u.s. accuses iran of attack. the chokepoint for oil. and a record low for yields. investment in china shrivels and the trade war squeezes the economy. victim, dragging with ae chip sector conservative outlook. david: welcome to "bloomberg daybreak" on this friday, june 14. it looks like everyone is running for safety this morning. alix: it is hard to know what that is about. friend once said one reason is as good as another. you can pick iran, you can pick china. alix: unbelievable move in the yield. record low yields in germany,

portugal, spain, and greece. euro-dollar also weaker. the safe haven choice today, the yen and u.s. dollar and u.s.market -- dollar. unbelievable.t fed?u fight the do you fight the bond market? what do you do? david: at some point, it is overbought. alix: we are joined by rachel evans and luke kawa. let's start with the oil markets. we have all this rhetoric between iran and the u.s. foil over the last five days, there's a whole lot of nothing -- oil over the last five days, there's a whole lot of nothing. luke, what are you hearing? luke: i'm more interested in what you are hearing. we are trading at pretty much

mid 2016 levels. it is the same place in the equity market. that's what continues to confuse me. it does look like if you look at what the iea is saying about production next year, u.s. inventory build versus the past five years, it really looks like this is a case of the fundamentals, and the market completely overwhelming what we are seeing on the geopolitical side. david: i wonder if the one common theme is questions about global growth, whether it is china or the iea. are you seeing that inflows? rachel: very much so. we are seeing this rush into haven assets. i think that has far more to do .ith growth than trading don't forget, we have the federal reserve meeting next week. that could put an interesting

skew on how people view bonds versus stocks. we may even see a selloff in stocks if they don't indicate they are going to cut sooner rather than later. people are moving very much into short in debt -- into short end debt. gold is getting a huge bid. by the way, luke, if i look at the curve for oil, it is we rated on the front end by $10. on the backend, nothing. a $10 move in a month is huge. david: how about china? we've got china data out which were not particularly encouraging. retail sales were pretty good, but investment was not particularly good. getting back to global growth, how much is this affecting the marketplace? luke: what is difficult right now as you look at global activity, there does seem to be a lot of global excess capacity

still, and yet the main release china,in the u.s. and in you do see this continued and, in this case, new divergence sections of the economy are this is targeted, and the rest of the economy. that is reelected in chinese imports, which are down year-over-year, and south korean exports, which are still deeply negative year-over-year. where does the global demand pickup story if not from one of these two places? alix: it is sort of a similar story to the u.s., where we get retail sales today. rachel: last week we had that very negative jobs data print that surprised an awful lot of traders. that's exactly how bad it was. will bemething people looking at to try to get a sense

that maybe things are not quite as negative as that showed. at the same time, if you are looking at the fed, does it cut, does it not, does it stay -- stay peaceful art patient, people are looking at that. stocks are at a five-week high ofthe moment, which is kind interesting given what is going on. alix: maybe the u.s. is the only good place except for semis? out ine broadcom coming an unbelievable clear downgrade of their forecast because of trade. odd because itso is a sector that has very much been in the background, but always present in the trade war. you could argue once became more about huawei and more about tech, it would increasingly ramp

up the pressure on them. huawei, if you look at taking center stage in these trade discussions, semis have recovered about half of their underperformance, and recently it seems like a sector very much trading on hopes that the potential things will get less bad. , when perks at the spoke he takes a look at broadcom's overment, they are rolling , but they are still in deeply negative territory. david: we tend to think about something like broadcom in terms of just the trade conflict over technology, but there is also the broader question about things like cloud computing. that could affect more than just semis. when i look at the flows, i look more at the tech etf's as well as semiconductors to get that broader sentiment of how much negativity spells out. for today, given the comments in , you are seeing a kind

of uptick in volume in those etf's as people try to play the broadcom news. stocks have slightly more ifosure to broadcom, so you're trying to get that broader play, that is one to look at. david: thank you both very much for being with us. a reminder, you can find all of the charts we used and more i running gtv on your terminal. andcan browse the features more at gtv . price head ofrowe global multi-asset. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." activist investor dan loeb acquiring a $1.5 billion stake in the sony, pushing the company to make dramatic changes. once other things, loeb sony to spin off its semiconductor unit and list it in japan. the company says it takes constructive proposals seriously. shares of online pet food company chuy begin trading today, raising more than $1 billion in an expanded ipo. values the company at about $8.8 billion. the national basketball association title has now gone international. for the first time, the toronto raptors are the nba champs. they beat the golden state warriors 114-110 in game six of the finals last night.

kawhi leonard was named the series' mvp. the golden state warriors had won the last two titles. david: thanks so much. we turn now back to the gulf of oman. secretary of state mike pompeo blamed iran for the attacks on two oil tankers. we welcome now jim walsh, m.i.t. security studies program senior research associate. thank you so much for joining us. you've seen the video, i'm sure. you heard what mike pompeo had to say. do you have any reason to doubt the conclusion that iran was behind these attacks? guest: my working hypothesis has been all along that iran did it, but yes. who doesn't like a good mystery? two then had a video come out gets everyone going, but the video, as these videos are, is

grainy. the head of the japanese company had a press conference a dispute of the claim. may need some more evidence, but we can assume that it was iran rather than a false flag operation by some other country in the region. david: you know iran so well. you've spent time there and really studied the nuclear capability. why would they do it? what is in it for than? jim: that is the question to ask. the why is the united states policy after having walked away from the iran nuclear agreement has been to threaten iran and try to bring its oil exports to zero. anyone working at bloomberg knows if you are trying to reduce iran's oil exports to zero, you are trying to strangle mostonomically, and yet countries in the world, if you try to smack them in the face or kill them, they push back.

