You mentioned brent. Index isy getting a bounce. We will get to some companies in that indexing in just a moment. Tyson foods has come out with its competitor to the beyond meat product, and getting a bum from that of about 1 . We just had that ipo, another successful tech ipo, with fiber international. Guy crude definitely the top story, spiking up after two tankers were damaged in the gulf of oman. Our editor for commodities is joining us from new york. Is this an escalation . Luke reporter the market is certainly reporter the market is certainly reading it that way. Neither of these tankers was actually carrying crude oil, but weve seen all the reaction in the crude market. This is just outside the straight of hormuz, which iran has previously closed outside the streets of hormuz, which iran has previously threatened to close. Weve seen a drop throughout the course of the day. If you are looking at the global picture, this area accounts for 20 of crude Oil Production 40 ofy, about 30 to what moves on the water itself. Perhaps you could tell us why we are seeing most of the reaction in the crude market, given that these were hydrocarbons, but not crude oil. Well, i think any threat to shipping in the region of the straits of hormuz is going to cause a pretty heightened reaction. Of oil exports 3 flowing through the streets of hormuz. There was also a net through the straits of hormuz. There was another incident there a month ago. Really come all of the chokepoint around the Arabian Peninsula have been called into question recently. Vonnie how is this impacting the companys in your coverage universe, jason . Will there be a prolonged impact, or is there just a bounce from crude itself . Jason crude has been extremely volatile. It was down yesterday significant as a result of inventory data. We are seeing a recovery as a result of these supply concerns. That is what we are facing right now, very much a tugofwar between potential demand weakness and all of these supply constraints. Also venezuelan and iranian exports. Companies are focused on keeping the cost of their business down so that it breaks even at 50 a barrel, so i think they will stay the course. Tina, should we be talking about or making comparisons to the tanker wars of the 1980s, which ultimately culminated in a u. S. Military worship being attacked . Is that a useful point of comparison . Ive heard it a lot today. Tina it is probably a little early to do that. That tanker war actually resulted in 451 vessels being attacked in that region, so we are still only at four for the past couple of months, so put that in context. But yes, if you are thinking of where there are heightened tensions, this is one key bottleneck for flows of oil, and there will be concerned if anything shuts down. One of these tankers is actually norwegian owned, and is owned by john frequent same by Don Friedrichs and, owned by John Friedrichs and, often looked at as the ayatollah s lifeline during that tanker war. Guy jason, will this raise the cost of hiring . Will this have any effect on shipping costs . Will that feed through the cost we all pay . How does it work in terms of the structure of the market . Jason i think theres a very reasonable chance the cost of insurance will go up. That does mean you could see some increase in freight costs. I think that will be overwhelmed by the increase in crude oil prices. If we continue to see incidents that affect shipping around the , thets of hormuz, again two dollarse in the to three dollars range. Curious, tina, we dont know to whom we should attribute this attack yet. There are speculative rumors out there that it could be iran. If it does turn out to be iran, will there be more pressure on europe to do a deal with around . With iran . Tina what i think this will do is raise pressure on the u. S. State mike pompeo and the president have talked about rattling the were sabr when it comes to rattling the to sabre when it comes iran. I think there will be more pressure on the diplomacy side to engage in some side of more punitive action with iran. Whether or not that is actual conflict remains to be seen. Vonnie we talk about Companies Dealing with fluctuations in prices, but how do Companies Deal with something more akin to you political conflict two geopolitical conflict . With, to start operational concerns would be first and foremost. Most of the companies do not have what i would deem significant Oil Production coming from the arabian gulf area. Most of their Oil Production is outside there. What i would say is the lng market is what could be the most impacted. Of there companies, most big companies, exxon, shell, do have significant lng production out of qatar that would be gingerly affected if the straits of hormuz were blocked. Guy tina, is it significant that these attacks are mainly being mounted on ships coming out of the uae, and in the gulf of oman rather than on the others of the straits of hormuz . Is this seen as being a kind of . Esser area of concern is it significant that these are happening on this side and not the other side . Tina i dont think you should read too much into that. What it does signal is that the whole region has a part to play in this. Obviously the straits of form use straits of hormuz is a pinch point for that region, but