the commodities surge, oil prices breaking 7003 year high on bubbling risk in the middle east and confidently hawkish, the fed sees no downside risks to inflation and the ecb account is now on deck. actually true the first day of spring, is getting warm today. "bloomberg daybreak," welcome to "bloomberg daybreak," and we are finally getting more mother. alix: -- warm weather. alix: i'm not buying it. the markets not buying into movement here other -- either. the euro is weaker as the dollar is stronger against most g10 currencies. eurozone ip is rolling over in the conversation data has pizza the eurozone now, where do we go. aty key that ecb account 7:30. seeing a little more movement on

the market and sings in buying and peripherals in europe. it feels like a touch of risk on, but not a lot of positions being taken. high of 2014a yesterday, backing off attachment you are still looking at over $70 a barrel. talk about geopolitical risk, that's where is reverberating. david: we just got earnings of for delta, they reported $.74 a share earnings, that's better than what was expected. what they are struggling with his increased fuel costs up as high as 25% and the challenge they have is they can't raise prices as much. they do say second quarter unit and they are in the midpoint second quarter in their estimate of where they're going to be a earnings-per-share. delta airlines a struggling with oil, it's fuel prices. alix: and how you wind up hedging that in dealing with that going forward as well with

margins and all these airlines were supposed to be cutting capacity and all of a sudden it was like no, thanks, we are going to pump capacity into the market. david: they had that tailwind of low fuel prices and it felt really good. alix: so much for corporate constraint. david: it comes back to oil just the way alix said it would. we are joined by marty schenker and we want to start with geopolitics and the risk. on gtd, it'srt average geopolitical risk. since february really, geopolitical risk has been higher than at any point since that big spike before donald trump became president. we are facing a lot of geopolitical risk. it's both china and trade war, but even a hot war. tweets thatd trump perhaps an imminent strike in

syria may not be in place. futures jumped on the move. yesterday i said it was not a sure thing donald trump was going to syria and there has been contact when donald trump and the russians. maybe they can work this out. david: as a practical matter, he said on monday he wasn't going to have -- you was go to have a decision between 24 to 48 hours. today he has very different tweets. he said never said what an attack would take place, it could be very soon or not suited all. the united states has done a great job of ridding the region of isis, when is our thank you, america? whenever going to find out? some in theuld get pompeo confirmation hearing. but all reporting that we have says he is not made a decision yet. alix: how do you hedge, cameron?

taken a i've always somewhat jaundiced view about these things. syria, is a humanitarian disaster. we've seen these situations in the past. the thing that strikes me as a president -- a precedent is what happened in yugoslavia. he was was part of a nato campaign the bond -- that bombed yugoslavia. and while that made some headlines of the time, from a market perspective, it didn't really have much of an impact. alix: you are seeing low vol techs -- the same downgrade and utility downgrades. cameron: whether that has anything to do with the war is debatable. as the market of voting machine or a weighing machine?

when it comes to military headlines, in the short line, there is some degree popery -- jiggery pokery. it may seem like a dumb thing to do to ignore these headlines, but it is probably the right thing to do at the end of the day. david: the president is not just conducting diplomacy through twitter come is also negotiating legal issues through twitter. another tweet about robert mueller, he tweeted just this morning if i wanted to fire robert mueller in december as reported by the failing new york times, i would have fired him. more fake news from a biased newspaper. there's a bigger issue here about the possible firing of robert mueller. reporting by jim jacobs suggests that he is openly discussing the firing of rob rosenstein, the assistant attorney general, which would be a prelude to reining in bob

mueller's investigation. overnight, steve bannon, former adviser to trump suggesting that trump go all live in blocking the mueller investigation to stop cooperating, firing side cob and there is some suggestion that all trump is listening to this. a full-blown constitutional crisis might be on the horizon. alix: oh, by the way. lose inhat's not all washington. we also got fed minutes out yesterday, they are vaguely hawkish saying they are more inclined to 4%. the one thing i wanted for love is an interesting chart that i at this point, nobody in the fomc is worried about inflation anymore. we've gone down to zero. that's the downside risk. and i think justifiably so. yesterday's a cpi showed a nice bump in year on year inflation rates. a lot of that was a known issue of the cell phone services to

klein from the verizon data plan falling out of the year on year comparisons. even beyond that, if you look at a higher frequency run rate of inflation, say the three month on three-month annualized change in core cpi, that's 2.9%. as easily consistent with the pc deflator, which is the fed's preferred measure, being above target of 2%. it's probably fair to say about inflation, this inflation shortfall is kind of off the agenda for now. if you see oil prices breakthrough and continue to rise, that's more of a headline measure, but that's obviously going to inform a higher rate of inflation as well. investors should recall that inflation is a thing. they are not responding in the correct way. cameron: i saw statistic the other day which i can't verify because it was not my statistic

is only one capital fund managers a major financial centers have been in the market for less than 10 years. they have never known inflation as a legitimate issue. the only known central banks that are worried about too little inflation and trying to prime the pump as it were for the last decade. for the financial crisis, we all bubble and then bad behavior from the financial sector were to blame for a lot of what happened there. but it's easy to forget that there was a lot of inflation from oil prices, for dollar, five dollar gasoline that squeezed consumers and that really exacerbated the depth of the recession and i think a lot of people either weren't around for that or have forgotten what that was like. maybe it's time not to pull out the 1970's playbook, although going back to robert mueller, echoes of the saturday night massacre of 1973 with next and come to mind.

we need to come to grips to what it's going to me for stocks and bonds if the fed is prepared to go restrictive as they suggest in the minutes. great point, especially with global synchronized growth. all of this lead to the fed saying that a number of participants indicated that a stronger outlook for economic activity along with increased confidence that inflation would return to 2% imply that the appropriate path of the fed funds rate over the next few years was slightly steeper than previously expected. if you wrap in the trade war, it basically says any sort of inflation we are going to see from the trade war will be transitory. it seems like they are blocking that out right now. but steeper as she goes. marty: they made very little reference to the increasing budget deficits on the horizon. the cbo came out and said we are going to hit $1.5 trillion from the tax cuts and increased spending. that is still a factor in the

marketplace. i've been around long after number 12% inflation under paul volcker. to cameron's point, it's true that a majority of market participants have no memory of that and have no experience dealing with that. they should be a heightened level of concern. in commodities, the opec report sees a tighter market aftermarket spell -- output spell to the lowest, they fell about 200-1000 barrels of oil a day and reports showed most of the global oil glut has been eliminated, yet come opec is still working with russia to extend those cuts and all the rhetoric we have seen and heard all deal with the fact that they are in continuous at least in the medium-term, which leads us to hire old isis, which then leads back to the inflation. how do you see the cycle? of 2015,the lesson

