production. a 180 after iran walked out. silver lining for mario draghi. rebounding from a five-month low, pointing to recovery in second quarter. euro find support. i split white house. -- a split white house. trying to restart talks with the chinese, others dig in their heels. david: welcome to "bloomberg daybreak: americas," i'm david westin with alix steel. you know what i got to do yesterday? i watched croatia-argentina. alix: i came back my show and i was like david is not here, something is wrong. david: i had a big lunch, canceled. alix: it was amazing. no one expected it. david: particularly no one expected that messi didn't show up. he was not a big factor. croatia played a big game, 3-0. alix: what was the other upset

-- germany? david: england pulled it out against -- alix: you are laughing at me. back to the markets. a friday morning rally underway. you will not take the conditions very seriously to the close. as in the future up 13 points, rallying on better pmi. long and yields, up 10 year. brent confused but higher, over 1%. headlines out of vienna on opec. david: the mourning grou brave. -- the morning brief. pmi from the united states and as we just heard, opec ministers are meeting as we speak in vienna. we are waiting to see if they have a deal. over the weekend, watching turkey, presidential and parliamentary elections, coming up on sunday. alix: time for the first take.

we are joined by stephanie flanders, who apparently doesn't sleep. and marty schenker. i want to look at opec. if you look at brent, higher, may or may not get a deal, how much, when? what role did president trump play in these meetings, that a u.s. president has not played before? marty: he has been tweeting that oil prices are too high, specifically targeting opec. i doubt they are thinking about what donald trump will say if they reach an agreement on increased output, but he is providing a nice distraction for those who are not particularly interested in opec. alix: hey now. the saudi minister yesterday was talking about consumers. do right by the consumers. you don't want to hire price. is $70 too high a price for consumers? stephanie: it depends how long your memory is.

it wasn't too long ago that we were close to $100. with economics, it is about the rate of change, where you are recently, not necessarily where you have been through history. it is interesting that people do not know how to read whatever deal is coming out. we don't know what direction oil price will go. had a study out of the last day saying that they thought the price, that the market was not pricing in the kind of increase we could see, but it looks like we will see in production. the scope for oil price will fall margaret david: -- will fall margaret david: donald trump -- will fall more. david: that is what he cares about more. marty: oil prices were at $50 a barrel when he was elected. it has been a nonfactor in the election cycle. it is interesting, that gasoline prices in the u.s. have risen. no one is talking about it. they are talking about

immigration, not oil. stephanie: we're kind to work at how we can get trump's tweets into our economic models. he is in the residuals somewhere. alix: that is a blowout. david: i'm not your if that is a good idea. .second-story europe . pmi's. a chart shows, maybe mario draghi is right. they went up, came down, way over here on the right, pmi, coming back up. is there growth returning to europe? stephanie: we still looking at slower growth than last year. when we were hoping for, things were optimistic at the start. pmi's, average, still a bit lower than at the start of the year. we are not euphoric. for the some support european central bank approach. i got to hang out with mario draghi this week. david: that can all with mario draghi and jay powell.

stephanie: they stuck to their guns and wanting to lay out the path are moving away from bond purchasing schemes. david: market reaction -- euro against the dollar over two days. euro strengthens. how much of that is because of stronger europe and because of weaker dollar? stephanie: we have the dollar driving things more. we could see a change through the second half. alix: the dollar was strengthening because of global synchronized -- weakening because of global single night growth. now that we have a stronger dollar, i wonder what that signals about growth? marty: it will be interesting to see how the fed reacts. we are now factored in three rate hikes this year. the fed has taken a path of independence of the rest of the world. they are aware of what is happening elsewhere but it looks like the fed is intent on raising rates on this deliver

course of the year. david: third story. trade. every day, trade. fascinating report on the bloomberg now -- who was on what side within the white house? lighthizer, and peter navarro, on the oxide, they want -- hawk the side side, on the other side steve mnuchin and larry kudlow. wilbur ross, i am not sure. is this a drama within the white house? marty: it is a drama playing out in the white house. what people have failed to get their heads around is there are looming tariffs in a couple weeks that will be imposed. there are no discussions going on. our quarters to find out -- is there any attempt to resolve this? we don't seem to have any discussions going on to pull back from tariffs. david: the major doug reporting

doveaybe thatthe -- reporting was maybe we could get discussions going. marty: despite donald trump banging his head on the table on tariffs, steve bannon last week and said he is proud of this president's stance on china. he has to keep that stance if he wants to keep his base. alix: i was interested during your panel, central bankers from japan and europe and australia and the u.s. they seem worried about trade but they cannot learn to quantify it. what was your take away? stephanie: you will never get them to say a nice word about protectionism or trade wars. it is something that disturbs them, when they thought they were getting on a normal path. the crucial thing that jay powell highlighted, very much speaking to the administration he said, we worry about the impact on investment. we know this.

want tobor market, we keep wages going but we need productivity and investment to back it up. if this has a chilling effect on companies -- they say -- i'm not really sure about that u.s.,ment, in europe, the that could be a problem for the recovery, even though we know the amounts of tariffs involved. alix: when you were talking to secretary ross, you cornered him. he was like -- oh well. david: we played some of what jay powell said to you concerning investment. what is he talking about? --ty: two stephanie's point to stephanie's point, there is indication companies are holding back. there was an interview last there are week, concerns about this tariff discussion causing companies to hesitate on investment. stephanie flanders and marty schenker, great to have you with us. thank you.

coming up, how the trade disputes could weigh on growth. tarullo, former federal reserve governor and harvard law school professor. live from bloomberg, this is bloomberg. ♪

♪ >> this is bloomberg daybreak, i'm emma chandra. disney taking extra steps to win regulatory approval of the $71 billion bid to buy fox entertainment assets. the company is prepared to sell off, generating $1 billion in cash, twice what disney offered last september.

disney and fox waiting to see of comcast makes a move. goldman sachs and morgan stanley urging investors not to heed stress test calls. worry,ks say not to dividends may not be affected. u.k., the aerospace company says it the u.k. leaves the eu, it maple investment out. -- it maple investment out. failure to reach an agreement, would be catastrophic, they say. david: president trump yesterday saying the trade disputes between the united states and the rest of the world are part of an overall effort to reform trading relations that have been broken for years. >> fishermen taking care of a long time before my administration came into being. for some reason, for 25, 30 years, nobody ever looked at trade deals.

