Moving news from all around the world. Joining us from riyadh is yousef gamal eldin. Ivan levinsohn joins us from tel aviv. Oliver cook sorrow oliver is in munich. Buts start with study ready with saudi arabia. Finance with the saudi minister and asked if the recent attack had an impact on saudis numbers. Heres what he had to say. It will be a couple of days before we are back online. Alix yousef joins me now. Tell me about what you learned, and what we can expect Going Forward. The idea being that a lot of the output is being recovered is one thing, but youve got the political developments, which are what investors are going to be zeroing in on in riyadh and far beyond saudis border. The Saudi Crown Prince has been speaking with the french president , the south korean president , and deliberations are underway between the u. S. Secretary of state and the saudi authorities, as well as the united arab emirates. That thereng here is has to be a response what happened with the saudi aramco attack. It is just a question of how that response is going to be played out. On the iranian side, may be call for some dialogue. Some lines across the bloomberg said that they are looking for a conversation to try to ease some of the tension. Ultimately, the idea is very clear in terms of potential presentation later in the day, where they will present evidence on why iran was behind those attacks, and maybe we will see what kind of action is in store. Alix thank, yousef gamal eldin. In israel, Prime MinisterBenjamin Netanyahu gambled to hold a second election this with contentious results. Reporter there is still real uncertainty about who israels next leader will be. We are waiting for the final results from elections last night, but already seems clear that Benjamin Netanyahu didnt have the result he was hoping for. He hoped to strengthen his hand, but the best he can probably do now is return to office. He doesnt have a path to form his preferred governing coalition of religious and rightwing parties that will stand by him despite his legal troubles. That means now we turn to a period of political gamesmanship as parties try to build a coalition and form the next government. There are a lot of possibilities here. We could see a National Unity government. Theres even a chance we go to a third round of elections. Alix thank you very much, bloombergs ivan livingston. Oliver going to send munich. Give us a breakdown. Oliver like you said come august sales dropped considerably. The numbers are skewed a bit because last year in august, we had a huge jump in registrations. Carmakers were trying to push its out the door before new missions testing rules were coming in. It doesnt change the fact that sales are down this year about 3 . Carmakers were telling us that the second half of the year was going to be better, and so far, it doesnt look like that is going to happen. Going to have to get a pickup to even reach the lower target. Alix no good news for germany there. Here is what Eu Commission president Jeanclaude Juncker had to say to the european parliament. , the unitedhappens kingdom will leave the european october with or without an agreement. That is why the risk of a no deal is palpable. Alix bloombergs tim ross joins us. What do we expect today . Johnson is boris fighting his case in the Supreme Court because there are opponents of his plan to get a hard brexit who Want Parliament to be recalled so they can discuss all of these policies and the potential way forward through brexit in parliament. Thats one fight hes got going on. Clearly, the town coming out of the European Union the tone coming out of the European Union is not that helpful is not that hopeful. So far, the European Unions main complaint is that britain has not come forward with any meaningful plans to avoid that very hard brexit at the end of october. Alix thank you very much. In the u. S. , markets expect 25 basis point cut from the fed. Bloombergs Michael Mckee more from d. C. Michael this isnt the ride most people signed up for. Its gotten a lot more complicated. Still, 25 basis points, and what they do next will be reflected in the new dot plot today. Come inside the bloomberg. Take a look at our version, the new, improved dot plot. You can see how we have changed the dots over the months. The question is, do they all get flat . Do they see a Straight LineGoing Forward as the fed prices out anymore rate increases, or are there still some holdouts that think the fed shouldnt be cutting anymore . We will find out more from jay powell in his News Conference, when he says whether this is a midcourse correction or the start of an easing cycle. And then of course, weve got to deal with the repo market issue. Whats happened in this pawnshop for the financial markets, theres not enough cash in the system. That is forcing all rates up, including the fed funds effective rate. It is trading now at almost the fed ceiling. If it goes through that, youve got a rate increase rather than a cut. The fed doesnt what that happen. You can see that on the right. Look for the fed may be to address that through either a standing repo facility that would put more cash into the markets regularly, or an announcement that one is coming, or some kind of additional liquidity for the markets. They might even start buying more bonds to raise the size of the Balance Sheet. Look for that as a possible twist as well. Alix going to be a busy day. Never have i learned that much about the repo market. Stay with bloomberg. We will bring you live coverage of the feds latest policy decision, followed by jay powells News Conference, timeing at 2 00 new york and 7 00 london time. Fedex slashing its profit outlook. They will reduce the size of its cargo jet fleet. Here is ceo fred smith on the company performance. It continues to be negatively impacted by a macroenvironment driven by increasing trade tensions and policy uncertainty. Coming up on this program, more on your morning trade and analysis for the markets in todays first take. This is bloomberg. Alix now for the bloomberg first take, where we give you the news and you get the trade analysis of the markets. Joining us now, Romaine Bostick and Stephanie Flanders. Guys, there is one story, and that is the fed. The chart is a 25 basis point cut seems to be in the cards. What is the most important thing you are looking at . Stephanie we are looking at how much jay powell manages to walk this line. Hes had difficulty communicating over the last few press conferences. It is a pretty difficult message to put across. He has a lot of differences on the fomc. He doesnt want to be seen to be just saying im going to underwrite any trade war that donald trump wants to create. That is a dangerous place to be. Equally, if he disappoints the market that we have seen already in the situation with the repos, the money markets are in a sensitive spot. Carl riccadonna talked about him needing to be vague, but directional. That is a tough sell. You need to be clear about the direction, but vague about the details. Romaine everyone that we spoken to over the past couple of days is busily saying the market has already priced for disappointment here. Theres no way he can guide with the aggressiveness the market seems to want out of the fed right now. I guess he could come abut it is unlikely he will be able to get the consensus to really come out on stage and do that. So you have a market that is still ahead of the fed, as it has been for most of the year. Alix it feels like mario draghi to steepen the curve, at the end of the day. Does the fed want to steepen the curve in the same way . What do you think . Stephanie i think they are facing both sides of the same they areght i think facing different sides of the same constraint. We talked about how limited the range for Monetary Policy change is, so then we Start Talking about long rates. If long rates are as low as they are, youve got a lower bound on them, too. They are all grappling with that. I think the priority for jay powell, if anything, its going to be more on the short end. Romaine keep in mind, youve already seen steepening on the back end of the curve, which is a good thing. Of can attribute some that to some of the action the fed has taken earlier. What happens on the short end, and