the rest is also crucial in terms of moving oil around. Weve also heard from an industry shipping association already telling its members to possibly avoid the area and take added security precautions. We tend to focus very much on the straits of hormuz because that is the narrowest point, but the whole region is a massive shipping route. Guy jason, what does this do in terms of changing the narrative around the relative balance within opec, and also the relationship that opec has with the shale drillers . If there is a problem in the gulf, how does that change the all the waye market through to how the balance of power works . If there was a problem here, presumably the shale drillers will become more important, but significantly it is the type of crude being produced, i imagine. Jason this a lot of points to be made there. First of all, i think the ability of the u. S. To instantly turn on production doesnt exist. It does take time for shale production to ramp up in a way that could not even begin to match any supply interruptions that would come out of the persian gulf. The other thing i would say is that right now there are real pipeline issues that would prevent the u. S. From getting any crude oil down to the gulf coast, so that becomes problematic. He also rightly referenced that hasgrade of u. S. Crude relatively high gasoline yield, relatively low diesel yield, whereas that diesel yield is one of the more in demand products on a global basis and much more undersupplied. Refined product markets would take potentially a pretty big hit if they didnt have those medium grade middle eastern crudes to depend on. Vonnie the holy oil and gas sector in the s p the whole oil and gas sector in the s p was upgraded at citi today. Do you agree with that . Do companies in your coverage overlap with that . Jason my coverage right now offers very attractive valuations. The stoxx are discounting about 51 mediumterm brent into their equity values relative to the stoxx 600. They are trading at full standard deviation below their historic relationship with the overall market. I would generally agree that these stocks offer very good value. I also think that the crude market is perhaps underestimating, at least over months, how any barriers there are two supply with the decline of iranian and venezuelan exports. The u. S. Is not going to be able to match those in the nearterm. Guy jason, thanks very much for spending time with us this afternoon. Jeffries oil and gas analyst, and thanks as well to tina davis. Vonnie the Dow Jones Industrial average up just fractionally right now. Of s p 500 up less than 2 10 1 . Cocacola a drag on the dow. Some of the pharmaceutical companies down as well. In terms of the nasdaq, it is still up about 1 3 of 1 . Will we stay in the green . Stick around and find out. This is bloomberg. Guy from zurich, im guy johnson. Vonnie in new york, im vonnie quinn. This is the european close on bloomberg markets. Lets check in on the bloomberg first word news. Heres courtney donohoe. Toldney President Trump abc news there wouldnt be thing wrong with listing with listening to foreign political dirt. Senate republican leader Mitch Mcconnell trying to avoid shutdown. Vernment hes urging the white house to move towards a spending and debt limit deal that helps democrats that House Democrats and live with. Kong, a top Business Group because on the government to have meaningful dialogue with protesters. Tensions remain high a day after a violent demonstration against proposals to allow extradition to mainland china. The public has serious apprehensions about the bill. Protesters have asked for a permit to march on sunday. In the u. K. , Boris Johnson led six other candidates in the second round of voting to find Prime Minister theresa mays successor. Johnson had more than twice as many votes as the runnerup, foreign secretary jeremy hunt. Three candidates were eliminated. The next round of voting takes place tuesday. 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 courtney donohoe. This is bloomberg. Vonnie lets check Global Markets now. The rally getting a little bit slipped slightly. Abigail doolittle is here to tell us more. Abigail we still have stocks higher in the u. S. , but elsewhere in the world we did have small declines, especially in japan. The nikkei down 0. 5 . Thellcap ruffled smallcap russell 2000 outperforming. Watching. We also see the emerging markets lower, down about 4 10 of 1 . Globally a bit of a mixed picture. Weighing on emerging markets today, the stoxx in turkey the stocks in turkey down about three days in a row, down about 3 over those days. Erdogan didident comment on the missiles bought by his country from russia. Some investors and traders fearful that could increase tensions between turkey and the u. S. These turkey etf shares falling. Relative to emerging markets from a bigger picture, we have an interesting chart in the bloomberg that may make the case that we could see e. M. Outperform. This is the ratio between emergingmarket valuations to u. S. Stock valuations. Theee that back in financial crisis, it went sky high as those stocks recovered first, and then slowly lower after the last five years, but could break above resistance. It will be interesting to see whether or not that happens. That