Moving up. We are all waiting for the jobs report tomorrow. Joe you have to talk about the resiliency of this market. We were down earlier in the day, and another come back to close over 2100. That is an important level. One thing that did help a little bit was a bounce back and oil after the inventory report. Energy down the most on the day, more earlier, then a pullback into strength. For a long time we talked about oil and stocks correlation. That is not where it was three months ago. Is going one way, stocks are going one way, the correlation down. 9, so today positive despite oil. , a bigresting stock move move down intraday, a report came out from andrew left of citroen research. Chemours. There is some doubt and Short Interest might be building. Joe a remarkable turnaround there. Lets look at the greek twoyear yield. Here is a threeday chart. That was thisop, morning when we got the ecb decision. They did not grant the waiver for banks to get greater access to ecb capital. That ass been some talk the greeks do their bailout deal , they will bring the banks back into the fold. That has not happened yet. Not too dramatic. Take a look at the u. S. 10 year yield. We are not seeing much buoyancy on the yield. Yields on the 10 year around where they were on may 18. Still not much life on the long end of the curve there. Scarlet in terms of currencies, the brazilian currency getting attention after the acting president past the first litmus test. Lower house of congress and bill to ease budget concerns. You can see the strength in the brazilian real. The bestperforming major currency versus the dollar. The dollar losing 9. 5 versus the real. You have the recovery in commodities like oil, but i hope that a change in government will turn the economy around. Joe it was an interesting day in oil. There is a oneday chart right there. We saw it tumble earlier. A little bit of disappointment after no movement from opec, no agreement to cap production or anything like that. In the day, we got Inventory Data that shows drawdowns. It ended flat, but you wouldnt know it was an interesting day unless you look at that chart. Here is a commodity that is showing signs of life. Look at natural gas, breaking above its 200 day moving average. Ugly,hart has been so such a disappointment, finally breaking out a little bit. I dont know. It broke above the 200 day moving average, then look what happened after that. Joe it is interesting that it popped like that. Scarlet those are todays market minutes. Lets take a deep dive into the bloomberg. You mentioned earlier that the ecb came out with this policy decision, no change there, but did raise its 2016 inflation target slightly. Cap 2017 and 2018 unchanged. We rolled outtion to analyze economic indicators. Map is on the left, the green shows gains, red shows declines. Can sort by country, value of the last cpi data point. If you sort by value, prices are venezuela and in gambia. Norway for the first developed nation to show up, 3. 2 present. As for the eurozone, lets take a look. Here we go. Rightve the eurozone here, 0. 1 as of may 16. We are still looking at deflation. Such a great map. You can see the two areas in deflation, eurozone and japan. Scarlet there we go. Exactly. To talk about this mornings initial jobless claims data. Farmrrow we have the nonfor payroll report. One of my favorite way of looking at the claims, 52week average of nonseasonally adjusted claims. We had a little bit of pickup and some of the numbers, and so there is some nervousness around that. It really doesnt look that bad. It is incredibly steady. Today was better than expected, so the labor data is looking benign. One indicator he would want if he was stuck on a desert island. Right now, im into hedge funds. I will start with the first one. Hedge fund liquidity, more of an impact than the latter chart. Things,looking at two one is the blue line, which shows the Hedge Fund Research groups index, your total equity hedge returns divided by the s p , so when that line is going down, hedge funds are underperforming. That is a basic longshort strategy. The chart goes back really far. The white line is pretty cool. This is a liquidity function designed by the novus group. This shows how long it takes for companies, how long hedge funds need to liquidate positions, and that is inverted. The lower, the less liquidity in the market. You talk about crowding and what happens when you have a lot of people in the same shares and it can produce violent moves. That is interesting to look at. Where they put money Going Forward will be important to market action. Scarlet that really tells the story of 2016. You can find the charts and more on twitter. Morgansng in jb global strategist. S p 500 breaking 2000, but i want to look at this chart of hedge funds. A lot of people have penned volatility on crowding. Im curious on your take. To what extent does Hedge Fund Positioning affect action today . They are identifying a trend of putting money to work, and hoping they can get