2016, in the united aids, is that the old relationships maybe don't exist quite like they used to in the sense of terms of economic impact, given the heightened oil production in the united states, used to be the rule of thumb, low oil prices is good for the economy, bad oil prices is bad for the economy. given that the u.s. produces so in a sense,se days, it's a good thing, because at least the united states economy to a largere immune amplitude of swings. what high all prices giveth to producers in south dakota, you taketh away from consumers. david: we're thinking 1970's. marty: you what i were both around for 12% interest. odd and even license plates. david: you couldn't buy gas

everything the way. are we still in danger of going back to that? marty: there is no imminent danger, but there's always the thing you least expect, the black swan theory abounds, when could not looking, there be something we are not even aware of sitting here today that could cause a disruption in supplies. the soul syria situation, if the u.s. and the russians get into some conflagration, then all bets are off. alix: and there's venezuela. marty shanker and cameron crise, thank you both. how do you mitigate risk as threats of a hot or cold war loom? brown, axialelissa oma and applied research. and opec sees output fallen to the lowest of a year.

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david: as the new cycles between a possible cold war over trade withchina and a hot war syria over chemical weapons markets can be forgiven if they don't quite know how to react. this chart of geopolitical risk is at the highest since president trump first took office. joining us is now, melissa brown, axioma head of research. this is my chart, i'm looking at the camera saying why isn't he pulling it up and i realize it's my job. to the right, geopolitical risk has spiked up just of the time

president trump took office. how does the market sort out what is real and what is not? one thing i would point out about a surgical strike in syria is that is unlikely to impact markets. at least equity markets. if something were to become more hotter, i guess, that becomes something more to worry about in the shorter term. but keep in mind, we had conflicts going on for many years and still market volatility of state quite low. strike.ou said surgical the markets trust the military to make sure it is surgical, because there are russian troops re, as well as iranians. the markets believe we are good enough that we won't let it expanded. ms. brown: they certainly do, and we are. alix: fair point. you are still picking up vol.

this is the s&p high low range versus the vix. how do you play volatility? ms. brown: one thing that's really important is a really take a more nuanced approach and so which parts of volatility are climbing? it's also related to this risk on risk off type of bet with people coming in and out of the market, as opposed to being related to a particular country or a particular industry or currency. as a portfolio manager, you want to make sure that you see where that volatility is impacting your portfolio and then react accordingly and make sure that you got the right risk on. alix: is it actually performing? in the past if you were at the against global risk, didn't really pay out. from brexit to the election and even the italian election, are rotation?

ms. brown: we are seeing the rotation into low-vol equities. that is necessarily related to anything that has to do with a hot war. i think that's just we have a bull market that getting quite long in the tooth. we have issues about a trade war potentially and i think that's probably much more driving that move. we hear about good volatility versus bad volatility and we are just on the use of earnings or banks. possible that this is geopolitical risk? it's harder for people in the marketplace to make money off of that than a different kind of risk ms. brown:. it is harder. as earnings come out and company start to talk about what they expect the potential impacts to become that will hopefully give investors a little more

information about how to sort out potential winners and losers. alix: the winners have been growth and momentum stocks. will they continue to wind up being growth and momentum stocks? momentum versus the s&p, you can see the hiccup we have seen in momentum. how does this play out? ms. brown: momentum always goes through cycles where you have enthusiasm driving the same stocks up and that tends to a little bit. the blitz we have seen so far is not concerning. the issue is not whether growth stocks will do well, it's where will the growth be? chances are the stocks that are able to produce the growth will have the performance that goes along with it. axioma,lissa brown of thank you. opec saw the output fallen to the lowest in over a year. more on commodities.

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alix: opec says the oil output fell to the lowest in your last month due to reduce supplies for venezuela in saudi arabia and they do say that most of the global glut has been limited. theing me now is dan dicker energy word founder. he taught me everything i knew about oil. they say the glut has cleared and why will they continue to extend the cuts, does that only mean massive upside for oil -- upside for oil? mr. dicker: it does mean that. they are talking about this sending prices over $70 a barrel and there is some of that they are. but the fundamentals are really strong. there's a stickiness oil prices in wti above 60.

i'm telling you that geopolitical risk is not as much is not as much as being implied into the oil market. there is fundamentally a strong case for oil continuing, sorry, above $75, above $80. alix: demand has been so good. india is my photo like $75, $80 oil. is dicker: every projection it is historically strong. 1.5 million ball girls -- barrels a day. demands that would be the issue in terms of oil prices going higher and remaining constructive over the next several years. alix: how do you play it? this has been puzzling many people in the oil market in 2018. is the difference between energy stocks the white line in oil prices the yellow line, why the gap and do we check -- do we catch up now?

mr. dicker: it's been frustrating for me as well. in my entire career on to bank coulding oil stock if i to where the oil prices were going. if i was right the oil prices were going higher and not cashing in on the oil stocks i'd has become a frustration for me. there's lots of reasons we speculate why, it been a bounce in the dollar, i thought that maybe young hedge fundees don't want to have oil stocks, they would much rather have tech stocks. they feel more comfortable with them then old-fashioned oil stocks. i think it's all a one-off and i don't think it is something that last and i think you are looking at a major opportunity in oil stocks based on oil prices that will continue to go higher. that differential will start to close. alix: goldman sachs came out with a note that says this is the time of a golden age for big oil stocks. mr. dicker: they are a cash monster at this point. alix: do you want to be with the

golden age of oil stocks or not? mr. dicker: you can pick and choose if you want to go in high beta with some of the shale players are in i tend to agree with goldman, i think that the value right now is in majors because not only are they providing tremendous cash flow that they have not been able to provide another years, but in some cases, the dividends are super solid and you can sit there and get paid to wait. managers, which is where i want you to go if you are going to buy majors, there's a reason why exxon is on the bottom of the packet has been underperforming everybody. the things that exxon is doing wrong many of the euro majors are doing right and that's being reflected in the stock prices. and that's where you go. natalie the dividends, but the way they are working their markets are much better. alix: i want to talk about the u.s. sanction impact on russia , how do youaluminum

play this? mr. dicker: in general, there has been a tremendous commodity blast it has been going on over the last several years. we turned around on the commodity bus that thing going on. it hasn't just been in oil, it's been in copper, zinc, industrial metals. you see that those are really done a lot of work and a lot of constructive work over the last few years. this room to aluminum has been another added factor but aluminum was always on its way upward anyways. alix: dan dicker, always good to catch up with you. facebook for me -- facebook scrutiny, after the break. this is bloomberg. ♪ this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy.

wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. this is "bloomberg daybreak." i'm alix steel. cautious, and at

risk on. euro-dollar off the lows of the session, but we had weaker industrial production coming in. the takeaway is data has definitely peaked, was that wind up meaning for the euro bowls in bulls in the market? biasemoval of easing should not be misunderstood, they broadly agree that there is not enough evidence that thattion is sustained, but the inflation goal is near. so cautious about inflation but still constructive. they removed that word, the easing bias word that shouldn't be misunderstood, trying to tamper the hawkish takeaway that came out from the ecb. said: to that point, they global economic risk is tilted to the downside and so there's widespread concern over the risk of trade conflicts. there may be clausen horizon the might influence their view. -- clouds on the horizon that

might influence their view. alix: it's sort of a reversal as we see there. let's take a look at the bond market. we have a soft italian auction earlier and you are seeing a bit in the referrals likes a them article. to see some selling in germany as well with yields moving higher by one basis point. we are following this more closely as well, so just to recap, the ecb minutes from the march meeting said widespread concern over risk of trade conflicts and others economic risk that is tilted to the downside, not overestimate the removal of the easing bias. we are going to talk about facebook and mark zuckerberg, he finishes second day of congressional testimony yesterday and it's fair to say anything, get a tougher time on the house died then you had the senate. >> how can consumers have control over their data when facebook doesn't have control over the data itself? >> mr. zuckerberg, i think your cozy community as dr. mark

jamieson recently set is beginning to look a whole lot like the truman show, where people's identities and relationships are made available to people that they don't know. >> he said everyone controls the data that you are collecting people that are not even facebook users that never signed a consent or privacy agreement and you are collecting the data. >> your platform is still being used to circumvent the law and allow people to buy highly addictive drugs without a prescription. due respect, facebook is actually enabling an illegal activity and in so doing, you are hurting people. >> let me say as we look at distribution of information, who is going to protect us from facebook is also a question? >> i don't want to see congress act. you want the federal government to get involved, you will see a mess. despite all the grilling,

facebook stock rose over the course of two days, hitting the highest level in three weeks. we welcome now for someone responsible for almost a $1 billion investment in facebook, scott stringer is the cfo of the city and the fiduciary responsible for investing the payment plans -- the pension plans. you are the fiduciary for new york state, it's the fourth-largest obligation in the country. i'm not sure everyone appreciates that. you made money over the past two days with facebook. mr. stringer: you lose money and you make money, but managing the pension fund, you're a long-term investor. we don't worry about the ups and downs. david: were you happier with your investment after you saw what mr. zuckerberg had to say? mr. stringer: we've been very clear in my role as fiduciary to suggest a facebook and mr. zuckerberg that they have a problem. there has been a serious data breach and we have to have action in part of what we have

proposed is that we separate out mr. zuckerberg's role as ceo and chairman of the board so we can bring in new independent directors who have new experience and data on law and on transparency. we are rooting for facebook because we invested it for firefighters and teachers and city workers. david: you wrote a letter saying we really want you to do this. are you getting support from other pension plans? mr. stringer: people are starting to weigh in and i thought the hearings were fascinating because there's a disconnect between the immense intelligence of mark zuckerberg on this whole issue of data and facebook and our elected officials are playing catch-up with the world. has to be more scrutiny and more discussion with facebook us to act to restore the confidence of the shareowners like myself on behalf of the people i represent. david: why was separating out the role of chairman from ceo accomplish that? does he not have enough time to do both? mr. stringer: part of it is

time. the ceo should spend as much resources and time to figure out some of the challenges that facebook has to deal with. strugglee's what i with. you are a shareholder but you wanted to spend more money on trying to deal of protection, which is going to want to prove their margins and could impact ad revenue. mr. stringer: we are not really talking about money. alix: they are going to hire 10,000 people. mr. stringer: it may seem a lot i, but it'sa del not for facebook. there's reputational risk and revelatory risk and a risk to our democracy and facebook us to own up to that. he challenged public companies before to do the exact same isng and that's what our job as fiduciaries and shareowners. we own $1 billion in stock, which should have a say and how concerns. ofk zuckerberg controls 60% the company with 16% of the shares. he's already influential. david: facebook has been a good

investment for you and your shareholders. -- your pension holders. how do you make sure they get their pensions with some of the things you would like them to do? mr. stringer: we are acting through the lens of being a fiduciary, someone who is protecting the financial interest of people whose retirement security depends on all this. these questions are best practice. share, add more independent directors, have more transparency and then let's get to the root of what's happening here. our democracy is at stake in one of the biggest companies in the world that we invest in is also at stake. alix: if they don't listen because of the voting rights, do shell your shares -- do you sell your shares? mr. stringer: we are not at that point. alix: if you're not willing to back it up with something, why would facebook pay attention? mr. stringer: they worry like we worry about reputational harm. we are going to use every lever we have to ask these questions

and by asking these questions, it has created a platform for congressional hearings, the questions you are going to ask facebook, and that's part of our role. -- howhow effectors effective have you been in changing corporate behavior? have you seen others have success in doing this? mr. stringer: when challenged corporations that have not been good actors, whether it's wells fargo or other actors, we have not been afraid to engage these companies. we now have proxy access shareholder victories in 450 companies, the right to run independent directors. there is an activism on behalf of our shareholders and our retirees. i think it's a role that more people should play in new york city. i've decided to play it as much as i can. bank of america talks about their loans to gun companies, here's what she had to say. >> we do have a few manufacturers of military style firearms, we are in discussions

with them. we have let them know that is not our intent to underwrite or finance military style firearms on a go forward basis. what a question for you, are you doing with gun stocks and other stocks that are in the spotlight? mr. stringer: we have worked to divest from guns and we have and we divested from coal and we continue to divest. we do this through the lens of will this in any way harm the bottom line, our investments? we do our due diligence. in the case of guns and coal, we have not had any at -- at negative impact to our pension fund and i think it's only appropriate to get out of guns as much as any bank or anyone else can. the mass shootings that are happening in this country is because of weak laws and foolish people in the collateral damage to the country is incredible. david: would you be willing to give up any at all to effect

these changes? mr. stringer: my job is to make sure we push the envelopemr. stringer:, i have due diligence that i take very seriously. we are exploring divesting further in terms of fossil fuels. we study and analyze and we do things in a way that only enhances the pension fund. because look i represent -- who i represent? whoteacher, the pensioner depends on us to be their retirements. there are issues we have to speak up about because it ultimately hurts the people i represent. stringer,tt -- scott new york city comptroller. rolling over a teeny tiny touch as the ecb is out with its account for the march policy meetings. the central bank was in caution across the board from euro moves to financial conditions to trade to global downside risk based on march. , alsog us from frankfurt