is perhaps a tell of some global risk on. Again caught in that range, but some optimism. Some area of outperformance in the dow. Take a look at american, southwest, and united. Sp morgan say that fare hike domestically could help these airlines. We see this in spades, with the airlines outperforming in a bid way with modest gains relative to the average. Guy thanks very much. Swiss franc trading at near to your hides against the euro, and the snb trading at near twoyear highs against the euro. Earlier i asked to the snb president Thomas Jordan it would take to go back to the original description. Thomas we have a highly valued currency. I cannot go more specific than that. In case it will change, we also adjust our operation. Guy but that level is different than it was previously. The gtl is important the detail is important. Back, we are more or less where we were in the period at the minimum exchange rate. If you take the tradeweighted Real Exchange rate, we have a similar level as there. Guy ok. The spread of swiss bonds to german bonds has tightened up. Is that the market signaling that you should cut rates . Thomas Interest Rates and Interest Rate differentials are important for us, and we are looking at that very closely. As i said before, also during the press conference, we have the possibility to see Interest Rates, but also interventions if necessary. Take ayze the situation, costbenefit analysis of the currency situation, and then decide what to do. Guy is it for her to say the next move from the snb is likely to be to cut rates rather than hike them . Thomas i dont make any forecasts on that, but if you look at the situation, of course there is no reason to tighten monetary policy. Else is that the monetary conditions tighten somewhat, and we take that into consideration. Guy youve talked about the fact that you have the ability to do so, and i dont think anybody is disputing that. Nevertheless, do you think you would get pushback from the Financial Sector . Is that what ultimately could limit the snbs room to maneuver when it comes to cutting rates further . Thomas no. We always analyze the situation from the perspective of achieving our goals. We see what kind of instruments are available, and then we make a costbenefit analysis and make the appropriate choice. Guy but if you were to cut rates further, would you expect pushback from the banks, from the Financial Sector . They are not happy now. You are at 75. If you were to go lower, they would be significantly more unhappy, and i am wondering incrementally if they would become more and more unhappy. Thomas it is not our task to make the Financial Sector. It is our task to maintain price stability in switzerland and support the economy, so we moved to achieve those goals. Guy do you think the swiss people, do you think the financial markets, believe in your ability to get inflation moving higher . Thomas we are at the moment in the range of price stability. The goal is to remain there, not to get back into negative territory for inflation. Last 10, 20at the years, the track record is quite well for the Swiss National bank. We always chief to go back to the range of price stability. So we manage the swiss economy through a very difficult period very well. We got growth, but also regarding inflation and price stability. Guy so you wouldnt subscribe to the view, and there is increasing chatter about it in the reports i read, that Inflation Expectations are becoming the anchored are becoming deanchored . Thomas our expectations are quite anchored regarding switzerland. They are centered around 1 , in the middle of the range of price stability. We are convinced that they are well anchored in switzerland. Guy snb president Thomas Jordan speaking to me a little earlier over in bern. Vonnie andy swiss franc about 0. 5 stronger against the euro off the back of that. Thank you. Lets check u. S. Markets now. We are moderating games. The dow 1 10 of 1 higher, the nasdaq 4 10 of 1 . The story, up 3. 3 for wti. This is bloomberg. Guy from zurich, im guy johnson. Vonnie in new york, im vonnie quinn. This is the european close on bloomberg markets. The biggest meat processor in the u. S. Once in on the fake wants ine the u. S. On the fake meat craze. Plans fors did you its competitor, expects the product will become a one billiondollar brand. Alibaba is moving closer to what could be hong kongs biggest share sale since 2010. Chinas Largest Corporation has filed confidentially for a listing. Alibaba could raise as much as 20 billion. Its newd 25 billion in york ipo, the largest ever. That is the latest Bloomberg Business flash. Guy we are counting everybody down to the european close. Lets take it where lets take a look at where european markets are now. Ftse digging into negative territory. The dax is still positive. The lead gainer on that market, wirecard. Matt miller talking to its boss a little earlier on. Four minutes to the close. This is bloomberg. Vonnie finishing up the day in the european session you can see it is mostly greener flat. Flat for the cac 40 in paris. The swiss market coming back from negative to down just three points. The dax is up about. 