To oil, but again, we are at 63. 18. Boeing, on some concerns it might need to issue more debt because of the next prices, is down 0. 8 . And seeok at europe where we are on the stoxx 600. Not many groups are higher in europe, and among them, probably the defense names. We are seeing travel and leisure on higher oilit prices and increased geopolitical tensions. Below rightd dollar now the high of the day. Lets get right to the latest from washington following president trumps decision to kill iraqs top general. Irans top general. The funeral is ongoing in iran. What are the nsa advisors to the president telling the president today . Kevin good morning. Iran saying that they would be a disproportionate response, and saying that the u. S. And allies are on full response. They say they feel iran has behaved with an expansionary Foreign Policy that is a nonstarter for them, particularly given the threat of additional sanctions that have been placed on iran as part of their maximum economic pressure campaign. Elsewhere on capitol hill, lawmakers still returning from congressional recess, but House Speaker nancy pelosi writing a letter to her democratic colleagues. In that letter, she says they are going to vote on the resolution later this week that would limit the president s ability to go to war with other countries. A similar version of that resolution has been introduced by senator tim kaine of virginia and the senate. Either way, in a week that was supposed to be all about impeachment, now very much all about the middle east. [no audio] vonnie concentrate on an impeachment trial with the likes of this going on . Questionsre have been on the Guiding Force for an expansionary version of irans Foreign Policy that has caused the United States, as well as be uneasy, to put it mildly. Been open debate in the Democratic Party about how the party ought to pursue iran and what plans should be. It is unlikely that Senate Majority leader Mitch Mcconnell would do anything to take up the resolution that Speaker Pelosi says she would like voted on in the house, but if you are trying terms of the in domestic influence on president trump, this week will very much be focused on Foreign Policy in the house of representatives, where democrats will likely use floor time to raise questions and concerns about the president s foreign policies. Vonnie thank you for that update. Lets bring in kit juckes, fx strategist at societe generale. When you see pitchers like that out of iran, what does it make you onto do with the Foreign Exchange market . Kit i think the market is not inclined to overreact. It is more likely to make lots of people do relatively little, not commit a lot of capital to go to work in this kind of uncertainty. Think prices will stay even ifly elevated, so the middle east isnt at the same power as it was in the global oil market, it is still a significant arsenal factor in terms of what prices will do. For the rest of it, i dont think this makes you rush forenly and aggressively means that it decisionmaking about investment just gets delayed until we get a little more clarity. Vonnie even the u. S. Dollar is not appreciating like you might expect at times were safe havens are sought after. Our markets suddenly turning away from the possibility that uncertainty should have them going safe . Is sort ofcertainty an clarity sort of clarity about an outcome that is very , andor the u. S. Economy you might well see the end of very well on the back of that. Of level ofnd uncertainty, where we are not , doesnt helpeans trade growth, doesnt up oil prices. It just adds to the ground noise , and i think it is why the most aboard reaction is what this bond yields. Net result, not a huge amount, so people buying the end first thing this week have not really moves, and the dollar overall is just a little bit softer, and the equity market isnt sure whether it should even pause for this. I think you have uncertainty is one thing, but you have to have getrtainty where people can to really move the markets. Vonnie last week, we had a twostens spread of 33, 34 basis points, which had everyone a little excited. Now the spread is at 24 basis points. Does that mean anything more than a shortterm move . Kit it just means that the 10 moves more than the twos. If you get a 10 basis point fall in tenure yields, we will price in a little more easing from here. Happen if weght got a nonmany factoring ism tomorrow that was as the manufacturing at the end of last week . That would give me a much bigger move on curves, short and long rates, and frankly, the dollar, than anything we are getting at the moment. Theres perhaps a bit of a pause on what to do with money, both from the investment and corporate side of things, but if you have to allocate, what do you do . Kit i would allocate for weaker u. S. Growth. The content this forecast for u. S. Growth this year is 1. 