♪ >> welcome to bloomberg markets. let's start with a quick check of the markets. the s&p picking up on declines now as crude oil declines even further as you can see down a 10th of a percent but having reversed from earlier gains. it is all about oil today trading below $70 a barrel after inventories came in and shrank having been building the last several weeks. also, exports showed a decline. traders skeptical of the data however. there is a big selloff in-- drap

drive down the s&p 500. we also got the adp payroll report which showed softer data for the labor market and that has bonds trading as well with the tenure at about 411 right now. in washington, d.c., kevin mccarthy, saying he's not going to return after the end of the year. this is one of the main events, the testimony from the ceo's on capitol hill to the senate. banks will need to set aside capital if all the end game rules are implemented and that's what we had the bank ceos basically telling the senate banking committee today. i don't want to say complaining but there certainly were complaints when it comes to those composed regulatory plans. have a listen. >> we have 10 years to do this

and it is shocking to me that after 10 years, we have to analyze it today. >> additional increases are an -- are unholy unnecessary. >> it would make lending and other financial activities more expensive. >> the proposal would increase the cost of capital and borrowing across the economy. >> it certainly can create volatility and our funding treasuries can create volatility in the treasury market. >> little diminish mortgages for lower income people. >> punitive to economic growth and doesn't strike the right cost benefit analysis. >> i'm not sure it was shared among all the regulators. this should be re-looked at. vonnie: sonali basak is in d.c. what the latest. they were constantly harping on the idea that all of these regulations would somehow hurt the consumer. is that what you took from it?

sonali: yeah, very specifically, the type of consumers that would feel the pain from this, they were talking about. when tim scott asked how it would impact rural areas and forms, they said it's not just a -- not just the cost of capital but it would also hurt hedging costs as well. another element that could be interesting as the worries the big banks have around how it would impact things like financing markets around treasuries. this is something we've heard jamie dimon talk about in the past and james gorman, but today you had the ceo of goldman sachs david solomon delineate the senators that this would impact the prime financing business that affects the treasury market. is not just about the treasury market, prime financing, especially after goldman has retreated from any of their consumer businesses, is increasingly an important business to goldman sachs and

they have been winning in that business. it's not just a matter of the capital rules. the finger-pointing was astounding. this worry that more rules on capital for the big banks will really push more activity out of the banking system and how dangerous that would be. private credit was an area of disagreement. i asked senator warren after the hearing a couple of times whether there was a distinct plan to regulate the private credit industry, and she kept on leaning back to crypto. the one thing that senator warren and the big bank ceos have in common is that they all believe that crypto has massive problems and should be subject to more rules. but i've got to say that in the year since 2019, i have watched these hearings, and we are in the room, the dust is settling, i've never seen senator elizabeth warren be so peaceful in conversation and an agreement with the biggest bank ceos. romaine: we know that the congress -- vonnie: we know that the

congress works with the federal reserve but it's only to a certain extent, did you get any sense that any of the senators were taking on board some of the commentary from the ceos and they might agree with them in some aspects? sonali: there were definitely a lot of senators that did come out in support of the ceos worried about a capital rules and how it would impact their constituencies especially when mortgages are already so high. we've seen the mortgages move on the heels of these regulations. these are still capitalist enterprises that do not need to engage in business as if they are not profitable for the firm's. the other hand of this, too, the federal reserve is not going to exactly be swayed by a few senators that would have that problem. it would have to be swayed or listening to a broader bipartisan group that all agree with the bankers this was an onerous proposal. according to terry haynes,

that's not the case right now, there were a lot of senators that agreed with the bankers but whether it was enough of a chorus to either stop, prevent, or limit some of these rules or privately, what some of the bankers told me is even delay the rulemaking process, it's unclear that would be made possible because of a hearing like this. vonnie: i saw that note as well. . this is just the initial shock in a very long regulatory war. let's discuss further now with consumer bankers association president and ceo, lindsay johnson. they have not been paying out so much on deposits. why worry about more access capital if it has the potential to make the system safer? >> thank you for having me. i think one thing you heard today from the ceos testifying, again, eight of the largest banks in the country, five are