, what waslessandro your biggest take away from the minutes? someone has proposed that the ecb would say almost accomplish its mission on inflation, to stop and asset purchases. the majority of the governing council rejected and they still have to see more evidence that inflation is on the right track and in fact come inflation remains low in the euro area and there is living wage pressure. the latest geopolitical noise makes it seem like it may hit confidence and draghi signaled this risk yesterday. for may be other works expansion in the euro area. production of the

eurozone is missing estimates. we've seen a slew of data, hard or soft, that puts the euro bi ulls in a dicey position. how does this wide-out playing out -- wind up playing out? alessandro: right now, the euro area economy has been doing very well. it's probably the strongest growth in a decade. at the same time, there has been some slowdown in the soft data. this may be just because the soft data are just aligning themselves again with the real data. maybe they have an overshooting a bit, or it may be the first time there's a crisis of confidence and people are starting to have doubts about what the euro is doing. it's always a risk that the euro might rise, they are looking very closely. oil is rising, the price of oil is rising so the ecb is still being very cautious for really declaring mission accomplished with qe.

alix: we have seen financial conditions tighten the eurozone as well. what else we learn about how they are reviewing the internal economy of europe? alessandro: the main thing so far is that the message was one still confidence. the euro area is growing strong and it's doing really well and they see no reason why it should not continue to do so. at the same time, there are risks and those risks, especially from outside the euro area. trade.opolitics and this is something that could hamper the recovery. as far as the euro area is concerned eternally -- internally, there is still confidence that the risks are now on the downside, so there is a risk that growth may come slower for mouth of the euro area. conversation in september, are we going to see a. stop, what does that mean

for deposit rates? alessandro: draghi said clearly is not going to be a sudden stop , so even a low-level now, it would be a 30 billion euros a month until september. what we have heard from ecb sources that we have reported on bloomberg is that there's going to be a very small tapering, this is just an option. nothing has been decided, nothing has been discussed. when they get to this point, it seems to be the main function so far. alix: alessandro speciale. thank you for joining us. david: we turn now to wall street, we cover three things. falls isve push, etf volatility has the market than finding to which a, the european peers have found their footing but deutsche faces in existential crisis, perhaps. and the air of the share.

it tookg click was all for samsung to make a $140 billion mistake. blackrock, collins, you saw a decline of 46% as global ishares etf's. this has been the wrist -- the risk i talked to bankers about. nety: blackrock still saw a inflow into the etf business and it's the world's largest asset and provider of etf's, but they did see a market decrease of 46% year-over-year. and about 37% quarter over quarter. ceo larry fink is attributing it to impart to volatility in the markets, that clients, especially institutional clients were rebalancing and risking -- de risking. we are definitely seeing a lot of money move and it's affecting the long-term growth essentially of etf's release this last quarter. bank, we talked

about it just about every day now. there's a story on the bloomberg -- are they fundamentally changing their direction? he wanted to be the goldman of europe. peggy: the bank has been an identity crisis and now people are saying how are you going to reinvent yourself and there are two things and play -- to the rebuild the domestic side of the bank and focus on that first, or do they try to be an international player, europe's goldman sachs? signs are indicating the new ceo may go back to the roots first and focus most on what they are doing at home and in germany first before trying to compete internationally. [coughs] job cuts. david: they have the postbank and all those banks, a little -- a local retail bank would be like if goldman had banks in every retail postal office.

people go to with a no first and he has done consumer retail banking in the past. it may be where they had first. samsung securities, someone getting in real trouble. the largest brokerages and they were trying to pay $.93 per share a , plan.ds under a company, someone mistyped it. it does sound like there were two main things that happened. people were like what, how can this be possible with your systems, and that it reminded me of the hawaii missile alert we saw a few months ago where it took them 38 minutes to resolve the problem. this was 37 minutes. they didn't really have a quick response to correcting the

issue. david: i love this story. i like the criticism that some of the people got the shares and then immediately went out and sold them. they should have known it was a mistake. but they are being criticized by making a few bucks. regulators are in saying how did this wide-out happening? -- wind out happening? it is a- david: securities firm. many things to peggy collins. , new yorkmaria vullo state department of financial services. alix: check out tv , you can watch us online, click on charts and graphics. check it out. this is bloomberg. ♪

david: the trump administration is cutting back on bank regulation, with legislation

pending to med -- the mend dodd-frank. just yesterday, the fed joined with the office of the comptroller of the currency to propose changing the way banks borrowing limits are set, a move that could potentially free up tens of billions of dollars for lending and other activities. this indicates with a new proposal says. it would be limited part of the fixed calculation and curtail the risks of individual banks. aligning with the overall as look ramin, but it would free up as much is $1 billion in capital that has been referred to for reserves. it was not unanimous. the fed proposed by a two to one vote. it orcome maria vullo, states department of financial services superintendent, she oversees the largest banking center in the world. a federal regulator, your estate regular, but you are very much involved in all of this. how you feel like things --

about things like that that is proposing right now. ms. vullo: the devil is in the details and they did make this proposal yesterday. it's important to think about what does leverage ratio mean, which is what they are proposing to change. and the freeing up of capital, what does that mean? banks hold a positive ordinary people as well as people with greater wealth and the fdic insures those deposits. banks use those deposits to lend and if you start freeing up this capital, what you're really doing is allowing the banks to use depositors money to engage in other activities, and that the risk. entiret's a risk to our banking system, a risk to the ordinary people whose deposits are there and that's why the fdic is not one of the federal agencies that is part of this proposal and i think that's very interesting to think about. report is that the fdic is not too happy about this. the fdic is continued to be run by an obama appointee.

politics aside, the fdic is an insurer and they are on the hook if there is an economic crisis or even just in one of those banks. we after number that the financial crisis was just 10 years ago. and we should not fail to continue to remember the lessons of those crises. the banks are doing very well, profits are up and they have a sufficient amount of capital, most of them. but there are many, many ordinary people and homeowners who are still suffering from the crisis. i think we have to always keep that in perspective. david: you really have your finger on the pulse of the banking sector in new york as well as the regulatory system. let's talk specifically about the bill pending in congress that a lot of people think will make it true that will cut back some on dodd-frank, particularly as it applies to smaller banks, not so much big ones, but smaller ones. do you think that is a sensible approach? ms. vullo: i am very much in

favor of any support that we can give to our community banks. in our jewel banking system, mostly the state regulators, and i have some very largest fusion to new york, but most of the state regulators what we focus on his community banks because they were on the ground in our communities, providing services, access to capital for communities and small businesses. there are certainly efforts in this bill, which is a bipartisan bill, efforts in their health community banks. however, the phrase this is about community banks is really hiding their elements of that bill that help the very big banks. the is the increase in threshold from $50 billion to $250 billion of assets in terms of greater regulation. we should be concerned about those things because there are a lot of very large banks that will then not be subject to some of the greater dodd-frank oversight and i have some concerns about that. to 250you think going

