The president accusing Prime Minister theresa may of making a mess of brexit. He said the u. K. Will have a new Prime Minister soon, good news. In the markets, we are seeing risk off attitude. You want to buy the dollar. Equity futures down. 4 . Semis could get particularly hard. The chip guys have three months of inventory stacked up. Yields going nowhere in the u. S. Oil a bit firmer. You have some iran conflict there, the military playing hardball with bp. Altogether, it is a by dollar story, sell u. S. Equities buy dollar story, sell u. S. Equities. We are joined by Lisa Abramowicz and michael mckee. 72 hours, has a busy giving a speech to open this Boston Press Conference and then going down to d. C. Michael you dont have to pay any attention to boston. Towill be fed by satellite the conference. Tomorrow, you have to be sitting in front of your bloomberg terminal and watching jay powell. He has to ratify the idea of the month, which the markets are anticipating, or we will have incredible market disruptions. One would expect that he will try to leave himself some wiggle room. He will say we will watch the data and act appropriately. Maybe it goes up probably not. Lisa it is a fine needle to thread. He not only has to give the market what it wants with the promise of some sort of rate cut, but he has to telegraph that this doesnt mean the u. S. Economy is in bad shape. Basically saying we dont think things are that bad. Given where we are globally with Interest Rates and with inflation, we think perhaps we made a mistake, perhaps where we are right now hes not going to say we made a mistake, but he might say weve reassessed and the real rate, the rate we are targeting is lower than 2 and it will be for the foreseeable future, so we are just normalizing, we are just being accommodative. Alix who would you rather be mario draghi or jay powell . Michael jay powell right now because his job is easier. Mario draghi has to come up with a plan to stimulate from a menu of choices, none of which are good. If they cut rates, they have real problems with the bank, Deutsche Bank being one of those. Again, they can only buy so many sovereigns. If they start buying corporate, they continue to distort the economy there. They dont have a lot of good choices. The problem for both of them is they are going to try to stimulate demand by lowering the cost of borrowing and demand is not the problem at this point. Lisa isnt the definition of insanity trying the same thing again and again and expecting different results . We have junk bonds in europe that have negative yields. Borrowing costs are low. Is that going to stimulate anything . Michael thats the problem the world faces right now. Alix they will spend some cash. They are slashing their 2019 forecasts. Time overall uncertainty around trade remains high. Fallis the last issue to or sort of in the middle . Lisa i think you will hear more about it. The problem is they dont know. The uncertainty is there. Tariffs have been implemented. Being at the epicenter of a lot of this because they make part of the inputs for automobiles and other manufactured goods that are slowing down. The key is how much is this an excuse and Company Specific . I dont know. I think its a very real concern at this point. Is thision is, how much a blanket kind of warning that we hear from companies and how much is it the weather excuse for specific companies having a difficult time . Michael Global Industrial production down 6 in the first half theres no questions that companies have stopped spending. Basf blames it specifically on trade wars. Thisat becomes a theme, becomes a canary in a coal mine we have to worry about here. Havee seeing wall street heart attacks over whats going on. Warne seeing companies and analysts are not taking down their forecasts. How come . At some point, you would think they would start reading into this. Story,k at the basf all the analysts are going, boy, we were surprised by how bad it was. That we got some news china was announcing a possible u. S. Weapons sale to taiwan. I wonder how that geopolitical risk filters into trade talks. Michael add it to the list of irritants between the u. S. And china. The u. S. Has been telling weapons to taiwan for years selling weapons to taiwan for years, even long after we recognized Mainland China as the one china. This is not something that surprises the chinese, the fact that the u. S. Agreed to sell weapons to taiwan and the chinese are upset about it doesnt surprise anybody. Alix lets get to our third story, which is Deutsche Bank. Nobody believes the restructuring. You look at the coco bonds, you can see yields spiking there. The Deutsche Bank share price continuing to fall. I wonder why. Lisa its really interesting. Initially, when Deutsche Bank came out with their plan, the coco bonds rallied. The perpetual bonds that suffered first losses did well. As people reassessed, they started to do worse. Deutsche bank is seeking to cut its buffer of capital as part of the way its going to raise money for restructuring. At first, people were saying its not going to be a problem for these capital bonds. On reassessment, they dont have enough capital on their Balance Sheet to satisfy things. People are concerned that this plan wont work as promised. The bank will not become more credit where the, you are seeing this in the credit default swaps worthy,e more credit you are seeing this in the credit default swaps. People arent buying that Deutsche Bank can pull this off. Michael the question i have is what does this mean for the overall economy. I will leave the Deutsche Bank analysis to the people who follow Deutsche Bank. This is the german champion that cannot lend and cannot make any money when it does. That tells you something about the european economy Going Forward. Deutsche bank is not alone. They are the biggest and the worst off, but a lot of banks in europe are unable to make profit anywhere near what they need to. Where the banks depend on lending to companies, if they arent lending, they arent making money. Thats an issue. Alix a spokesman for Deutsche Bank saying they will provide extensive european u. S. Equity research. They will continue Quantitative Investment solutions. Because we need the money. Lisa will the German Government force companies in the region to use Deutsche Bank . Will this become a political incentive subsidized by the government . Michael the question of what the government does Going Forward with Christine Lagarde as the new ecb chief, can they push forward european banking . Thats the only thing thats going to save anybody. Alix Deutsche Bank also lisag Macro Research abramowicz and michael mckee, thanks a lot. We did get a trump to eat talking about tweet talking about trade. Negotiated oring being set up for negotiation. Weve been treated unfairly by other countries, but thats changing. A deal could be coming. A big week for the fed. Jay powell heading to the hill with fed cuts and play. In play. We are recapping breaking news from this morning. Virgin galactic will become the first Space Tourism company to go public. A stake will be sold to a Shell Company, allowing Virgin Galactic to go public without an ipo. Richard branson himself will be joining Bloomberg Markets at 10 30 a. M. Eastern time. This is bloomberg. This is bloomberg daybreak. Richard bransons Virgin Galactic will become the first Space Tourism company to go public. A stake in Virgin Galactic will be sold to a Shell Company that already trades on the new york stock exchange. Social capital lp. That deal will allow bransons company to go public without an ipo. Pepsicos secondquarter earnings beat estimates. Mountain dew and doritos boosting results. Higher prices lifting revenue, but its been hard for the company to sustain volume growth, especially in the north american beverage unit. Facebook is facing another blockbuster court fight in europe over privacy. The eu court of justice hears