Gold was making a bid for 1300. Now coming off that potential. Over,continues to roll separate from the macro events we are seeing there. It is down 0. 6 . David dan coats will testify before the Senate Committee on intelligence. At 10 30, we get weekly crude inventory numbers for the u. S. We expect supplies to fall. President trump continues his infrastructure week, traveling to cincinnati, to talk about investments in waterways. Jonathan we begin in spain co popular has been rescued by santander in a takeover. Seeing debt surging. Joining us to discuss more on the acquisition is Bloomberg Intelligence ajit. It will not make sense to people outside the markets. Market, this makes a lot of sense. Walk me through the junior debt and the senior debt. What has happened is overnight the ecb has market, ta lot of sense. Deemed popular is likely to fail. Debt,eans the tier one the tier to get have been two debt have been written down. Two has been converted into shares and transferred to santander. That was expected. Ofs was supposed to be loss when it was written up loss absorbing when it was written up. Jonathan is this a success for the regulators . Yes. In many ways this is what was supposed to happen. Events in italy have cost out the loss absorbing see process. Swiftness in terms of the event certainly gives confidence to this process Going Forward. Jonathan richard from black blackrockng joining me at the table. Great to be here. I think this is good news. This is another shortterm reason not to buy europe. Investors have been worried about the french elections, concerns about the Banking System, and this is another one of those risks and allows investors to focus on the increasingly positive fundamentals in europe, stronger growth and inflation taking hold. Jonathan some people would have been attracted to the juicy yields out there, 11 coupon over at santander. We definitely look at equity rather than credit in the market. We see more upside in equity today. That is because as growth comes through, what drives your return on the equity side is Earnings Growth in an environment where the yield curve is stable. Jonathan you mentioned the growth story. That is why santander wants the bank anyway. Take a look at what the ceo over at santander told Francine Lacqua about this acquisition earlier. This opportunity comes at a good time. Spain is doing well. Spain has been growing close to 3 for two years and will be growing close to 3 this year. This is the right time in the economic cycle. We are not in a rush to sell real estate. We aim to sell at least half in the next 18 months. Jonathan look at what santander has acquired, to businesses, one that is very solid. The other is a really bad lending business to property that has not gone well at all. How long do they have to do proper Due Diligence on that side of the bank . That is the key question. Popular has been trying to market itself to a number of bidders for weeks. It has only been weeks. Popular has almost 37 billion ,uros in nonperforming assets only seven of which are related to real estate. Somedoes provide confidence. Given it has only been a number of weeks, it is still a question. Turnedn many investors to meet without even prompting and say they are long europe. They want to buy europe. They can take positives out of this story this money. Those that are short can take another look and say there you go, there is a bank that needs to fail. There are a lot more of them, in italy, too. You go back six months or 12 months, europe is a deeply contrarian trade. Recognizing the trouble. I think this transaction is another reason to think about reentering the market and focusing on those longerterm fundamentals. When we look at the money coming into your, this is still very far from a trade. When we look at the growth prospects, it is still attractive. Jonathan lets talk about italy. That could be the next shoe to drop. Emboldenedgular feel , you are likely to fail. You need to be acquired. Do they do the same thing across the periphery and take confidence away from the way the debt market has performed on my screen this morning . Certainly this whole process has set a precedent, and investors will be questioning the regulators if they dont carry on doing this in other cases. It will put a spotlight on some of the less robust banks in southern europe, such as the italians that are in difficulty. It sets a precedent. Jonathan looking at the ibex this morning when the news broke, 14 on the ibex already. Do they have to be careful about what they are actually buying . If you buy the ibex, you are buying santander in a big way. Diversification, if youre buying to europe, make sure you are getting diversification. You also want to get exposure to areas that are growing rapidly. This applies to santander as well. They think the european stock market has been geared to the european economy. There is significant european exposure, but there is also significant global exposure. We are seeing Many Companies benefiting from the recovery in global activity relative to the euro. There is increasing demand for european debt. This is about the Global Growth story, and europe is advantageous going into that. Jonathan thank you very much. Coming up on the program, more on the european banks with Chris Wheeler at atlantic equities. He will weigh in on the action in spain. Coming up, friday we have press reaction to those u. K. Election results. From the city of london, i have got to say, a beautiful one. The cable rate goes nowhere. From london and new york, youre watching bloomberg tv. \ david this is bloomberg. We are here with alix steel and Jonathan Ferro. We are keeping a close eye on the big story of james comey testifying tomorrow morning on the hill. We have special coverage beginning at 9 30 a. M. Eastern time. Ber is cracking down on harassment in the workplace. After aed 20 employees companywide investigation into harassment claims. Three dozen other employees have been warned. The European Central bank is preparing to cut its inflation forecast according to officials familiar with the matter. They are concerned about weaker energy prices. Showsay ecb projections Consumer Prices rising at 1. 5 each year between now and 2019. That is your Bloomberg Business flash. Alix the reaction in the market is stark. The euro dropping like a stone, now down 0. 6 . Joining us is richard from blackrock. Changed that, taken hawkishness off the table . We always thought this was going to be a dovish meeting. We have seen growth improving. Inflation expectations have been anchored at low levels, not just below the forecast, but well below the ecb target. That is a good reason for them to be cautious and move away and the move away from accommodating Monetary Policy is still a way off. Alix this yellow line is where we were in the beginning of the year. The green light is where we are now. I want to show how much the markets have rerated for higher rates quickly. The first hike expected in about a year. Is the market still too hawkish . I think in the shortterm, the market is too hawkish. I think it needs to adjust. The ecb will be very cautious about tightening too early. Out to 2018 further and beyond, we see the ecb normalizing to a more appropriate level of policy for the broader economy as that sustained expansion takes hold. David we have a piece on the bloomberg today warning that although you are probably right, you can have too much of a good thing. Inflation is the only indicator that suggests they should continue monetary easing. Ecbthere risks in the remaining as dovish as this . That missingare the signs that the economy is overheating. E those signs today. Pressures and other parts of the economy, and we dont see that today. We dont see evidence of Financial Stress building up. What we see is an equity market which is rallying, strong flows into credit markets, spreads coming in driven by the ecb action, and we are worried about keeping this level of accommodation for two long, but we dont see evidence that now is the time to tighten policy. Jonathan we could argue that it is also all because of the credit markets. How much is the ecb bailed out by their own forecast tomorrow . On, isnt it . S whatart thinking about they are going to do with Monetary Policy. We get the countercyclical move. We have seen the ecb play an Important Role in compressing credit spreads. What you have seen is fundamental investors coming in and buying other areas of the market, which are reflective of the improving Economic Outlook globally. Wary to unwind that position. It was not long ago we were worried about deflation in europe. Now we think we see signs of a self sustained recovery. The risk of remaining cautious is far less than the risk of tightening too early and ruining what is an early but sustainable recovery. Jonathan talking to the guys upstairs, they feel that comes in around 5 billion euros worth. This is said to be 22 billion. This is 30 year that in europe where the yield is 3 , 3. 5 . Do you want to assume that kind of risk in a place like italy . As you look forward as an investor, it is important to take a longterm deal and by assets view and buy that provide longterm worth. When we look at the equity markets, receive valuations much more attractive and fundamentals improving and flows coming back into europe. We think those are the areas to focus on. Goldilocks, is that fundamentals ok, ecb going nowhere fast. David isnt there a drinking game involving goldilocks . Jonathan alix steel would be so drunk. Angry drunk. You dont want to see angry drunk steel. David President Trump is going to ohio today. Ohio senator rob you dont wants us today to talk about infrastructure and trade. This is bloomberg. Alix this is bloomberg daybreak. With davidteel weston in new york. Election fatigue is coming on. Jonathan and a big way. This time last year we had the brexit decision. I dont think anyone expected election anytime soon with the exception of theresa may. The countdown until the election continues. Many are wondering what the boat is about. An issue we addressed earlier, the u. K. Election about nothing. A textbook example of the limits of elections when choices are clear and articulated by strong leaders. They can move politics four. When choices are clear and parties dont know where they stand, both resolve nothing. Turnill,e is Richard Black rock. This is a vote that resolves nothing . Participants were thinking majority, more certainty, leverage for the prime. What to expect now . The Learned Behavior over the last year has been to we had brexit, u. S. Election, french elections, italian reform vote. The Market Reaction is whatever the outcome to look through that. That is the same likely reaction we will get this time. Whatever the outcome, what investors are going to do is focus on the fundamentals, what are the fundamentals telling us . They will be focused on any sign that this election result has any implications for the brexit vote Going Forward. The one asset potentially moving is the pound. Jonathan let me put forward an outcome for you. Tell me whether this matters. Hung parliament. There is some argument that that leads to some decline in sterling, increased uncertainty, and another election, talking about election fatigue. I think investors will look late look beyond the result itself. I think they will largely be unaffected by a hung parliament. Jonathan what is clear from everyone is that shortterm is about sentiment, and anyone with a time horizon longer than five minutes it is about brexit. I wonder how long it takes to look at the labour party wi n. Bigger deficit spending, less accommodating bank of england. How long does it take to get there . We have a whole series of elections where we can look at what is the impact of those elections on the macroeconomy, on investors, and the result in most cases was fairly limited. If we look at the data, the published data and sentiment data coming out of consumers and corporate, as we have seen labor olls narrow,nd the p no evidence so far of that impacting investor behavior or animal spirits in the you k economy. U owth of a long way from recession. You would have to see a very different path for a labor victory to materially change that. Jonathan lets stick to sterling denominated assets. Is the ftse still case of i will tell you where the sterling is and you will tell me where the ftse is . The ftse is very high. 80 of earnings, from overseas. If the pound balls, that is a good indicator. The key determinant will be the success of the u. K. And the Global Economy, not the move of the pound. That is a positive environment. Short run, strike that have an impact. Longerterm fundamentals are sound. Jonathan we had a massive conversation about buying your. Europed. Intothe u. K. Story bleed the by europe story . They are both ultimately global stories. They are about improvement in Global Growth and sentiment coming back to encourage investors to come back to the u. K. We see Continental Europe better positioned and more attractively priced. We are not seeing any evidence that concerns around brexit and the upcoming election are having any he really impact in terms of impact in terms of Investor Sentiment coming back into europe. Jonathan final question for you, i am putting you on the spot. I know youre not exclusively an fx guy. Which side of the trade do you want to be on . This is a oneweek call. Trying to call currencies over one week is not the right thing for most investors to try to do even if you know the outcome of the election. Of the lastessons years this is challenging. Togerterm, there is reason believe sterling will remain weak. Vonnie there is someone coming up the believes brexit is a headwind. Youre watching bloomberg. Afternoon forod london and a good morning for new york. Im so confused with the time difference. Im jonathan with alix steel and david westin. Lets look to the Market Action. Flat. S are dead we go nowhere on the dow and s p 500. What is remarkable about the session as we head into tomorrow with three key decisions on the calendar tomorrow. , it is remarkably muted. The pound going nowhere. Sterling does nothing. The euro is a bit softer on the session after the inflation forecast from the ecb may, in softer. Treasuries go nowhere to some extent. 