Step in removing some policy accommodation. The time of this meeting, the committee was going with a lot of weak data, weak gdp data from quarter one and weak inflation data from march, and they made references to that data being transitory. There was a clear debate around the idea of inflation and where inflation was heading. Some in the committee are more wordy ofried about the prospect overshooting inflation as unemployment continues to fall below the levels they think are the lowest sustainable levels for unemployment, while others on the committee are worried that some of the most recent data on inflation signals that there may be a pause and price rises there, so perhaps the committee should be cautious about raising. One caveat to these minutes, they are a bit dated. The data since then is split. The april payrolls was quite strong, which supports those in the committee that wanted to see a hike in june. But april inflation cpi data was extremely weak, so that will run the other way. So it remains to be seen where that nets out on this committee. And on the Balance Sheet plans, a lot of people in the market are waiting for news on this. The key bit from the minutes the staff proposed that the committee would announce a set of gradually increasing caps, or limits, on the dollar amounts of treasury and Agency Securities that would be allowed to run off each month. The caps would initially be set at low levels and then be raised every three month over a set period of time to the fully phased in levels. Here is the kicker, nearly all policymakers had a favorable view of that approach. Scarlet thank you very much. Lets check the Market Reaction to the fed minutes. Thee starting with treasury market, the 10year note is not showing that much movement. Going a drop in yield into the minutes, although we also had a fiveyear auction about one hour ago that showed relatively strong demand, so that could have been contributing. We are now seeing a little bit of buying in the treasury market and it increase of one basis point in that 10year yield. Stocks not really budging here on these minutes, pretty much where they were before and in a very tight trading range, the tightest we have seen thus far this year. Outside of stocks in treasuries, lets look at the u. S. Dollar to see if there was any kind of reaction there to the minutes, particularly to more detail about how the fed is going to be shrinking its Balance Sheet. A little bit of a leg lower, and it looks like that is accelerating for the bloomberg dollar index. Are something to watch in the wake of these minutes coming out, and if you look at the price of gold, we see little bit of uptake, so opposite with the dollar is doing, as you might expect. Dual mandate,eds you can track it on the bloomberg, looking at unemployment and inflation. The Unemployment Rate has fallen to where the fed was targeting, but core inflation as measured is still a little bit lower than the 2 target. As chris mentioned, the fed now has more data to consider for its next meeting. Julia thank you very much. For more, lets bring in mike mckee, the economics and policy correspondent for bloomberg. Risks around inflation, either to the top site or downside, it seems that nearly all numbers rejectingeed to start the Balance Sheet. Mike i would not put a lot on the idea on whether they are going to raise rates are not in june, based on the minutes. Look at the data were getting right now. We were talking when the minutes came out about how in the beginning of may, they were working of the jobs report that had come in very disappointing and inflation that was up, and we have now reversed that. It is not clear what they will do, but if the data keeps coming in strong and we get a lot more data between now and the june 14 meeting, they will probably go again. The interesting thing is were making progress on the Balance Sheet and where were going with that. How they are going to do it you can check the box on by the end of the year because on most everybody agreed on that. They also agreed on this idea of caps or monthly limits. And want it to be a regular predictable system, but they also want to taper it, not shocked the markets. Nearly all policymakers expressed a favorable view of that approach. Looks like the taper idea will be done. You idea of changing it every three months makes some sense. If we can go to my bloomberg here, i will show you why. When you look at the distribution of the feds holdings, in 2018 this is the bart chart in the upper lefthand corner. I cannot make it bigger, unfortunately, but there is a significant amount of holdings that will hold off early in the year, and as he moved towards 2022, that declines. So you have to deal with the fact that every month and every year, you will have different amounts coming off of different times. And it is a frontloaded to 2018. You can adjust, you can take account of that. Julia and 2018 is the year it really kicks in. Scarlet the 10year yield is drifting, as well. It was drifting higher before the fomc minutes were released, lows. Is now at session the dollar is also at session lows. Craig even on the 10year, coming down quite a bit, off by 1. 2 at the moment. When it comes to the balance rulesbased zika approach. Mike they want it to be regular and predictable and run in the background. Once they get started, except which will amount in dollars reinvested each month, once those are fully phased in after a year, in the and forget it to her they do not want people thinking they are going to back off or go forward. They want it just to go to their preset target here are the target is what we still do not know yet julia the question here is, what do they back off on then . Is it on rates . Mike they would prefer to use the fed funds rate to target and not use the Balance Sheet. They would keep the Balance Sheet in reserve if we had another big downturn and were still too close to zero or at zero on the fed funds rate. They hope to be able to raise the fed funds rate, get about 200 basis points, so you have room to cut. Julia great to chat to you. Mike mckee from Bloomberg News. Lets check in on first word news. Mark the Associated Press reports the father of suspected manchester bomber salmon abedi has been arrested in