they are out of control, how bad they are. we will make them very good and fair for both countries, our country and whichever country we're dealing with, there are plenty of them. david: we welcome daniel tarullo, former federal reserve governor. earlier in his career he served as assistant to president clinton for economic policy and knows about trade. >> thank you. david: listening to what the president said, does he have a point? daniel: i think there is a point. it is certainly not the case that people have ignored trade policy. you would have to say that, over the last several decades, the attention to paid on the impact of american workers has not been what a lot of people would have wanted. manipulationy situation is the best example of that. for a long time, people

criticized china for its macro policies and exchange-rate controls. there was a tendency to get the can down the road and say it will get better. in retrospect, we now see, the impact of those policies was a level of displacement that could not be absorbed by the u.s. economy. david: donald trump the candidate criticized china quite a bit for currency manipulation and then he said, i think that is passed us. is that over? daniel: it is certainly not the issue it was 7, 8, 9, 10 years ago. no question. there is a dispute over whether there is a surreptitious currency manipulation, but it is not what it used to be. alix: that brings us to retaliation. china doesn't import in up u.s. goods to do dollar for dollar retaliation. what is the most efficient way china can push back? itiel: and a lot of ways

would be a continuation of some things u.s. companies complain about. difficulties in getting approval, harassment within the chinese operations, that sort of thing, which can have a big impact on u.s. companies operations, and does not require any action at the border. david: what we're doing is we're putting tariffs on goods and they will retaliate, we have a chart showing tariffs proposed. now $200 billion, not $50 billion. will back into the kind of reform you're talking about? problem of many is there has not been a clear definition of what it is the administration is after. in a sense, they have begun by retaliating and now they seem to be debating on what it is they want. usually one would have gone in the other direction. unless they articulate clearly to the american people, to the chinese and to themselves, what

it is they are after, you're not going to be able to focus on as ae, on bringing, political matter, the country with you. you end up having the administration fighting with itself quite publicly. david: what did that mean for the economy? we talked with wilbur ross yesterday and asked him, how much pain are we willing to endure for the economy? >> unemployment is at record lows. optimism,enthusiasm, relatively all-time highs. small business optimism, low unemployment overall, very low unemployment for women, very low unemployment for african-americans, very low unemployment for hispanics. anybody who thinks the economy is being wrecked, doesn't know what they're talking about. david: in a nutshell, what i took from that, we can afford it. we will be fine. daniel: it is always a question

of the delta. what is the impact of what you're doing? you can start from a good place and still have negative effects. i would say here, as with a lot of things that are not indigenous to the economy, it becomes a question of whether companies and investors reach a point at which they think a risk has been largely realized. then they can move quickly. if you run the impact of trade restrictions, even medium level trade restrictions like these, through economic models, the impact on the economy doesn't look that great. for what the models on capture are the knock on effects of changes in sentiment, future planning, ripple effects elsewhere. that is the sort of thing you cannot know with certainty at the outset. one thing we didn't touch on.

when you need to focus on what matters to you, it has got to be things that are truly of high worth to the u.s. economy. articulatedhave not -- is it intellectual property theft and why and what specifically do we want to change? the talk of the bilateral trade me, at best, ao red herring, something that is really not getting to the heart of the problem. alix: i'm glad you brought that up. a great chart on the budget deficit. the whole idea is that the deficit will widen because you have a stimulus. the trade imbalance will do the same thing. you are importing more because you want to spend more. i don't understand how these match? daniel: it is two levels. first, the global trade balance and secondly, bilateral. a lot of the focus seems to have been on bilateral trade balances, which of course, are

not what is fundamentally important. the question is -- what is a country's global current account position? that was one of the issues with the currency manipulation -- where the surplus was. here you are right. as a global matter, with the tax bill, the deficit anticipated in the future, the u.s. will be running a significant trade deficit. there is no way around it unless somehow, people wake up tomorrow and all of a sudden the savings rate triples and that will not happen. david: if you are in the white house what would you do? on trade policy? daniel: figure out what my position is internally, let people have all the fights they want to in the roosevelt room but once you figure it out, announce it, have someone in charge, then pursue that in a deliberate fashion. david: the main news is that daniel tarullo would never have thought i could pull up a chart on the bloomberg. alix: background.

these guys went to law school together. five or 10 years ago? did you know each other well? --id: very well-paid alix: very well? alix: isn't that nice. jerome powell says negotiations are affecting business behavior. we look at what that means for the fed outlook. this is bloomberg. ♪

♪ jay powell spoke this week at the ecb meeting. he said they are watching closely the possible effects of trade tensions on business behavior. >> those concerns seem to be rising for the first time decisions to post on investment, hiring, making

decisions. that is new. yet? in the forecast the answer is no. you don't see it in the performance of the economy and we don't have any way to know how to put it into the outlook yet. david: daniel tarullo still with us. you used to make those decisions. when do they take it into account in the forecast? daniel: chairman powell probably signaled that. when it shows up in hard data. what he is referring to is what some of the presidents may have said during the economic go around in the meeting last week. in talking tom, business people in their districts, they heard this sort of thing. it is in the realm of the anecdotal now. when you start to see it in numbers, or at least in aggregated intentions with polling, that is when it may

start to be an account. we mentioned the forecast, the fed forecast, the staff forecast with models often lags these early developments. that is frequently one of the debates. are we at the point where the models are holding on to much to what is been going on the other side will say, you are jumping the gun. that is the hard decision. alix: from market perspective, to do a rate hike, it would be tough. thede david's terminal, rate hikes in 2018 versus 2019. 2018 standing firm at 3.5%. 2019, weakness. when would we feel the hard data effect? daniel: for a number of years before the first rate increase, there was almost an approach of the fed which was -- we need to make sure we are ready to start raising rates after so many years. so when things would happen

which would lead you to question whether the strength of the economy really had acquired momentum, the tendency on the part of many of us to say -- maybe we should wait. i think now, it has shifted to a different mode. the converse. we now see a path to getting rates closer to neutral, the economy is performing well in general. now, it takes something to knock them off of that. the presumption would be, keep going. as chairman powell's remarks indicate, he is not suggesting anything seen as close to marking them off but he is saying -- there is something out there which could's take david's chart down a lot. david: a new vice-chairman, a new head of the new york fed. williams,y and john

the new york fed, jay powell being a member of the board, they have been involved in the formulation of monetary policy for the past six years. john, longer than that. you will not see a fundamental change. certainly not so long as conditions remain in this mode of -- should we keep up at what pace and nothing unusual is happening? what we don't know is what happens if something unusual happens. alix: daniel tarullo sticking with us. thanks past the first hurdle -- banks passed the first hurdle but goldman is still stressed. this is bloomberg. ♪

♪ alix: this is "bloomberg daybreak: americas," i'm alix steel, a rally underway on the futures market. not a position taken into the weekend. dow jones futures up 100 points. s&p futures up.

