Dow still 25 points shy of those levels. Six Straight Days six great sessions with the s p 500 climbing following last weeks plunge of 1 . It has come back, and then some from those levels. One of the things limiting what would be bigger gains is the price of oil, following the opec ,eeting with oil down 4. 2 below 50 a barrel once again as opec extended the production cuts but not for a full year, rather nine months. There was optimism that had been percolating that it would be longer. Oil shares today, they pulled back with many drillers and Oil Services Companies taking hits, transocean and marathon on this list. Stocks are higher today, not lower or being dragged down by these energy shares. Consumer discretionary a strong group, best buy is trading at a record, up 22 in todays session after the Company Comparable sales unexpectedly rose in part because of mario and the sales of the Nintendo Switch with Sears Holdings trading higher after the Company Reported its First Quarterly profit in two years, even as sales plunged as sears and kmart. Pvh, the clothing manufacturer beating estimates for earnings and upgraded over at j. P. Morgan. This is a big part of the reason the sox are higher along with gains and other types of Consumer Discretionary stocks like amazon and netflix come also trading at records. Something going on in the bond market, highlighted line our rate team, the 10 year rate even rate and white, now off to ,ercent from where it 2 inflation target of the fed 2 also and the 10 year yield in blue still above 2 . What you break even rate implies is that, despite the fed potentially raising rates a couple of more times this year, investors are not optimistic that we will see inflation pick up to any high degree, or treasury yields necessarily take up to a high degree. The president continued his travel today with a visit to the brandnew nato headquarters in brussels. In the u. S. , his agenda taste new challenges. Our global team of reporters have been covering the action and joining us is the editor for bloomberg news. Brussels. N in the president wrapped up a working dinner early, 5 45 p. M. At nato and he did not shy away from the topic of burden sharing within the alliance. Is grave trump concern the security concerns are the reason i have been very direct with secretary stoltenberg and members of the alliance in saying that nato members must finally contribute their fair share and meet their financial obligations. Nations are member still not paying what they should be paying at what they are supposed to be paying for their defense. A battle we know well. France and germany have not made any secret of their concerns about upgrading natos role in the coalition. After critical issues, could they find Common Ground . [laughter] on the antiterrorism, i think they found Common Ground but on l for increased defense spending, the eu pushing back on that to a certain degree. During the campaign, donald trump was about this already and in the eus mind, they have responded already, a commitment to giving towards the 2 target he is talking about and they think they have made strides. They are not there yet and have a long way to go but at least they are trying to tackle the situation. They were hoping for a message of unity from donald trump at this nato summit and they got that to a certain degree in terms of the Counterterrorism Measures and nato is more on board with the antiisis program. They are disappointed they got harangued about the contributions to nato. Angela merkel has talked about smarter spending. I want to talk about flashpoints. The British Press making a great deal about the Intelligence Leaks regarding the manchester attack. Some reports suggest that there is no longer intelligence sharing going on between the u. K. Government and the United States administration. What are you hearing and do you know if they talked about that behind the scenes . Theresa may, the u. K. Prime minister, she came here with the intention of button holing donald trump about that issue. Nato in general is saying that it is a bilateral issue, something that has to be worked out between the u. K. And the u. S. At the same time, part of this new ramped up efforts of counterterrorism includes enhanced intelligence sharing capabilities. We will have to work this out and figure out some way that we are not irritating each other in sharing our intelligence. Scarlet thank you so much for giving us your perspective. In washington, the Republican Health care bill hitting another the Congressional Budget Office estimates the house passed bill would reduce the deficit by 32 billion less than a previous version and would leave 23 million americans not insured. Here is what a member of the House Freedom caucus told us about this cbo analysis. I could care less about what cbo says, they could not find their rear end with both hands. It is not a good count and they have never given us good scores. Scarlet lets go to the white house. Not a lot of love for the cbo from that congressman, yet, when you look at the senate, they needed the cbo score for pragmatic reasons. That is right, needed the cbo score to reach a certain target to comply with senate rules. It did meet that target. But several senators have seen this number, 23 Million People who will not have insurance under this program and that has scared some of them off as they believe this bill from the house is a dead on arrival in the senate and they will try to craft a plan to cover more people and not take as many people off insurance and maybe funds medicated more than this house bill. There are several republican senators not happy with the bill. The market in the senate is so tight, only 52 republicans, they can only afford to lose two votes at already a handful of Senate Republicans speaking out against the house bill after the cbo score. The senate will take its time to craft a bill that will get support from moderates and conservatives in the party, something that will happen over the next few months. Scarlet Mitch Mcconnell said it would be a challenge to get to 52 votes. Breaking news, headlines that in u. S. Appeals court, the Fourth Circuit court has upheld a block on the trump travel ban. Give us more context, why is this significant and what does it mean for the next set that step step . The