4 . And some of is flat the individual stocks that have caused this to happen where card the best performer in the deck. In the backs. In the dax. Earlier onth the ceo saying growth will come from the International Component of wirecard. Brent crude is trading higher almost 3 along with the wti on the attack in the gulf of oman. Brent is up. The stoxx 600 up just. 1 . The Energy Sector has pared gains. It was up more earlier on. An upgrade from citi helping the energy index, as well as the attack on those tankers. Guestsy that, but our saying that sector offering a lot of value right now. One more story. The swiss franc stronger by. 2 versus the euro, moderating gains. Stronger. 5 earlier. Wirecard up 2 as you see. That is look at european markets. Heres a look at the u. S. Where seeing gains for the s p 500. Paul tudor jones thing yesterday does the best traded one to two years. The yen stronger but not by much, and the energy index also appreciating off of those attacks. Merican airlines up almost 8 it will have managers fly the planes before the public in an effort to reassure the public those planes are completely safe before they get back on boards. Tyson foods up. 8 . It is introducing a half protein it is introducing a half protein, have angus burger. Union pacific getting a downgrade, the transportation sector getting a downgrade. Twitter is the worst performer in the s p 500, down 4 . Guy worth noting when you talk about those airlines that the Paris Air Show kicks up kicks off on monday. Joining us now from with some ,nalysis is luke kawa bloombergs process that reporter. Oil prices are higher. Is that risk on or risk off . Uke udc classic shades of a tentative risk on rally. In the bond market, we have yields down and offensive downs. Lows as i was heading to set. The bond market set a different story. Story in europe, where inflation breakevens are falling, happening stateside, really yields an inflation breakevens down. Really mixed price action. It does support the idea everything will be meager. Maybe we should have gone on vacation tuesday in comeback for the fed next week. Except for oil being up 3 and the potential for that to continue through the rest of the week. That is interesting. I like the move and oil stocks, what is even more interesting is the move we could be seeing in energy debt. Sebastian boyd chronicle that judging by all of the default versus were the spreads were, energy looked all out of whack, it looked like a tactical opportunity for junk bonds. If you look at where junk bonds have been trading relative to the rest of the index, it is not like they are trading like oils at 42 to 45. The damage was so concentrated in energy, even more so than it was in december. Im more interested to see what happens in the junk space. Guy was that claims move big enough to move the needle . Luke i do not think the labor market strength of the claims numbers is the prime in focus for the fed. Radio, it was set the entire hiking cycle was predicated on the idea that labor market strength feeds through the wage pressers wage pressures and consumer pricing. But was theappened, justification for the hiking cycle. Now easing might shift toward more broad risks. Pci pce continue to underwhelm. Surveyed in the march minutes, which reveal the risk to the outlook, 14 said the risk to their core pce outlook was broadly balance. Only three said tilted to the downside. We havehave vonnie brought calls on sectors today. Markets cutting Union Pacific as part of a broader call to cut transports. Are we seeing a shift when it are bankstion deciding it is the time to rotate to different sectors . what is informing the calls for sector rotation is the idea that bond yields have a floor. If they have a floor of global activity is still slowing, it creates a nuanced activity opportunity to figure out where you want to be in terms of defenses or something more u. S. Centric. Guy you said we should go on holiday in comeback for the fed meeting. I assuming that more applies to the fact we should go on holiday and comeback for the g20. Even the fed will be confused about what is going on with the trade narrative. Luke they will be confused but there will be so much riding on it. The insurance narrative is firmly based into the market, the idea that the fed dennys substantially or quickly enough to a lay any downtrend to a lay quickly enough any downtrend. Verdict, to tens positive. If that stays the way, we will set a record for that combo streak. That underscores the extents to which the market is putting a lot of stock in the fed being able to bail everything out. Guy great stuff, luke. Pelosi has just been speaking about the hong kong protest. She is calling on congress to reassess city special trading status that would allow extradition to china. Joining us is Marty Schenker, chief content officer at bloomberg news. It took a while for the white house to come out with a response. How unusual is it that congress is talking . Marty nancy pelosi is getting in front of the story in hong kong. It is unusual for the speaker to get out in front of the administration, which conducts foreign policy. Nancy pelosi representing a district in california that has types that has ties to the reason to the region. She spoke about Tiananmen Square and how that resonates with her and she is extending it to these protests as well. Guy if the u. S. Removed Hong Kong Special status, the