the ecb is going to be positive. I think that, with all of the news coming out of europe right now, the conversations over the next couple of weeks and macron trying to assert himself is going to be the real important thing. David but the germans like their Central Banks conservative. Steve they certainly do. David steve is going to be staying with us. In the meantime, lets turn to the china trade situation with the United States. Donald trump there is a deadline for trade, but that it is all in his head. Pres. Trump i have no deadline. My deadline is what is appear. We will figure out the deadline what is up here. We will figure out the deadline. Nobody can quite figure it out. David we welcome now shawn donnan. What is the view from over there . President trump clearly thinks hes got the chinese on the run. Reporter i think in that rose garden moment, you have what the chinese are trying to figure out, and that is what is in Donald Trumps head and exactly what he is trying to play. As we roll into this g20 meeting at the end of the month, which has some pretty high stakes, i think the view in china right now is that donald trump is an increasingly erratic and difficult person to negotiate with. One of the senses i got in 10 days on the ground in china was of a lot of people are just saying, if we are not going to get a deal with this man, it is time to prepare for a longerterm conflict and think about how we sure of the economy here in china and rethink how we do business. David for those people wanting a deal, one of the things that is most disturbing is you have President Trump saying we are going to get a deal because the chinese needed, and the Chinese Government was officially and unofficially saying we cant withstand the pain we can withstand the pain. That does not sound like we are moving towards an agreement. Shawn i think there are two reasons to think we are not moving towards an agreement. Both sides are still blooming at other for talks pricking down last month. For talks breaking down last month. The chinese feel that donald trump was asking too much of them, and xi jinping is not prepared to give in for his own domestic reasons. The second reason to think that is thats not nigh neither side is really feeling much economic pain. I think we talk a lot about the potential economic consequences of a trade war, but if you look at the economic numbers on both sides, they are still in relatively good health. Alix bloombergs shawn donnan, thank you for joining us. Still with us on set, steve hiavarone of federated investors. What do you do with a prolonged trade war with china . Steve within equity, you are going to focus on parts of the market that tend to be defensive. You might focus on dividend players, small caps, not just because of the fact that they are more u. S. Focused, but also because you have low Interest Rates. When you think about what is going on with trade, the base case is still a deal. We are right in the middle of where trump always wants to be, and that is he wants to always convince the other side that he is insane and he is willing to walk away. The chinese certainly think hes insane, and we are all sitting here wondering whether or not a deal ever gets done. I think that potential he gives him the opportunity to sit down with xi and say, look, i know we are not going to get x, y, and z. Lets agree on this framework to go forward. In the markets, you have this binary event in the mind for june. If they dont meet, if the 300 billion does come in, what is the next date you have to look forward to . Wheres the next forum where you can kickstart this again . We said this all along comedy trade negotiation with china is the single most important along,c policy all the trade negotiation with china is the sin the most important Economic Policy you can do. This is high stakes, but it is important. My guess is there is enough incentive on both sides that it does come about risk levels are high. Hasd President Trump identified the issue correctly, but i am curious about your base case that there will be a deal. Why is that your base case . The markets have often gone wrong im not listening to donald trump. He says he likes tariffs. Why do we believe a deal get done . Steve i think he is willing. I think he believes we will either set a new term of coexistence in which we benefit more, or he will seek to crush his competitive rival. When you look at it from the chinese perspective, we still are a very big part of their demand. Trade is a very big part of their economy, upwards of 40 . You cannot find another u. S. Consumer. It is, quite frankly, not clear that a democratic candidate or president , other than being kinder in their tone, would prosecute this any less harshly because i think there is broad consensus. Trump is not getting beat up by the left on this. I dont think there is a democratic white knight for them, so i dont know how long they can continue to stimulate in the face of these tensions. David thats a really important point. The democrats are not rushing to go soft on china. Steve chiavarone of federated investors, thanks for being with us. Slack is set for its direct listing next week. More on that and what it means for tech bankers in todays wall street beat. This is bloomberg. Viviana this is bloomberg daybreak. You are taking a live look at the hewlettpackard enterprise greenroom. Coming up in the next hour, Goldman Sachs chief u. S. Equity strategist. This is bloomberg daybreak. It is the latest sign of openness from the worlds most profitable company. Saudi aramco will hold its first Earnings Call in august to discuss results. Become an he refilled an audit of oil reserves in january. Showed 100 billion profit last year. Amazon extended their