cba members, they lend directly to consumers and small businesses, and their focus was on the impact of the consumer. what you hear is the pace and the scale of the regulations coming starting with the basel capital rules and also a number of rules coming out of other regulators, it is going to have a cost to consumers for mortgages, auto, credit lines, small businesses, our economic recovery, and it has a cost for u.s. competitiveness. what i have largely heard is the costs are outweighing the benefits. vonnie: that certainly was the message coming from the ceo's, but it doesn't necessarily have to have so much of a cost, right? it's the ceo's and their teams making these decisions. >> i don't think so. actually think what we heard was, if you raise capital requirements for any different products, say mortgage or an

open line of credit by 20%, that is exorbitant. typically the way that has to be done is borne by consumers somewhere. you even heard, and cba represents members at $10 billion in assets, this cascading effect is going to be felt all the way for smaller lenders as well. we've seen that time and time again even when you try to apply it to the largest institutions. it definitely impacts others. this basel capital rule would be implement it for $100 billion institutions and above, those are the same institutions that are lending the vast majority of loans to small businesses, they act more as a community bank, and set up a large multinational bank, and you are impeding their ability to make consumers' needs. it does have a direct correlated cost. vonnie: what are the other items up for debate?

lowering credit card late fees for example. why is that a problem? banks are already getting interest, as long as it takes people to pay back their loans, so why are the banks trying to resist this going away, late fees? >> one of the best things about the american banking system is the diversity of our banks and the competitiveness, when you have 5000 different banks, different sizes who cater to different needs, competing for consumers' business. it's a highly competitive market. what we've seen time and time again, whether it's on credit card late fees, cfpb is trying to set prices for what a bank can charge, if a consumer pays late, that is going to have a direct impact on the cost of everyone's credit availability and their cost. even the cfpb themselves knows

it's likely 74% of borrowers would see their costs go up, those borrowers will pay on time would see their costco up. many of those borrowers may be living paycheck-to-paycheck but pay on time. their costs are going to go up. we want to understand the impact of these things. even though it may sound good politically, again, a consumer is going to be on the losing end of it and we want to make sure we understand then we can further justify some of these proposals. vonnie: that was certainly the message to the seat senators today -- to the senators today from the ceos. thank you, lindsay johnson. coming up, bloomberg's ed ludlow is at amd's advancing ai event which just got underway in california. we will be speaking with him next. this is bloomberg. ♪

vonnie: this is "bloomberg markets." amd's advancing ai event is underway. the accelerator market will be $400 billion by 2027, they say, an upgrade from a previous forecast. let's bring in ed ludlow, who is actually at the event in california. this upgrade to $400 billion. >> it is surprising. the previous cost of $150 billion is relatively recent. amd, now saying, the market for the gpu's found in foundation models and the inference side of generative ai

tools will now be $400 billion by 2027. the question is, what changed? the entire semiconductor industry in 2022, including all chip types, from the most complicated you be used to analog devices, analog chips, was $500 billion. amd is saying the entire market for this ai accelerator space is going to boom almost a total size of the current chip market today. vonnie: it is huge. amd, going for the jugular with nvidia immediately, comparing its own device with what nvidia has. talk to us a little bit about what the battleground is here exactly. ed: the battleground is amd's mi 300x going up against nvidia's h100, which has been a big factor in preparing nvidia's own stock. but it is the gpu of choice in the ai space right now.

nvidia's h 100 is shipping in volume in the real world. it is supply constrained. amd is only -- has only started shipping the mi 300 x recently. they have something called hbm3, the latest generation of high been with memory, which reduces latency in the processing and data but also makes it more power efficient which on paper means it's a more cost-effective product. nvidia won't have that until the second quarter when they ship the h 200. even though amd is playing catch-up against a clear market incumbent, as it stands right now, they have a product in the marketplace albeit in low volumes that has a technological age. vonnie: the market likes what they are hearing,amd up when it percent. but what is the market looking for? -- amd up 8%.

