2016. The bulls and the bears duking it out. It is above 1400. Not above the true top of the range that follows the gold crash. This huge range, the this is a weekly chart. Goldhas actually confirmed for a move back down. All of this suggests that we could see gold drop down that just to that level but perhaps toward the bottom of this range. The gold bowls might the gold it suggests that the dollar may strengthen and we could be entering a risk on period. Sarah the s p 500 today once again and again new highs. Where we have not really seen a move higher is momentum, that at least by way of a relative strength index. Around 67ill stands or so. Still not through that 70 threshold that signifies markets might be overbought. How uncommon is it for stocks to make new highs when momentum isnt running rampant . The fact of the matter is that it is not that uncommon. You look at the past five times that the s p 500 date new highs, but with a five day period beforehand. You can see that four of the five times, the strength index was below 70. This most recent new high that came yesterday was only at 66. You can take this to mean potentially that this rally we are seeing is truly unloved, but maybe it is actually for the better that we are seeing some steadier, calmer gains. Romaine lets get back to the discussion. Still with us is anthony from ameriprise financial, and kawa. Ergs lou, luke the fed meeting. We heard from some of them who seem to be trying to throw a little bit more water on the idea that we could get a 50 basis point cut. What do you think we should be expecting for the end of the month . I think it is hard to justify a 50 basis point cut unless the fed just wants to jump out in front of it and give investors and the market confidence. I do think that the market has baked in some kind of a cut in july. I think Economic Data has been slightlyd to modestly, negative. I think there is a justification for the fed to come in and cut. Right now, the market is pricing in the rerate cuts, almost with a lot of certain deeper. I think that is wrong if you believe that orchids are going to continue to move higher and the fed needs to cut three times. If the fed needs to cut three times, markets are going down and we are probably in a recession. I think you will see expectations tamp down on those out quarter cuts because i just dont think the Economic Data supports that kind of cutting in this environment. Yesterday, the same point was raised, the downturn, easing that you really need support the economy. What i wonder when i look at these odds, is the market really pricing in 75 or is it pricing in a fairly high probability. Then the chance that we may be cutting so much that the fed is behind the curve. Just attaching some probability to that. That is kind of what i wonder. Caroline in terms of where to put your portfolio amid this, we dont get the key doom and gloom of three cuts. ,o you stick with u. S. Stocks do you go more internationally, do we get a weaker dollar . Anthony International Stocks are more attractive from a valuation perspective but that is for a reason. Earnings growth is slower, their economy is slowing. I would stay close to home. We are advising clients, be overweight the u. S. , be balanced between cyclical sectors. Really focus on quality investments. Companiesigh quality in your stock portfolio and really good qualities on the fixed income side. We tilted our tactical portfolios a little bit more defensively to start the Third Quarter for some of these tensions around trade, slowing growth, slowing profit growth. Think if we get some clarity on trade in the economy, stocks can rally. If we see the economy continue to slow and the fed needs to cut more than once or twice, then you will want to have more bonds in your portfolio. Caroline anthony, we thank you, and bloombergs luke kawa. That does it for the closing bell. Whatd you miss . Is up next where we will look at the women looking to take over the eus top job. This is bloomberg. Caroline live from bloombergs world news headquarters in new york, im caroline hyde. Theanother record high for s p 500 but today, it was led by the defenses. Then hold the top spots for eu leadership for the first time. A cautious thumbsup to the nomination. Oil slips mounting fears about the Global Economy. Pickup power. Inyslers surging ram sales the auto market. Investors waiting for tesla to deliver its figures. Christine lagarde could become the first woman to run the ecb. An historic shift coming as the no signseconomy shows of weakening. Joining us, from the National Bureau of Economic Research and a former boe policymaker. Has she got the right expertise, the right experience . She probably has. I think it is probably a good appointment. She is a lawyer, so is jay powell. A french finance minister, been at the imf for eight years, seems to understand how the World Economy is going. Ishink one of the big things this is probably a fairly seamless handover, understanding that the Global Economy is flowing and will probably follow on from what draghi said. The fact that she is not an economist, i dont think that is a big deal at all. Anothered away good thing, obviously, it is a woman. I think it is a pretty good appointment and it could have been a lot worse. The markets i think will read it that way. This woman is very capable and will have to handle the politics very well. That is not something that economists have been able to do very well. Joe when you look at the euro area economy over the next several years, how much of its success will depend on good choice of Monetary Policy moves versus the politics required to cajole governments to be more aggressive with fiscal policy which a lot of people would say is the lever that really needs to be pulled at this point. Danny that is obviously the