agreement delivery torocery include more cities. Morrisons will become a retailer on amazons prime now website. Ubs and its Top Economists apologizing for comments that made reference to a chinese pig. The bank said his remarks were innocently intended. Asked that is your Bloomberg Business flash. Alix thank you so much. How many things have you said on i, and you are like, oh, didnt mean to say that. David it is always when you try to be a little cute and it comes across the wrong way. Alix weve been there. Trust us. [laughter] alix we turn now to wall street beat. First off, alibabas mega listing. Giant has applied for a hong kong listing. Ceo still wanted. The bank continues to search for its next leader. David when in doubt, turn to a lawyer, right . Joining us now is should nelly is sonali basak. Now hong kong is back in the news in a big way. Sonali seriously. We alluded to this a little yesterday. Alibabacitement about listing in hong kong with 20 billion, not insignificant. International, one local bank. When we reported the news, shares jumped a little bit. It shows you the excitement around the steel. Also have wall street banks getting in. Sonali that is something they are doing in the u. S. Also, financing a lot of unicorns preipo. Theres a lot of regulations around doing this. However, it does get you on the deal. It did help Morgan Stanley with uber. For alibaba, we havent talked about the debt financing, but i would be surprised not to see Morgan Stanley on it. U. S. Banks are pushing hard into china and want to be on these deals. Morgan stanley was colead for alibaba in the u. S. As well. Theres a lot of unicorns popping up. They consider china just as important as u. S. Banks, and they are breeding more Tech Companies as we go along. Alix interesting. Staying with the whole theme, slack could have a value of up to 17 billion. Youve been all over this. It is going to ipo next week. What is the conversation right now . Sonali slack is going public via a direct listing, not a model that is heavily proven yet. Spotify did it last year, opened and closed about 12 lower than it opened. A direct listing is when you just go public. You are not raising money beforehand. You are not setting a price the night before. So the morning of a direct listing, the banks and the investors are all huddling to figure out what the right price will be and how much supply and demand there will be for the shares. Right now, honestly, this year is much more volatile than this time last year, so there is a lot of risks embedded. They tend to be a lot more volatile than a traditional ipo. Spotify did all right. It wasnt as volatile as people expected. We will see what happens with slack this time around. Go and raisey do their valuation of around 17 that . N, how is sonali what people tell me is that the private markets are pretty advanced nowadays, so it is not so surprising that private investors have bid up the stock. The question is, can it maintain that valuation . It is 20 times its forward revenue multiple assuming a 50 growth rate. Growth has already been declining yearoveryear. It will be on the company to keep that up to maintain that valuation. Alix what is the benefit of the direct listing . How does that help slack . Sonali i think of it is very silicon valley. David you save a lot in bankers fees. Alix thats for sure. Sonali the funny thing about the fees, i also call it the democratization of markets a little because they want the market to set the price, not the banks. There are a lot fewer banks on direct listing, so fees are lower, but the top three banks, goldman, Morgan Stanley, and alan, share most of those fees, so they get a bigger share of a smaller pie. Fewer people win. This time last year, people were worried about this eating away at the ipo model. David lets talk about wells fargo. An interesting move here, where they had an interim ceo, alan parker. They have been on the search. The reports are theyve gone through several candidates that havent worked out, and now they may actually give it to him. Hes a lawyer. Sonali it is controversial not just because hes a lawyer, but hes considered an insider. David they brought him in because the board was inpatient, saying we are not cleaning up the mess fast enough. Sonali and then they got more inpatient and the ceo left without a new plan. Morgan isth at j. P. Still kind of in the loop here. Reports have said he is very reluctant to take the job. They are really looking far and wide here. The ceo of Mortgage Firm caliber home is another person that has been popping up. As more people turn down the job, alan parker becomes more in the spotlight. Insiders already want him. The question is are regulators going to allow this to happen . What does Elizabeth Warren say . Cocoo of opene sex listed a stash of Goldman Sachs of Goldman Sachs thought about as well . David what i notice is they are all men. No women. Alix who wants it . Youre going to have oversight, the fed all in your business. David or you want to take it when it is broken so you can fix it. Alix they have to be able to fix it. David thats right. The lawyer can deal with the regulators better, maybe. Ing up, cisco deadlines physical deadlines loom over washington. That is next. This is bloomberg. David this is what im watching, the debt and the deficit down in washington. Weve known this was percolating. Come fall, weve got the deficit and the debt problem. Mitch mcconnell reportedly summoned an emergency meeting at the white house with Mick Mulvaney and steven mnuchin, including richard shelby, head of the budget committee, and said weve got a real problem because we could really run up against it. As you know, there is the debt, but really that overall limit, they could