arguments on the legality of tools used by companies to move commercial data outside the region. Taponents say eu citizens da is at risk the moment it gets transferred overseas. Facebook argues the data is protected. Alix markets are gearing up for jay powells testimony before the House Financial Services committee. Many looking for clear signals on possible insurance cuts. The marketgh says has become to dovish too dovish. I think the market got to dovish too dovish on the fed. The idea that they would do 50 basis points in terms of easing in july is too optimistic. Ultimately, the fed sees lower inflation and they see slowing growth. The prudent thing is to do 25 basis points. Alix joining me now is Stewart Kaiser, Ubs Investment Bank derivatives strategist. What do you do when there might be a 25 basis point cut but the market is still expecting multiple cuts . How do you trade that . Stuart some people would argue its pricing zero versus 50. Will 25 be enough to satisfy the market . Risk has come down in the short term. The vix is very low. The belly of the curve six months out remains elevated. We are hoping for something from the fed. Over the medium term, we will keep risk pricing a bit elevated, which is consistent with how the market tends to deal with policy. It reflects a weaker Growth Outlook over the mediumterm, you still have uncertainty in the system. Alix you would play it shortterm. Wheres the biggest misprice in terms of assets . Volatilityp big tex big tech volatility. Financials would benefit from a higher rate outlook. Retailers would benefit from a rate cut. Tech is a bit of a wildcard. It gets dragged into the trade discussion when huawei tariffs get announced. Retail are the two areas where the most focused on. Alix how do you score that with the underlying fundamentals . The Goldman Sachs chief thatmist said yesterday policymakers are relying on the wisdom of crowds. Taking the fed fund levels far away from fundamentals it is all lies, all mirrors. What do you think . Think you hopefully try to play that this location. It is very tricky. Play that dislocation. Decline, core pce last month looked pretty strong. Why are you cutting rates in this sort of environment . Cited things they are worried about. Are we the Global Central Bank or u. S. Central bank . Thats against a backdrop of u. S. Earnings next week. We probably get to percent negative growth relative to last 2 negative growth relative to last year. Theres quite a bit of growth still priced in. Consensus numbers for q3 and q4, if the growth uncertainty israel, those numbers would come down if the growth uncertainty is real, those numbers would come down. That would be your ideal outlook for equity markets. Equities intive for the second half. Alix if you take a look at the bloomberg here, the white area, that is the Bloomberg Financial conditions index, the higher it goes, the looser conditions are. If we reset those for looser financial conditions across the globe, is the u. S. Still the best play . Stuart it is a difficult decision. You want to be where there is growth. There is growth in the u. S. Would you rather be draghi or powell . I would rather be the guy who has growth to worry about. U. S. Inrather be in the that scenario versus europe. U. S. Versus asia is a different debate. The trade piece is so important to that decision. What we have seen over the last 612 months, the trade issue has been treated as beta in asia. Its been treated more as elephant in the u. S. Traded more as alpha in the u. S. If youre going to get a resolution of trade and asialation from the fed, could come up from a beta perspective. Big picture, we want to be in the u. S. To the extent that the u. S. Is easy against a strong growth backdrop. Alix Stewart Kaiser will be sticking with me. Spat hitshina trade basf. Is it just the beginning . That woulds ,dd advising banks on mergers wanting to break into that for a while. Looks like they have finally succeeded. This is bloomberg. Alix basf cutting its profit forecast for 2019. Shares taking a hit, dragging down shares of rivals. Kris bryant joins us from berlin. Analysts were looking for a cut but this was worse. Going into the Second Quarter, analysts were becoming increasingly worried that this would warn on profit. The worlds biggest Chemical Company came out last night and said earnings this year would be as 30 below last year and sales would also probably decline. There was a big downgrade to expectations. Basf seen as a bellwether of the global economy. A lot of interest here in what basf had to say. They are obviously suffering from difficulties in the automotive sector. Industrial production in general is much weaker than expected. They are having problems in the United States where farmers are struggling with the heavy rainfall weve seen in recent months. That has held back the growing season in the United States and that has an impact on demand for basf crop chemicals. A difficult environment for this company. Shares down 5 this morning, dragging down other Chemical Companies and upsetting sentiment in europe and beyond. Comesf a sign of worse to for the corporate sector . There are some concerns about Large Companies exposed to global trade. Stuart thank you very much alix thank you very much. Obviously, they blame trade. How much do the back half earnings have to come down globally and in the u. S. To account . Stuart earlier in the year, we had a tough first quarter. You hope companies have kitchen sinked it a bit. Year forwn 2 year on q2. Range, youithin that have to have some sort of reconciliation if the trade stuff does continue to be a drag in the economy. Our view is the trade impact plays out over a sixmonth period. Hopefully its not as much of a headwind later this year. Flat plusbetween that seven or 8 , there will have to be some reconciliation. Alix take a look at cyclicals versus defensives in europe. Cyclicals are still outperforming. Alix our view on positioning right now is at least in the u. S. , most active managers are skewed to a safer, more defensive stock. You could be in a safe cyclical. Youve also had a dovish bank from the ecb, more dovish than the market expected. You might have some rotation into cyclicals to try to catch that. There u. S. In particular, is been stocks with a stable earnings Growth Outlook. The community is defensively positioned at this point. Up, dissecting Deutsche Banks restructure. Taking a look at the ecb. What they could actually do next. This is bloomberg. Stuartalix this is bloomberg daybreak. You have the dow jones off. 3 , s p off. 3 as well. Watch the semis. There is an inventory issue. The dax still off. 8 . That is the basf story in particular, slashing their profit forecast for this year. You are seeing a nice bid into the dollar. 1 . Dollar down part of the story will be weaker retail sales and a rub Second Quarter rough Second Quarter. Commodities going nowhere. A bit of a geopolitical risk bid into oil. Iran threatening military action against British Naval forces there. Its all about the equity market, risk off into jay powell for the next 48 hours. In hong kong, the controversial extradition bill is now dead. Short of saying she would withdraw the bill. It would allow extradition to china for the first time. A federal judge in shooting down a Trump Administration rule forcing Drug Companies to include prices in their ads. Last month, advertisers sued to block the regulation. U. S. s ambassador to the joining twitter just in time for the start of new trade talks. First tweet says he looks forward to engaging with more american people. Chinasis blocked on heavily censored internet. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is. This is bloomberg. Alix the ecb could be poised to restart its Bond Buying Program in the quarter. You can see where we are at with qe. Joining me from brussels, paul gordon. Really, qe . Can they really do it . Are there bonds to be bought . According to mario draghi, there is considerable headroom. How considerable is a point of dispute. The ecb has limits on what it can buy, 3 of any individual government sale. Theres a question of how far before you get those limits or do you move those limits . Which brings up questions of monetary financing, funding a governments debt. Much andoom, but how how effective qe will be is a point of debate right now. Alix we are seeing junk rated companies in the negative yielding that pile. Would that be an outlook . This is extraordinary news. Any corporate debt the ecb buys does have to be rated investment grade. No, it cannot go into junk. The rules are there, self imposed by the ecb to avoid falling into areas where it shouldnt be. Maybe it will tweak the rules. Alix paul gordon, thank you very much. The euro hitting that three week low against the dollar. Part of that is what the ecb can do in the murky data with basf. Still with me is Stuart Kaiser. What do you do when you have italy issuing fiftyyear debt . You have junk bonds in negative territory. What do you do with europe . Stuart i guess you smile. Alix if you are the junk rated companies, you smile. Stuart the logic here was we go negative, we generate nominal gdp and banks are able to profit from that. Youve had negative rates impacting profits in a less than friendly way. They tried to minimize the impact. From a u. S. Or Global Investor perspective, europe has been a tactical trade for the last couple of years. When you think the ecb is going to get easier, you may be allocated there a bit maybe re a bit. Their europe, we turn to Deutsche Bank. The companys grand Restructuring Plan includes laying off 25 of its workforce. Execution risk seems higher than we initially expected given more headwinds to capital. The plan here is leaving little room for error. Joining me now is Karen Brenner of the Nyu Stern School of business. Great to see you. Thank you for joining us. If you look at what Deutsche Bank wants to do, what goes into that kind of execution . It is very unusual in a turnaround situation for a company to decide what is the core reasons for being, can it return to a profitable core that earns a comfortable rate of return on invested capital. That seems to be there plan ther plan, setting off other assets into a separate entity, segregating the assets, raising as much cash as possible by selling off those assets, closing those assets down and cutting the dividend. So, raising cash, having a strategic refocus, taking as much pain as they need to take once, that is an enormous issue, and doing that hopefully once will minimize the impact on morale Going Forward for the organization, which is very important. Theyve been through multiple ceos over the last several years. They have seen this movie before. Focus, a more dramatic more strategic change. Hopefully it has a better chance of delivering results. Alix with your expertise and corporate restructurings, is this going to do it if they can execute . Theres always execution risks. Clearly, there are cultural risks. Bad morale doesnt help those kinds of situations. The other thing that is unusual in this turnaround is that often in turnaround situations, you bring in people from the outside. Outsiders dont have the capacity to make the bold Strategic Decisions and moves that have to be made. Sayingly, the street is given the size and magnitude of the shift here, the insider that is executing this turnaround seems to be making bold Strategic Decisions. Obviously, it is all a function of raising enough cash, cash is the lifeblood of a turnaround, the more cash they can generate, the more time they have to deal with execution risks. The last point i would make here, obviously, the ceo is making a commitment by purchasing stocks, stepping up and saying he has confidence in the plan. Situation,turnaround just returning to the core business is not sufficient. Its a question of whether they have a sufficient core and what else they need to do through alliances or other relationships to have a sufficiently growing as profitable business Going Forward. Alix when executing a turnaround, what is the biggest trap companies can fall into . Theres so many. A key issue is making sure the leadership and communication is rocksolid. People have been through a lot. Your core assets are your employees. If people dont feel they are on board with a clear vision and direction they can execute against and buy into, companies waste a lot of time. Capitale, that wastes and that is a huge issue for any organization. Leadership, communication, execution risk. Alix is there a feedback loop . When you talk about the market not buying into this plan, is there a feedback loop that cycles through management and execution plan . To the extent of the company doesnt need to go to the capital market, if the company can generate its own cash, it can deliver on its operating plan and hopefully demonstrate the results a couple of years anin. Alix still with me, Stuart Kaiser of Ubs Investment Bank. What do you do with european financials . Stuart from a strategy perspective, weve tried to take a shot on european financials a number of times. Weve generally been disappointed with the results. From my perspective, it is a wait and see on this. We are not aggressively jumping into european financials at this point. Perspective,gy weve proven not good at timing this stuff. Alix the lack of sustained volatility in equities, fixed income and ethics fx, do you see that paradigm, that shift changing at all . In june,ost fomc gold volatility jumped quite a bit. That was a huge reversal from earlier in the year. You had equity volatility. Volatilityre is that is being held lower by policy. Successfully trying to tamp down volatility. Here, you do have the chance in the bond market to get some volatility over the nearterm as the fed digests a new policy stance. Thats what we are monitoring. What weve seen over the course of the last 612 months, when you get moves in volatility outside of equities, those tend has all that stuff collapsed over the course of the last week or two. I think its a bit too low. We would expect a bit more volatility priced into the market over the next 24 weeks. Hopefully that doesnt disrupt the equity markets too much. The markets look at each other. Alix thank you very much. Stuart kaiser of Ubs Investment Bank. Coming up, banc of america ontrack to take the ipo crown. The biggest winner for ipo underwriting. If you have the bloomberg terminal, check out tv. You can interact with us directly. Check it out. This is bloomberg. Viviana this is bloomberg daybreak. Hour, lorin the next. Rom Rbc Capital Markets this is bloomberg daybreak. Piper jaffrays buying sandler oneill. The price 485 million in cash and stock. Sandler oneills best known business is advising banks on mergers and issuing debt. Airbus warning airlines of potential problems with older versions of the superjumbo a380. The company asking carriers to inspect wings for possible cracks. That is an issue that has arisen in the past on the doubledecker plane. In february, airbus said they would quit making the a380. President donald trump shared a quoteronald reagan the picture is real. President reagan is falsely quoted as saying when i met that young man, i felt like i was shaking hands with the president. The account and the quote have now disappeared. Thats your Bloomberg Business flash. Alix i love that story. We turn to wall street beat. First up, the mystery of Jeffrey Epsteins fortune. Details of how he actually made his money. Bank of america was the top underwriter for ipos this year. Best first post the half in a decade. And lisaow abramowicz. Lets start with Jeffrey Epstein. There was all the talk yesterday on wall street about how he made his money. He appeared in court yesterday looking super haggard. About we really know Jeffrey Epstein is that he started as an options trader and then became the money manager