for a while, iran has been saying if you try to cut off all the region no one in is going to be able to export oil. so it would at least be consistent with the past statements that if you come after us, we are going to push back. iran who is in charge of and this kind of policy right now? jim: that is a great question because it is more complicated than you might assume. course, iran has a president and a foreign minister. i but in iran, i think historically, different parts of the governmentm have been -- different parts of the government have been involved in foreign policy. ,hen there was the war in iraq i don't think it was president rouhani managing the response. that was the revolutionary guard. so it varies issue by issue. sometimes it is the president,

sometimes the revolutionary guard, sometimes other actors in iran. who is in charge is decided by the supreme leader. david: do the irradiance basically what -- do the iranians basically want to get reduced sanctions as part of a deal? jim: i think you are right to stop us iran wants to violating the nuclear agreement and stop imposing sanctions. i don't think we are ready to enter negotiations. the president said the other day he doesn't want to negotiate. it is hard to put it what the u.s. is going to do, but i think iran'sd be very hard in to domestic politics to walk into a negotiation after they have been threatened and the other party walked out of there obligation. but the other party is smart and pragmatic, so if there is an offramp here, then sure, but right now iran feels like it is

under attack, so it is very hard for it to turn around and show up at a negotiation. security walsh, m.i.t. studies program senior research associate, thank you very much. with us now from baltimore is sebastian page, t. rowe price head of global multi-asset. we are seeing a huge move again in the bond market. you are seeing a big rally, and yields continue to plummet. how do you understand it? what is your overall take? sebastian: there's definitely a component of it that is flight to safety, and the market expects three cuts by the end of the year. our portfolio managers and fixed income investments are in line with that view. an important component of this is the lack of inflation pressures that would force the fed's hand into being less dovish. so part of this is the flight to safety. a actually expect more of

model environment than a drastic selloff at this point. the oil discussion is important here. you see that their reaction to geopolitical tensions has been muted. part of this is that the demand for supply dynamics are still in favor of extra supply, and we are long-term bears on oil. david: you can't look at supply without demand. to what extent is this a projection that demand will not be what they would like it to be? sebastian: especially with lowering expectations of global growth, softer numbers out of china overnight, the supply component for us explains why we are long-term expecting a drawnout bear market in oil. our experts are looking at extra supply of about one billion barrels a day, and inventories are drifting above 60 days, so that spells extra supply for sure.

add to that the demand component , you get the muted reaction. those events are important from a geopolitical perspective, no doubt. but a few damaged oil tankers won't change the broader world balance between supply and demand for oil, which is basically bearish. alix: the market is buying bonds and gold, and that is the take away from the last 24 hours. what are you doing? do you buy into any of that? sebastian: our horizon is six to 18 months. we've been reducing our exposure to stocks, keeping a long position in stocks, but reducing the exposure relative to our long-term strategic benchmark. as we've been taking money away from stocks, under the hood we've actually been rebalancing toward emerging markets. we think there is a macro case to be made for emerging market stocks with a more dovish fed and potentially a weaker dollar off of a five-year high.

also, there's a dow you wish in case. emerging -- there's a valuation case. emerging markets have outperformed since the beginning of the trade tensions, so we are tilting toward emerging markets. we are putting money into high-yield. despite the tight spreads, you still get 6% to 7%. if you expect models to be up 15%, high-yield offers an interesting carry idea or investment proposition if you expect more of a model through environment. we are also putting some money into cash as well. bonds are remarkably expensive at the moment, and we are kind of in line with the fed expectations. our fixed income managers are just slightly overweight bonds. so we are not panicking. we expect a slowdown in the model through. alix: and to that point, russia cut rates today for the first time in over a year, so it is

coming. david: globally, exactly. sebastian page is going to be staying with us. coming up, trade chips away at broadcom. shares down in premarket after the company cut its annual forecast. more on that next. this is bloomberg. ♪

david: we got another indication yesterday of how the trade conflict between the united states and china could have profound effects on the tech industry when broadcom set a broad-based slowdown in demand for semiconductors, and its earnings. despite its here with maurice taylor riggs -- here with more is taylor riggs. taylor: the stock is down almost 10% because they cut their full-year revenue outlook. full year adjusted net revenue now looking at $22.5 billion. that is down from previous expectations of $24.5 billion.

the company said this was partly in response to export restrictions on one of our largest customers. i am going to go out on a limb and call that huawei. say it did come out and is beyond just this one customer , with a slowdown in demand and customers reducing inventory levels, so they are taking a conservative stance for the year. you are now seeing a broad-based slowdown in all of the chipmakers, with shares falling this morning. analysts out this morning really mixed on the sector. some saying if this is the bottom, it is not that bad. others saying any call now for a rebound in the second half of the year has to be rethought after these results. alix: thank you so much, bloomberg's taylor riggs. still with us, sebastian page of t. rowe price. what broadcom and the followthrough in semis told me the trade war is still

not priced into the market. sebastian: we've moved from trade war intertec war. it is hard to -- trade war into tech war. it is hard to predict how these things go. we've laid out three scenarios. two of these are pessimistic. equity markets seem to be more optimistic on this. the one optimistic scenario we have on this we only assigned 20% probably. this would be a trade resolution by the end of the year. the problem with that is you need strong incentive for that to happen, probably in the form of an economic downturn, so it is not necessarily all happy days, which explains the softness in the markets and the flight to safety effect in bonds we are seeing. david: and yet, if you look overall at the marketplace, is the marketplace really pricing in a continue trade war that goes beyond this year? sebastian: the market is, in

part, pricing it in. i think the bond markets are pricing and a lot more downside than the equity markets. heels ondigging in its sovereignty and interference with the chinese government, and preventing that has become more of a tech war issue. one thing we've noticed that hasn't gotten a lot of attention , but that is important in our mind and reflects why china is really digging in its heels, is the fact that china has reduced tariffs on its other trading partners. if you roll before the trade tensions, they were all at about 8% on a weighted basis. for the other trading partners, they are down to 6.7%. this includes japan, germany, and canada. we think that is an important negative. alix: retailers also warning yet

again in a letter to president trump, "we remain concerned about the escalation of tit-for-tat tariffs. we know firsthand they will have a significant negative impact on business, farmers, families, and the u.s. economy." what do you expect for growth? sebastien: there is a downside for equities here. clearly the for strontium is much more oriented towards consumer goods -- clearly the fourth tranche is much more oriented towards consumer goods. at least it has been priced in the emerging markets. david: let's be a little bit more nuanced and suppose there is not a final resolution by the end of the year, but there is enough at the g20 so they don't impose the 25% tariffs on the additional $325 billion. how does the market react to that? sebastien: we assign about 45%

probability to that. i mentioned 20% for the trade resolution. that scenario is probably the most likely, and we think that is roughly in line with market expectations. there is a downside scenario, to which we assign 35%, which leads to further retaliation from china, and beyond just terrace, but also -- just tariffs, but controlling other rare earth exports and so on. alix: you will be sticking with us. coming up, the trade headwinds and how it is affecting china. we will take a look at the trade war impact and what the pboc can do to combat it. this is bloomberg. ♪ the latest innovation from xfinity

