Flirting with 2 . Your two year treasury note now at about 1. 5 . Crude oil, we will get that data showing inventory levels expected to rise. Remember, all of the gains we had, nymex crude as well as brent, and saudi arabia come all of the gains are raised. Now we are looking at more of a demandside issue. Keep an eye on the transport side. Down transportation average down 1. 5 percent. We were down more than 2 yesterday. Last week Cantor Fitzgerald recommended folks going on the transportation average, shorting. A lot of people laughed it off. Right now that average down more than 4 . Worst twoday decline we have dowto have had on the transport since december. Guy there are weird things going on in this market, but we are certainly seeing equities spooked by this growth story. The ism and you factoring terday putting the cacs what the market feels is really on edge right now when it comes was a punchy month on the downside for european equities and Global Equities peered what is weird, take a look at what is happening with yields. Yields are rising. Bond prices coming down in this growth scare kind of environment, which is peculiar. It may be where we are entering this period, where rates are, where equities are in the relative valuation story. You would have thought the yields would be coming down to their and bond prices rising. The other thing worth mentioning is the british pound is softer. 1. 2285. Rading at the bond market remains and the equity market seems to be signaling Different Things now. Romaine we are getting a lot of different signals, and headlines from the wto related to the case involving airbus and boeing. Wto saying the u. S. Can. Etaliate against 7. 5 billion that is less than what folks were looking for, but again, seven point 5 billion in e. U. Goods. Billion in e. U. Goods. Here to talk about this and a lot of geopolitical issues in fromorld right now, montauk investments, portfolio manager. Chris, there is a broader issue here now about this Global Growth story. Whether that is impacting and whether we need to be worried that the trade issues, the demand issues are just going to be too much for the market to bear. It has been much like last year, going into the Fourth Quarter around trade tensions, about around where we are in the macro cycle with the wto headlines. We prefer to focus on structural growth stories at our firm and our fund enables us to work through a lot of the noise and has the courage and conviction as we go forward. Romaine talk to me about the structural growth story because people have been trying to poke holes in the structural growth story all year long. If you are on that side, and so far most companies, at least the big multinational companies, have held up pretty well. That growth story has sort of remained intact as folks have written it out have written it out. Do you see any meaningful risk to that Going Forward into 2020 . Chris it reflects the skittishness of the market and we would not be surprised if that continued near term. But if you look at a company like airbus, it might be subject to some of these headlines today. When we look at a business like tail it has a 20year behind it. 2 billion people coming into the middle classes in emerging markets, the average american is only one ine three people in emerging markets have been on a plane before in their lives, and it is that structural growth story that will endure regardless of some of the reverberations we are seeing in the markets. Guy chris, that is fine, but i am wondering whether or not we are seeing a paradigm shift when it comes to the global economy. Globalization is clearly in reverse. Airbus and boeing will rely on china to deliver many of the aircraft that they are going to be selling over the next few years. If the u. S. Continues down the road it is on, if china continues down the road it is on, we are not just in a trade war. We are in a completely different paradigm. Much more about the great power status, more akin to the cold war. How does that structural story stack up if that is the direction we are traveling in . Chris thanks, guy. I think that can often be more a cyclical story than a structural story. Trade wars are never a good thing, and they are often loselose around the world. At the end of the d at the end of the day, for a coming like airbus, that is going to be delivering planes in a world that will need more and more of these jets, they have to come from somewhere. They are in a privileged position that they are in more of a locked up link for that statement. Duopoly fored up that statement. There are a whole range of other industries out there at the moment, because if the chinese decide they will not buy them, that will take a big dent out of their bottom line. If u. S. Companies, if u. S. Investors cannot invest in china, that will have a meaningful impact. Thise underestimating how trade war, the big war between china and the u. S. , could affect the structural story . Chris