owner of the Parent Company of victorias secret. I wonder where the money is. He has a 77 million mansion near the museum mile. Homes andew other expensive cars. As unclear how he became millionaire. Thats all people know about him. It does raise the question of who is connected to them. Who are the moneymakers behind him . Alix it was interesting, protests around the court there is some pushback on that level also. Its wrapping in some Trump Administration officials too. Especially acosta. Theres some reporting from wasr jacobs that says eroding before this. Nancy pelosi stepping up, asking for his resignation. His office has already said that wont happen. Lisa why wasnt Jeffrey Epstein prosecuted earlier . Why did prosecutors take it so easy on him . Why did it take them a decade to rehash things we have the evidence. That question will come back to haunt a number of people. Alix bank of america could be the ipo crown for real . How . I thought this was a Morgan Stanley, Goldman Sachs jam. Lead, but not left its bank of america on all these ipos, then we will see next week whether the fees show for it. Bank of america lost their top equity market dealmaker who went to silver lake. They are not the less lead, which is the most exciting part. Lisa they worked on the most successful deals. , the ones thats have popped the most. This gives you a sense of how competitive it is. This will be the first time in a long time that a bank was first two years in a row. Its unusual to see that. Normally, there is jostling around the top. Alix we will have to see if they undercut each other on fees. Goldman sachss overall underwriting, so not just ipos. T week alix we spent years trashing hedge funds the first half, they crushed it. Winners and losers . David einhorn and bill ackman, whove been losing money for a while. They did well in the first half. Overall, the industry has posted the best first half in a decade. They are still trailing the market. Alix are you supposed to look at how they are trailing the market . Lisa i will be debbie downer. On one hand, they were an average of 9 for equity funds about half. They are hedge funds. They are supposed to be hedging against market downturns. They have not outperformed that much in down markets. That argument loses a bit of clout. If they had hammered home during the volatility, fine. We are talking bad volatility now because people got pushed out of the water. You have to look at the cumulative return over time. Bill ackman losing money over four years straight and then making money in six months, the question is, is this where i want to be . Alix coming up, to Public Markets and beyond. Virgin galactic will become the worlds first publicly traded Space Tourism company as they merge with social capital. Radio. To bloomberg this is bloomberg. Alix houston, we have a listing. Virgin galactic will become the worlds first ever Space Tourism venture to hit markets after receiving an 800 Million Investment from social capital. Joining us with more from london, max blossom. Can you walk us through the logistics of how this ipo is happening . Thats right. They are taking the route of reversing into an already listed company, essentially an investment vehicle. They can bypass the traditional , having to answer difficult questions about the business model. It immediately gives them a huge chunk of Additional Capital to fund the business Going Forward. Previously, Virgin Galactic has only done a number of test flights. Alix can you walk me through how much money it was going to cost to get all of this up and running . Galactic hadrgin about 1 billion of capital invested. This will be another 800 million based on the information weve seen. Youve seen a substantial investment so far just to get to the point where theyve demonstrated they can successfully send this craft into sub orbit. We are looking at another 1 billion to get to the point where the business will be sustainable generating cash in the 20 20s. Alix do investors like this kind of thing . Do they want to play that sort of hope and fantasy . Theres been this huge amount of excitement around space. Spacex was valued at 1. 5 billion 30 billion. Generally, people are excited about the technology that is being developed to put people into space, whether its for tourists or to support nasa. There is that kind of excitement, this is something new. Maybe the technology will lead to something else. Alix my Worst Nightmare would be going to space. Thank you very much. Coming up, Rbc Capital Markets head of u. S. Equities strategy, her big fear, the 2020 election. How do you position for it . Busy. Jay powells to day before his two day Congress Come investors expect powell to pave the way for a cut. We will speak to Lori Calvasina of rbc on a rate cycle. Gutting isl maker 2019 forecast. This is worse. Deutsche banks execution risk shares slumped, bond sink. Doubts about profitability role. Welcome to bloomberg daybreak on this tuesday, july 9. I am alix steel. David westin is off. President trump is keeping me busy, resuming his battle with the u. K. This morning on twitter, firing back at the British Ambassador to the u. S. Any dispute over leaked memos. A couple minutes ago he tweeted, the wacky ambassador that the u. K. Foisted on the u. S. Is not someone we are thrilled with. A very stupid guy. You should speak to his country and Prime Minister may about their failed brexit negotiation and not be up south my criticism of how badly it was handled. I told mei how to do that deal but she went her own foolish way and was not able to get it done. But not know the ambassador have been told he is a pompous fool. The usa has the best economy and military anywhere in the world by far. An unbelievable exchange of words. The pound falling to its weakest level against the dollar since april 2017. Part of that is the Boris Johnson potential Prime Ministership. Retail sales are coming in week and there are secondquarter growth worries. The overall markets also have a risk off the. You have futures down by 10 points. Are trying to work through a lot of inventory. Eurodollar coming back, but it is still a stronger dollar story. Crude getting a little bit of a geopolitical smooth by. 5 . Investment institutes eye with its Global Investment outlook for midyear is out with its Global Investment outlook for midyear. Joining us now on the phone is the blackrock head of research. Thank you for joining us on your outlook. What led you to this call . Factors are two main that caused us to shift our view. One is a push led by the u. S. That increases the Downside Risk to Global Growth but also creates a wider range of potential outcomes for the future. That is for us the key reason to reduce some of the risk and reason some cash. Equally, we have Central Banks making a dovish tilt. You mentioned powell. They are stretching the cycle out for us. Recession risks are less of a worry. Instead, we are looking at compress bond yields and an extended expansion. We are looking for fixed income products such as emerging markets or credit exposure. Alix how much cash do you want to be in . Elga we would rise it raise it marginally to offset some. The key balance against equity or risk asset drawdowns would still come from government bonds. Low yielding and could potentially still be sensitive to expectations as far as the fed rate cut cycle is concerned. We think that expectations have run ahead of reality. On the longer term, it is important to have a key allocation to government bonds. They are what helps you to periods of risk asset drawdowns. Alix what do you want to do with the expectation that Central Banks will be dovish . How do you structure a portfolio with that risk . Elga there are a number of things this requires. First, Recession Risk is lower. That means you can still have u. S. Equities and credits. You do not need to worry about the cycle moving against you. As yields are compressed and coupons are compressed, you need to watch carefully for the relative market expectation as far as policy action is concerned. In the u. S. , we think these expectations are excessive. In europe, we think the ecb will be able to deliver on what is priced in. That for us has been a reason to not only upgrade a range of European Assets but go all the way. Alix elga bartsch blackrock investment, thank you. I do have breaking news you. Highspeedying a interconnect product of cloud infrastructure. It is a cloud playing for 70 a share. That looks to be 2. 