215 2. 15 on the u. S. 10 year yield. Intel ron, an attack on the parliament there has ended. Security forces killed four. Unmen there were two attacks, one on the parliament. At least those go people were killed and more than 30 wounded. A suicide bomber set off a suicide bomb at the shrine of ayatollah khomeini. Fbi director james comey will stop short of saying President Trump try to obstruct justice in the Senate Investigation into russian meddling in the investigation according to someone close to call me. He will testify in front of the Senate Intelligence committee tomorrow. We will have special coverage of that on Bloomberg Television and radio again in 9 30. President trump outlines his vision for american infrastructure. The plan calls for 200 billion in federal spending over the next 10 years. Critics say much more direct federal money is needed to repair roads, bridges and other assets. We will bring you live coverage of President Trumps remarks later today. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. 27 hundred journalists and analysts in more than 120 countries. David with all the talk about russia and james comey and attorney general sessions. We are wondering what came of tax reform. Tom barrett is one of President Trumps staunchest supporters. He remains bullish on the agenda overall. Hanging fruit for everyone. I am the most can encouraged i amusable tax reform as for everybody because everybody will win. Health care is much more complicated. Im optimistic about the workable tax bill. It wont be as bad as the naysayers think, mnuchin and together with the budgetary confinement and a congress will have to get there, this congress has got to do something. I think on a business sense, boldness. Hope, when you look at transparency, why stock market doing what it is doing . Ands driven by five stocks all we have to do is invest at google, amazon, whoever. That is the market cap of the world. ,ransparency and optimism capital at a time when the rest of the world is in sovereign wealth centralbank warfare. The Central Banks have now become the governors to shore. Du jour 10 years ago, nobody cared who the central banker was in these countries. It was a boring job. Now it dictates the pace. We are almost in the 10th year. Everybody wants to fix Interest Rates. All of you in the audience and Interest Ratesas started to trip from 5 to 4 , everyone saying i would lock it and go fixed. If you would have done in the 15 years the last 15 years, you would have been wrong. Everything is getting cheaper, in five years we will have driverless cars. The effect on the world is going to train change tremendously. Yet you have amazon who has put Shopping Centers out of business. You have netflix, which was a , blockbusterpan video which was worth 5 billion and netflix were severe worth zero and blockbuster is bank. Obbed bankrupt who can figure out where the world is going . Is the best bogner world for preservation of capital everywhere. Place in thet world for preservation of capital everywhere. What he what the president is doing is driving Global Growth in a meaningful way. I think that is the rhetoric. He has the best team in the world. Kelly,lerson, general general mattis, steve mnuchin, oblique the best cabinet that has been formed in the last 20 years. Has yet tobinet that have a legislative a compliment they can show. Health care continues to be a first time around disaster, they got it through the house. A very tough goal to start with. They need to rack up these wins somewhere. You can point to a more robust foreign policy. Where is the evidence and the sort of meaningful change that is going to keep the base and in particular im interested by you saying he is reaching out. Without any affect in their pocketbooks or meaningful job creation, without a view of america as a strong leader in the world. That will come back and haunt him in 2018. Tom you are so pretty. I think america is a strong leader. At the end of the day, you are right. Wants toge american hundred dollars to 300 a month more in their pocket. Ite ownership is the lowest has been. People have to use Emergency Rooms as health care. Public schools are in shambles and not very useful. Our military needs to be rehabilitated. I think it is baby steps. There is no magic elixir. Avid that was tom barrack there may be turmoil in washington, but people like tom barrack reassuring that tax reform will go forward. Here to give us some answers are inman. Eynman fe welcome both of you. Josh, lets start with you. If you are investors an investor looking at tomorrow, do you do nothing, do try to anticipate or hedge . Josh i would not try to anticipate. There is a lot going on in washington. And to theough that fundamentals, coming out of the election, people got to carried away by what we might get. People have scale that back dramatically. It seems there is a danger that people the pendulum may have swung too far and people may be discounting any possibility from trump. Even is a better than chance of getting something before the end of the year. Much scaleddown from the big plans, but something. Rip legends in congress will say if we dont do anything, we are in a lot of trouble. David that is what tom barrack said. Will you be watching the comey testimony. Will it be for the interest in it or will it affect the value . It would affect someones. Alue if testimony comes out you get these feelings of derailment of the trump agenda. That is the risk is for the markets. When you look at trump trades and you see the s p and the dollar, it is now verging as we go in different directions. There is some hope in the market. This testimony tomorrow is important. Alix where is the biggest miss price misprice . Josh i think bond yields have gotten too pessimistic. We did see some gradual back up. Maybe not all the way to where we were postelection, but i think a little bit. Alix are we in an asymmetric risk world . I feel there is more Downside Risk. The dollar is a good signal. It continues to weaken and has given a good backdrop for emerging markets. It is not a good signal of strength. David finally, we were talking about the bond market and equity markets seem to be seeing two different economies. Ben i think the bond market has been more rational. Josh i think more on stocks. Alix we will get more into yields. Emons feinman and ben both joining us. We will bring you live coverage of President Trumps remarks on infrastructure and be joined by ohio senator rob portman desperately trying to change the conversation from President Trump. This is bloomberg. Emma this is the hewlettpackard enterprise green room. The former British Ambassador to the u. S. Joins us at 9 30. Emma this is the hewlettpackard enterprise green room. Jonathan good afternoon from london and good morning in new york. Im Jonathan Ferro alongside alix steel and david westin. If i told you the european regulators told a bank in spain they were set to fail, would you the picture onbe your screen . Santander has picked up the pieces and the junior bonds have done what they should have done. The senior bondholders are sitting pretty. The picture on your screen . Futures go nowhere. The ftse looking a bit softer. The dax up the other way. The cable rate hasnt moved for two straight days. As euro a little bit softer we look ahead to the ecb forecast tomorrow and reports suggesting they may revise those. Orecasts lower the treasuries anchored around 2017. We are softer, up by a single basis point. That is the its righthas to sell its chip business. Weston digital wanted to derail a deal with concerns the chip unit may fall into the hands of competitors. Theyve not been able to match the price offered by others. Likely to be cut as part of a business review. Southeast asias Largest Airlines is trying to revise earnings after a quarterly loss. It is under pressure to reduce costs after con competition from regional carriers. That is your Bloomberg Business flash. Alix in the treasury market, the question has been why are 10 year yields so low . The potential answer came yesterday when maybe china may be buying treasuries. Foreignexchange reserves climb for four months in a row. This is the biggest increase we saw since april 2014. With us is josh feynman and ben emons. Was this china buying u. S. Treasurys or is that too much of a leap . Ben somewhat of a leap to make buying,china is always it is managing its reserves as a basket. The dollar is something they have to add against and by treasuries. There is a cautious stance in the market. Managers have been increasing duration and adding more treasuries to the portfolio. Breaking news. It is reported president is about to nominate an fbi director to replace james comey, it is christopher ray. We are waiting for james comey to testify about why years why he was fired. Alix he said he was a man of impeccable credentials. Of othere function things, not just foreign buying. Are we in an Alan Greenspan situation . This is what Alan Greenspan had to contend with. You wound up having a rate hike, but yields went lower. Are we going to see the same situation . Josh we havent seen that for a while. We are living in a Slower Growth world structurally. Trend growth is lower. We are in a seemingly higher situation related to opportunities. All those things constrain the real Interest Rate. They keep real rates lowered. Alix that is a fundamental call versus we have china and Portfolio Managers and japan buying. Which is it . Josh fundamental. The fundamental macro drivers, demand for investment capital. Those have continued to be both pushing and holding down real Interest Rates. It doesnt mean it cant be a cyclical upward pressure from time to time. The global cycle seems to be per from improving. Other Central Banks may start to pull back a little bit on stimulus. That can put on upward pressure. All this is constraint which are structural which keeps real rates from going back to where they were in the past. The conundrum is still alive and well. Alix ben, you obviously look at yields. Two point 15 on the 10 year. Where are the profits here . I thought we would see massive selling after the enormous rally yesterday. What are they waiting for . How sticky is this money . Ben you get this sequencing of events like tomorrow. There is a fair amount of caution here to see how this plays out. The volatility market is exceptionally low. That is by people on the sidelines not putting in. You have to have another catalyst here in order to get people off the sidelines and then things can change. You see these diverging trends. It suggests the market is skeptical about what the plans will be or how they will be implemented. Alix what kind of yield winds up disrupting equities or the fed . Ben one of the yields is the tenyear treasury yield if it shoots up fast, that could be the case. Cutting itss out inflation forecast, it does this as a doesnt want conditions to change too quickly. If the ecb