absolutely, there is an element here where big iconic names will be caught in the crosshairs of the trade wars and potentially a Global Economic slowdown or downturn. We just prefer to focus on the business end, the structural power wind that can endure through that. Romaine a lot of folks are talking about the Fourth Quarter, and particularly october, they talk about whether october is a volatile month, and there is debate as to whether that is true. When you compare to where debt when you compare where we are now versus q4 of last year, and you look at how investors are positioned, are they positioned in a way that if there is a shift in some of those structural issues, they will be better protected, or less surprised than where they were in november and december of last year . Chris i think everybody is a little more nervous in q4 than last year. Isnt that good for the market to have a little more defensiveness . Chris i think it is. In our view, it is thing out a lot of opportunities. There will be noise. As we wait, we wait to see the trade tensions play out, the geopolitical issues, all of these things. I think the markets have some great opportunities for us. We are looking through that and seeing a paradigm of lower Interest Rates for longer. We are seeing wonderful growth stories. It just means that not only are we going to navigate through seeing somee are Great Stories out there. Some of the punchy names has multiples attached to them at the moment. Do they represent, given those multiples, a defensive state, or do some of the unloved cyclicals represent better value at the moment . The market really is dispersed at the moment. At one end,icals defensive stops with multiples at the other. Chris i think that we would , al them extensive defenses lot of defensive Companies Like staples, utilities out there, currently in search of yields. Deteriorating, and their margins are coming down. They are more indebted than they ever have been. To us, that actually adds up to a much more risky combustible hasation than i think historically been the case. We definitely do not think the lofty multiples in those sectors of the market are justified. Romaine chris demasi is sticking with us. He will stay with us. We are going to get more on the economic slowdown ahead, and more on Bloomberg Television and radio. I will speak with chicago fed president charles evans. Gicll speak with him at the does he think the manufacturing number changed the game . A. M. In new york thursday morning. This is bloomberg. Romaine bostick in new york. Guy and from london, i am guy johnson. Emma chandra is here with details. Emma stocks are getting hit on both sides of the atlantic. The s p 500 is opening in the red, down more than 1 per that follows, as you mentioned, what we are seeing in europe with the ftse 100, the stoxx 600, both falling by more than 2 , having their worst days since august. Since october of 2014. Payrolls data we saw earlier in the morning in the u. S. , falling short of estimates the ism data yesterday, pmi data, we saw in europe today. Really a very ugly start to the Fourth Quarter. It should be no surprise that we switch up the board, mining stocks faring the worst. , rio tintodividually falling some 3 , worst since july. Falling 7 over the past two days. These are the companies that will feel the paid from the pain from slowing economics. This blue line here, the financial conditions index. You can see it dropping and the s p 500 falling after that. Just wanted to mention the big detroit automakers, we are getting Quarterly Sales data from them. Doing slightly better at ford and at fiat. Gm not looking good at the moment. Guy a bit of breaking news over the last couple of minutes. We are getting details coming out of the u. K. s proposal to break the impasse on the border on the island of ireland, and potentially allow brexit to happen. Boris johnson had proposed something called four years and two borders per the plan goes like this. With northernup ireland and southern ireland, ireland basically remaining with one block, with a Customs Border effectively in the irish see. That in the irish sea. That would happen for four years. After that, the assembly would reconvene with the option of ending that, and the u. K. As it is now, with Northern Ireland in it, would have a common border. We understand that Northern Ireland would get a vote on that border every four years. Once things are settled down, we will start to get that plan coming into place. Romaine we will keep an eye on that. With us here in the studios, chris demasi. We have been talking a lot about what is going on not only in the markets, but a clearer picture about what is going to happen over the next few months, the next few quarters. One thing you kind of mentioned before we went to commercial break, was this idea of looking at the structural components of the market, some of the specific companies. For a lot of years, this was all about growth. A company