out before the trend rolls over. That just exacerbates any market moves. If you have the heard running in a direction, it is harder to get the heard to stop in just a few cattle. Thats what we have seen over the past few years. Joe one of the things that oliver has reported on is that a midthis rally we have seen since february, there has been signs of skepticism, people piling into low volatility etfs or money flowing out of mutual funds. Where next . Is there still seem to be when we see this huge buildup, this reservoir of negativity, are we going to does that augur for continued gains . Pessimistic. Very you dont have a lot of people thinking this is great and things will get better. The longer a market rally goes on, the less stable its in itsays the cons Investor Base becomes. Continue, but fundamentally what we are seeing is investors want to on stocks that look like bonds and bonds that look like stocks. They value stability and a market. Weve seen Consumer Staples comes stability, outperform. At the start of the second quarter, we have seen a rotation into financials. According to ubs, this relative strength by financials signals the fed is back in business. Do you agree with that . The chance of a rate hike this summer has definitely increased, and thats helping provide support for financials. Some people may be putting the cart before the horse. Im not sure june is a sure thing. It, bank ofggs japan meeting, ecb met today, still a lot of uncertainty and data coming out of china. When i think about the things that cause financial conditions to tighten my summer, europe, china, and so on, these variables are in place. I think the fed will hike this summer, but i think it will be in july. , basicallyinancials you have this idea that if we have a hike, financials will be doing well. You today, they are still negative as a sector. Is that because of the Capital Market concerns . Quarter basis point hike enough to say banks that are struggling. Im not sure it is enough to save the day. The financial is asian of the Global Economy which took place in the early 2000 has run its course. Result, Financial Institutions are being forced to pull back in forced to fire a little bit. We will see more consolidation. It will take margins to make financials profitable Going Forward. We got the fed minutes a few weeks ago, we have seen an impressive market reaction. Why hasnt the prospect of rate hikes coming sooner than expected then and negative like people would have guessed . The market seems to be treating bad news as bad news and good news is good news. When we see strengthen the u. S. Economy, it gives support to the u. S. Dollar, and that is a check mark in the box. Its as the u. S. Economy is fine and risk assets doing well. A year ago, good news was bad news, because it meant that the fed was going to start hiking sooner than the market was ready for. Could that change before the end of the year . Absolutely. J. P. Morgan Global Market strategist. Thank you for joining us. Scarlet opec standing pat, refusing to put a cap on production. Ministers insist the Global Oil Market is on the rebound. Mark president obama delivered his final commencement speech to u. S. Military members at the u. S. Air force academy. The president said there are limits to u. S. Power. It also means resisting the temptation to intervene militarily every time there is a problem or crisis in the world. History is littered with the ruins of empires and nations that overextended themselves, draining their power and influence, so we have to chart a smarter path. Came as thedress president considers to weather once again increase the number of troops he will leave and afghanistan. Afterderbird jet crashed a fly over at that ceremony. The pilot ejected from the plane, but there is no word on his condition. The president was still at the graduation at the time of the crash. Organizerslympic have told the International Olympic committee that the risk of zika infection will be reduced dramatically in august. Brazils winter is june to september. The group of Health Experts called for the games to be postponed are moot because of zika. The World Health Organization said there was no Public Health justification for such a move. The chinese are spending more time on airplanes as flight delays worsen. The Civil AviationAdministration Says the average delay for flights last year was 21 minutes, two minutes worse than 2014. The biggest reasons, air Traffic Control issues, followed by the weather. Global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. Back to you. Scarlet whatd you miss . Opec maintaining the status quo. On lack of a quota building gained so far this year, up 80 from the 12 year low in january. Is no news good news . In the past few have said that saudi arabia strategy of are suing market share at all cost is working, but didnt the kingdom and opec get lucky with a string of supply outages . Yes and no. Yes, there was an element of luck, canadian wildfires, nigerian explosions, etc. , but