actually end up defaulting come fall. Alix this is literally the conversation we had every time we come up against the debt ceiling that always winds up getting fixed, and every time it is that this time could be different. David totally right. The only thing that makes me a little worried is things have not gotten better in washington. Partisanship seems to have gotten even more dysfunctional. You have a president ial Election Year coming up. It injects a real degree of politics into this. Alix and the budget deficit. Forget the debt ceiling. David and the sequestration going back to the obama administration. If they dont figure it out, they will really have to cut back on federal spending in a dramatic way, which has got everybody concerned. Alix because where would you do that . David it is automatically across the board, but it is defense and social programs. Into 2020. Ially coming up, Goldman Sachs chief u. S. Equity strategist will joining us. His thoughts on tech. If you have regulation and competition, how will that fair for the sector . This is bloomberg. My deadline is whats up here. Well figure out the deadline. Nobody can quite figure it out. Alix President Trump tells reporters a trade deadline with china is one that only he knows. As hopes for a g20 fade, we dig into it. And oil tankers in the gulf of oman damaged in a suspected attack. And problematic privacy practices. Mark zuckerberg in the hot seat as emails show he was aware of privacy issues. Kostin ofo david Goldman Sachs on regulation. David welcome to bloomberg daybreak on this thursday, june 13. The tankers are really the big news this morning because we dont know exactly what happened or who is behind it. Alix if you want to come into the terminal, you can track tankers and oil all over the world. This is the gulf of oman, and this is really where the ships are right now. This is their travel pattern that we saw. It was right here that they were attacked. Dont know when, but there are some speculations that it was perhaps a missile. We dont know who or why that would happen. David about a month after similar incidents in the same area. As you know better than i, typically in the straits of hormuz, if something happens with oil, it really sends the market up, but they are not up as much as we would have thought. Alix when it comes to the equity market, s p futures higher. Oil popping 4 , but i would have expected it would be up more than just about two dollars. You are having a safe haven bid and better growth and inflation into the swissie. 1 dollar swiss up 4 10 of despite the fact that the Central Bank Governor says he once a lower currency. Down lets find whats going on outside the business world. Viviana hurtado is in washington was first reduced. Viviana thats was first word news with first word news. Theana two oil tankers in gulf of oman have been damaged in the second suspected attack in recent weeks. Four ships in the area were damaged last month and the u. S. Pointed the finger at iran. President donald trump ramping up criticism of germany. He is threatening sanctions over Angela Merkels support for a gas pipeline from russia. The president warned he could move some u. S. Troops out of germany because he thinks it is not spending enough money on defense. If a foreign source offers dirt about a political opponent, President Trump says he would take it. The president telling abc news there wouldnt be anything wrong with listening. That is evoking some of the controversial conduct at the heart of Robert Muellers investigation. 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. Im Viviana Hurtado. This is bloomberg. Alix thank you so much. Trouble in the gulf of oman. Two tankers damaged in a suspected attack, and that sends oil prices higher. Joining us is the former assistant secretary of defense. We dont know who is responsible or why. Can you give us some insight as to who the likely players might be . Guest it doesnt make a great deal of sense to blame iran because both ships are related to the japanese and one form are another, with Japanese Companies , and the Prime Minister of japan is there now trying to broker an arrangement between the United States and iran. It could be a group like the who tease like the huttis fighting in yemen. They might have done this because it could be oil from saudi arabia that was on its way out to singapore or whatever the s were, or it could guard Iran National outside of the government because of their feeling against the United States and being branded a terrorist group. Leads backthat all to iran, doesnt it . It is thought that iran has overover the ho the whose hes over the houthis. The houthis started this conflict without the u. S. Got in there. Alix where does this leave the u. S. . We had press secretary Sarah Sanders saying in an email that we are aware of the attacks and the u. S. Government will continue to assess the situation. They said they would help the vessels. How does the u. S. Navigate this . , because weusly have the fifth fleet in bahrain and all of those other ships into the persian gulf. To putd assist and begin more forces in to guard the straits of hormuz. In terms of what we can do, unless you want to start a war with iran, theres nothing. And we had to build up of our forces there, it sort of reminds me of the gulf of tonkin, where you had ships firing on each other and it led to a big bore, and they werent completely a big war, and they werent completely in control of the governments under control of the governments and things got out of control. Alix thank you very much. I dont think you want to be compared to the gulf of tonkin. David that didnt end up so well, as i recall. Item of geopolitical risks, like the latest one coming out of