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it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. alix: this is "bloomberg daybreak." we end the week with a big rally in the bond market globally. ,eighing in futures on the u.s. kind of around the lows of the

session. semis and technologies getting hit after broadcom lowers its full-year forecast for the year, in part on trade and we can demand with -- and weakened demand on huawei issues. 2.06 on the 10 year as the fed rate cuts being priced into the market, really weighing on the front end. crude now flat. safe haven of choice, the dollar, yields, and gold. david: let's get an update now on headlines outside the business world. viviana hurtado has first word news. viviana: iran is denying u.s. allegations it was behind the attacks on two oil tankers. the u.s. releasing images it says prove iranian involvement. officials say and a ronnie and

patrol boat was seen removing an iranianed -- say an patrol boat was seen removing an unexploded mine from one of the boats. president donald trump looking for a new press secretary after on almost two year tenure for sarah sanders, marked by attacks on the press, false information, and the near disappearance of the daily press briefing. the president urging sanders to run for governor in her home state of arkansas. over to the u.k. now, where health secretary matt hancock withdrew from the race to become the next prime minister. hancock quitting after boris johnson built a big lead in the first round of voting. he's not saying who he will support. rivals hold talks about joining forces to stop johnson from winning. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thank you so much. the impact from the u.s./china

trade war getting to show up in some data here. risingial production just 5% year on year, its slowest since 2002. joining us now is did nice simon, lazard asset management simon, lazard asset management, and still with us is sebastien page of t. rowe price. can the pboc still support the data? can stillrtainly they cut reserve requirements, but i don't think they are going to do all out stimulus. david: not a surprise, necessarily, but not welcome news. china has driven so much global growth. we are seeing central banks around the world see the need to stimulate at this point. denise: i think that is

providing an offset to the growth we are seeing, but eventually we will need to see that stimulus stabilize. alix: so do you like china specifically here? , in this mean, i like kind of environment where growth is slow and the risks continue to be to the downside, i think you want to be in emerging-market assets that have a fixed income component, u.s. dollar ig credit, both on the .overeign and corporate side some duration looks attractive, and some idiosyncratic stories that aren't correlated to the global picture. david: what about china debt specifically? denise: with the slowing economy, interest rates could wouldown, so i think that -- you could see lower rates. alix: there's a great function i just discovered today from one of our producers. mipr on the bloomberg.

the sea of red means lower interest rates, and that is anywhere from the developed market to developing emerging markets. you seen, where do the best opportunity in emerging markets when we are going to see what looks like a global rate cut like we saw in russia today? sebastien: overall, we allocate to emerging markets not to the index, but actively managed strategies. -- ourore leo managers portfolio managers are underweight china, but overweight latin america. the big picture, as you just mentioned, is there is room for rates to come down in emerging markets. central banks have more bullets. we were just talking about the ability of china to stimulate. the country is already stimulating its economy.

the goal, though, is not the same as in previous measures. the goal is to stabilize growth at 6%, 6.5%. bazooka, but we could see a little bit more, which is perhaps a good news/bad news event for equities. david: you point out in your notes that emerging-market debt has done well over the past 15 years, much better than the global debt market. as you look at a world of slowing global growth, where does that create opportunities when it comes to emerging-market debt? denise: i think you want to focus on dollar-denominated riskt because there, the premiums are getting the yields around 5.5% to 7%. quite attractive because default rates have been low in emerging-market sovereigns. david: sovereign, dollar-denominated debt or private? sebastien: i think both look attractive --denise: i think both look attractive here. you want to stick with countries

that have stable macroeconomic outlooks. i think a lot of those countries are in asia in the investment-grade sector, some in europe, latin america. alix: how hard is it to find those countries that are limited exposure to trade? in asia, for example, if china rolls over on trade, it is going to trickle out to the rest of asia. denise: when the countries that are exposed to trade, there the fx is going to be more vulnerable, but dollar-denominated debt has a different dynamic. low, so they are vulnerable to that over time, the debt is not at risk there. david: as you sort these possible investment opportunities, which is more important, how exposed they are to trade, or more structural things like debt to gdp, inflation rate?

what is the dashboard you use? denise: over the medium term, i look at the balance sheet and how resilient that will be over time to different shocks, both domestic and external. in the shorter term, look at global factors in the growth outlook, and in particular, how that is going to affect some of the assets that are more sensitive to the short-term factors like currencies, which are more globally sensitive. alix: the elephant in the room aside from trade is obviously the fed. july is a pretty good possibility for a rate cut. september is virtually a lock, and maybe even a 50 basis point. sebastien, is that your base case also? sebastien: our base case is close to what is priced in, which would be as many as three cuts by the end of the year. but if you dig into our debate internally, our economists

sometimes take a different view from our portfolio managers in the fixed income market. our portfolio managers are expecting lower rates. in fact, they are long-duration come along treasuries. many economists in the market think that this would be an unusual set of cuts given the current environment, with the economy doing ok, and the worry about the tight labor market, unemployment at 3.6%. classical economic theory would say this would lead to wage growth and i, pressures -- and economic pressures. but breakevens below 10-year are noay below 10%, so there is inflationary pressure to force the fed into lowering rates as much as everyone expect. david: one of the problems is geopolitics can turn on a dime in the way that economics don't.

we connect president trump and president xi get together and declare a deal, or declare warfare, which would have a very different effect on what happens in markets. sebastien: and those geopolitical market events are very difficult to predict. that is why laying out scenarios is important. in our scenarios, you try to figure out what is priced in and what is not. ,here's also, at the moment which happens in markets, a real difference between what seems to be priced in equities and what seems to be priced in increasingly in bond markets. alix: if we get these rate cuts come but the dollar holds up, which is basically what we have been seeing, how does that affect your view on emerging markets? sebastien: we are probably still -- alix: sebastien, hold on.

i was going to ask any's. -- ask denise. denise: i think that the local g withes we are seein negative yields are supportive for emerging markets, certainly dollar-denominated debt. alix: but yet, the dollar holds and doesn't go lower? there's going to be some kind of vulnerability. denise: if it is strengthening, that would be a headwind certainly for currencies. alix: sebastian -- david: sebastien, how do you protect yourself from overreaction in the marketplace? what investments do you make? sebastien: i would go back to looking at cash in the short run. not a large allocation come about as part of the portfolio decision. if you look at high-yield bonds with a 6%, 7% yield, this is a

risk position, but on the margin at the moment, we like it more than stocks. we've been making those marginal changes that we think position us well for a model through environment. simon of lazard asset management, and sebastien page of t. rowe price, thank you both very much. , ge ceo larry culp's leadership brand. how he hopes to restore ge to its glory days in this week's "business week" feature. this is bloomberg. ♪

viviana: this is "bloomberg daybreak."