effects would be dramatic. When one of those be a blowup the trade talks with beijing . Marty that would definitely complicate our relationship with china. It would be overstating it to think that nancy pelosi statement means that a change in status is in any way imminent. Unfoldsis the situation , there will be more people in congress who are calling for chinese overt the how they treat hong kong. I think we are way early in this process to worry about that. Vonnie it looks like things have called have calmed down today. Any danger things could blowup on a dime again . Marty yes. The organizers have called for another mass protest on sunday. Organizers in hong kong have billnded debate in the although carrie lam says they will go forward with the extradition legislation. In past protests, they basically waited them out. I think there is a strategy here to do just that, especially in the context of the g20 coming up. There may be an attempt to calm things down until president xi and President Trump meet in japan at the end of the month. , presumably xi jinping has to deliver upon this. We started down this road. It would be a huge climbed down for beijing to not follow through with this piece of legislation. Yes, but there could be modifications. I agree it would be a very precedentsetting thing for the Chinese Government to back off of this extradition plan, which they defend as simply trying to impose the rule of law to keep hong kong from becoming a place for criminals to reside. Said, the interest of the people of hong kong and of china can coalesce in some sort of compromise down the road. Deteriorate and violence happens, i think it throws everything up in the air. Guy what does vonnie what does this say about the future of the region . It is an incendiary issue, but there are so many things going to happen between now and when economy goes away. Marty the experiment of hong kong, trying to have one country, two systems, has been just that, an experiment. People are on the edges pushing one way or the other. The pendulum is swinging in chinas favor. I think the chinese understand they have a vested interest in keeping the financial interests of hong kong stable for investment and other reasons. I think they will be extremely patient. When i say patient, im talking years, not months. Vonnie absolutely. Schenker, chief content officer, thank you. Guy we have now wrapped up the European Equity market section. Lets take a look at where we are as we come through the auction and settle down. The ftse 100 flat. Some of the miners had a better day. The oil stocks worth paying attention to. The cac 40, like london, absolutely flat. We are trying to understand where we go with these markets as we watch the clock ticked down to the bed. To the fed. We will carry on dab Digital Radio. Jonathan ferro is in new york, i will be joining them here in zurich. Live on dab Digital Radio and on all your bloomberg devices. This is bloomberg. Guy from zurich, im guy johnson. Vonnie from new york, im vonnie quinn. This is the european close on european markets. Guy lets get an update on first word news with courtney donohoe. Courtney two tankers have been the ships were not far from the straight of hormuz at the head of the persian gulf. One ship has been described as being on fire and having a hole above the waterline. The owner of the second ship says it was damaged by it shall. When four ships were damaged last month, the u. S. Pointed the finger at iran. Is tryingime minister to use his position as a friend of both iran and the u. S. Shinzo abe is in tehran where he will he urged iranian leaders to avoid conflict at all costs. The u. S. Shows little signs of easing sanctions. Bloomberg businessweek has learned that the fbi and the National Institute of health are targeting Ethnic Chinese scientists, some of them american some of them american citizens. This stems from the trump administrations desire to counter chinese influence at u. S. Research institutions. Ofomberg looked of the case the chinese scientists ousted from a Cancer Center in texas. And risk oftirees running out of money a decade before they die. Arerement account balances not increasing fast enough to cover rising life expectancy. The problem is worst in japan where women have a 20 year savings gap. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. I am courtney donohoe. This is bloomberg. Vonnie thank you. It is time for our stock of the hour. Tyson food on the rise after the Company Announced it is getting in the fake meat business. Kailey leinz is here with more. I do not understand how angus beef is fake meat. Kailey they are offering a beef patty partially combined with peabased protein. They want to serve people who still eat meat but they want to add more protein to their diet and do both things. According to tysons, 40 of americans are looking to do that. Basedre offering this pea patty and a Chicken Nugget replacement that will be entirely plantbased. Looking to cash in on this plant craze. Tyson says they expect the brand the meat market growing 25 . Bloomberg intelligent estimates it will be a 10 million market. They are looking to cash in on this and push to make their products come to market faster, given the insanity we have seen around beyond meat with its rapid growth. It