tripoli. A spokesman told the ap that the father of abedi was detained in aaa for interrogations. The father said his son was innocent and had been planning a trip to saudi arabia for a pilgrimage. A day after britain raised its Terror Threat level to critical, soldiers from the british army are providing additional security at the houses of parliament and downing street. Security will also be stepped up at major Public Events and potential soft targets like railway stations and airports. The Prime Minister also ordered the military to guard landmarks and sporting events. President trump is spending the night in brussels after meeting with the belgian Prime Minister. A fivelegnt is on journey through the middle east and europe as part of his First Official overseas trip. He will attend his first nato summit tomorrow before continuing on to sicily for meetings with leaders of the g7. Secretary of state Rex Tillerson says he expects the president to tell new tell members to step up and meet their obligations under burden sharing. Tillerson told reporters that the agreement was a target of 2 of gdp of gdp for all nato members. I expect the president to be very tough on them, saying that the u. S. Is spending 4 , doing a lot, the American People doing a lot for your security, for our joint security, so you need to make sure you are doing your share for your own security, as well. Bek he added that it would important for nato to join the Coalition FightingIslamic State. The u. S. Ambassador to the United Nations is in turkey or she attended a Ribbon Cutting for a ribboncutting for new u. S. Funded school. Nikki haley says the American People are thankful the u. S. Ally is taking in so many syrian refugees. The school is serving children who have fled the Syrian Civil War and is being funded by the u. S. State department and is run by the turkish government. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Scarlet coming up, we are glued to watching oil or glued on oil opec is meeting tomorrow. Major Oil Producers closer to extending an extension to an agreement to curbing output. We will head to vienna with a top Energy Analyst from barclays. From new york, this is bloomberg. Julia this is bloomberg markets. Am julia chatterley. Scarlet and i am scarlet fu. West texas crude around 100 51 a barrel. The am cartel is expected to exd Production Cuts for another nine months to prop up global oil prices. Will compliance be harder to maintain if that is extended . Here is what the Iran Oil Minister told bloomberg earlier today. It is important for all opec argument to, this comply, to fully comply. It is very important. Compliance very good , but we need to comply with these decisions for any period of time that we need to. Scarlet joining us from vienna is Michael Cohen from Energy Commodities research at barclays. The key word there is compliance. Not opec that opec and members compliance with the Production Cut is almost 100 . Will it be different this time around if they extend those Production Cuts . Yeah, i mean, it was easy for them to comply during the seasonal downturn in the winter, harderis a much process during the summer months when they have a lot higher demand at home. So if they want to keep their exports at the levels that they were at in the wintertime while summer demand is rising to a very high level, then they are actually going to basically need to raise their output if they want to keep those export levels the same. So it is one thing to talk about complaints in the winter, another thing to talk about it during the summer. So we expect that compliance will kind of fault or over the summer a summer months. Julia how much slippage are you talking about . Calculations, over the first of five months of this year, compliance has been about 95 , 97 . The Monitoring Committee today noted that in april, the compliance level was above 100 . If we seeculations, some of the output slip a little bit higher over the summer months, we can see compliance levels drop down into the 70 to 80 range. Julia i saw some chat on twitter about the Iraqi Oil Minister ruling out deeper cuts. What is the likelihood of deeper cuts from this meeting . Memberink that the countries do not want to be too contentious here. They want an agreement that is agreeable to all parties, and i think that once you Start Playing around with the actual levels of the quotas are levels of these huts, that opens up a whole big can of worms that they really do not want to get into again. So for now, it is our assumption beenthe cuts, as they have stated, stay in place through the summer and then threw into the following months. But it is very unlikely that we will see production levels be even lower than what they have already agreed to. Scarlet brent has gone of the important thing to sorry the important thing is to know that there is a consequence to these actions. So if opec cuts even more, it results in an even higher inventory drop. And a higher inventory draw means higher prices, which means lower demand and more nonopec supply. Around with this fragile agreement is going to have a consequence on the mediumterm dynamics of this market. Scarlet right, a delicate balancing act. When you look at bridge prices, they have gone from around 48 when the announcement was made to around 54 now when you look at brent. What happened back in november, and did they get what they wanted . They wanted to do is to provide them with a little bit less of volatility. I think from their perspective, 27 oilpect of 26 or was something that they did not want to face. By our calculations, we think the revenues they have made have actually been about 10 higher kept theiry had output at this very high levels from the fourth quarter. So yes, they have achieved their adjectives. They have kept a floor under the market and made extra revenue. At the same time, they have unlocked this sort of pandoras box in terms of tight oil supply, and they run the risk of not really having an explained exit strategy at this point. Does that is the problem as we move into the 2018 time period. Scarlet you say opec needs to articulate an exit strategy for what are the perils of doing so before they are ready to move ahead with it . I think what they need to be able to do is a say, you