like when doves cry. throwing the ball back in president trump's court. the yield avalanche. surgesyields tumble, old -- gold surges. and the latest direct listing comes to market as equities break record highs. david: "bloomberg daybreak welcome to -- welcome to thismberg daybreak" on thursday, june 20. we are waiting for the bank of eglin to come out with its rate decision now -- the bank of england to come out with its rate decision now. alix: we didn't see any dissension today, but the boe did note there was tension between brexit assumptions and the market view. that is surprising. i say that it sarcastically. inflation came back to the boe target, so they've got to get ahead of higher inflation.

david: we are going to go to our colleague guy johnson, the :nchor of "bloomberg markets the european close." guy: the fed is talking about easing, the ecb talking about using. the market is pricing in easing to the expectation for the bank of england. that is really what the bank is noting when it talks about the tension between its brexit assumption, which is for a smooth exit from the eu, and the market is pricing in a much bumpier view of how that brexit story is going to develop. we have the unfolding of the conservative party leadership contest. boris johnson expected to become the next prime minister, talking about a hard brexit. that's what the market is pricing. they are having to recognize the difference in where they are and where the market is right now. the bank has been talking about rate hikes being necessary.

the market sees it a completely different way at the moment, and it is putting the bank of england in the context of the global economy at the moment, and the context of a tougher brexit. suspect the trade we are at the at the screen moment has more to do with the bank of england today. at least he bank of englund is recognizing there is a difference between where it is and where the market is. alix: fair point. at 81 basislds now points for the 10 year. to dig a little deeper, the boe does see downside risks to the the gross greater than in may. let's dig a little deeper into that no deal brexit. where is boris johnson where are we -- where is boris

johnson? where are we in this leadership contest? guy: the expectation is that today we will know the final two candidates voted on by the wider conservative party. it is almost certain that one of those will be boris johnson. the question is who could be the other one. it could be jeremy hunt, the current foreign secretary. it could be michael gove, the environment secretary. we don't know that second candidate is going to be come about at the moment it looks as if it is boris johnson's toluse. the likely -- boris johnson's to lose. the likely expectation is that he will become prime minister. he talked about a hard brexit and fiscal expansion. you need to think about who is going to be the chancellor of the exchequer, who is going to have to choose a new governor of the bank of england, so it comes back to the bank of england eventually, but the politics story very much intertwined with the monetary story of the

moment. all of that in the mix right now. alix: things a lot. appreciate it -- thanks a lot. appreciate it. johnson, joining us from london. you've got 81 basis points in the 10 year. is that a legit reflection of the risks that the boe is now talking about? guest: it is interesting because we are all worldwide on the race to zero. brexit, you should wait and see what is going to happen because we don't know. it is highly likely it is not only going to slow down the growth and perhaps tip into a recession, and we don't know to what degree, so keep your power to be able to cut rates. why preempt it? i think this goes for worldwide, that is a question we all ask. next time to crisis happens, and

it will, what do we have? let's keep something. david: at the veer released, -- at the very least, we don't know which direction. it would be almost reckless to either cut or raise. lale: i think so. i think you just stay put, and the market always calls the central bank's bluff, so just ignore the market if you can come about focus on the data. i think that's with the central bank job should be. alix: there's a distinction because i feel like a year ago, butwere talking brexit, global growth was ok so global trade was going to hold up the u.k.. that is like a complete 180. andmuch is global growth trade slowdown affecting the boe , which is in some ways idiosyncratic from other central banks? lale: it is hard because you

don't know what is going to happen with the trade. the biggest change in my opinion happened after the mexico issues came on. it became a policy tool for the u.s.. that is a different ballgame because now you can put different countries into the mix. i'm picking on my home country, but you don't get along with turkey, and next time you put tariffs on turkey. for a business owner and a , you don'trspective know how to shift your manufacturing. you don't know what to do. so i think trade is a big deal. global growth is slowing. that is absolutely true, but it hasn't been it if with the exception of certain parts of europe. david: but are there some upsides to trade? president trump is talking about having a great deal with the u.k. we are eager to increase our trade. it really is different from a lot of countries around the world. lale: it is, but you can also have a 180 on that one.