the gulf of oman, have markets and dissipating that the fed will cut rates, and perhaps even soon. Now we are talking about sort of a preemptive rate cut or insurance rate cut. It is fair to say the fed is going to provide a good amount of support. Bad for the dollar, but good for the u. S. Stock market. There is valuation support for equities. We are not seeing bonds as a particularly attractive asset class. Dont fight the fed. That saying is there for a reason. The question is, how much further are they going to go into and passed the first rate cut . David we welcome now david kostin, Goldman Sachs chief u. S. Equity strategist. Is it good for the economy . If the fed cuts rates, that would be generally good for the market, but the forwards of the futures market is anticipating that the fed will be on hold in the june meeting. In the july meeting, the forward market is anticipating without a high degree of excitation that there will be a cut. One thing we can look at historically is when the fed does not deliver on an expectation of a cut a month ahead, and the fed walks back that expectation, equities dont do particularly well. Dont have a lot of precedents for this. 1990, 1992. But in both of those instances, it starts to weigh on stocks, so the expectation at Goldman Sachs is that the fed is unlikely to be cutting in july. There are some reasons why Economic Growth is still there. The trend of inflation is still in line with 2 . Investoran equity perspective, that would suggest that the market at these levels is more biased to the downside as opposed to the upside. Alix we just had a short that shows what happens to the s p in and out of a cut. You are right that the market is not expecting a noncut. If they do get it, though, can you expect the same kind of historical upside for equities . Guest historically, when the fed does cut, equities rise. That is the positive scenario, and that is in line with the expectations for the end of the year, the s p 500 rising to around 3000. A modest increase from the current level, maybe 4 or 5 with dividends. That is a modest return from current levels. That would be consistent with the historical experience of the fed cutting and moving forward. Asdman sachs views the fed not going to cut. Theres a lot of information between now and then. Youve got the g20, the tariffs, a lot of other variables entering into this equation. Alix the issue also becomes factor rotation, what factors do well in a cut, what dont. How do you look at that his directly, and how to be set up if there is disappointment . Guest in terms of sector performance, historically when the fed is cutting Interest Rates at the start of the cycle, Health Care Stocks and Consumer Staples do particularly well. There are oftentimes concerned about slow down on the economy, and technology consistently does poorly. I dont necessarily think that is the appropriate president for thinking about the economy and the market at this time because so much of the Investment Community is in an asset light environment. The growth in some of the Technology Companies is much more significant and durable. We talked about the fact that Software Spending in this country has increased for 49 of the last 50 years on a real basis, and that is the idea of the persistence of growth. It is whether we are in accomack expansion, contraction, low inflation, high inflation. Growth inrs, you had spending on software. That makes it somewhat different. Youve got to interpret the market and what we have today. David can we talk about simply a cut or no cut without talking about why the cut is made . There are Different Reasons to cut. Because the economy is going south, that is not necessarily good. Mike wilson of Morgan Stanley, this is what he said. The boat if the fed were to cut in concern we are entering if the fed were to cut in cern that we are entering if the fed were to cut out of concern that we are entering a real unemployment cycle, we think that such a cut would rise guest Consumer Confidence remains pretty high, and with economic expansion as opposed to contraction. The reasons why the fed may cut does relate to tariffs and some questions about the broader political environment, which i think is a question to why the fed is cutting and maybe the president from the president from previous playbooks of what happened when the fed cut rates. The argument is the fed is not likely to be cutting rates necessarily. They have to walk that back. Right now the market is expecting that and they have to make that change. That would suggest the different shift in investor expectations, that is normally consistent with a weaker market. Davidid ko kostin of Goldman Sachs is sticking with us. Coming up, we take a look at the regulatory risks weighing on techs biggest names. This is bloomberg. Alix some breaking news for you coming out of the u. K. The 10 candidates are now whittled down to seven. The second round of the process to replace theresa may. Boris johnson in the lead. David not too surprising. Alix and it is only the first round. Regulatory risks are back in focus for big tech investors. Googleof amazon, apple, falling on antitrust concerns, particularly privacy when it comes to facebook. Historically, equity valuations and share places and share prices decline, following a downshift, according to david kostin of Goldman Sachs. How have you understood what has happened to gross and equity when this has come up in the past, with ibm, at t, and microsoft . Guest theres been a lot of discussion in the press from the ftc and apartment of justice about some investigations taking place. We went back and looked at some experiences in the case of ibm, at t, and microsoft. What was the share Price Performance . What was