you can look at production coming out of china and mexico and azerbaijan, low oil prices are having a twopronged impact on oil supply. We are seeing production getting hit because of the sustained low prices and the resulting cut back an in capex. You look at the collapse in nigeria, the collapse in the oila production, workers strike, this is because of lower oil prices. Lower oil prices are affecting production around the world. What is next for opec and oil prices . Can they go significantly higher later this year . Are this case is that you can slowly p your head over 50 towards mid 50s. Your head over 50 towards mid year. Between 50 and 60, you will see u. S. Shale production coming back. As long as we see declines in nonopec countries and if you assume that you will see continued problems in the venezuelas and nigerias of the world, you will need to see u. S. Production coming back next year. Its not 1. 5 Million Barrels a day type growth, but you will see the u. S. Getting back to work next year. Processbe a 69month for that to happen, so you need to get to the price levels to bring back those producers. I want to read you a quote from the saudi energy minister. We realize the markets will bounce, but we want to make sure we wont create a storage that will shock the system. Does that strike you as a genuine statement . I am hesitant to question the altruism of the saudis and the situation, but if we had stayed , 20 18,or another year 2019, there would not have been any oil in the world. All the existing assets would have been in freefall. It could have deftly set the stage for an extremely volatile environment within a few years time. The it is interesting simple take away from todays meeting is nothing happen. If you do want to dive down the rabbit hole, you can say that seem to come in a surprisingly conciliatory mood. Theyre basically saying they will not flood the market. It does seem like they are playing nice with the rest of i dont know what the geopolitical drivers are here, but they did seem to come in a mood where they were married prepared to make friends. The country has come out with this new vision for 2030, relying less on oil. Does saudi arabia even need opec . Saudi arabia does not need opec very much. Saudi arabia has clearly as the 2030 vision indicates, the changing nature of the oil market means the optimal response of saudi arabia has changed. They need to increase production much more quickly than was the case. They dont really need opec. Opec clearly needs them. Without them, there is no kingmaker in the room. Joe thank you very much for joining us. Why iron oreng up, is at risk. We have the chart that explains the rise and fall, next. Scarlet i am scarlet fu. Whatd you miss . Iron ore is at risk of losing all its gains this year. This is iron ore traded in china, peaking in late april, then the plunge began. For may, the worst monthly loss in five years. Today, it extended its declines. One analyst in china says demand is weak and supply is increasing. We talked about this so many times. What a rapid turnaround. Seem like yesterday we were talking about all this money piling intos speculative future investments in china. Im looking at a chart to get us ready for tomorrows nonfarm payrolls report. It goes back 20 years, the Unemployment Rate in the blue line and the Conference Boards labor differential index. You can see these two numbers have tracked each other well for a long time. This goes back 20 years. If we zoom into the last year, you can see that both of these numbers have flatlined. HasUnemployment Rate improved, the Conference Board number has not improved since august. People have hand waved away the flatlining. It is interesting that both of these measures which track each have stalled out. Economists have unemployment dropping to 4. 9 . We will see. What number will give us clarity on whether employment is hard to find. Joe we will never have clarity. Scarlet months and years after the fact. Im going to check out hedge funds. At that totalg index longshort return versus. P white line going down means s p is outperforming. The blue line is a short strategy for hedge funds. 8 , to date, shorts are up outperforming the s ps gains year today. Very are getting a solid bit of performance there. Did hedge funds did hit on the price of their assets, but also they are the most convicted in terms of the money they have in their top 10 holdings than they have ever been. Joe they are really confident about ideas that are not working . Scarlet it is all a matter of time and framing. A new report that shows workers take on the same proportion of net incomes today than they did in 1948. For real . We will discuss, next. Okay, ready . Whoa [ explosion ] nothing should get in the way of the things you love. Get americas fastest internet. Only from xfinity. First word news. Hillary clinton argued that donald trump fundamentally unfit to be president. Secretary clinton today detailed what she sees as the dangers of mr. Trumps approach