8 . It is priced right at the type end of what right at the top end of what could happen. That adjusted numbers suggested that manufacturing is a small part of the u. S. Economy, but the correlation between the ism and gdp is better than it deserves to be, frankly. We are more likely to higher,ear note yields and 10year gilts weaker than stronger, and that is a theme we will be talking about, weaker for the United States as the boon from tax cuts fades away. I suspect that is how it will play out. Vonnie the u. S. Dollarcad short you like, is that a trade based trade . Kit it is partly a valuation that will benefit from the current level of bond yields in canada and australia. That i think continues to provide support for it slowly. Whenever i mention the Canadian Dollar, which i think is undervalued, i get plenty of emails from canada from people who think theres no chance that the economy looks vulnerable and is going to weaken, but i do think the Canadian Dollar is from alowly recovering trade hit that came before the north american trade deal was struck. I think that slow revalidation of the currency can continue with all of this here. Juckes stays with us, chief fx strategist at societe generale. Lets get a check markets with kailey leinz. Kailey investors are looking at the real impact that increased tensions with iran really have. The s p 500 is down less than a point, while the dow is lower by about two thirds, and the stoxx 600 down by about 0. 4 . Highs, nowloff the up by about 0. 8 . Seeing yields rise after filing earlier, now looking at 1. 8 again on the 10 year. Brent crude prices of about 0. 4 come crossing that 70 a barrel line earlier today. This is a difference in price for the march delivery relative to the december contract. The earlier delivery contract now has a premium of about six dollars relative to the longerterm, so that signals some caution around the tightness of the oil market. Finally, for a group of movers on the day, among the worst and best performing stocks in the s p 500 today are in the retail and apparel sectors. From the upside, you have the likes of gap and macys, and to the downside, the two worst performers today, l brands lower by about 3 , and also under armour, down about 4. 5 after a downgrade at jp morgan. Vonnie thank you. That is kailey leinz with our market check. Do remember the function vtb go on your bloomberg allows you to browse all of the recent charts the function gtv on your bloomberg allows you to browse all of the recent charts. This is bloomberg. Live from new york, im vonnie quinn. This is the european close on bloomberg markets. Lets check on the bloomberg first word news with ritika gupta. Ritika House Republicans want her to want meant ability to transmit articles of impeachment to the senates of the trial can begin. Democrats want guarantees about the scope of the trial in the republicancontrolled senate. In new york today, jury selection begins in the Sexual Assault trial of disgraced movie producer harvey weinstein. Dozens of women made allegations against the hollywood mogul. It led to the me too movement worldwide. Weinstein has pleaded not guilty. He says any Sexual Activity was consensual. Weather and some rain are helping attempt to fight australian bushfires, but still, dangerous conditions will return. Fires in southeastern australia are blamed for at least 24 deaths. Or than 12 million acres have burned. Thousands have been forced into makeshift camps. In venezuela, a day of political chaos. Barredy forces Opposition Leader juan guaido and his supporters from entering the general assembly, allowing supporters of president Nicolas Maduro to choose their own a similar president. Loyalists went offsite and elected him anyway. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. To. Ritika gupta this is bloomberg. Vonnie thank you. Earlier today, we spoke with bill dudley, Princeton UniversitySenior Research scholar and former new york fed president. About his newed Opinion Column on the framework for monetary policy. The fed had to intervene on a high for quincy basis to keep the Interest Rate at its target. Theres lots of reserves in the system, but the fed could make it even better. One thing they could do is establish a standing repo facility. If there is some sort of shock to the system, they could communicate more clearly why the new regime is better. It is easy to operate, it makes the Payment System work better, and most important lake it is better from a Financial Stability perspective because theres no conflict between the fed offering and openended liquidity backstop versus its control of monetary policy. Under the old regime, if the fed edit reserves to the system, it risks losing control of the federal funds rate. It feels like marketers bentz market persimmons are worried , and that leaves the fed having to buy a lot more treasuries, or for Bank Regulations to be rolled back in terms of what they are required to hold on their Balance Sheets. What do you say to fears on this . I think the fear is overwrought. I think the fed has addressed most of it already