were to move quicker, that could disrupt the market as well. Alix josh, how you constructive portfolio with this . When you have a fed that is going but not in the market is too uncertain. Josh the fed is going. Alix in june. Josh beyond that depends on what the economy does. They will see their plans broadly in place, they will continue on this gradual pace, or begin the balance sheet. They will be treading carefully. There is no great sense of urgency. Inflation is running below target. About the financial conundrum posed for the fed, they want financial conditions to move up a little bit. Rates dont move at all, that makes it hard to tiny natural titan financials. Alix Joshua Feinman and ben emons, thank you. If you have a terminal, top check out tv. Interact us interact with us directly. Remember that breaking news, President Trump saying he will nominate four fbi director. This is bloomberg. David this is bloomberg, im david westin. On the eve of james comeys testimony to washington, President Trump has nominated a replacement. He said i will nominate Christopher Wray to the new fbi director. Joining us is kevin cirilli. Wray is not a stranger to washington. He served as in the Justice Department under george w. Bush. Does this, is a surprise . Kevin this is someone who was on the short list. I was speaking with a source familiar to the issue regarding the president s thinking regarding the fbi director. This is a choice the administration feels will have widespread support within all factions of the Republican Party. There were several other people on the shortlist including Fred Townsend who was perhaps one of the most well known in terms of the punditry world. Towers spotted at trump as senator Lindsey Graham this week. When you take a step back and you look at how they arrived at this situation, they are looking for someone who can have the full backing of the Republican Party. Hopefully get some democratic support, but also have the perception they will be impartial to the Ongoing Investigation into the russia probe which will dominate the news cycle in terms of the next 48 hours. David Fran Townsend was head of counterterrorism under bush. Was no stranger to this. He let a lot of prosecutions after 9 11. He has the security credentials as well. Someone whois also cityth former new york mayor rudy giuliani. In terms of people who of had a president s year in terms of who they president s ear in terms of the fbi replacement. People like senator Lindsey Graham or john mccain, as well as these more conservative members of the Republican Party have not been as outspoken in their criticism of the president s decision to fire now former director call me because im told by some that they wanted to have input on who would be the replacement. David the extent to which attorney general Jeff Sessions had a lot of input because you up in reporting, there have been questions about his status in the cabinet. Kevin i spoke with a source connected to this story with attorney general Jeff Sessions, there is a believe that the offer to resign was as a result of the president s frustration the attorney generals to recuse himself from the russia probe. Whether or not they have patched it up, there is widespread speculation that only they can settle. David do you have any sense of how people in the fbi will react to this . Kevin i think we will have to wait. Pick,k this is a safe that is what the white house is putting out. The reaction will immediately trickle in now. David thank you for joining us on the phone. That is our chief washington correspondent, kevin cirilli. Jonathan coming up on the has releasedoecb a list of priorities. Contingent concern will bonds. We will talk european financials. London and new york, you are watching bloomberg tv. Jonathan it is the countdown to super thursday as the former fbi director prepares to testify in d. C. , the president nominates a new one. Santander offers to take over bango popular. Bango popular Banco Popular. A good afternoon from london. Good morning from new york, im Jonathan Ferro alongside alix steel and david westin. Do go nowhere. Up about 1 10 of 1 . Treasuries a little bit softer as well. Yields high by a single basis point. What strikes me is a remarkable calm across assets despite big events coming up. Alix real risk options yesterday. Not seeing that reflected. Dollaryen neutral on the day after a big slide yesterday. Gold was near 1300. Oil continues to roll over. Down 7 10 of 1 . David it is time for the morning brief. Nationaltor of intelligence dan coats will be testifying before the senate this morning on the Senate Intelligence committee. That is one day before James Comey Testifies on capitol hill. At 10 30 we get weekly crude numbers from the u. S. President trump continues his inrastructure week cincinnati, ohio. Lets get an update on whats making headlines. Emma chandra is here. Emma President Trump has picked someone to replace james comey as fbi director. The president said he will nominate Christopher Wray. President trump calls him a man of impeccable credentials. , an attack on the parliament has ended. Security forces killed all four attackers. There were does attacks in iran today. One of the attackers blew them thet blew himself up at iranian parliament. A suicide bomber set off an explosion at the shrine of ayatollah khomeini. According to people familiar with the matter, there is concern the blockade on qatar could continue. Saudi arabia has closed the one ground crossing into the country. They accused qatar of backing extremists. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra, this is bloomberg. Up having equity futures relatively flat. We wind up having a move in the markets when it comes to banks. Take a look at ing group. All of these moving higher. Popular being purchased by santander. That will be beneficial for the proeurope pope probe bank trade. Also looking at other probe bank pro bank trade. Amarillo moving as well. Aig outlook lowered. It is a tough time for the company. Year to date down 3 . Take a look at whats happening with the equity in the free market down by him a 6 . Its revenue trailed estimates. Revenue came in light as well as earnings. There will be a repurchase program. Not enough to boost that stock. David, still some individual movers even though the general market is calm ahead of that super thursday. Or waiting. They are not sure what to make of it. We will have testimony from james comey on capitol hill tomorrow. President trump today has named a replacement. He tweeted i will be nominating Christopher Wray, a man of impeccable morals, to be director of the fbi. Joining us is kevin cirilli. Anin he hit he is attorney at king and spalding. He also has experience in the Bush Administration. In the top lawmakers Republican Party have had the president s ear on this including Lindsey Graham, they advocated the pic for someone to have the kind of Establishment Experience that would have all support from the Republican Party. Im told by a source familiar with this that they believe this pick will fulfill those just that. David not to be too shortsighted, we have this testimony tomorrow. How does that change the complexion of the testimony if at all . Does it take light off that . Kevin there was criticism yesterday from republicans and democrats that the president had not nominated someone. It becomes a mute issue on that. The second thing is that it allows the reactionary standpoint elsewhere from the hearing and it allows the administration to make the case they want to move forward. The third point i would make is that i have spoken with several inrces, last night particular, about how republicans are preparing to handle now former director comeys hearing tomorrow. What they feel is they will this is what ive heard from two sources, they will try to flip the script and put as much pressure as they can on director to defend the decision for why he for months was able to target President Trump, but did not target with the same gusto according to them, the Clinton White house. Y will try to track him catch him in doublespeak. They are organized in how they will aggressively try to politicize this. I havent seen this type of Rapid Response since the campaign. Much, kevin. You so we will check back in later. We are on the phone with the former fbi assistant director. Thank you very much for joining us. Ron good to be with you. David one of the questions we had is what is the likely response within the fbi to this nomination . There are a lot of people in the fbi very concerned about the firing of mr. Comey. Might this help the situation . Ron it might. I think they will be pouring whatmr. Wrays bio to see positions he has taken in the past, where he has served. I know he has reported to have done a couple years within the doj. I think by and large they will see that as a positive. For, ity are looking appears as though mr. Wray is relatively young. Its is a big job and i think is going to be seen as a key component of it. At hisll be looking prior engagements going to former colleagues to get a better understanding of how it was to deal with mr. Wray when he was on the other side of the street. Is nott important thing that he previously was an fbi agent, i dont think they see that as a prerequisite at all. But, can he be independent to a fault. That is what the organization is about. That is what the organization is looking for. Is that independent streak to find their way to do what they all believe is the right thing politicsis to put the that are particularly divisive today, somehow put that off to the side and guide the organization to the right result and in high priority cases. The men and women who work there are very effective at managing cases across the board, particularly low priority cases. It is these cases where you are talking about senior political leaders that get so contentious that you need a wise, experienced, relentlessly independent director to help be the face of the organization. David lets fill in a few blanks. He was an assistant u. S. Attorney in atlanta. He started as a prosecutor. He was at a time when general ashcroft would have been there and jim comey as well. He was associate attorney general before that. He spent quite a few years under george w. Bush. He knows his way around the division. Jim comey was in the Justice Department long before the fbi. Ron i think those are positives. The assistant attorney general to the Criminal Division and others are going to have to have a clear understanding of the fbis priorities, and understanding of how they match up or conflict with the dojs priorities and be able to pick up the battle for the fbi as far as its mission and funding, the expectations of congress are critical for someone. I think having served in those roles, frankly i was a little bit critical of the lieberman interview on a couple of pounds, not the least of which was that yet no prior intimate knowledge of the doj or fbi. I think that was a significant deficit that perhaps cannot be overcome. Here, we have someone with that prior experience. Hopefully it is perceived as a positive within the fbi and maybe he will be off and running. David ron, thank you for joining us. Former fbi assistant director. Now we turn to republican senator rob portman of ohio on capitol hill. Thank you for joining us. We have a lot to talk about. This big news we have to start with. What do you know about this nomination . Do you have any initial reactions . Listened to i just your commentator talk about his experience and you mentioned he was a prosecutor at the Justice Department. I think that is good. I dont know him. I heard his name in the Bush Administration, but i dont know him. I am looking forward to looking at his record and experience. I would agree with what ron said where you are looking for with independence and the ability to handle a delicate job at this juncture. Im looking forward to seeing his experience and background. David as a senator wholl be asked to confirm. Thatmportant is independence you referred to as you decide who should be the next director . Sen. Portman it is the premier Law Enforcement agency in the country. Has beenagency that able to keep a distance from politics and i think that is important. I think it is something again right now that requires a leader who has integrity, who has the confidence of the department and , people in the rank and file. They could use a morale boost at the fbi. Alix how would you judge if you will be independent of enough . Sen. Portman you look at his background. He served as head of the Criminal Division in the Bush Administration