to national security. This is not someone who should ever have the nuclear not hard to it is imagine donald trump leading us into a war just because somebody got under his very thin skin. Secretary clinton delivered her remarks at the start of a fiveday trip to california, one of six States Holding primaries on june 7. Paul ryan says he will vote for donald trump. The speaker made the announcement via twitter and in a column for his hometown newspaper. Ryan tweeted i will be voting for donald trump this fall. Turnconfident he will help the house gops agenda into laws. Says he will appoint a special prosecutor to handle the case against the White Chicago Police officer accused of shooting a black teenager 16 times in 15 seconds. Jason van dyke is charged with firstdegree murder in the 2014 shooting death of a man. The shooting led to protests. Of families of crew members that Malaysia Airlines flight shot down over ukraine are suing the airline. An attorney said the airline failed to conduct an adequate Risk Assessment and chartered a course to a known conflicts own. It was hit by a surface to air missile at the height of the fighting in the ukraine conflict. Global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. I am mark crumpton. Back to you. Scarlet lets get our recap of todays action. Opec met and did nothing. Ecb meeting, they did nothing. The s p 500 got about 2100. The dow adding 49 points. It was pretty much a steady grind higher. Joe that has been the story all week, the last two weeks, the general it was assigned failed they. Day, a market about nothing. This is a story about estimations versus reality. 6 forere still down gap. They still need to reevaluate what is going on. Broadcom shares up by 7 . Broadcom became one of the top 10 chipmakers following its purchase by a vodka. A Quarterly Dividend of . 50 a share, thirdquarter revenue beating estimates. Secondquarter numbers also coming in better than what analysts were looking for. Whatd you miss . Samers taking home the proportion of net income today than they did in 1948. His is according to a report joining us now is author of the study of the Heritage Foundation center for data analysis. Thank you for joining us. There is a common story widely believed the official numbers say it that labor has continued to get a smaller and smaller share of the economy and that capital is winning out. When you are just the data, it does not show that. In fact, the labor is in the same place as 1948. Explain to us your work and why it is different than the official data. The bureau of labour statistics short looks very alarming. It shows workers share of income dropping and dropping. Few people noticed is that is gross income, not net income. Depreciation counts as capital income. If you have a computer that you have to replace, to a business, the money you spend replacing the computer is not part of net income, but gross income. Nobody gets to eat the depreciation. This chart we show is you adjust the official data for the , notciation, so net income gross income. Explain it a bit more. Explain what adjustment you made to get here. We look at net income instead of gross income, which all the academic economists agree is the right thing to do. The beer of labor and statistics changed how they measure the selfemployment income. Labor income, capital income, some sort of mix of both. Until 2001, they said 80 of that is labor income. After 2001, they say it is now about 50 . It doesnt reflect anything going on in the real economy. I took selfemployment income out of that and said this is not employees working for employers, so it is a separate question. To make that change, you switch from gross income to net income. You cancel out depreciation. Or you take into account depreciation. You point out that depreciation has been rising. Explain what this means and why this is the case. We are using more and more computers in businesses today than before. They tend to wear out or become obsolete than the investments of 40 years ago. You can use a building built 40 years ago. I hope you would not be using a computer from 40 years ago. You need to replace them more often. Helphelp protech to the productivity, but wear out faster. Stipulating your adjustment is correct and that labors share has been flat since 1948. Is that it does not match of Income Distribution has become skewed, and so it is not everybodys share is equal. Some people at the top are doing much better, but a lot of people are doing much worse. For the labor class as a whole, they havent gained. What do you say to that . There are some reasonable concerns. You can use the information used for the overall labor share. A u shape and is income growth, where it has grown faster at the bottom and top of Income Distribution. Still up 20 since 1979, but not up nearly as much as the folks at the top. Not everyone is growing at the same rate, but that is different from saying employers are pulling a fast one on employees, which is the implication often drawn