had to have a good growth story in order for investors to buy in. It seems investors now are moving away from that, correct me if i am wrong, focusing in on the actual profitability and Revenue Generation that the companies have at the moment. Is that the case . Chris i think what we are seeing is that, at least in some of the businesses we look at on the short side, is that the growth story has been thrown out, and investors the market has been chasing these sorts of businesses, things like Consumer Staples businesses, which we mentioned earlier, in a hunt for yield. It is extraordinary to see some of these staples Companies Trading at the same multiples as alphabet. Of insanity in the markets when the earnings have actually deteriorated and have become more volatile over time, not less. About the, you talked idea that you expect rates to remain very low for a long period of time. Why should these bond proxies give up multiples and that kind of environment . Chris it comes back to earnings, and you can only put a high multiple, low discount rate on these sorts of businesses until the earnings start to roll over. We have seen that already. Some of the companies we have been short over the years campbell soup, kraft we saw earlier in the year, especially when kraft heinz starts to break and profitability roles over. At that point it does not matter what the multiple is when the earnings decline so significantly. When you look at the central bank and the support the markets have had over the last decade or so and you look at i guess the little ruckus we had on monday with japan, even thinking about possibly pulling some of their support out of the bond market, you had a market that reacted in a way that they could not function if the Central Banks were not there. I am confused as to how deep that runs, if that is really true, if that is really a reflection over the market is headed. Chris absolutely, you saw that in the u. S. Market this week and last week as well. What it adds up to for us is that all of the stimulus, the quantitative eating quantitative easing over the last decade is here to stay. More likely than not, we are in a protracted period of low Interest Rates. It is easy to forget over the last 10 years that if we extend the analysis back over the last 200 years, they have been three distinct periods or Interest Rates have been lower and they have not come out of that trough for three decades. We are only 11 years into this cycle. We absolutely think we have support remaining in the market. We are seeing signs that it cannot be reversed so easily, and we think the lower Interest Rates will stay longer as a result of that. Romaine wonderful insight. Chris demasi. Coming up tonight, Justice Ruth Bader ginsburg speaks with david twopartn in a special, on the David Rubenstein show, peertopeer. Here is a preview. David today many people think the court is very critical, that people appointed to the court our democratic by democratic president s and those appointed by republican president s follow the point of view of the republican party. Dothat a Fair Assessment or people have that view . The pressnsburg tends to play up a 54 or a5three decision. But if we just take last term as a typical example, you had 68 decisions after debriefing and arguments. , 20 of those were 53 divisions, but 29 were unanimous. Romaine live from new york, i am romaine bostick. Guy in london, i am guy johnson. Taylor riggs come over to you. Taylor i am joined by the head of municipal fixed income at a company in new york. I want to kick this off by covering the needs to treasury raio, muni to treasury tio. Goodthink it is a really time. When i was on back in august, i was definitely pretty reserved. The ratio had gotten really rich. If you recall, treasuries pledged plunged to low levels in september, and i think there was real sticker shock in the muni market. Then treasuries back off and munis sold off. There was sticker shock and more supply coming into the market. As you said, at that higher ratio, munis to treasuries, if muni, youaaa rated are picking up treasury vase on a tax adjusted basis. Taylor i want to talk about another portion of the market, which is the taxable portion. Take a look at 30day visible supply on the taxable side. About the third highest it has been so far this year. Why the increase in supply on the taxable side . That low rate environment that i mentioned before has created a ton of refinancing activity in the taxable muni market. You can no longer refund a higheryielding taxexempt muni deal in the taxexempt market. They did away with that in the tax reform act. But you can do that in the taxable muni market if yields get low enough and the numbers and the mass add up. That is and the math add up. That is where we are right now. It has been a growing part of our business, and his new supply that has come in from the refundings in august and september has been a good thing for the market. Taylor there has