The visit to stake out Common Ground in their struggles with President Trump. The u. S. Supreme court says a 40 foot cross can continue serving as a or memorial in a busy maryland intersection. Justices rejected arguments that the nearly one hundredyearold monument represents an unconstitutional government endorsement of christianity. The concrete memorial was built to honor 49 local men who died in world war i. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Live from bloomberg world headquarters, im taylor riggs and for shery ahn. We are joined by our bloomberg and bloomberg audiences. Here are the top stories we are following. S p 500 is touching a record high. Chairman powells dovish delivery has fueled the global bond rally and boosting stocks. Setting up a day to go public. Slack technologies sword on day one and gives this company a market value of more than 21 billion. Rising tensions between the u. S. And iran. The nation shooting down a u. S. Drone. President trump downplaying it now saying it may have been a mistake. Lets get a check on the major averages. Of course, we are watching, you could call this the fed affect. We have watched these markets, they got what they wanted. We are seeing a broadbased rally. Energy leading the s p 500 higher because of the geopolitical tensions. Oil on the move. Tech and industrial soaring. The only weak spot, utilities and financials on the day. We are watching slack as it jumps in its debut and the price of gold continues to firm up. We are watching the materials players move higher. We mentioned the bond market, check out the 10 year. There were calls for this to hit a yield below 2 and the did happen. This is quite an astonishing move back at 2 . The question with possible rate cuts coming this year, how low could this go . Taylor i love that. Lets put this into a conversation from the 10 year into more of the shortterm market. Particularly the twoyear. If you come to my terminal, what i love about this chart is it is the average of g10 Central Bank Rates and white. Take a look at the one year forward. The expectations for all of these g10 Central Banks is that we will be cutting by about 50 basis points. Story, a mario draghi jay powell story, a g10, everyone is dovish story. That will please president donald trump. He was happy to be hosting Justin Trudeau at the white house and at a q a, he did say he is hoping for a rate cut from the fed. Pres. Trump i guess they indicated that they will be lower, what are you going to do . You cant win them all. You cant win it all. Eventually, he will do what is right. Lets see what he does. Amanda he has been clear on that that that is the direction he would like to go. Interestingly, we are seeing other Central Banks, mario draghi, mark carney, echoing the statement that they stand ready to simulate. Taylor i like the removal of the where the patients and introducing the word uncertainty. That seems to be the theme. Yields lower, we saw that into a cross asset conversation and how that holds into the equity markets in the u. S. I want to bring in our bloombergs cross asset reporter luc kawa. What changed this morning . You take a look at the s p, hovering around 2950. The median yearend price target is 2950. Did strategists wake up with a new sense of s p just going higher for longer . Luke what is interesting is that we have not really seen strategies i just. What we saw ahead of time was ones who did lower their eps estimates. They kept their yearend target like brian belsky. When you rationalize it, this is more or less what they were expecting to see. Lower rates and the fed supporting multiples, even though we see earnings expectations continue to slide. What we saw was a few strategists, Goldman Sachs mainly, capitulate and say we did not see fed cuts in 2019 we do now. Taylor what are strategists saying about Asset Allocation in terms of what looks attractive . If you have the s p nearing record highs, where do you go . Does everything look top he or still morees look attractive on a relative basis, given the massive bond rallies we have seen globally . Luke i think the early signs i have gotten is that the fed has given cover to go back more into emerging markets and really increase and push exposure. We are seeing now u. S. Stocks with more international exposure, are markedly outperforming the domestic focus. That is if you want to tied together the bull case, lower rates, higher multiples, the super bowl case is that a fed cup would give emerging markets some of who are hamstrung, more room to ease policy without worrying the copernicus side effects. You will get a list and growth a lift in growth from net. Thata of course, all of and we are still expecting the number of rate cuts, although now we get capitulation on the fact that there will be rate cuts. When we look inside the terminal, you can see historically a rate cut that comes because there is a recession is not good for the stock market. If a cubs if it comes for any other reason, it creates a market rally. We do have stuff soft data points. You think people are whistling past the fact that there is a recession coming . Luke i think the argument everyone is wrestling with, and if you look at the difference between one year easing, generally priced into markets compared to what is delivered, the only cases in where the market in the fed have lined up areluke i think the argument everyone is wrestling with, and those 95 and 98 scenarios and everyone loves to use as analogs for the current day. Those are the only scenarios where stocks managed to invest on a 1, 3, and 12 month basis following the first fed cut. I think that is what people are grappling with now. Amanda the big question always is Central Banks are the cause of recessions, they move too far thoseand a recession follows te slowdowns. Do you think we dodged that in this case, that the Federal Reserve pivoted at the right moment . Luke i think for investors, if you are trying to formulate a bear case now, it is either monetary impotence or monetary too late to the party, or monetary not enough ammo. Something in that realm of the conversation. Every central bank, as the earlier chart that taylor showed, they are lining up and telling you lower rates are coming. The only way you can have a bear case is to