the biggestu.k., issue is really brexit. if you look at the u.k. economy and the u.k. stock market specifically, it is very geared toward u.k. economy. it is the banks, the mortgage lenders, and retail. forget the four nationals. that is the heart of the economy. that is going to change, depending on if you have a hard or soft brexit, and the whole equation of long trade comes into that, too. i think it is hard. alix: the other factor underpinning us is in inflation expectations. it felt what the boe is the one place you were going to have inflation, and even that has come down to the boe target and allowed them to take some hikes off of the table. if you can't get an overshoot of inflation sustainable from the u.k., where are you going to get it? lale: it seems like if you look

at the data, we are in the era of disinflation. that is just the challenge of easy monetary policy. but again, i am going to go back and really simplify things. it is just one of the data points you look at. why 2%? why is it not 3%? why not 1%? alix: it feels like jay powell did take off before percent, but still -- take off the 4%, but still. david: that is actually a profound question. [laughter] topcuoglu will be sticking with us. they are noticing a difference between brexit assumptions and the market view. the market view a little more pessimistic than their own brexit assumptions, so all of that playing into the election as well. in the market, it is a very clear day. this is a fed easing day. this is a lower rate for longer

day. you see money flowing into u.s. equities, most likely opening around a record high. weaker dollar across the g10 space. the euro soaring up. 10 year yields hit their lowest level since november 2016. some unbelievable moves yesterday in the two-year. crude flying as well, part of that the fed and the weaker dollar. the other part is geopolitics. this is your typical we are going to get some yield kind of day. david: we have a lot to cover here. coming up, fed chairman jay powell opens the door to a rate cut in july. more on that next in first take. and we are following a string of attacks in the straits of hormuz. overnight, word broke that a u.s. drone had been shot down by iran. iran claims it was over iranian territory. the u.s. claims it was not. oil moving up apparently in response to that.

this is bloomberg. ♪

♪ david: you and i have both been following this story overnight about a reported shooting down of a u.s. drone somewhere between over the straits of hormuz and over iran. there is some dispute over where exactly, but everyone agrees a drone was shut down. at the same time, there was a missile attack on a saudi powerplant. typically they are seen as being backed by iran, so to binning on how you draw the line there -- so depending on how you draw the line there. david: we will talk with tired --gadier general mark

with a retired brigadier general later in the hour. chairman powell sets the stage for a fed cut. then global yields tumble. finally, slack it's ready to make its public debut. here to discuss is vincent durell a -- is vincent's a gorilla -- vincent cignarella, and still with us is lale topcuoglu. >> uncertainty surrounding the baseline outlook has clearly risen since our last meeting. it is important that monetary policy not over react any individual data point or short-term swing. addingo would risk even more uncertainty to the outlook. our colleagues will be looking to see whether these continue to weigh on the outlook. david: i found this fascinating. it is important we not react to

any single data point, but they came pretty close. [laughter] i think this is maybe the first time we've seen the fed be so close to neutral in terms of where they are. men andcally have eight women on one side of the table, eight men women on the other, all looking at their own models and saying this is what i think is going to happen. powell i think set the stage for a july rate cut. it is possible, but he also set the stage for major disappointment by saying we are looking at the data points. i totally agree. i think he took a very balanced approach in saying we are going to look at the data. he specifically said sentiments can be volatile. i think he's just putting all of the cues in. vincent: reacting to a short-term data point would create more uncertainty, and create a fragile feeling around what the fed is doing.

market win?s the lale: the market is already winning. alix: but if you have yields at 2% or lower, isn't that going to force the fed's hand? vincent: not at all. i think it just keeps the yield curve inverted. when people say this is the sign of a recession, in typical times they yield is a sign of the recession. but the fed has set short-term rates, not the market. the market has set the long-term part of the curve. the market has flattened the yield curve on one side of the coin, and the fed has flattened it on the other side. we will see who wins, but it doesn't dictate a recession or downturn. the economy is doing just fine. lale: let's get to our second story -- alix: let's get to our second story, and that is the craziness we have seen in yields. yesterday was a huge rush, particularly in the short end. td securities looking at six cuts by the end of 2020, 10 year

at 1.3% in june 2020. lale, you totally disagree. lale: be careful what you wish for. eithero to 1.3%, we are having a massive recession or i'll is a mistake. there is nothing -- or massive policy mistake. there is nothing in the data that suggests 1.3%. the s&p is up 17%. david: which takes us to vince signe rella -- vince cigna rella's chart. how do you come up with the rate cuts? vincent: this is the chicago fed. we have one a bloomberg. goldman has one. i'm going to play with the guys who don't have a dog in the hunt, which is the chicago fed. going back over 25 years, financial conditions haven't been loosened. the credit is there. people are lending money to credible borrowers.