been talk about cracks in the corporate junk side of the market. Do you see cracks in the muni junk market . Time not yet, but it is for caution. I still like the highyield muni market. The broad market yields about 3 . That is a taxable equivalent of over 5 . There is not much out there in fixed income for u. S. Taxpayers paying investors. Taylor, you point, have to be cautious because we are moving to the end of the cycle, and i will tell you, over the last two or three years, just about any deal that can get done has gotten done in theyield muni market. The rubber will hit the rode for some of those funds. Another piece of advice, if you have a bond in your portfolio that you do not like, it is probably a good time to sell it. Not wait until volatility picks up. Taylor a little bit of caution there. James iselin, thank you. Taylor riggs, thanks. Time now for Bloomberg Business flash. A look at some of the biggest stories going on in the news right now. Ford, thirdquarter sales less than expected. Dealers could not get as many high profit suvs as they wanted. Ford says inventory will not be a problem this quarter. Meanwhile, Fiat Chrysler sales flatten into the third quarter. They did beat expectations. The ram pickup offset jeep declines. Blackstone group is buying a 65 stake in waterpark operator great wolf resorts. This is bloomberg. Im all about my bed. This mattress is dangerously comfortable. When i get in, i literally say ah. Experience deeper rest with the awardwinning leesa mattress. This bed hugs my body. Im now a morning person. The leesa mattress is designed for every body. Providing strong support, pressure relief and optimized airflow to keep you cool. Hello bed of my dreams. Order online, well build it, box it and ship it to your door so you can try the leesa mattress at home. Love it, or get a full refund. And rest assured, returns are free and easy. I love my leesa. Today is gonna be great. Find out why so many people love the leesa mattress, then try it in your own home. Order now to get big savings but only for a limited time. Just go to leesa. Com today. You need this bed. Romaine live from new york, i am romaine bostick. Guy from london, i am guy johnson. Lets catch up with the bloomberg first word news. Payrolls for u. S. Companies rose more than forecast in september. Data, employers added 135,000 jobs. The august figure was revised downward to 157,000 that suggests a manufacturing recession come and despite the outlook, it is having an impact on hiring, government jobs report is out on friday. North korea has appeared to raise the stakes. Just hours after saying it would not it would resume talks with the u. S. , kim jonguns regime fired a rocket off the eastern coast. Hat would be an escalation british Prime MinisterBoris Johnson is outlining his plan for a new brexit agreement. In his first keynote speech as Prime Minister at his conservative partys conference, he warned the European Union to compromise or watch the u. K. Move away from talks. Of whats be in no doubt the alternative is. The alternative is no deal. That is not what we want. It is not an outcome we seek at all, but let me tell you, my friends, it is an outcome for which we are ready. The u. K. Is do to exit the e. U. On october 31. Johnson says he will never agree to delaying brexit beyond that date, even if it means leaving without an agreement. In greece, strikes against the broughts new government transport to a halt today. The strikes affected banks and schools. Labor unions held protest rallies calling for the restoration of pay scale and labor rights. They were lowered and suspended during greeces three consecutive bailouts between 2010 and 2018. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more this is countries, bloomberg. The oil bulls not liking the eia report that just hit the screens over the last couple of minutes. Inventories rising by 3. 1 million barrels. The market was looking for around 2 million. Not good for the bulls. Where are seeing crude coming under pressure, romaine. Romaine for more on our top stories, the wto giving President Trump the green light for the u. S. To impose tariffs on a wreck and on a record 7. 5 million on imports. Global headd by the of currency strategy. This was widely expected, but it is still sort of rattling people because it looks like a couple of months ago there was going to be some sort of detente in the trade war between u. S. And china. But always on the back burner was this idea that it could be sort of expanded to europe, to other parts of the world. Is it an expansion of the trade war now . To be honest, i am heartened by the fact that he is taking care of it within the wto. That is the way it is supposed to work. Pretrump, the u. S. Had an issue , taking the case with the wto, as with airbus, you saw and arbitrated multilateral approach. That is the thing that should be done. I like the result. Even though it does not fit into the narrative of three trade of free