so there is some experience there. To a certain extent you base it on your conversations and how he views the role of the fbi. Senator portman, i originally wanted to talk about infrastructure because the president is traveling to your hometown to talk about infrastructure. What do you make of what the president is trying to do this week in laying out an infrastructure plan . How will we pay for it . Sen. Portman i am supportive of the principles. He laid out principles which indicate the administration will task aftern as a perhaps health care is done and maybe as part of tax reform or after that. I think it is great. You look at the roads and country,round the probably about a third are in bad shape. We have probably about 10 of bridges as functionally obsolete. One happens to be in my hometown of cincinnati. Ur ports are in need of help our airports are in need of help. I am encouraged by what i see. In terms of how you pay for it, what we have talked about is taking seed money and using the leverage of activity bonds or tax credits or other instruments to try to expand the amount of Resources Available and i think it is not opportunity to improve the economy both shortterm and longterm. To worke will immediately and create more economic opportunity. I think it is not opportunity to work on a bipartisan basis on something where democrats and republicans seem to have similar views. David you have been diligent about warning the dangers of running up a big deficit. I know you were focused on this. Private Public Partnerships are good to talk about and have been done in other parts of the world. There are many people who say things like paul rhoads you can charge for, there are other things you cant charge for. I think it is a good beat. Ohio as an example we have aging infrastructure in water and sewer that is more difficult to pay for compared to a road. That has to be taken into consideration. If you look at the white paper that was done during the campaign and i think wilbur ross was the coauthor, it talks about the fact there will be increased revenues from the workforce coming in initially and over time it will be the right projects which is different than tolling or bringing in other ways to pay for it from the users. I think it is something to be considered and overall this directedbe an effort not just by the federal government, but by the states. I think the states have a sophisticated priority system. Certainly in ohio, we are identifying where our weaknesses are and a way to give states considerable flexibility. Alix senator, obviously all eyes will be on d. C. Tomorrow with comey testifying before the Senate Intelligence committee. The risk for the market is that we will hear something about a potential obstruction of justice. As a senator, what will you be looking for to confirm that one way or another . Sen. Portman as i have said from the start, i do think the russians meddled in the election. I was talking about this long before this election in fact because i believe the Disinformation Campaign is very real. We have seen it recently in france and germany. , to havehat is the key this testimony relate to this broader issue we have and how do we get to the bottom of it and do something about it. Whether it is the special counsel probe or the Intelligence Committee probe, i will be listening for what happened and how to get to the bottom of it and ensure the American People can hear directly from people involved looking at the raw intelligence and understanding it. Lets hope to give people some comfort we will have a elections with integrity and we will be able to deal with this issue in terms of the disinformation and meddling. To talke have a lot about, but i dont want to let you go without talking about health care. That is some in your been outspoken about. You have been an opponent of a bomb a care saying it does not itk of obamacare saying doesnt work. However you dont want to throw people off of insurance. How confident are you that you can that the senate can thread that needle and do it in a reasonable amount of time . Sen. Portman im confident we can do it. I dont think we should set an official deadline yet. We should have the opportunity to let people understand how you can cover people in a more effective way than the Affordable Care act. Wasreason i was an opponent what happened in ohio yesterday. Truly sad for the tens of thousands of people who will be finding themselves without Health Care Insurance because anthem pulled out because the structure does not work. Of ourit he had a third counties in ohio only have one insurer. Now we have 18 counties where there will be no insurers under the desk in the exchanges. Another one third of our counties only have one. The system that was established did not work. Not just for the insurance companies, but for people i represent. Deductibles have gone up dramatically. Many feel like they dont have Health Care Insurance even though they have it. Premiums have gone up almost 100 in ohio. 82 for small businesses. There is an opportunity for us to do something about it and we should not miss it. So thank you show much much for your time today. Alix the michigan sports football whatever. Santander has agreed to take popular. O the man you want to hear from, Christopher Wheeler will be joining us on that as well is his outlook for european banks. This is bloomberg. Jonathan santander has agreed to take over Banco Popular after european officials said it was likely to fail. Take over. Ill joining us to discuss is Christopher Wheeler. He joins us on the phone in london. Right to have you with us on the program. Im going to bring up a chart that will make regulators smile. Up. Senior debt rolls is that what they wanted to see . Is that a way to resolve a failing bank . Christopher i think it probably is and it seems we have set up these regulations and im glad to say we have not had many cases where we have had to implement those regulations for the resolution. , it is it is quite nice quite helpful to have early in life situations. You can see those regulations are working. Jonathan is this an example you can trigger a t1s . The senior debt rallies off the back of it. This is Banco Popular. Can you do this with a Deutsche Bank . Hristopher you can obviously it is a much bigger scale. The beauty here is that Banco Popular is a mediumsized bank given all the mergers that took place in spain. Therefore, it is possible to do it because you have a bank like santander that can step in and by buy. We get into the situation is deutsches converting and then we have a much bigger problem. We come back to the fact that the reality is that too big to fail has not gone away. Jonathan the other reality, lets take italy. A lot of nonperforming. Lets talk about the following. Can junior debt holders mostly in retail. Youve seen some headlines of big management firms with same to, can you do the those that took on serious junior debt in italy . Christopher this is a big problem. I was at the table in the u. K. When they put restrictions on who could own. I think it is a very good product for Wealth Management for companies to put their clients into. Im talking about it around barclays or lloyds bank, a very solid bank. Whereances of a problem they get bailed in will be quite slim. Thatnk we have to say obviously where you have banks in italy and spain where you have smaller investors, it is a problem for the european regulators. The push towards institutional orders is probably the right way to go. Inathan i want to bring bank of america analyst. News you can execute this kind of resolution and it will bleed across the market. Do you still have concerns with this kind of debt . James this is what these are designed for. The whole point about the postregulation was to make banks safer and capital could be converted in a situation. This is a very good example of this. Every pond you own, you have to do credit analysis. You have to understand, just dont buy them blindly. Deutsche bank could do right. It is about doing that work and thats one of the reasons why they are professional investors. You have to do your credit work. Jonathan chris, a quick question. 1e bleed across in the at space rolled over softer. Is that a positive or a show the market has a big reach for yield . Christopher i think your other guest is rightly pointing out people are looking at the credit. One of the few very good things that came out of the crisis was the fact we know of certain institutions providing blinds on doing work,u were they wouldnt have bought them. Jonathan Chris Wheeler, great to have you with us. Jonathan from london to new. Ork, im Jonathan Ferro a softer session emerges on the ftse here in london. 0. 15 to be precise. Heres the action elsewhere. Remarkable calm on the cable rate for todays heading toward the u. K. Election. The euro a little bit softer ahead of the ecb, with reports saying that the ecb staff forecast will be cutting the inflation fo projection. Maybe we have a dovish surprise in store. Yields up a single basis point, 215 on the tenure. Year. David the big news this morning and that last hour has been the new fbi director. Jas comey of testifying in front of congress, President Trump has nominated a replacement. He tweeted, i will nominate christopher a ray, a man of impeccable credentials, to be the new director of the fbi. Details to follow. Joining us now is a woman i was turn to when i want to know the law, lenny okelly. What we know about mr. Wray . First off, hes not a high profile person, but hes a career prosecutor type and has worked in private practice as well. He was not a politician. David like joe lieberman. he has done a number of things we remember well like the enron task force. More recently he represented Credit Suisse and its settlement with the u. S. Government over helping americans evade taxes. Hereost significant thing might be that he represented the Chris Christie in the bridge get trial. David oh really . Winnie vanity fair reported on conversations on how trump should handle the matter. He said get an internal group of lawyers, look it over, maybe they wont resolve everything, but they let you know what they need to know. He is a man of integrity and christie worked for chris wra y in the Justice Department. He was an attorney in new jersey. David do you think the president might need a group of lawyers to get together to get back to him on some subject or the other . Winnie its not his style, shall be say, but i do think that was interesting that it was Chris Christies advice and recommendation and this was the man chosen. David do we have any sense of timing to get this confirmed . Winnie i dont. They has a moving slowly as we all know, so we will have to wait and see from washington on that one. David great to have you, winnie. Alix disarray, delusion, delays, come on . [laughter] joining us now is the man who profited and off of the market routes. He joins us now. So great to get your perspective on this day. Your game is safe haven investment. When we look at politics, geopolitical risk, elections in europe, how do you look at the world . Tale hedging is very much a form of safe haven investing. we are very much in a centrally planned market. Withthat happens distortions and oneway biases in the market, they go on a very long time. The worse it will be when its over, but theres no way of avoiding it. Its initially about preparing for them. Alix when you try to prepare for some kind of big risk, you want up getting hurt. Look at what happened with brexit, the french election, President Trump. None of the dramatic risks actually paid off. How do you structure that investment with a timeline . Mark it depends on how you prepare for it. I do it with a very convex with. Way. If you do it on the demise of the market we are in, thats dangerous. When you dont get the timing right, its not going to work out well. We do it in a very convex way, but it requires patience and discipline. Its like santiago waiting in eternity for his fish to come. Godot. Aiting for mark ive been doing this for 20 years, so thats maybe the reason i have longterm perspective. Alix is it the central bank or a politic risk or an issue we dont know yet . Mark this whole idea of catalysts is something that i kind of stay away from. Its more of the environment we are in. Book a few years ago about how the great metaphors is that we are in this Fire Suppression environment. Central planners will not let there be wildfires. They control the short run, but ultimately the blaze of glory happens. It doesnt matter where it comes from. It could be from an errant