latest time the courts have blocked the travel ban, trump started off implementing a travel ban that was struck by the courts and he rescinded the First Executive order and crafted a new order that would comply with the courts which has been scrubbed down by multiple courts. The president has been frustrated in his efforts to block travel from certain countries in the middle east, saying that was an option for him to block terrorists from coming into the country. The courts have disagreed and said that this is not complying with the constitution and democrats who have attacked this band have called it a muslim man , but drilling his Campaign Promise last year where he said that he wanted a total and complete shutdown of muslims. It looks like this band will be tied up in the courts for the foreseeable future. Great to get your perspective. Up, act 2 30 p. M. Eastern, we speak to democratic senator ron wyden of oregon, the Ranking Member of the Senate Finance committee. A lot to pick up over the last few days. His takewe want to get on tax reform because Steven Mnuchin has been testifying on capitol hill and he coined the phrase, the Steven Mnuchin rule of not imposing tax cuts not giving tax cuts to the wealthy. How is he holding up against that promise . Scarlet lets get to the first word news. A spokesman for an antiterror force in libya says the suspect in the Manchester Bombing attack phones his mother hours before the incident and said, forgive me. They said his mother told interrogators person left libya for england only four days before the bombing and called her on the same day of the attack. His brother and father were arrested in tripoli. Home searches in the city of manchester have crossed to the u. K. , revealing important clues as the fastmoving investigation into the concert bombing continues. According to Manchester Police chief who also says the eight arrests made so far are significant. U. S. Intelligence may now have to guarantee there will be no more leaks to the media after photographs detailing the bomb and the name of the suspect were First Published in the u. S. President trump has asked the department of justice to in his words launch a complete review. Queen elizabeth poll children injured in the bombing that the attack was dreadful and wicked. She visited royal manchester Childrens Hospital to meet victims, families, and medical staff, 12 children under the age of 16 were taken to the hospital following the monday attack at manchester arena. The republican candidate in todays nationally watched special election for montanas one congressional seat has been charged with misdemeanor assault for allegedly grabbing a reporter by the neck and throwing him to the ground. He has tried to align himself with president trump, defended himself as the charge was announced wednesday, saying the reporter of the Guardian Newspaper was being aggressive and grabbed him by the wrist. Their exchange at his campaign office. Paul ryan called him to apologize. Democratic leader at the policy all the incident outrageous nancy pelosi called the incident outrageous. This person who wants to be the one representative from montana be a want to be donald trump, language like that, partially treating people partially treating people. We have got to say, behave. Three of montanas biggest newspapers pulled their endorsement of him but did not endorse an opponent. The president and the french president engaging in handtohand combat in brussels. At the first meeting ahead of the nato summit, both men a lot can for what seemed like an eternity before the president seemed ready to pull away and the french president was not an held on longer. Donald trump has called handchecks barbaric in the past handshakes barbaric in the past. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Bestwyden scarlet buy jumped 21 , the most since 2001 on an unexpected gain of sales, which famous twins are behind the retailers revival. From new york, this is bloomberg. Scarlet return to earnings ofs, yesterday shares best buy surging today after they reported a surprise gain in sales, the First Quarter comparable sales one part 6 up 1. 6 up. Their earnings top estimates. What is behind the Strong Performance . We are joined by nick turner of bloomberg news. The Nintendo Switch plated big role, not just for best buy but also target but in best buys case, it helped lift the numbers. Best buy has been looking for electronic product, always the iphone and other parts of done well over time but this is one of those breakout hits that has benefited them. They have been waiting for that for a while. Scarlet is it sustainable for best buy because this is a one fad and people move along. You hope they come along often enough, things like fitbit and gopro have been sellers for a little while and the faded. The ceo said he wants to focus on International Growth and the digital business. In light of what we have seen from amazon, we have walmart with their jet. Com purchase. Given the tensions between those companies and the former employees, if you put forward towards christmas, you could have a pricing battle and does best buy get squished in the middle . It was a risk coming ecommerce up 23 last quarter. The walmart, 63 . Used costcutting as a big part of their ecommerce strategy for the last few years. It is a tough business still, i having a they think brickandmortar performance presence, with people wanting equipment set up. Scarlet very aggressive on costcutting when he first took over best buy, their ceo, is that still in progress . The easy cuts are probably left i cannot imagine much. An obvious thing to cut. He will have to have a sharp eye and terminals terms of expenses Going Forward but i think he has done most of the hard work and they need to make sure the business is operating the way it should. Scarlet quick and responsive. Thank you, best buy shares at a record high. Julia as oil prices we hear from a Top Energy Investor about how he views investments through next year. From new york, this is bloomberg. Julia this is Bloomberg Markets, i julia chatterley. Scarlet i am scarlet fu. How are Oil Companies making money in this current price range . Alix steel earlier spoke with the head of Energy Assets at kkr about he how the seas Oil Investment through next year. Oil companies are trying to make money and they have money to spend. They look at the forward curve for signals for when to invest their capital. They are a Growth Business and they will keep investing until they run out of money. When you look at the forward curve and prices, 50, 52, what level would stop that kind of shale production and oil rate increase . The Oil Companies think that they can make money at 50. They will keep drilling at this curve. I know you are well aware, there has been a lot of money invested in land, particularly the Permian Basin and the number is 40 billion in two years and you cannot spend 40 billion on an asset that does not produce cash flow and let it sit there. How long does that story play out . 