s&p could end the week in negative territory. european energy stocks on the front foot, oil, we may get a deal in the opec meetings. dax at 4/10 of 1%. pmi, services strong in germany. other assets. surprise, surprise for dollar bulls. euro gaining traction up 1.16. did the bulls get ahead of themselves? extension from the bailout. headlines put to rest. 4.16 for the 10 year. can they go back to market? david: a reduction of principal. alix: they can keep it standing in. 5-30 spread, still flattening, 2-10 strengthening, crude over 1%.

mathematical world when opec releases the numbers. a lot of calculations. david: i hope you will be here to explain, when they produce more, the price goes up. let's get an update on headlines outside the business world. emma chandra is here. emma: as you are discussing, opec moving closer to an agreement to boost oil outputs. oil minister is not pessimistic, a reversal from last night. saudi arabia is leading the charge for an increase. the countries have been drafting language for a deal. they split in the trump administration on how to handle the trade fight with china. some officials are trying to restart talks with china, before u.s. tariffs take effect july 6, setting up a battle with other officials who take a hard line.

one of america's best-known conservative commentators has died. forles wrote speeches democrats before turning to the right. he was a passionate advocate for invading iraq in 2003. he belittled barack obama and his columns won him a pulitzer prize. he died yesterday of cancer at 68. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra, this is bloomberg. alix: trade with china, trade with greece. david: pretty shot. alix: 35 of the largest u.s. banks passed the stress test, they can withstand economic shock. the third straight year, all terms exceeded the minimum. yalman, whatow,

happened with goldman sachs and morgan stanley? leverage ratio, very important for the banks, they came very close to the passing mark. this is not the stage. next week we get the results. when you're so close to the minimum numbers, if you're trying to increase your dividends and buybacks, it is likely you cannot do that. we were all worried about it. that is what the headlines and stories were and they came out with goldman and morgan stanley saying don't read too much into this, we will be able to increase our dividend buybacks because the numbers don't reflect reality. we were all confused. we are still confused. apparently, analysts estimating there might be something with the tax reform and how that has impacted not the lost scenarios but the taxes impact on capital and what it does.

it is complicated. there is something going on behind the doors. we will hopefully find out more next week. alix: and some weeks it is -- in some ways it is no surprise. they have the strongest capital market divisions? yalman: we were expecting goldman and morgan stanley to be worse, because they are so reliant on capital markets. the harsh test scenarios the fed has this year really punish capital markets. the stock market decline is 60%, theoretical scenario, bond yields change. all these things together, morgan stanley and goldman were going to be impacted. analysts, the analysts i used in estimates, were expecting goldman dividends buybacks to drop. shocked butthat goldman was shocked more than we were.

something is going on. alix: the street knows it. thank you very much. david: the big banks have been critical of regulation imposed on them in the wake of the crisis. earlier this week, goldman sachs ceo conceded in retrospect, it helped the banks as well as the financial system overall. >> the stress tests were done in such an aggressive way, i was the focus of a lot of the aggression. they were done in such a way there was no issue about whether it was convincing from the point of view of whether it was just soft, or whether it was real. it persuaded the credit world that it was real and the banks were credit worthy. david: the man responsible for those stress tests, daniel tarullo, still with us. it is interesting to hear him say it was a good idea. daniel: to be fair to him and the other ceos, they never took

issue, not in the depths of the crisis with the tests or thereafter. some of them would like changes that would make the outcomes different. i think they recognize, as a matter of risk management and capital adequacy, this was an important innovation. if you compare where u.s. banks are today with where european strategy ofhe making them recapitalize quickly and getting capital up further has paid off. david: later in the interview, he said that. he compared the u.s. with europe and how much stronger we are. he also said, there are changes that should be made that were not intended that has to do with reserve requirements. >> you're supposed to have capital related to the riskiness of the balance sheet and there was a general worry that maybe

we were not assessing riskiness the right way. let's have a general, we don't assess riskiness, we just look at all the assets on the balance sheet so those things have to be adjusted. david: is he right? daniel: there are two issues. how much capital of the banks required to have? two. what is the binding constraint at the margin? what he is saying there is, leverage ratio, which is a measure of capital that does not weight by the riskiness of assets, that has become binding constraint for the banks in the stress tests. they have said that is distorting decisions they are making about treasury, and other risk-free assets. i have some sympathy for that. i don't think as a regular matter, leverage ratio should be binding. an important

backstop because it protects against things happening that no one expected. no risk associated and all of a sudden -- the asset class blows up. the more important issue to me is what the total amount of required regulatory capital is. --h the fed puzzles and now that proposals now to reduce leverage ratio and interest rate, with the stress test, it appears to me, some of the banks will have a reduced total requirement because of the impact on leverage ratio. our original concept was -- raise risk-weighted requirements to keep the amount of capital high but do not have the leverage ratio binding at the margins so it does not distort your decision to buy treasuries. alix: can we move to deutsche bank? the rating was lowered today. we posted an article yesterday about how the bar was at 12 or triple what we have seen in one

trading day at other banks in the last year. if you are still a regulator and you are dealing with deutsche bank, what would you do? daniel: wow. i read your report. it did seem quite unusual. what you do in those circumstances -- you ask the bank to explain what has happened and two, you have a talk with the home country regulator, in this case, ecb, the simple supervisory mechanism. the problem that confronts u.s. regulators and the large foreign toks, we do not have access all their consolidated global information. when they tell us, this was a hedge, we really don't have a way of confirming that was the case. or when they say -- do not worry about our capital and liquidity position in the u.s., globally we are in good shape. alix: they cannot show it to

you. daniel: they will sometimes present numbers but you don't just want a conclusion. you want the unvarnished data. david: this was in the context of a larger set of transactions. the fed and the fdic have them on probation. how does deutsche bank win back the confidence of the fed? daniel: that will happen over an extended time. it does not happen -- with corrected x, we are ok. alix: do you believe them? david: daniel tarullo, former federal reserve governor, thank you for being with us. coming up, rising cost of detention centers turning nonprofits into big business. next on businessweek beat. alix: oil climbing to the highs of the session. a delegate saying opec talks will focus on a return to 100% cut compliance at almost every country. almost every country over complying. that would imply an increase in

production. they are also allowing venezuela and supply losses to be set. they have not yet reached a deal. this is bloomberg. ♪ this is bloomberg. ♪

♪ emma: this is "bloomberg daybreak: americas," i'm emma chandra. stephanie cohen. to the bloomberg business flash, general motors and ignoring the call for more u.s. jobs. resurrecting the chevy blazer, planning to build in mexico. the auto workers union is criticizing the decision.