match or my kid with a 22 in the woods. It does not matter what the ultimate cause of the fire is. Alix what is the best safe haven . Mark the one you have to invest the smallest amount in it and the largest payout in the crash. Alix what is that . Mark very biased. Its what i focus on doing, so its a tale hedging. Gold is not bad. David but you are way out on the tail. You have things that are huge consequences but are and expensive to hedge against. Do you sit around and think what is the worst thing that could happen in the world . What would be the disaster . How do you do that . Mark we structure the portfolio in a way that we intend to make a lot when the worst thing happens. We are way out in detail, but thats the nature of the tail. David what is one of the worst things that could happen . We dont need to give a fancy about this, but a huge stock market crash. This is where we make our ha y. So many things that could go wrong here basically are subsumed by that. David huge a long order of 2008, that sort of thing . A more distorted market and more aggressive monetary interventionism today. I think its going to be far worse than that simply for that reason. When i do is not just about playing good defense. To my clients, its all about playing good offense. The small tale hedging investment, and allows you to be more aggressive and have higher beta. Thats really the whole point of it. It allows you to do something that you would not otherwise do. Its about participating in the craziness that is distorted market today. Alix how are you participating in the craziness . Mark im allowing my clients to participate in the craziness. Alix wheres the most upside in that . He said gold is not bad, but whats the other side . Mark its everywhere. Everyone is chasing yield. Thats what the Central Banks are causing everyone to do. You have half of active a u. N. Going after income funds today. Thats crazy, but its not surprising because we are being starved of the yield today. It also means that vol is very low. That is yield enhancing trade to sell vol. Ive never seen it this low in my 20 year career. Implied volatility on equities, you can see it in the vix. You have to go back 20 years to see the vix as low. These are the basic traits that people able to do and have to do today. David does your opportunity actually go up as you see the concentration of etfs . People are really betting on the index. More money is going into that. Does that create more opportunity for you because you can bet against that . Mark it creates a fatter left tail and general complacency in the market. I love implied volatility low. I needed to be low. The complacency driving the markets up and making people pile into yield traits, being yield hogs, thats making it cheaper for me to do when im trying to the. Do. Alix what is the biggest mispricing the market . Mark its all over the place, but volatility is the most complacent the. Ough. Alix you mentioned gold is not bad as a way to protect the tail. What action do you expect . We have not seen the safe haven reaction we have thought. I covered gold back in 2010. We are nowhere near that kind of conversation. Can you give me a nice goal predictor . Mark goal wil gold will be very nois. It tends have a flight quality ad. N things are tha b i think its a good momandpop kind of tail hedge. Alix do you needed to go to 2000 to have your moneys worth what you just needed to move . Mark over a lifetime, much more upside than that. You have to play the long game with precious metals. Alix gold over 2000 the long run . Mark certainly. Its a noisy trade. I dont need to be right in what i do. I dont like forecasting other than knowing that the left tail is fat and stocks in the right tale is that in gold. Alix i will not quit this job until gold hits 2000. Great to have you. L, thank you very much. Jonathan those price calls, i question them a lot. Coming up on this program tomorrow, we will have full coverage of the ecb decision tomorrow. The global head of fx strategy and the Credit Suisse global head of fx. All that coming up from london and new york, you are watching bloomberg t tv. Emma this is bloomberg daybreak. Im emma chandra and hewlettpackard enterprise greenroom. Coming up, the former British Ambassador to the u. S. Who joins us. The countdown until the election continues. Many are still wondering what the vote is about. At issue, the Bloomberg View editors addressed in a piece titled the u. K. Strange parliamentary election about , britains vote on thursday said to be a textbook example of the limits of elections, when choices are not clear and and take elated by strong leaders. Elections can move politics forward. When choices are clear and parties dont know what they stand for, votes resolve nothing. Joining us now is the bank of america head of global cross strategy. Is is a textbook example of something that will ultimately solve nothing . Probably. If you take the average of the opinion polls, we will end up with a decision where the conservative government is reelected with a slightly bigger majority. Going to gets not what she really wanted, which was a much bigger majority and much more flexibility to do much and wanted to do on brexit. The one thing she has gotten out of it is an extra to d two years to hold the brexit negotiations. She does not have to finalize until 2022 is. Jonathan do you think of any outcome when you wake up on friday morning and really have to rewrite your thesis on Global Markets and where things are going to head through 2017 . James not Global Markets. You can recal rewrite your thesis as to whats going to happen in the case youu. K. She is more flexibility and thats quite good for the pound. On the other hand, if you end up with a big swing to the labour party and it ends up being a part of the coalition, then the big question for the u. K. Is how much softer does the brexit get . How do you way those two options . It is really u. K. It is not affecting the rest of the world. When we have brexit, that will impact the rest of the world. This really doesnt. Jonathan the ocd coming out and saying the whole brexit negotiation story is a headwind for europe. Pretty much everyone we speak to says by europe. You see the performance of the cocoass. Bounced back after selling off initially. Set to be about 22 billion euros. Why do we still have this relentless bid for yield . James as far as europe is concerned, brexit is an issue. Does it really affect the european economy . No, not really. The french elections were much more important in that regard. When macron was elected, for american investors, before and after the first round of the election, you saw a big swing around in sentiment. No one wanted to talk about europe before. Le pen wasealized not going to win, everybody wanted to talk about europe. It comes back to Central Banks crushing yield around the world. That means that investors have to reach out to places that would not normally go to to get that yield. Jonathan you guys of done the research about this and we were talking about it last week in new york. Why buy the debt when you can get a bigger pick up on the equity and less risk . James that is one of the things we have been saying to people. The highyield yields less than actual market and it has a worse Credit Rating on average. Washington investor stay in credit and not going to equities . Why should investors stay in credit and not go to into into equities . You can still pick up at 3. 5 yield in the market as a whole, but you can put the basket. Jonathan is an original story, the periphery versus the core . James within the equity market, theres quite a segment story. The yield is pretty much quite across the board. You can find it and oil stocks, banks, insurance, utilities. You can put a fairly dovish basket together. Butthan maybe not as much, still rather like the s p story in the u. K. At the moment. Just a proxy for whatever happens with the fx market. When qb first started, is the equity market insulated by what the ecb may or may not do through 2017 . James not particularly. The story is different from two years ago. Two years ago people were buying the equity market on hope and buying it hedged. This time around we are not buying it on hope. We had the best earnings season in europe and over 15 years and our data. We have earnings revisions the strongest in nine years. You are actually buying a market where the earnings story is finally coming through. That is where we are seeing proper interest in european equities. Jonathan james party, bank of America Merrill lynch. We take it to emerging markets. The finance minister of india will be joining the program. There are cracks in the long em trade. Brazil is one and south africas another. India looking a low bit softer. We will catch up with this man on the other side of the commercial break. You are watching bloomberg tv. Jonathan india kept its benchmark rate steady as they lowered estimates for the current financial year. A future reduction in Interest Rates. With us is indias finance minister. Great to have you with us on the program. There are cracks in the emerging markets story at the moment. Mess. Is a political india is an area of significant growth, but things are softer at the moment. I want you to give me your view of what you think is happening in the country and what the ministry can do to support growth and get things back on a high track. Arun first of all, let me tell you the world may not be appropriate. In the last three years, we have had a 7. 5 8 , and the 7. 1 growth. On account of global t demand depressing a little, the capacity of indian banks to support growth is somewhat inadequate. We were anticipating a lower growth rate. Even then, notwithstanding the fact that demonetization took place in the Third Quarter of last year, we end of year with a 7. 1 growth. Normals,er by indias but our normal today is seven to 8 . I do believe that india has carried on a large number of Structural Reforms in the last for years. Now with the kind of Structural Reforms that are setting in some of the kind of Public Expenditure and the investment we are getting in, i do expect the growth to turn around and improve this year. That is what all global agencies are indicating. I do believe that the effect of the demonetization, the gst likely to set them by the first of july this year, hopefully with a good monsoon being predicted this year, the growt s revival will take place. The one important challenge we have is in regard to the private sector investment. We do believe that the global curve is also turning the turning slowly. Domestic consumption is improving and hopefully we are able over the next euro so to address the problem of the indian Banking System itself. We will again pick up significant growth. Jonathan minister, and the first quarter, there was a slowdown on gdp. The estimate is still 7 for the full year 2017. How much capacity do you have to push forward to enable these banks to have more Public Sector bank mergers . Is that something you can achieve without pushing growth further down . Well, i think the merger itself will only strengthen the indian banks. It will not weaken them. It will not weaken the capacity of the banks to support growth. I dont think india needs numericabllly a large number of banks. We have foreign banks, private sector banks, payment banks. Now the nature of the Banking Industry with technology itself has changed. Anrefore ive announced amalgamation and merger is something very much in the cards. The first big one is the state ranked with the subsidies already taking place. We will be contemplating a few more. Initially the idea was to allow the health of the banks to improve a little, but i do think there are some which we can work on. Jonathan looking at the story with a high denomination notes, the move to ban them, they got tongues wagging around the world. I want to gauge from you and what you have indicated so far, do you truly believe that has been a success . N see, i think there have we were conscious of the fact that the demonetization to the extent that it causes a cash crunch may temporarily for a quarter or two impact us adversely, but there were some longterm advantages. Sorry, the first significant advantage is that there is a great and a substantial Movement Toward digitizers and of the economy which is taking place. That is used of cash relatively comes down to the use of other modes of payment increases. This a substantial number of subsidies added. In the first three months after demonetization, 9. 