you know? [laughter] a 500t: if you've got credit score, no one is knocking on your door. but it is there to be had. major corporations are going to the well, and people are throwing money at them like crazy. look at tesla, essentially a junk issue, and they can borrow anything they want. alix: so is that what the dollar is responding to? is that why the dollar isn't dropping off a cliff? is it doing something different than the yield? vincent: i think the dollar is down because it has been up a long way. when you look at places to go and you think maybe there is a recession or maybe the economy is going to stumble or maybe there are trade wars, why would you want to be in emerging markets? it is a dodgy place to be if you think trump is going to start a trade war. if exports are going to shrink, they are going to have difficulties. the other side of that coin is

they are mostly funded in dollar loans. with a strong dollar, that creates a double problem for them. the borrowing costs are up, and the revenue is down, so not a good place to be. lale: i agree. i think pem bullish story -- i think the em bullish story has been the rate cuts. if that doesn't come through, it goes the opposite way. we are long treasuries come a, and long u.s. dollar -- we are long-duration,, and long u.s. dollar. compares price to revenue. it shows the s&p overall took 2.5 times revenue. they have all of these up in the 20 club. if slack goes out at the numbers we are talking about, it will be in the top 20's.

these are forward revenue. vincent: revenue are not earnings. when you go back to the picture we just discussed about a c.,ential for a recession, et i just don't see the allure of buying stock in a company that doesn't have revenue. maybe i am just old-school. alix: it could be the we chat, though. we chat is huge in china. people are saying this could literally be the we chat for the u.s. lale: i'm sure there is good within some of these companies. profit, don't make any and the multiples assigned to them are just insane. 3/4 of those companies don't make any money. i think you think about old-school economies, consumer

staple companies that have competitive advantage, that trade at significant we cheap multiples and actually generate earnings. and that's with growth. are a plain old vanilla company that pays a stable dividend in this area of no yield, and you can grow your earnings in low to single digits -- in low single digits, that's not terrible. vincent: perfect point when you look at some thing like the comparison between beyond meat and tyson, who has the distribution network and the opportunity to get into that space as a competitor, and a company that has yet to make a dime in profit. you have the dividend yield. i was speaking to my peer who said i can give you dozens of stocks that have yields higher than the 10 year treasuries, so that's why people are buying equities. that: you all should know

the bloomberg capital arm is an slack.r in speak withe going to a slack cofounder and ceo, and the cfo, coming up at 10:30 a.m. eastern in new york. you can find all of the charts we are using at gtv on the terminal. go ahead and check it out. coming up on this program, it is still the search for yield. -- lalecent: says topcuoglu says you want to go for the consensus. this is bloomberg. ♪

alix: treasuries leading the global bond rally. 10 year yields dropping below 2% this morning for the first time since november 2016. the corporate debt market also seeing a rally as you see

spreads contract after yesterday. still with us is lale topcuoglu of johcm. do you want to be selling the high-yield and investment-grade? lale: well -- alix: this is going to be a really deep answer. [laughter] lale: for the last two months, we are basically hiding out in the flat end of the curve. the curve is inverted, so you can hide in the front and not take any credit risk. you are really not getting paid to extend anyway. andthe biggest issue now, hopes ofee whether the think cut come, but i this is one equity rally that no one seems to have per dissipated in. alix: what does that tell you -- seems to have participated in.