know, what is the production levels at any point in time during the next year, and it is very hard to do that when some of their some of these opec member countries are actually at very high risk of a relapse in production, which could very much sort of sacrifice, basically cause a problem for their production level overall. That theye problem, do not want to necessarily say, well, here is what our production will be in march 2018 dojune of 2018, because they not really know what production will look like from venezuela, nigeria, or iraq at that point. Julia i want to ask where that leaves us we have talked about opec supply and about nonopec in the form of russia that is compliant with these cuts. Then we have the shale, and we were talking about the Saudi Oil Ministers comments over the weekend saying that we welcome moderate levels of shale. What do moderate levels of shale look like here to bring it to the point youre talking about in terms of your oil target for this year . Right at well, i think that is a deliberately vague statement. I think when they talk about moderate, it is a range of about 800,000 barrels a day to one Million Barrels a day. The problem is when you start looking at the impact of a possible higher price over the summer, you could conceivably dispatch one Million Barrels a day or even 1. 2 million perils a xit of growth on an exittoe basis, and that is not necessarily moderate in terms of what is happening on the demand side. Demand is growing by one million or 1. 2 Million Barrels a day and opec output is flight, then the growth in tied oil supply is basically not leaving any room for other supply. You will not get that stock draw, which is what theyre trying to achieve. Julia great point what about positioning in the market . Are we at the point where you buy the rumor, sell the fact . I appreciate your target from 2017, but what is that like here . I mean, i think there is obviously the managed money positioning that has been back towards more neutral levels. On a shortterm basis, i think we will see a lot of volatility as the market continues to question the impact or the compliance levels of an extended cut. But from our perspective, what really matters here is the inventory level, the prevailing inventory level, and the speed and direction that those inventories go over the course of the summer. I think what will happen that gets us into that kind of mid 50 range for the second half of the year is when inventories do draw dramatically over the course of the summer, that leads us to a higher equilibrium in terms of the overall positioning level. Scarlet good stuff. Michael cohen, head of Energy Commodities research at barclays, joining us from vienna. Thank you. Julia treasury secretary steve on the is testifying proposed budget. We will continue to monitor it for headlines. You can watch it live on bloomberg tv go. There will be challenging questions on the assumptions made in this budget. This is bloomberg. Scarlet this is bloomberg markets. Look atets get a quick the equity market. The s p 500 at session highs. This would be the fifth straight day of gains if we hold in the green. The utilities come a realistic, and materials names are trading higher, by. 6 . Drag is coming from the financials and the energy stocks, a brief turn into negative territory after the fed minutes. Tohave regained, back session highs. Scarlet lets get you the Bloomberg Business flash a look , at some of the biggest business stories in the news. The General Electric ceo says meeting a goal of two dollars a share next year may be a stretch. He is under pressure to boost performance. Oil market and headwinds and equipment pricing are optimal to meeting the goal. Ge has it several quarter of weaker sales, and the stock has dropped more than 11 this year. Dow chemical and dupont have gotten advice from an activist shareholder, saying changing the composition of the spinoffs they have planned could create 20 billion in additional value and further say proposing the companies could create more. Noveo pharmaceutical shares soaring. The hiv drug producing the highest ever Response Rate in a Clinical Study to more than 90 of participants responded to the vaccine and treatment for hiv. They say the drug requires further studying. That is your business flash update. Julia still ahead, the commodities, the latest on oil as opec moves towards a deal to extend Production Cuts and u. S. Inventory falls for a week. From new york, this is bloomberg. Scarlet from bloomberg World Headquarters, this is bloomberg markets. We have Commodity Markets closing in new york. Oil halting a fiveday rally, even after u. S. Stockpiles declined for seventh week. If consolidation comes before opec ministers meet in be in a tomorrow, theres a to be closer to a deal to extend Production Cuts. Earlier, we spoke to the United Arab Emirates oil minister. End of the year, i can tell you we will bring in more from the inventories. And i can tell you that we will contribute more to that differential. Scarlet meantime, iron or lead a slum in Industrial Metals after moodys and expect delete downgraded chinas credit rating, warning the debt position will warning as the economic expansion there slows down. Nickel lit abroad slump, dropping 2. 6 , right around session low spirit stockpiles rising the low most in more than a year. To precious metals, political turmoil that has been pressuring the u. S. Dollar is fueling demand for gold as an alternative asset. G btv 8823. Thewhite line illustrates bloomberg dollar index. The yellow line tracks gold. The recent rise is highlighted. Gold prices above the longterm trendline, the red dotted line. Gold is no of almost 10 in 2017. Other headlines first word news. Mark britain pose a political leaders will resume campaigning to returnin an ever to normal business following the manchester bombing, even as troops patrol Tourist Attractions and police hunt a network of terrorists. According to officials, Prime Minister theresa mays conservatives will reserve resume campaigning friday. The Opposition Labor Party will pursue it is similar timetable. It is said that the election will be june 8. House Speaker Paul Ryan says the goal for the Gopcontrolled Congress is to prevent the push for tax reform them