2 million new subsidies have been added. Anticipated Tax Collections in the years to come will substantially increase. Thirdly, i think the new normal has been established in india. The message is loud and clear that its no longer safe to be substantially in cash. Jonathan sir, just to reply and get your thoughts on the r. B. I. What you think of the mpc declining to meet with officials before the policy meeting and todays decision . Arun i think the finance ministry represents the government of india. And the finance ministry is an accountable institution. The government will give its own assessment of the economy to the reserve bank. Is a normal done thing. Whether its done orderly or in writing is immaterial. Its an important input that the Economic Division of the finance Ministry Gives its input to the central bank. Ultimately its what the new authority of the central bank itself to decide the rates. We always respect the jurisdiction. Jonathan should they cut rates today . They have already announced the policy. Normally i dont comment on it. The ministry makes a formal statement. Jaitley, great to have you on the program. Jonathan the countdown to super thursday. The President Trump nominates an fbi director to replace jim comey as he begins to testify. They go popular is taken over after the lender was likely to fail. The Global Economy has a lot riding on whatever comes out of d. C. Apparently. An update shows the u. S. Is the only major economy expected to see growth in 2018. Welcome to bloomberg daybreak. On this wednesday june 7, im Jonathan Ferro alongside david westin and out still. Lets get you up to speed on the Market Action. Features dead flat on the s p 500. The euro dollar softer on the back of an ecb report suggesting that they may well cut their inflation forecast through the period. T wil does the story across assets. Lets get you movers ahead of the cash open withou alix steel. Alix revenue fell 5 year on year. This is basically about the trucking industry. They wrote down the value of their inventory for use trucks and also cut their inventory for the fourth straight quarter. This Company Still and turnaround mode. Cocacola and pepsi co. Getting a teeny bit of a beat up in pregrade market. Yet the downgrade over at bml. They sided likes of Earnings Growth over at the big heavyweights. They basically said any kind of merger is not a compelling story for coke or pepsi as well. Tesla up by 6 10 of 1 in the premarket. We have the bull and bear side. Elon musk says he will plan to build a separate factory for the model y crossover vehicle. He has one mega factory and could have as much as 12. Chanos says that tesla should burn about 1 billion in cash. The market still up by six tens of 1 . Been the markets have preparing for that trifecta tomorrow of the election in the united kingdom, the ecb announcement, and the congressional testimony of former fbi director james comey. Earlier today we learned who the present has chosen to replace james comey. He is Christopher Wray. Before we talk about what affect any of these may have, lets get the latest on this story from kevin cirilli, who has now moved to capitol hill. Of thiswhat we know point of the news of Christopher Wray. Kevin President Trump tweeting that he is nominated Christopher Wray to leave the fbi. This is after former fbi director james comey will testify in the senate. Other officials are set to testify today in congress. The white house believes that mr. Ray is an established take and should have the backing of the Republican Party. That is something that top gop lawmakers had advocated for. They feel that in order to put the russia probe behind them, they will need to have an fbi director who is perceived at least to be nonpartisan and be able to investigate the matter without political influence. Quickly is developing here in washington. Lawmakers drafting statements for how they are going to react. There is no question that the white house is hoping to use this nomination as a way to preempt any type of criticism that will dominate the headlines when director comey testifies tomorrow. David what will the headlines be tomorrow . Kevin i spoke with several sources last night who are working in the Rapid Response department for the initiation regarding tomorrows hearing. That trying to flip the script. They feel they should be able to hold director comey to whatever he has done with President Trump with the former administration. They are going to ask pointblank about whether or not he kept memos of hillary clinton. Theyre going to ask pointblank about memos that he has with former president barack obama. They clearly trying to organize. They are arranging a very elaborate Rapid Response effort, led from the rnc as well as katie walsh and mike dembski. These are folks who have left the administration and now are outside. The white house sent over talking points earlier this morning to the rnc. They are ready for a political battle. David they seem to be very well organized this time. Kevin, thanks so much for joining us. We will have special coverage of come east testimony tomorrow on Bloomberg Television and Bloomberg Radio at 9 30 a. M. Eastern time. Jonathan a big thursday coming up with an ecb decision and the u. K. Election and a big testimony down in d. C. Is all this action in washington a market event or not . Joining us now is Paul Christopher, a Global Market strategist. His tomorrow considered a market event on your desk . Paul not necessarily. The expectations of this point would be that the u. K. Elections go in favor of the tories and that the ecb comes out and says Something Like we really dont think we need to cut rates anymore, and probably at some point will begin to taper. We are not expecting anything big out of either of those events. However, the markets have already demonstrated a certain resiliency to political events especially that are unexpected. Remember it is the economy that is driving here. You have a synchronized Global Economy for the First Time Since before the crisis. Plus you have good global liquidity growth not just here in the u. S. But around the world. Jonathan one of the biggest risk off days of 2017 was a political story and it was connected to jim coming. Ey. Wise that not significant to the markets . Hel it could be if indicates under oath that the president interfere. You have another one of those long washington investigations where the media and investors probably keep one eye on that in another eye on the economy. Earnings or whats driving markets. Jonathan is it the right approach to look through the political lens . We have had a series of guests talking about that experience suggest that you should not Pay Attention to the stuff and carry on with what you have. Paul it is they difficult to position yourself for the Downside Risk when you have liquidity growling and the economy growing the way this. You probably have to deal with the events as they occur. None of the events immediately undermines the economy. If theres any sort of risk, its to the longer term. It does not pay to try to guess in advance here. Alix where are the asymmetric risks in the market . Paul we think the risks are still on the political side but maybe longerterm and thinking about tax reform and also politically, broadly speaking, the fed. How many rate hikes might we get in 2018 . We think the market is going to be more interested in the that as we get closer to the end of the. Year. Alix are we looking at more upside or downside . Paul we think stocks probably consolidate a little bit here. Are yearend target for the s p has a midpoint of 2280. We are looking for rates to move higher. For yield, we think it probably gets up toward 275. David what does that imply about things like tax reform . What is baked into that . What is your base case . Paul our base case is that we do not have enough information to build into 2017, but we hope we will begin to see the outline of a tax reform plan by autumn. We think the markets will begin to digest that as well. You could see some discounting of a plan in 2018, but beginning in the fall this year. It would really have to be very significant. At this point, it just does not look like theres enough consensus in washington to really deliver big tax cuts. David if that is right, does that mean theres actually upside . If washington outperforms, what are you anticipating . Paul if washington outperforms, that would be the upside risk. We believe delay and delusion continue. Alix you mentioned 285 on the tenure. 275. T alix how . It seems like we would be closer to two been two and three quarters. Paul a lot of that has to do with inflation. Inflation expectations right after the election cycle, to start the new administration, were actually rising. Now they have moved back consolidated again. We are looking at inflation at 2. 4 . We think the markets will have to adjust to that Going Forward and that will count for much of the move higher. Alix construct me a portfolio for the next 12 months. Paul to start with, we have a lot of u. S. Investors who are overweighted in u. S. Large caps. We think the market cycle continues here, but you have a great, perfect opportunity here to rebalance. Take some profits and recycle that money. We like reits right now. We like quality names in the bond side. We would stay in the middle of the curve with quality corporate names, quality munis. We would think about taking a portfolio of toward longterm target allocations in International Equities europe, japan, and emerging markets. Alix perfect segue what were talking europe shortly. Youre going to be sticking with us. Tech is that sector poised for a pullback. Lots of money moving up to that sector where the nasdaq has rallied nearly 20 alone. We examine the warning signs and the sector. This is bloomberg. Later, former British Ambassador to the u. S. Joins us to discuss tensions in the middle east and tomorrows u. K. Election. Strongly struggling Banco Popular has been rescued by santander. And the most recent bloomberg gadfly column, this is how you get a bank rescue right. That chart on my bloomberg, is that the picture of success . And i guess you thought . Pretty much. Regulators can see this is a good news story. Not being forced for a bank wind up in the riskiest debt is being triggered. The shareholders are wiped out. It is billions of euros of losses, but ultimately senior bondholders are protected and the market crucial is not taking fright. Jonathan i want to do with the cocoa story. You can speak back of course, but this is Banco Popular. The cocoas are in the hand of big institutional players like, reportedly. If it was bitterly and the cocoas were in the hand of retail, with a be bailing him hi . With that be playing out in the different way . Beyond just the cocoas in a place like italy, its a much smaller bank. Too big to fail has that been addressed in europe . No. This is a popular spain story. This is not a complete rubberstamp for eurozone rules. On a day when it does work, we should focus on the fact that it is working. Popular is an idiosyncratic extreme worst. Extreme risk. There are more skeletons in the closet waiting to come out, but his success today. It may be a oneoff, but why not say that . Jonathan they rolled over a bit and then back up to is that a good sign as well . Are some of these banks going to have to watch . 