the president may slap a 25% tariffs on all imported cars. more debate about the state of workers in the gig economy. the state appeals court of new york says careers are not employees. not entitled to unemployment benefits. so far, viewership of the world cup has fallen 44% in the u.s. compared to years ago. thehad already lowered numbers. david: we turn now to businessweek beat, stories featured in the latest issue of bloomberg businessweek. detention. upwards of $1 billion to care for children separated from parents at the border, nonprofit detention centers are benefiting. crafting a turnaround.

turned the focus to customers and the business has turned around with it. the legend of nintendo. has130-year-old giant turned reports of its demise into nintendo mania. alix: i am not a gamer. much so.d is very i played zelda. david: she knows all about it. alix: joining us now, the cohost of bloomberg businessweek. the business of detention. we have been talking about it in editorial meetings. the magazine did a deeper dive. reporter: incredible reporting by the bloomberg news team. this is a story that has been cited by other organizations. a gutwrenching story. the humanitarian side, we could spend hours debating. what we wanted to know, more

about these centers. the government is spending close to $1 billion to house these children, 12,000 children and all. 10,000 come across the border on their own, 2000 since president trump's new policy in april. the hard thing is, this is a business, taking care of these kids but it is booming. david: it is likely to get more booming. we're not going to separate them all, we are going to detain families together, expanding the need. melania trump down there yesterday looking at the centers. reporter: this has been tricky. congressman have been trying to get to them. a former walmart in texas, some members have gotten down there. jacket, $39. i really don't care, do you? david: she asked probing

questions. how often do they talk to relatives? 10 minutes, twice a week. on a telephone. reportingamazing around the story trying to understand what care is going on. facilities, some kids are under one-year-old. it is a tough story. david: buying stuff. alix: etsy. booming, it had a downturn and now they brought josh back in. fascinating. etsy, a granola crunching, nice -- exactly. they bottom line guy. reporter: he is known for being a turnaround specialist. he was at ebay. skype, he ultimately sold it for $8.5 billion to microsoft. incredible turnaround specialist. one year ago after investors sales,lling for change,

down, earnings down, stocks down. one year later, stocks rallied. he is shifted the focus from merchants to customers, consumers. he wants more people going to the website, spending more time and buying more. that shift. alix: that turnaround, nintendo. reporter: i love this. david: all the time. alix: 130 years. so much criticism, when the console didn't take off after the wii. they stuck it out. now they have a great comeback. reporter: the switch has taken off. felix wrote the story. what is wonderful is, he went to japan, kyoto, headquarters. often when you want to talk to nintendo, you talk to nintendo america executives. he went there and got to talk to the researchers, look at how they are developing.

unusual ability to recalibrate with regularity. this is the company that had incredible highs and incredible lows. they say that is just business, how it happens. alix: they are hiring women, younger people, the more diverse, the better. cooler ideas for games. thank you so much, carol. a reminder, you can find all the stories in the latest issue of bloomberg businessweek and catch commentary, analysis every weekend as it airs on television and radio. what are you doing in two weeks? reporter: i will be with you for the day. the boston pops fireworks celebration. i cannot wait. on bloombergar television, a wonderful event, a great tradition, great music, great crowds. i cannot wait. i hope it doesn't rain. david: even that wasn't business week. -- full page. alix: i know.

tim arena will be there. i know nothing about the culture but musical theater, i am there. it will be great. join us on july 4, 8:00 p.m. on bloomberg television. opec nearing a deal on boosting supply. the latest from vienna. this is bloomberg. ♪

♪ alix: breaking news, a deal out of the inner. opec -- a deal out of vienna. a real increase. walk us through what we know now? reporter: thanks. we just got this news from the meeting. they have agreed on a deal. on paper, one million barrels per day. not all countries can increase. real barrels in the market, 600,000.

bottom line, that is what you need to know. we are notnths, finding out when they will be increasing but you will see saudi arabia, russia, uae, kuwait, increasing production. that is what we're hearing. alix: we don't know specific details of how they got there. oil on the highs of the session, brent over 2%. what does that how you about market reaction, interpretation of a real increase of 600,000 barrels per day? reporter: the market has been back-and-forth all day. options market, bearish. many people are focusing on the consensus that they were able to find. last night, the iranian oil left angrily 20 minutes into the meeting. this morning, they said the meeting had done well. a key player was the prince, the

son of the saudi king. him and the minister have been doing this for years. they were able to come to a consensus. we heard behind the scenes, to tell you how we were able to get this, it is about the communique, iran might want saudi for consensus, academically, the saudi's might be able to increase the quota. they cannot boost production but what this would do, if sanctions were to be lifted, that gives them room. for saudi, this could be a small price to pay in order to get the deal, which they were under pressure to. alix: hang tight in case there is more breaking news. liam denning following opec and oil. $600,000 -- take of of 600,000 barrels increase? liam: that is the fundamental problem in opec. a handful of players account for 60% of production who can

increase, mostly saudi arabia. then you have this larger group which account for 40% of production, iran, iraq, venezuela, which for one reason or another cannot raise production. alix: we have a chart that outlines that. the have and have-nots of opec. who has the ability? barrels per day but the alliance will be on saudi arabia, even mexico not going to be able to add. is this just going to be a positive for saudi and russia agreement? what is this doing to the rest of opec? liam: this is probably the best outcome they could get. it maintains unity, to give something to the russians, gives something to president trump, in terms of trying to ameliorate prices in the second half of the year when we see higher demand. what it does not do is solve the

fundamental problem -- you have a lot of opec members who cannot raise production. they are not reliable suppliers to come in the market. david: you say venezuela can't raise -- is a production declining? how is it compared to when the first imposed production quotas? liam: it was around 2 million barrels per day, down from 3 million barrels a day 15 years ago. it has since fallen to 1.4 million barrels a day. david: that happens to be 600,000 barrels right there. alix: probably what the market is higher. david: getting back to where we were. liam: probably lower and iran will find supply taken off because of sanctions which is why you have seen saudi arabia $80,om saying -- maybe $100 oil is not a bad thing. maybe we should increase. alix: do you expect russia to cheat more? saudi arabia and russia steadily

increasing production, testing stuff. what is your call? liam: russia is in a strange position. it has semiprivate oil companies, all of which have projects they want to bring on. they don't benefit from higher prices because of the taxation system in russia. they want to bring on a barrel to take advantage of the market now. we're definitely going to see russian production go up. it was going to go up anyway. we will see what comes out tomorrow between opec and opec plus countries. we will see a higher level of production. alix: great point. this is not the end of the meeting. how does this set of opec plus? opec plus meetings tomorrow? the russianey had energy minister attend the meeting last night. this set up the meeting quite well.