dragging into next year. He spoke today at an event. Our goal is not to have tax reform slip into calendar year 2018. Theant to make sure that by time the or closes, people will come into a new tax code. It is an of vision agenda but when we are focused on achieving. I mark it is unclear whether a final tax reform plan will include a border adjustment tax. Ryan says there is a possibility that may not happen but negotiations are ongoing. There is a report that former senator Joe Lieberman is no longer being considered for the post of fbi director. That comes from cnn, which says President Trumps team has restarted its search. A number of Senate Democrats were opposed to lieberman, even though he was the partys Vice President ial nominee in 2000. They say the director of the fbi should be someone with the criminal justice that ground. Brazilian president michelle temer is scrambling to stop the revolted his party. Lawmakers are pushing for an official resignation in the wake of last weeks accusations. About a half dozen lawmakers told Bloomberg News the surest past of removing precedent temer is for the Top Electoral Court to an old the election results, in which he shilled share the ticket with former president dilma rousseff. Resignation. A global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Julia thank you so much. Azil, we are to look at the performance of the emerging markets. Been strong. S the index gaining more than 27 over the last year, that some countries have more challenges than others. Brazil is one of those in recent weeks, where president michelle temer faced pressure to resign after last weeks allegations, and we have reports that antigovernment protesters have invaded the finance ministry. Joining us is Hernan Yellati from berkeley investments. Clearly, the domestic pressure is building on Prime Minister temer here. How likely is it he will be willing to resign . Hernan i think the pressure will continue to mount. As we saw late last week, president temer is willing to fight. It is a bad scenario for the economy, a bad scenario for the reforms that are basically in the pipeline, the Social Security reform that is key after the limit on government expenditure. Brazil needs to be sure that social expenditure, that is not put into other branches of expenditure. Julia we expect a decision from the supreme court, ruling on the evidence against the president today. Assuming the president continues to hang on, are we looking than it potential impeachment . Given the technicalities around that, even if he were Proven Guilty or suggested to be guilty by the supreme court, the process of impeachment, given the characteristics, shall we say, of congress in brazil, makes it not necessarily a given that he is impeached. Hernan exactly. I think impeachment is the less likely scenario. I think hitting twothirds of congress to vote for impeachment right now, with all the investigations ongoing, will be unlikely. I think that either the court rules against the president or there is a resignation. I think that, of course, if there is a resignation, we are end direct elections from the congress, and the main event will be october 2018 where brazil will hold general elections. Julia so sometime before we get a decision. Scarlet i want to go inside the bloomberg to show etf flows. What is interesting is that result has some of the most net flows by a mile. Were looking at 700 million right there over the past week. Net 800 million has flowed in. Only 101 million has flowed out. Why this reaction . Hernan of course, this event is bringing a lot of volatility. I think volatility is what will , most going up or down. The market is going to continue to move as long as everybody is trying to make their minds on a negative court ruling against the president. Of course, a resignation will be a positive event, and everybody is looking for that is probably the most likely scenario. But if this is a projected protracted process that will delay the agenda, i think there is more down side down the road. Scarlet and you have to look at the brazilian riel, as well. Thetv 8704 looks at real and the drop, which is highlighted. It has come back a little bit, recovering a chunk of that loss. That weakness is the trend. So for currency consistently under pressure, how does that help results position . Hernan position is a problem in brazil. That brings instability into play. Without the Social Security to a much are looking worse stability scenario looking forward. We have a problem of lowering and expenditure that basically will have to be dealt urgently in 2019 with the new government. So i would say that we are potentially looking for a drag on the reale and the equity that, and i would say importantly, fixed income, is the one asset that may be less volatile, considering that investors are looking for sustainability as a 10, 15year trend, not as an immediate trend. Equity probably gets much more feet on that. Julia and Foreign Ownership is less than it was in 2015. I want to talk about venezuela, because they have challenges of their own. I believe we have some pictures of the uprising that has been going on in the country among economic pressure. The hope is they will continue to support oil prices are it is critical for the venezuelan economy. What is the outlook . Of course, Higher Oil Prices are a big benefit of the venezuelan government and the state oil company, because they can manage to continue to service their. That is something theyre willing to do. The problem is capacity. Capacity to pay has been diminished because the economic crisis and the fact that the Public Sector is completely moving forward without giving any space to the private sector. Oil revenues are the most important and the exclusive source of revenue from the government. Dollar inflows coming from oil is one thing the government can show as strength, to continue to pay and to stay in power. Julia thank you so much for talking to us. Of emergingti, head Market Strategy at berkeley investment. Scarlet coming up, my conversation with arthur blank, owner of Atlanta Elkins in the Atlanta United soccer club. What he says about security at large events following the deadly terror attack at manchester this week. From new york, this is bloomberg. Julia this is bloomberg markets. Scarlet lets get a market check after the release of the fed minutes. Julie i want to focus on retail, Holding Steady after the fed minutes, reacting more to other stories. The wall street journal reporting that American Eagle is teaming up with cerberus to make a bid for abercrombie fitch. Abercrombie spiking and American Eagle racing. Express is still potentially in the running to acquire abercrombie. Those shares earlier spiked, and now they are unchanged. Elsewhere, still a lot of pain in retail. Tiffany posting an unexpected sales decline in the first quarter, samestore sales down 2 . Analysts had been looking for a gain of 1. 