billion dollars is a stretch? ms. vullo: i think it is very important to ensure fiscal stability in the protection of consumers. ifid: what is the connection any between the sort of regulatory reform and the possibility of consolidation among smaller banks? will it free of these banks to consolidate and is that a good thing? ms. vullo: depends on the circumstance. we are seeing this a problem because some of these large banks when they are freeing up liquidity, you have large banks taking over and it hurts our community banks. i think our community banks are the ones that are the communities doing the work and a lot of these large federal banks are not generally liked by the public. they are not necessarily in the communities doing the work of the public. i think we have to be very careful of further consolidation. already, our banking system is overrun by that and then you add to that some of these other disruptors ignore the marketplace lenders who are

trying to get in the market also further hurting our community banks and the payday lenders everything else. there's a lot going on federally on that as well. david: at the state level, how do you deal with that issue? there's the issue of nonbank that.going into there are increasing numbers of people going into that space. ms. vullo: in new york, we have user rates and certain requirements and if you are lending, you are subject to the same laws of the same thing should be on the federal level. i don't think we should give special treatment to people who are engaged in bank like activities to not be regulated like banks are. it should be a fair playing field they should be consumer protection regulation overall. david: whether it's federal statutes like dodd-frank or regulations, how much of a say to you have? do you have your views expressed and do they listen? ms. vullo: i had my view six breast and state bank

commissioners have gathered together and had many discussions on the federal level. there are places where we have our unique role. and there are many, many places where we can fill the gaps with his deregulatory environment. to protect the markets. some of this is just giving too much access they could raise some real risks to the economy. david: maria vullo of the new york state department of financial services. great conversation especially heading into bank earnings tomorrow. coming up, laird landmann at tcw fixed income group, are treasuries fairly priced? this is bloomberg. ♪ welcome to the xfinity store.

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a trade war with china. a tight market, opec says the global glut is almost gone. confidently hawkish, the fed sees no downside risk to inflation and hints at a steeper rate hike pass. the ecb, not as optimistic. david: welcome to bloomberg daybreak on this thursday, april 12. i don't know if you know this, but that is where i proposed to my wife. alix: my husband proposed to me on the top of rockefeller center. in the markets, we are looking at a potential risk on rally. s&p futures up by about 13 points. euro-dollar modestly weaker.

1.43.ollar and down by yields up by about one basis point, some buying in europe, but it feels like a very calm bond market and despite opec ticket bullish read on the market, crude is still off by about extensive 1%. -- 6/10 of 1%. david: we turned over to kailey leinz with "first word news." president trump's nominee for secretary of state says a milder relationship with russia is now over. he will try to convince lawmakers that president trump plans to get tough on vladimir putin. opec says its oil output fell to the lowest level in the year last month.

most of the global oil glut has been eliminated since opec and its allies curbed production. president trump is backing off of the timing of an attack on syria. said anresident trump attack could come soon or not soon at all. the kremlin says both sides should avoid actions that reduce chances to find a resolution. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. bloomberg. david: we want to get more now on the rising tensions over syria. let's turn now to bloomberg's national security reporter on the telephone from washington. theashington, we heard president was going to make a decision in 24 hours and then we heard he met with general mattis and now he is saying it might not be at all or not right away.

the spokeswoman for the president, sarah huckabee sanders, said yesterday that all options remain on the table. we do know there are consultations going on between the u.s., the united kingdom and france, to come up with some sort of a response. if there were to be a military strike, the speculation is that it would be done by the three of them together, possibly also in consultation with israel. that is not something where the u.s. fires off 50 or so tomahawk missiles as it did, a year ago but clearly he walked back when the president said in no uncertain terms that the strike was coming. he was then sort of criticized for broadcasting the u.s. intention, something he criticized president obama and purdue -- president obama for doing in his administration. david: talking about the u.k. and france, is that about

appearance or do we really need them for logistical or other support? >> they are part of a u.s. led coalition fighting the islamic generally i think the u.s. once a situation where it is not perceived as being the u.s. against russia. when there is a security council meeting -- when there was a security council meeting a couple days ago, the u.s. and its allies were very quick to stress that the council was mostly united except for bolivia against russia. they want to project a sort of solid unified front and portray russia as being the one that is isolated. a coalition airstrike would carry more weight than just the u.s. going alone. alix: thank you so much. russian equities have been rocked the rising tensions while russian corporate credit is taking a beating off the back of

newly imposed sanctions. this is the russia credit default swap and you can see it rising off of the highs, but nonetheless the highest since 2017. joining us now is laird landmann , managing director for tcw. great to see you. laird: thank you for having me. alix: what do you do if you own russian sovereigns? have -- allnk you spreads are basically compressed quite dramatically over the last 10 years and the risk is being priced to perfection. i would not want to be in this trade right now. when you think about owning corporate credit or sovereign credit, you want to be in places where the rule of law is solid and the pricing for being in places where the rule of law is not solid and there is

heightened political risk certainly should be more than 140 basis points. out, you haveoint to get yield somewhere. do we see contagion to other areas of eastern europe? laird: a place that is going to be caught up in this political -- and the u.s. does not have a coherent response right now, it is going to experience widening. i don't think you will be paid to take any of these risks. david: does it spread more broadly into e.m.? laird: i think it is going to be contained. you have to think about the process we are going through in readjusting risk and changing to another regime. the central banks have put us in a deep sleep over the last 10 years. we are beginning to come -- we

are beginning to become too volatile. it is going to take a while for people to reach the conclusion that risk is globally priced. if you're in asia or latin america, i don't think the risk is that profound. alix: come inside the bloomberg, looking at jpmorgan trip kuehne e.m. etf, that is the blue line. -- that is the white line. if you are u.s. investor, you have to sell bonds issued by the companies under sanctions by may 7 and that has created price distortions. what is the broader implication of that? laird: the broader implication is that there are risks within these types of bonds that people do not anticipate. now, the risks are coming to the surface and it is going to win at liquidity in some of these

sectors and you are seeing returns. what is fascinating is that the local currency indexes are holding up. that can be two things. it can be the dollar basis that is involved. the other factor could be the fact that they are just less liquid. much the way in our high-yield market, sometimes the triple c basis does not move at all but the double the basis does move. david: russia is one situation, iran is another. there is talk about ramping up sanctions. if that happens, look at that due to bond markets? -- what could that do to bond markets? more of the same? laird: more of the same. very few people own bonds directly connected to iran. a ties over into global growth and it has a continuation of the trends that have been in place since the start of the year.