say, this simply is not enough for the headwinds that are coming whether it be through trades, through lack of china stimulus, or the endogenous slowing we have seen in the Global Economy as the u. S. Fiscal news has worn off. Amanda luke kawa, great to have you with us. President donald trump seemed earlier today to downplay irans attack on a navy drone in the persian gulf. That had escalated regional tensions and fueled the surgeon oil prices. He suggested a loose and stupid individual may have been responsible. He address the situation while he was meeting with Justin Trudeau. Pres. Trump iran made a big mistake. This drone was in international waters. We have it all documented. It is documented scientifically, not just words. They made a very bad mistake. Welcomefor more, we National Security team leader bill faries. I want to start there. It did feel earlier, the president had said wait and see what i will do, i am not going to tell you which sounded ominous, for those who are faring hawkish behavior. What do you make of the walking back here . Bill you know, every day surprises. I do not think when President Trump set iran had made a mistake that many of us believed he was saying an individual had made a mistake. That was the line he reiterated with Prime Minister trudeau. This is a president that ran on getting the u. S. Out of intractable middle east conflicts. He has repeatedly said he does not want a war with iran. His Political Base certainly is not in favor of Something Like that. It is still a surprising comment. You do not hear washington frequently giving tehran the benefit of the doubt. I think there is an effort to try to dial back some of the tension that led oil prices to search this morning on this latest attack. This is the second time in a week the president has dialed back tensions or sought to dial back tensions over iranian attacks in the gulf. It is an interesting development. We are still looking to see if there will be any kind of a u. S. Military response, whether that is sending more troops or ships or something. I think the president , for now, has combed fears that some sort of a big military strike is imminent. Taylor taylor put into context how tense the situation really feels. It feels like it has been escalating recently after the tanker attack and then the drone shooting down today. Given the past decade, how tense does this feel . Bill it is definitely the most tense relations between the u. S. And iran have been since 2015 when the two countries were part of that Big Nuclear Deal that was agreed to during the obama administration. I think you have to go back to the early part of the few thousands to find a similar period when there were worries that the u. S. May have a preemptive strike to knock out its nuclear capabilities. That said, the tensions are quite high. This was the third Major Incident in the gulf since the middle of may. The u. S. Has deployed more forces and accelerated the deployment of an Aircraft Carrier to the bombers and region. I think the big fear when you talk with analysts and political leaders who are experienced in many negotiations is with all of these Additional Forces and the heightened rhetoric, the chances of some sort of an accident or a minor issue escalating into a serious crisis are that much higher. Taylor thank you, that was bloombergs bill faries with the latest on iran. Coming up, President Trump and canadas Prime Minister trudeau wrapped up their meeting at the white house. We will get the latest on what we may have heard in regard to usmca. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs. Amanda im amanda laying in toronto. A facetoface meeting between President Trump and commit and trust in trudeau is over. The two leaders are pushing for approval of the usmca trade agreement between the u. S. , canada, and mexico. Joining us for more is Sarah Mcgregor in washington. Know thatesting, we mexico has ratified this agreement. The u. S. And canada have not yet. Did we get anything new today that leads us to think that this deal is anywhere close to being done . Sarah you know, i think the Main Objective that was achieved today is trudeau and trump showed they can get along. They put up a united front. A year ago, trump was at the meetings in quebec and as soon as he left, he got on his plane and tweeted that trudeau was weak and dishonest and withdrew his name from the communique and communications were at a low. We have seen the usmca negotiated, steel and aluminum tariffs removed. That has allowed the leaders to put on a braver face with each other. Toyou said, the usmca needs be passed in the legislatures of canada and the u. S. Canada seems to be tying the timing of that process to the u. S. Getting it ratified, and that depends on congress. And the key lies with nancy pelosi. When the democrats believe they have a deal they can get past through their party. Amanda of course, at that meeting, the subject of the two canadians being detained in china came up. The president said if Justin Trudeau asked him, he would raise that with xi jinping. In terms of how this fits into the mix, this is a more friendly and counter than as you say they have had in the past, it is still not totally friendly. We are not out of the woods on some of these issues. Can we trust the president will go to bat for canada in china . Sarah i think Donald Trumps objective is to get the best radio possible. He has floated the idea that huawei could be included as part of the trade deal that the u. S. Reaches with china. Tied to that is the arrest of the huawei cfo in canada and the subsequent arrest of the canadians in beijing in what was seen as retaliation. There is a big mix going on. I think it is fair to say trumps objective is to get a trade deal with china at whatever cost that is. It is hard to sell it tell how much Political Capital he would get from putting pressure on china to release these canadians. I am sure they talked about that. Trump said he would do whatever he could to help pressure for the release of those canadians in beijing. Taylor we are hearing from nancy pelosi and the subcommittee chairman on the house and ways Means Trade Committee that they need to see quite some significant changes before they even begin to vote on this deal. Some of the