they have likely agreed and they will put up a similar communique. we had that meeting tomorrow between the 24, the entire group. this was the main meeting. in principle, we're hearing they were able to strike a deal of 600,000 barrels into the market. alix: the interesting thing, liam, oil price up 2%. that is probably not what saudi's wanted to happen. they don't want to give more incentive for shale producers to produce more and move market share? today is a relief rally from yesterday when people thought, there was that drama around the iranian delegation, etc. shale, thatu.s. ship has sailed. as long as oil, we're seeing logistical problems, holding back production growth over the but i2 to 18 months, don't think there is any

stopping that. so, in order to actually stop it, you would have to plunge prices. i'm not sure opec can even deliver that. that would hurt saudi. david: saudi has to be worried about the budget. high price helps with the budget holes? liam: they have an ambitious reform program going on as well. this is part of the problem. saudi is trying to meet many different objectives using a blunt instrument of opec. we will through today, see what happens in six months, 12 months. alix: any kind of cheating we may see. leon, great for your perspective. ♪ alix: we have a deal.

opec reaches a deal to raise output by one million barrels of oil per day, a net increase of 600,000. silver lining for mario draghi. euro finds support as a soft patch might clear. a split white house. hawks versus dubs -- doves. toid: welcome back "bloomberg daybreak: europe we are with alix steel covering opec. how good can it get? alix: we planned it. let's get to the news. anne-marie, lay out we have learned in the last 10 minutes. minutes, west 10 have learned that in principle the group has agreed on a 600,000 barrel a day real increase to the market. this is likely to look at a one million barrel a day more likely.

what will be hitting the market is that 600,000. this is production coming from saudi, russia, uae, kuwait. these are the ones that have the capacity to turn on the taps. we are learning that the deal would return to 100% compliance. all of these opec nations are complying more than 100%. were know that the saudis cutting more. they say they want to lead by example. annmarie, any sense of what the saudis had to give up to get iran on board? less than 24 hours ago, they ross --walked out of the room. annmarie: yes, we saw them leave quite angry and furious about what was going on. he had a lot of fiery comments

to say about the united states putting pressure on the group. we heard about a possible quota on iran. we are still learning what is in the final decision. we had a bilateral meeting this morning, saudi arabia and iran, and that seems to go really well. prince.ayer was the it seems like the prince was really able to bridge the gap between the two countries. alix: thank you so much. with us on the phone is tom petri, he has been an active advisor to $200 billion worth of energy deals, including the biggest in the industry and has been an advisor to saudi arabia. what is your initial take on the deal? tom: my sense is that this was an objectively argued and negotiated process and it is fact-based.

the supply demand realities were acknowledged and i think they really bought into the notion that we need to act now and not let things get out of control on the upside. this is quite an informed decision process by the saudis. i think there probably was some trade-off with iran, but it was well done. alix: what does that wind up meaning for the future of the oil market? does that put a cap on any price rally? tom: i think what we've got is it is going to be a very iterative process. we will know whether the 600,000 is enough. the risk here and the markets are speaking today -- the risk is that that is not enough and that there will be another meeting and another series of steps to accommodate what global demand is calling for. don't onlyiranians

want to get money out of oil, they want to put as much pressure on the united states about the sanctions. what did they get to help accomplish that? tom: i think they get positioning where they look to be a well-behaved partner in the process of opec's decision-making process. that is probably to their benefit. there may well have been something passed between the saudis and them. you can be a partner in this and come ultimately, it will be to your benefit. david: ultimately, the saudis are not going to help the iranians with respect to the u.s. sanctions. tom: no. david: isn't that really iran's first priority? tom: iran, i think, really does have to finesse that. now of the articles you see , if you can do with north korea and shake hands in front of the tv and the cameras and so on, why can't you do it with us?

who knows what we may be dealing with in 6-9 months from now? there could be an element of that. alix: tom, the oil price, brent is still up over 1%. that could be the fear of unleashing oil from saudi arabia and russia taken off the table. how do you factor in russia and saudi arabia wanting to pump more in the future? do you expect them to cheat? tom: no, i don't. i think this is a very different model from's times -- from times past. i think they want to make sure we don't get to $82 quickly. people think we are going to need even higher than $80 for saudi to balance all the books, but the reality is that when you get there and do you get there in a sustainable way or do you get there in a spiral that is self-defeating?

is acknowledged by the action -- if acknowledged by the action that they do not want the spiral. alix: so great to get your reaction. partners. of petrie tighten capital manages $100 million and has returned 69% on two years betting on oil related assets. your quick thoughts on the oil-related deal? john: we think this is incredibly positive. the real question is not how many barrels, but why is opec increasing production? the market is extremely tight. inventories are declining. global investment has been down by 60% since your 2014 peak. now you are starting to see real problems in the u.s. shale. it is not just pipeline constraints.

there are service constraints, as well. had opec done nothing, you think you would be between 500,000 and 2 million barrels undersupplied into the second half of the year. 600,000 is not enough to balance the markets and we think this is constructive for oil going forward. alix: you made a killing over the last couple years in energy. there is a chart on the terminal that shows the outline of oil prices. how are you making your money right now? john: we have made some money in offshore drilling. we have some risk in u.s. midstream. we made some money and credit. i think the big takeaway right now is that the u.s. shale just is not going to get it done given the constraints. what that means is that oil companies are going to have to invest more significantly outside north america, so we think 2018 is the year of the offshore driller.

this was the most oversupplied segment during the downturn. in 2013, these equities cumulatively traded for $90 billion. today, you can buy them all for $20 billion. the one we like the best is in norway. the ticker is bdril. closer to home, you can by roland, rdc, transocean. we also like u.s. midstream. we think some of the dislocations in the permian are going to create arbitrage opportunities. distributions that dislocation, as you say, corrected? it seems like there would be a big incentive to build big pipelines quickly. john: right, the pipelines don't get built in the permian until late 2019. the pipelines are going to get built. the question from there is once you get the oil out of midland,

how do you get it out of the gulf coast? the midland is price going to increase to the wti price or is the wti price going to fall?\ we think there are real constraints and there are opportunities for midstream companies. alix: you were mentioning for the supply gap and i want to show another terminal. cc rv shows the forward curve for oil, six months ago, it was that green line, the big change is the re-rating in prices all the way through to 2022. the forward curve is re-rating. signal forig buy integrated companies? john: we think the move will give confidence to the majors and two oil companies to invest in some of the long-term projects that really are needed

to balance the market over the long-term. that is very significant and we think that is very helpful. david: that is my question. i understand that makes perfect sense in the services. shareholders don't love it when they start investigating -- investing in investigating drilling. john: at the same time, investors are return-focused. improvedmics have significantly. there should be opportunities from an equity perspective. alix: really great to catch up with you, john. in the markets, here is what we are looking at. we are looking at the s&p grinding its way higher. the dollar bolt, feeling kind of shlubby today. , the story of the last 20 minutes. up i 2% after an opec deal.