but what is the market looking for? >> in the space, there's so much chat around the underlying products and technology, the main question is, who are the customers? these gpu's are not just things that you can hold in your hand or a bag full of chips. these are designs that go into data centers. the big question the market will have is, who are these customers? they teased us today that there is demand from the hyper scalers. the proof is in the pudding. who are they going to be shipping the mi 300 x to in volume? >> thank you so much. looking forward to hearing more out of that event, the advancing ai event from amd. up about 70% year-over-year. don't miss our interview with lisa su later today right here on bloomberg television. still ahead, lauren gilchrist

of newmarket explains why she thinks we are about to experience one of the most creative commercial real estate cycles in our lifetimes. this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically.

avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh a few years ago, i came to saona, they told me there's no electricity on the island. we always thought that whatever we did here would be an emblem of what small communities can achieve. trying to give a better life to people that don't have the means to do it. si mi papá estuviera vivo, sé que él tuviera orgulloso también de vivir de esta viviendo una vida como la que estamos viviendo ahora. es electricidad aquí es salud.

vonnie: this is "bloomberg markets." i'm vonnie quinn. elevated interest rates and low office demand, still shaking the property market. $80 billion in the third quarter, the highest level in a decade. let's discuss more with lauren gilchrist and abigail doolittle. lauren, let me ask you, the fact we are seeing interest rates come off a little bit, is that going to give relief to a market that is really particularly distressed right now? >> interest rates clearly impact the vast majority of commercial

real estate no matter the asset class or location, but the reality of where we are today as we are experiencing a significant structural shift in the office market because of the changing nature of work in this hybrid environment. we need succumbed to a place where we begin to recognize the actual customers for office space are truly those workers and users that occupy the space. while interest rates are an incredibly important financing consideration and buying consideration, the changes we've seen have a lot more to do with the overall composition of the work force with the overall demand for office space and how consumers and workers want to live and work in today's post-covid environment. >> terrific to speak with you. vonnie was talking about this wave of distress we have started to see him by 2025, $1.5 trillion of cmb is coming due and because of that environment we are talking about it might

not be the easiest period of refinancing. some of the other guests we've had on recently to talk about this say there is an expectation it could really become pretty serious over the next couple of years. here in new york, which some consider to be the greatest city in the world, they are saying that if it's not class a, they could go anywhere between $.25 on the dollar or $.75 on the dollar. is not consistent with what you and your colleagues are seeing? does it extend to philadelphia and other major city centers? >> sure. to be clear, flight to quality is a really important part of a dynamic we are seeing in the office market today and really there is a bifurcation between the haves and the have-nots. the haves are the well-capitalized landlords that owned -- that own trophy assets with efficient floor plates and modern work and amenity spaces that enable people to attract talent to those buildings. going back to that theme

of the office worker is the customer for the office space, we have to think about the labor market conditions we find ourselves in, which is to say that 2.1% unemployment for people that have a bachelors degree or more is very low. full employment is about 5% overall. so the leverage really exists with those employees, in terms of the employers they choose to work for. and employers are finding they can differentiate by choosing those trophy assets. here in philadelphia we would say the trophy office market is approximately 91% occupied. whereas the overall office market is between 75% and 80% occupied. and that's due to the fact that tenants have had leases rolling, they've downside their existing -- downsized their existing spaces and because of that downsizing they've been able to afford higher quality space with better capitalized landlords overall.