40 billion, yes, but maybe not in the next nine months if the curve stays around 50. The 40 billion was spent that the idea that he gave them an opportunity to spend more once they acquired it and the most important thing to realize is that the next year is probably not going to change a lot of mines. Minds. Drilling plans are out there and they will continue to drill. Your best case for 2018 . Russia and saudi arabia will want to get back their market , what is your best case for 2018 for that . We are longterm investors and we do not focus as much on 0172018l happen in 2 but we think opec is looking for stability. We are seeing that in the market with oil relatively stable, one of the reasons we have invested. Relative stability unless we see supply shock. Go below 40rice or stay in the 50, 55 range . We have two factors, one is the industry is a depleting resource. The installed oil base is declining every day and we have to spend capital to replace that production. Ishin a range, i think it reasonable to assume we can stay where we are but will depend on how quickly u. S. Shale can increase. Also, does opec cut more . They have had a history of cutting a fair amount of production but we have not talked about that much recently, opec has been destabilizing force over a long time and they could do more. 1. 2 Million Barrels per day bucket. P in the why are you making the choice of not going in the permian . We have talked about investing and 2018, we are investing and expect to continue actively investing but doing something very different with our capital, buying existing production. What we see in the industry today is a gimmick in the United States and north america in particular where companies are continuing to focus on growth. That growth comes from lying land, in particular, in the permian and investing capital in really to bring more production online at to finance that able go to Capital Markets which have been receptive in 2015 and 2016 but slow down this year. Secondly, they sell assets and they sell assets they feel are lower growth to invest in assets that are higher growth. That is good for us, we like acquiring assets that are being sold today that have current production, it gives us a longterm approach to the business. Price or oil curve that makes you say, i do not want to put my money in oil right now . Two things we focus on, volatility, it is really hard to invest when things are volatile because we are in the partnership business. We work with other companies to develop or acquire assets. Those companies have to be willing to transact with us. If prices move around a lot, it is hard to us for us to invest but when there is stability, we can invest in fed production and become really good risk managers in this industry and one of the things we focus on. Longterm risk management. We are happy to invest, generally at any price, as long as we feel good around the cycle. We follow two things in a cycle come industry fundamentals and Capital Markets fundamentals. Oath of those are working for us right now. Scarlet that was the head of k kr energy speaking with alix steel and houston. Julia coming up, we speak to ron wyden of oregon, the raking member of the Senate Finance committee. Stay with us, this is bloomberg. Planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Julia treasury secretary Steven Mnuchin on capitol hill talking byes and being questioned those including democratic senator and Ranking Member of the finance committee, ron wyden. Thank you for joining us and my apologies for mispronouncing your name earlier. Mitch mcconnell said last week that they were closed door going on between the treasury secretary and gary cohen, and housesenate leaders that are democrats involved in those . Sen. Wyden we have not been involved in those meetings and the fact is that i have written two bipartisan, comprehensive lateral income tax reform bills, the only ones in several decades. I would very much like to see a bill written that would provide real relief to the middle class. That would create opportunities for everybody to get ahead, not just the 1 . I have not been involved in those discussions. Julia i want to ask you about comments made by one person, a democrat from california said that Steven Mnuchin has said to her that he does not agree with this border adjusted tax, that it is neither supported by the president , even paul ryan seems to have softened. Do you think that is the way we are headed . Not a border adjusted tax . Lets sen. Wyden lets call it what it is, a grocery tax. A real kid on middleclass people who are walking on an economic tightrope already, balancing their food bill against their fuel bill and paying for essentials. For a lot of those people, they cannot absorb extra costs and this would be a body blow to the middle class, i call it a grocery tax. Scarlet retailers are fighting back. , the steven phrase mnuchin rule, referring to the statement in november that the white house tax plan would provide no absolute tax cut for upper income earners. Steven mnuchin has been testifying this week on capitol hill and based on what you heard, is the white house still committed to the Steven Mnuchin role . Sen. Wyden it does not look like it when he was asked in the house and senate, he does not restate that commitment. When i heard it originally, i said this sounds like a step in the right direction, no absolute tax cut for the wealthy. I asked him and said, from this day on, lets call it the Steven Mnuchin and he thought that was an appealing idea, almost like the buffet rule but it did not take long