, thank you landmann so much, you are sticking with us. coming up, the of we side of debt. how leverage is becoming a bigger driver of equity returns and what is the risk as we head into earnings season. this is bloomberg. ♪

kailey: this is bloomberg daybreak. regulators say disney will be forced to make a mandatory takeover offer for sky. that is provided disney completes its 52 billion dollars takeover of most of 21st century fox and fox does not by the

pay-tv company first. fox already owns 39% of sky. it was a big first quarter for the world's largest money manager. blackrock beat early analyst estimates. has $6.3 trillion in assets under management. the parent company of british airways is considering a bid for a regional air shuttle. offer -- norwegian has aggressively moved into low-cost intercontinental flights. that is your bloomberg business flight -- your bloomberg business flash. alix: u.s. stocks are starting to move to the ugly side of potential debt. leverage is becoming a stronger driver of returns. the higher your debt, the more you are underperforming. that is that white line. the lower your debt, the more you are outperforming.

still with us is laird landmann of tcw. laird: if we look at leverage, whether we measure net leverage or gross leverage and investment-grade companies, we are sitting at cyclical peaks and we're above the level we were at at 2008. that is tempered by the amount of cash some of these companies hold. when we look at the investment-grade indices, 24% of the companies actually have leverage ratios. the rating agencies are providing a lot of leeway to these companies. david: is that reflected in the marketplace because i am not sure i can see it. laird: it is not reflected in the marketplace, it is reflected in the optimism. david: the degree of leverage, is that reflected? laird: absolutely not. david: why not?

laird: central banks incentivizing people to risk. they want people to pile into a winning trade at the end of the cycle. it is human nature to want to be with the winning trade and that is what causes cycles to end and i would argue we are having a regime shift starting with the beginning of the year, with the fed beginning to taper, rest -- risk is going to start becoming fairly priced. alix: this chart might scare me. take a look at the different levels of high-yield. the yellow line is the overall high-yield index and the white line is just single b's. triple c's outperforming. do you expect this to be a quick washout change? laird: this is a regime shift. we lived for the greatest passive investment program in our history. that is beginning to unwind and

as it does, we will see more discriminating risk taking. this shows the lack of liquidity because broker-deal balance sheets are so small. when we have the short-term selloffs in the marketplace, what happens is people sell the most liquid securities, the double b's and single b's. the triple c's don't do any price discovery. this is an over-the-counter market. unless someone asks for a bid, the price generally stays where it was the day before or it is updated very gradually. david: let me put two things together that may not belong. on the one hand, there is a regime change. been telling us, the ecb is telling us, not like it is a surprise. on the other hand, you have regulatory changes. are the regulatory changes keeping the market from recognizing what is coming? laird: maybe, that is a hard one

to know. i think that the regulatory changes have not had that big of an impact on the actual position sizes the broker-dealers have. the trading operations which can make a lot of money for these organizations in good times have been downsized overall and the risk appetite of wall street is aligned with the value for risk methodology. that is a factor that we are concerned about, going forward. if you combine regime change with less capital put toward buying and selling and transacting, that could create some liquidity situations. alix: what do you like then? laird: there has been a change on the front end and bloomberg has covered that. how theooking at massive issuance of bills, the beat attacks, all of this has

resulted in short-term selling of corporate's both from foreign corporations and domestic corporations that are repatriating with the new tax law changes. that has caused corporate spreads to widen out anywhere 15% to as muchby as 120%. it has been a massive adjusted national adjustment. -- massive adjustment. alix: i want to talk about floating yields. a lot of the leverage loans are coming with a lot of risk. what do you wind up seeing in that space? laird: if we were forced to choose between buying high-yield and buying loans, we would want to buy us ourselves toward loans ourselvesint -- bias toward loans at this point. more conservative but there is a structural flaw in that market which is the clo's.

almost all the loans are being directed toward cielo buying -- clo buying. you are going to have a difficult time placing loans and it could create a technical disruption. david: laird landmann will be sticking with us. coming up, facebook is one of jacob asset management's biggest holdings. we will heard -- we'll hear from darren chervitz, the director of research. that is next. ♪

david: facebook ceo mark zuckerberg has now endured two days of grilling before congress and through it all, his stock is actually going up. mr. zuckerberg self admits that regulation is probably inevitable. >> i think it is inevitable that there will need to be some regulation.

my position is not that there should be no regulation i also think you have to be careful about what regulation you put in place. david: joining us now is darren chervitz, jacob asset management director of research. welcome. darren: thank you for having me. david: did you come out liking his stock more or less by the end of it? darren: a little bit more. it was a snooze fest. it was a tough thing to watch. that's ok, as an investor. that is about the best case scenario out of a congressional testimony. he did not make any big gaffs. he has had interviews and press meetings in the past but have not gone particularly well. i think he did not put facebook in a bad position when it comes

to a potential ftc consent decree issue that may arise. overall, i thought he did a good job but like you said, regulation is coming and that is going to be an issue for the company. david: let's talk about what that could do to the company media companies have been enjoying an almost arbitrage on regulation. let's put up some bullet points about what a summary of the european approach is because a lot of the questions to mark zuckerberg is what about that kind of regulation? thehave a opt in-opt out on regulation and it is even stephen. a right to refuse the use of marketing, a right to retrieve and sell your own data and a fine that could be 4% of revenue. are we heading in that direction in washington? darren: i think we are going to head somewhat in that direction. they are ahead of the game with privacy regulations and will

remain ahead of the game. are -- gdpr li te. i don't think he has the start of interest in mind but yesterday, he talked about regulation, if you don't crafted in the right way, it could be good for us because we are the dominant player and we can pop -- we can afford to do these things you are requiring and we will still have a lot of data. if a startup company is trying to get into the game, it is going to get much more difficult. alix: did you buy the diff? darren: -- did you buy the dip? darren: we did not. last year, we trimmed back almost all of our large market cap names in our jacob internet fund. littlet rates getting a bit high, we believe it is going to be important to focus on smaller and mid-cap names. facebook is now at the bottom end of our top 10.

we are not adding -- we did not add but we did not sell either. our thrust is probably going to be continue to trim the name. ,here is going to be pressure not just talking about the regulations but just in terms of how they have to approach the situation. they're going to have to invest in some of these things that they have talked about, doubling the number of people they have on staff to watch over security, content and privacy issues. i wonder as i watched that yesterday, it is not just a matter of how many people you employ, they have to be thinking every step they take about getting called back in front of congress and going more slowly. as a practical matter, tech companies tend to get slowed down by government and is that allow smaller companies to catch

up? was one of the interesting discussions is who do you compete with and he had trouble coming up with a name. they do have a dominant position. want to call it a monopoly but they are in a terrific position. i don't think that is the real risk. the real risk lies in how much their profit margins, which are huge, that is going to come down. david: you invest in tech more broadly, what is the chance of this moving over to other tech companies? darren: every company that deals in online advertising, targeted advertising, is going to have to deal with this just like what is going on in the eu right now. it may slow things down, but i don't think people want to from medical he shift away from that is -- from the business model. nobody wants to pay to be on facebook. alix: good to get your perspective. coming up, the newest read on u.s. jobs.