from the unadjusted chart. The data does not support that. Joe how do you adjust for the increasing role of Stock Options and equity in peoples income, particularly at the high end, silicon valley. Where does that go into the calculations . Those are initially going to show up as labor income to the executives, and lowerlevel employees as well who get them. After they exercise them and have the stock, once it is shareholder income, it shows up as capital income. Labor and both as capital income depending on when they get exercised. There is this common story that the internationalization of labor and the rise of technology, computers have been good for capital owners, not so good for workers. Your data contradicts that. Im curious why. Why hasnt the internationalization of labor and the rise of technology been this boon for capital . If the data does not bear it out, what is wrong with the fundamental story . We have a competitive economy. Unions try to wall of sections of the economy from competition. There are sort of minilabor cartels. It is good to be on the inside the gains ofbut the unions come at a cost to the workers outside with lower wages and worst job opportunities. Members, butthe good for the nonunion members. Think of the united auto workers. They no longer run the auto industry. That is not so good for ditch right, but for every other american who can buy a car at a much more affordable price, that is good news. The weakening of unions has had an effect, but it is specific to the union sector. Technology helps to raise wages. Construction workers are tremendously more productive now than they were two generations ago. Construction industry wages have risen along with that. It is a mistake to look at technology and say this will hurt workers. In most cases, it helps them. Joe very provocative argument. Thank you for joining us. Scarlet nigerias lost year. We examine how falling oil prices, corruption, and that currency have weighed on africas biggest economy. That is next. Scarlet i am scarlet fu. Shares of cap arising in late trading, Sales Numbers beat analyst estimates. Said the performance improved heading into memorial day weekend. Leaning towards dropping its bid to acquire tribune publishing. Tribune said show voters selected a proposed slate of directors at its meeting as they seek to fend off the hostile takeover attempt. It would review the bid after the shareholder meeting. A lawsuit alleges the department of labor rules overstep boundaries for regulating dealers. The white house says the tougher hiddens will eliminate incentives that cause brokers to push Investment Products with high fees. That is your Bloomberg Business flash. Whatd you miss . Nigerias lost year. Nigerias president took office a year ago on a wave of optimism that he could revive the nation. Africas biggest economy is on its knees, forcing him to throw the towel on a currency peg. Joining us now is a strategist. Lets jump right into the big question, why after a year are thetill not seeing devaluation . If you look at the forwards now, youre implying a 40 to 60 the valuation. The government has indicated they are likely to move away from the peg. The pressure is now too much. Peg, assuming they do de what does that do for the country . The oil prices have dropped of production have dropped due to terrorist activity in the south, it allows them to have flexibility in paying their people and bringing dollars back into the country as competition increases, and unfreezing a lot of the dollars stuck in the country, which is causing businesses to pull back from nigeria. This is different than say a currency devaluation for competitiveness. It is an oil exporter in a situation like this, its about creating fiscal breathing room. Like i said, it is also because they have tagged the currency to such a degree that the commerce has almost stopped. The market doesnt exist. Of this comes as you wonder who is really in charge. The president or the central bank governor. Has made remarks comparing the device weighs in on the level of murder. Joe who is in charge . The president is in charge, and thats why you havent seen anything move so far. They have run out of options. There was a lot of optimism a year ago, but it has been so slow and incremental that nothing has changed. Deltaaram in a north and avengers in the south. He cant manage it anymore, so he will have to devalue. Nigeria is taking it from two angles. The military acts disrupting production, and the other is lower oil prices. Will the rebound prices provide some relief . Lost 600,000s barrels of production on 2. 