coming up in the next hour, richard nephew, colby a center on global energy policy -- columbia center on global energy policy research center scholar. this is "bloomberg daybreak." bayer will invest about $5.6 billion to develop alternatives to its weedkiller roundup. the german company is battling more than 13,000 lawsuits claiming the weedkiller causes cancer. gly -- is made from from glyphosate. floorles will prohibit traders from drinking at the new york stock exchange during the workday. the floor traders are responsible for setting global benchmark prices for industrial models such as copper and aluminum. facebook has been booted from smp -- from the s&p index of

globally responsible firms over issues of privacy. their two-year period, score plunged from 63 to 21. i'm to be on our cotto. that is your bloomberg business flash. david: oh how the mighty have fallen. they went way down, too. that privacy thing didn't work so well. it's the privacy thing, a governance thing, a social thing. and this matters, especially to millennials. david: they pay attention to that stuff. now we turn to our weekly ek" feature, previewing stories on newsstands today. the fbi and in ih are said to be tsrgeting chinese scientis -- and the nih are

said to be targeting chinese scientists in the u.s. m850i has the features and performance of a bentley and costs $100,000 less. it is still over one her thousand dollars. -- still over $100,000. [laughter] alix: so this cover story about how to not defeat cancer, which has to do with trade and restrictions and scientists of asian descent. as we think about the trade war, this started to hit the medical field. the story centers around a woman scientist who is a naturalized citizen from china at the national cancer institute. tok in 2014, they started

mount all of these investigations into whether she stole information, was working with foreign governments, started questioning her ties to china. so this really starts to heat up in this trade fight about how much information we can share, how much we can't. typically we think of cancer as something that doesn't have borders. this time the border matters. david: and no military application. with huawei, it was dual use. i'm not sure what the dual use would be with cancer cures. what's wrong with them having cancer cures, too? i'm literally baffled by this. taylor: i think a lot of this was pre-patented ideas, even though a lot of the cancer researchers say these ideas were out in the public, and once you publish it it is open knowledge. there are just questions about them not disclosing the ties to china, or going back and working with chinese partners over there and perhaps stealing ideas. i will say it sounds like a

bipartisan issue because it started in 2014, but it is some big debt has been ramping up a little more recently. david: the second story this week is about larry culp, the reasonably new ge ceo, about him calling up some guy at a plant and showed up in blue jeans with no entourage to see the plant. at one point they bought an orthodontics company, so he had braces put on when he didn't need them so he could know how they worked. alix: that's a little bit crazy. david: there's no details who small -- no detail too small for this man. alix: i think this speaks not about ge, but the management style of a man who came in to bring things around. they asked, why would you risk your reputation given big success? he said this is exactly why. ge deserves to exist. there are photos of him walking around a wind turbine plant.

previously, the ceo had never even visited that plant. it speaks to his style, very hands-on, face-to-face interviews with top management of why you did or did not miss sales goals, your cash flow targets. it could be a story about industrial giants, but maybe perhaps more of a story of a ceo turnaround. david: and also character. i've got to spend a little time with larry and asked him, are there any moments where you say, what have i done? he says he loves coming to work every single day. he's excited to go to the office. alix: as people who interview ceos, you can tell if there is a ceo who is going to turn and say what is the number, what do i tell who has can had conversations with workers in a meaningful way. at least from our point of view, it may say difference in the conversation. taylor: one of the first things he did was have a five page

report, his first letter to shareholders, versus the 26 page report from his predecessor. he said a sickly, we are just similar playing this -- he said basically, we are just simplifying this. his turnaround to ge has just been laser focused, clean up the gas business and reduce debt. that's all we have to do. i think that also speaks to the way he manages. david: totally right. he made when, he may lose -- he may win, he may lose, but you have to be an optimist, and he believes when he comes in every day he can make it better, which is really impressive. now let's go to another thing that is impressive, a 100 $125,000 bmw. a there is a piece in "businessweek" this week giving a review of it. they think it is amazing. they really love it.

, but you canrtible put this top up or down when it is going 30 miles an hour. i've never heard of that. taylor: it can. -- it can fold back in about 15 seconds as long as you are going under 30 miles an hour. it can go 60 miles per hour in 3.8 seconds. i hear that is something that is pretty cool. [laughter] taylor: it can top speeds of 150 miles per hour and costs $125,000. my only problem is it should be instead.d alix: and why doesn't it have crystal? david: i think a lot of guys are

saying i don't want crystal in my car. you know, leather. taylor: perfect in time for summer. david: i'm not sure it's for that demographic. alix: just saying. many thanks to bloomberg's taylor riggs. check out the latest issue of "bloomberg businessweek," on stands now. coming up, lots of news for white house staff, one offering a resignation, one being called out for the hatch act. this is bloomberg. ♪

david: here's what i'm watching. it's the white house, sarah sanders and kellyanne conway. sarah sanders, of course, is the daughter of mr. mike huckabee.

she's been the white house press secretary, and she is stepping down at the end of this month. the president has glowing things to say about her, among other things, saying that she would be a great governor of the state of arkansas. when asked, she did not deny deposit ability. -- denied the possibility. in the meantime, we have another story with kellyanne conway. the hatch act says if you are taking money from the federal government as an employee, you should not be campaigning. kellyanne conway has more than once taken political positions, and they say she has violated it quite a bit. the office of the special hadsel says "never has osc to issue multiple reports to the president for hatch act violations by the same individual." alix: so what is the energy for that? david: the osc has no enforcement power, so it is up to the president, basically.

a spokesman for the president came out immediately and blamed it on the liberal media. so the president seems to be having nothing to do with it, place by a statute in congress, and she does this regularly. she's got one boss. alix: exactly. the important question is, who is going to replace sarah sanders, and who is going to nl?" him or her on "s up, the huge rally in the bond market. where do you go to safety? don't fight the fed, don't fight the bonds. this is bloomberg. ♪