11 on Banco Popular. It is important that there were not wider tremors being seen in the credit markets today. That helps regulators make this decision. This is not been a massive hit to market confidence as the way that Deutsche Bank was about a year ago. Jonathan lets get to santander. They raised 7 billion euros. They get a decent business and they get a Property Portfolio in spain that ive not imagine that they have been able to carry much Due Diligence on. His 7 billion a good enough amount of money to raise the cover of potentially what may be hiding . Lionel we dont think yet, but it is toward caution. People saw popular as having a 5 billion euro capital gap. Yes, obviously this is a bank with such a rocky past. Last year it was in for about seven months before he stepped up. Their more losses to come. Covers potentially litigation risks as well an unexpected losses. This is going to take work and effort. They would not do this if they do not think it it was worth it. Steel, if this was for five years ago and we were talking about a bank potentially failing anywhere in europe, we would have a very different picture on the screen. What we do see on the chart is markets working efficiently now. Maybe take a bit of confidence from that. Alix and the buyer call has been the huge call. With us to discuss that is part christopher. That has been the call by europe. May be double down or what . Paul it does not make us want to double down, but it does help us see that this is part of the broader european recovery that we think will develop over the next couple of years. A lot of my clients call and say, why are we getting into europe sooner . Its because of issues like this. Its because earnings have not established a very firm footing for an uptrend. We do think it will develop Going Forward. We think its a great time to begin averaging into europe, dollar cost averaging into europe for a recovery that will take a couple years to develop. Alix how do you make the allocation . You want to buy spain on that, but italy you buy that as well . Or do you go by the dax . Their different ways to safe haven play it. Paul we do not want to buy individual countries. Thats kind of a concept going by the boards anyway as globalization continues to develop. Deeper for the region. We prefer the region. Lets look at small caps and midcaps in europe, playing the further development of domestic growth. David what about sectors such as financials . That taken significant steps. This is the first resolution that has worked. They had a bank fail and seem to be coming through it. Does that make you more inclined to go to financials . Paul is a good point and an important positive first step, but we would prefer to wait to see whether that earnings track develops more sustainably Going Forward. We would prefer to take a more diversified approach. David they would have to earn something beside surviving. Paul u. S. Investors want to see sustainability here. David does Paul Christopher of wells fargo investment institute. Coming up tomorrow, we are focused on the big story a former fbi director james comey testifying on capitol hill. We will have special coverage on Bloomberg Television and radio beginning at 9 30 a. M. Eastern time. Live from new york, london, and washington, this is bloomberg. Alix this is bloomberg daybreak. The oecd warning about equity valuations, saying Global Equity increased, reaching historic highs in the u. S. And germany despite little upward revisions to gdp growth and inflation. Such highgrowth and expected earnings increased, reaching historic highs in the u. S. And may however exaggerate the expected benefits of possible policy initiatives, including tax cuts. Joining us now is the woman in charge, dr. Catherine mann. Dr. Mann, great to see you as always. What kind of growth are we going to need to see to support the valuations we are now seeing in the major equity markets . There are two issues going on with equity valuation. One is the numerator, which is what earnings are expected to be. The other issue is what expectations are for the denominator, meaning Interest Rates. Both of these are important components when we think about what equity prices make sense. Although the earnings on the top line look like they may be are going to be a little bit stronger going in europe, the denominator is the question mark. It in the when we put context of global Interest Rates, and that is where we have more of a concern that the market is perhaps a little bit priced to high given what expectations are for overnight policy rates Going Forward. Alix what is the biggest misprice . Dr. Mann what is the biggest misprice . Meaning the u. S. Or europe . Alix wherever you see valuations versus growth, where do you see thae biggest disconnect . The biggestmann disconnect is with alternative instruments. We will see that with interest rising Going Forward in the United States and we see a gap of 150 basis points between what the market expects the overnight Interest Rate to be in the u. S. And what it is in europe. That is going to play out in the form of Exchange Rate changes or in the form of snapback of some of the other prices. Equities are going to be caught up in that turmoil. Alix for the u. S. Growth 2017ast coming up 2. 1 for and 2. 4 for 2018. Had you factor in fiscal policy for that call . Dr. Mann we had a more aggressive approach to factoring fiscal policies for our last projection. Some of the numbers came in a little bit weaker than we thought and that took down 2017. It is also the case that our expectations for movement on both the fiscal spending side as well as on the tax side, those have moved out into late 2018. In some sense, we are looking at the projections we have that have more robustness on the Real Investment side and do not depend too much yet on action in washington. Jonathan one thing the oecd has warned about this Financial Stability concerns around housing in places like canada and here in the u. K. As well. What is it specifically that youre so concerned about and how do you expect that situation to evolve . Have put a flag up on housing and housing prices because this has been a locus of problems in the past. We think its always a good idea to keep your eye on the ball. With australia, sweden, and canada, the house price to rent ratios have been the highest since 1980. The u. K. Has come off a little bit off that high, but what that means is that in the individual countries, is it going to be a homeowner when Interest Rates start to rise . Is it going to be some exposure on the Balance Sheets of the banks as valuations might change with higher Interest Rates . Its original issue, which is particularly important in canada. Its a different recipe of concerns and attention for each market. Jonathan lets talk about the recipe for concern in the u. K. And whether the intention for concern will actually exist given we have an election to get through and several years of negotiations with europe as well. Do you think the care officials wont be looking at it the u. K. Officials wont be looking at it . The u. K. Oh, i think officials will definitely have their eye on the property market. Is a very important barometer of Consumer Sentiment when we think about that angle. Its a very important barometer if we look at commercial real estate. We dont talk about it too much in the report, but its a very important barometer or policymakers to consider. They will definitely be looking. T it could its a its an important signal. Jonathan much bigger in a place like canada . Canada has been very stable in terms of its attention to the property sector. They are very well aware of it. They have approached it in a couple of creative ways in terms of looking at concerns in certain markets about foreign owners were nonresident owners. Or nonresident owners. They have applied some interesting strategies in order to cool some of those markets and they seem to be having some traction. Jonathan we really appreciate your time. Coming up next on this program, we bring you the opening bell in new york city on the other side of this commercial break. From london and new york, youre watching bloomberg tv. Jonathan from london and new york city, this is bloomberg daybreak. Good afternoon and good morning at the same time. Alets count you down to the market open. Futures going nowhere ahead of the opening bell and 24 hours before super thursday. Stocks dead flat ahead of the open on the s p 500 and on the dow just up from alltime highs. Switch up the board quickly and heres the scene elsewhere. Treasury yields higher by two basis points. We bounce off 2017 lows. A stronger dollar in the mix as well. Flattened by the downside moving the euro this morning. The single currency much weaker off the back of a report by bloomberg that the ecb may be getting up to cut Inflation Forecasts c going into the meeting tomorr. That means the weaker euro story. Into the cachehe catch u open, here is alix steel. Alix the s p and nasdaq a few points away from their record highs. The nasdaq seeing the biggest uptake, up three tons of 1 . You wind up having oil not holding up. What does that mean for financials . They were flat yesterday, but can the market extend the rally if you do not wind up having oil and financials . This is how big oil is stacked up. Occidental down by over 2 . Exxon and occidental will getting a nice lift yesterday. There were rumors about exxon making a bid for occidental, all looking forward to the 1030 doe supply and storage data coming out. Sector as we head into 1030. We have been talking but the risks in the market whether they come from the u. K. Or mr. Mario draghi or the ecb. Heres the sector that does not care and that is tech. That is looking at the ratio from the volatility from the nasdaq 100 versus overall equities and the vix. The ratio spiked much higher, over 1. 3. We talk about complacency in the markets. Where it is not complacent is tech because tech is where all the money is going. There is action and a market to be had. You just have to divorce yourself from what is happening on the market front. D. C. d. C. Pockets pockets of volatility start to pick up . Do you see pockets of volatility start to pick up . Mark i do. That being said, i think fundamentals have been terrific as those paying stocks as we like to call them. Performance has been terrific and i see that continuing through the Second Quarter as you will see those reports come out next month. Is not only where the action is in term of the stocks, but where the performance is an fundamentals continue to improve. Jonathan what is the somatic story around those companies . Is in a cash story . Is it a growth story . These are for companies that dominate their individual industries. What is it that you like about them . Mark its a combination of all those things. You have companies gaining huge market shares in obviously very huge markets. I often say internet economics moves quickly more toward monopolies. Although we do not like to use the word monopoly around stocks, these companies are gaining that monopolistic type market share. The market share they garner is not overwhelming. You look at amazon that has maybe 45 of that market and its only 3 of retail. You look at what google has, which is a large percentage of that Online Advertising market. It is not an overwhelming share of the overall online market. You have this absolutely meteoric shift to the wedding cloud. Web and the cloud. The amount of volume going to those places is still small compared to the overall market. The comparisons back to 2000 frankly are not relevant right now and why you still have to Pay Attention to those stocks even at these thousand dollars levels we are seeing. Jonathan lets talk about the word monopoly you mentioned. Marketies are broken by forces and not regulators, but regulators can accelerate the process. Is it the googles of the world where you say take a look at that and maybe things have gone far enough . Mark thats a great question. One needed to make sure the political will is there to take a look at that. There has to be some sort of prints for behavior or action and i do not see that predatory action. What i see is businesses and amazon and google that are executing far better than competition. With you what amazon is doing international and what theyre doing with the cloud. Look at what google is doing with vr and autonomous vehicles. These are markets that are nascent and taking advantages of places where there is an explosion of growth. Alix tony dwyer says it has been widespread in tech. 44 of shares are now touching 52week highs. Does that reflect your work as well . Mark we all want to point to the fang stocks because theyre interesting to watch. At 1000critical mass a stock. This is a model to of areas a multitude of various. Areas. Are analyst has shown stocks of touched a 52, but they are accelerating growth and operating margins. You look at other areas in the industry and people in the industry with zillow and grubhub , thesear and true car are places that frankly have massive growth. They are underneath the top 10 or top 20 s p stocks. They are getting a lot of market share and theres more for them to gain. Alix there are two stories that i see. You see a lot of volatility market play because it is a medium from immune from d. C. And strong german growth. Earnings growth . Does this hold . Mark you are looking at fundamental performance. These are not story starts anymore. These are stocks reporting great earnings. I think people are going to look at these stocks every quarter with a very keen eye. We just have not seen that. I think you are going to want to Pay Attention here. You can move to the cyclical stocks. The bond market is telling you that the explosive growth and the gdp growth people have predicted is not happening and what happened given whats going on in congress. Alix if we get clarity out of d. C. And the fed hikes a little bit, does the money stay in tech . Mark if you see that kind of movement, you will see some rotation out of it. You want to buy the fastestgrowing stocks. When you see that emerging cyclicality, rates go higher. Maybe see an infrastructure bill of note. Weve heard lots about but im not really seen, but we could see that kind of rotation. Jonathan really appreciate your lehmann. K lets look through the boards for you quickly. Features going pretty much dead flat. We are up to 10 to 1 on the s p 500. Up zero. 16 on the dow. Treasuries print year to date lows on 10 year. 2. 