Credit for the rally. Does he own the drop . Sell share his views later on bloomberg. By the dip. Goldman sachs is bullish on stocks. We will hear from the copresident. We are less than a half hour away from the start of cash trading. Real seesaw trading happening overseas. In the u. S. , we had a big down day and then a pretty good update. In asia every recovered off losses from the day before and dropped down from the session high. Take a look at where retreated now. We do have gains across the board. We are looking at decent gains here. Dax and cacs gains are up. The yields are coming back down. They dropped about 20 basis points in a flash jump in bonds on monday. Then they rose again yesterday. Another coming back down a little bit. It will be very interesting to see where we open. Everything is a moving target. It will be interesting to see how long this rally lasts. Thats this kind of story. The close, u. S. Markets continue to rally. Thats what were pricing in in europe. You can see was been going on in japan and china. Quite a strong fix in terms of the currency, sending a message that they are not happy to have their assets dragged into this maelstrom. Lets move that off and show you whats going on elsewhere. The Commodity Index remains big. Gold is up half of a percent. Lets get a bloomberg first world news update. Thank you. The u. S. House of representatives has passed a stopgap spending bill. Some information may be added before the senate votes. President trump says hed theome another shutdown if democrats continue to refuse demands for a border wall. If we dont change the , there are many gang members. If we dont change it, lets have a shutdown. We will do a shutdown and its worth it for our country. I would love to see a shutdown. German lees Angela Merkel and the social Democratic Party has negotiated through the night for a packed on the governments next countries next government. Officials are hold up. There is no sign of a deal after more than 20 hours of discussion. A final decision is not expected until a larger group negotiates. South african president jacob duma seems a close a step closer to resigning. Thats after the National Crisis delayed on a meeting to force him from office. Duma had zuma had been scheduled to do a speech tomorrow but has canceled that. This is bloomberg. Guy thank you very much, sophie. Raw materials are set to perform well. Industrial matters are up on average 50 per annum. We did 30 last year. In this type of environment, this is where they were intended to perform well. Guy lets focus in on oil. Statoils profit beating expectations as it took advantage of crudes recovery than many of its bigger rivals. The gain rose to 1. 3 billion compared to the loss of 400 million a year earlier. The ceo. E now is lets talk about price. You have taken advantage of arise we have seen in the price of crude. Is the current price sustainable . Theres a lot of uncertainty in the markets. There is Strong Demand and i am not doubting that will continue. On the supply side, we will see more supply from the u. S. Theres a lot of targets that have been sanctioned that will come into production on the supply side. , i expect the price will be lower than 70. Above 17. Y below that we do have a good view in the mediumterm. We still havent seen the impacts of the low investment levels. Guy the sense seems to be that the very difficult. Over the last two or three years is over. The deepest part of the downturn is over. Still facing a lot of uncertainty. For us its about building resilience into our business. There will be more downturns. Its a cyclical industry. There will be things down the road. Are going to have to take very good care of it. We will have to continue to improve. Weve seen it before. Costs might come back. For us to improve, its extremely important. You were able to keep down last year compared to expectations. Cash generation was a touch weaker than expected. What do you attribute that to . Weve seen cash generation miss the expectations. We had a very strong cash generation. More than 3 billion on the year as a whole. We will be below 50 for the next few years. We see a strong picture on cash generation based on a high quality portfolio. Projects have an average breakeven around 20. That gives us a good view of volatility ahead of us. Guy as a company with shale about, we are looking for a Million Barrels a day for overall output growth this year. See that forecast and how are your breakevens in that area . We expect that the shale output will increase. We have seen Higher Oil Prices so the lot but will increase. Tot is probably not enough support on its own the growing demand. We do see additional volumes coming in from the conventional part. We will keep some sort of pressure on the price this year. Longerterm, we expect to see impacts from the low investment levels. I dont expect shale to be able to compensate for that. Guy how does it compare and share right now to the other parts of the business . The heat may return. The you expect cost pressure to come from the supply chain . We all remember the days in the super cycle and under cost pressure from the guys you make the shovels was extraordinary. Do we get back to that picture . We have seen some cost pressure and expect that to continue. More on the see productivity of the subsurface. We have indicated 20 cost from water, fracking kroos, and so on. There is still a lot of capacity in many segments of supply. We will see more balance. Do you expect regulations to ease in the United States more than they are to have . Be noxpect there will further easing. I think there is room for significant simplification. That doesnt necessarily serve industry. We still need good, high quality regulations. There will be some meaningful regulatory adjustments and we are prepared to take part in discussions on how to shape that. Smile on your face is an interesting indicator. How do you see your Investor Base changing Going Forward from here . There is a sense within the Asset Management community and at a