♪ alix: u.s. accuses iran of

attacks. american officials release video they say proves iran was involved in attacks on oil tankers in the gulf. the 10 year yield falls to a two-year low and the curve steepen's as the market tries to push the fed into a rate cut. and broadcom wounded by trade. the semiconductor cuts its revenue forecast, dragging down the chip sector as demand, trade uncertainties, and huawei force a weakened outlook. david: pictures are really dramatic, that grainy footage. one of the questions i have is what comes next. by the way, this is the second time. a month ago this happened similarly. alix: we are right in this time of the 60 day deadline that europe has to decide what to do, if they are going to keep eyeing iranian goods -- keep buying

iranian goods through a subsidiary or not. that is a question mark for me. david: there were people hopeful with shinzo abe going over there might lead to a reconciliation, and it looks like that didn't go well. alix: it looks like it did go well from president rouhani's point of view. in the markets, you are seeing the aftermath of the effect of the rally in global bonds. the question is why we are seeing that. 10 year yields down, s&p futures up off the lows of the session, but still down. euro-dollar a little weaker. the haven of choice not only bonds, but also dollar. it is truly unbelievable to me. david: geopolitical tensions are rising in the persian gulf, and we are seeing a rush to safety.

global bond yields are sliding to record lows. here to take us through all that is taylor riggs. taylor: take a look at my terminal at gtv . we are now down to about a 1.57 worst in 18 months come all the way back to the lows of 2017. germany's 10 year at a -26 basis points, and japan at a -13 basis points. this is one of my favorite charts. this takes the value of negative yielding debt worldwide, topping $11 trillion. it has been a love -- it has been above $11 trillion for the entire month of june, really going back to early may when we started heating up the trade rhetoric. you are seeing a bit of a missed match between the bond market and equity market volatility.

equity markets not seeing that much volatility. analysts are saying this means the bond markets really are starting to price in the risk. equity markets still a little bit too optimistic when it comes to slowing global growth and trade. alix: thank you so much. joining us now onset, kathryn rooney vera, head of bulltick research and strategy, and katie nixon of northern trust wealth management. these are good low yields, what does that signified you, katie? what is the reason for it? katie: i think it is a regrading of inflation and inflation expectations. think it is the geopolitical risk you have been talking about all morning, related not just to the trade issue, but now the issue with the ron. -- with iran. thirdly, i think it is a regrading of global growth expectations. even here in the u.s., you're

seeing growth expectations come down. david: and yet we see employment strong. there are some indications the economy is not really suffering as much as markets might indicate. kathryn: right. employment is strong and consumer confidence is high, but you have treasury yields very low. that spread differential because my attention. i think the bond market is overpricing the amount, magnitude, and speed of head cuts -- of fed cuts. think the market is going to be disappointed, which has repercussions for treasury yields, which intuitively go higher from here, and equity markets, which will rerate lower. there is not much inflation, but if chair powell is correct in what he said two months ago, that d inflationary and poses that -- that deflationary impulses are transitory, then they shouldn't have to cut. alix: so how do you fight the

bond market, though? every time you do, you've been hurt. kathryn: you are right. the bond market vigilantes are out. the bond market is basically taunting the fed not to cut. so what does the fed react to? the fed credibility is at stake once again. the fed has had issues with credibility over recent years. what are the dot plots going to show us? is the fed going to succumb to going pressures, or is it to respond adequately to its dual mandate in the state of the red economy -- of the u.s. economy at this juncture? david: is inflation expectation from the fed point if you the most important -- point of view the most important? katie: it is employment and inflation. leading indicators point to slowing at some softness, and i think that is what the fed needs to be looking at. what do we think the economy is

going to look like in six months? looking at real inflation and expectations, look at the cpi from this week. there's no inflation impulse in the economy, despite the fact that we have arguably full employment, so clearly there is an issue here with inflation that may not just be transitory. i think the fed has come around to that. i also don't agree that the market will be very disappointed if chair powell doesn't respond to the data being reflected in the bond market, which is very low growth in very low inflation. is incompatible with those things. alix: and the backdrop has to do with trade. one of the latest shoes to drop had to come from broadcom yesterday. they lowered their full-year forecast because of trade and user demand as well. they said, we believe it is they said, "we believe

it is driven by trade and reduce demand by one of our most active customers." what struck me was the slide in the stock, which shows it is possible that trade tensions are not actually priced into the equity market. kathryn: they are absolutely not. the equity market and bond market are telling completely different stories. i think we have to be careful about exaggeration of the impact of trade tensions on the u.s. economy and on inflation. you see a dichotomy here between economists and market participants. the markets are calling this apocalypse, calling for u.s. recession. that is what the treasury market is telling us, anyway. the equity market says hold your horses. it may not be that bad. the mathematical impact of a 25% on $500cross the board billion in imports from china, bye-bye conservative copulations -- by my conservative calculations, doesn't factor in

import substitutions, impact of the dollar, or any type of substitution from alternative sourcing countries. vera ofathryn rooney bulltick and katie dixon of northern trust wealth management will be sticking with us. talkg up, we are going to with the lead sanctions expert of the u.s. team indy the 2015 negotiations with the ron, richard nephew -- in the 2015 negotiations with iran, richard nephew. this is bloomberg. ♪

president trump has just confirmed what secretary of

state mike pompeo said yesterday, that the tanker attacks in the gulf war iran's fault. this assessment is based on intelligence, the weapons used, the level of expertise needed to conduct the operation, and the fact no proxy group operating in the area has the resources and efficiency to act with such a high degree of sophistication. david: we welcome now on the telephone richard nephew, columbia center on global policy research fellow, and on the --otiating team with negotiating team in 2015 for the iran nuclear deal. you know the situation well. what are the u.s. options at this point? richard: i think the u.s. basically has three options,

defend and on how much they want to escalate the crisis. the first option is diplomatic, and we have already started that with regional partners and other partners. another is by adding pressure on the iranians, political pressure coming from a variety of companies -- of countries. the most concerning at this point is the possibility of using military force to try and attacks onranian shipping. there is a real risk of escalation. alix: when you were leading the iranian sanctions conversation back in 2015, did you know who was leading the country and how that would play out? who did they even start negotiating with? richard: at the time, we

definitely had an iranian popularcy empowered by support, as well as the supreme leader, to try and engage in negotiations. a couple of days ago, the supreme leader close the door on the when he injected treaties of prime minister abe. he has been very clear that he doesn't see a viable approach to negotiations now. i think restarting talks now would be very difficult. the iranians have lost a lot of trust in the it on states as a negotiating partner since we withdrew from the jcpoa. david: we see now that small boat coming up to the ship. is there anything the fifth fleet in the region can do to prevent these reasonably small gulf boat attacks? it is a big area. richard: this is the difficulty, it is a heavily congested waterway as well. there are different types of