6 is year yield this morning. The dollar stronger on the day. 1. 1oll over for tents at 234. Good morning. You are watching bloomberg tv. Emma this is bloomberg daybreak. Im emma chandra in the hewlettpackard enterprise greenroom. Coming up, bill gross. Stay with us. Jonathan from london and new york, 24 hours away from three big events. Theres the News Conference that goes with it and the draw me down the drama down in d. C. Stocks crawl back to alltime highs. Pipe to on the day of tens of 1 on the s p and dow as well. Switch up the board, yields higher by couple of basis points. Dollar strength on the dxy flattened by the downside move on the euro. 1. 1233 with expectations building based on some of the reporting syria a bloomberg that the ecb might be cutting Inflation Forecasts. A lot to look forward to. David feint short investor jim chanos has been short tesla and gave his thoughts yesterday at a conference here in new york city take a listen. See i think i will have to the Company Actually begin to make money selling products. I should point out that we were also short solarcity that he bought in. That worked out a little bit better than tesla. The fact of the matter is this is a company as you point out that burns lots of cash. We think they are going to be running close to 750 million and a billion dollars a quarter. David that was not in asia but in new york city, but that was jim chanos talking about tesla. We have been talking about tech, different kind of tech auto tech. What do you make of the teslas of the world and the transmission going on in the industry . It is obviously genuine. You have seen big valuation in tesla and other areas of autonomous vehicles. In ann ornament ornament amount of investment. Everything you hear is about the our nar and autonomous vehicles. Theres lots of investment there. I do not think people are buying it based on 50,000 cars sold every quarter. They buy based on what is happening the next three or five years. David somebodys want to make money off it. Is it going to be silicon valley, detroit, or beijing . Mark accommodation of all those things. Tesla is not valued on the cars they are selling, but the technology they are creating. Look at mercedes and chrysler, but tesla was the first with the 250 mile better. They will be the first one with the 350 mile battery. The Battery Technology that they have a second to none. What you will be able to do with that Battery Technology is franklin revolutionary could frankly revolutionary. What you are seeing some of their other programs like the rocket market that they have, i think it is hard to be short stock based on story stocks. Its hard thinking when is the right time . Being right and early as the same thing as being wrong. David if you are going to project, is it a company like tesla really devoted to electric vehicles . Or will it be a google who is also in this . But started someplace else, technology can move over to cars. Mark you are betting on the right horses. You have to bet on a combination of those. You can see they are ahead but technology can movetechnologicaf these companies you want to Pay Attention to. Alix ive a broader question. Is every Company Going to become a tech company . It reminds me of the oil industry. Independence here in the u. S. Are becoming data dependent companies. Is this going to trickle through most sectors . Mark it already is. If you think this is apple, thats a far cry from what they do. Its a health care company. They will be able to track everything going on in your body. Its a software Company Going on with what they have. Look at tesla and i got an update in my tesla every three to four months over the web. It just happens to be masquerading as a car. Every company has to be that company. If youre not playing in that field, you will be missing on a lot of advantages and revenue. Alix let me be the one to related to oil and tech. [laughter] mark the drillers are looking down. Every foot they go, they know how much oil there getting out at realtime. That is a tech company masquerading as an oil company. Alix mark lehmann, thank you. Check out tv. You can watch us online, clicked on our charts, interact directly. Just clicked on tv on your terminal. This is bloomberg. Jonathan from london and new york to our viewers worldwide, youre watching bloomberg daybreak. Russia is now urging negotiations to resolve efforts to isolate qatar with the foreign minister emphasizing any escalation in the region is a matter for concern. We believe any differences should be resolved at the negotiating table to limit concerns and unite forces against the main threat in the region terrorism. This is as the white house sends mixed messages over the gulf spat. U. S. President donald trump threw his weight behind the saudi led diplomatic isolation. Sean spicer later stated that the u. S. Wants to see the issue deescalated. Joining us now is sir peter westmacott. He served as the u. K. Ambassador to the United States previously pick great to have you on the program. A fractured middle east. And used as saying that, but what do you think of the current escalation . Sir peter is worrying. It is worrying. A few years back we had gulf arabs going against qatar. One is a little bit independentminded. They do not like being al ala and the heart jazeera being there in dohar. It is pretty sudden and pretty brutal. I think it was rather unexpected. This is something put together between the Saudi Arabians and the united arab emirates. They have been rather fed up with independentminded and slightly soft liners that they see in qatar. This is bad news and i think it is potentially destabilizing in the region. David we saw when the president of the United States went over to the region that he put this at the forefront of his agenda as well. Jonathan has he fueled this move . Sir peter he took the credit for it and seem to think his visit made a difference. Subsequently we heard a message from the white house that says lets called down and sort this through dialogue. When he was there and got along extremely well with the king of saudi arabia, he did seem to be a part of the group of Sunni Arab States going up against iran. Qatar is perceived to be a little bit too cozy with iran and a low bit too cozy with a syria. I think the presence visit probably did make a bit of a difference. Its also something which may have been influenced by russian disinformation operations. Its a story that the tweet that the family has virulently denied. That could spat call down a bit just like the 13 years ago. Thealm down a bit just like one three years ago. Jonathan at the same time, iran has faced their own attack. Theres something amiss here. Sir peter it is not quite add up. It was a bit odd when the president was lecturing iranians on human rights. The people of iran voted for the reformist candidate. Irans democracy is far from perfect and iran is not a perfect neighbor for many countries in the region. It is nevertheless a country that has a sort of functioning democracy. It was a little bit we are to see that mismatch. What we have at the moment is israel and the gulf arab states and the president of the United States coming together to say iran is the front of all evil. It is the regime itself that loves being bracketed as being the bag us because they can point to the United States and others as the foreign enemy with whom they can justify their own internal aggression. David the United States has managed to weigh in on the regional balance of power whether they have wanted to or not. When we talk about iraq, it made iran stronger than what it was. One of the risks now with the United States weighing in on the saudi side against the iranians . Sir peter i wouldve thought particularly given what we have heard this president say that he would not want to weigh in directly. In the past, the United States has weighed in and there are many people the region who say that by interbeing intervening in iraq that it simply handed iraq to the Iranian Regime on a plate. We have the Prime Minister in iraq with a much stronger position who is much more than theand proshia previous brutal regime of saddam hussein. We have a bit of a standoff between sunnis and shia. For the nine states to weigh in on one side for the other, theres a certain troubling democracy in saudi arabia. I wouldve thought that was a little unlikely. I would add however that the event sits has taken saudi arabia side in the war with human where it is saudi proxies versus iranian proxies. There with the israelis in turning taking a firm line against iranians in the region. My hunch is that they would want to stand back and not get too involved. The second reaction from the pfizerouse, the psalms sean spicer one, thats called down and whats not lets calm down and not be taken for a ride. Lets not create a situation of turbulence, which is a nobodys interest except maybe the russians. My hope would be that it is lets calm down and talk this through and get to the bottom of whatever the difficulty is. David the president of the United States announced 110 billion in arms sales potentially to saudi arabia and give speeches that were very friendly to the saudis and very antagonistic to the iranians. It wouldve been a mistake for the people in the region to say the United States is picking sides . Sir peter its a legitimate conclusion to draw. Remember the United States was also saying wonderful nice and family things about qatar, which is a host country for a very significant u. S. Military base. There some things here that dont add up. I agree with your basic view that i think it would be a legitimate conclusion that the unite states seems to be taking the sunni arabs against iranians. Jonathan the approach toward the middle east was quite uniform. The United States and europe taking united front toward a place like iran and taking a united front on the way back out. Where is europe going to sit on this issue and who is going to lead it . Sir peter one qualification on that yes we were in the same position on the iran nuclear deal. None of us were giving the iranians a free pass on destabilization in the region. There was always that qualification. The europeans will remain very attached to what we call the jcp oa. We do not think theres a better way out there with iranians not getting nuclear weapons. I think the white house wants to keep that going. Jim madison others do not seem inclined to throw that away. In terms of the other elements of putting pressure on iranians, you will find the europeans less keen. What the europeans would like to see is iranians getting their fair share of the deal further nuclear deal. They have not had the benefit of months of the section much of the section suspension. Jonathan to peter westmacott, sir peter westmacott, thank you. Lets get you up to speed on the Market Action ahead of the big thursday tomorrow. Features pretty much unchanged. Stocks for the marginal move to the upside. We switch up the board very quickly and heres the situation now where treasury yields are 2017 lows earlier in the week and bouncing off that. Yields up a basis point. Dollar strength flattened by that move in the euro. , just off byck up ahead of 1 , all had the ecb Rate Decision, the u. K. Election, and the coming testimony. Youre watching bloomberg tv. York, 3 00 00 in new in london, and 10 00 in hong kong. Welcome to bloomberg markets. Vonnie here are the top stories we are covering from bloomberg and around the world. Wrist formp nominates a rate to be the new fbi director, the news coming the day before fired james comey is set to testify before the senate. Comeys testimony, the u. K. Election and the European Central banks Rate Decision tomorrow, stocks are rising. Gold and treasuries rising as markets study themselves following yesterdays risk off trade. That britishme of election vote will determine the path of brexit negotiations. Swedens finance minister joins us with her thoughts on the path ahead. 30 minutes into the u. S. Trading session this wednesday