trade. It is a better way of doing unilateral tariffs and trade wars. That is the road we do not want to go down. Romaine are you concerned about the idea of the traditional trade structure that we had at one point, the traditional Global Markets that we had, has sort of been fractured in a way that could be irreparable . Win that is the big question. We are in the third year of mr. Trumps term. ,t is a very mercantilist unilateral approach. I do not think we have moved to the point of no return. These kinds of policies could easily reverse by the next administration. But to me, it is pretty clear, forou looked at hoping trade tensions easing, President Trump at the yuan General Assembly last month, the bad news is i do not see an easy, quick resolution to the u. S. China trade war. It may be possible we do not see that that is the biggest risk to Global Markets right now. Can i circle back to what you said about the wto . I appreciate that this is happening, but traditionally the expectation was that the u. S. Would not impose sanctions, that they would be a negotiated settlement. That is not happening. Months time, the two should cancel each other out, that the u. S. Has decided not to go down that road. That has got to be a worry. In awe are already slippery slope in terms of global trade tensions. The wto released its trade forecast for this year and next. Revisions, we have japan and european autos coming up on cap in november, more tariffs on china coming october and december. Within the greater narrative, it is not good. In terms of timing. But again, i like the fact that the wto is doing what it is supposed to do. It may not be the best for everyone involved, but it is a sign that the process still works and i am all for that. Guy ok. Yesterdays manufacturing ism data, the market is pricing in a fed cut in october, 25 bits. Clearly u. S. Manufacturing is joining the rest of the world in some kind of recession. Many of the fed are saying that the u. S. Consumer is still on board so they do not worry much however, do we need to wait until one bleeds into the other before we get worried . Shouldnt we be worried now . Win the trade war is something it is not just u. S. China. We have all the countries within the chinese supply chain korea, taiwan all hurting. European automakers are hurting. It is a global phenomenon. We need to step back from that. I dont see that happening anytime soon. I heard one analyst earlier this say the u. S. S a economy is a plane with one engine working. The Manufacturing Sector is hobbled. The tariffs are another headwind. So you make a case for the fed cutting rates, but to me, if you want to get rid of the headwinds in the trade war, the Monetary Policy the first best policy is getting rid of tariffs. I am not a fan of this unilateral, titfortat trade war. Look at some you of the reaction we are seeing in the market fx, the dollar a day like today where we are getting obliterated in terms of equities, the dollar right you that 52week high, nothing can seem to knock it down. When you consider now that we are getting u. S. Data tracking weaker than what we explained earlier in the year then what we have seen earlier in the year, what does that mean for the dollar . Win we saw this in place around midyear. We had a soft patch in the data. People started ramping up their rate cut expectations. The dollar softened a little bit. When you step away from everything, the fact that, as uncertain as the u. S. Is, things elsewhere are going to be much worse. The euro zone is struggling. To me it is sort of like the least worst alternative. U. S. Is growing around 2 in the second half of the year and that is trend growth. It is not bad with the 11th year of an upturn. Relatively speaking it is doing well. Actually speaking, i would like to be in the u. S. Right now. Guy chris, final question. When the doj looks like it is getting ready to app its policy up d boj looks like it is getting ready to amp its policy up. Win this went into effect yesterday. Policymakers, you look at the comments and such, even the last time they hiked they hyped this back in 2014, 2015 when the economy went into recession. The yellow lights are blinking. It is probably too soon. They probably want to see how see the impact across q4. Through likely to ees 2020. This point it is being pulled back and forth by the domestic factors and by international factors. It tends to be a riskoff beneficiary. Broadbased dollar rally, 2020, this whole diversion story. The u. S. Recession will derail that call, but i dont think we there yet. The yellow lights are bring that our blink in, but i am cautious on the outlook right now. Romaine always great to have of on, win thin, mobile head currency strategy at Brown Brothers harmon run brothers harriman. Guy the oil stops in particular taking it on the chin. This is a move lower for the ftse. European markets are generally lower, but the ftse is leading the way down. Still ahead, Michael