escort options that exist come about as we saw in the late 1980's, at some level the united states has got to extend its production directly to the tankers, and that is a very complicated sort of option for us to even consider at this point. effective means demonstrate to iran that these attacks come with cost, and that they will be multilateral in nature. that's part of the reason by the international diplomatic effort has got to be an initial part of what we are doing. alix: i want to get your take on the coalition in the area with the u.s., qatar, saudi arabia, uae. how does that play into this as well? theird: each of them has own independent military capabilities, but we've had cooperation with them for a number of years. we've got the means to coordinate operations to be able to identify potential threats and targets and to respond to them. there is definitely a role for the regional partners to play in

all of this, but i think part of the issue we are going to have is that there's a lot of small boats that are operating in the waterways. to get at allible of them. really you have to get at the root of the problem, and that is iran's perception that the only option it has at this point is to start lashing out at ships transiting the strait. alix: thank you very much. great to get your perspective. still with us, kathryn rooney vera of bulltick, and katie nixon of northern trust wealth management. we were up 4%, but gave up a lot of those games. if you can't get -- a lot of those games. isyou can't get a $10 jump, trading in oil the worst trade ever at this point? certainly i am surprised as you are that we wouldn't see more of an important move into the downside in oil, but it also

speaks to the import of the trade war and global fears with regard to economic deceleration in the markets right now. the fact that it does not have an impact on oil much more than a blip on the radar is really important to me. david: so well put. the real question here is global growth in demand for oil. increase production for sale, also. indeed. a major factor i don't know that global players are worried about supply right now. the transport costs are obviously going to be greater and start looking for alternate routes, but it is happening in an environment of slowing demand, and it is slowing in the biggest consumers of oil. china demand is slowing. i think that is overwhelming the shock of what is happening. forever.ought of this

it is really surprising to see a muted reaction. alix: what strikes me is if you are looking at a world of weaker economic growth, the trade and equities would seem to be value, but you seem to have equity falling out of bed if oil prices can't get a bed -- can't get out of bed. what do you do with that? katie: it is tough. banks don't have a good time when you have a yield curve that looks the way our yield curve looks right now. certainly, energy is going to be under pressure here. it is a really tough time for the value trade. in the meantime, some of the great growth stocks of the past are facing some headwinds. you mentioned broadcom and some of the growth related headwinds, but also regulatory headwinds as well. it is hard to make a super compelling case to go pedal to the metal on some of those growth stocks that have been such great winners in the past as well. david: given those challenges, you specialize in emerging markets. are there opportunities there?

for example, debt, what you thick is going to go up, not down. kathryn: one of the headwinds to the emerging markets trade would certainly be if the fed doesn't cut three to four times over the next few years because that would mean that the dollar reacts in a different way than would be beneficial to the emerging market space. em currencies need to appreciate. i think there are opportunities in emerging markets, and even in financials because my argument is the 10 year treasury curve is overbought at current levels, and the fed is not going to cut as dramatically as is already priced in, so you will get financials rallying if the 10 year treasury yield does go higher above to an -- above 2.5%. alix: staying with oil and emerging markets, if oil stays low, do you think that would be for oil importers?

with global growth worries, it might be harder for a country like india. how do you square the two? kathryn: india is a global growth leader. it has been growing at a faster pace than even china. been are names that have beaten up severely, such as mexico, such as china. china equities was my biggest topic coming into this year. it has been were markedly well -- it has fared were markedly well. the trade accord will come to , who knows the timing, but i do think incentives are underlined. i would cite the msci emerging markets index, where you couldn't get -- where you can get a very nice exposure to the emerging-market world. david: a lot of things look very different. very different.

of bulltickey vera and katie nixon of northern trust wealth management will be staying with us. coming up, more on the effects of the attacks in the gulf of oman. that is next in today's bottom line. this is bloomberg. ♪

david: time now for the bottom line, where we look at companies worth watching this morning. bayer is moving forward with their problems about the run-up drug. they started a mediation -- the round up drug. they started a mediation process for those thousands of cases brought. in the meantime, they are investing to try to recertify that it is safe over in europe. alix: if you hear ken feinberg, you know it is going to be big. he's a big name. david: he's done a terrific job every time. alix: let's get to what i'm

looking at, and that is really boeing at the paris air show, and the pressure that is going to be put over the company in the next week, and what door it leaves opens -- it for airbus. that is all part of the conversation i'm really looking forward to over the next few days. david: finally, you ca -- finally, we are looking at tankers, and you can imagine why. joining us is jeffrey gibbons. what is the first thing you think about when you see those attacks in the gulf? >> increased charter rates. it is a lot tougher than people think. you have tough sees, tight deadlines. now you have missiles coming at you. if you work there, you will start to many some sort of pay.d

that includes increased insurance premiums, escorts, armed guards, those kinds of things. but you also have increased risk premiums. you will see this throughout the tanker trade, increased turnout demand, which will push up rates. alix: i was speaking to one of my sources who runs a tanker company. you already have more risk insurance, but now that is going to rise. randy: the premium has gone up about 5% to 15%. just anecdotally come out of the million, 2about $5 million barrels. that was a month ago. now it is 5.5 million. some of that is going to increase insurance costs, but a lot of that will be kept by the charter owners. david: are the regional effects? what does that due to the prices around the world?

there's aht now tanker in saudi arabia waiting to leave, but the captain is like, we are not leaving in this environment. then you have other cargoes that want to be loaded that are hesitant. you're seeing more exports out of the u.s. gulf come out of brazil come out of the safer regions -- out of the u.s. gulf, out of brazil, out of the safer regions. alix: so what happens if they don't go through there to begin with? players are going , spote scrubbers exposure. they are trading at big discount to niv. youhe products tanker side, are looking more at scorpio tankers, or one of those guys

with more emaar and lr exposure. alix: thank you very much. because itesting seems easy, just go a different direction. but that adds time and cost. david: ships take a long time. alix: and then you have global demand. that is another headwind here. david: i am so impressed you did not take the i am obeyed -- the imo bait. alix: well, we are 40 seconds to a heart break. thanks, randy -- a hard break. thanks, randy. closely watching numbers ahead of the fed policy meeting next week. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. 30 seconds away from retail sales in the u.s.. they were good in china despite the other data rolling over.