7 percent. It is the worstperforming stock in the s p today. Down and up with numbers tomorrow. It is at a three and a half year low and is down 43 year to date. In general, declining sales for this industry. Finally, lets check some other losers within retail. Lowes has had trouble keeping up with home depot, and its numbers are missing estimates. Chicos down much worse than the estimate. It is having its biggest oneday decline since 2011. Advanced auto parts, following on the heels of autozone yesterday, with comp sales down 2. 7 . A lot of big numbers to the downside. Scarlet more pain for the retail sector. The deadly terror attack at Manchester Arena highlights the challenge of keeping the public safe at large public venues. I sat down with arthur blank, owner of the atlanta falcons. Our conversation begin with a precaution at the new mercedesbenz stadium he is building in atlanta. Differs criteria is that the foundation is a secure and safe and individuals at any event feel safe and secure the first criteria. We have paid a lot of attention to that. Nfland exceeded the baseline standards. We have had Homeland Security look at our plans. We have had a variety of security agencies across the country. F. E. Will be providing everyday security for our stadium. Having said all that, scarlet, with of the world as it changes today, terrorism changes, we need to be certain that we are looking at the reality of what were facing everyday and making adjustments for the Security Standards and parameters we have in place. Obviously, that envelope for security, that side of the stadium and any areas where you begin to funnel people together, it is a challenge but one we take as seriously as we can. Functions security relative to the ceo, relative to the stadium, report directly to the ceo. It is a very high priority. His background, a graduate of west point, so he tends to look at things from a very tight operational standpoint. Scarlet you talk about safety and Security Standards at what about the space outside the stadium and Public Transportation . Is that the citys responsibility . We have to take response ability for anything in our grounds. You get the county and Police Department involved, and theyre great to work with. Motor stopspublic within 300 feet of the stadium, so we need to be sensitive and make sure security is covered through those stops. So we have more people coming by Public Transportation than any stadium in the league, which is a great thing for the environment it we want to promote that it we have to make sure those areas are safe and secure. We want to make sure that Everybody Knows who is accountable for what so there is no confusion. At the end of the day, we have to be certain that anybody who comes within a quartermile of this building will be safe and secure. About the stadium itself. You have a specific vision for this arena and how it will contribute to the westside communities. What is the distinction of your approach versus team owners and other cities . I think a lot of them try to do the same thing. Goals out a mutual set of here at we said we want to build an iconic and unique stadium that will leapfrog the industry , sameen or eight years thing in the Home Improvement center business, which we did successfully. Every fan amenity you can imagine, from scoreboards to the food, concessions, pricing, whatever we could touch, seeds, size, number of seats in the building, the visual aspects of it, all of that is on the leading edge of anything that is developed. And people outside of our ownership group, outside of our operating group, who have come to visit the stadium say it is the finest Sports Entertainment stadium in the country. Having said that, our goal, publicly stated, is unless we are able to mixing etiquette changes on the west side of this stadium, which has been left behind, then we would not be successful. So there is a mutual goal of building a great stadium, great place for hospitality, great place to celebrate events, and helping with others in a collaborative way and the People Living there, to bring the westside back up. It is the birthplace of Martin Luther king and andrew jackson, first africanamerican mayor in the history of atlanta, so it is a great place. We are providing a number of support resources in place to help folks in those communities be the best they can be. Scarlet that was arthur blank. More of my sitwhatd you miss . Down with the billionaire on sit down with the millionaire on whatd you miss . Treasuries are is testifying on capitol hill, talking on tax reform, saying he has some concerns on the border adjustment tax proposal. To watch it,nue and you can watch it live on the bloomberg at tv. From new york, this is bloomberg. Julia this is bloomberg markets. House democrats are seeking documents from Deutsche Bank on two politically charged matters. It is its banking on behalf of the trump family and moving money out of russia. A Bloomberg Finance team Senior Writer is joining us. They are already trying to bring the bank back to revenue growth. Exactly. After a crisis, they have to go through lots of legal cases. They paid billions of dollars in fines. Deutsches, and the last few years, they have been dealing with a lot. This is pretty unique. Not many banks, actually no bank, would really lend to donald trump before he became president. Bankany years, deutsche did. Scarlet 300 million, right . Yes. So being the banker for donald trump, you would think that would be great for them, but here is another problem. Julia this will be closely settlementt only the with the fed but also the