sovereign level, that the needs to be a downgrading of investments within the hydrocarbon space. How do see this playing out . Theres a lot of work going with Climate Risks and how to embed that into the strategies. We have done that extensively. We are introducing ambitions for our renewable business. There will be more pressure on transparency. We are prepared to join those efforts. Can see what the Climate Risks are embedded into our portfolio. We will be part of shaping that. Matt you are able to make money at 50 a barrel now. You are lowering the costs of breakeven to 21. You ask backed shale output to gross the production side. About theu think demand side . It also continues to rise. So much talk about electric cars and going green. Is there any point in the new future that you expect the demand to turn over and had down . I think theres a definitely lot of focus on what is peaked demand. Peek mayhere will be a be in the late 20s. That is a reasonable assumption. I think the men will continue for some time but we will see a decline at some point. Its very sticky. This is much more than electric cars. The talking about whole transportation segments. Journey toally long fight Climate Change in relation to all production. Is importanteak what happens after may be even more important. We engage ourselves and in alternatives and renewable energy. Guy thank you. The ceo of statoil. Up next, another day of heavy trading in asia. We will look at what to expect from the european open. This is bloomberg. Guy market turbulence continues but is it time to buy the debt . What promised to be recovery in asian markets has been faltering in asian trading. European futures pointing higher. The pacific is a must back to where it started. Nice roundtrip. Says people are looking for buying opportunities. They are struggling with the fact that they have lots of liquidity. They feel violations have been stretched. Not surprising when the s p was up north of 20 . There were people looking for buying opportunities. When you see a big spike in volatility and might make people cautious. Maybe they are looking for a second or third effect. Buyings also a opportunity which is why he saw the Market Reaction on tuesday. Guy the view from mr. Swartz. Lets get the view from our team. Goldman says you should be looking for opportunities here. Is it too early at this point . I do get is probably too early. I think he is right that overall this will be seen as a buying opportunity in a month or two time but i think it is too early. The measures are hitting some bank desk today but it wont hit many until monday. That will be a reduction in liquidity. The fact that rates are headed back again will put a little pressure on the equity move. Thats what started the pressure in the first place. I think you can see that in the price action. Tradedened bullishly but disappointingly to the close. Risk aversion you see the most violent bounces. Dont read it much into a bounce. I think we have more pain this week. Are we waiting to hear from Central Banks . Are starting to turn to how the Central Banks might react. I dont think we will get any coordinated centralbank action. Said, weeople have have been looking for this correction for a long bit of time. About the term healthy correction given the speed and the pace. Markets were overdue. Is a lot of money out there that was looking for a pullback or theres been exceptionally strong pullback. That means fault of he will stay elevated. For the next few months, we will have more volatility that we saw for the last few months. Thats going to change Risk Appetite and leverage levels. I think overall, this is not to worrying a problem. I just think its a little bit. Oo early to rush back in its like people are finally discovering what volatility us. What is going on . All the sudden, everyone feels sorry for the losers. I do think that is slightly strange. Weve had a market with very little volatility. There was a decade of traders who had never experienced a rate hike. Now we have had traders that havent experienced sustained volatility. I think suddenly, we have so much of the market and it does seem like we are very forgiving of Retail Investors when they look to gamble beyond their measures. Matt thank you very much, indeed. European fair values off to a positive start. Wall street pointing to a negative start. Up next, stocks to watch. Open, nowlk about the eight minutes away. This is bloomberg. Guy five minutes until the start of trading in europe. What do any need to know about individual names . We had massive deals last month. Years Profit Growth will be fueled by more and more deals. We will see more of that. Matt i was going to ask about the beer. What stood deal with carlsberg . Looks like theyre making a lot of changes. They are looking for growth in the east. Exiting some slower markets like finland. It are sitting in a stake in a japanese brewer. We will see what happens. Never a day goes by that man doesnt want to talk about u. K. Supermarkets. They they are facing are facing the uks biggest ever eagle pay claim. Gmail workers are saying theyre getting less pay than male workers. We are talking about 4 billion pounds of this moment. Its not positive. Guy we will see how that opens. First go on your bloomberg. Available now on the mobile app. Coming up, its the market open. Four minutes to go. We are basically feeling in the gap between the finish of trading in europe and the u. S. U. S. Futures pointing negatives. European futures pointing positive. The european open is four minutes away. This is bloomberg. To the start of trading in europe. How will european equities perform . The indications are that we will see a positive start. Remember that wall street continued to climb after the european close yesterday. Up byoxx 50 is called around 1 this morning. Similar across all of europe. Terms of the major forces. The expectation is for a higher europe. Pointing to the states, we expect a lower open. The mist price for the dow, 1 . For the s p 500 index,. 