for him to walk it back. When you think of some of what is in their tax reform proposal and right now it is only one page, shorter than the typical drugstore receipt, the special 15 passthrough rate which would allow the fortunate few to convert ordinary income into Investment Income to be eligible for this special rate, that could be susceptible to abuse and it comes at a time when the president has proposed cutting resources for a tax enforcement. Julia we will have to see what happens when the page is longer but robert comey, are you hearing anything about whether the special counsel could limit or prevent james comey from testifying to your committee . Sen. Wyden i cannot get it to committee deliberations. What is important for your viewers is our function is different than bob muellers function, our function is to do an investigation and inform the American People as to what happened to their democracy and do it in a way that protects sources and methods, information that needs to be classified. Mueller has a different function, a criminal one. There is a process called the complexion, a 50 word for making sure people Work Together and do not trip over themselves. A fancy word for making sure people Work Together and do not trip over themselves. Scarlet what indication do you have that the white house will claim executive privilege over james comeys memos and discussions he had with the president . Sen. Wyden i cannot get into committee deliberations. Its you look at press reports if you look at press reports, this president has quite a sweeping notion of his power. For example, we find that when those of us who are Ranking Members of key committees send the letters to the various agencies, we are completely stonewalled. We cannot get any information from those agencies at all. It is like the separation of powers, just being rewritten so that all the power is with the executive branch. I cannot comment on any kind of matters related to what we talk about in the intelligence committee. But people can know from the press reports and the example i cited, this president has sweeping notions of his powers. In my view, if you look at the kind of things he has done with ,he Ranking Members stonewalling requests for information, he is rewriting the separation of powers. Julia i know you have to leave but i want to ask, if we look at for thegs going on government, one area democrats and republicans should be able to Work Together is on tax reform. Why are the democrats being excluded from those discussions behind the scenes . Sen. Wyden you will have to ask mr. Mnuchin and the president. Julia i am asking you. Sen. Wyden i do not know, i have worked closely over the last few years with two conservative republicans who are quite close to Mitch Mcconnell and we produced tax reform proposals, real legislation, with bill numbers and details that would show that you can provide meaningful tax relief for the middle class and create red, white, and blue jobs for americans and give everybody the opportunity to get ahead. We made it clear that we think the American People are demanding the congress, on a bipartisan basis, work on key issues like taxes and health care. I have a record that shows that. Julia thank you, sir, senator fromyden joining us capitol hill, republicans would argue the deficit says something about their spending plan. Scarlet lets get into the markets which are closed in new york and with the opec meeting we begin with oil falling below 50 a barrel after the iranian minister said opec members and their allies including rishaad reached a deal to extend production cuts for nine months and this follows the last years output agreement that sales will spark a sustained price recovery. The Saudi Arabian Energy Minister says hes not concerned about shortterm price woes. I do not worry about bailey daily kneejerk reactions to the market, they tend to react in ways that are not consistent with the fundamentals. Of financialt actions taken place, this is not on technical selling sometimes moves the market in ways i am not not consistent with longterm trends. Scarlet other headlines in first word news with Mark Crumpton. The fourth u. S. Circuit court of appeals in richmond, virginia ruled against president trumps revised travel ban. It said his prior calls for a muslim ban could be considered in weighing the legality of the second order, the ruling the first of two federal Appeals Court decisions expected to decide whether the revised travel ban is lawful. An Appeals Panel in seattle heard arguments on may 15, contradictory ruling would virtually make sure a review was happened that happened by the u. S. Supreme court if the justices take the case. The president pledging to get to the bottom of leaks of sensitive information. He called recent lease deeply troubling and said he is asking the Justice Department and other agencies to review the matter. The comments, amid anger from Great Britain over Intelligence Leaks and the decision by Manchester Police to withhold information from the United States about the investigation into this weeks bombing. A report about how russia tried to meddle in the u. S. Election. According to the new york times, top russian officials discussed how to influence mr. Trump through his campaign advisers. They cite former and current americans familiar with intelligence information. Theconversations focused on Trump Campaign manager Paul Manafort and michael flynn, then a donald trump advisor. The uns secretarygeneral says a tax on health care facilities, workers, and patients took place in more than 20 countries last year, including syria, yemen, and afghanistan. He said that the attacks violate Geneva Convention and our basic humanity. The secretarygeneral said the last year Security Council resolution to protect Health Care Workers has made little impact. He called for greater investments towards the roots of conflict. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Julia thank you. Coming up, investing for nonprofit investec and endowments. 