how much control the fed has on the short end, will be interesting in the light of what has happened over the last couple of days. Alix how much do i really need to care about the repo market . Romaine you have to care. Alix but there is systemic stress, right . Romaine this is a fundamental element of our Financial System. This is like the faucet in your bathroom. You wake up every morning and turn on that faucet, and you have no doubt that water is going to come out of that faucet. That is the overnight lending market. What we saw monday and tuesday was that the faucet was running dry. You have to ask, whether it is a shortterm issue, why no water came out. The fact of the matter is banks arent as capitalized. The trading sides arent as wellcapitalized as we thought they were. About half of the Bank Reserves back in 2014. Combine that with the fact that the environment is totally different. Got half the Bank Reserves. I dont know what percentage treasury issuance has gone up. Inpite the support of qe 2013 and 2014, this is what happens. Would say the shortterm reasons for this are we maysomething that know more than other people, but you have to worry about the underlying cause. There is so much uncertainty and ignorance about how the system is going to function under much more stress than it is under now. We know this isnt a 2007 situation because we know banks were in a fundamentally different place. They are not relying on repo and leverage in the same way as they were before. But we also know, and this is something i used to hear a lot at j. P. Morgan, there is a growing concern about liquidity coming from the loss of primary dealers in the market, from the changes of regulation and the behavioral changes, and we dont understand how the market is going to operate when there is much more pressure than now. That is why we need to be concerned about this week, not because it shows us we are going back to the Lehman Brothers crisis, but because it shows us people. Do not fully understand romaine i think it is important people do not fully understand. Romaine i think it is important that we get this in the press conference. Alix you basically mean that they expand their Balance Sheet. Romaine exactly. Stephanie which is something that other Central Banks have. They probably waited too long. Romaine exactly. I think that is what the market is going to want to hear. Even if he doesnt address it, he will be asked about it by reporters in the room. Alix i wonder if it spreads to other funding mechanisms, but what it says about the amount of issuance. That is, to me, the big elephant in the room when it comes to this kind of funding stress. We were looking down the road, even a radio even a year ago, when we saw the impact of the tax bump. You could see an extra near a squeeze coming on to supply and debated that market and demand in that market. We dont necessarily think the details of the tax plan or the seen fiscal stimulus is right, but the way that policy is loose. Alix i did want to touch on the slowing auto sales over in europe. Then you get this warning from fedex yesterday, cutting capacity. It was pretty grim, the overall, nation of the two how did the overall combination of the two. How did you read that . Upaine if you put fedex against ubs, you dont see the same stress. Against ups, you dont see the same stress. They are shifting their spending in the way that ups did. Fedex waited a little bit longer, and now they are hurting from that. As far as the macro issues, theres certainly weakness, but weve known about that weakness. I dont think it is gloom and doom. It is just a matter of how these businesses are going to adjust. Stephanie in germany, across europe and the u. S. , the pain we are seeing, or the concerns about momentum, is all the manufacturing side. What we have not seen is that spread thus far. We seeing underlying strength in consumer spending. That is true in the euro zone, and that is certainly true here. Its 10 years into the cycle. We dont necessarily expect 3 growth rate. The president might expect 3 gross rate. We dont was sincerely expect that. Alix Stephanie Flanders and Romaine Bostick, thanks very much. Find all the charts we used at more we used in more. Go to gtv on your terminal. Coming up on this program, airbus forecasting a surge in demand for clean fleets. The chief commercial officer will join us next. This is bloomberg. Viviana youre watching bloomberg daybreak. General motors cutting off Health Care Coverage for striking workers. The United Auto Workers say the company may have jumped the gun and may have to cover workers until the end of the month. Since the strike began sunday at midnight, theres been no sign of progress in the talks. Bank of England Governor Mark toney reportedly may be out extend his term. That is your Bloomberg Business flash. Alix thank you so much. Airbus sees higher demand for replacement jets over the next two decades than previously forecast. Guy johnson joins us in london with the airbus chief commercial officer. Hey guys. Guy hey, alix. Christian scherer is the guy airbus sends out to sell aircraft around the world. Hes pretty plugged into what is happening with the global economy. He joins us herein london. Lets talk first of all about the global economy. It is slowing down. It is probably as a result of what is happening with the trade tension between china and the United States. Central banks, including the fed, are cutting Interest Rates as a result. Why doesnt this slow down up in your numbers . Guy, it doesnt show up in our numbers because we are doing a 20 year forecast, and we have experienced in our industry the great resilience of traffic growth towards occasional negative influences. Overallntinue to see and Economic Growth of 2. 8 , and trafficitself fuels growth on average of 4. 3 percent. It is the resilience that makes us confident. Guy ok. But the trade narrative, though, is not going away anytime soon, it seems. It seems to be dragging on and on. Theres now a possibility of a new front. Wto disputeost a with boeing. The thought is that the white house is going to hit europe with a series of tariffs, including on aircraft, and on luxury goods from everything to cheese it effectively looks front on the trade war. Is this a trade war with europe beginning . Christian it would certainly be negative if it actually translated into a trade war. Barriers set up on one side of the atlantic would see similar and probably higher barriers being built on the other side of the atlantic. What we do hope is that this is negotiation, of people coming to the negotiating table burying this old hatchet and moving forward. The reason we are saying this is that theres no gain for any side of the atlantic in a trade war around aerospace. Secures 40 of what we do in the United States. We produce aircraft and employed thousands of people in the United States. Businessment to airbus in the u. S. Would have immediate ripple effects into the ecosystem of aerospace, but also to the consumer in hyatt tickets costs in higher ticket costs. Guy do you worry that an escalation of tensions in the gulf, a military conflict in that region, could affect demand . Theres talk of a war in the gulf. Emirates is about to potentially plays a very large order for airbus. Christian obviously, these are not positive events, but we are today talking about a 20 year forecast. The earlys proven in 1990s, with the first gulf crisis, that the industry rebounds very quickly, and quickly wipes out any negative effect that the price of such nature has on global traffic and global Economic Growth. The main growth arena in our ,ndustry is going to be in asia and asia in itself from the prc, east asia in general, is the growth we are going to experience where is the bulk of the growth we are going to experience in the next 20 years. Only regret you believe go tensions guy thank you very much indeed. This is bloomberg. Alix this is bloomberg daybreak this is bloomberg daybreak. Happy wednesday. Happy fed day. In europe, a little bit of strength. 0. 3 ,an automakers are up despite the fact you had auto sales falling the biggest monthly drop since 2018. In other asset classes, it is a story. Ds a buy bonds percent. Wn 0. 