alix: what does that tell you? people need to generate income. you pilego down to 1%, in fixed income as much as you can. i don't think rate cuts are necessarily going to solve that problem. david: so what is the smart contrarian bet right now if everyone is piling in one direction? lale: i think you wait for the trade issues to resolve. growth is slowing. it doesn't seem like a recession. 1.5%, i will be 2%, but think we can still live with that. i think there's a risk the rate will surprise you to the upside. we may be at 2.5% in less than a year. alix: if that is the case, do you want to be selling at high-yield and buying better in investment-grade? lale: it gives you at optionality down the road. if you are doing the upgrade to

quality, going in the investment-grade and taking spread duration risk, i think that is a bigger issue. on high-yield, i think you have to pay attention and be really picky. not all high-yield is created equal. figure companies in your sectors very carefully, and go with the companies that actually generate cash flow. you know how i feel about that. will bele topcuoglu sticking with us. raskin, formerh fed reserve governor, joins us on why they didn't actually pull the trigger. this is bloomberg ♪ -- this is bloomberg. ♪

when you rest on a leesa hybrid mattress, bedtime is no longer simply the time you go to sleep. it's time to switch off and catch up. enjoy me time, and we time. 40 winks or 8 hours solid. the leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket springs provide edge to edge

support, responsiveness and comfort, while premium foams relieve pressure. keep you comfortably cool and limit motion transfer. leesa's hybrid mattress is not only recommended by experts, experts choose to sleep on it too. try it yourself in any west elm store. or order online and we'll ship it to your door so you can try it risk free. the leesa hybrid is american made. built to last. and, because everyone needs a place to rest, we donate tens of thousands of mattresses to those in need. live healthier, live happier by resting deeper. right now, you can get 10% off, plus two free pillows. go to leesa.com today. alix: this is "bloomberg daybreak." buy equities, that is the story of the morning. futures up by 8/10 of 1%.

today they are playing a little bit of catch-up over in europe. the dovish fed bringing up equities there as well. in other asset classes, as we move toward record highs in the s&p, still big lows for the bond market. at one point we dipped below the lowest level since 2016. the dollar weaker. it seems like the fx woke up to the fact that the fed is dovish. has the other actually topped out -- has the dollar actually topped out? gold finally getting a bid. it was stuck in no man's land, now inching towards $1400 announce. ounce.rds $1400 an betting soybody was much against inflation, what if inflation happens? alix: that is a whole different kind of story. we will break that down in

today's "commodities edge>" i have that in my show today -- "commodities edge." i have that in my show today. david: oil is up today on the news that there was a drone shot down near the straits of hormuz or over iran. iran claims it was over iranian soil. the u.s. claims it was not. there was also a saudi missile attack, perhaps on a power station. we will continue to follow that story as it develops and talk with retired brigadier general mark kimmitt later on those events. alix: the said flipping the script. all year, chairman fed powell preaching a moderate approach to monetary policy. >> we are in a place where we can be patient and fixable. a patient approach with regard to future policy changes. it is a great time for us to be patient, and watch and wait, and see how things evolve. we will be patient.

alix: what a difference a few weeks makes. fed chair powell now opening the door for july rate cuts. >> we will act as appropriate to sustain the expansion. we have been mindful of ongoing crosscurrents, raising concerns about the strength of the global economy. for a somewhat more accommodative policy has strengthened. alix: joining us now on the phone is sarah bloom raskin, former federal reserve governor, johcm istopcuoglu of still with us as well. it's cautious the new patient, and does that really mean a cut in july? sarah: what we heard from chairman powell was fewer references to patience. in your earlier clips, you have patience being the mantra. now the fomc statement and his presser has moved off of that

notion. he is clearly getting markets and the economy ready for a move to cut rates. -- the wordpatients patience is not appearing as it did before. euro seeing more explicit recognition of what he calls the crosscurrents come of trade issues going on. this is really a moving which he is positioning the fomc and getting markets signaled in the economy signaled correctly that a rate cut is going to come, not at this meeting, but it is going to. david: that's my question. was he getting the fed to neutral, or for a rate cut? the market interpretation is that we are going to get a rate cut. on the other hand, he talked about a lot of uncertainty, particularly with respect to trade.

so are we now at neutral, or decidedly pointed towards cuts? sarah: that is such a great question. i think we had been neutral prior to some of these statements. as you will recall, the fed was on a trajectory of repeated rate hikes. it then paused those rate hikes. neutral.the posture of we are now in the mode of moving the gear out of neutral and towards a different gear, towards accommodation. the accommodation has not happened yet, but the signaling is increasingly important because markets are sophisticated, and they react to even the mere signaling of what is to come. what we are seeing not just in the fomc statement, but also consistent in his press conference, and also in the dot plots that came out yesterday, you are starting to see a movement towards the preparation