25 billion for hundreds of institutions. From new york, this is bloomberg. Julia this is Bloomberg Markets, i am julia chatterley. Scarlet i am scarlet fu. Julia you are looking at energy. The worst performance of the etf weve tracked on our screen, the sector etf is the xle, the energy etf. It is down by nearly 2 as we in the prices go down wake of the opec agreement to extend production cuts for nine months. There had been some speculation, optimism, hope, that they would bes extended for 12 months or get deeper cuts but they did not materialize. That is where the disappointment is coming from. The worst performers within the transocean and marathon falling around 7 with Chesapeake Energy by nearly that amount, and oil and natural gas provider. The friends Oil Services Company turning lower. French Oil Services Company turning lower. Relative strength versus oil price, oil price and what and on the white line is not just the xle but the xle as a ratio to the sb why, the broad market spy, the broad market. Energy stocks dramatically underperforming the s p 500 orspy. Even as oil has had ups and downs. Energy stocks have underperformed. We had seen a closer correlation between oil prices and oil stocks and the s p 500, that correlation has broken down. In other words, the declines in Energy Stocks have not been a stumbling block or not significant enough one for the s p 500 as a whole. We will watch this correspondence between them to see if Energy Stocks continued that underperformance. Scarlet thank you. Lets turn to the business of managing money for nonprofits, foundations, and endowments. Joining us is the ceo of common fund, catherine keating, she took over in 2015. Stages ofthe later the u. S. Economic expansion and market cycle. The fed gave us that assessment yesterday. Without much more nuanced. How do you make money in this environment and achieve returns . Haverine our clients longterm goals, nonprofit investors, some are older and we look for the longterm. Theould say that this is ninth year of the economic expansion, very long and historic and relative terms, yet nothing on the horizon to end it , markets tipping at alltime highs and we do not see anything to stop it anytime soon. We are realistically optimistic about where we are in the cycle and about the prospects for returns Going Forward. Julia how do you build a portfolio composition . You have a luxury, if you have investors, you have money for them, if they have a longterm perspective, you can look at alternative assets that maybe time money up for longer, do they have the same caution we hear about, things like private equity over illiquidity complex. Catherine i like the word luxury you used. We think the focus is a luxury and the fact that we can focus on nonprofit investors exclusively helps. We know their return targets are high, most nonprofits distribute 5 a year and they have to earn 5 , if you want to be inflation, call that 2 , 2. 5 , targeting returns north of hot 7 , a high bar and the only way to get there is to take equity market risk and private market risks. Scarlet private market risks, private equities. Catherine private capital. Thelet lets talk about business of managing money for endowments, since you joined you have overhauled the organization, cutting managers, especially on the hedge fund side. What does your actions say about the value of the endowment models before you came on the scene . Catherine we have been investing for endowments for 46 years and the endowment model has three things, first, take equity market risks, the s p 500 has returned 4 more than the bloomberg market over the last 30 years. Diversified. The only free lunch in investing , putting together a diversified portfolio that gets you the same amount of returns for the with less risk. And take advantage of private markets, they do pay a premium, 3 , 4 per year. Scarlet did endowments and foundations invest into many alternative Asset Managers and maybe diluting their returns . Catherine i do not think that was the case, it is true that the last decade has been difficult for investors. And difficult for the endowment model. Why is that . We had the Global Financial crisis and lost 58 of Global Market capitalization along the way. Less obvious, following that, we had unprecedented monetary stimulus to the tune of 12 trillion between centralbank quantitative easing and 600 or more Interest Rate declines. Is the size of the second largest economy in the world and you have all of this liquidity washington the markets. Thats walking through the markets, equalizing strong and Weak Companies which has made the environment for investment more difficult. Julia what proportion of the money you manage is in the private markets, private equity, Venture Capital . How do you perceive hedge funds at the moment and what do you tell investors about hedge funds and the opportunities that may be there or not be there . Where do bonds fit into that, fixed income . Break it down for me. Catherine i will start with bonds. Most of us in our investing lifetimes have been investing in a bond market the last 35 years. That is beginning to change. What we tell clients is that, over the last 10 years, the per yeargroup is 4 Going Forward and we think that is more like 2. 5 . You have to get used to the new environment and bonds. Hedge funds, a difficult environment for hedge funds with each rep trillion dollars, low volatility, low rate, difficult environment. One of my colleagues wrote a terrific piece on hedge funds and the title was, what does the cable industry and Hedge Fund Industry have in common. They have one thing in common, they have relied on bundled pricing and people want to cut the cord. Model pricing for hedge funds is a combination of market data without with bundled pricing and many investors are trying to cut the cord and separate the outflow from the beta and pay for the album separate the alpha from the beta and pay for the alpha. Private equity would be 35 , 38 , if you look at typical clients, probably less than that, more 20 , 25 . The reason people do it is there is a real premium for investing in private markets and over time it averages between 3 and 4 per year and if you have a 7. 