Referendum rapidly approaching. Lets get to the stories you need to know about. In london where oil tops 50 a barrel. Jodi schneider in japan. And mike mckee right here in new york with the latest fed talks. The rally continues in crude. Brent toppinggh, 50 a barrel for the first time this year. Javier blas, talk to me about driving things toward and barrel. Alter javier we are losing some had thousand barrels a day in nigeria. 700,000 barrels a day in nigeria. In the background is the demand that a strong. Everyone is driving a lot in the u. S. That combined with supply outages is bringing us to 50 a barrel. Jon i want to talk about debt supply. A 9 billion auction what does that tell you about Market Conditions . Javier the pain for the producers has been really acute. You see qatar borrowing 9 billion. They have a big production, relatively reduced population. It is not a country you would expect to be in trouble. That at 50,ing us the problem is not over. Although the markets have rallied, we are up about 80 from the lows, we are only back to the level we were in november. Back in november, we were talking about trouble for producing countries in the middle east. Yes, the situation is better, but will qatar is telling us is it is not mission a come pushed. 50 crude, there is an obsession with round numbers. Reporting 50 is actually quite significant for a lot of producers out there. Javier particularly because we are beginning to see a lot of overselling by shale producers in the u. S. Rally in distressed that come junk that for u. S. Oil producers. Bankssignificant for the that were financing these companies. Slowdown. Ally a breathingovide some space for the banks. Wti at 49. 86. Vonnie a warning from shins oh on they asked the g7 meeting gets underway in japan. Jodi schneider is covering the meeting. Zo abe shins o abb this points to domestic issues in japan as abe has repeatedly said that he will raise the sales tax in 2017 unless a major earthquake occurs. The Prime Minister was indicating that he wants to postpone the sales tax. The last time the sales tax was raised in 2014, japan fell into a recession. Vonnie that was jodi schneider. She is reporting from tokyo and the g7 meetings. David markets are closer to willving that the fed raise rates in july. Michael mckee is cohost of bloomberg surveillance on radio. What do you expect to hear . Fed officials are not under communicating their response. Tomorrow, janet yellen is likely to be talking more theories and practice. That will be key to understanding her thinking about the economy. Bullard and jim speaking bullard says growth is slow and Inflation Expectations are slow, but markets are strong, Financial Stress has eased. Back down to where we were last fall. If a data dependent fed wants to move, one of the headwinds disappeared. David they are data dependent could we have more coming out this morning. Durable goods. Keep an eye on the sub Index Capital goods suspending leaving out the defense spending and commercial aircraft, a proxy for business pending. It has been falling. The goal line is higher, business pending is lower. Why is business not contributing . To see be adjusting today if that turns around with the more optimistic indicators weve seen recently. Thats interesting to see today if that turns around with the more optimistic indicators weve seen recently. Wrap of whats been happening, a big two days of gains over in europe. The biggest twoday pop on the stock 600 since february since february. The big headline generator not coming from stocks, but right here, commodities. 9 . Crude higher by many derivatives of this story, look at the credit markets and debt markets, the huge upscale bond issue from abigail we are watching many stocks moving globally, starting out in japan. A relatively flat asian session. Ta shares finished up 21 . The company is looking for a white night suitor. In may have found a buyer kkr. Also finishing higher by 9 , mitsubishi. Offering investors some uncertainty about how bad the scandal would be. We have the Southern Bank stocks selling off, led by a spanish 2. 8 down more than 20 on a million share offering. Rallying in europe, the miners as gold trades higher for the first day in seven days. It looks like maybe the huge housing number on tuesday could be helping out copper. The g7 summit has wrapped up in japan. President obama met with the leaders of six industrialized nations to discuss ways to get the Global Economy moving. So far, wevea discussed issues of the Global Economy and the continued accelerated growth. To use all the tools at our disposal to make sure we are not only putting people back to work, but also helping to lift wages. Vonnie tomorrow, president obama becomes the first sitting president to visit hiroshima. In france, strikes at Oil Refineries may spread today. The union has called for electrical workers to go on strike. Hollande madencois it easier to fire employees. The Hedge Fund Industry may lose a quarter of its 2. 9 joined always in assets over the next year. 2. 9 trillion in assets over the next year. Hedge funds having their worst start to a year since the financial crisis. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Coming up next, policy divergence. The fed versus the bank of japan as the u. S. Prepares to hike and japan leads to economic stimulus and to economic stimulus. His 50 is 50 Oil Sustainable . David this is bloomberg. Joining us now is anastasia amoroso. Aboutt to talk with her divergence among Central Banks and what it means for the u. S. Dollar and emerging markets. We want to start with oil. Brent crude earlier rose to over 50 a barrel for the first time in six months. The spread on the highyield Energy Bond Index titans. Ens. Tight anastasia highyield energy has been the bestperforming asset out there. Within they highyield universe. That paves the way for a june rate hike. Will a default in the highyield space continue . Yes. A lot of the smaller emp companies took on debt when oil was at 100 a barrel and leverage themselves up thinking oil will stay in at 80 100 range. Even though we are at 50, it is not nearly where we need to be. Even if you do not have outright default, you will see restructurings. Is this the time to go into you highyield into highyield energy or be cautious . Anastasia i dont think theres any particular value at this point. At the beginning of the year, i would have said yes. Areyield energy spreads falld for that 20 probability. Looking at the oil market, are we in a position where we are saying hi crude prices are good financial conditions . Anastasia high, but not too high. If you look at the history of markets come every time oil wasies significantly, that not a good thing for the Financial Market. 