3 you still have the stronger dollar into the fed. Well anything actually mean for the dollar . That is really the question. The fed is readying a rate cut. Our cap participants gearing up for that 25 basis point cut. Also waiting for clues about the future paths of policy. Joining me from boston is jurien timmer, fidelity head of global macro. What is your base case for the rate cut and the dot plot . In all the fed is, likelihood, going to cut rates. The key is, is this another reluctant cut like the one in july, where the kind of framed it like a midcycle adjustment, until a week or two is not where ago, was looking for for more cuts. That is now down to three more cuts. Degree, but the Market Pricing and three more at that went and the fact will do one more if conditions warrant, that is not the same page as the markets. Obviously all the technical stuff that is going on in terms of liquidity adds a whole other dimension the fed is going to have to deal with today. They are clearly not in an enviable position right now in terms of all of their crosscurrents that they have to navigate. Alix talking more broadly about the dot plot, but are going to learn about the feds new rate . Do we learn anything about that today . Dont think so. The dot plot has lost some of its significance because there issomes parody there some disparity among fomc members. I think it is losing its role, and we saw her earlier this year how quickly the fed had to give it from a high to hike every quarter, until we got some kind of neutral rate, maybe slightly above, and now they are having to cut if they dont see the need to because coincident indicators remain very strong. For the fed to keep cutting here in what could be a small easing cycle would require a leap of faith that the yield curve is allknowing, and that the fall in the pmi below 50 is the start of a bigger trend. Those are unknowable things to know in real time, but the longer the curve stays inverted, the more powerful its signal becomes from a preferable from a historical perspective. I think it comes down to the neutral great, not the neutral dot. Beautiful rate, by the fed 0. 25 . Es, has fallen by it wasnt even really a cut because everything is relative to where the natural rate is. Alix you bring up a good point. It is also the point of will a rate cut do anything. Will it work . I want to highlight what the bank of international sediments had to say it international sentiments had to say earlier. Central banks would not be ashed so much towards Monetary Policy. That . How about we heard all about it from mario draghi, fiscal, fiscal. Do we hear it today from powell . Jurien we are running pretty. Ubstantial expenses japan is doing it. But i, nation of fiscal and monetary i think is the next frontier because at some point, Monetary Policy becomes, the tools become inadequate as you get closer to zero and even into negative rates. , it reallynd japan does come down to fiscal. Alix on that note, it feels like a couple weeks ago, the theme would have been buy stocks, by bonds. We are now into negative stockstion, which means and bonds are the cheapest we have seen. What is it mean for you today on the fed . Jurien i continue to like a very simple 6040 some variation. When you look at the last 20 months or so of the market, where the market is essentially gone sideways, we have the 2018,ion peak in january the ce is down to 17. 2 or so. Of basic0 month period 6040s, it has delivered basically all the upside of the s p and half of the downside. Even in the last couple of weeks, when we saw all these andtions in the bond market effective rotation, that relationship has remained nicely intact. Over the next months or years, that kind of diverse a full portfolio of having equities, i think we are in a bull market for equities as the Global Demographic trends keep pushing bond yields down. It remains a very effective strategy. Alix good to catch up with you. Jurien timmer of fidelity. Decides,d for the fed followed by jay powells News Conference, coming up at 2 00 p. M. New york time. That we want to get an update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Viviana iran telling the u. S. It had nothing to do with an attack on a saudi oil facility. Tehran also warned it would respond if the u. S. Takes any action. Loaded, is locked and but hasnt specifically blamed iran for the attack. Over to israel, where an election do over appears to have produced a deadlock between Prime MinisterBenjamin Netanyahu and his opponent. The countrys longestserving leader betting on an election to keep power in his hands. Official results wont be. Out until tomorrow the Trump Administration is expected is out until wont be tomorrow. The Trump Administration is expected to announce that california will no longer be able to have tougher emission standards. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Tonto this im viviana hurtado. This is bloomberg. We are going to take a look at why investing in clean energy is good policy with Julie Cerqueira and manish cabana and manish bapna. If you have a terminal, check out tv. Just go right to tv on your terminal. This is bloomberg. Viviana now to your Bloomberg Business flash. Climate change is devastating actually, we will have viviana now to your Bloomberg Business flash. Climate change is devastating the lush gardens of versailles. Hornbeam trees overlooking the canal died in maria antonias garden. Withering. Are the weather is becoming hotter, so some are being were placed by trees with a better chance of surviving higher temperatures. 2015 paris climate accord, nongovernmental organizations are helping companies figure out where their contributions should be. Signingn 630 companies on. The group is responsible for about 1 of overall climate pollution. If they meet their goals, by the year 2030, they will cut admissions cut emissions by almost 30 . Blackrock and vanguard are falling short when it comes to fighting Climate Change, according to the Nonprofit Group majority action. It reports the firms voted vanguardeast says its engagement with companies can lead to meaningful changes. Im viviana hurtado. Thats your Bloomberg Business flash. Alix thanks so much. We continueve covering Climate Change now. We will take a closer look on how it affects the economy. Emma chandra has more. Emma the u. S. International Labor Organization saying that im a change will have a major impact on employment. Lets take a look at jobs because losses are expected as. Ell operation to Structure Operation disruptor. Finally, we are looking at working conditions. They deteriorate as a result of Climate Change. We will see reduced productivity, and that will impact worker health. The impact of jobs is expected to be felt across sectors and geographies, but it wanted to highlight some research out of the fed in the u. S. That focuses on retail workers. That make up about 10 of employment in the u. S. Analysis,to the fed it is likely to be is disrupted. Adapting to Climate Change does put them with economic opportunities. Last year, the u. N. Saying a decisive shift towards a low Carbon Economy globally could result in some 26 trillion of economic benefit over the next 10 years. They see that increasing to 65 entering theost workforce. All of this bringing higher global gdp. The key is taking that bold action to shift to a low Carbon Economy. That requires a buyin of both Business NewsBusiness Leaders and world leaders. Onx for the applications job creation, joining me from ,ashington are Julie Cerqueira u. S. Climate Alliance Executive director director, and money bob and monist recourcesna, World Institute managing director. How much money will be spent or added . Julie i think it is hard to say. If we are looking up the states who are leading on Climate Change, they are reducing their emissions faster than the rest of the country while their per capita economic output is growing at three times the rate as the rest of the country. In addition, their communities are seeing more money in their pockets because they are paying less for fuel at the pump, paying less on their power bills , because theyve got more Energy Efficiency programs in place. These states are also creating jobs. Clean energy presenting Climate Change and being a leader presents tremendous economic opportunity. Out can