5 return target, that illiquidity julia a great article on your website about the illiquidity fear and tackling that. Great to have you back. Catherine keating, ceo of commonfund. Scarlet violent protests in brazil brazil as the president has calls to resign which he has resisted. This is bloomberg. Julia this is Bloomberg Markets, i am julia chatterley. Scarlet i am scarlet fu. Julia in brazil, the Bar Association has filed a request to impeach you president , coming after demonstrations against the embattled president exploded into violence across the capital city yesterday. Protesters set fire to the Agricultural Ministry and trust several government buildings and class with police clash with police. They called out the armed forces. What do we know about the Association Decision to request an impeachment from the president in brazil and how important is this . , just a couple of minutes ago representatives of the Bar Association walked into Congress Less than a mile from here and formally filed their request for impeachment hearings against the president to be initiated. There have been others but arguably this is the most important one, the Bar Association is highly influential and are arguing that the president is trying to cover up a massive corruption probe going on for years in brazil and used his influence to help individual friends. Is where we are in the political process, on the streets, we have shown pictures of violent protests. How are these artists different from the demonstrations that help push rousseff out of office last year . Yesterdays protests were some of the most violent protests i have seen in the city. We saw ministries on fire and helicopters Police Helicopters overhead. At the same time, we have seen these are organized, rather than spontaneous. Demonstrations. We believe it is not the overwhelming majority of resilience participating brazilians participating but polls show the president is deeply unpopular. This crisis probably exacerbated that. Julia someone said to me that the best way to get rid of the president is to have the top court to void the election results, how likely is that . One of the options we have heard, legislators are concerning, those who do not back or no longer back him, the probe had been going on for quite some time and they look at illegal financing of the 2014 Election Campaign in which he was elected as vice president. Tell whatssible to the outcome is. Even that would not be very swift, he can appeal the results at any time. Scarlet thank you for that perspective, our bureau chief in brazil. Julia oil trading below 50 a barrel after opec announced it is extending cuts for nine months. Mohamed elerian on that later. This 3 p. M. In new york, 4 00 p. M. And new that san francisco, im julia. Scarlet and im scarlet fu. Welcome to Bloomberg Markets markets. Julia where i from bloomberg World Headquarters into new york. Top stories first. Lower down trading to 49 a barrel for crude. Enoughd production cuts to please investors. Jim is hitting a legal roadblock after the automator claims they volkswagenst a book to rigged tests to past missions tests. Challenges to Trump Administration agenda. Where one hour from the close of trading. This get a closed but get a weck at Market Street julie record today for the s p and nasdaq. We seem relatively muted going into the long holiday weekend. Six straight sessions now. This is higher for the major averages. Part of the game is coming from earnings and part of it is coming from momentum. If you take a look at the groups on the move, julia pointed out that oil is falling in the wake of the opec meeting in vienna. Not enough to counterbalance all of the gains that we are seeing in Consumer Discretionary. That is up 1 . Technology is showing a lot of strength today. We are seeing records and familiar names that have frequently been some of the bestperforming stocks in. Ontributing the most my, amazon, alphabet, are all trading at records today. That bringse me back to a discussion that has been frequented this year. Are some of these stocks, the momentum stocks, are they accounting for too much of the game in the s p 500 . Profits, ben carlson, talks about that appearing later on what you miss. Tickling the bloomberg year. He makes a point to that the there of the rally shows is health to it. At the top your, we have the New York Stock Exchange composite index price. The prices peaking here first and february. The press the breadth the amount, there is a good that we have seen very scene. These are rising and falling on a printer pretty regular basis. You ladies will talk about that later on. We cant wait. Thank you, julie. On markets, we have the vanguard ceo leading the Worlds Largest mutual ceo company. I think the u. S. Market is really fully valued right now. Market making the assumptions that tax reform occurs, Infrastructure Spending goes up, and regulation is stamped down little bit. Thoseobability of happening over the next six months are low. That would tend to disappoint investors. We are very cautious about the u. S. Right now. Letsth different get some spur effective lets get some perspective. We spoke to last week, you said under the surface trump performs were given up on. Do you think the opposite . I stand by my view. I think it is an acceptable opinion to say the u. S. Market is all when you compare it with other popular markets like europe. In that case, the u. S. Look pretty rich. Julia so you are seeing the markets have long since given up . I think in the sense that, if you look at tax reform is one of the big touchstones of trump, if you look at the High Tax Companies like as of the election, they have underperformed. Ater the election there was mess of outperformance and that initially surely eroded over the last four or five months. Infrastructure is the same thing. Like jacobsstocks engineering. Companies went up 20 or 30 in the aftermath of the election. They shatter the s p. The performance has eroded. I think jacobs is now up 5 since the election and four is up to. Both of them like the s p. Hoping forre infrastructure, they are not reflecting it in the market. Julia i completely hijacked this conversation. Scarlet . Scarlet talk about the sectors outperforming going into the woodwork. Lets talk about value stocks. You brought us the chart that looks at simple value criteria. Explain the that is, first off. Not a lot of companies are meeting that. I set up this screen a couple months ago and i wont rattle off about it. It is pe, price to book. The usual volumetrics. Lend a little support that the u. S. Is fully priced, on the turmoil, you can run the screen going back to 1992. I have done that. Check, the fence