3. From new york to frank for, Christine Lagarde heads for the euros ofs slowing and the need for fresh stimulus. Shery lets get a quick look at how the markets closed in the u. S. Stockmarkets removing with between gains and losses throughout the session before moving decidedly higher in the last hour of trading or so. We have the s p 500 falling to session lows when we heard from cleveland fed president Loretta Mester talking about the fact she could not support a rate cut. We saw a estate, utilities, communication stocks pulling the market higher. The s p 500 closed 3 10 of 1 higher. It was a session of low volumes. We are headed towards a july 4 holiday and not to mention that trading will help only during the morning session. We have seen a little bit of light volume in this session. Not to mention that we have a lot of ecodata coming around the holiday, including the labor report on friday. Take a look at tesla. This was one stock that moved with a surge in late trading, gaining as much as 9 , at the moment gaining 7 . Tesla withn record deliveries. More than 95,000 vehicles liveried in the Second Quarter. A very good signal given the fact the Stock Plunged about 30 this year. Lets see how we are setting up for the markets in asia. Sophie this wednesday, we are likely to see a straight session in asia after the action on wall street. Stock futures pointing lower in sitting as well. Over at wellington, kiwi stocks opening in the red. We will be watching for tracking a rally in treasuries as the governor warned of protectionism for a move into haven assets. For the governor at the rba, more data to consider today. Trade and building approval which will offer the australian economy after the Central Banks cuts. Paul . Paul thank you very much. Lets check in on the first word news. Subsidiesgrunning dispute between airbus and boeing have dragged more eu products to a risk of potential tariff targets. Washington has identified 4 billion of eu goods ranging from fruit and cheese to tubes and pipes. 21 billion of product that the u. S. Published. The eu has a similar case pending against boeing and has tariffs of its own. Imf boss Christine Lagarde is set to become the first woman to leave the European Central bank after being nominated to succeed mario draghi. She is such a takeover in november. Eu leaders have nominated the German Defense minister to become the european commissions next president. She will be the first german to hold the post in more than 50 years and will have more reaction to Christine Lagardes new role in a moment. Oil had its worse reaction to an opec meeting in four years despite it tumbling after the allies agreed to extend the production curve into 2020. Russia and other independent nations back to saudi arabias plan, although divisions remain against the curve. The decision came with shale surging in the u. S. Close to being an exporter. It has the lowest market share since 1991. In order to help maintain the current state of the market and avoid the buildup of inventories, we have decided to keep the level and the magnitude of the cuts intact. Died and thehave Financial Capital to a halt. And ledublic transport to the city declaring a holiday. Plane overshot the runway. The local department recording 45 of rain in 24 hours, the second heaviest downpour on record. Global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Paul thanks. The nomination of Christine Lagarde to leave the European Central bank followed a European UnionSelection Process but leaders seem to be on board. I have known madam lagarde for many years. Im absolutely sure she will be very independent. Christine lagarde this somebody we know very well in ireland, heading up the ecb. She will continue the policies of mario draghi, keeping Interest Rates low. We believe she has all the necessary skills to head the central bank. I do believe Christine Lagarde experience. She knows how to cautiously address issues. She will be very committed and engaged. Shery the markets seem to be on board as well, even if cautiously. If approved, she would arrive at the ecb at a difficult time for the euro zone economy. Here to size up the pick and what it means or policy in the markets is financial chief economist chris. Great having you with us. I saw in your notes the first thing that stuck out was if i were her, i would not want this job. It is a challenging time for her, isnt it . Chris yes. The ecb, unlike the fed, does not have much power. They have negative rates already, of course. They could go deeper negative but it is not clear that would help anything. Easing, of quantitative they have already done is massive. There is not a lot of room left to do policy moves. Even there, i was thinking about it on the way to the studio and she is a good pick for that reason because having a Central Bank Head with the credibility to push for fiscal stimulus in europe, i think that is absolutely critical. There are not many People Better suited to do that than she is. Shery because she could be bringing that star quality of a politician more than economist. Chris right. She has finance minister experienced so she knows what it is. What the hurdles are to spending. She also knows what needs to be done to clear those hurdles and for europe to move forward with fiscal stimulus which central bankers have been talking about for years, but obviously has never happened. Paul chris, you said that you wouldnt take the job if you are offered it, but Christine Lagarde is a choice. If you turned it down, that would send a dreadful message. She is a