they can make better choices and occupy higher quality real estate at the same price while still ensuring that they can tend to the most expensive component of their overall occupancy cost, which is there talent. >> it sounds as though there will in fact be pressure on anything that's not class a, i don't know if you would agree with those values. but relative to that 25% that is class a and trophy, vonnie and i are very fortunate this building we work with is phenomenal, it is like a little city, any amenity we possibly want is here. you are talking about satisfying the employee, other buildings will have to have similar amenities. how many buildings right now of the class a, what's the percentage that have terrific amenities? the remainder would have to a minute ties up -- amenitize up, how long would that take? >> total trophy market is probably about 10% of the overall market here and that is a component of the market that

we have seen, call it 91% occupied, as compared to the rest of the market, call it 75% to 80% occupied overall. i would say that's probably pretty typical as we look at some of the largest, most densely urban markets across the country, when we think about the new yorks and the san franciscos of the world, those gateway markets. you're building is probably pretty emblematic of what a true trophy, highly a minute ties to building would look like and that class b, class c space with noninstitutional capital behind it and noninstitutional ownership behind it has really begun to struggle because they have been unable to create the kind of hospitality type amenities that today's office worker demands. vonnie: bottom line, maturities, they've had it easy for a long time, but how many of them are going to get refinanced and how many lender takeovers will we see? >> total commercial debt

maturities we anticipate to see across the country over the next two years are about $1.2 trillion -- the reason why this has been so challenging to think about in this post-covid environment is because overall, a lot of these buildings were capitalized with bank financings and we expect it to be very difficult to refinance considering the buildings were bought at all time pricing high ts an all-time high -- heights an all-time high interest rates. when it comes to financing, existing landlords would typically have to do a cash in refinance. that is difficult for a lot of them to do especially if they are not that top of the market, well-capitalized highly institutional group. as a result of that, we are beginning to see some receiverships come to the market, subsequent to special servicing, and work outs for those buildings that truly have

no direct future in bringing new tenants to their buildings. there are many buildings right now that are 25%, 50% occupied that are unable to cover their debt service. there is no demand for that office space and it needs to go through a workout period to be able to refinance the building or to dispose of it. vonnie: all right, newmark's lauren gilchrist. thank you so much for joining us today. also bloomberg's abigail doolittle. we will be speaking in a little bit about the bank of canada's decision and statement, the chief economist will join us. but we for we go -- but before we go, i want to mention we had another announcement to do with race and carson block -- reeds and carson block. that came out a little while ago. getting back to the markets, the s&p 500, down fractionally, a 10th of one percent, as we see crude oil tumbled today, almost

4% lower, at $69.62 on wti, brent crude above $75 a barrel. this is bloomberg. ♪ (car engine revs)

(engine accelerating) (texting clicks) (tires squeal) (glass shattering) (loose gravel clanking)

jon: i am jon erlichman. welcome to "bloomberg markets". >> and i am vonnie quinn. the s&p 500 is unchanged at the moment but there are two diverging factors. one is that crude oil is tumbling out of bed. there is a longer story behind that in a few minutes. energy companies are a drag on the s&p 500 where other companies, like tech, would have the index higher. wti down below 3.25%.

this particular week's inventories saw strength. dollar canada strengthening today. we are off the highs for the dollar. canadian dollar after the bank of canada kept interest rates steady. acknowledging that growth has not been the most amazing in the middle of the year, but at the same time, not ready to say straight out that they are not quite a hike again. jon: very true. i think a lot of people were looking at this decision today almost like a test run of what kind of language we are going to be hearing from the fed. this is the third meeting in a row that the bank of canada has kept rates unchanged. like this dialogue in the market about the possibility of rates

going down next year in the u.s., there are plenty of economists that think we are going to see a reversal in rate policy and year. but the bank of canada is still focusing on the fight against inflation and not quite ready to say that fight is completed. let's bring in dawn desjardins with deloitte canada and joins us in our toronto studio. what you make of this? everybody expected they would be on hold again. people were wondering about what the language would look like. how did you assess it? dawn: i think what they are trying to do is say we are making good headway. we have seen slowing. consumers, businesses as well. definitely seeing the impact of these rate increases. inflation is coming down and they point to some aspects like shelter. i think what they were trying to say is things are progressing.