department of justice peer groups resident is also responsible of appointing people to the department of justice. In line with what youre saying in terms of the existing relationship donald trump had with Deutsche Bank, their decision and future settlements will be under fierce scrutiny. Exactly. Part of the controversy with trumps firing of comey was whether it was about the inquiry into russia. Trump also fired one of the attorneys who was looking into this Deutsche Bank involvement and loans, etc. , from new york. So now there will be questions on that it was that related to this . Or will there be a new appointment that is going to be fair . All this stuff is tough. The bank, they really have no control over these things. Instead of really benefiting aom somebody they had longrunning relationship with as a client, now they have to deal with these conflicts of interest, political charges, democrats pressing from one side, public scrutiny constantly going on. It is not something to be proud of. Banket at least deutsche has enough capital. They raised capital. Capital. Id raise long overdue. Over the last year we have been talking about Deutsche Bank, and they said they were not going to do it to do it. They eventually did. That helps a lot. People are not as afraid. Julia very quickly, can you an idea of the amount of money were talking about . He settled with the u. K. And new york state. What are we talking about here with the fed . The biggest amount came in billions already. It should not be that big, but it is hard to know the amount. Scarlet all right, thank you so much. Julia a bloomberg exclusive, Mary Jo White weighing in on plans fortrumps financial reform and much more. From new york, this is bloomberg. I am julia chatterley. Scarlet and i am scarlet fu. Welcome to bloomberg markets. Julia we are live and bloomberg World Headquarters in new york. To the top stories were covering President Trump campaign on the promise of Regulatory Reform for wall street. In an exclusive interview, the former sec chairman rijo white gives her perspective. And what impact has the president of the policies had on business is so far . Some would argue they are helping the rich get richer, look at a billionaire and special advisor to the president s 50 million windfall, carl icahn. Lets check in on markets. If you look an hour after we got the release of the fed minutes, stocks are a little bit higher than they were at that point. It is unclear what traders are fixing on here. Looking at some of the notes that came out after the minutes were released, it seems perhaps the feds plan for reducing the size of the Balance Sheet was more organized or more orderly are more fully formed than some were estimating. So we have stocks near the highs of the session. Buying in the bond market. Yields on the 10year now down by two basis points, not a big moves but one to watch. We have more inflation data coming out soon. On inflation, it bears mentioning that Market Expectations for inflation have been coming down. Take a look at inflation breakevens, we have seen reducing chances there. Outside of stocks and treasuries, the vix is once again showing very muted volatility. The vix now on its longest losing streak of the year. If you look at its average level for this year thus far, it is the lowest ever. We have the other half of the year to go, definitely have seen a big drop in volatility. The dollar is trading a little bit lower, off by. 1 a 5 . Oil prices are lower off by. 25 here at oil prices are lower, as well. A report of a big drop in inventories last week, but gains were given up. The best individual stock in the s p 500 today is into it is intuit, a leg up. The company reporting earnings that Beat Estimates and a forecast that leaves room to Beat Estimates. Analysts commenting on the companys Small Business demand, demand for its quickbooks software, as well as consumer demand. Volume going up about 2 , but price per user going up i even more. That was encouraging to analysts. Julia thanks so much. Scarlet Mary Jo White elected to leave the sec early. During her time at the commission, she oversaw an increase of enforcement and a substantial amount of rule writing required by doddfrank reform. Lets get the exclusive interview from david gura. David Mary Jo White joining me now in new york, back in private practice. As you left washington, did you sense the shift in the regulatory terrain . It has clearly shifted. All the discussion and proposals about deregulating in certain areas. That is definitely a shift in philosophy, i think. It is a little early to judge what it will actually mean in terms of concrete changes, legislative or regulatory. David what do you hear from clients who wonder what is going on in washington . The president says he will be breaking up the big banks, but a week later that is not on the table. It is a frustration, and we all have to wait to figure it out. The philosophy, about to be pending bill, you do not know how it will land. You have to advise the clients that there are laws and regulations on the books and you need to follow those and keep your compliance function strong, and then we will see. Of the reformst that your clients want, they should figure out the top two and then perhaps argue for those. Do not be too broad. I do not really expect that kind of radical change. David on the issue of radical change, if a full repeal of doddfrank is on the table, that must be frustrating. The sec had more mandates than any of the other financial regulators, so we worked very hard on those. I do not see a wholesale repeal of doddfrank. Certainly i think it would be a big mistake, obviously, for the core reforms to be rescinded. I think most people agree with that in the business community. David looking back at your tenure at the sec, how much of it was occupied with requirements from the doddfrank act . Would you have been able to do more without that . Clearly, we would have been able to do more different things. It was a heavy burden, probably the heaviest in the agencys history. The staff to get very seriously, had to follow the mandates in the statute, and do the rules as best we could so they were as costefficient as possible. I was bound and determined to have bandwidth for our day