if you take a look at where we stand in the market, we are seeing signs across the board but it seems pretty muted. the biggest sale coming in the 30 year. the 10 year was ok but it was not very voracious considering the risk off appetite. s&p futures up by about 12 points, around the highs of the session. i am watching the euro dollar continuing to grind lower. weaker industrial production numbers out of europe but also an ecb account that is not appear as hawkish as the initial statement from the ecb seemed to be, warning of financial conditions and the euro. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alix: this is bloomberg daybreak. s&p futures now up by about half a percent. despite the fact that industrial production in europe did come in

light. i mentioned it before, watching euro-dollar down by 4/10 of 1%. you also wound up having ecb that seemed to see more downside risk to the global economy and the eurozone economy as well as confidence. we wind up seeing data dropping in the u.s. as well, targeting import prices. initial jobless claims coming in $233,000 -- jobless claims coming in and that -- coming in at 233,000. year on year up by 3.6%, missing estimates. february revised lower as well. this would factor in trade wars but it does give us a baseline. laird landmann is still with us and bloomberg mike mckee is joining us -- bloombergs michael

mckee is joining us. michael: it looks like we did see oil prices fall during that month and they are back up again, but that made the biggest reason -- that may be the biggest reason we see oil prices where they are for this particular month. this is the trade weighted dollar and this is what has been affecting import prices. the dollar has fallen, import prices go up, oil prices go up and it does not show any signs of breaking out of that because given the outperformance of the u.s. economy, you would expect more people buying dollars to get into u.s. securities and it has happened. that is a bit of a conundrum for the fed. alix: taking a look at the auto prices, down 2/10 of 1%. how that winds up and what that does for consumer demand and how it translates. michael: if you do have trade sanctions, that should be an

inflationary move but it will be a short-term thing. company's pass along their price increases and then after that, the question is what happens to growth, and the fed in the minutes yesterday apparently discuss that, suggesting they would be more worried about the growth impact and the inflation impact. alix: rallies to our next conversation which is the number of participants in the fed minutes indicated strong outlook activity along with increased confidence that in nation would would likely be steeper than they had previously anticipated. if you are looking at a potential steeper rate hike world, where does that leave us for 10 and 30's? laird: it leaves us with a flattening curve over time. this is being very well telegraphed by the markets and we are seeing the curve move

toward the flattening position, near 3% yields. i am not surprised that the fed is saying that. if not now, when? we have a synchronized global expansion, very low unemployment. it seems like this is the ideal time and if you are a risk manager in the fed, you think about managing your personal risk in terms of how to handle this, this would be the ideal time to give yourself a cushion, raise rates and be ready for the don't -- and he ready for when the deleveraging occurs in the economy rolls over -- and be ready for when the deleveraging occurs and the economy rolls over. basically shows the 530 spread and the 210 spread. both are down, under 50 basis points. this sort of indicates the end of a cycle. how concerned should we be that we will keep going in this direction, in which case we

could end up with a recession? laird: anytime the fed tightens, you will end up with the curve somewhat flattened. i think the term premiums continue to flatten. flat curves don't cause recessions in and of themselves. i think they are more of an unsavory character that waits for accidents at intersections. david: is it wrong to say that the reason is because the market does not believe in growth in the out years. the long end of the curve is not going up while we are tightening. , and: that is part of it that is the theoretical aspect to it but there is a practical aspect that as the fed increases short-term rates, as people see , a eventuallyurn people reallocate their portfolios. alix: this leads us to you not --ieving necessarily in

there is nobody on the fomc that sees downside risk to core inflation. i hope this was a fascinating point in the minutes. michael: it shows how much they have moved away from the deflation issue and the belief that we are going to see inflation. the debate is not how you are going to prop up inflation by the fed, it is how do you to have down inflation and at one point -- do you tamp down inflation and at what point? how far does it go above 2%, for how long and how hard to they have to step on the brakes? there are a lot of people on the fed saying let's let it run for a while and see what happens. curve,ttening yield probably not flattening a whole lot more unless something different happens.

we have a commodity curve ccrb,is, the ccr be -- you take a look at the green line, that is where the market thought funds would be in december and the orange line is where they are today. the market is already ahead of the minutes, saying the fed is going to be steeper and faster. right now, leaving the minutes, we are status quo until we see more data come in. david: why shouldn't i be concerned that we are in this situation we have an anonymous fiscal stimulus -- an enormous fiscal stimulus coming in our direction? that is the logic of it but economics is a nonlinear science. unemploymenth 4% and you think about what the potential for growth is, we are all taught growth is labor force

growth plus productivity. there is not a lot of room to bring in additional labor force growth. we can rev the engine. in california, we have people who take subarus and they rev up the engines and make them look really fast but they are not fast. that is what we are dealing with. the fiscal stimulus gives us a quarter or two of strong growth, but eventually we have to fall back to this 2% long-term growth rate. david: the administration would say it is not just that short-term stimulus but it is also productivity that will generate productivity. laird: do i buy that government spending is going to increase productivity? if government spending was occurring when we had 7% unemployment, that could bring productive workers back into the labor force. capital spending takes years to get the productivity back into the cycle. i'm not sure adding a lot of capital spending -- that is

going to be individual companies and entities that make those decisions. alix: back to our question we put off from the top of the hour. do you think that -- where should they be next december when that fed rolloff comes into play? laird: 10 to 30 year treasuries continue to flatten. alix: where do we go? laird: i will give you a number. we get to a 10 basis point turn premium between tens and 30's. traditionally, curves have really gotten very flat toward the end of the cycle. the terminal fed funds rate is higher. i think you are looking at, and i hate to make predictions like this, but three and a quarter flat yield curve as we get to war the end of the cycle. alix: that also brings me to europe because you can see financial conditions have tightened.