6 billion net of cash. It is a 46 premium. Cisco stock a little bit lower by. 7 . Acacia. Acquire joining us here on set, Lori Calvasina, our market head of u. S. Equity strategy. We ended up talking to elga about what you do with Central Bank Expectations when they are so high. Lori we think people have been aggressive in calling for a july cut. We do not think the data supports it. It is fair to say we have dovish Central Banks. The fed has been inching toward an easing path. How do you support your portfolio for that path we are eventually going down . To me, it is simple. Pick your spot carefully. Second, look at dividends. A lot of sectors we find that we like having combination of attractive valuations or valuations that have room to move higher and good dividend yield. We have consistently seen that early in a easing cycle. Alix is this a typical rate cutting cycle . Typically, small caps would outperform. Is that what we will see again . Lori you can eventually see that with the small caps. When we say pick your spots carefully when we think about cyclical areas of the markets, whether youre are looking at industrial, consumer, we think you want to look at areas that have been d risks already. Small caps have been underperforming and look cheap bly unbelievably cheap. More surprisesee in terms of downgrading. How does that stack up versus Central Banks . Lori it is a question of shortterm risk and longerterm. Centralview the dovish banks as hail wins. In the near term, earnings is a big hurdle to get through. I see a lot of chatter saying expectations have already come down. We got news this morning saying there is more room for exultations to go lower. To give you one stat, we track closely revisions to the upside. That is clocking in around 39 . Typically, you see at bottom out in the high 20s to low 30s. In january, it had 30 . Going have a recession around, that goes down to 10 . In a nonrecession scenario, we think there is room for forecasts to come down. We do not see evidence of that. Alix typically what we wind up hearing is if you are going to go into the dividend paying safeties, they are so expensive. Do you feel like earnings will support these high valuations . You can look at utilities. You have real estate. They are all high valuations. Lori i would stay on the sidelines. That is one area we look at the valuation data. Whenre at peak levels financial prices peak current stay neutral there. We cannot get past that hurdle. When we look at utilities, i would take a contrarian view versus a lot of my clients. I see a lot of clients saying we do not like to on the stocks. They never grow. We do not own them right now so they are already underweight. Expensive. Ey look we do not disagree with that last point, but on our model, there i they typically peak at a two standard deviation. We think we are in the middle of valuations reaching that peak and we are not there yet. If you look at priced cash flow, at the broader market, we do see compelling industries within the group. Alix like what . Lori beverages, tobaccos, retailers. Alix Lori Calvasina will be sticking with us through the hour. Lets get an update with first word news. Hong kong says the tradition bill that sparked historic protests is dead. She stopped short of saying she would withdraw the bill. This measure would allow extradition to china for the first time. Opponents are skeptical that the fight is over. They are planning more protests. Imfs managing director is set to be confirmed in october as the next president of the European Central bank. The eus finance minister signing off on the agreement last week. Now attention is turning to a replacement as head as t of the imf. President donald trump just weeding the British Ambassador to the u. S. Is a very stupid guy. This is the latest any dispute over leaked diplomatic memos. The president disinvited kim darroch from a meeting with the emir of qatar. Global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Alix coming up, dissecting Deutsche Banks restructuring. Who actually benefits . As we had to break, a merger for tuesday cisco buying acacia communications. We will get you more on that deal later in the hour. This is bloomberg. Alix viviana this is bloomberg daybreak. Piper jaffray has agreed to by an Investment Bank for 480 5 million in cash and stock. Sandler oneills bestknown business is advising Community Banks on equity officers all facing all things offerings. A stake in Virgin Galactic will be sold to a Shell Company that already trades on the new york stock exchange, social capital lp. That would allow bransons company to go public without an ipo. Texaco reporting second kerning Second Quarter earnings that beat estimates. Chips and other snacks lifted revenue but it is hard for the company to sustain volume growth, especially in the north american beverage unit. Alix we have breaking news. 18 billion in contracts are elds. To two oil fi half will go to saudi companies. Overall, the company is saying they will maintain oil outlook capacity at 12 Million Barrels of oil a day. The higher capacity they have shows how much capacity they can bring online in an event of a disruption. Turning to financial Deutsche Banks Restructuring Plan is looking like a bus to the market. This terminal shows coco bonds and yields moving higher. The bottom panels have Deutsche Bank equity. Analysts at Rbc Capital Markets this gives more headwinds to capital. It appears to leave little room for error. Drawing us now is Lori Calvasina of Rbc Capital Markets. You have had 24 hours to digest. What are the markets need to see for them to respond well to the plan . The issue is capital continues to be capital. Theys a real positive when put together this plan and they are going to avoid a capital rate according to the plan. They will stop dividends. They will run with a smaller buffer. I think given all of the past plans and the past promises, it is hard for investors to get over that. If you listen to the call yesterday, basically all the questions were around capital and the fact that it is going to be 2020 before things start to turn on that front. I think patient is required for investors involved in the stock. , think for new investors perhaps in might be taking a safer approach. Alix how much a share to Deutsche Bank have in the equity trading business and fixed income business and what does that do . Who wins when they shut that down . Alison if you look at the overall market shares, and we look at reported revenue as the best, companies will give different numbers over time. They have a 4 share if you look at a number of banks globally, including the top nine and some european peers. Equities a 4 share of , fixed income is Something Like 9 . Those have come down over time. What is interesting, one of the truck to put out this morning, is there is a lot of talk about u. S. And europe and u. S. Getting from europe. Pairsou look across these i just mentioned, it is really jp morgan is the big winner in equities. Morgan stanley, big winner in equities. The big share losers have been Deutsche Bank. A lot of that is due to changes for Deutsche Bank in particular. Their prime business has not recovered from the 2016 issues. At the same time, when you look at jp morgan, really strong growth. Strong growth in the nonus prime business. They have successfully filled out because of Investment Opportunity in nonus business. Is