just by adding reserve to the system come about buying treasury bills and engaging in a series of open market operations. The fed can make the system Even Stronger by setting up an overnight standing repo facility, which would be ofilable to a wide array counterparties. It would basically make the system Even Stronger. There, bill dudley former new york fed president , speaking on a Bloomberg Opinion piece today. Back with us in london is kit juckes, chief fx strategist at societe generale. The former new york fed president is not the first to suggest a standing repo facility. Is it a good idea . Is that what the fed will come bush midyear . Will accomplish midyear . Kit it looks as if it might. Trying to get the money market to operate smoothly is to get a combatsystem that can sharks. Combat shocks. We are learning about what happens when you try to redesign the architecture in the postfinancial crisis era. As we take away the special measures that were put in place for the crisis, weve redesigned the plumbing. There is things can go wrong which you havent thought of. They now need to find something which is resilient and simple we are seeing less of them. We traded overnight dollar rates up to 50 over the turn of the year, and my third or fourth year in financial markets, and definitely there was a wide sense of how expensive this is going to be as everyone rushed around, trying to get Balance Sheets sorted out for the end of the year. , by andless of that now large. What we had was a period when the money market froze up into 2008 thatight in left scars with all of us. I would say what we saw last year, although we talk about it a lot, adds nothing to the kind of volatility and shortages of liquidity that we seen at various points. I think we become very used to, and recent years, a system where there was a lot of cash floating around, so the whole thing wasnt a problem. As we normalize policy in the road gets back to normal, maybe we just get used to it again. I always worry about it when we dont understand it. Maybe that is just what we do. We just worry too much. Vonnie well, speaking of worries, back to trade again. Exportersned that should benefit. Im curious why, given that the president is very likely to turn his head towards europe next. It is just an odd currency,. O be honest on a daytoday basis, it moves around relatively wildly as if it is just a trade sensitive currency. It correlates closely with the Australian Dollar come of the new zealand dollar, as well as the swedish krona. They are all similar currencies. I think i would argue at the moment that out of that group, it is the one that, if i have to own that one, can i own the one with the central bank that actually does look as if it is on balance, either doing nothing more raising rates, and a country which has got a very healthy balance of payment . But yes, it is still a trade sensitive currency. Vonnie talk about some of your other trades of the moment. Do you see any be on the few you have laid out, like the norwegian krone, for example . Unless you just bought equities and bonds and setback and drink tea, which never occurred to me, i think it is going to be a difficult year. The first thing i think is theres readily little across the emerging market space its going to be immune from further continued economic weakness, let alone geopolitics. People making money in emerging markets are going to make money and carry and probably get most of it back and find it terribly difficult, so i think that is the first thing that makes the year hard. I do think eventually the euro will recover because it is so cheap, and theres so much pessimism about the euro and about european growth, but i think that just gets counter waited. Im going to hate watching it trade for most of this year, and i will just want to buy the yen, but i will have to be very patient. Vonnie kit, thank you for all of your time. Kit juckes, global strategist at societe generale, joining us. This is bloomberg. European look at where markets are trading as we head towards the close. The dax in germany is the worst performer. Carpets contribute in mostly that. Thecac 40 down 0. 5 , and ftse 100 down 0. 6 . This is bloomberg. Vonnie it is a down day across the board. Seems toexception that be trading of its own devices. Other correlation with european countries. Let us dig into the performances. In europe the dow is down. Most companies in the dax are lower. There are few that are higher. They were not high enough to pull up the rest. Maker one of the poor performance. The major indexes that were lower were the airlines. Transportation and French Airlines to easyjet. The transportation index part of the drag on the market. We had oil lower. That is impacting things. Down well from the 70 mark. Session quite the strong. That will have set the tone for the airline companies. Let us look at some of the individual industries. Oil and gas the only two that are positive. 