happening to those stock prices over the time when the companies came under investigation, when lawsuits were initiated, and over that litigation period . What happened post settlements . The pretty common experience was a major downshift in sales growth from before to after, and a decrease in valuation. That would be the concern one would have as an investor, to think about what the impatiens would be of some of these investigations were to materialize in a lawsuit. David lets take a step back before the investigation. Whichve an analysis sectors are most concentrated. Tech is right up there. Monopolies are good when it comes to making money. That concentration increases share price. Guest the whole idea of competition and analyzing the idea of applications of industries, theres a lot of complications behind that. You can look at information in public companies. Theres also the private industry. How do you compare, i need to find an industry in retail, is it internet retailing or all retailing . The definition of what is the competitive set is the first part of the debate. The second part, what is the location in terms of Pricing Power . The evolution of what has been happening in the of the economy, moving towards a sort of network effect. If you are the first mover, there are probably more valuations associated with that today than in the past. David there are a lot of talks of these investigations, but if you look overall at u. S. Industry, it has become remarkably more concentrated over the last 20 years. Years ago there were 8000 publicly traded u. S. Stocks. Today there are 4000. Theres a lot fewer companies, and the economy has grown, so by definition, in the public sphere there is more concentration. Ipos, mergers,f delistings. Some Small Companies just waited from wanting to be public. A lot of regulatory oversights. Theres a lot of regulation. Companies have stayed private. A number of Major Companies have stay private for a long time and had reason ipos. An aggregate from 8000 to 4000 stocks means you have more concentrated sectors in many industries. David when you go back and look at microsoft or at t, it slowed those companies down, but we had the head of the antitrust division in the last two days say we got to the about developing the next company after it. What microsoft did was created the yahoo and googles of this world because it slowed down microsoft. Is there anything right now that would hurt defang hurt the faangs right now and help the next faang . Guest there are certainly concentrations within those different industries, so does it impede some innovations and of element . There is certainly a possibility of that. On the other hand, there is an extremely innovative u. S. Economy and no lack of access to capital. It isnot as though strangulation of innovation. It is quite the opposite. Some of these companies are among the most innovative in terms of the spending on retail and filament. There are some benefits in terms of higher margins to reinvest in the business. Alix so great to catch up with you. Of Goldman Sachs. Coming up, for those wanting to travel to the upside down, netflix will give you a chance to do so soon and it comes out with Stranger Things videogame. More on that next in todays bottom line. This is bloomberg. David time now for the bottom line, where we look at three Companies Worth watching this morning. First of all, im watching crowd strike. We thought we knocked it out of the park with beyond meat. Crowd strike is up 87 , doing even better. And that was not the nicest tape in the world to ipos. This is not like a risk on, optimism kind of feel. David it is a Cybersecurity Firm doing well so far. Alix im also looking at beyond meat, that stock hurting in premarket. Part of that is having to do with tysons. Tysons has announced it is going to have its own line of plantbased protein products. Remember, they had a portion of beyond meat that they sold out of well before the ipo because they wanted to go it alone, and they are not alone. Nestle is rolling out a veggie burger this fall. This is a trend. It just depends on how you want to do it. Is it going to be small Tech Companies, is it going to be the beyond meats . David but when you start to go white label like tysons, be maybe it has really arrived. Alix and regardless of beyond meat, just a huge shift in the protein. David the urge story we are talking about is netflix getting into the the third story we are talking about is netflix getting into the gaming business. Brooke sutherland is with us. Courtney this is really digging brooke this is really the continuation of netflixs effort to challenge media giants like disney by pushing not only into a original content, but associated merchandise and now potential videogames. They are talking about having a based on come out Stranger Things when the third season premieres. They already have a mobile game. This is sort of a test case to see if they can apply that to other shows down the road. David im not sure how many successful shows have turned into games. His knee has been trying this for a long time, and im not sure i could disney has been trying this for a long time, and im not sure i could name one thats been successful. Brooke you get these hits, and then you have these long runs with a dark of new content content. Arth of new it will be interesting to see if this can be done and whether they can replicate this model. Can you continue to do this down the road . Merchandise could maybe be a better avenue for them. Obviously disney does a lot of this with acumen figures with Action Figures and dolls. It also raises to me, how much money . That is a cash burn for sure. Brooke right now they are not making the video games themselves. They are just licensing out the characters. But as you continue to do that, do you want the control inhouse . I think we have to see how this works first. As a netflix investor, you dont want to see them splashing out this cash on an untested gaming enterprise. Alix brooke sutherland, thank you very much. Coming up, we talked to the head i had of getting its biggest customers. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Alix this is bloomberg daybreak. I am alix steel. Lets catch you up on what is happening in the markets. S p futures up seven points. In europe, energy one of the upper formers because of oil getting that big surge because of the tanker trouble. Is it a safety trade or more Central Banks inflation is better than most Market Participants thought . Eurodollar flat, bonds nowhere, oil popping. Speak your prices, export prices year on year basis coming down. 7 . Import basis down 1. 5 . I also want to highlight the jobless market. 222,000. Obless claims slightly higher than the week before. Of thetime indicator jobless market is something will be paying attention to. David some indication the San Francisco fed has a model we will we have bottomed out on unemployment. We want to bring in michael mckee. What we read into these numbers . everyone with think import prices were rising because of the tariffs. They are down more than expected. There is a simple explanation. It is the strong dollar. The dollar has been strengthening and that is weighted against the rest of the world. Petroleum because of the volatility of the petroleum market. You can see how import prices are much lower than they might otherwise have been because of the strong dollar. The other interesting aspect is the crisis prices from china are down. 1 and they have been soling over the last year or since the president put on the tariffs last july. It is little bit strong dollar, a little bit of a weakening you can see the blue line rising and import prices from china have been falling. We go for currency effect. We are talking about 10 to 25 terps from china. China is absorbing a little bit of the vein of the pain, but not a lot. I wonder if you lead that through in terms of command in terms of demand, is that a china story . Michael it is a china story. Especially the tariffs. A study found agriculture was the sector that had been most impacted by the tariffs, in particular in the States Donald trump won. It is a political issue that continues to happen. David michael mckee, thank you so much for joining us. President trump has dipped business guessing on trade, first by threatening new tariffs on mexico, now he says he has a new deadline for china he is not willing to specify. My deadline is up here. We will figure out the deadline. Nobody can figure it out. David joining us is ramzi hermiz, shiloh president and ceo. Shiloh industries is an important part of the automotive supply chain. Includer clients General Motors and feel chrysler. Welcome. Good to have you here. You said earlier that problems you affecting you said while we expect to be relatively protected from negative impacts of the tariffs, the same cannot be said for our customers. Are you being affected, are your customers being affected . Ramzi what we put in place is an in market for market strategy. The customers we sell to are within the market. Our product is not crossing borders. In that respect we are protected from that. Our customers will been our customers may then export the vehicle across the border. The added value where shiloh comes in, we are able to offset about 60 of our customerss impact on tariff when it is related to a steel or magnesium part we have manufactured. We protect ourselves but also create a Value Proposition for our customers. Jonathan you reduce the amount alix you reduce the amount of aluminum . Ramzi yes. Weve restructured parts that were previously aluminum and have been able to take as much as 25 out of that product. Withoutluminum lighter sacrificing performance, quality, safety, or sustainability. David what does that do to your margins . Ramzi we do see margins increasing. We have made a significant product shipped to a product oriented business. Alix if that is what you are doing one year ago, have you had to change and do new things or are you doing the same old, same old as the trade war tracks on and we get the whole this may never end situation. Ramzi what we are finding is customers looking for alternative solutions and being must more open to alternative ideas. You see that change, you see an openness from our customers and a willingness for more innovative ideas and we are bringing those ideas forward. David we have mentioned mexico, we have mentioned china. What about your . What about europe . Forwardean tariffs went , what would that do to your business . Ramzi our european production is for customers in europe but we do have that impact on some of the suvs produced in the u. S. Are exported, bmw, mercedes, are exported to europe. David are they significant customers . Ramzi they are very important customers. There is that potential risk. We also look at innovative ideas to help offset those costs. David talk about the Automotive Market in the broader sense. There is softness in the United States and china and europe as well. How is that affecting your business . Ramzi we been able to outperform the market. With our new product launches, we have a number of significant launches in 2019 so we are at it to the portfolio Going Forward. There is still risk in the market and we continue to look at our opportunity is content for vehicle, not necessarily the unit sold, but how do we increase the content we provide. Alix your stock is still down 38 . To . Do you attribute that ramzi shiloh trades a little bit