Deutsche Bank at the derivatives of that. You also had Morgan Stanley downgrading, talking about a tougher outlook for the sector, trimming its target, looking at global gdp, potentially rate cuts. Lori i still like the banks. We have been overweight for financials for a while. We like banks in particular. With valuations where they are and with new positive catalysts starting to emerge like taking shares from european competitors , being able to lift dividends, entering into a period of the market, this does not seem like the right time to be backing away. This is the time to step out. Alix are you worried about low yields . Lori it seems like the yield curve matters to the banks when people are worried about tipping into a recession. When we have better Economic Data and the yield curve is seen as not sending a real signal on the economy, you do not hear about it. Of thehe preponderance evidence. I do not think you can use the yield curve as a one single indicator to say stay on the bank. Alix a confirmation bias for sure. Lori calvasina will stick with us. Coming up, u. S. China spat hitting germany, slowing markets from cars to crops. This is bloomberg. Alix time for bottom line, when we look at three Companies Worth watching this morning. First, cisco with some m a. Joining me now is taylor riggs. Taylor it is m a tuesday. Sharere purchasing 70 a in cash for 2. 6 billion. It is already an existing supplier. Cisco is looking at owning the supply chain going in and not having to go outside. Outside of this deal, we have talked so much about the issues with the supply chain. It makes sense for companies to really be owning on invertible basis vertical basis. Can helpmmunications cisco in optics, software, everything. It is owning up the Software Solution as well. Alix i am looking at overall semis. There is a tree dispute between japan and south korea. Japan put export curves on south korea and some of their tech. It really affects the Global Supply chain, computer displays. They are supposed to meet friday. This is a big deal in an industry that is already under trade war. Taylor that story is huge for samsung. Samsung is really getting hurt. We were speaking on this last night. Ofsung only has one month supply chains in their inventory. After a month, they are in trouble. Huge implications for chipmakers. Alix not to mention chipmakers were already getting warnings on inventory building. There is three months inventory for the whole sector. Calvasina of Rbc Capital Markets is still with us on set. For me, this was an amazing forecast cut that totally shocked. Lori they are going to look at cutting profits by 30 this year, reducing guidance is never a good thing. The biggest concern to me is from autos, the lack of consumer demand, the drop in german manufacturing. The data has nothing good. Bankis on top of deutsche and other companies restructuring or cutting their profits. Germany in particular seems to be slowing. Felt broad,n basf anywhere from auto to general consumer. Alix it was broad but they really lamed trade. They said the g20 did not yield anything. Lori investors are going to view it as the canary in the coal mine. Companies, these conglomerates come out and they have very broad bases. I think this fits into this category. I think investing investors will view this. Tensions have not eased the way we expected them to. They were thinking in the second half of 2019 would improve. We had generally positive news out of the g20. They said not shaping up at all the way we thought it would. Lori i think the g20 came too late for this earnings season. Last season, we saw a focus on the cadence of demand. They said things were lousy in january, february come up do they get better in march february, do they get better in march . What we will be confronted with over the next few weeks is that those green shoots are withered up. Kind of earnings downgrades can we see for the back half . What sectors are most vulnerable . If you look at earnings revisions sector by sector, they are coming down across the board. Some sectors are coming down less. There is not any one particular place high. You have written a lot of announcements in technology in particular, which is getting under investors a little bit. It is not so much sectors that i hear about. It is really Fourth Quarter. There is a few that companies have been banking on a rocket back in the Fourth Quarter to make the annual numbers. I have a hearing skepticism over whether that big hockey stick move is going to happen. We talk about diversification of revenue. Get 11 of the revenue from germany. It is not just a german problem. There is some signs of slowing demand in the u. S. And the u. S. Is arguably the better economy. And all the to asia supply chains globally. They are diversifying. Diversification may not be helping. Alix Lori Calvasina will be sticking with me. Coming up, the race for the white house how markets are pricing in or not a change in the oval office. This is bloomberg. This is bloomberg i dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Alix this is bloomberg daybreak. I am alix steel. You are seeing risk off in the equity market. A move into the dollar but a wait and see for jay powell. The dax is the underperformer in europe. Continue disappointing Deutsche Bank story. S p futures up. Watch semis as well. Youre still seeing a broadly stronger dollar story. Eurodollar off the lows of the session. Weak retail sales and a twit or thrownand insults being by the ambassador to the u. S. And President Trump. The curve now steeper, 2. 10 at 16 basis point. Rampup,some rhetoric iran talking about enriching uranium to 20 , talking about military action against the British Royal navy. Tensions simmering as well. Time to get an update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Prosecutors warning against granting bail to fund manager Jeffrey Epstein. He was arrested on sex trafficking charges. They say he is the means and motives to flee. He is being held in new york awaiting a bail hearing. A federal judge shooting down a Trump Administration rule forcing Drug Companies to include prices in their ads. Last month drugmakers and advertisers sued to block the regulation. Congress did not intend to give the government the power to regulate Prescription Drug marketing. Facebook is facing another blockbuster court fight in europe over privacy. Today the eu court of adjustments hears arguments on the legality of Companies Moving commercial data outside the region. Opponents say to you citizen data is at risk the moment gets transferred overseas. Facebook argues commerce could be hurt if data agreements are scrapped. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Alix thank you so much. Breaking news. Ibm has officially closed its acquisition of red hat, a 34 billion deal. The second Largest Technology deal ever and it helps ibm pivot to the cloud world, playing catchup to names like microsoft and amazon. That deal finally closed. Lori calvasina of rbc capital is still with us. There is that and you wrap in the facebook finds. What is your these this for big tech and regulatory. We have this regulatory headwind starting to pick up and we are seeing m a deals im hearing of global is if growth is slowing, they need to buy the growth. I would say the antitrust investigations did seem to be a wakeup call for the street. A lot of investors who were not focused on the regulatory issues are starting to think about them a lot. Alix do you feel like it is priced in or is the risk more like when negative news hits, that is when the thesis comes to the foreground. Lori i do not think it is priced in. When we look at the broader space, we are trading at values relative to the broad market we saw last years peak. It is something we will continue to see impact. It may happen slowly rather than all once but i do not think it is fair to say it is priced in. Alix doesnt matter who wins the white house . Lori