600 from oil prices being higher. Travel and leisure are the poor for performance. Lets go to the u. S. And see what is happening in the United States. Not nearly down as much as in europe. The s p has gone back to neutral. 10year yield backup too. The dollar index softer. Is downn taller 10. These are the stocks moving. Odd retailers doing well today. Taking back some losses from the last few weeks. Homebuilders up about 2. 3 . Downside, we have a lot of cars and auto parts. Down 2. 6 . That is how things are looking in the United States. China planning to send a team to the United States to sign the phase i deal. Liu hu is going to think the deal. Deal. The are we expecting this to go off without a hitch . Despite tensions in the middle east. That u. S. And china may not be on the same page when it comes to the nuclear accords. Never say never, vonnie. You bring up the middle east tensions. Even thinking about the last year or two years of trade talks, what looked like commitment from china and the u. S. Following meetings and one aries. Bueneas with incentives in beijing and washington giving a boost to fragile growth heading into 2020 there is a pretty firm expectation that the vice prime vicenot going to be premier is not going to be embarrassed. Vonnie what are the Unanswered Questions about the deal . I think we know the element of what is going to be in their. There will be more agricultural purchases from china. There will be commitment in terms of tariff rollbacks from both sides. There will be commitments from china in terms of intellectual property protection. What we are really waiting for is the details. Exactly what commodities will china be purchasing and when . Exactly what tariffs will be rolled back by the u. S. And on what schedule. Exactly what commitments china is offering in terms of intellectual property protection, market opening. Commitments in these areas . Or are we just going to see past policyng up announcements to make them appear as if they are substantial . Vonnie the president has said it will roll into the phase two negotiations almost immediately. Is there more incentive to start phase two now that there are other geopolitical hotspots that are diverging congress . We will see. My intuition is that the answer is no. There is a reason why there is a phase one and phase two. The Big Questions which have been left to phase two market access, the chinese subsidies, these are difficult. Where there is not a lot of commonality or Common Ground between china and the United States. My expectation is they get phase one done. That reduces uncertainty and gives the market positive momentum heading into 2020. Phase two will be a longterm story. My expectation is we will not see rapid progress. Vonnie thank you for joining. Let us turn to bloombergs group. On renaultrging group. He ran from what he called japans rigged system. Joining us is benedict,. It reminded me of the el chapo escape. Something that was unheard of. Completely bypassed all authority in several countries. Benedict, how do we know that it happened . What new information do we have . Mix ofas an interesting simple execution and complex planning. Simple in the sense he left his house by foot. Train that took him to osaka. That is where the more complex, more elaborate part of the plan kicked in. There was as we know it private jet waiting for him. He was put into a box that had drilled and transported onto the plane. He had a pair of experts waiting. One was ex military from the u. S. And one from lebanon who knew a thing or two about getting people out of tricky situations. This is part of the plan they worked on for a long time. Ultimately it was carlos ghosn who put into motion. A law of this had to do with the way he felt he was separated from his wife. He did not have access to her. Straw at thefinal end of christmas where he said enough is enough in terms of how he felt the japanese legal system is treating him. He put this plan in motion. An interesting mix of very simple and very complex executed together. The big day we are waiting for is the middle of the week where he gives the press conference where he will provide more detail. The other interesting thing is this could really have without ceosted and executives of companies. Carlos ghosn had two french passports. Citizensn was only through employment may require them to be looking for a visa in another country while they are traveling. He had that privilege. You, are me ask executives above the law and whatever country they may be in . Justice is supposed to be equal but when you have that power and money, access to lawyers, and as we saw the ability to put something in motion, the world is a bit different. We are still finding out details. More details will come out. Aram not sure we will he all of it. He has to protect his family and whatever people he interacted with. We will hear more of the story but we are still chasing to get all of the detail about how this came about. Vonnie he has been flagged through