politician. How useful is that going to be in bridging divides and relying on her star power to help her with some of the critical decisions that lie ahead . Chris i think she will be absolutely terrific at that. I have no doubt she will take the job. She has risen to challenges like this before. When she came into the imf, it was not exactly an easy time either. Of course, she acquitted herself very well in that position. I think coming in, what she will do is get to know the staff, build support. At the same time as others have said, insisting on the independence of the central bank. Working with mario draghi to continue policy rather than striking out in a new direction. I think she is going to do terrific. Paul what is the first order of business for Christine Lagarde as head of the central bank . Chris i think to reassure, as mario draghi has done, that the ecb is committed to doing whatever it takes to meet the mandate of the bank, which of course is stable prices. Dr also, it is becoming, as aghi sort of suggested, there is somersault ability for growth. There is the need not to chase inflation to low. I think she will do a good job of articulating that message. That is the first order of business. Letting people know what needs to be done. Things could those be European Banks which are in a rough shape. How wellequipped is Christine Lagarde to handle them . Chris coming from the imf, this is something she is wellversed in as well. Abilityhas a response and has been active in europe for years helping to keep things going. When the greek banks were in trouble, the greek sovereign debt was in trouble, the imf stepped in and was part of the package. I think in a way, compare her not to draghi going out the door who obviously is a pro at this but compared to draghi coming in. I would say she is more qualified than he was when he. Ook the job she knows all of the challenges the European Banks face which are pretty significant. Shery as we were speaking, this news breaking on the bloomberg. President trump saying he will be nominating Christopher Waller to the fed board. We have seen the president really not too successful in those nominations for the fed board. What can we expect in terms of fed policy as we see the rest of the Central Banks around the world following suit and easing policy . Just to elaborate more on the breaking news President Trump tweeting im pleased to announce it is my intention to nominate waller, phd, executive vp of the Federal Reserve bank of thing lewis to be on the fort of the Federal Reserve. Chris this of course following on the news, the recent news that he had looked at James Bullard, the president of the st. Louis fed and bullard declined. Shery as dovish as they get. Chris and happy with his job. I think this is a nice way of leveraging the st. Louis fed influence. Waller as head of research has been working closely with bullard for years. I expect they see i july. A solid choice and by choosing a fed insider and a phd, i think the president has addressed the two biggest objections. As to what the fed is doing now, i would not pay too much attention to Loretta Mester. I know she moved markets today but she is very much an outlier and has been for years. One of the most hawkish on the committee. The rest are leaning towards for half of them are leaning towards rate cuts. The others are more open to the idea than they were before. But ik they will ease, think they may not realize the urgency that the markets really are counting on that first rate cut coming at the meeting at the end of this month. Be a doesnt, there will selloff in equities. There will be a further drop in Interest Rates. Paul all right, chris low, chief economist at ftn financial. Still to come, oil takes a hit as major independent producers commit to opecs extended outlook curves. Shery we ask what the fed can do to keep the bull market in these uncertain times. A former Financial Intelligence vp ryan allen joins us next. This is bloomberg. Paul we are counting down to the sydney open this wednesday morning. We have futures pointing slightly lower right now, down about a state under 1 5 of 1 . Im paul allen. Shery im shery ahn. You are watching daybreak australia. Investors rushed to havens as the s p 500 had a new high. Treasuries and gold surged. Our cross asset reporter Sarah Ponczek has the market action. We saw this move to risk off. Sarah pretty boring day. We really didnt see Much Movement but if you look underneath the surface, we clearly saw a shift towards safe havens. Within equities, you look at the sector breakdown, you get real estate, Consumer Staples all top the leaderboard. You look at the bottom and it was much more cyclically oriented areas in the market. Whether it is energy, materials or financials. Even outside the equity space, we saw a bond rally paid 10 year treasury yields at 1. 97 . Gold rallying once again back above 1400 an ounce. Even though we are not seeing much i of big movers, we are seeing progress for safety. Paul oil plunged today, that is considered the worst reaction to an opec meeting since 2014 so what is the sinking prices . Sarah it is an interesting take away. Falling 4. 