600,000 barrels of oil a day increase. the market telling you potentially that is not enough. david: the market is pretty happy and oil right now. alix: it could be short covering, but it could be we are in for a bigger supply later on. david: coming up, surprise, surprise. trade infighting in the trump administration. officials don't agree on the hard-line approach to china. this is bloomberg. ♪

david: infighting in the trump administration over trade. sources say some officials are trying to restart talks with china to avoid an all-out trade war. joining us now with more from washington is kevin cirilli.

kevin, i have to say when gary presidentnce from the , it did not end up well for him. kevin: no, it did not. that divide is on full display as president trump continues ongoing intensify negotiations with the chinese on trade. on the one side, you have senior trade economic advisor peter navarro advocating for a much more nationalistic, protectionist strategy along with the likes of commerce secretary wilbur ross. then you have treasury secretary steven mnuchin and a u.s. trade trade the issue of aligning themselves with peter navarro. you have the president angesting he is going to add additional $200 billion worth of tariffs against the chinese should they respond with $50 billion of tariffs to the

original $50 billion of tariffs proposed by president trump. if that sounds confusing and like a lack of detail, that is because it is. up here on detail -- capitol hill, republicans breaking with the white house because they are concerned about the impact the trade policy might have on the supply chains into their district setting into the midterms. all of that comes ahead of that july 6 deadline. more folks are concerned about the additional $200 billion worth of tariffs that could that escalate and tensions continue to rise in the coming months. david: you will keep us up to speed on all of it, kevin. alix: i said the same thing about gary cohn. let's look at the uncertainty about trade. joining us now is a u.s. bank wealth management senior portfolio manager. are you hedging any kind of trade risk right now? eric: we have really looked to

dial back the overall risk exposures in our client portfolios. beginning in the first quarter, we thought we had gone from a narrative largely supported to risk assets to one of increased uncertainty. certainly, the heightened rhetoric surrounding trade is feeding into that. clients we would be dialing back our exposures. does that mean coming out of equities and to other assets? does it mean doing something different within equities? eric: both. number one, we had been favorably disposed to equities for the past two years. just began to come back to a more neutral position. within equities, we have certainly looked to reallocate our bias remains more domestic than global, while we are still maintaining global exposures, we just lightened those types of

positions. within the u.s. come also taking an expanded role toward small-cap. alix: if you come inside the bloomberg, this is showing that you are not the only one with that trade on. it has been health care and biotech leaving the way. eric: small cap is one of those great areas for active management. we certainly are looking to take advantage of it. while we do think there continues to be opportunities, there is a significant amount of churn. you are creating opportunities by sector, as well. we are still maintaining a growth orientation, pro-cyclical bias. years,in recent months,

do you expect it to continue? eric: we still remain favorably disposed to technology. we do think the backdrop excluding the potential ramifications of trade remain very fertile for tech companies. from our perspective, that was one of the areas that we certainly looked to harvest gains. david: you are taking some money off the table in tech? eric: we have reduced incrementally, yes. david: and then deploying it in defensive stocks? eric: not defensive, but we are looking at other asset classes. you are looking at now having a real return on the front end of the yield curve, if you will. if you are looking at a two-year treasury, getting 255 basis points of a treasury yields. standpoint, we are buying some time. what about a global

allocation? i found euro-dollar really interesting. today, we are causing out. what is your take on u.s. versus europe? eric: it is a great point and one we are looking to get greater clarity as we get into second-quarter earnings. we had been in a rather consistent downtrend in the dollar, particularly on the back of the global synchronized growth. seeing that wane, we have seen the dollar reverse quite sharply. while some people will point to , we have come back to a more neutral posture. david: eric wiegand, thank you so much for being with us today. coming up, airbus gives theresa may an ultimatum, threatening to pull out of the u.k. if no brexit deal is reached. alix: we are talking about one

deal that was reached. opec. behind closed doors, they are going to increase that to one million barrels a day, which means a real increase of 600,000 barrels per day. opec cohesion still lives. this is bloomberg. ♪

david: u.k. prime probably did not need any more reminders about what was at stake in brexit negotiations, but she got one nonetheless, when the head of airbus warned it would pull out of great britain altogether if the country leaves the eu without some sort of transition agreement. we welcome benjamin katz from london. this has gotten a lot of reaction, why? i think the stock is given to the u.k. government -- this is not airbus

saying, we want to deal, we can't handle a no deal brexit, they are also criticizing the transition period, which has been crucial to what theresa may has been trying to achieve. they say even the transition deal is not going to be enough to sustain a business and the way we want to. david: if worse comes to worse and airbus pulled out of the u.k., what would it mean to the u.k. economy? benjamin: you are looking at a company and an industry that is core to the u.k. u.k. is one of the leaders in aerospace and aviation. rolls-royce is the engine maker. you have smaller suppliers which rely on the contracts. it is not just overnight. they have been talking about this three years. overnight, the statement was the harshest they have given, saying they would have to review investments in the country. it is not clear whether that

would mean future investments that could be made in the u.k., the u.k. missing out on that or whether it could be removing the facilities that they have here and shipping it elsewhere. david: when it comes to auto companies, supply chain, when you are not part of a customs union, what happens with parts crossing the english channel? is there also an aviation issue here? if they pull out, it could affect overall air traffic, which would affect airbus necessarily. benjamin: you are looking at two issues here. two hugely significant ones. the initial one is whether aircraft will be allowed to fly between europe and the u.k. this is an issue that british airways, ryanair, easyjet have spoken about and there has yet to be clarity on the issue, though the government is quite confident they will have an agreement. the other part is for the suppliers.

the car industry is slightly more exposed. wto rules, they will be hit with tariffs on parts leaving the euro and entering the u.k. aerospace would not face the same tariffs, but customs, border patrol, the delays will have an impact. for every week of delays post-brexit, they are looking at losing one billion euros in revenue and they are looking at several weeks of this due to these kind of measures that would come into force. david: finally and briefly, what has been the u.k. government reaction? benjamin: so far, it has been more of the same. they say, we hope things will be fine. we hope a deal will be done. they are looking for something more substantial at airbus. alix: i don't envy them. you son katz, thank

much. you have parliament, hardliners, labour party, too. u.s. relations stand? we will discuss with david o'sullivan. take a look at oil stocks and oil prices on the opec deal. a real increase of 600,000 barrels of oil a day. energy stocks getting a boost, as well as oil prices. this is bloomberg. ♪ omberg. ♪

alix: this is "bloomberg daybreak." i'm alix steel. you do have movement in the equity market. s&p futures up 14 points. oil is the one to watch.