you broaden that on a world scale, but countries have also been putting in a lot of money and getting the benefits . Talk a little about the numbers, as well as payback time . Manish what we seen over the past few years is it is a false choice, the lot of investment in boulder Climate Action can result in new jobs, new market opportunities. Consider all Economic Growth. China has major growth in were noble energy. Germany doing the same thing. In no small part because they policies beinge made are creating new markets around energyefficient homes, more fuelefficient vehicles, solar and wind. These are multitrillion dollar opportunities. Companies are seeing massive opportunities to invest. Alix if you are not going to work in a coal factory but will work in a solar farm, what is the appetite for job retraining . Julie i think it is a major priority for all of our governors. In our coalition, weve got 20 have governors who are both republican and democrat. To be realistic that as we translate away from a fossil fuel based economy, there isnt going to be a magical solution where youve got lots of green jobs waiting on the horizon. It does require very thoughtfully retraining the workforce for the job that currently exists, and from perspective, it is important not only to have good jobs for people to go to, but that have strong benefits and wages, and are as comfortable as possible to the benefits people had in previous employments. Alix our states putting money into that . How much does it cost . Julie absolutely. The cost is different by state. California has 35 million theyve put into what they are calling a highroad stocks program, where they are looking at how they can train people in order to transition them to a. Ob that is available there was a new executive order removing towards 100 clean energy, and a jobs package is part of that. Brought uplad you germany because it pivots off of. He conversation we are having the auto sector is the primary example. They have all the standards for renewable fuel, and that is how theyve been retrained. So who pays for all of this . Istian i think it is manish i think it is important we look at this in aggregate, but also what it means for specific communities. When we look at the United States, there are over 3 million. Obs thats three times as many as in the fossil fuel sector. The problem you rightfully point out is that we need to find, for those people that may lose jobs in those sectors that may transition, we need to invest heavily in those types of retraining programs to ensure that they are able to capture the benefit of greater jobs in the green economy. In the short run, what is the right way to fund it . Is it going to come from companies . Is it going to come from the country issuing their own debt, or subsidies . How do you see the best use of money . Investors are already starting to see the value in this. Ceos this past year saw Climate Change as the noble one as ember one global risk these Companies Come from other 45 countries. They spent every single industrial sector. The reason they are doing this is not because they are cardcarrying members. It is because they believe in the strong Business Case for investing in a low carbon future. Alix wrapping it up, i want to hit on the news with you. We are expected to get from President Trump really pushing back on california being able to regulate their emission standards. What are the governors talking about if the president is successful . Julie it also allows the 13 other jurisdictions across the United States to follow those standards, and the rest of the states to decide whether or not they want to be able to put in place the standards that will protect their population. This is obviously a temporary setback. We are going to see court cases come through, pushing back on that attack. I think you are likely to see states considering whether they should also join in and adapting especially, and looking more closely at how we incentivize the deployment of electric vehicles. I think the important thing to keep in mind is these are critical in order for states to protect their communities and be the innovators in the transportation sector. Alix guys, thanks a lot. Julius akira of the u. S. Julie cerqueira of the u. S. Climate alliance and manish , World Resources institute. We continue our series for the rest of the week with a focus on retail tomorrow and National Security friday. Coming up, it is for decision day. Like it or not come over more rate cuts are coming. If you are jumping in your car, dont worry. One into Bloomberg Radio sirius xm channel 119 or on the Bloomberg Business at. This is bloomberg. Alix time now for our traders take. We have the overnight repo rate hitting a high of 2. 8 . The fed is going to come to the market in probably 15 minutes time. With us is vince cignarella. What do you care about with the fed, with the trade . Benson the trade of the day, dont tear male dont tell me about the longterm term. How do i make money today . The asymmetry trade is more likely than not higher yields and higher dollar. We are all going to accept the fact they are going to lower by 25 basis points. Are they going to say this is another midterm cycle adjustment . Markets arent going to like that. If they want to get rosengren notgeorge do not duiss dissne went not dissent. We have a 25 basis point cut, and neutral for a while Going Forward. That would be positive for the market, positive for yields, and positive for equities. Alix you see higher yield and higher dollar because they will be able to tread that line, not go full out . Think it is going to be more the insurance cut. I dont think they can make another flip so quickly to say that the tightening cycle is over because the data has been good. Alix do you really care about the repo rate . Ive been talking about it all morning. Michael no, not at all. This is something that the fed did on a regular basis prior to the greenspring area the greenspan era. We will probably get back to that. We are going to need the repo rate from the fed more often. Alix thanks so much. Joining us in our fed day of nuveensarah malik will be here. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Alix welcome to bloomberg daybreak on this wednesday, september 18. Heres everything you need to know at this hour. The Federal Reserve is likely to cut Interest Rates today for a second straight meeting. Policy makers be reluctant to forecast further cuts. Iran tells the u. S. It had nothing to do with the attack on a saudi oil facility. Tehran oso warned it would respond tehran also warned it would respond if the u. S. Took any stance against the u. S. Against tehran. [indiscernible] reserves for a couple of days before we are back online. Alix meanwhile, airbus sees a jump in demand for replacement jets over the next few decades. Chiefked to airbus commercial officer. We do continue to see, overall, Economic Growth of 2. 8 that fuels traffic growth on average of 4. 3 . It is the resilience that makes us confident. Nba commissioner adam silver on sports gambling. Would you like to own a piece of the betting profits in the league . Not the prophets. I think our proposal i mean, is been a bit controversial, but we proposed that we receive something called an integrity fee. Some people say that is a euphemism for you getting a royalty. I set all right, call it a royalty. Alix you can see that tonight on the David Rubenstein show at 9 00 p. M. Heres where markets are trading. Equities a little bit soggy as we head into this rate decision, down by about 0. 