2 Million Barrels of production. That is a huge loss. They need to sort out the attacks first. Budget they do, the balances with the deficit. Either the price needs to go up a lot, 50 on average for the remainder of the year, or they have to bring back some of this production which has come offline because of these attacks. Got amnestyghters in 2008. None of them are getting paid anymore. These guys are taking back up their arms and disrupting oil production. That budgeth deficit, nigerian officials are headed to london to tap their International Bond market. Joe do you see any prospects . Nigeria has been one of the worst performers on the bond market. Who wants to put money into nigeria when it is about to devalue . Nobody. Local currency bond issue would have to be really high for returns. Bonder, foreign dollar issue, theyll be able to get away with that. There is still a large amount of demand for high hard currency bond debt. Joe thank you very much for joining us. Scarlet fridays u. S. Payroll report looms large with a solid , women defy expectations for a rate hike in june and july . We will have a preview, next. Scarlet breaking news on apple, its website saying there have on iphoto orissues icloud and apple tv service. Updated on anyu other headlines. The shares marginally lower at the moment. Whatd you miss . Tomorrow, the latest to read on the labor market, and we could be in for a distorted report thanks to a strike at verizon. When it comes to the jobs report, everyone is fixated on the Labor Force Participation rate. Atthe unemployment has been 5 for the last nine months or so. Does thison is represent a stalling in the labor market or is it because Labor Force Participation has been rising. Saying thisple are is a good thing and the rise of the labor force. Its not more people coming back in. It is less people leaving the labor force every month. It is not clear whether that has the same implications as the reverse, and so it will be interesting to see if that trend continues. May point to people being more cautious, not leaving their jobs. The difference between fewer people leaving and more people coming in, does it matter . Problem is we really dont have much granularity on watch this data means. There is no way to interpret them with any certainty, but certainly had raises these questions that are very interesting and a relevant part of the debate right now over the state of the job market and appropriate policy and all that sort of thing. Joe Something Else you are looking at are the different, there are three different labor markets. What is going on . You see three different distinct labor markets. Sameis is looking at that labor force flow data, people transition between employment, unemployment, and not in the labor force every month. The labor market that is facing employed people and the labor market that is facing people outside the labor force, those are the orange and blue lines respectively. Those have normalized. The thing that is lagging behind is that there are a lot more Unemployed People dropping out of the labor force every month than finding work historically, so the question is that has been lately, so lot a lace can we improve our long that margin and have more Unemployed People finding work each month and dropping out of the labor force. Also looking at temporary employment, people who will get laid off first. Does this give us any indicator of what we will see Going Forward . Employment is the indicator for the reason you mentioned, that they get laid off first in a downturn. So rose and temporary employment has been slowing lately. It is not quite declining yet, but another measure of temporary employment has been declining. That has been declining for a year or so now. Well that start to be reflected in the official stats as well or will we see this continued emergence where the official jobs report shows more positive picture in terms of tempora Employment Trends . Will that tell us whether people went to fulltime or laid off . This is just looking at how many people are part of that to barrera employment pool. It does not speak to whether they are finding fulltime jobs are not, but that is another thing we are watching. That parttime employment rate, we would like to see that the client is more people find fulltime work. Joe looking forward to watching that data at 8 30 a. M. Tomorrow morning. Yes. Scarlet coming up, which you need to gear up for tomorrows trading day. That is next. Scarlet i am scarlet fu. Whatd you miss . Another number comes out at 945 p. M. Eastern time. Eurozone retail sales coming out. Comingme pretty big data out tomorrow, the jobs report. Economist looking for wage growth of 2. 5 , 160,000 new jobs , and 4. 9 for the Unemployment Rate. You dont want to miss it. Scarlet we will be on Facebook Live as well. Live as well. Hiim here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money. And more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today, youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home and heres the best part. You still own your home. Take control of your retirement today craigs the series the series now shifts back to california. The two best layers in the world are going headtohead. Best players in the world are going headtohead. Gnocchi injuries for either team, which means this year no key injuries for either team, which means this year, no excuses. From brooklyn. Nicely done