big issue and draghi expressed in his street in his speech the other day that it has to go on the fiscal front because what tools does the ecb have . They say they are going to cut rates but they are already negative, they have been doing a lot of qe. How far can that go . Pmis this week suggesting that germany and spain at the very least rna manufacturing recession. I think it will be very much the politics of the Monetary Policy cant do everything, we need help from elsewhere. That is clearly something that lagarde can do. She knows all the arms to twist. I think that is probably the biggest deal, playing the politics, dealing with the germans, trying to get people to understand that the European Central bank can only do so much and it will need fiscal help. That is going to be political. I think she is well set for that. Romaine theres a lot of focus on Christine Lagarde for obvious reasons but there was another appointment with ursula becomingly chief executive of the ecb and the european commission. Can you tell us a little bit more about how she factors in to the equation with some of these Political Trends were just. Eferencing danny this is a changing of the guard with much dealmaking done today. The 25xit party today, or so brexit members appeared in and theyean parliament turned their backs on everyone else. That caused a great deal of consternation. This transfer of power is a really big deal. Having a german in one of the , micron is central to her being appointed there. Obviously, this is a big deal. Immediately after this deadline for briggs it. Immediately thrown into the fray and the european movements of populism will be something to deal with. The populists are a very big deal. The french and german want their hands on everything. This is tough times going forward. It looks like they are headed downwards as growth is slowing. Caroline we were hearing those words of caution from mark carney, who currently leads the bank of england. Danny carney has had to handle the politics of brexit. The head of project fear. He has warned about global protectionism, the slowing Global Economy, also brexit itself. Is thewarned that brexit biggest downside risk. Carney needs to find a new job and theres a new job going and looks like at the imf at the end of the year and maybe they are looking at mark carney for that one. Joe thank you very much. Coming up tomorrow, an interview with cleveland fed president Loretta Mester at 6 00 a. M. New york time. Coming up, how fiat Chryslers Ram trucks helped deliver sales in a shrieking market. This is bloomberg. sroline they are out, tesla production numbers. They say, in the second quarter, record production of vehicles and record deliveries of approximately 95,200 vehicles. In addition, they said they made progress streamlining logistics , costlivery operations efficiencies to our positions. The delivery of 77,000, more threes. 5 thousand model romaine lets go deeper into this. Ben powell joins us. He is a Senior Research analyst at baird. He has raised his price target on the stock to 355. Looking at these numbers, they appear to be giving investors what they wanted. The deliveries overall are higher than expected. Production numbers also higher than what analysts were expecting. Ben very good results here. Like you said, it is something we are all watching for and that came in i think better than expected. Overall deliveries came in better than expected even after bears have been inching up their numbers into this release, kind of conceding that they can get their own volumes but not their own profit. , you startumber seeing that they can get the cash flow positive this quarter. That argument, the new argument here, might be out the window after tonight. Joe talk about that a little bit further. One of the concerns raised prior to this was the fact that International Sales might be less profitable or more costly to achieve given the distribution channels. Your view, with these kind of numbers, that issue is not as much of a concern. One of the biggest things with the stock is that there is so much noise. People are making things up about margin not being profitable. I think tesla cant go too far in this release before it has been audited. They do say they have increased cost delivery and efficiencies. We are really only into like a into like year three of the model 3 ramp. And x, i would be worried recoveredpt they nicely. Caroline interesting. This isnt a story of cannibalization, this is a story the mod x waiting for del y. Waiting for the incremental buyers, especially the rest of the year went china could start coming online. It was a drop in the bucket when they were just selling s and x there. Targetctory that is on to produce this year. You will get more awareness about the vehicles as a status symbol. It is nice to have the factory in shanghai. The people there want to buy from tesla. That opens up a market that is very big and this whole demand issue that was created out of nothing should be put to rest right now. Romaine do you think this is sustainable . We have seen them do well on a quarterly basis before and a couple of quarters later, things kind of go south. Bearshe headline from the will be that it is not sustainable that i dont think that is the case. I think this is sustainable. I think we probably get it up q over q to q3. Kallo from robert w baird, thank you very much. I want to point out tesla shares are up 7 after hours. Fiat chrysler reporting monster truck sales, very large truck sales. Not monster trucks. Apickup in what seems to be sputtering auto market. Joining us, the bureau chief at bloomberg. How did ram do it . Romaines favorite truck. Some of these trucks can be monster trucks. If you are fiat chrysler, they did it because there is a 12 inch touchscreen, the Exterior Design is