7 . This could be pretty counterintuitive because opec did agree to extend output cuts for another nine months so you would think ok, less supply, that means we could see in order rally but the fact of the matter is we are seeing concerns regarding demand. Think about the week pmi numbers we got earlier this week. The fact of the matter is it is very difficult to balance the oil market when you have demand worries. Going forward, we will see what happens next but clearly in the near term oil under pressure. That also weighing on energy stocks. If you look at the 10 worst performing stocks today, every single one of them. Shery you are putting out a story looking ahead to earnings season and forecast getting worse by the week. What is that telling us . Sarah if you look at the index level, already for the Second Quarter when we start to get estimates not when we get estimates, when we get actual results in a few weeks, we are expected to see a decline in earnings of 2. 5 . If you look in the recent weeks, we have already seen companies begin to get more pessimistic and analysts get more pessimistic as well. On the analysts side, in june alone, we saw analysts downgrade 160 more stocks. The most since 2015. For companies as well, those that are revising their guidance Going Forward, more than 80 have actually been cutting guidance. That just warns that things could potentially be worse than expected as we do start to get into the depths of earnings season. Paul Bloomberg News cross asset reporter Sarah Ponczek, thank you for joining us. Llets brother the market moves with ryan. I know you have not had too long to digest this news but we have had this tweet from President Trump saying he is intending to nominate Christopher Waller to the board of the Federal Reserve. Christopher waller has a phd. I wonder if that is a sideways dig at jay powell who does not. What will this mean for markets . Ryan that is a great question. Hasll know President Trump been on the feds case to ease rates and ease policy. We know that James Bullard is one of the most dovish participants in the fed, so President Trump i think is just trying to get as close to bullard as possible. Picking or choosing one of his colleagues, hoping that dovishness will pay off and the fed might ease the remainder of this year. Is with the markets certainly expect as we take a look at this chart on the bloomberg. The market betting on more than 50 basis points of cuts this year. If it does not come through, there is going to be quite a correction, dont you think . Ryan i complete the agree. I think there is a big risk when expectations are high for the fed to cut rates or what we saw in may, when expectations come of market expects a trade deal to get done. Whenever there are High Expectations for something that is somewhat unexpected or uncertain like the fed cutting 50 basis points, that is a risk to markets. I could see if the fed does not could basis points, that come back and we could see another selloff. Shery we see this risk rally not only in the u. S. , but also in europe. This chart on the bloomberg showing you have cyclicals gained against defenses, even when you see the lining move. The german bond yields falling to new lows. What is it telling about where equities can go from here . Ryan that is such a great question. The bond markets, whether that is overseas or in the u. S. , it is a completely different story than what the equity markets are. That gives me pause and caution. I think it really depends on wherever the fed goes, that is going to have a lot of weight and how equity markets move forward. The bond market is telling us there is a slowdown and be concerned. Easingmarkets, they are and accommodative policies across. Shery these markets seem to be pricing in more dovish Central Banks around the world and potentially with Christine Lagarde, becoming the president of the ecb. Does that mean we could see more support and Central Banks coming to the rescue . Any idea at this point what a Christine Lagarde presidency would mean for rates or qe . Ryan great question. I really dont think there is going to be a whole lot of change. I do know she is in a very tough position. I dont think she is going to change policy from what draghi has set for the remainder of the year. I think she will continue to be dovish and cut rates, as well as move forward with qe. I dont think she is going to change anything there, but i have to wonder how many more arrows does the ecb have and its quiver moving forward . They have been trying for some time to stimulate the economy. As we just recently saw earlier this week, the eurozone pmis continue to show contraction. So, it is a tough spot for her, but i assume she is going to continue easing through this year. Paul i know you still like a u. S. Stock, what is your outlook for earnings in the next quarter . Ryan i think earnings are going to remain soft. Potentially 2 would not surprise me. With all the uncertainties, the stronger dollar, the uncertainties around trade, there are a lot of things out there that are affecting earnings. As you mentioned earlier, analysts are downgrading earnings and i also expect similar to quarter one earnings where it is very soft, 2 , to flat moving forward. Paul all right, ryan nauman, former Financial Intelligence vice president. You can get a roundup of the stories need to know to get your day going in todays edition of debris. Bloomberg subscribers can go to their terminals. It is also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get news on the industries and assets that you care about. This is bloomberg. Paul i am paul allen in sydney. Shery im shery ahn to new york. Lets get a quick check of the latest business flash headlines. Deutsche bank is sounding out potential buyers for a wide range of unwanted assets as it prepares for its most dramatic overhaul in years. It is gauging interest for both performing and sour loans as well as equity, data securities a