let's not get too excited about when we are going to be able to lower rates, but i think it is notable they did not say the risks to the inflation outlook were increasing as they did in october. jon: a lot of people are curious about what is the risk for central banks to shift away from that hawkish caveat, if you will? what do you think the bank of canada might be concerned about if they declare victory on inflation, a, since they are not quite there, but that would encourage more people to, i don't know, jump back into canada's housing market? dawn: i think they are concerned if they are perceived as not really giving up but not being as assured they are going to hit 2% -- the governor has said it does not have to be 2% before we can reduce some of the tightening. but i think 2% has to be

within sight. we are balanced and perhaps a little bit in excess supply, but if we see rates go down -- and we saw this in the spring. when the bank paused the housing market caught fire which was quite interesting and remarkable. vonnie: if you look at the work function on the bloomberg regarding canada, traders are pricing in a rate cut around april. how can it be that in december the bank of canada is not ready to say they are finished with hikes, that they might actually go another hike, and traders are already thinking in four months they could be pivoting already. dawn: i think markets tend to get more excited than central banks would like. [laughter] that is part of what they were

trying to do today by keeping this idea that there is some chance they may have to hike again. i think it was aimed at tamping down future expectations of how quickly and how aggressively they are going to be lowering their policy rate. i think they want to communicate while they may -- i don't think they will -- but to the extent they want to keep that air of caution, that is why they were positioning themselves that way. jon: this week we had mohamed el-erian on bloomberg radio talking about the markets taking on the u.s. federal reserve on a variable that the fed completely controls. it is there an aspect here that we have to be mindful of? central bankers all felt up against a wall for being late on the inflation fight. if the market is increasingly -- and we saw that expectation vonnie was alluding to -- is

increasingly expecting rate cut as soon as april, how does the bank internally feel about what the market's positioning is right now? dawn: i think the banks generally are not going to be succumbing to market. we have seen many instances where the market runs away, but again, we can get a data point and a lot of that can be retraced. it is the market. people are anticipating that perhaps the economy is weaker. perhaps inflation may fall more quickly and that central banks, as a result, will get into actual more quickly. vonnie: the yield differential between the canada and the u.s. on the two-year is more than 50 basis points. the u.s. two-year yield is 4.59. what accounts for that massive difference? dawn: it really is that people are seeing an economy in canada

that is weaker than the united states. the u.s. economy completely surprising to the upside in the third quarter. we think we are seeing slowing momentum in the u.s. economy, but having said that, that is -- will the bank of canada have the opportunity to go ahead of the federal reserve simply because our economy is weaker? this will likely lead to inflation pressures decelerating more quickly and attaining that 2% target. although when you look at -- when i looked at the markets -- it seemed markets in both countries were looking for 50 basis points of cuts by june. jon: one of the other considerations for where the economy heads from here is what is happening on the employment front. we are awaiting a government jobs report later this week. the market this morning was reacting to the private payrolls data. the most recent jobs report for canada did show growth but one

thing the global audience might be interested in is we have record population. that has been a key priority for the country. the jobs creation is not keeping up with the actual population growth, which is a sign of underlying weakness. dawn: absolutely. what we have seen and what canada has stated is if we want an unemployment rate that a steady, we need to have 50,000 jobs created every month. we are looking at a three-month average because the data is so volatile and that has not happened for quite a few months. as a result, we have seen our unemployment rate move up substantially, and we are also seeing it in job vacancies. they have come down considerably. still elevated, but increasingly what we are hearing and when we look at the survey data is companies are pulling back in terms of putting jobs out there.

of course, they are worried about the economy. when you see a consumer that for two consecutive quarters has stalled out, you know, it is not a big leap for companies to anticipate a slowing in terms of sales. vonnie: thank you so much for joining us. pleasure to speak with you. dawn desjardins, deloitte canada chief economist. coming up, we are watching gamestop ahead of its first earnings report under ryan cohen's leadership. this is bloomberg. ♪