is a rapidly growing space. Tysons trying to get in on it. Felluld note beyond meat as much as 6 when tysons announced this. Not a big move in relative terms, but it did react, and the stock has recovered. Guy this is not a zero sum game. This is an expanding market. Presumably there is space for both players. Street,if you ask the it is going to be a large market. Jefferies estimating it could reach 140 billion, capturing 10 of the noble meet market. That of the global meet market. Beyond meat on the Conference Call said there is room for multiple players. They are confident they have a better product, but it is a big market and these products we are talking about, blended meat is differentiated then beyond meat which is purely plantbased. Tyson, a very established player, already a very large footprint. Beyond meat is just getting off the ground. You can see why investors were scared. Vonnie i do not see out took everyone so long to get to this point. Kailey leinz with our stock of the hour. Now is time for the latest Bloomberg Business flash. One of hsbcs u. K. Units were women atses lower one of hsbcs u. K. Units are paid bonuses lower 70 than their male counterparts. Last year the number was 85 lower. Hsbc is not commenting. It is the latest sign of openness from the worlds most profitable company. Saudi aramco will discuss results. They released an audit of its oil reserves in january. Released ahe Company Buying perspective that showed a 111 billion profit last year. The uks largest retailer started on a week note by a could sales growth came in worse than expected. That is your latest Bloomberg Business flash. Up . What if we got coming it is time for battle of the charts. Today i suspect a big focus on the group market. On the crude market. Find out shortly. This is bloomberg. Vonnie it is time for our global battle the charts. You can see all of the charts on the bloomberg, run the function gtv. It is an all oil day. Kicking things off his alix steel. Alix you can see this chart on the bloomberg. I will try to wrap it in with economic data. Yesterdays slide 4 was harsh and it was because of global demand. That has big implications for the fed. For like to back out because they like to back out even back out oil. This is twoyear breakevens versus oil. It is at. 67. The closest you get to one, the tighter the correlation is, meaning oil prices go up and breakeven expectations go down go up. Part of the issue Central Banks are fighting for is the entrenched low expectation. Volatile, itues will influence that expectation. There are economics. Vonnie i thought that was masterfully presented. It will be a formidable competitor for our next guest, jessica summers. Jessica i want to take a look at how hedge funds arguing the oils face. Although we have a bullish day, they are quite bearish. Total positioning on wti crude declining at the lowest level since march. If we take a look at the bottom panel, you can see funds are short, the short positions rising for six straight weeks. That is longest streak since november. We will see if the shortselling continues. You can find my chart gtv. Vonnie i think they are both very valuable chart. On a day like today it is a serious matter. We will learn a little bit more about this on commodities edge. Youll be talking about the attacks . Alix i well, as well as what it means for capital markets. We will talk about how that trickles down to the ecm world. Vonnie we have been talking about oil for most of the day. It is featuring in the main equities and other asset markets. I am playing for time because i do not know what to do. Those are both fantastic charts. On my side i will avoid you a tie. Alix first ever. Vonnie the control room is backing down, allowing a tie. This is an upset almost as big as the Boston Bruins and st. Louis blues. You watch hockey . Alix i have a toddler and i get up at 3 00. Vonnie congratulations to you both. A reminder, you can watch commodities edge at 1 00 new york time. That is coming up in just a little bit on bloomberg. Before that, we have balance of power with david westin. He will be speaking with senator bill cassidy about the health care industry. Lets get a quick check on u. S. Markets. About two and a half hours into the trade. Holding on to the gains, out the at personal gain albeit partial gains. The nasdaq covering more ground, up. 5 . This is bloomberg. David from bloomberg World Headquarters in new york, im david westin. Welcome to balance of power, where the world of politics meets the world of business. On the brief today, alix steel on tanker attacks in the gulf of oman. From washington, shawn donnan on chinas response to President Trumps pressure, and Marty Schenker on whether democrats are willing to put their money where their mouth is regards to President Trump. We came in this morning with attacks on tankers in the gulf of oman. What did it do to markets . Alix oil spiked up quite a lot. We saw a rally of percent, weve backed off that. Im surprised we did not see a 6 or 7 rally. Supposedly there were two tankers attacked. You can see on iranian tv. Pretty stark. The question is who . It is hard to find a who not related to iran, but theres a question why iran would want to be involved in something the specific. David theres also news about