exxon up one point 5%. oil services up almost 2%. you can see that reflected in the european energy stocks. up over 2%. the dax also on the front foot. pmi came in stronger than expected in the eurozone. if you were dollar bowl yesterday -- bull yesterday, you are feeling the pain today. the spread is steeper, had been flatter. crude is holding on to the lead. it had been range-bound. david w.: let's find out what is going on inside the business world. we turn to emma chandra. emma: house republicans have canceled today's scheduled vote on immigration legislation needed to put down an intraparty fight between moderates and conservatives.

there is a split in the trump administration over how to handle the trade fight with china. bloomberg has learned some white house officials are trying to restart talks with china before u.s. tariffs take effect july 6. that is setting up a battle with other officials who want to take a harder line. the way has been cleared for greece to exit the bailout that has kept it afloat since 2010. euro area creditors struck a landmark deal to ease terms. that has long been seen as a key ingredient to greece's return to financial help and its reentry to financial markets. global news 24 hours a day powered by 2700 journalists and analysts. i'm an much on this is bloomberg. alix: thank you so much. we are watching the news out of opec to add real production of 600,000 barrels of oil a day. we are getting headlines that the communiqué does not specify the signs of the oil hike, but

that opec will return 100% compliance. back with us. what does the latest headlines mean. annmarie: it could be a way of them somewhat fudging the numbers. we heard that nominally it would be one million barrels per day. then he actually explained what that means in real terms. about 600,000. take a listen. >> [indiscernible] that is a nominal figure. distributed,it is what is actually distributed to the market is going to be a smaller number. david o.: this could be -- annmarie: this could be a way of

keeping back to the historic 2016 deal. it is more about lessening the cuts in communication than them saying they are going to increase production. alix: a great distinction. it is not that they are going back to the cuts, it is that they are meeting the cuts. what are the questions we still need answered when the communicate comes out? annmarie: we heard that there were potential talks about a quarter on iran. we are waiting to hear what comes out in the communiqué. we're waiting to see if iran got something out of the deal that they want. we are also waiting to see what happens with venezuela. potentially, some members could pick up production they have lost. those are things the market will be focused on for those two specific countries. alix: thank you very much. david? david: let's turn to trade. the focus in recent weeks has been on the united states and

china, but less attention has been paid to the united states and europe. we have very substantial trading relationships with europe. europe and the u.s. together account for global gdp of 50%. states that export more to the eu then china. we welcome now david o'sullivan, the eu ambassador to the united states. welcome, mr. ambassador. david o.: my pleasure. thank you. jeopardy isw much there around this relationship? david o.: the first point is really just to emphasize what you said and the graphic. the transatlantic economic corridor is the most important in the world, bar none. the european union is for the united states and the u.s. is for us the single most important trading partner. this works on trade, investment.

70% of foreign direct investment in the united states comes directly from the european union. we really welcome huge american investment in europe and american companies make an awful lot of money operating in europe. the stakes are very high. we deeply regret that we are in this trade conflict, we would much rather be discussing how we could grow the economic relationship further. david w.: the conflict as i understand now is still looming tariffs and reciprocal tariffs coming back from the eu. and there is talk about automobiles now. what could be the next steps that could further jeopardize the relationship? administration has launched an investigation using the same basis as for steel and aluminum on the security provision on autos. we don't believe there is any case to be made that this is an issue of national security. the ruby public hearings, an investigation, there will be a

report sometime in the fall. if the tariffs were to be put on autos and auto parts, this would be a huge escalation because the volume of trade involved is much higher and this would be a great concern, not just to europe or our exporters, but also to the domestic u.s. industry, which would stand to lose very heavily through these kind of tariffs. david w.: i want to illustrate how complicated this is. there is also a possible effect on european companies. european companies were building suv's in the u.s. for export to china. you also get caught in the u.s.-china problems. david o.: absolutely. bmw is the largest auto exporter in the united states, exporting to europe, but also globally, a major exporter of products made in the united states. david w.: it is unfortunate we have these reciprocal tariffs. it could get worse. is there any glimmer of hope?

as you talk to u.s. government officials? david o.: we see a maelstrom. we made it very clear that if we could find a way to avert these steel and aluminum tariffs, we were more than willing to sit down with the administration and look at a positive agenda for eu trade, looking at standards and norms where we can reduce the transatlantic issues. david w.: some countries have managed to navigate this water. australia, south korea. is that a possibility for the eu? because we don't believe our exports are causing any problems to the united antes, we don't think such action is legal or justified under wto rules. we are not willing to play that game. we believe we must in by the rules of the wto, which makes

this kind of action illegal. david w.: since the time he was running for president, president trump has focused on china first and foremost. are there any discussions going on of the eu helping the united states with respect to china on the property issues? thed o.: we share many of concerns. the irony of the steel and aluminum tariffs is that we both suffer from excess chinese capacity. we offered that we should be working together on issues like steel overcapacity or intellectual property issues or the other investment restrictions on foreign companies. we suffer from the same problems. so far, that offer has not been taken up and the administration has prepared to try to work directly bilaterally with china, but the offer remains. david w.: finally, i want to talk about one other issue, which is iranian sanctions. with respect to u.s. sanctions on iran coming on

the nuclear agreement? this o.: we consider nuclear deal to be absolutely vital for european security and for global security. we are very anxious to keep this deal in place, to keep iran compliant with this deal, and for that, iran has to see some economic benefit out of the deal. that was the trade off and we are working to see how we can continue economic and commercial activity with iran to keep the deal alive, which is important. alix: what do you do for european companies operating in a wrong? what kind of backstop is provided them? david o.: ultimately, this is a commercial decision. alix: but with european reassurance? david o.: we are looking at ways can work with can work with sml aluminum companies. we are looking at how we can work with investment environments in iran and how we can provide guarantees and different lines of credit to companies to enable them to do

business. it is not a question of making money. it is a question of preserving a nuclear deal, which we consider vital for regional and global stability. david w.: david o'sullivan, great to have you here. david o.: thank you. david w.: goldman sachs looking to close the gender investment gap. we will discuss with stephanie cohen. you can listen to the radio. tom keene and jonferro on from 7:00 until 9:00. tom fromis on with 9:00 until 10:00. this is bloomberg. ♪

emma: this is "bloomberg

daybreak." coming up later on "bloomberg markets," an exclusive interview. jason mudrick. general motors is ignoring ll forent trump's ca u.s. jobs. they plan to build the new chevy blazer in mexico. intel is now in the midst of the worst leadership crisis in its history. the chipmaker ousted the ceo for an inappropriate workplace relationship. during his five-year tenure, he upended the mentoring approach and pushed out several internal leaders. that may force intel to look outside for a permanent successor.