interpol. Japan has asked him to issue a red notice that would make him an international fugitive. He is taking on japan. One man against the japan legal system. It is clear by the way he was treated that the Justice System over there is not the same as it is here. There is evidence of bias in the system. Got a fair trial but based on the way he was treated after his arrest, the hand and glove connection between the regulators and court i think in terms of Public Relations he will have a let of public support. The way he was treated was such that there is a good amount of sympathy. Vonnie in certain countries but maybe not france. Shareholders are extraordinarily kelly, his greg former associate, is still in tokyo. Bearing the brunt vonnie bearing the brunt of tokyo. Beret and of green people wellversed in how to move around countries, bend the rules. How to get things done in different parts of the world. Michael taylor is a fascinating character. He is from massachusetts. He was in the special forces in the 1980s and developed an affinity for lebanon. He trained christian militia during the unending civil war which is how he met georges iraq. He married a lebanese woman. He travels a lot. He has had a number of runins with the law. Where hed instances has helped out Law Enforcement and the cia. He is in a gray world where he provides value to certain aspects, elements, agencies of the government at the same time running afoul of other rules. We have seen this with other contractors before. If you do enough work for highly placed people in the government, you get a little sloppy about other activities. Vonnie is there a precedent for this . In the criminal world, there is a precedent or two. In the corporate world is there a president for escape . No. We are fascinated with the details of the story. The Bigger Picture is and i think it is up to carlos ghosn to make this public as to whether or not is he getting a fair shake in japan . That will be the Public Relations battle. Can carol, his wife, travel with indemnity . That is a risk for her offspring. They were careful in the way they moved around the world. She left japan months ago. She was always concerned that she too would be caught up in the dragnet. Clan the question is how much freedom of movement met they have Going Forward . Carlos ghosn is a math that you never knew quite where he was. He would spend 200 days a year on a plane. This is not a man who sees the rest of his life confined to lebanon and a house. Be a chief part of his aspiration. To clear his name, his family have maybe not be ceo but freedom of movement minus japan. That seems highly unlikely he will ever return. Tort from that, he will try clear his name. Create freedom of movement again. Vonnie we are out of time. I want to ask you about the legal team. Clear histe french legal team knew about what was going to transpire. Does he have a legal team . Team,has a japanese legal lawyers across the world, a u. S. Lawyer. As greg said, these are expensive people. He is able to fund it for now. For how much longer . Does he have the resources to keep going the way he has . The one in japan said they were blindsided by this. They had no idea this was happening. They were facing tough questions Going Forward from the authorities. Whether they aided carlos ghosn. Vonnie thanks to both of you. And gregenedikt kammel farrell. Let us check where european stocks have settled. We have a down day overall. Dax in germany done 7 10 of a percent. Helping. Akers this is bloomberg. Vonnie live from new york i am vonnie quinn. This is bloomberg markets. President trump is warning iran not to retaliate. The u. S. Killing of one of its top generals. The president told reporters he will go to a void to a fight every wrong strike spat. Expellingakers are american troops. The president said if that happens, he wants them to pay billions in construction cost. He will impose sanctions if iraq refuses. French officials and Union Leaders will return to the negotiating table. The two sides will reach an agreement to end nationwide protests and transfer strikes. The finance is a compromise is close. Macron has pushed ahead with his overall plan. In the u. K. Opposition labour party has begun the contest to succeed jeremy corbyn. He said he would resign after last years crushing election defeat in which the party sank to the lowest number of seats since 1935. In pro football the Dallas Cowboys are hiring Mike Mccarthy to be the new coach. That is according to the press. Mccarthy won a super bowl with green bay and took the packers to the playoff nine times in 13 years. He will replace Jason Garrett whose contract was not renewed after nine years. 