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vonnie quinn. it is time for the stock of the hour. we have been tracking gamestop ahead of quarterly results. the first report with the activist investor turned ceo ryan cohen at the helm. shares higher on the day, although we wanted to mention that the options market implying you could see a 15% move following the report. there has been momentum behind this stock in recent weeks. vonnie: it might take a couple of quarters for ryan cohen to do his thing, but the other interesting thing is that she week reports after the -- chewy reports after the bell and that is the company that brought him attention. the market reality is that investors are getting back in. retail investors have caught the attention of the meme stock mania. this survey shows the most

bullish stance for the group since july is happening right now, levels not seen since 2021. all the way through most of the year until fomo struck we had disinterest from investors and then a little bit of interest recently, less so, and then positive again. the book report says this could be a contrarian indicator not a signal we should jump into the market. jon: it is great to look at that too. everybody is going to be talking about how is the trend toward digital going as opposed to retail stores? maybe it is more about charts like that when considering the move we have seen in meme stocks these last few weeks. vonnie: it certainly tells us a lot and perhaps we can get more context from callie cox, investment analyst at etoro. she joins us now. thank you for joining us.

talk about the survey which shows retail investors getting bullish. is it a contrarian indicator? callie: i don't think so, and you are right, retail investors are getting more bullish. i liked that you used the word trepidation. that is what we were seeing on the others of the flows. retail investors have not bailed out of the market but they have become more anxious over the past year and a half or so. they have rotated to cash and bonds. they have not traded as much and now that rate cuts are inside and many americans are feeling good about their financial situations, they are dipping their toes back into risk. jon: can you see that when you look at things like volume? callie: we can. we saw stock in crypto volume pick up on the u.s. side of our platform in november, which mix a lot of sense. we have seen that on wall street if you look at stock exposures. stock exposure shot way up among

managers. retail investors are riding that wave. but i think there are degrees. if you are going to step out and say this is a contrarian signal or side of excess, you need to look at cash levels that are still high. vonnie: are you seeing this infatuation with short data call options? callie: short dated options have a lot of pros and cons. they are precise instruments. they are good for hedging around events. but they also see price fluctuations that are more extreme. we do see a good bit of interest in those, but rightfully so. it makes a lot of sense to look at a shorter data contract. same thing with fed days in cpi days. short dated options do not worry

me as a contrarian signal. it makes a lot of sense given the sophistication of the market environment we live in. jon: against that backdrop, i mean, if we want to call this market one that had been like a bear market rally versus bull market, does the momentum we see recently solidify the idea this is a bull market? callie: we have been saying for months we are in a bull market until proven otherwise. mainly because investors got too pessimistic in late october and we have not seen those signs of recession yet. if you look at the momentum we have seen in november, it does look like we are more in a bull market than bear market. i look toward the fundamentals. the fundamentals still come from the fact we have not hit recession. most recessions coincide with bear markets, so, until that happens i need to be proven otherwise, and i still think we are in able market. vonnie: what proportion of the activity is concentrated in the

mega caps? those very few stocks that have seen outsized gains this year. callie: you have to understand every day investors invest in what they know. if you look at the magnificent seven, the tesla, the apple, the amazon, these are popular brands among americans. it is not a surprise many of the magnificent seven names are among the top held names, which does not concern me. big tech as a whole is looking more defensive as this rally continues. they are some of the most durable companies on the market so it makes sense investors are rotating into them. jon: when it comes to the main driver of this late october to now rally that we have ultimately seen -- we just got through a segment on where interest rate policy goes from here. how much in your opinion is based on the narrative growing of rate policy reversing? callie: i see that as the

primary reason and the funny thing to me is the fed has hinted since july that they have been growing more flexible on policy. powell in his july meeting was the first time he talked about downside risks to the economy, hinting toward the balance of risks between inflation and the job market. if you consider the dual mandate is the fact they have to promote healthy employment while controlling inflation, you know, the commentary of balanced risks is significant. as we head into this i am not surprised by the fact markets are anticipating rate cuts. are they going overboard? maybe so. maybe this rally is getting tired, but again, i go back to economic fundamentals and as long as we see a strong job market i am not sure a bear is ahead of us. jon: good to have you with us. etoro investment analyst callie cox breaking down the markets. when we come back, a bloomberg investigation into how well the

oil sanctions have worked against russia. you might be surprised about what we found. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns.