more stocks meet criteria, the more value there is in the market. Julia scarlet working to can see. Cameron the number of stocks meeting is a relatively low which would suggest that the market is fully price. Julia what about u. S. Stocks that the pill growth criteria . Cameron it is a familiar looking chart. [laughter] it is the same drill basically. You have a lot of stocks meeting Simple Growth criteria revenue, and support, and you can see, going back in the 90s and early or middle part of the last decade, there were a number of stocks meeting the criteria. Now there are relatively few. We talk about the market being fully valued or lack of opportunity, this is where that is reflected. If you say, i only buy stocks if they meet exwife or z criteria if they meet x, y, z criteria. There almost empty. Scarlet no matter if you look it about you look at value or growth. Camera, thank you very much. A check of some other headlines on first word news with mark. You know what, we are having technical difficulties and mark is now joining us. No, he is not. Julia im going to hijack the screen once again. Coming up, opec members come up to extend and the advisor tells us why bloomberg is more significant than the last one. For now, this is bloomberg. Scarlet this is Bloomberg Markets. On scarlet fu. Julia and im julia. This is a look at the biggest stories in the news right now. China and their Alibaba Group lead a 1 billion investment countrysone of the largest food delivery services. According to people familiar, the companys value start up at 6 million. Complete the deal makes it chinas secondlargest fundraising effort for a start of this year. Amazon opened to kiosks in seattle allowing customers to buy groceries and pick up in as little as 15 minutes. The amazon press pickup spots of the Company Better compete with the services of some competitives like that competitors like walmart. This is available to primaries only, it is an 800 billion market. To the is reporting no bid saying it is too low. That is the that is according to people familiar. The bit estimated at more than its market value of 5. 8 billion. That is your business flash update. Opec and its allies extended all production cuts and nine more months. This comes after they failed to get a grip on prices. Advisor andonomic bloomberg commonness onomberg economist explains daybreak americas. This is a different opec agreement. It is different because they need to include nonopec and, second, it is much more differentiated among its members. That is why it is holding. In terms of uncertainty, i dont think its the aramco ipo. So far they delivered half of because they promised and, second, it is great to have alex out in houston, because we dont the share. That we are atis a 45 to 55 range. When we move either way, ultimately, is a function of what shall does as opposed to what opec does. It is very difficult to get a cartel this site together. Opec was nowhere, four years. What brought it together. Is it technology that made it possible . Yes. And it is also the november 14 when they in said i would no longer accept the market share reduction as treat. Prices went down to 20 and that was a huge waste of opec. They said you have to take me seriously in the saudis will no longer play the role of the swing producers. That is what it took. Pricetalk about sensitivity in houston texas. There isnt much Price Sensitivity at all. We have seen the raids come back on as prices climb and, on the downside, we see how resilient they are. Yeah, john. Absolutely. Its more for the downside than upside. My question for mohammed, looking in central bank an exit strategy, they really struggle with that. Opec is going to have the same problem. I do we navigate an exit strategy, mohammed . What you need to hear about how they ramp up reduction gear . I think year . About demand. Is the Global Economy will pick up and they will be able to handoff to demand. If that doesnt happen, then they will have to figure out how to extend this production cuts. Then, they risk folding into the old trap but they talked about, which was, they become the swing producer of the Energy Market as a whole. There, to figure out how close the sale producers come to running out of cash completely when prices were much lower than that. Did opec come together to quickly . Should they have waited more to have Creative Destruction in the space you will be discussing . It is a great point. It has to do with the backing of the curve. If it is above 50, Oil Producers will be hedging in the u. S. That is ok. In a year, we are about 52 on the curve. That would get dicey if we put below 45, for example. I love demand, that is key. What do you see in oil demand . That pairs with global growth. This is where it is really hard. I think we are getting closer and closer to a tipping situation. With both the probability of tips being equal. I wouldnt bet on demand. It is a risky bet. If you are sitting on opec, it is the best bet because you dont have to do anything. You hope demand will be the solution for you. That is something to look at the very carefully in the next few months. Scarlet that was mohammed, the chief Economic Advisor and bloomberg columnist. We turn to General Motors and they hit thats they are hit with a class action lawsuit. This is the fifth carmaker of people cheating since 2015. Volkswagen admitted to installing software to bypass the rules. Start with the obvious question here. How is this different or similar to what to be doubly was doing and what they ended up paying for . At this point, it is apples and pineapples with vw. When they broke, it was discovered by the West Virginia researchers and a confession was already extracted by the california regulators. Bw had a knowledge that they only operatee to their filters during the testing. Therethat, and the epa thats redoubled their efforts redoubled their efforts to find anyone cutting their corners and the trial lawyers did the same. ,hey brought the cases sometimes they inspire the regulators to get involved, and happen here. Until there is a regulatory issue, there is difficulty seeing traction behind the claims. Scarlet jim came out with a statement as well. They said the claims are these and we will vigorously defend ourselves. All epa andth regulations. Julia jamie, you said