great, and it is basically a luxury car inside the truck. If you are General Motors and you are on the losing end of this macho competition, it is because they have been discounting the truck and they have this cheap version of the ramp called the classic that sells for 6000 less, has deals on top of that, and leases for 179 per month. They have gone for the luxury truck at the top end and the contractor, work truck buyer who needs four wheels and a bed. It has been hurting gm and probably taking something out of the height of ford. Caroline who is buying this . Im not seeing a plethora new. Ork is it sedan being sold off on the back of this . David it is an interesting phenomenon. I was talking to someone at chevy. Moving into pickup trucks they are kind of taking look of the minivan. Ubiquitous, boring, very practical but theres just no character. People arent buying sports cars anymore so if you want something that will make a statement, a pickup truck is the way to do that. Owners aresedan getting out and go into a pickup truck because they dont want that minivan feel that a lot of the crossover suvs have. Romaine that is definitely the man. More than half of the drivers out there are women on the road. Are they willing to buy these ram trucks . Does that appeal to them . David women are getting into suvs. Some women dubai pickups. It is still a mostly male ment or it a big chunk of male segment. A big chunk of their sales are work pickups. Haulneed to tow and things, they have tools, payloads in the bed. Those work trucks come with a lot of equipment on them and they are very highmargin rate highmargin. You are looking at a contribution of 10,000 per. Thats a lot of money to fight over. Caroline lets get you a quick check on the latest business flash headlines. Deutsche bank laying the groundwork for the based overall and its history. The just overhaul in its history. Deutsche bank plans to shut down some unprofitable businesses and place assets in a unit to wind down. Considering to sell a Regional Sports network. Four networks could fetch up to 1 billion. That could include tv rights to teams like the Pittsburgh Penguins and houston rockets. Romaine a quick recap of tesla. Is what theyes sold in the most recent quarter. A lot were shipments to europe and china. We also saw an increase in the u. S. As customers ran to get ahead of that federal tax credit. Joe coming up, opec plus countries agree to a packed on output cuts. Why some say the renewed pledges are a sign of weakness. This is bloomberg. A Solar Eclipse is starting to darken the sun over northern chilly. Northern chile. Tourists from around the world have gathered to witness the eclipse began at 10 24 a. M. Local time. Argentina are the only places the eclipse can be seen aside from an uninhabited island in the ocean. European leaders have nominated Christine Lagarde to be the new leader of the European Central bank. European Council President donald tusk made the announcement after three days of deadlock. Tusk praised lagarde and said he is confident she will rise to the challenge. Madame lagarde for many years and i am sure she will be a very good president of the European Central bank. She released a statement saying she was honored to be nominated and would temporarily relinquish her responsibilities with the International Monetary fund. She would become the first woman to run the euro area Monetary Policy just as the bloc seems to be in need of stimulus. Weighing in on tensions with the United States over the subsidy dispute between boeing and airbus. Carney says it could prompt a widespread slowdown. Carney also says a shift in policy is needed and says that Monetary Policy must address the consequences of such uncertain day. The house ways and means effortse has expedited to release trumps tax returns. They have asked a court. It comes after treasury secretary Steven Mnuchin rejected a written request and subpoena for the returns. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Caroline oil had its worst reaction to an opec meeting in more than four years. Prices sliding just after the intel lets bring bloomberg economist. Is it almost as if saudi arabias restraint is signaling things will get worse than anyone expected. They were a couple of factors behind the reaction. One was shortterm, how badly mean how badly managed the meeting was. Caroline opec, never. Particularly this time given that the main decision had been made at the weekend g20 meeting anyway. The very fact that you have opec plus where you have all these countries involved, if you think about the way opec is set up, it is really set up for a world in which demand only ever goes up. When prices drop, investment drops, and it takes a long time for rival supply to come back on. None of those things really hold true anymore. Shale comes back quickly in regard to prices. Demand is less certain than it used to be. Joe u. S. Oil production now topping 12 Million Barrels per day. It has basically gone up in a Straight Line for almost a decade. It doesnt seem like there are major signs of it slowing. Backthis slowly render a rendered opec less and less significant . Liam they are doing what they can with what they have got. The only way that opec plus would really work is if the u. S. Joint it. In the meantime, they are doing what they can. A lot of opec members, what you really need is to be flexible and nimble. They cant be. They need a certain price to make their economies work and the only tool they can really use is to cut supply. This agreement has been going on for quite a while. The last six months at the beginning. It looks like it will keep going for some time. It doesnt seem to be working. Romaine now, opec is basically, what, saudi arabia and russa and russia . Context the u. S. Is outstripping production for