above our peers. From that standpoint, we have been able to hold up. The sector is down, so we feel there opportunity and value in shiloh with what we have Going Forward and the opportunities presented. We see significant Growth Opportunities. David we talked with the president of General Motors yesterday from flint, michigan. There were expanding their truck site up there. One of the things talked about was the shift from Passenger Vehicles to trucks. This is what yet to say about that shift. Not everybody does from a car to a pickup truck, but pickup trucks and heavy duty pickup trucks, a lot of people are in their living with that. A lot of those are primary transportation and they are living with it. Some of those are the expensive luxurybased pickup trucks. You look at those and you say that is happening. Enough is happening across the cars and crossovers and other things aside from pickup trucks. David g. M. Might sell fewer vehicles. They might make more money because the Profit Margins are higher. Is that true for your company . Ramzi we have a content opportunity for growth so we are 200 per content for vehicle. Our Product Portfolio and rage up to 1200 per vehicle. The more product we put in, that is our growth opportunity, not necessarily tied to the unit sold. Gm is a large customer. Selling,ct they are that is an opportunity. The larger the truck, the more weight you need to take out of it. It is a value add. David you have to provide more of your product if it is a truck than a Passenger Car . Ramzi for every 100 pounds, we improve fuel economy by 10 . 5 oftruck, we can take fuel efficiency we can provide by light waiting. To put ourriving product into those vehicles. David there is a transformation coming in automotives. Electric vehicles and autonomous vehicles. How will that affect your business . Ramzi from an electric vehicle side, our content opportunity is just as rate. We are very much involved in the electric vehicle side. The more weight we can take out, the more battery life extends. That example about taking aluminum out, that was on an electric vehicle. When you take weight out, but does extend battery range. David thank you so much for being with us. Alix the man known as chinas father of electric cars is now betting on another kind of automotive future, hydrogen. He spoke exclusively to he asked what and the ultimate goals are for the market. The market is huge. The key is to sort out the factors that have been hindering the development of fuel cell vehicles in the most appropriate markets. We should establish a Hydrogen Society. Compared to the Hydrogen Society, the electric society has been established, but it would be a process for the Hydrogen Society to be established. Step, we will promote the adoption of Hydrogen Vehicles and selected trial regions instead of all over the country. On setting up a system including hydrogen production, storage, transport, and refueling as well as a car transportation network. Alix it may sound radical, but at elon musk stands up and talk to listen. This guy talks without the tweets so you have to listen way talks about hydrogen cars. David i was fascinated by the segmentation. We start to go clean city is an longer distances, hydrogen will work. You have to find out where the Hydrogen Comes from. Alix the overall issue is extending your battery life. Your cap fast charging stations, which will be harder for a long trip, and if you do not have better batteries to charge, you need an answer to that for mass adoptions to take place. Up, do you invest in brazil when its economy is faltering . That is coming up in todays follow the lead. This is bloomberg. Viviana im Viviana Hurtado and you are taking a live look at the hewlettpackard enterprise greenroom. Coming up on bloomberg markets, an exclusive interview with joey levin. This is bloomberg daybreak. Here is your business flash. It is a sign of opening from the worlds saudi aramco will hold its first open call in august. The Company Revealed an audit of its oil reserve in january. In april, aramco released upon perspective that showed a 111 billion profit. Over to the u. K. , where morris and amazon extended their agreement on Online Grocery home delivery. Sameday service will be rolled out to more cities. Morrisons will become a retailer on amazon prime now website. Ubs and its Top Economists apologizing for comments that made reference to a chinese pig. The bank says paul donovans remarks were innocently intended. The riseng he said in prices mainly due to sick pigs and set it matters if youre a chinese pig. Lix time for a volatile lead a deep dive into stories making headlines and moving markets it is time for follow the lead. Dx a investment is an independent asset firm that manages about 200 million in assets. Joining us is the ceo and also with us is damien sass our damian sassower. This is gdp. The title is brazil in crisis. For the macro take, what is going on in brazil . You cannot talk about the macro in brazil without talking about pension reform. Today we will get the committee and the lower House Reading out the proposed pension reform bill and we will get a sense of what the retirement ages are, where the benefits are going, and what the expected savings are. Will be 750 billion . Will it be 1 trillion . There is discrepancy. It is coming under the shroud of misalignment with the chief justice, who is in charge of the car wash investigation, they are assigning things to him that may or may not be true. Im sure oscar knows far more than i do, but it is amazing what is going on. Oscar i think people want to make a case saying there was a collusion between prosecutors and the judge. When you look at the messages themselves, there is nothing big that would give that idea. It is a cybersecurity attack that happens everywhere in the world. There are always opportunities. We are looking at a Cybersecurity Company to invest in that started in brazil. The company is called secure. We can always find local opportunities that will benefit from situations like these. Dear point that todays front to your point that today will be a big day, the market has fluctuated from optimism to plasma some. Yesterday they were very positive about the number of congressmen. 