job, including a lot of discretionary rulemaking. Clearly, there was a lot of work and he consumed a lot of bandwidth. ,here is still some to go little unclear what will happen to those that are not finished now. There is already more discretionary bandwidth. Do you know or what can you assume about how the job will be approached now . He is terrific. I think the sec is in great hands with clayton, a knowledgeable lawyer. Beforehim a little bit went down to washington and have gotten to know him more. I think he will be a strong leader. He is focused, as you would expect. Ipo markets and why there have been so much few. Of those he will focus in on that with senior staff , as well as some regulatory barriers that may be impeding companies. I think that will be a focus. There will be a lot of personnel change in washington, d. C. Various look at the regulators, look at the sec, a commission that is not full. There are many vacancies be and how handicapped is it by not having a full complement of commissioners . Has done itssion work historically with even two commissioners at a time, but he clearly functions better with five. It is not so much in terms of workload because you do not usually split up the work when he gets to the commission level. You are all functioning on the cases and rulemaking. In terms of consensus and getting new and get ideas from different perspectives, you are better off with a full commission. David how did you deal with the amount of political pressure that was on you . Out . O you screen it you know, it comes with the territory. It is part of it is certainly a high profile Public Service job. The epicenter of a lot of the litigant urged issue, which increases the amateur political pressure. If you listen to it, it may inform what you are doing, but you do what you think is right. David you where you in the u. S. Attorneys office in the southern district. Certainly there was political pressure. Hired the assistant United States attorney at think highly of him. It is a hard job to give up, being u. S. Attorney. All u. S. Attorneys are also president ial appointees. You know you will have to leave at the end of a particular administration. That is hard to take. It appeared as if he was going to escape that and be able to stay, but the president decided differently. It is tough on him. David help us understand your decision to go back to private practice. I understand it required a lot of time and attention. You could have retired haveprobably could not retired or ever, perhaps. I was in private practice for my career. Of i love practicing law. Engaged in practicing law. I love to do it at i like to work on hard problems and help client. I am happy with the change. This new group within the firm, what is it . What will it do . It is an important restructuring and communication to the marketplace. And crisiseme depth management of all times, government investigations, internal investigations, scandals. It is an effort to let the marketplace know that depth of expertise in the different areas, whether it be a sexual abuse matter at a university, a liborons, or investigation involving every regulator in the world. You can match your crisis with a very expert team. It is very exciting. thank you very much. Scarlet is conversation continues at the big law business summit. You can find more information at www. Bna. Com. Lets check the other headlines. The Associated Press reports the father of suspected manchester bomber salman a beanie has been arrested in tripoli. A spokesman for a libyan antiterror for still bap that his father was detained in tripoli for interrogations hear it before his arrest, the father said his son was innocent and had been planning a trip to saudi arabia for a pilgrimage. A day after britain raised its Terror Threat level to critical, soldiers from the british army are providing additional security at the houses of parliament and downing street. Security will be stepped up at major Public Events and potential soft targets, like railway stations and airports. Prime minister theresa may ordered the military to guard landmarks and sporting events. The British Government is urging social Media Companies such as facebook and twitter to go after terror posts on their sites. Reinforce the demand to allow access to encrypted messages after the manchester attack. Supporters of a lot Islamic State posted messages online boasting about it. President trump met with Charles Michelle today, and president ismp said number one topic terrorism. The president will attend the nato summit tomorrow. Several thousand antitrump demonstrators gathered in the city to protest the president s environmental and immigration policies. First Lady Melania Trump visited the vaticans Childrens Hospital today. She made the step after she and the president met with pope francis. She sat down with 15 children, drawing with them and taking pictures. She toured the cardiac intensive unit and the recreation room before ending the visit by praying in the hospitals chapel. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Some might sayp, billionaire investor carl icons role as special regulatory advisor is paying off. Windfall and rating concerns face a potential conflict of interest. Stay with us. This is bloomberg. Scarlet this is bloomberg markets. Changes inside the beltway are paying off for one billionaire investor carl icon. The rollback of environmental regulations saved his oil refining companyinvestor carl i. Or a company he has a stake in 60 million in the first quarter. Democratic lawmakers have raised concerns of a pot conflict of interest of his role as a special regulatory advisor for investment. Ofs bring in the zach bloomberg. Is carl icahn making money or saving money through his ties with the Trump Administration . Icahns problem is he owns these refineries, and the refineries, and the refiners have to pay a lot of money for these renewable fuel credit. Carl icahn does not like them and does not want them to have to pay for these things, and he has lobbied the government to try to get rid of the system so he does not have to buy them anymore. The price has gone down, meaning more money for his refiners. Moreis is about how much money they made this quarter compared to last quarter because