We could have had a 0. 4 move on the european stock markets development we saw over the weekend. The german tenyear yield move reasonably small. We are still trying to figure out what this means in the longer term implications. It is a story that has the potential to upset the Global Economy. It has the potential to upset the gulf region. Lets talk about the details of the strike we saw in saudi arabia over the weekend. We have had more reports coming out related to who may have been responsible. How long does it take to fix . Lets ask that question now. Really quiet. E we are not getting much from them at this point. The markets are left with the idea that it could be a while before they get this back online. The first thing you would want to hear as an investor is for the ceo to get out in front after the attack. They said they would update us within 48 hours. Were still waiting on that. People are saying they expect this to Linger Longer in terms of getting full capacity back. Production 40 of back online in the next few days. Justis the heart of not Saudi Crude Oil production and export infrastructure but this is the heart of Global Infrastructure for oil. It is just 5 of the worlds global supply. It is huge. We dont know how long it is going to take to get full on the political side, saudis are pointing the finger at iran as well as the u. S. Did. Knew over the weekend moran waspompeo said to blame iran was to blame. Frontvelopments on that on what we should expect from the u. S. . The u. S. Is waiting to see and go through all of their intelligence about this. There is one thing President Trump has made clear when he was campaigning. A war in thewant gulf, but when you have headlines that the saudis are hunting the finger at iran, they are not saying it is the you yemeni rebels. Escalates what we see as proxy wars to be more front and center. Rbc has r long, been saying the lima is broken. The market completely move to be focused on the supply side. The whole summer the market has been obsessed with the demand side, the Global Growth concerns. Supplysider is going to be front and center for weeks if not months. Guy thank you. The headline now, royal dsm trading in the midlands exploring a bid for dupont. The price tag would be 25 billion. Havet is said to approached potential bidders. Sm while is among the dupont fording for 25 billion. Dsm is down about 1 . For more on the events of the to the evers get more global manager fund. We have to ask you about the events of the weekend. Is very big news. The jury is out on how meaningful this will be in the long run. We dont know how long this will last. They might be able to get some of the production back online. It will be interesting to see how this evolves and the ramifications for the other players. It is such a big number. Vonnie is it something that would have you reconsidering some of your holdings . We own steaks in two different tanker businesses. We are happy with those investments. In the short run, they will probably trade up a bit. As investors understand what it means, that will determine the future, the intermediate future for these companies. Down, happy withif you have prn perhaps you need fewer ships. Bet. E making a longer term i think these are phenomenal investments. These businesses have evolved so well. You have regulatory changes coming from all kinds ofi thinkl investments. Areas. Happened toges have change the nature of the Oil Tanker Business that we are happy longerterm. If they were to selloff, we would use that as a chance to add. Currently we would not make any changes. I dont think it impacts anything else in our other businesses. Guy good morning. Can the Global Economy take a 10 rise in oil prices . It is teetering on the edge from germany to china to the u. S. Manufacturing sector. 10 of on oil prices, what have . Is that going to david it is going to have a cost impact on certain businesses. A half, itt year and is always going to happen for the next couple months. We cannot sit around waiting for. We focus on companies that are going to do just fine anyway. Whether it is vivendi in france, which owns universal music, that is not impacted at all. We are always looking at disruptions in prices to take opportunities in the market place. We Love Companies that are going through change. It does not matter. This time it is oil. It is brexit. It is the german economy. It is always something. You have been in a no growth environment outside the u. S. For a long time. There are wonderful bargains out there. We use the crisis to take advantage of these opportunities. Every crisis, the headlines are bad, but when you get past it, there is real value. We focus outside of the u. S. Because it is cheaper. Europe has been a tomorrow story for 30 years. These companies are taking advantage of these crisis periods to restructure their businesses, spin off noncore assets. The explosion of capital raised is all kinds of m a. It is a good time to take advantage of disruption. Guy one of the things we spent time talking about is the rotation of money back into value plays. It sounds like you are well positioned for that move. Do you think it has legs . David i am a Value Investor. I have been a Value Investor my whole career. I have been doing this for 30 years. I have been investing in europe for almost 30 years. We are not sing songs that value is back and it is easy from here. It is never easy. This rotation, for us the key is to focus on where there is value. Something is happening at the company, the sector, the industry. They are refocusing their business. They are doing things to get value from the stock to the shareholder. They are not sitting back and staring at their screens. We dont care about that. We dont want wishful thinking. We want to have catalysts that will push the stoxx up that these stocks up. Are you not concerned about the potential for tariffs to hit