im not sure it does. We spend a lot of time looking at the election and the risk, and i feel that health care and technology are sectors that have enemies on both sides of the aisle. With tech, democrats and republicans have Different Reasons for being unhappy with the sector but it does seem like it is not held in high esteem by the American Public at large. It is a target from both parties. Alix lets look at the survey data. This is the perfect pivot to talk about the race to the white house. Rbc does client surveys and found in its last one before the democratic debate that markets expect President Trump to be reelected but the chances of a democratic win are going up in touch, 34 . Bloomberg chief content officer joins us. From where you sit, Democratic White House . What are people talking about . Marty just as we came on air a new emerson paul claimed donald trump the victory in the democratic debate. His head to heads on the major rivals narrowed by five Percentage Points in the latest poll. It is more than a year away from the election and i think speculation on whether the demo rats will take the white house is pretty premature. A lot could happen between now and then. Lori we have been talking about the election all year and what i have been hearing is people think trump is going to win, but they are readjusting their portfolios in case he doesnt. The consensus is a trump reelection, but i do not think it is a High Conviction view. Alix what i also noticed in your survey is that even if trump wins, only 50 expect a trump bump. Walk me through what you found. Lori i was surprised by that. We went to the survey and we asked a bunch of questions. We try to ask folks what people thought the probability of outcomes was and how it would impact the market. We found with trump that 69 think he would win but only 50 said it would be a positive for stocks if you get. We asked what happens of republican other than trump wins. We do not think that is going to happen, but we wanted to put it in their. For control there purposes, and more than two thirds said they thought it would be good for the stock market if a republican other than trump would win. That does you something about how trumps tweeting is weighing on the investment community. Marty and it is interesting to me how what is happening in the economy will be critically important going into the election. There are so many factors that go into that that have nothing to do with the presidency. It has to do with commodity prices, it has to do with climate change, it has to do with a range of issues that do not matter in terms of where the economy what donald trump is going to do for the economy. Alix what is in the policy handbook that will give us this trump bump that we had when he was first elected . Marty you think he has already use the ammunition he has with the tax cuts and deregulation which have had a positive impact on the markets. One thing the survey does not talk about which is also important, what happens to the house and what happens to the senate . Congress,s a divided there is little that is going to get done. Lori we ask people what do you think will happen with the senate . Two thirds said it would stay with republicans and 80 said the democrats would continue to control the house. Marty which speaks to the stalemate. Alix which leads us to have you. Osition we talk about health care having a high risk versus a low would be utilities, consumer staples, stocks you want up liking. Walk me through it. Be systematico about this, take our personal opinions out of it. We spent time talking to our analyst and tried with our analyst to focus on specific issues, not taxes stay low under republicans. We threw that out. We found if you map out all of the specific industry risks to the different sectors, the only ones that do not have any issue are utilities, staples, and industrials. Industrials, with the Green New Deal or if you get a infrastructure push, in a democratic sweep, that could be good for the industrial space. That is the only cyclical part of the market you could find a reason to buy. If you think about tech regulation, it spreads into three different sectors. It hits the Communication Services sector most acutely. It also hits the tech sector from the hardware names and derivative impacts. And because the internet retailers are sitting at consumer discretionary, it takes that out. Just the take sector just the tech sector takes up three sectors on the s p. Marty i think the difficulty congress has on agreeing on anything on a top level republicans and democrats agree there needs to be new regulation on social networks, but how to regulate them and what to do about them, there is no consensus and it will be difficult to see the solution. Hear about that after having been in the Financial Services industry for two decades and watching what is going on for the past 10 years, that does not tell me there is no regulation coming, it just tells me it will take a very long time and be a very painful road and i do not think investors are set up for that. Alix you want Financial Services is the beating up on banks done . Who marty it depends the next president will be. Elizabeth warren has a plan for that and it would not be good for the financial industry, even though bloomberg reporting showed there is reluctant respect creeping on wall street for elizabeth warren. Lori calvasina and marty schenker, thank you both very much. A pleasure to have a chat. Global banks already spending a trillion dollars in the last three years on their digital strategies. Allison clark will be joining us for our banking unchanged series. Users can interact with charts using gtv. Save the charts as you would like. This is bloomberg. Viviana i am Viviana Hurtado in the hewlettpackard enterprise bring them. Coming up on balance of power, republican senator kevin cramer of north dakota. Here is your Bloomberg Business flash. Cisco systems agreed to buy acacia and a deal valued at 2. 6 billion. That represents a 46 premium to on monday. Ose a fight between japan and south korea threatens to up and the Global Technology supply chain. Japan placing restrictions on exports to south korea on three key materials. Their use in the production of semiconductors and cuttingedge screens could have an impact on everything from iphones to laptops. Airbus is warning airlines of potential problems with older versions of the jumbo 380. The company asking carriers to expect wings for profitable four possible cracks. Said itary the airbus would quit making the 380. That is your Bloomberg Business flash. Alix it is time for follow the lead. A deep dive in the stories making headlines in moving markets with insights from industry veterans and insiders. All week long will focus on emerging trends in the banking industry. Today we will look at digital transformations in the bank and take us through how the financial industry is shifting to Digital Banking. Here is emma chandra. Emma i wanted to start out by taking a look at how banks have performed over last 12 months. This chart shows you the s p 500 Banking Sector against the broader s p 500. They track each other through the second half of the last year but the s p 500 pulling away after that december selloff. We know there are number of headwinds facing the banking industry, not least that Monetary Policy looks set to be eased, but there are other challenges, and one of those is the shift to digital technology. Take a look at this chart. This shows how the number of Bank Branches at bank of america has fallen over the last decade and the number of mobile Banking Units has increased. That is the white line. Bloomberg intelligence does tell us it is indicative of the broader trend as more consumers expect to have a mobile experience. The Banking Sector is taking its cue from the Global Payments sector, which is had to adapt as Digital Commerce has ballooned. Global volume of Digital Commerce