330 people backing. The numbers look like something around 850 billion. David there are always opportunities, but you are swimming upstream, it seems like. Investment in brazil has not been going in a good direction. What you see that other investors do not see . Have said this year before, you look at big pauloies like uber, sao is the number one city in terms of rides from them. Rio de janeiro is number three and competes directly with new york. You have softbank investing tech , announcing they will do 5 billion there. A lot of local stories. Youve met gerald lee from modern logistics, the company has been growing more than 800 . Just because there is a lack of infrastructure. The opportunity is when youre able to look at these local themes that do not depend on the macro side. Alix what do you think . We hear a lot about emerging markets. What is your take . Damian we just saw chile do a surprise 50 point basis cut. We have peru tomorrow, we have russia tomorrow. Brazil has some of the highest nominal and real yields in all of emerging markets. There is capacity for them to stimulate growth and that would help equities, which are teetering on alltime highs. With u. S. Treasury yield, a 10 year at 2. 11 is near an alltime low. It carries so much better in brazil local assets. It is worth taking a look. David lets talk equities for a minute. I will put up a chart that compares brazil, which is the white line, with the purple, which is peru, yellow, which is chile, blue is mexico. Does that tell us anything about those countries as Investment Opportunities . Oscar i think there is an issue with regards to brazil that we have a lot of local money. That allows movement in the market. Foreigners oring International Funds pouring money into brazil. We are seeing the brazilian locals buying it. That is driving the prices. Either Social Security reform comes in and you start having a bigger flow from international investors, but from the fundamental standpoint, i think the valuations in certain sectors are higher. Alix thanks so much. As we are staying in the region, i will talk about commodities in my commodities edge show, a lot about tankers and oils but a lot about investment in south america in the oil sector. In this story in the show, back to our top story, new images of the oil tanker on fire in the gulf. Oil prices rebound. More unbelievable footage. More on what im watching, next. This is bloomberg. Alix here is what i am watching. The suspected a tank on two oil tankers near the persian gulf. These are stills from irans news. News. Ib joining us on the phone is jillian lee, Bloomberg Oil strategist. Youre a great piece talking about how this is not iran. You said fingers be pointed at iran, but the potential benefits of the persian gulf nation are outweighed by the rest. Why would this not be iran . Julian i did not say it was not iran. I said there significant doubt and there are reasons that doing this would not be in irans interest. Firstly, one has to look at what might iran gain from this . Certainly disruption to flows out of the persian gulf. Flows,es damage the oil potentially from countries like saudi arabia, the uae, which have lined up with the u. S. Against iran and against ukrainian against iranian interests and iran has threatened to close the straight, which it has done in the past. In terms of tangible benefits, we will see in oil price that is higher than it would otherwise be, but iran is exporting so little oil that it is not going to make a big difference to its income whether oil is up or down five or 10 a barrel, which does not look like it will change that much. If you look at what the potential costs for iran being behind Something Like this are, clearly it adds another excuse for military action of some description against iranian interests, against Iranian Military installations, it ratchets up the tension at a time when the japanese Prime Minister is currently visiting iran. Tangible sensest there is some room for movement, some potential for talks with the u. S. About sanctions and about a way forward. Iranian from an Government Point of view that the timing of this lets say, on. Lets say, odd. Alix yes. More questions than answers at this point. David there is between iran did and iran did not, and that his surrogates that iran did not prevent. Alix yemen, for example. Open,up on the achieved equity strategist will be joining jonathan ferro. This is bloomberg. At comcast, we didnt build the nations largest gigspeed 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. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, crude spiking as two tankers damaged in a suspected attack. China fighting back. The ministry of commerce saying it will fight to the end if the u. S. Escalate the trade dispute. Tensions continuing to weigh on the european economy, where Industrial Production disappoints. Good morning. Here is your thursday morning price action. Up 10 points on the s p 500. A little bit in the trade a little bit in the treasury market, yields down to 2. 11. Eurodollar unchanged. Point 1270 not euro 1. 1279. The market in a Holding Pattern ahead of a major event risk. The next fed meeting. The fed next week. The g20. It depends on what happens in the g20. There are two