2 . Dollar. S, buy does that change at all come to 01 . O 1 p. M. Come 2 as wel break that down wait for the fed to intervene in the markets for the second time in over 10 years. Markets looking at a 25 basis point cut from the fed today. What comes next . Markets are widely expecting that 25 basis point cut. We would expect a 25 basis point cut. They are going to go 25. I think that is baked into the cake. We will be watching for signals that come after that. What is interesting for us is to see what happens with that dot plot. Mine is dovish expectation of the dots will go lower. Is this really a midcycle adjustment or the start of a more prolonged easing cycle . We need the language to indicate further accommodation. How much dovishness there is or is not. I think the market is not going to get a message that is perhaps as dovish as they had been hoping for. Alix 20 me from washington is Michael Mckee. Mike joining me from washington is Michael Mckee. S . Ke, 25 basis point michael i guess. It seems to be the consensus. They are not in the business of surprisingly markets, so we will get that 25 basis point cut. There was talk of 50 some time ago, but the economy doesnt even really justify a 25 basis cut. But they told the markets they would do it, so look at that. It is the dot plot and the survey of Economic Projections that we are going to care about. You look at that second column, 2020. Has that collapsed into no moves, or maybe one or two cuts . That will tell the markets a lot about how dovish the fed wants to be. Can jay powell tell the markets we are going to be doing whats necessary without making any promises . Thats going to be the communications challenge for him. Alix and also what they are going to do with the shortterm funding rate. A lot of talk about that repo rate. How instrumental is that going to be . What does that mean for the fed Balance Sheet . Gina the fed has been michael the fed has been expecting problems in the repo market. Not the problems they got, but as they shrink the Balance Sheet, there would be fewer reserves, and they knew at some point the demand would exceed the supply. They just got there faster than they thought. Now the question is what they do about that. You can see the problem it causes. If the rates are higher outside the fed funds market, thanks might lend their money there instead instead of in the interbank market, and then you see a rate increase, offsetting what they do. Do they start a standing repo for zillow the standing repo facility that enables marketers bentz to get cash whenever they enables Market Participants to get cash it . Ever they need do they start buying more bonds to keep the level of reserves at a level that meets demand . It is not something they wanted to address this quickly, but the Market Forces their hand. You Michael Mckee, thank very much. Joining me on set, sarah malik, nuveen head global equity, and mark cabana, bank of America Merrill lynch head of u. S. Rates strategy. What do you care about most . About thecare most data. Theres a lot of headwinds and tailwinds they need to look at. We think this is more going to be an insurance cutter to Going Forward rather than the beginning of a cycle. On the headwinds side, we had consistently week manufacturing data. We still have these nice tailwinds in place that have been supporting the cycle, like a strong consumer and employment claims. All of that means they will be looking at the data Going Forward, but most likely insurance cuts rather than a cycle. We think one cut today and probably one more after this. Very data dependent. The economy probably holds up relatively well from here. Unless it moves significantly in a direction, we think there will just be one or two insurance cuts. Mark we think they will certainly cut any five basis points today cut 25 points today, maybe then 30 or 35. For the rest of this year, we think they will cut two more times jan today. Fact we seeto the the economy slowing to some extent. We are not talking about a recession by any means, but we think that trade uncertainty and what weve seen in terms of the consumer, the fed will need to respond to that. For the dot plot, we think they may err a little more on the cover side. We think the medium. That the market focuses a lot on could fall to signal that there will be a total of three cuts this year, essentially validating Market Pricing. We think there could be a cluster of dots that might suggest the fed could give a total of four times this year. Again, may be slightly more dovish than where the market is right now. This would be basically validating Market Pricing as it exists right now. Alix lets get to the repo issue. The shortterm is the funding problem. Overnight repo coming in at 2. 8 . This is without a doubt one of the worst things that can happen in many respects that overshadows the fed moving because the plumbing doesnt work. Tony james talking to our anchors overnight. Heres what he had to say about putting the repo in perspective. The rate spike looks very scary, but it is only overnight. The actual cost to the system is not high. Problem, verycal short term, that the fed is stressing. Im not surprised that they stepped in here. Panic, or is it tony james . James. Ts tony what we have seen from money markets is the fed has lost their control to maintain a stable money market system right now. They are in the process of fixing that, but theyve overshot that in terms of the number of reserves they have put into the system, and that is why we are seeing this big term spike in Interest Rates. Repo operation yesterday. They are doing another today to try to add reserves to the system. Still, markets are telling them it may not be enough. Repo is still around 2. 8 at the moment. A loss of control and ascending steps to get a handle of it, so you shouldnt worry too much about the broader impacts of this, assuming the fed can get true whole can get control. Like we cani feel extrapolate something more is that they are losing control now when everything is fine. What happens when there is a crisis, and what about a budget deficit . Saira we agree generally that this is not going to be a longterm problem. The markets in general, its another headwind. Another reason to have volatility. Have these, we bigger issues. A bunch of deficits need to be dealt with. These things sort of pileup overtime. It is part of why we feel like markets will remain somewhat in a trading range, but with downside risk. It is going to be hard for the market to break out from here if we dont see better Economic Growth and some of these headwinds and risks dont move out of the way. Alix since the ioer did not exist before 2008, do we ever get back to that era . Mark no. Thats what the fed has told us. The fed has told us they want to fundamentally change the way they implement policy precrisis. Small regimes with cash in the system could move money into the markets. They want to live in an abundant reserve regime, which means they will have so many that small fluctuations in the quantity of reserves dont impact funding markets. At the core of what is driving funding markets today is the fact that there was about a 100 billion reserve drain over the last couple of days. There is that drain, and youve seen riba rates explode higher on the back of that. That implies there is a scarcity of reserves, and that is going to be the regime that the fed has chosen to live in Going Forward. It is a big deal because it means the fed Balance Sheet is going to be much larger than it was precrisis. So the way they solve this repo issue is by buying bar mons bonds. Ng more it has the exact same impact on the fed Balance Sheet, that the fed needs to buy more bonds. That is a different regime then we are used to. Alix on twitter, i asked if there is a repo for dummies book, but apparently there is not. Both of you are sticking with me. Stay with bloom work stay with bloomberg for our live coverage of the fed decision, followed by jay powells News Conference, at to of 5 p. M. New york time. Coming up at 2 00 p. M. New york time. Coming up , we get mark and sair as top calls. This is bloomberg. Alix bonds rally. Stocks struggling to gain some traction. What is going to come out on top today . The trade a little while ago was buy stocks, buy bonds. That is now a negative correlation. What do you do today . Saira rates are already low, and the fed is not going to have the impact people are looking for. Revisions are still negative for cyclical stocks. As soon as october earnings season comes around, that is when people reason those arent going to be leaders from here. A market between growth stocks. The fed rate cuts dont have an impact on the economy and dont get Earnings Growth to accelerate, it can be very challenging to the market and companies leveraged to move forward. Getting stocks were very expensive. Yields were getting exceedingly things became a little more positive with a minitrade deal. Even if things shift a little less, we dont think things will. O away mark i just dont know that the fed has sufficient confidence right now to tell the market it is wrong. If the fed wanted to send a signal to the markets that it was overly easy in terms of the month of accommodation priced, the fed would need to be a bit more confident and certain about the outlook. I just dont think they are they are right now. We see risk that the fed validates Market Pricing through dot plot come the child will doesnt dot plot, that powell during thee too much press conference, and if they signal they will cut three times this year, that the market would deter rick would interpret as dovish. Alix that would explain why cyclicals wouldnt be interesting to you. What do you wind up doing with defensives or dividend proxies . Saira if you go into a multiyear period of low rates, people think that bond proxies are just expensive. Why are you paying so much for Medium Companies . Thank be the story with bron proxies with bond proxies the market is missing. Alix do you need the yields to go lower from here to for that to make sense . Saira i think around this range could be a very good story for bond proxy companies Going Forward, this 1. 