almost all of those nations, at what point do we get to a level where i guess opec i will say dissolves but basically the structure goes i wont say dissolves but basically the structure goes away. Liam to me, opec as it used to be doesnt really exist. There is still a website, they still meet and i dont think they will dissolve. For saudi arabia, it is a useful purpose. It gives them a certain heft in the world. I think it gets more important over the next year to manage supply cuts. If you think about u. S. Politics in general, that is quite a useful thing to have out there. But, over time, i think it is becoming more and more clear that this process does not work in the way that it used to. Caroline lets talk a little bit more about saudi arabia. O seems to be dangled out there. Right time to be trying to go to for a huge valuation . Liam if they are going to revive it, the first thing they have to do is make people forget about this to trillion dollars thing. Right now, you have saudi arabia signaling that it is really going to be extending the supply cuts for a long time . Alid was saying yesterday that hes going to wait that out and good luck to him on that. In that sense, you will have aramco may be coming to market while his production is becoming the biggest lever. That raises the risk premium. The biggest factor is what discount rate you put on it. It moves quite sensitively when you do that. Romaine i want to thank liam denning of Bloomberg Opinion for that. How do you make 14 billion of debt disappear . We will talk about that next. This is bloomberg. Caroline it had record secondquarter deliveries and production. If it holds in proper training, it would be the largest gain this year. Remember, tesla has fallen significantly. About one third of its value has been eroded this year. If we can see a little bit more than 8. 8, you would see the biggest moves of this year. Romaine right now, time for a look at what stories are trending across the bloomberg universe. Deutsche bank is sounding out potential buyers. Germanys largest lender gauging interest for loans including assets, equity securities, and Interest Rate derivatives. Bloomberg. Com has a story on vegan meat makers suing the state of mississippi over food label restrictions. Andlaw passed in march became effective on monday. Plantbased Companies Say the law violates their First Amendment right to free speech. Tictoc on twitter is reporting that china has slapped three rounds of tariffs on slapped new rounds of tariffs on imported wine. U. S. Wine sales were already lackluster before the tariff had even kicked in. You can follow all those stories on your bloomberg terminal come on bloomberg. Com, and at tictoc on twitter. Joe a federal over sort federal Oversight Board argued once that over 6 billion of puerto ricos bonds should be no and void because issuing them in the first place violated the debt limit. Now, wisconsin is trying to eliminate similar bonds. Kind of a fascinating story going on in illinois where a conservative right wing think tank is trying to get over 14 billion worth of illinois general Obligation Bonds what are they saying exactly . Is this think, it tank and a hedge fund which has 25 million of these. They are trying to get a certain amount of illinois bonds invalidated on this idea that they could never issue them for a specific purpose. You have to issue bonds for a specific purpose. They say pension Obligation Bonds for example, are basically deficit finance. They want to invalidate 14 billion worth of these bonds. It doesnt seem likely it would be successful. The if it is, illinois has ability to pay bondholders. It is a curious case and sort of an example of how the puerto rico precedent is starting to be felt even if it is potentially for political motives. Caroline the issue here is general Obligation Bonds. What sort of precedent is this setting . Our other states going to start looking at these . It will be interesting to see how the puerto rico things play out. They are not only trying to repudiate 6 billion of debt in puerto rico, they are also trying to claw back revenue. Fees being paid on the highways that were pledged to bondholders and the Oversight Board is saying, actually, you can take that money out that threatens another subset of bonds. It raises the question of whether puerto rico is an outlier or if it is the kind of thing where you do see these challenges and to see certain parties, whatever motives, kind of step into the market. Romaine has this had any effect on the appetite for muni bonds . Brian there has been no effect so far. When you saw this illinois headline, it is like holy cow, this is the sixth most populous u. S. State, it obviously has a lot of debt, and it is in the headlines because it has these issues. Chicago is not doing great itself, below Investment Grade by moodys, and illinois kind of hanging onto Investment Grade. Caroline fascinating read. Thank you. A check on the latest headlines. United technologies unit chronically late in levering engines for the f35 program. That has raised questions about whether the company will be ready to increase to full production by next year. Poor performance on its current batch of engines. They say they are working on a corrective action plan. J. P. Morgan chase is expanding artificial intelligence. In machine invest learning units. J. P. Morgan has already deployed ai and machine learning. A twist in the power plays that have transfixed. There has been speculation that rivalsbeen in talks with such as julius baer. Another indication of the competition of swiss managers to keep their best private bankers. Time for smart charts with abigail doolittle. Starting with the s p 500. Yet another record high. Abigail yesterday, alltime high. Today, a record closing high. Other asset classes. Katie