7 . It will be interesting to see once we get the arbitrage out of wall street trades later. The indication is at the moment that europe will at least come out of the gate in reasonably positive form. The question is, how long does that last this wednesday morning . Lets talk about the numbers we expect. You should get a pop this morning. Lets wait for the Market Makers to get going. Climbing already. 1 ected to climb to around higher. Similar story for most of the other markets in europe. We are expecting a positive picture to slowly emerge. We will see exactly what it looks like. The cat up. 9 , ibex up by 1. 2 . Positive picture come through as anticipated in europe. How long do we start to see that continue through the morning . Asia didnt have a strong close. We definitely faded into the close in asia. And in the United States, already pricing a negative start of the session. He will be interesting to see what the european picture ends up looking like. Need to talk about the individual stocks story and what is going to be happening in individual names. Sectors that have underperformed the last few days. It will be interesting to see how the financials trade through this. What are we seeing in individual names . Matt lets take a look. Lets see what is going on as far as individual names. What is going on as far as movers in the market. It will be an open where everything is a moving target. We saw changes in the overnight markets in asia. We could see those changes today, considering the cash trade right now with gains for the most part, and what we see in futures. Kind of a wild ride in the u. S. Screen and weov will look at what stocks are putting up the biggest gains and biggest losses this morning. We see the pound and other currencies really shifting right now. Look at the movers here. We have seen for the most part, it looks like gainers. I think we need to reset this data because we have 577 stocks unchanged. It looks like that screen needs to refresh. The markets are slow to open this morning. Typically, we see the dax slow to open. ,e are seeing gains in the cac the ftse and on the ibex down the board with the exception of the dax. We stillg is open, but need to get a lot of these markets up. Out. Guy we will come back to these markets. I have to say, the cac opened up around. 4 percent at this point. Good morning, what are your thoughts on the last few days . What we are going through right now is a regime change in markets. Bank bondl Central Market lead. We have a Strong Economy, inflation set to rise and Central Banks need to hike. Get used to hire bond yields and volatility in the market. That is not going away. Guy the last couple of days, some of the sessions have been different in how the market has reacted. There was this feeling that at some point, you need to flip out of equities and into bonds. You are telling me yet we are going into a higher regime and that trade doesnt work. Mark absolutely, right now you have to be careful. What is interesting about the recent events in markets, you have a lot of products that were designed for the old regime, and they are very much yield enhancing, return enhancing products, shortfall products which dont survive in the highyield, highball high vol environment. But the market can get through this. If you look at the market, growth is good. Be more of these blowups to come down the line. Matt mark, should we feel sorry for people who were all in short vol . Isnt this a good thing to remind people that markets go both ways . That volatility can flareup . We have banks around the world for giving short vol notes so seasoned investors understand why the vix exists. What is going on . Mark we certainly dont forgive them. The market has been talking a long time about these short volatility products. The market new it would come eventually, but these products still grew and had investors in them. We are not talking about a crisis situation. We are not getting aaa mortgage bonds half the value they were. These were products that were meant to be risky. We can move on. What the central bank should be looking at is if this damages the underlying economy and there is no sign of that. The declines have actually been pretty small. Note, we have people worrying about the s p valuation, fairly frothy at 23 times earnings. On the other hand, earnings forecasts were lifted at almost a faster rate them we have ever seen. Dont you expect u. S. Companies to earn a lot more money this year than last . Isk absolutely, and this why equities will find a floor eventually. Volatilityhave more the next couple of days, but investors will look toward asities in a Strong Economy a good investment. Especially when bonds are starting to have a bad time. As i said, you have to be very cautious. Selloff, there will be volatility in all risk assets. Be careful, d risk, but bonds will do well. If you look at the backdrop, equities impact growth via wealth hits to consumers. We are nowhere near that yet. The Central Banks will be looking at that, seeing no problems occurring, carry on their path of hiking rates. About the products that were built for the previous regime, risk parity trade, a lot of money flowing into those structures. Looking forward at what will be affecting the market, will we see liquidity mismatches between Asset Classes if volatility picks up . Mark all the excitement during the financial crisis was the banks, now they are delivered. Delevered. Volatility will be in the fun sector. Adaptione difficulty adapting. Areliquidity mismatches something the bank of england is looking into because as you get a bonds selloff, they may have problems serving that liquidity if underlying investments cant be sold. If that is the case, you might get some funds shutting their doors, which could cause a panic. Another source of stress for the market as we move into this higher rate regime. Mutualrk nash, from old Global Investors. Up next, the stocks on the move this morning. Tesco is an interesting story. We will come down back to that, the stock is down 1. 2 . This is bloomberg.