24 hours a day. Powered by more than 2700 journalists and analysts and more than 120 countries. This is bloomberg. Vonnie it is time for the stock of the hour. Shares of boeing have been lower. The company is looking to raise as 5 billion in debt. The grounding of the 737 continues to take a toll. As you can see, the share is off 1 . Trying to get off the bottom love. Bottom low. If we take a look at where boeing has stood to airbus, boeing stock is only up a little. Airbus is starting to benefit from the grounding of the 737. Airbus up 63 . Boeing has a strong Balance Sheet. It does look like some effects of the crisis are starting to play into the fundamentals. The big fundamentals are taking a look at the free cash flow. Negative for two straight quarters. First time this has happened since 2009. Billionlooking at 3 negative in the last two quarters. It really has been a positive the last few years. They have had some downgrades. S p. Are rated a minus by with all of the ceo turmoil, some of the Balance Sheet fundamentals are being looked at more closely. Vonnie what does it mean for boeing . I want to take a look at a chart. We are getting reports that boeing they be looking at raising 5 billion in debt. Why . Given all of the turmoil, you can see we are taking a look at spread relative to treasury. They are really tightening when they came to market. Points. D at 90 basis the tightening may not be a boeing story but a global risk story. Flight to quality, flight two bonds. It seems like a good time for the company to be issuing debt. They have 10 billion in cash on the sheet. Not a bad move. Vonnie taylor on boeing. Coming up it is the global battle of the charts. This is bloomberg. And they lived happily ever after. The end. The end might not be as happy as you think. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke but the good news is you can rewrite your ending and get screened for stroke and cardiovascular disease. Life line screening is the easy and affordable way to make you aware of undetected Health Problems before they hurt you. We use Ultrasound Technology to literally look inside your arteries for plaque that builds up as you age and increases your risk for stroke and heart disease. So if youre over 40, call to schedule an appointment for five painless screenings that go beyond annual checkups. And if you call us today, youll only pay 149an over 50 savings. Read it again, papa . Sure. Ive got plenty of time. Life line screening. The power of prevention. Call now to learn more. Vonnie it is time for global battle of the charts. You can see these on the bloomberg to tv. Our deals reporter. Partnerught business to the stock market. One of the best in the decade for u. S. Stocks. What does that mean for dealmaking . It allows company to use stock rather than just debt when doing deals. As you can see from this chart, Companies Used a portion of the payment in stock at the fastest rate last year since 2000. That met last year deals that were financed through partly stock went up 44 compared with the year before. About 700 billion. That helped Companies Guard against volatility in the market. Trend definitely underpinned mega deals last year. If we can get over the early market, we can see them stocking up again for deals next this year and 2020. You can see my chart on g tv. Vonnie very impressive. Something we have not spoken enough about. Excellent chart. Coming off aor is three win streaks. John hyland. Im taking a look at the manufacturing data that came out friday. You can see me in the top panel the pmi coming in at 47. 2 . Now at the lowest level since june of 2009. Right around the end of the great recession. You can see new orders and production at the bottom panel. Those coming in below 50 at the lowest in april. Have the u. S. And china expecting to sign the phase i agreement next week. If you continue to see softer reads in manufacturing, Bloomberg Economics notes you will have to look at issues aside from trade impacting manufacturing like a strong dollar and Global Growth environment. Economy get more u. S. At the end of this week. You can find this chart on running g tv. Vonnie very nicely presented. All those will have to come to an end. I think your winning streak and. Todays winner is nebula. Thank you both of you. Check out their chart taken on g tv. Coming up, bonds of power with david west and Joe Lieberman joins the show. He would discuss the latest on iranround situation the situation. Balance of power is next. This is bloomberg. David i am david westin. Welcome to balance of power, where the world of politics meets the world of business. From the white house, Kevin Cirilli with breaking news about john bolton. From sydney, the continuing bushfires. It is a crosses debt crisis down there with a mounting toll on the people and forests in australia. Bill faries, lets talk about what is going on with iran. What is the latest . Eventsuite a sequence of over the weekend as u. S. President donald trump and uranian leaders iranian leaders treated threats about potential strikes and actions after the killing of the head of the quds force. You have the Global Coalition to defeat isis. It isd iran saying withdrawing in large part from the 2015 nuclear deal. All of that is coming onto president donald trumps