european carmakers . Fiat, chrysler, ferrari, tariffs have impacted these businesses. Is fact is that what wonderful about this holding , an insurancely company, they keep finding ways to pull value out of their conglomerate. They recently sold their autoparts business to kkr because they realized they do not need to own every aspect of the supply chain. They are finding ways to create shareholder value. They redouble their efforts on cost cutting, margins, streamlining. They are able to push through more change on operations. Guy a lot of these businesses go private. Particularly when it is spinning off noncore businesses. Do you see these businesses ever coming back . The Public Market story is getting more and more strength on a daily basis. David there is a cycle. What a business thanks is their core service or industry today, you find over time they refocus. The world changes. Today,they acquired eventually they want to sell those things. Growthic buyers in a low environment are buying growth. Asntually they buy it back Technology Changes and businesses change. That is what keeps us in business. There is always change. First baseman them off. Then they buy them back. Them off. Hey spin then they buy them back. Companies in europe are doing this change in taking advantage of the fear and distress that sets in after a weekend like we have had. Marcus. Thank you, david lets check in on first word news. Most 50,000 auto workers have gone on strike against general motors. Its the first United Auto Workers strike in 13 years against gm. Gm offering 7 billion of investment. The union says that all her fall short. North Koreas Kim Jongun making another attempt to restart stalled Nuclear Talks with the u. S. The offer was made last month. There has been no public response from the white house. The economy in china slowing down again, putting pressure on authorities to support growth. Last month, industrial output rising at the slowest pace since 2002. Citigroup lowering its Growth Outlook for china. A u. S. Investigation into rigging the Precious Metals market. Bloomberg has more on the government looking to charge people higher up the chain. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy lets take a quick look at luxembourg. Slightly bizarre situation. Ministerhe prime speaking at a podium that has been set up, one for him and one for Boris Johnson. Boris johnson has skipped this press conference and left a meeting with him. Comments coming through. The pound is trading at session was as we speak. Those as we speak. He is saying the british have offered no concrete proposals. He has advised the british to use the time wisely that is left. Boris johnson has told him there will be no second referendum. Possibly indicating some concern about the idea that we end up with delay after delay. Johnsons brexit tactic would not happen in luxembourg. The odd situation here with luxembourg Prime Minister with nong the press Boris Johnson. This is bloomberg. This is bloomberg. Vonnie live from new york i am vonnie quinn. Chandra is here with more details. The dow is down 0. 4 , breaking in the day winning streak. The action in the u. S. Following action in europe. Driventhis action being by the oil markets. Lets take a look at brent crude. We saw its biggest spike ever. Above a barrel. Day ineaded for the best more than three years. Similar action in wti. Oil devastating strike on facilities in saudi arabia. Impact. Also having an you can see in a sea of red we have two sectors and green. 2. 4 , more than 3 at the highs of this session. Mood everywhere havens. Ustrated by the u. S. S falling on the tenyear. Vonnie thank you. We have another breaking headlines. Elliott is said to be building a cnh industrial. Shares of cnh are up more than 10 . Tina, bring us uptodate on the latest. As of now we have a fresh glimpse on who might be responsible for this. There is a lot of fingerpointing going on towards iran. The saudis say they believe this is iranian backed or supported. Mike pompeo has come out and said clearly he blames iran. We are waiting for saudi aramco to give us some indication on how long this damage will impact output. It is a huge immediate some why reduction for global oil. Why are the saudis not saying anything at this point . What we have got so far is this is going to be more complicated to fix then we thought. On sunday we were hearing reports that this could be fixed in a matter of days. That may notlike be the case. We have seen from the footage that it looks like extensive damage on those fields. When we have heard so far is the saudis are looking for ways for customers to offset what they have already lost. What is the consensus on where prices stabilize . That is wide open. We think it is a matter of weeks. Haveanalysts think saudis four weeks of supply. If it lasts longer than that, you will see a huge uptick in oil prices. Thank you for that update. That is tina davis. This is bloomberg. Guy im guy johnson. Vonnie on vonnie quinn. This is bloomberg surveillance. Boris johnson, the british Prime Minister getting quite a latil. From xavier Boris Johnson deciding he was going to skip the press conference, which made for some interesting visuals coming out of luxembourg. A quick look at the bond market. Given the size of the scale we , these moves are not that big. Vonnie still ahead, i will be speaking with mark landry up on what to expect this week on Housing Finance reform. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy live from london, im guy johnson. This is bloomberg markets. Vonnie fares a of fannie mae and freddie mac up. Mac. Ng us is freddie joining us is mark calabria. Expecting nextbe month from an fha and a treasury agreement . Mark we are working on a Letter Agreement. At 3 billion. Ps wewill still be limited, but are looking for a number that will get us through the next year and a half or two years. After that, we will reach an agreement to the underlying share agreement. Is not when you said it calendar driven, do you anticipate within a year that fannie and freddie will be out of government control . Vonnie it depends on how quickly they raise capital mark it remains it depends on how quickly they raise capital. They will be responsible for building capital and hitting goal posts. What we will be doing to the share agreement amendments is setting up mile markers for fannie and freddie to hit. That will be the ones that drive down that road. Vonnie how much capital will this Letter Agreement authorized to retain . Mark probably enough that well get them through a year and a half or two years. This is a point of negotiation. The secretary and i have not settled on a final number but we are close. I am hopeful that will get done i the end of the month. Vonnie in the neighborhood of . Mark the secretary and i are both in the same neighborhood. Vonnie you talked about reducing fannie and freddies footprints. Are there other products you want them to be in, jumbo loans or other types of loans . Mark this will focus on derisking. Going to market, how do you look at products that dont have a high return . Fannie has leveraged 1000 to one and as a regulator i need to the able to make sure the risk they are taking is commensurate with the capital they hold and that is not the case. , thet reductions in risk major footprint will look the same but a little safer. That is appropriate given where we are in the housing cycle and the amount of leverage these entities have. Vonnie you are asked by senator brown how you inspect investors investorsolved in the if the steps you take decrease profitability. What do you say to that . Mark i would emphasize that as a regulator, it is on the companies and not me. I can help make this a safe and sound business so that you can make sure they dont fail again. The Current Situation is the leverage they have will fail in the next crisis. How do we make them sustainable . A number of the higher risk products they do dont have good returns on equity and we can reduce some of that risk. Keep in mind, the smaller they are, the less capital they have to raise to get out. Vonnie how do you respond to criticism that this will just be money in the pocket of hedge funds who own fannie and freddie . Mark it is not necessarily a concern of mine. I am tasked to getting them safe and sound that is my focus. If Shareholders Benefit or dont is not important to me. I have to help them build capital are they will not sustain the next downturn. Long before fannie and freddie raises outside capital and how do you anticipate that going . Would it be an ipo route . Mark it could be. We need to start to retain capital. To one yearmonths of retaining earnings to show the track record before they can policyarket, of a sizing driven, the earliest they would go to market would be the Fourth Quarter of 2020. 2020 is more likely the case. I want to emphasize a lot of things need to be done to get to that point. Vonnie how are the shares being repaid . Are these one the bargaining chips . Of thet is one parameters. My view is that the governments portion is being managed by treasury. My focus is getting fannie and freddie in a safe and sound condition. Vonnie a new competitor would have to raise tens of billions of dollars of capital and be on the National Stage and have a rate of return that would get investors to be attracted to it. Do you anticipate that happening and how long would it be before Something Like that happened . Mark to issue new charters will require an act of congress. The important caveat is that you have a chicken and egg. If i dont have the ability to issue new charters and bringing competitors, no one can compete. I would like the opportunity to issue new charters and bring competition in and reduce the reliance on fannie and freddie. If we have five or six of these entities, no one of them is necessarily too big to fail. The competition aspect is as much about bringing Financial Stability to the Mortgage Market as anything else. Vonnie investors returning to the course and they believe it provides incentive for the government to settle outstanding lawsuits. Are you looking for a settlement to be made . Mark we are looking to rebuild capital. Have a sweep which is part of the plan, a lot of the suits start to go away. This is about building capital and that is where i am focused. 2015 and a paper, you ignore fhathe to to restore capital fhs to , to restorehfa capital mark it is my intention to have us and sweep which is a questionable reality. Think it is a use of my limited time to rehash history. My time is, how do i get these entities to build capital moving forward . That will require an end to the sweep and that is what we plan to do. ,onnie that is fhfa director mark calabria. Mark guy time for futures and focus. I massive spike in crude. A massive spike in crude. We are joined from the cme in chicago. What is it going to take to stabilize the price . The market needs to know the extent of the damage. Are we talking that the refinery will get a sizable percentage. Orit this week or this month six or seven weeks . That will be very important to the marketplace. You cannot take the oil out of the reserves. You have to get ships there and change all just tics. Very hard. Guy in terms of how the market is pricing risk, has it been underpricing the risk of such an attack taking place and what happens now why she mark how much premium do need to build in. To that is a hard question answer. Now that little drones we dont know if they were a jetpowered car what came through, but the big question is why didnt the saudis not them out of the air . What is the premium . Is it one dollar a barrel or 10 a barrel. The second question is what happened to the defense mechanism . Guy the Global Economy is in a tough place right now, with week wee