says anyavian bank money manager serious about ethical investing should shop facebook. the social network was unresponsive to questions about the cambridge analytica scandal. facebook has not responded to a request for comment. that is your bloomberg business flash. alix: thank you so much. goldman sachs is trying to close the gender gap and they are putting some money behind it. men made 36 times as much money last year, while women received just 2% of u.s. venture capital. $500an sachs has invested million in businesses founded are started by women and has started a fund focused on female and is building a new ecosystem supporting female investors. joining me now is the woman behind his initiative, stephanie cohen. this is a big deal.

this is the first big rollout. stephanie: yes, we are thrilled. it is a first investing initiative with a gender lens. it builds on her long-standing commitment to women's economic empowerment. we are going to commit $500 million on the gender investing gap, simply that the women are not getting the capital they need or deserve, but punctuated by the luck of diversity in the investing community. we think this allows us to do what we do best. it has three main things that we are talking about. we're most excited about the ecosystem. we want to build the pipeline, so it is not 36 times next time. alix: talk about the capital. part of it is your own merchant bank. the other part is raising capital that you are then going bygive to funds managed women. how are you going to split allocation? stephanie: sure. a bunch of investing

businesses. we have 12 senior women who have almost 200 years of investing experience who are going to lead this initiative. they are going to invest in women founded, owned businesses. we are going to raise client capital to invest rectal he in funds. we are also going to seed managers. only 2% of private equity funds in the u.s. are founded by women. we are also going to build the ecosystem to help all of that. alix: is it split in the allocation? do you have an idea of how you are going to his lit it -- to split it? stephanie: if we happen to raise more capital than we expect, that $500 million is not a ceiling. the other part of it comes from our balance sheet, so we can be flexible. you should look at the $500 million as a starting point and not as an ending point. alix: what kind of backing are

you expecting to get? stephanie: we expect to raise money with like-minded investors. we expect high net worth investors, pension funds, our institutional clients to also be a part of this. alix: are you worried about not having enough opportunity? stephanie: we could have said we are going to raise more capital than that because we do think there is greater demand than the amount we put out there, but we want to start and make sure we do a good job and the reason why we are seating managers is to build that pipeline. david: how many opportunities to do you discover through the 10,000 women program? a lot of female entrepreneurs. did you find prospects there? stephanie: i'm so glad you raised it. 10,000 women is the background behind this. it gives the beginning part of the funnel. this is the later part of the

funnel, but not the last part of the funnel. we are just at the beginning phases of going through all of the wonderful women we funded in 10,000 women and we think it would be fantastic if one of those women were the one that we were able to fund. if you looked at my calls and texts over the last couple days, there are tons of women -- we really believe this is starting a continuation of the movement that a lot of people are really supportive of. alix: this is the next phase of your career. before, you were the global head of financial sponsors for goldman sachs. you have a good read on m&a and what is coming out of the pipeline. what is your read on m&a? stephanie: it is a quite strong market right now. the conditions of why m&a is strong and whether that is conducive markets or that there is a lot of change in the sectors in the world -- and the

continues m&a market to be strong. the reality is that companies and businesses feel that doing m&a is the right way to grow and adapt and change. david: we are certainly seeing disruption. you are seeing this in the comcast versus disney. what does it turn into workouts? is there any concern it is overheated? stephanie: i'm going to leave that to the professionals. what i would say is that m&a is just part of the toolkit. as we think about the world more partly, they view m&a as of the toolkit. what we see as advisors is that people only pay what they believe makes sense and when they look at the forward projection. alix: going back to your world of leverage loans back in the day, we are seeing underperformance there.

do you get the feeling we are seeing a lot more supply because private equities are going to issue a lot or do you feel like there is something else going on more macro? stephanie: i think there is a lot of private capital out there. we started the conversation talking about women not getting the private capital, but the reality is there is a lot of private capital out there. we do expect private equities to continue to put capital in. private equity has been a good performing asset class. investors making decisions on the equity and the debt side. alix: thank you very much, thank you for bringing that initiative to us. coming up, it is what we are watching. i'm watching oil. it is getting a boost after opec reached an agreement. david is watching the turkish elections happening on sunday. we are both kind of watching that. david: we are. alix: more on that next.

bloomberg users, check out all the charts we have looked at through the show. this is bloomberg. ♪

alix: david, here's what i'm watching. i know it is a super shocker. deal toec reaching a return to compliance, which will add 6000 barrels of oil a day. --s is the chart i find 600,000 barrels of oil a day. this is the chart i find fascinating. the short-term pricing has rolled over a bit and not performed very well. the longer-term brent price outlook is the white line. that is literally what opec is dealing with. short-term, the market is not as tight as you might think. long-term is where the issue is. that is why they have to increase enough to help the longer-term outlook, but not

overdo it. david: i'm going to go way out over my skis here. there is a new law going into effect about maritime. could effect -- affect the supplier. alix: it is 2020. that should increase the demand will beght oil, which brent, wti, some version of saudi arabia and oil. you could see a surplus of heavy. you can see oil prices really rally. some have very aggressive price targets on it. i just feel a this is a really special moment. david: a special moment. turkey has big elections coming up on sunday. everyone expects mr. erdogan to win. but also parliament. there is a big election. in thef things hang balance, including monetary policy. mr. erdogan thinks he knows a lot about that. alix: they have a coalition.

his party and mhn, if there coalition does not maintain a coalition in parliament, that is chaos. david: he has had increasing power throughout his entire term, essentially. the question is will they continue or where --will it start to erode a bit? alix: will they start to block some of his executive orders? david: which would be extraordinary. alix: there's another one, july 8, the second round. david: if there is any hesitation with him, how will markets react to that? markets don't generally like uncertainty, but markets on the other hand don't love what he has been doing. alix: that wraps it up for "daybreak." coming up on "bloomberg markets," the chief global strategist on why the vix could spike. that is coming up next. as we had to break, take a look at where the s&p is headed on the futures market. up 14 points.

higher onxxon moving brent. in other asset classes, the dollar bulls from 24 hours ago, you are not feeling good now. thepmi data over in eurozone came in better than estimated, but it was services, not manufacturing, but nonetheless, good news -- we will take it. the spread steepening a little bit. 47 basis points is how we trade. brent crude up a full 2.5% as we wait for that communicate from opec. david: greece is finally going back -- coming back. congratulations. alix: this is bloomberg. ♪

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jon: coming up, opec managing internal and external differences said to agree on principle to boost production. white house split over trade, some favoring restarting talks with china to avoid a trade war. scores mayess test not cut payouts. 14, positiveare up one half of 1%. a weaker dollar story and g10 today, and treasuries are off a little bit. yields are higher. crude rallying, opec overcoming its differences. deal.o have reached a want to head over to