changes we are looking at, labor, and bar mental, pharmaceutical. Do we have any idea which of these is the most important for the u. S. To be able to get this done . Sarah robert lighthizer, the u. S. Trade representative was on capitol hill testifying for hours this week before senate and lawmakers. What came up time and time again from these lawmakers was that they want to see an enforcement mechanism, something in place to ensure that this agreement takes force and it is enforceable. I think that is a really big issue. They want to make sure it is not locking the u. S. Into higher drug prices. It will still be able to keep drug prices low. There has not been specifics from the democrats. They have formed working groups to work with the administration to get these changes made. It is not clear how deep they want to go to see changes or whether it can be implemented in an easy way and we can get this done by the end of the year, get it through congress. Amanda great to have your thoughts on this. Sarah mcgregor, thank you. Makingup next, slack is a listing on the new york stock exchange. The messaging platform using the ticker work. We will hear from one of the leaders from the new investment round. This is bloomberg. D. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs in new york. Amanda im amanda laying in toronto. Time for the Bloomberg Business flash, a look at the biggest business stories in the news right now. Kroger held its own against walmart and amazon in its latest quarter. Profits Beat Estimates and Digital Sales jump. Kroger plans to offer pickup or Delivery Services for all of its u. S. Shoppers. Shares of carnaval are going the other way. The cruise line cut its fullyear earnings forecast for the second time in three months. Carnival sees lower ticket prices on the back half of 2019. It is being hurt by the u. S. Crackdown on travel to cuba. The city of austin, texas has a number of selling points for tech workers. The cost of living is lower than in bigger cities and paychecks are getting fatter. Tech salaries and austin grew faster than another major u. S. Cities. It rose 15 over a three year period. This is according to the recruiting pot formed hired. That is your business flash update. Taylor the story of the day, slack now a 21 billion valuation in its debut. You have the price action of those shares in their direct listing. It was not an ipo. Up about 60 . Really phenomenal, given the last previous valuation was not 21 billion. One investor who is joining us now to talk about his role in helping lead the first three investment rounds first lack, partner at kleiner perkins. Benefits ofbout the slack during the direct listing versus the ipo. Ilya i think first of all, slack is an Amazing Company and brand that has a lot of recognition. The company has 10 million daily active users. You can imagine many people heard and know of slack. The company has a lot of capital it has raised in the private markets. For those companies, the direct listing is quite interesting because it allows you to transact very quickly, allows you to set the right price, and it is highly effective. Taylor we know they do not need to raise cash, but there is always a question with these Tech Companies about the path to profitability. As an investor, what would you like to see from slack with regards to their pratt their path to profitability . Ilya if you look at the category that slack is in, software as a service, these companies typically have to make significant upfront investments. There can be and benefits of that overtime. Slack on average has a net revenue expansion of 138 annually. That means the revenue expands and grows organically within with its customers. When you are at the scale of half a billion, that is quite impressive. Amanda in terms of how it came to market, may be a bit of a chill for investor investment banks. Are there certain types of markets or time in the market when a direct listing woodwork and others when it might not . Ilya i think it is hard to speculate on that. I thicket depends on the company. Think it depends on the company. They do not need to be communicated or put in front of investors. They are really wellknown, they do not need to raise a specific amount of capital. They want to get access to Public Markets and transactions. Those companies can farewell. Can farewell. Fair well. The ipo market has outperformed in a massive way, even those big tech names. Do you expect that to continue . Is there hunger for these kinds of the unicorn names out there . Ilya i thicket is exciting times in tech think it is exciting times in tech. You see Companies Perform well today. In our portfolio, we have a company, beyond meat, which has done well. There is interest to get exposure to tech, exposure to high growth opportunities. The brains and the names that are recognized will get a lot of attention. Greatgreat for investors, for companies, great for tech workers, great for everyone that they ipo is open now. Amanda we have to leave it there. Great to have your thoughts. Thank you. A quick note, bloomberg data, the Venture Capital arm of bloomberg lp, is an investor in slack. Just a reminder, bloomberg users can interact with all the charts you have seen on the program or others at gtv go. You can see recent charts and browse the analysis behind them. From toronto and new york, this is bloomberg. The latest innovation from xfinity isnt just a store. Its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. Mark President Trump is downplaying irans shooting down of an american drone, saying it might have been an accident executed by someone being loose and stupid. President trump iran made a big mistake. The drone was in international we have it all documented scientifically, not just words. They made a very bad mistake. President made the remarks during a white house meeting with canadian Prime MinisterJustin Trudeau. When mr. Trump was asked if the u. S. Will respond, you only said youll find out. Turkey is warning the United States to not oppose sanctions over its purchase of a Russian Missile defense system. President erdogan calls his relationship with trump really good, but the relations with people under him are far more different. Julian assange is now jailed in britain, suspected of rape in sweden