exceeded three 3 dollars in 2017 trillion in 2017. Most growth in asia and pacific regions, but this chart does not tell you that growth across geographies is being driven by mobile commerce. Mobile commerce accounting for 50 of Digital Commerce in 2017. That is forecast to increase to 70 by 2022. What it tells us is customers are now expecting to be able to conduct transactions and services on their mobile devices and they expect that to be seamless. That is now the challenge for banks. Alix thanks you so much. Clarke, ands alyson our own sonali basak. Allison, how successful has this digital pushpin . Alyson it has been successful on a couple of fronts. In terms of the banks themselves they have helped drive lower efficiencies and costs and improve the experience of customers. We are getting to a point that it has possibly gone too far. We are seeing a lot of banks push customers to serve and do more and more digitally sonali jpmorgan closed after starting it. Why is that and what are banks doing right and doing wrong . Alyson we are seeing a huge increase in trends of Digital Banking launching in the u. S. , some coming over from europe, and we are seeing traditional firms like chase launch these digital offshoots. The problem is a lot of the banks launching these digital offshoots in the u. S. Are doing it for the reason of deposits. They are not thinking enough about what the customer wants, about how they add value to the customer above and beyond the product. We have the value was not there for the customer. It did not have the runway needed to start showing what value could provide. Sonali you are bullish on goldman and apple. Do you need apple to succeed in this game . How to the bank succeed without attack player . Alyson the interesting thing about this goldman and Apple Partnership is the apple brand. People feel about apple not the same way they feel about banks. Nobody feels that way around their bank. This is what is exciting. They had are playing by different rules. They are taking a longer game and partnering and the focus will be on how to we add value to customers. How do we get them out of Credit Card Debt and not into Credit Card Debt, which is different from where the traditional banks are focused. Sonali tmobiles big pitch is to buy big banks, introducing your note the interest earnings mobile first Checking Account with no Overdraft Fee for the first 50. Alyson this is a phone company. Do you trust your mobile device with your banking . Alyson same thing. The way people feel about tmobile, the connection they have with the brand is different from a traditional Financial Services. They have already structured the product with low fees, helping you get out of debt, saving money, high rates, that kind of thing. They are taking a different customer driven approach to what they are doing and they do not need to make money they make money in other ways by leveraging it into the Telco Services and so on. Alix what has been your understanding of how to wrap in libra and facebook into the Digital Payment world . Alyson i am not a Digital Payment expert. Uncertain. Ra is even the banks are not warming up to it because theyre not sure what it means. The interesting thing about facebook is facebook does not have consumers. When youre in Financial Services, trust is critical. Without that trust, you may succeed in lowcost payments and daytoday stuff but you will not become the primary bank for customers. You happy with that customer throughout their financial life. Sonali it cannot all be about trust. Some of it has to be about the rates you charge your customers. Something interesting, markets lowered its savings rate and that was a competitive advantage. How do you think that will impact the success they are seeing early on . Alyson rates are important, particularly when you are depositing money. What we know from Customer Experience is that if you want to create great experiences that are effective and you have the emotional connection, you can charge more, you do not need to be the best Interest Rate out there in terms of attracting your customers. Some firms are doing great things in terms of helping their customers save and grow and attracting lots of deposits and they are not the cheapest around. They are not the best Interest Rate. Alix do banks need to hire different people now to do all this . Alyson yes. This is an interesting thing. I do not know if it is the people, it is the culture. Most bank cultures are broken. Driven cultures, they are stuck in the past of driving sales and doing what the firm wants and shareholders want. We need cultures that are more about helping customers improve their financial position. I would not of expected that angle. Alyson clarke, thank you much. Basakergs finalsonali joining us as well. Ibm purchases red hat, sealing the worlds secondLargest Technology deal ever. If youre heading in your car, serious xm channel 119 and the Bloomberg Business app. This is bloomberg. Alix i am watching a lot of things today, but what i am definitely watching his ibm closing of 34 billion purchase of red hat. Joining us is Bloomberg IntelligenceSenior Software and i. T. Analyst. What does this mean for ibm . It gives them a product to sell across the cloud ecosystem. Hybrid cloud is one of the biggest things in technology. A volcker of the spending is done by Legacy Companies like jpmorgan and pepsi. Who will ones, partially move some of their stuff to public clouds and others externally. Red hat gives them the possibility to sell a number of services. This is something ibm shouldve done a long while ago. Alix how quickly can ibm realize the benefits of this . It will take about 12 months or slow unless we get into a macro slowdown. This should help their topline growth next year and going into 2021 that will be good for them in terms of getting the topline growth up. Alix it expands its offering and takes a chunk been cloud. What about competition. Where is it stacked up in terms of microsoft and amazon . Ibm was competing a lot with these bankers before. With red hat, they are neutral and will help people move wherever they want to move. As long as they keep that independence alive, they will help customers move some to amazon, some to microsoft, and some to google and in that case they will generate more money by Generating Software and services. Will not just be ibm cloud, it will be moving services applause any cloud. As someone is buying services in the cloud, red hat is there. Yes, and that is key for them to make use of that independence. Will not say you have to move stuff to the cloud but you have to use ibm for it. Alix is it in their culture to let a Company Operates independently . It has never been done before on this independence, but everything we have heard points that this is the direction they are taking because in our view, if they do not take this direction, it will be hard for them to be a good player in cloud longterm. Alix thank you very much. Always a pleasure. Stay with us later on today for interview with ibm chairman and ceo and red hat ceo. They will be speaking with david westin later on in the day. That wraps it up for bloomberg daybreak americas. Coming up, the open with jonathan ferro. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan under pressure from the white house. Chairman powell gearing up to go in front of congress. Deutsche bank shares still falling. Expressing concern about the latest turnaround plan and economists predicting the ecb will restart qe. With 30 minutes until the opening bell, good morning. Here is your Tuesday Morning price action. Two days of losses on the s p 500. We might make it a third. Futures soccer 10 points on the s p. The bond market unchanged. Your yield 2. 05 . Dollar strength again. Here in the United States, lets begin with the big issue. Waiting enthusiasm in the equity market. We are concerned the cycle is slowing. We are due risking. Defensive positioning