5 , plus or minus. Alix when you take a look at yields, what does it wind up meeting for the dollar . Do we have to have a stronger dollar . Mark no. We would think that if the fed exceeds working expectations on the easing front, that would that would imply modest weakness. I would think that if the fed does exceed expectations, you will be looking at a somewhat softer dollar. That said, i dont think we will see the dollar weakened materially, just given the backdrop where the u. S. Economy is still the best developed economy in terms of overall growth, where the european economy is slow antiblue andlematic slow problematic. If the fed does surprise on the dovish side, you would expect some dollar softness. Malik of nuveen and mark cabana of bank of America Merrill lynch, youre staying with me. More next in todays bottom line. This is bloomberg. Viviana youre watching bloomberg daybreak. Offral motors Cutting HealthCare Coverage for striking workers. United auto workers says the company may have jumped the gun and may have to cover workers until the end of the month. Since the strike began sunday at midnight, there have been no signs of progress in talks. A big drop in european car sales last month. Sales were down 8. 4 in key markets. The Auto Industry battling sluggish demand and dealing with the challenge of rolling out electric vehicles. In europe and the last year, car sales have fallen in all but two months. Bank of englund governor mark carney reported lee may be asked to extend his term if brexit is delayed. Carney is set to leave in january, but the Financial Times reporting it is unlikely a successor will be named. That is here Bloomberg Business flash. Alix thank you so much. Time now for the bottom line, where we look at some Companies Worth watching. We are joined by bloombergs paul sweeney and emma chandra. First we are looking at facebook. Contractors have been listening clips. Portal paul theyve also been transcribing some of those comments. Facebook says theyve been transcribing those comments to better help them improve the hey portal voice command service, but of course, this raises privacy concerns not just at facebook, but across all technology. We know that facebook and other Technology Companies have been going some heightened Regulatory Oversight by u. S. Regulators. Alix thank you very much. Now we get an update on fedex. At thatndra is looking stock. Emma fedex slashing its profit blaming ahe Company WeakeningGlobal Economic outlook, also the trade war. Ceo fred smith calling out uncertainty over policy. We are seeing the stock plunge, 11 at the lows in the premarket. That would wipe out its entire gain for 2019. Not just fedex is a big company, but also seen as a Global Economic bellwether. The stock price peaked before the recent cyclical high in global trade, as it did ahead of the prior two recessions. The reaction from wall street has been quick. We have seen selling in the premarket, but at least three analysts downgrading the stock. The analysts at citi culling the revision to the outlook drastic. Alix for more, we are joined by david roth. He just changed his rating from buy to hold on fedex. Thanks for being here. Good to see you. What is the Biggest Issue fedex has . Do you see it as idiosyncratic or industrywide . Thanks for having me, and it is both. They talked about headwinds related to global trade, and they had their own difficulties with growth. They cited the tariffs causing some slowdown in economic activity, mainly in europe, the european exports being negative with chinas demand slowing for those. Then they have their own issues with integrating tmt over in europe. That is causing a lot of costs when seeing the revenue. In general, across they continue to invest for growth. They see the Parcel Market growing over the next several years, and if it is not growing as much as they think, you will be left with costs and not a lot of leverage until the economy picks back up. Alix on a shorterterm, idiosyncratic basis, what is there that may or may not make a difference . thereseres david not a lot they can do nearterm. They are gearing up for peak season right now, so they really have to invest in service and fully staffed network. What they planed to do if volumes remained soft, which is their outlook, they are going to be cutting the lock cutting a lot after peak season. They will cut capacity on International Trade routes. Theyve already limited to domestic flying hours in their express network. They are going to try to just right size the business to the volumes they expect, and from an International Trade perspective, that means lower. Alix does this make you like or not like other transportation stocks more . David on balance, this is negative news, but it is more idiosyncratic to fedex when you look across a Global Transportation space because a lot of the u. S. To domestic Transportation Companies are still doing fairly well, specifically those exposed to the u. S. Consumer. In the u. S. Economy right now, weve got the consumer doing very well, with good numbers recently out of walmart, target, home depot, and lowes. I think we will have a strong holiday season. The industrial index is where the concerns are. Alix thank you very much. Coming up on this program, oil has been whipsawed this week on develop mens out of saudi on developments out of saudi arabia. We will break it down. This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. Getting housing numbers in just a few seconds on this fed day. Nothing happening in the markets. Soggy trading in the u. S. Equity markets. European autos able to hold out against despite terrible numbers for august. In other assets it is higher yields lower yields and a higher dollar. Buying bonds and selling the dollar. Not a lot of movement before the fed. Housing starts out just now. Permits coming in month by month in august, up 7. 7 . Housing starts also coming in strong, 12. 3 . July revised less bad, just down 1. 