over. equity futures softer. a risk update developing. a stronger rally into the bond market. yields lower hereby two basis points. two basis points lower in germany. the dollar also getting a safe haven bid in. crew going nowhere despite the political tension. retail sales, you backout autos and gas, up high .1%, better than estimated. desk aprilot estimated higher 2.3%. -- higher to .3%. in that respect higher, on a month by month basis, a little bit light. up by .5%. you notd not -- david: say this is an indication of the economy in trouble. alix: in some respects i think it is lumpy. the data can be volatile and april was so bad so you have to

wonder let's even it out. david: it turns out april was not as bad as we thought. alix: true. david: .5% for the month. >> it does not mean the fed has to cut. rivera.ing in catherine catherine has already weighed in. catherine: this does not mean the fed has to cut. the g20 results in failure, president trump puts 25% across-the-board tariffs on all chinese imports, then july or september can be in play. at this juncture, unless you think the u.s. is falling off a cliff, and this number indicates otherwise, the fed does not have the necessity cut rates. the story was a lower yield, big rally in the bond market.

the two-year and the three-year flat. re-rating a little bit of the expectations. katie, do you agree? katie: i think the fed will cut rates. i do not think it matters. i do not think the fed has to wait for the economy to follow ed before it starts to take action and i think the bond suggestingeing loud this current fed funds rate is incompatible with the slow growth, low inflation economy that has a bigger tail risk when it comes to the trade uncertainty. we should talk about what will happen under the g20. it could be an agreement not to impose additional tariffs, it could be a tariff related agreement, but does that take trade off the table as a major uncertainty? it does not change the fact that companies are already voting with their feet. they are already making business decisions away from the old trade framework.

that is to be costly and disruptive and is not progrowth. david: it is interesting they say they have to do it because of the bond market. is that the way it works. the fed looks at the bond market or do they have asked questions about the underlying growth? do we know the underlying growth in the united states is slow? katie: i think it is a circular argument. the bond market is where it is because of the re-rating of growth expectations. the fed is looking at the long -- at the wrong indicators. the were transitory has come up time and again related to inflation. even at full employment we have not reached the inflation target. they have to start rethinking that target. david: you talk about transitory. the g20 is territory. he could go a couple of different directions and it could affect global growth and the u.s. economy.

catherine: it sure can. inflation has been historically low and is lower because of fundamental structural shifts. optimization, -- automation -- these are the industrial revolution on steroids that will keep inflation low. the transitory nature i refer to as the month on month deceleration we have seen since december in core pce. if that were to continue, i concur the fed would have to cut rates. were that to be transitory, we would get the pass-through impact of the current tariffs on the consumer prices. can you imagine the credibility shock that would be at the fed has to cut only to raise rates in the course of 12 months? katie: i do not think the tariffs have been inflationary. we have been living under tariffs and cnet impact demand. -- and seen it impact demand.

we've not seen it come through in terms of an inflationary impulse. david: the challenge for growth is things like demographics, automation. how will the fed cutting rates address that? it does not make people younger, it does not cost people to invest less in automation. how is that the right remedy? katie: i'm not trying to solve the inflation problem with interest rates. i'm trying to solve the growth problem. i think it's also a because it restructures the yield curve so we have a positively sloped yield curve that will feedback into the banking system. that is why i think the fed needs to cut rates. it is not because it is going to spur inflation. we are in a secular period of low inflation, growth is very vulnerable. looking at second-quarter growth estimates in the 1's coming off oil from a robust first-quarter

artificially inflated because of inventory. we are seeing a deceleration of growth. how close to the 1 level you need to get? david: katie makes the point it affects the cost of capital. if you're a cfo, you've never seen the cost of capital so low. to take it lower will that cause a ramp-up? catherine: i do not think it is. corporate see the fact that inflation expectations are low over 5, 10, 30 year horizons. they are not expecting the cost of capital to jump any time soon. what we have to be careful about is underestimating the economic growth cycle we are in. janet yellen said economic expansions do not die of old age. look at australia. there are countries that have enjoyed extended periods of economic expansion without recession. but then a slowdown,

economy is still growing above potential. that is a goldilocks scenario. until we see inflation, i recommend going long and staying long. alix: is there also the issue of diminishing returns? if we are in a slowing economy and you think most central banks will cut, whether you're an emerging market or developed market, is it the best house on a bad block situation when it comes to the u.s.? katie: i think so. i think central banks be fighting for stability, not strength. they will be trying to stabilize economies. china is trying to get both hands on the wheel and drive stability. the same in the u.s.. we want to drive stability around our potential gdp. we are in danger of going below it unless the fed takes action. on a relative basis, the u.s. remains the strongest economy. that mean the fed

will have wind up getting more accommodative to get the juice versus the juice going to europe or the ecb or the boj? katie: i think the impulse is here to stabilize. right now all eyes are on the fed. if the fed does what the market wanted to do, i think corporations and investors will say now we can breathe a sigh of relief and go back to investing for the long-term. a nirvana scenario or goldilocks scenario is extremely low cost of capital and low inflation. that is a good environment for risk assets. alix: thanks a lot for joining us. great to see you both. a recap on what we have seen. retail sales stronger than estimated. ,ou backout autos and gas coming in .5%. that bad number in april was also revised higher and things like miscellaneous stores was revised up 2%. a lot of revisions.

the market is clear. you are seeing the curve flattening. money coming out of the front end. yields up by one basis points on the two-year and the three-year as the bank end of the curve stays lower. david: now let's get an update on what is making headlines outside the business world with viviana hurtado. is denying you's allegations it was behind the attacks on two oil tankers. they.s. releasing images say proves iranian involvement. iranians were seen removing mines from one of the tankers. the attacks take place not far from the head of the persian gulf. said his life is at stake in a fighter extradition to the u.s. he is in a prison in the u k he spoke to a london court by video link. by the courtharged with endangering national

security. his lawyer calls the case an assault on journalistic rights and free speech. we stay in the u.k. join a tvson will debate with rival candidates for prime minister this tuesday. johnson ran up a big lead in the first round of voting this week. meanwhile, health secretary withdrew from the race to become the next prime minister. he is not saying who he will support. rivals are holding talks did about joining forces to stop boris johnson from winning. 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 viviana hurtado. this is bloomberg. , riding the rv revolution. we will speak to the cofounder the company behind one of rv rentals. that is next.

this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up later on bloomberg markets, the democratic national committee chairman. this is "bloomberg daybreak."