Arougheti is going to join us in the studio to break down all things private equity. That is coming up. This is bloomberg. Romaine we want to bring you breaking news. Bernie sanders of vermont canceling an event after a procedure for artery blockage. Apparently he had stents inserted following chest discomfort tuesday. This is coming from a statement by his campaign. He had a medical evaluation and testing found he had a blockage. This is the senator from vermont, bernie sanders. He is also running for president of the united states. Will geopolitical concerns emerging from all over the world of private equity firms they have different views of how they can factor in to assess the risk we are seeing right now. Bloomberg businessweek anchor jason kelly is in the studio with aries manager cofounder and ceo Michael Arougheti. Jason Michael Arougheti is with me, as guy said he has 140 2 billion give or take in assets. What is the feel in the world right now . Guys in europe, recessionary fears right that right now, brexit is a fear on the rise in not on the horizon, right in front of us. Got back from an european offsite last week. Surprisingly optimistic over there. I think for a while, everybody looked at the u. S. As the hot head of uncertainty. You had a safe haven where people were bringing capital. But when you look across europe and the markets that we play in, we are still finding ample things to invest in in the real estate market, the private markets are healthy. I think some of it is the central bank is very accommodative. People feel there is an ecb put which is allowing people to be more active with the economic backdrop. Jason brexits a pacific brexit, specifically, and you get into investment committee, how do you model that out . 12 years ago when we set the business up, we saw a meaningful shift in deal flow from the u. K. To the continent, so probably 65 of what we were doing five years ago was u. K. Ased, 50 or lower, you see meaningful slowdown in transaction volume that has obviously affected capital flows. About sort of generally the credit market out there. How are companies feeling given some of the macro uncertainty . Michael there is a huge dichotomy right now in the world because markets crave certainty and we do not have a lot of it right now, and you cut look at what is happening to you could look at what is happening in the economy you could look at what is happening in the economy. Questions about the health of the consumer relative to the lack of health in the manufacturing community. The folks we talked to our optimistic, cautiously. Balance sheets are strong and healthy, revenues are up, profits are up. We are talking ourselves into a slow down and started to see a shift in sentiment. Jason when you think about the more traditional buyout space, where do you see evaluation, and how does that that where do you see evaluation, and how does that play out for 2020 . Michael there is still a lot of capital in the private equity market, 800 billion to be deployed. Deal flow is adequate but obviously price multiples are elevated and have been for a long time. The bigger challenge is private equity since its inception has made its most moneys most money by companies that invest better. Folks have been able to generate very attractive returns. I think those procyclical strategies are not going to work Going Forward, so right now valuations do not look very stable. Liquidity is good. Flowbility to drive cash credit is going to be important. Jason when you think about valuations, you have private market versus Public Market. We have seen that in 2019 as companies have gone public, maybe with disappointing results. How do you sort of square that . Given your work both in the private and Public Markets, how does that work itself out . Michael there are two questions in there. One, how are the private markets developing relative to the Public Markets, not just in terms of valuation but in terms of capital flow. This ongoing conversation we will be adding to for decades, is, are the private markets because how they are structured and funded, and what we can do, does that affect the structure of Public Markets . I think the answer is yes. Companies are staying private longer. Private equity and credit are becoming more flight civil in what they can do for a private company and that is impacting what is going on in the Public Market. When you look at the Public Market, fewer Public Companies than we have ever had, higher concentration of and past investing now in favor of active investing. Becausery interesting the company that needs to go public is really the largest versus those that have a valuation disconnect. From a private equity standpoint, when you look at a company like palatine, or where we were, we are trained to look at cash flow and ultimately how that converts to value. The Public Market has a willingness to price in the value of innovation and disruption. Sometimes detached from the cash flow. What