of the drop in the price of those credits because of his lobbying. Deny he isoes not lobbying, but he says if this goes, it also benefits my competitors. So we can look at the windfall he has generated, 60 million, thatis argument would be it is generating windfalls for his competitors, too. There are some refinery owners who feel the same way icahn does. It is a zero sum game. Some are making money off of these are no will fuel credits, selling the credits he has to buy. When the price is high, it is bad for him. When the price is low, it is bad for the sellers. Scarlet he is a special regulatory advisor but does not have to abide by certain regulations or certain ethics regulations. Man who is kind of the was not there. He is called a special advisor the president for Regulatory Reform, but he is not an employee and does not have a portfolio, does not have a government email or office. He is essentially just someone who the president listens to, so he does not have to go up like to any ethics rules. Julia if he had a formalized position within the government, he would have to get out of some of the positions because of the conflicts . Hade very likely would have to sell or distance himself from his 20 billion of invested assets that he has. Julia and carl icahn is not alone in this. In the Advisory Board the donald trump has, there are many ceos. They can suggest things change or not change. He is not alone in that. Absolutely. Another example is stephen schwarzman. He is an individual advisor, ceo of blackstone. Julia it opens pandoras box. Scarlet and not looking at one person, carl icahns is doing well because shares of cbr have gone up quite a bit, so anyone can be benefiting from that by owning cbr. Are some other people who made money off that trade, as well. Much, ourhank you so pulitzer prizewinning journalist at bloomberg. Julia time for the Bloomberg Business flash. , blueprint for a combination but the state of the deal is in the hands of and the Advisory Board, which remains divided on the transaction and has derailed the plane once before update. 359 for Foreign Exchange manipulation scandal leading to more than a linked to more than a dozen global banks. At least a dozen employees in the new york office participated in schemes to many late manipulate the price of various currencies. The frenzy continues. Digital currencies suing over 50 to more than 90 billion in the past seven days. More companies are embracing the technology. Some50 investors see it as a hn for Political Uncertainty. That is your business flash update. Scarlet still ahead, market volatility might be low, but moneyoes not mean no is being trade. From new york, this is bloomberg. Julia this is bloomberg markets. Scarlet time for options insight. Is the equity us derivatives strategist at macro risk advisors. The spike in the vix last week was so shortlived. It looks like, from what you are seeing, people do not think it will come back. Yeah, so there has been a lot of speculation about the short much money ashow other shorting volatility, and concern has been growing about that. Too much leverage growing in the system. You can hardly call the vix a 16 at the highs, and now back at 10 handle. So oh, is there any covering going on . It was not too painful a move for people. Going fromso oh, is there any cg 10 to 16 is not that bad. Julie you did not see evidence of a squeeze. Moreme people are shorting volatility. If you look at inflows into etfs that use the returns of shorting vol, they increased last week. Julie this chart shows short vega. What is that . Vega is like an options geek term. It is talking about volatility exposure. That the white line is the total amount of vega, which is risen to the highs of all time. Julie people have a lot to lose potentially. In aggregate, people have a lot to lose. That, whatn all happens now . If all of those people are still short volatility and if we think volatility is going to remain subdued, i mean, what happens . It is a good question. I think a lot of people have pointed to the disconnect between the low vix and high perceived Political Uncertainty. It is mainly the Political Uncertainty you can point to. There is trump and all this stuff with russia, north korea, and all that other stuff. We think those are risks, but they are not necessarily nearterm risks. They are more just uncertain things on the horizon. We think it makes sense to own long dated volatility. It will be a lot lower, the costs, and there will be a lot more time for the trade to play out. Julie if you look at implied volatility right now, we have a chart of that on the bloomberg. It is a still low, which reflects a view that volatility is probably not going to absolutely your julie i assume you can get it for cheap then, as well . Exactly. Has been low, and it is a function of how quiet the market has been. To me, that is a buying opportunity. Julie how are you taking advantage of the opportunity . Buying vol is not visible as buying a stock, but you can buy long dated options in delta totral fashion, so you want kind of remove the directional component of the trade. Not up or down but about volatility being higher. That is on the screen. Buying long dated puts and buying stocks against it to make trade. L julie interesting stuff here on what has been going on recently. Appreciate it. Scarlet thanks so much. Julia moodys downgraded china. It is said that a collapse is just a matter of time. More of an exclusive interview ahead on whatd you miss . This is bloomberg. Mark it is time for first word news. The Associated Press reports that the father of suspected manchester bomber summon a beatty has been arrested in tripoli. A spokesman for a libyan antiterror forced said that he was detained for interrogations. Before his arrest the father said his son was innocent and had been planning a trip to saudi arabia for a coverage. Speaking to a bash Rex Tillerson he would like to see u. S. Join nato weeks terror attack would strengthen the resolve in the fight against terrorists. I think the discussions we had in israel and today around this threat the leaders of these three faiths the horrible attack reminded us while we have to do this. It reminds ussaid why we have to win this fight. Mark to listen added he added,