avalarahhh ahhh a few years ago, i came to saona, they told me there's no electricity on the island. we always thought that whatever we did here would be an emblem of what small communities can achieve. trying to give a better life to people that don't have the means to do it. si mi papá estuviera vivo, sé que él tuviera orgulloso también de vivir de esta viviendo una vida como la que estamos viviendo ahora. es electricidad aquí es salud.

jon: this is "bloomberg markets" . i am jon erlichman with vonnie quinn. let's dive into bloomberg's big take, an investigation into russian sanctions on its economy. moscow's monthly income from oil exports is greater now than before the invasion of ukraine. take a look. ♪ >> the energy world is completely turned upside down by russia's invasion of ukraine. we have seen the shadow fleet. ♪ new ship owners, new shipping companies we have never

encountered before. ♪ >> the sanctions have been effectively dodged by those unwilling to participate. ♪ >> this right here is the shadow fleet. somebody is doing something to make that ship appear somewhere else. to actually see this behavior was really surprising. that makes you think what else is going on? ♪ jon: it has been a fascinating investigation. let's bring in alex longley who co-wrote the story. we got a taste of what a shadow fleet looks like and then the numbers you were learning on this closing in on half the oil leaving russia going through the shadow fleet. alex: that's right.

to give you more numbers, there are two things in play. one is the price at the point of export -- that is a russian port -- and the other is when it arrives in china and the other countries that are buying that oil. that gap in between is where this shadow fleet and where the murkiness occurs around sanctions on oil exports. we estimate that to be about $11 billion pretty much disappearing. and then you come into the story of the shadow fleet, where it is going, and we spent time -- as you saw in the video -- heading out to greece to look at the transfers out at sea. but also trying to talk to the traders, shipowners, and get into where the separation is going. quite often you find it leads you know where and there is an address on the road where the

numbers do not go as high. vonnie: sanctions experts often expect a little of this kind of thing when they put the sanctions together. they know the entity is going to try for work arounds. but the entity needs cooperation from somebody or some country. is it possible to track those cooperators down? alex: it is incredibly tricky. we have reported on some of the traders helping russia export its oil. but in terms of pinning down -- particularly with the tanker fleet where you are finding these ships are registered to single companies in the marshall islands, cameroon, and the cameroon registry will not talk to us -- raises huge questions of safety at sea. to go back to the example of greece. that is right next to a tourist town and is only a matter of time before what happens -- one

thing goes wrong and you have an oil slick nobody is ready to pay out for. in terms of finding these people, it is impossible. you talk to people in the insurance industry and we have the names of the insurers, but if we run it by our contact they say, i have never heard of them. jon: it is a fascinating discovery. alex longley joining us, and also, as the story points out, the idea of does the u.s. government want some of this oil to ultimately be discovered? if that would complicate the story of lower oil prices, the u.s. government would like to see that. you mentioned at the top of the half hour the weakness we have been seeing in energy prices today. a lot of negative momentum for crude and when you look at the broader equity landscape in north america that has been one of the drivers to the downside. the s&p 500 basically hovering around the flat line with some sectors outperforming.

we have that continued weakness in crude now down below $70 a barrel. for vonnie quinn, i am jon erlichman. this is bloomberg. ♪

romaine: the report was definitely clear. the question is whether it was right. here a bloomberg headquarters in new york, i am romaine bostick. >> and i am scarlet fu. let's look at how markets are trading. not a lot of big moves in equities or treasuries. the s&p 500 pretty much flat. there is a lot of talk about the benchmark index making a climb to almost 4600 last week, which could suggest there is downside ahead. the