stockton, thank you for joining. You have a list view. Talk to us about whether or not you think this breakout will continue and where you think it may be going. Katie they removed resistance from the chart, so that is a good thing. Reflect positive momentum. The last major breakout was 2016. Proceeding that, we had a trading range characterized by downside volatility. You saw a nice followthrough in 2017. It entered the consolidation phase, now advancing to alltime highs. The breadth, meaning we are seeing good participation on the rally. It does reflect participation. Abigail in that previous example, it looks like we went from roughly above 2002 a little bit low 3000. If you were going to play this forward, how high do you think we could go . Katie it goes back to that breakout to derived measured move projection. Yielded aut in 2016 very longterm target of about 3280. Abigail could you see that happening at the end of this year . Katie in the next 12 months or so. Abigail now lets look at your 10 year yield chart. I love this cloud you have. The cloud shows the downtrends. Yeartodate, the breakdown in q4. As it has come down, lower highs, lower lows. We have seen recently a loss of Downside Momentum. You can see it there in the bottom. , thessover in something indicator, the moving average gauge. Right as the 10 year treasury yield comes into support of about 10 , eight psychologically significant level. I think there is a good chance we see some stabilization around that 2 level given the loss of Downside Momentum and than that would preserve downside support back through 20 and prevent the breakdown that would target about 1. 4 . Abigail i was just looking at this chart today and over the past few weeks. A similar chart using the 50 day moving average. A range suggests there could be a move if the stabilization continues to hold back up. Somewhere in that cloud, could you see that . Abigail i think we have to assume it is the shortterm countertrend move. Resistance is a bit of a moving target based on that model. Mid july, it ranges from the thinko 2. 3 area and i that looks pretty realistic for a countertrend move. Abigail lets go global. Mark was talking about the nikkei. Theres a reason we are both talking about it. We have finally seen a little rotation into japanese equities. You see it in the nikkei two with the breakout comedy approximate asian the approximatitation. This happens about twice a year over history. I think renewed momentum on a shortterm basis could unfold into something more meaningful. Of course, the nikkei 225 is not without resistance. It has more challenges, especially from a relative perspective. This breakout plus that oversold buy signal is significant. Abigail risk on view, positive nikkei, and00, the perhaps bonds. Romaine coming up, protests embroiled hong kong and have shaken the citys assumptions of wealth and stability. A look at the citys economy in the aftermath of those protests. This is bloomberg. Caroline hong kongs reputation as a wealthy and stable city has been called into question. After days of protest, the citys legislator legislature was ransacked. It was a holiday on the day of the actual protests. We didnt see the market reaction. We saw the reaction in our days trading. It rallied in terms of stocks but what happened in terms of repercussions . Shery it is rallying in the hong kong dollar. We continue to see the protest and uncertainty in the political sphere. The interbank costs rising at the same time. We saw that in june, this time around as well. There were whispers of potentially protesters withdrawing cash in hong kong dollars. We know there is a seasonality factor. The first half, you always have these companies trying to pay out dividends. Local rates do tend to rise. You can see on that chart, the onemonth rate is above the onemonth counterpart libor. We could see more of a squeeze if we see the big ipos planned for this year. Joe we know some people like kyle bass have been saying for a long time that the dollar peg will be abandoned. Is there anything we see in the political or Financial Market that. That could lend to shery he was shorting the hong kong dollar. They keep the hong kong dollar pegged u. S. Dollar. They are not looking into it, they dont feel they need to change the system, saying they have 430 billion of foreign reserves. Romaine do we have any idea with the things we saw today with the strength of the dollar, stocks. We had heard whispers about protesters needing cash. The fact that banks needed to improve their offerings, boost accounting numbers by the end of the first half. The issue right now is that angst could get a little bit worse from now on. Investors do tend to set cash aside to buy into those lucrative ipos. We are talking about alibaba, also talking about the asia unit raising about 10 billion. Caroline dont miss more on this, daybreak australia and daybreak asia. It seems that the u. S. Is dropping the fight to add to the senses the citizenship question. The Supreme Court blocked the trump of ministration from adding the question and the Trump Administration from adding the question. Also, notably, england lost, the football,on in the 21. Romaine drinks on caroline. Joe are we seeing a currency reaction . Caroline just tears. Dont miss this tomorrow. U. S. Markets close at 1 00 p. M. Eastern for the fourth of july holiday. Joe numbers for u. S. Jobless claims, trade balance, and ism manufacturing. Romaine our interview with cleveland fed president Loretta Mester at 6 00 a. M. Eastern on bloomberg surveillance. This is bloomberg. Emily taylor im taylor riggs, in for emily chang. This is bloomberg technology. Tesla setting a new record for vehicle deliveries. The Company Stock soaring. We speak with billionaire investor mike nova grath. Swihe bit coin price