the key will be whether the regulators. Ill decide to investigate what precipitates the regulators to think it is a big and of issue or concern that they need to investigate . It depends on how much it is out of line with what is excepted or allowed. Also, what is the reason . Companies can put software in their diesel vehicles to control emissions, allow them to them its more than what would normally be allowed, but if they are disclosed in the right way, that could be acceptable. One case where they had come back since vw and brought the case, was against chrysler. It makes the argument like they are not like bw and did not confess to anything, but the regulars mitigates and issued a notice of violation and suited them in civil court. Julia its interesting. I spoke to the ceo earlier this year and he said that the regulators are not clear with the lines are as far as omissions are concerned. The carmakers can only react as far as the regulators provide them with guidelines. That is a different point. Im looking at the classaction lawsuit that was filed today, apparently there are 80 references to volkswagen and theres an assertion within it that the environmental damage caused by each of the actions is worse than that and what was going on with volkswagen. And you give us clarity . Jamie clearly, the lawyers in this case, and they brought several cases like this, are trying to paint them with the old wagon brush. Theyre trying to say they are the same, and maybe spur g. M. To settle and say, goal way, we dont want to have a big long messy fight here. For instance, the similar lawsuits, consumer lawsuits, on vw, and until they fix the cars, there is a huge degradation in the value of the vehicles. No one is saying, we will have to see. Generally, it is not like there has been a huge loss of the that are powered by the diesel. These are highly regarded, seem to be in compliance, but thats will be the case for them to make. There are different ways for two to come out. Though the courts, regulators, so this is another challenge to gm. Scarlet certainly another challenge. Jamie butters, joining us from detroit. Help, this doesnt diesel vehicles in the United States. This is another nail in the coffin. Julia is this the al nail in the coffin . , ask a like a volkswagen silly question and get a silly answer. [laughter] still ahead, despite voting down, it has been on a nine percent tear since the start of the year. From new york, this is bloomberg. Julia this is Bloomberg Markets. Andjulie chesley, scarlet im scarlet fu. Its time for julie hyman. We have the chief strategist at interactive brokers. Steve, we saw volatility come back down and start take up. Inyou think there is value continuing hedgeing against volatility . Im a born header. I think there is always some reason to be hedging. You can never be a hundred percent confidence. That said, i think the best strategy has been by closing your eyes and going on any stock in it will work for you. I have this nature of always looking for the hedge, so i have to be looking somewhere for what can go wrong. Always looking for the fly on the ointment i suppose. It looks like today, one of the ways is looking at gold . Which is interesting. Gold traditionally does well when there is cheap political risk, and gold has not reacted in that way this year, necessarily. Steve what has reacted . The reason i think about that is because it is relatively cheap in a different way than equities. Equities, you can talk about the evaluations of them being high in the volatility being low, but in gold, there is no inherent evaluation play. Also, the volatility has been coming up dramatically. Julie we also have a terminal of that. Looking at the gld which is the thats versus volatility. The price here of volatility is in white and you have the gld itself in aqua. As you say, the volatility is bouncing around. ,teve if you look at the chart vix versus spx, you can see it inversely correlated, which is his very hard to draw conclusions from that one. That is why looking at other strategies because gold seems to be relatively inexpensive with the volatility of gld and any underlying gold falling off. Julie specifically what makes the most sense to you . Looking at your strategy, it is a hedge, but it is a pretty bullish hedge here. Steve it is a hedge bullish trade. It says if there is geopolitical , i could elaborate on all the reasons we dont have time for that, but if gold were seem like and it does it is not a foregone conclusion that it wont, it is a very inexpensive way to participate in it. It does time around the next to set meeting. You have employment numbers in the meantime, and there are other potential catalysts before the trade expires. Julie if your timing around the fed meeting, what do you think about the probability at this point that we will see an Interest Rate increase . Steve i think that is a foregone conclusion at this point. They are one of those things that make me nervous because too much consensus is never a good thing. Look at oil today. Couldttle minor upset move things in one direction or another. This is basically saying, i think the path of least resistance is up. That would be the way to deal with that. Julie always be hedging, i guess that is it. Steve, thank you so much. Julia and scarlet, back to you. Julia this could slow the president s agenda. Jonathan joins us next. Mark im Mark Crumpton and it is time for first word news. Barringexecutive order entry to the u. S. Was put on continued hold by a federal Appeals Court today. Richmond virginia based Circuit Court of appeals said trumps prior calls for muslim bands pushing the legality of the executive order. Today is a ruling of two expected to decide whether to revise the travel ban and if it is lawful. Wouldradictory ruling ensure a review by the supreme court. A spokesman for an antiterror force in libya says the suspect in the Manchester England telephone his mother hours before the incident and said forgive me. The spokesman said he told in garrett his mother said he left for england only four days before the bombing and called on the same day. His brother and father were arrested in tripoli. Theresa may address the u. S. s Intelligence Leaks on the Manchester Bombing today. She
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