we have obviously seen the peak in the data. is it a peak or is it a rollover? michael: the right any signs that it is a rollover. the european central bank is still stimulating the economy. that is not coming off anytime soon. the debate is whether they continue into december. it will be sometime in the 2019 before we even start talking about raising rates in europe. it does not look like there is any reason to think things are going to roll over. the biggest thing i see from european analysts is confidence brought on by what is going on within the united states politically, if we do tariffs, if there is a trade war, how does that affect everybody? they could be affected by that but right now, the world as it is does not seem to be in any great jeopardy. david: whatever you expect out of the ecb six months ago, how

has it changed? laird: i think the ecb is going to have to be amazingly careful. we think about the size of their quantitative easing programs, relative to the size of the market, it is an order of magnitude different. in europe at the peak last year, they were buying seven times the net supply of debt in the marketplace. you think about that debt -- that debt and how distortion in the difference would be. it is going to be a very difficult exit for the ecb. they're going to hit the snooze times.awful number of it is not surprising that european growth has all been in place because it is all driven by the ecb. this is not a fundamental situation. andd: laird landmann of tcw

bloombergs michael mckee, thank you very much. let's get an update on what is making headlines outside the business world. kailey leinz is here with "first word news." kailey: president trump keeping his options open on syria. the president warned russia should get ready for a strike on its ally in retaliation for that apparent chemical weapons assault. today, president trump an attack could come soon or not at all. the kremlin said both sides should avoid steps that lowers the chances of resolving the conflict. rare praise from president trump for a democratic politician. the president tweeted the california governor is doing the right thing by sending 400 national guard troops to the border with mexico. president trump has frequently criticized brown. in the u k, the housing market has been hit by weak demand and there is no pickup and site. the royal institution of chartered surveyors says british

homebuyers -- home prices were unchanged in -- unchanged for the second month in a row. global news, 24 hour is a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. earningsming up, bank kickoff first quarter results. that happens tomorrow. more on what to watch, next. you can turn in your rate -- turn on your radio and listen to us. surveillance can be heard in new york, boston, washington, d.c. and across the united states on serious xm satellite radio -- radio. ♪

kailey: this is bloomberg daybreak. coming up later today on bloomberg markets, a representative from texas. david: we are on the eve of those bank earnings that start getting announced tomorrow morning. i talked with new york state's department of financial services superintendent. she rates the banks in new york and this is what she had to say. >> banks hold the deposits of ordinary people as well as people with greater wealth and the fdic insures those deposits and the banks use those deposits to lend entity start freeing up this capital, you are allowing the banks to use depositors money to engage in other

activities and that is a risk, a risk to our entire banking system, to the nordic -- to the ordinary people who deposit there. the fda -- the fdic is what -- it the fdic is not one of the agencies involved. david: in fairness, the fdic has continued to be run by an obama appointee. >> politics aside, the fdic is an insurer, they ensure those deposits. in anre on the hook economic crisis and we have to remember that the financial crisis was just 10 years ago and we should not fail to continue to remember the lessons of those crises. the banks are doing very well. profits are up, they have a sufficient amount of capital but there are many ordinary people and homeowners that are still suffering from the crisis. your: you really have

finger on the pulse of this, the banking segment in new york, as well as the regulatory situation. >> i tried to -- i tried to -- try to. david: -- as it applies to some of the smaller banks, not so much the bigger ones. do you think that is a sensible approach? >> i am very much in favor of any support we can give to our community banks. system,ual banking mostly the statement realtors and i have large institutions but most of the state regulators, we focus on community banks that are on the ground in our communities, providing services, access to capital's -- the capital. there are certainly efforts in the bipartisan bill to help community banks. the phrase this is

about community banks is hiding that there are elements of that bill that help big banks such as the increase in the threshold in terms of the grade -- greater regulation and we should be concerned about those things because there are a lot of large banks that will then not be subject to some of the greater dodd-frank oversight and i have some concern about that. david: that was maria vullo, superintendent of the new york state department of financial services. did report today, tomorrow we will hear from j.p. morgan chase, wells fargo and citigroup. ?hat should investors expect join us now is barclays managing director. jason, give us an overview. overall, what do you expect the trends to be? jason: we think most banks will expectations.

thanks benefit from the marginal hike we saw in december and .ncrease we saw in mid-march i will put 2018 on track to be the third straight year -- we thought it would be a bigger pickup by now but if you look at seened data, we have not nine straight weeks of growth since before the crisis. that bodes well for the outlook. you mentioned volatility in the marketplace. that not robust, but given to one of 17 -- for cost to continue to be

controlled. loan offices continue to be benign. let's bring up the rise in libor. what bank is most exposed to floating-rate loans? jason: they are all asset sensitive, the larger banks, bank of america is the most asset sensitive followed by jpmorgan. generally speaking, we think margins will increase for all banks. alix: in terms of the loans, you mentioned you are expecting an increase in loan officers. do expect a buildup? jason: last quarter, half my releasedactually loan-loss reserves. we do think you will serve to see them increase with loan is running at half their historical running -- loan losses

at half their historical averages. any such increase will be modest and banks have pretty good growth to offset that. david: particular attention paid to goldman sachs because they are in a transition. what do you expect there? investment banking pipelines are going to be strong. if you look at the announced m&a at the early part of this year, that will begin to close later this year, a lot of financing associated with that. we see a lot of the initiatives laid off in the september conference. -- laid out in the september conference. david: what about forward guidance as we listen to them

and their calls? always been to see some deregulation coming out of the fed? whether start to talk about how that could affect them, going forward? jason: in the early days. this regulatory rollback is occurring. there is a lot of talk about what of the house gets that through to become law or not. at the end of the day, the treasury laid out 250 recommendations, of which 200 do not meet congressional approval. we saw that the last couple of days around the stress capital buffer and the stress test. to makeus eight years the regulation a lot more stringent. over the next few years, we will see a modest rollback of that. alix: the number one bank to play into earnings? jason: we are constructive on the particularly bigger banks. when the bigger guys stand out.

alix: we will get those earnings tomorrow. thank you so much, jason goldberg of barclays. i am watching commodities. youou check out tv , can watch us online and check out our charts and graphics. just go to tv on your terminal. you can send your questions. this is bloomberg. ♪

alix: i am watching commodities, don't roll your eyes. david: you are always watching commodities. alix: oil and aluminum off of their highs. this is been a monster week for both. aluminum at one point reaching the highest level since 2012 and oil reaching the highest since 2014.

be talking about that on my show, commodities edge at 1:00 p.m. david: we are looking forward to that. how much of this is long-term and how much is short-term? there are threats about syria and pressure with china. fundamental,h is how much is a premium? don't miss that. that is this afternoon. this morning, we will get to bloomberg markets: the open. we've got mike swell of goldman sachs and michael purves of we did and company -- of we didn't --

jonathan: from new york city, i am jonathan ferro. this is the countdown to the open. ♪

coming up -- jonathan: coming up, switching from one narrative to the next. geopolitical risk replacing trade as the dominant market concern. and mosted stocks federal reserve officials leading to war -- leaning toward a slightly faster pace. just about 30 minutes away from the opening bell. futures positive 13 on the s&p. , 123.70.bleeds lower yields creep a little bit lower, up by a single basis point. for the market, it is geopolitical -- geopolitical risk replacing trade as the concern. >> the middle east is seriously broken. >> i