5 . We shall we saw earlier Mortgage Applications were like. All of that feeding into the narrative of what will see for the fed. Saira malike are and mark cabana. It is going to be about refinance, how much we see for the long end. Mark it is also what it means for the consumer. The data this morning suggests the Housing Market continues to be robust, consistent with the story we were discussing earlier. The consumer remains healthy. As long as that is the case you would expect the Housing Market to continue to be supportive. We do not think housing will be that much of a big impact for the u. S. Economy. We think lower rates and increased refinancing should help the consumer due to lower amounts they would spend on mortgages. We think these persistent uncertainties in terms of the u. S. Backdrop and the global backdrop may seek to offset some of the benefit from these overall lower Interest Rates. Therefore, the Housing Market will be a benign factor for the economy in the near term. Alix do you like the consumer . Saira we think the consumer stay strong. Forward looking consumer indicators have weakened. Consumer is what is holding up the cycle. We are keeping a close watch because we do not see manufacturing picking up and capex picking up good alix does the oil surge worry you in the case of the consumer . Saira it can impact the consumer when it comes to gas prices. These supply shops you get a quick spite and oil prices go back to where they were. It is a reminder theres a geopolitical risk and there there is still unknown. It adds to uncertainty in the market. Alix how do you see that reflected in the chips market . Mark breakevens widened to to the commodity price shop but it has not had that much of an impact further out. Persisted, how the sallies not been able to had the sallies have the saudis not been able to bring supply back as quickly we agreed this will not have a huge consumer, but itnsumer, but raises risks for a broader geopolitical spillover which could have a much greater impact on the economy and the consumer. Alix for now the Housing Starts and permits number coming in relatively strong. We finally got the headline that the fed will take 75 billion dollars of treasuries in securities in the repo operation. The overnight repo rate was 1. 8 . Mark cabana, thank you very much. Malik will be sticking with me. The saudi arabia finance minister said attacks had zero impact on revenue and the country will continue to spend as needed. He spoke to bloomberg. We are back online. Economyon, in terms of disruption is zero. Will be a couple of days before we are back online. No impact on spending or on revenue, even in the longer term as you look toward the end of the year . Absolutely. What about additional allocations for defense . , asf you look at our budget of now, there are significant allocation to all of the economic sectors as well as the needs for defense. There is no change and we will continue spending as we need on our defense and protection. As we go into the later part of 2019, you look at a world where there is increasing economic uncertainty. Numbers showing the world is slowing down. Geopolitical risks in this part of the world. You have the fed and other Central Banks easing. How confident are you you can reach your targets for growth . You need to remember we have embarked on a significant forum, economically and financially. E are seeing results the oil, because oil growth depends a lot on the decision that are made by opec the internal gdp is growing. The oil gdp is going to grow at 2. 9 . It is going to hit that number. We are seeing real results happening. Alix that was the saudi arabia and finance minister speaking to bloomberg. Joining me now from washington is dan yergin, ihs markets vicechairman. Always a pleasure to see you. You have such indepth knowledge of the saudi system. It is what they are saying true . Can they bring on all of the supply in a few weeks . Daniel it was a very Interesting Press conference and there is some question about the difference between supplied, capacity, and so forth. I would say half his back and the other half will be met from internal, which include stocks but also include reducing domestic refinery runs. Their message is they said november is when it will all be back in operation. Addressy have done is part of the real anxiety in the market. You can see that in the oil price. The other question is what happens next. Mike pompeo is arriving in saudi arabia. Tell him they will make some determination as to where the attack came from, instill great uncertainty as to what will be the response. Alix what do you think happens next . It seems we are waiting for the saudi News Conference to say we blame around we blame iran. In your experience, what does that crosstalk mean . Dan there is a sense that once you say it is iran, something will have to happen. One big question is what are the iranian intentions . It is probably because the news on sanctions has gotten very tight. This undermines any chance President Trump would meet with president rouhani in new york. Nobody can afford to show weakness. You can see the administration backing off from anything direct. What was quite shocking about this attack was the precision in the targeting and the execution. You look at the photographs and the symmetry of what was done it is a message about you escalate, we can escalate further. Everybody is vulnerable. Alix what struck me so much is how little the oil price moved. I have a curve on my terminal and the orange line is where the brand curve is now. The greenline is where it was a month ago. You obviously saw a huge rerating in the front end. Longerterm, the curve barely budged. Is that accurate . Dan i thought that was interesting. People talked about the surge of oil prices. What struck me was it was not a huge surge given what had happened. If this had happened several years ago, it would have been a different reaction. Part of that reflects the change in structure of the oil market. U. S. Oil imports are down to less than 6 . It is china that is quite vulnerable at 75 . The market said we can absorb that and that is what we are seeing right now with prices coming down. It is to emphasize this is not over. There is a phase two and phase three. Alix great point. A new ceo about shale response. Here is what he had to say. The price would have to get up so high, may be up in the 80 and 90 range and stay there for several months. At some point, all of the shale plays may need to add some production, but we cannot do it that quickly and i do not think we can add that much. There is no place that can add one Million Barrels or 2 Million Barrels a day inside the u. S. Alix is that your read, that shale producers cannot get on the market with a lot more oil even if they wanted to . Dan by the end of this year the u. S. Will be up to 13 Million Barrels a day. What scott is also pointing to is the new caution or new paradigm in shale, which is you have to return money to investors and not just move quickly on shortterm price movements. I think it will be a more cautious response. If prices remain at a higher level, we will see more oil coming in. We will not see this fast growth we have seen over the last few years. Alix what is the single most important thing you will be watching to dictate whether or not this is ramping up to another level that the market is not pricing in yet . Kind ofhink the market relaxed, had a great sigh of relief. If we start to see there is some kind of reprisal, and then what happens. It is unintended consequences. This will not go unremarked. This was a massive act of war on the single most important piece of hardware in the world oil industry, as well as central to the saudi economy. It is not going to go on responded to. It will also require a different level of defense, because the saudis were defending against highaltitude attacks. These were low out to do tax and much harder to detect low altitude attacks and much harder to detect. Alix dan yergin, thanks a lot. Still with me is saira malik. When you price that in, the story on monday was this would till emerging markets. This would kill emerging markets. How do you view that in terms of the equity lens of the world . Saira the equity lens is less concerned about the impact of oil prices, but there is this doyle about the a story about the bubble up in inflation that does make us concerned. The fed is in a conundrum where they are trying to deal with slowing Economic Growth and making sure they do not ignite inflation. If you look around the world, the biggest headwind for the nonus market is the tariff. You can benefit from that outside the u. S. By looking at the countries that benefit as the u. S. And china does less trading. This may be an area like brazil. The u. S. May turn to brazil. There is talk that you can still invest and get good returns. Now we get an update on what is making headlines outside of the business world. Viviana hurtado is here with first word news. Viviana today the Federal Reserve is likely to cut Interest Rates for second straight meeting but policymakers may be reluctant to forecast additional cuts. President trump will not be happy with another quarterpoint cut. Last week he called fed policymakers boneheads. Today the Trump Administration is expected to scrap californias authority to vet tougher auto emission standards. Revoking the california standards would have a major impact. 