we are seeing now is a Public Market pushback on funding that innovation and expressing it as value. Jason so how does this movie end, or how does this part of the movie end, do you think . Michael which movie, the public versus private . Jason yeah, this disconnect. Michael the markets always rerate. We are seeing the markets pushback on valuation and governance, which is another part of the conversation. The private markets are still showing discipline, be it we have seen valuations creep up. We have to be mindful of the liquidity dynamic in both markets. It is very robust. Venture Capital Funding still very active. Private equity and private credit. The valuation mismatch could persist for quite some time based on the amount of capital that is looking for excess return. Are you worried about politics right now . Michael i worry about it more as an american than as an investor. As an investor, our company is designed to make money regardless of who is in congress or the white house. We have demonstrated that over 20 years there there is a lot of negative over 20 years. We will get through that demonstrating what we do with education. I am most concerned because we are divided when our politics are disrupted. I would love to see it calm down a little bit so we can get back to business. Jason michael righetti, thank you so much. We did not get a chance Michael Arougheti, thank you so much. Get a chance to talk about the yankees. Romaine getting a check on the markets, we are basically at the low of the day worldwide. Seeing a market basically held hostage by concerns about a slowdown in Global Growth. The Dow Jones Industrial average. Own about 1. 74 the s p 500 breaking through key moving averages. Tech stocks being weighed down. Things are the bit calmer in the treasury market, the treasury treasuries held down. Coming up later this afternoon, cam harvey. Research affiliate senior advisor. This is the guy, when you talk conversionscurve and the conversions and the length for recession, this is the guy who wrote the dissertation. He will defend his thesis and talk about the process for recession Going Forward. This is bloomberg. Cession Going Forward. This is bloomberg. Guy time now for features and focus. Stocks aredent getting crushed where you are, stocks are getting crushed where i am. How much of the game changer is the i am the ism end effector number from yesterday . Is from temperate optimism to cautious optimism. Ism under 50, you saw the market reacted to the downside. Then we continue to see the news overnight. There in the u. K. You saw construction with the numbers a little weak coming out of there. You continue to see global weakness, china and europe in general just basically towing the line. Trendingeing a market with cautious optimism. That means you will see a lot more volatility. Guy joe, is the fed going to rise to the rescue . The markets reprice on october 30. Are we going to get another rate cut . Joe i think the question is not so much the rate cut because i think someone is that i think everyone is starting to i think it is looking at policy, and that will be more of the tone that is going to come there it right now looking at the fed fund futures, there is a 70 probability. That has doubled since a couple days ago when it was in the mid30s. Me one thing that surprises about today, in august equity markets got beaten up. We saw yields going down. In the bond market. That is not happening today. Explain the difference. Joe well, i think right now you are seeing that prices actually are going up right now and the bonds. Here is why. Seeinginty you are the curve coming into question. We do not know in the short term the globalive slowdown is right now. If in the next couple of weeks we start to get a hint that the u. S. Economy is under pressure, that will put more pressure in the equity markets and it will put more pressure to the upside in the Interest Rate markets as far as price. You will see yields come down, but im telling you right now, what we are seeing is a market that is saying i dont know if that kind of equity yields are going to be a matter. Joe, thanks for joining us. Market lows for the day, s p low for the day, 5100, having the worst day 62016. Crude oil, nymex not providing any help. This is bloomberg. In the minutes left european trading day. From london, i am guy johnson. Romaine from new york, i am romaine bostick, in for vonnie quinn. Guy you have a difficult afternoon this is the ftse 100. We are continuing to fall, now at 71. 22. By 240, nearly, points in london. Yesterday the ftse did not get beaten up as much as some of the continental markets, today the other way around. We are seeing a lot of aggressive selling, and it is on volume as well. We are getting a decent volume day to the downside. Offstoxx 600 is trading pretty sharply today. Some of the oil majors are under pressure per that is why london is getting dragged down more than moche. More than most. The other