has learnt nissan is ready to accept renault's demand for representation on its board. the french automaker is nissan's largest shareholder. it wants greater say over management and strategy. ceo makingrenault its demand in a letter to nissan. to abstain from voting on nissan's new government structure on june 25. fire will invest $5.6 billion to develop alternatives to its weedkiller roundup. the german company is battling 14,000 lawsuits claiming the cancer.ler causes yer says ita wants to give more options in fighting weeds. exchange at the london will prohibit workers from drinking on weekdays. setting global prices for

copper and aluminum. alix: you might laugh, but this is the end of an era for the commodity trading world. david: you wonder some of those fluctuations over the world, there was not anything going on in the market, they had something to drink. [laughter] alix: day drinking. time now for follow the lead. today we focus on the experience economy, specifically the market for recreational vehicles. here's a look at the rv economy with michael mckee. michael: you know what that about,sales report was people stocking up for the camp fire. the rv industry is growing. maybe becausen, it is a highly discretionary industry, rv sales have tracked gdp closely over the years. it is something of a leading indicator. we have rough years for both and now we're seeing an upswing in

rv and gdp. that is the good news. the we are news is we are not seeing confident employment in the industry. this is rv dealer employment. year.w until we hit last even though we are seeing sales rebound, we are not seeing employment grow anymore. it has flattened out. whether that has reversed or not, it is difficult to say. the other weird thing, maybe our guests can talk about this, rv prices as measured by the personal consumption index were fairly stable for years and years, and then the last year, this year, prices have gotten very volatile. they have come back to unchanged , but volatility for unknown that may something affect the way people think about whether they want to buy or not. david: michael mckee, thank you

so much for that introduction to arby's. joining us is jen young, outdoorsy co-founder. last week the company announced the first of its kind vehicle purchasing financing and distribution program with mercedes-benz. jen: great to be here. david: we want to understand the rv marketplace. you know why there has been such a fluctuation in the price of rvs? jen: there's a massive growing trend for recreational vehicle travel. globally, $8 million is spent on travel but rv rentals is the fastest-growing some within that group -- segment within that group. david: what determines the size of your business? you're involved in the rental rvs owned by other people. when you see it go up and go down? our our job is connecting travelers with the 18 million

recreational vehicles in the united states and the 50 more million units found look -- and the 54 million units found globally with people who want to be able to rent these vehicles. alix: you have a good window into tracking gdp and rv shipments. what do you extrapolate from that? jen: business is great. has done almost one million book nights of recreational vehicle travel. you had over 15 million visitors to the website and we are seeing a massive shift. what is surprising to people is that millennials and generation x are driving the demand or recreational vehicles. 38% is under the age of 40. david: if the business is growing that fast, our prices going up to rent rvs? jen: our prices for rvs are not going up. i think because of the

broad-based choices for individual owners. we are seeing a reasonable fluctuation. you can rent an rv on outdoorsy.com from anywhere from $60 a night to $145. alix: if you take a look at who your customers are, like millennials, if you think of the rvs of old, you will think of a certain type of worker. can you walk me through income brackets and the goal, how that has changed in the last 30 years? millennials are looking for spending reasonable amounts of dollars on recreational vehicle travel and are opting more to lower-cost price point. we are seeing a huge demand for camper travel. outdoorsy relates to many demographics, whether it is the generation x traveler looking more for adventure, or even early retirees who are looking for more frequent use of the

vehicles. david: if this business is growing globally, it is the fastest-growing part of it, where is that coming from? hotels? motels? what are they not spending money on? jen: we think the new consumer wants something different from their travel wallet. people are looking to spend more time around the environment and not so much the city and the taurus destination. -- the city and the forest -- and the tourist destination. alix: what are you noticing about what countries are the strongest? jen: we are focused in the u k and also france and germany. italy is the california of europe and there is a massive market for us. and australia and new zealand. alix: thanks a lot. jen young of outdoorsy.

coming up, trade ships away from broadcom sme's get hit premarket. this is bloomberg. ♪

alix: what i am watching is going to be broadcom, the stock plunging. the company cutting its forecast. bloomberg intelligence senior analyst joins us now. we talk a lot about the macro. can we get into the micro with broadcom versus huawei? what is the exposure? they said last year huawei was about $900 million in sales. this is not a huawei specific issue. everybody is tapping the brakes. there was a lot of anticipation on a quick trade settlement on china trade not being a dampener to demand. now that that is getting

extended everybody is tapping the brakes. everybody is uncertain. broadcom is a broad-based supplier. it supplies into the iphone, in the samsung, into huawei and into networking gear. as a result, huawei is in the number two position after cisco and their networking market is already impeding broadcom sales. the fact that it is a broad-based supplier and not just huawei alone, it is multiple demand components is scary about this particular decline. david: what is the chance it is a timing issue, it is a short-term dislocation but they will find other customers. is this people buying less of the things that require the -- s or anand: this was addressed on the call yesterday. it will take some time for other

vendors to step in and take huawei's share. broadcom being a broad-based supplier, that will work itself out over the next quarter's. the fact that everybody else is also tapping the brakes on the issues with china and the trade care of trauma, that is concerning -- the trade tariff drama, that is concerning. alix: is there any insight of what it means that we are not trading in our phones. we are not buying new ones. anand: even before we are in this trade drama, we were a little iffy on the macro. phones were on a year on year unit decline. that was not so healthy of a market to begin with. now the trade tariff drama happens. this was an overlay impact on top of what was already not a

particularly healthy market. together, itit all is not so happy. alix: i would think not, looking at the premarket applied. thank you very much. we have some trump headlines from different interviews, the first was fox saying iran was responsible for the attacks on the tankers, also currency is being manipulated by china, and then the abc interview. spent 30am told he hours with george stephanopoulos and they will be releasing it over the weekend. he said disagree with him entirely. --x: coming up on the open coming up, the open with jonathan ferro. this is bloomberg. ♪

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coming up, a final read of the u.s. economy ahead of next week's fed decision. retail sales looking solid. economic data in china disappointing. industrial output posting the slowest growth since 2002. as trade tensions rise, the white house still waiting for china to agree to a meeting at the g20. 30 minutes away from the opening bell, good morning. here's your friday morning price action, futures negative six on the s&p. treasury yields lower, now they are unchanged on the 10 year. 10 year yield at 2.10 in the dollar finally stronger, the euro down to 1.1232. we begin with the big issue, taking stock of all of the economic data ahead of next week spent decision. >> a strong sense we would get a rate cut. >> the market is expecting a rate cut. >> incredibly likely the fed will cut rates. >>