26re not on the brink of again. That does help financial conditions. It certainly helps Energy Companies somewhat. I want to talk more broadly about potential divergence. Whatdoes that mean for seems to be a trade that is short the u. S. Dollar to go along emerging markets . Anastasia that was the trade for the first half of the year. It worked out very well. The white line here is the u. S. Dollar. The blue line is emerging markets. Anastasia a pretty good mirror image of one another. The fed is hiking with no one else wants to. If that is the case, we could see a resumption of the rally. The most susceptible part of the market is part of the emerging markets, but not all. Oil helps places like russia. That is one thing that is different this time. Even though the dollar has been strengthening, oil has not necessarily been falling. Oil could move higher from here. We are into a possible seasonal territory here. Draop. Inventory we are looking for a robust summer driving season. That should drive oil higher. Do you see an increase in demand for oil in places like india . Anastasia india, china. You have to look at it in volume terms rather than dollar terms. They arerms still doing their fair share and u. S. Is a drop. Vonnie coming up, time to bank on financials . An upcoming of rate hike. Yellenseans for timetable, next on bloomberg. Jon this is bloomberg. Futures in the u. S. Looking firm, dow futures up about. 1 . If you look at the euro, the gains continue. The dax keeps climbing, this time by 48 points. Thatr yen holding on to 110 handle. The story of the session is brent, the vti 50 watch. 50 watch. Wti 2128 was the alltime closing high. Anastasia amoroso is still with us. Can we get there between now and june 15 . I would not rule it out. It is only a 2 move from this point forward. What hasnt happened is the fears a stronger dollar unraveling. That has not happened. The fact that oil has been resilient and credit spreads are tighter ands points data is improving come all of that could push as higher from this point forward. If you look at fundamentals come if you look at earnings and look , we areple math slightly above fair value. The only thing that changes that is time and better data. As we move more towards this , 2017 earnings, the dismal quarter could take as higher. 12you look at the next months earnings, the reason s p has not gotten anywhere since that middle of 2014 is because the next lowest has been stuck at a 125 number. As we move into 2017 and earnings consensus materializes, it is a 135 figure, that would ultimately move us higher. At 5 e still looking upside plus maybe a 2 dividend. There are some constraints that could play out. Vonnie david the priceearnings ratio may be not reflective of what has been in the past. What is your yield compared to what . When you are getting negative Interest Rates may be the priceearnings ratio could go higher. Anastasia it does make sense, but you have to have a confidence boost here. Im not sure what that confidence boost is going to be. One thing that happened from 20042006, the last time the fed was raising rates, multiples did not move on the s p. They actually contracted. The fed is raising rates. That is not necessarily a confidence boost. Im not sure multiples go higher from here. The other constraints, wages. Corporate margins and u. S. Have been doing phenomenally well. Rise, that does eat into your margins. That means margins do not expand from here. Jon looking at financials, the question i keep asking, are they rising on the perception that there will be a transition to the bottom line . Anastasia if we get a 25 basis point rating increase thats rate increase, it would help. About 1 billion to the top line. You have to be somewhat careful within financials. Notpure play on the fed is the overall financial sector, it is the Banking Sector within it. Vonnie have you changed your allocation, percentages at all . Investor if i as an think about where im willing to it may not risk, necessarily be in the pure equity space. 5 upside plus 2 dividend on a , if mysitive scenario expectation for highyield is that may be a better opportunity. Vonnie anastasia amoroso, thanks. David coming up, you will hear from the bond king himself, bill gross. Find out how hes positioning jenness among thats janice Janus Capital. Jon this is bloomberg. Futures in the u. S. A little bit firmer. Gest today pop in europe two day pop in europe the higher by a fifth. A stronger euro, up about. 25 . Gold snapped a sixday losing streak with the headlines generator in the crude market. Brent up. 9 . We are back through 50 a barrel. Vonnie time now for first word news. Two members of Donald Trumps team tell bloomberg an endorsement by paul ryan is imminent. Ryan spoke with trumped by phone last night trump by phone last night. Airlines and u. S. Taking matters into their own hands, spending millions on more workers to shorten long lines at security checkpoints. Its expected to be a record summer in the u. S. For air travel. Sophisticated submarines may be the only hope of finding the egyptair data recorder. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Jon tom keene joining us now from bloomberg surveillance radio. The big discussion over the last 24 hours is blackstones view on hedge funds. This from the president of a day of reckoning we face here that will be a shrinkage in the industry, it will be painful. Pretty painful for an awful lot of places. Weve seen people calling the end to the Hedge Fund Industry. We do face a decreasing amount of assets going into these funds. Tom what is fascinating is the different kinds of hedge funds and where is working and not working. Do long shortd to in this market. We think of george soros, global macro making big bats big bets. Very concentrated debts. Concentrated bets are hazardous to your future. Big forthe industry to these guys to go out there and generate the kind of returns 1980s . Back in the tom i had the privilege of talking to Julian Robertson about this. Everybody by definition was smart and they were very few players and the industry burgeoned with a lot of smart people. But also a lot of people that were kind of smart. This 2 and 20 gain what is never talk about is the reason you do a hedge fund is for that 20 gain and that is over a hurdle. To get there, you used to have make 21 gross in a low rate environment, in a low terminal value environment. Two and 20 does not work with that new framework of 15 a year crossing down to 8 a year. The Pension Funds that dropped 200 million across various hedge funds, they are now pushing for returns. Just by cutting fees, getting those fees down. New world, low returns. The idea of absolute return versus relative return, nobody of trying toamic make absolute return in a low yield, low terminal value, low potential gdp environment. It is all new. It is ugly, particularly for those making focused, conservative bets. That part of it has really been challenged. It is a little different. Aa quick disclosure nonexecutive director at blackstone. Overwork, tired, but hanging in there. David now to a bloomberg exclusive. Erik schatzker sat down with bill gross who manages the 1. 3 Janus Capital unconstrained bond fund. Heres what he had to say. Bill i think they will move in june. The Second Quarter is looking decent with a 3 kind of quarter. Jobs will probably be adequate in terms of growth. The dollar has gone down instead of up and the stock market is close to it week. Peak. This is their time, if ever, to move. Janet yellen is more dovish than some of the governors and president s. There are president s and governors that i think are beginning to understand what i just talked about in terms of the effect of low Interest Rates on this savings pool. Erik the fed, sooner or later, has to make a move. Those of the arguments in favor of a hike in june. What arguments do you find persuasive against a hike in june . The question of trying to answer what appropriate neutral is. Some would argue where we are and whereto zero other banks are now, negative, it is an appropriate rate. Aggregate demand and Global Demand is insufficient, which has been a condition for 1520 years. Erik that holds some water with you . Bill yes. Theres two sides to this. To elevate financial asset prices and tickle down into the l economy and create jobs now, it is becoming very tired. Ultimately, financial and small savers are bearing the brunt of policy Going Forward. It is not an easy answer. Upward. E to move bill what about erik what about the impact outside the u. S. And the feedback loop that comes with it . The chinese are interested in iswing when and what the fed going to do because their concern is about the impact on the u. S. It would be a simple thing for the fed to raise rates and the dollar to go up for emergingmarket currencies to go down in for their exports to be more productive. Over the past five or 10 years, theyve borrowed a lot of money in dollar denominated debt. If it is dollardenominated and the dollar increases, some fear it will crack. Erik how sensitive is elin and the rest of the committee to those issues . Isple wonder whether the dog biking the tail or the tail is dog is the dog wagging the tail or tail is wagging the dog. Bill it does indicate some currency. Y to s mandate is for inflation and domestic growth. But, as weve seen since lehman conditionsinancial and Global Economic growth have taken on an importance that they never had before. Prices seem to indicate a growing level of confidence the fed can pull off a rate hike without provoking a selloff in risk assets. Wasnt the market primed for almost 15 months for the fed to move and when it finally did in december, stocks and credit sold off violently for two months. Why wouldnt that happen again . Bill it could. They will temper the potential with language that butests not only gradual, maybe the next one would be in december. Many governors have been open about 23. December might allow the markets to stay call him. A stay calm. Vonnie we will hear more of that interview later on. Sayings from jim bullard that the full payroll report will be relevant and the risk of Financial Market bubbles are moderate that risk may rise later. He has no problems about china asking about the Federal Reserves plans. He did note today, want to guess how many fed hikes there would be in 2016, but he favors a rate of normalization. Data dependent, data dependent, data dependent. On. Oil rally raging highest levels since november. Could opec throw cold water on the rally when it gathers next week . David this is bloomberg. Coming up later, blackrocks chief investment strategist a fixed income will be joining us. Jon the crude rally rate is on. Libby toudouze joins us now. Im sure the stock picks are doing tremendously well. Its really been great. Youve seen most of the Companies Perform well in this type of environment. ,he interesting thing is especially for companies in the midstream space, the pipeline companies, it has created a positive feedback loop. These stocks have not seen deteriorating cash flows. Their stock price went down and it caused a financing