13 other states follow its lead and represent one third of the u. S. Auto market. Over to london, where Boris Johnsons government is back in the Supreme Court for day two of the hearings. His lawyers are defending his decision to suspend parliament, asking for a written statement about what johnson will do if he loses the case. A loss has the potential to derail his brexit plans. 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 for vienna hurtado. This is bloomberg. Alix coming up, goldman alumni reunited. Next Goldman Sachs employees are being poached for a new hedge fund. Remember, bloomberg users, interact with the chart we show throughout the program on gtv. Shape the save the charts and catch up with all of the analysis. Gtv. This is bloomberg. Viviana you are watching bloomberg daybreak. Coming up later today, jean sperling, former Economic Council director. Alix we turn to wall street beat, three stories wall street is buzzing about. Howard marks of oak Street Capital says it is hard to invest in stressed that. Apollo shutterfly funding comes around. The firms acquisition of shutterfly found a buyer for 300 million in bonds. In goldman alumni reunited for hedge fund. Sean gallagher hires ex colleagues to join the hedge fund. Anding us is sonali basak saira malik is still with us. Howard marks talked to Lisa Abramowicz yesterday. Here is what he had to say. I would not use the term seeing opportunities. Investing in distressed debt is a struggle. The economy is too good, the Capital Markets are too generous , it is hard for a company to get into trouble. If they get into trouble, the Capital Markets are happy to bail them out. Alix what was your take away . Sonali the economy is too good . It is all about perspective. P. Ney is so chea people have been searching for yield. You have companies being able to raise money and defensive markets and this made it hard for people to make money. Alix how do you think about that . Low yield, zombie company, how do you think about it . Yields yields saira are an issue across the board. Also quality. You are looking at distressed debt, you want to make sure you are buying the quality and not overpaying for something and not getting what you think you are getting. Alix some of the rotations that shouldve been, like energy two years ago, you should have seen the cycle. All this money raised and then it is nothing. Sonali there are a lot of funds starting out and raising money. You wonder if some people think next year will be better. Oaktree,arveout, oaktree is looking for european opportunities. Your seating you are seeing more discerning people find the structure they needed good i guess. Alix Apollo Funding itself and its investment in shutterfly. Sonali remember in this deal alix you want to say flutters hy, dont you . Sonali i really do. In this deal, they are already getting so much debt. To buy another 300 million worth of bonds is interesting. It shows the have to of apollo to get deals done it shows the heft of apollo to get deals done quickly. Alix and the funding within the market. When you cannot offload stuff. Sonali Ipo Companies are getting more challenging to go public. It becomes more attractive. Alix lets get to the third story. Apparently using Goldman Sachs the Hedge Fund Industry has had more shuttering than starting. But you had people that were there almost 20 years go off on his own and dive into the fray. The people who have been raising money, and we were talking about yesterday, they are getting demand because people still want alternatives. Not valuegy here is necessarily, it is a blend. It will focus on smallcap stocks. It is definitely getting harder to be a hedge fund manager. There is overcapacity. You have to deal with key issues across the Asset Management community. You have an alternate view on the asset class. I think it could work. As an industry, it is struggling. Alix thank. Great to spend time with both of you. Saira malik. And it seems you cannot do one without the other. Do one without the other. We are talking about watching rug the and beer drinking. It could be a problem when fans descend on japan for the rugby world cup. There are concerns if therell be enough brew. Some of the biggest aficionados are british and irish and theyre expected to drink four times as much as japanese spectators. Bar say theyre trying to avoid a shortage. Oktoberfest is this weekend. Dear inflation in europe. The fed taking beer inflation in europe. If youre heading out and jumping in your car, tune into Bloomberg Radio on sirius xm jenna 119 and on the Bloomberg Business sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix here is what i am watching great the fed and the repo rate. Recently the new york fed took 75 billion in securities. The second time in over 10 years. Joining me is ira jersery, Bloomberg Intelligence chief u. S. Interest rate strategist. We knew it was coming. The overnight repo rate was 2. 8 . What will we hear about this from the fed today . Ira the Federal Reserve has to consider the fact they are close to the reserve limit. This is something weve been talking about for a while. We thought the fed have to worry about this in december or january. We are at this point where there is not as much money in the justm as people think, because the fed Balance Sheet is big. So a big reason has been a lot of the new regulations over the last decade, especially capital rules, which constrain the amount of Balance Sheet banks have in order to conduct regular operations regular repo operations. Report rates spiked monday. I think this will alleviate things for the short terms but there will be discussion at the fed meeting on how they will do a standing facility to not have to make these operations a regular thing. Alix there seems to be two schools of thought. One is this is the plumbing of the Financial System and is extremely important, the other is it is a shortterm thing and the fed will fix it. Which school of thought are you . Ira i think it is both. This is very important. It has to be paid attention to. We have to care about it because liquidity crunches start like this. At the same time, the fed reaction and adding 75 million of liquidity is something that will alleviate those pressures. You have already seen that. Both of these options trying to show this is a 75 billion or 85 billion problem, not a 300 billion problem. Constrained the treasury market, which the fed can directly add liquidity to on an instant. I think i do not think this is systemic, but it is something the Federal Reserve has to think about as they meet and try to think about how they are going to do reserve management Going Forward . Alix appreciate that perspective. Ira jersery, thank you very much. President trump just tweeting he has asked the treasury to substantially increase sanctions on iran. That comes on the heels of iran sending a letter to the u. S. Through the swiss embassy, saying they would respond swiftly to any actions but are not looking for any war with the west. This also comes before saudi arabia will be holding a News Conference pointing to direct specifics as to why iran is to blame for attacks on saturday. Trump asking the treasury to increase sanctions substantially on iran. A Big Development for the oil market. That wraps it up for me. Coming up with jonathan ferro, the fed day coverage will continue. Rick rieder of blackrock, matt hornbach, and Tiffany Wilding of pimco will be joining john. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, it is Federal Reserve decision day. A divided committee expected cut rates once again as trade officials get set to restart talks. Larry kudlow says the mood has turned more optimistic. Saudi arabia keeping the oil flowing, restoring output weighing on crude prices. Good morning good here is your wednesday morning price action. Futures down. 1 . In fort exchange, the dollar stronger against everything through the morning. At 1. 1055. Back treasury yields lower by three basis points to 1. 77 on the u. S. 10 year. A rate cut widely expected, but is it sufficient . A cut is necessary but not sufficient. The question would be guidance. What is the Forward Guidance . What they can do to make it easier is not paint th