for a rate cut. david: when it comes, what will it be? he was asked specifically about 25 basis points versus 50 as the first cut. he said i don't want to get into specifics, but an ounce of prevention is worth a pound of cure. that is sort of saying if we are going to do it, we are going to do it big. sarah: it may or may not. the fed doesn't have a lot of room, actually, to do a huge cut. the current levels are somewhere between 2.25% and 2.5%. that is lower than the fed funds rate would be if the fed wanted to achieve maximal accommodation. so in other words, the runway is shorter. the question is the extent to which the fed is going to want to waste all of its so-called ammo on a big rate cut, as a so-called insurance policy, now,

or whether they will want to hold back some of it should things deteriorate or need more room to accommodate. alix: is there another narrative that we are all missing because we are so focused on a preemptive cut? i thought what what i learned yesterday is that jay powell is very intense on having the fed maintain credibility when it comes to inflation, and wants to get that number consistently at 2% or over. did you get that at all? lale: i think one of the angles people have stopped talking about, is they have the balance sheet to run off. you could just stop the balance sheet runoff, and that will help support asset prices. not that the lending conditions are tight. if the issue is we just want to keep asset prices going up, you can easily do that by just

halting the balance sheet side of the equation. , asset pricesious are being held up -- is asset related?ing held up sarah: i think one way the fed and the markets are looking at the trade conflict is looking at the way it gets transmitted into the real economy. features of the particular uncertainty around the trade wars and the trade issues, which have escalated since the last fomc meeting, is a flatness and even a dip in business investment. that is what i think is particularly critical here, the extent to which the uncertainty around the trade wars is firmsng the inclination to invest. ,hen that happens, of course

and if it happens on a massive scale, the economy starts to turn down. that is not a good come along run -- that is not a good omen for where we are heading. alix: if the data stays the same , so some pockets are a little , what, some are ok happens to a fed cut probability? do they need the data toured here you rate or get -- data to deteriorate or get better to avoid the cut? sarah: it depends on what data it is. some are better than protecting -- some are better at predicting and will send greater signals. consumer confidence, business confidence are down a bit. those are not good indicators. remainsation level below 2%. it always appears stuck at this point. that is obviously of concern as

well to the fed. i think the fed at some point is going to put some significant weight on the fact that they cannot seem to move the inflation rate higher than what it is now. they can't get it to 2%. so it really depends on which data points we are talking about, and how to they move. sohing ever stays the same, it's probably not a great way to think about it. there are going to be changes. the question is what indicators and data points are changing, and what way does the fed want to keep those changes. david: sarah bloom raskin, former fed governo reserve gove, , thank youpcuoglu for being with us. coming up, deutsche bank said to be under further investigation for money laundering. alix: and if you are heading out, tune into bloomberg radio across the u.s. on

sirius xm and on the bloomberg radio app. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, fixed income, chief economist. ♪ alix: we turn now to wall street beat to cover three things wall street is buzzing about. federal authorities investigating whether deutsche bank complied with laws meant to stop lenny monitoring and other crimes -- to stop money

laundering and other crimes. slat gets its firstbu -- buyk gets its first rating ahead of its listing. sonali: there was a whistleblower that "the new york times" reported on earlier this year that flag suspicious elating to the trump and kushner companies. the investigation is apparently part of a wider investigation into how illegal funds move into the u.s. so it is unclear where the money is coming from, but what is clear here is whether they are files. into suspicious

alix: at deutsche bank i have lost track of what kind of investigation and what trouble with different regions. i don't know. david: you need a flowchart. sonali: i was making that last night. [laughter] david: the good news is they've got a very steady, solid management team. it seems like a resolving door -- a revolving door. everybody is moving out, moving in. sonali: the two men that matter are the chairman and christian sewing. they are considering replacing the head of the investment bank. meanwhile, and the u.s., you have the head of the u.s. broker-dealer leaving and moving to wyoming -- excuse me, jacksonville, florida. there's a lot of people moving in and out, so who is going to run the operations?

the regulatory front is a big question mark. alix: he's basically moving were no one to get to him ever. let's get to our second story, kkr. they are lifting their opportunistic credit debt. what are they actually buying here? alix: risky stuff. it is something interesting about kkr. year, after we saw some frothiness in the market, they said they would pare back a little bit. this is a bit of a reversal from what we saw earlier this year. something interesting about leverage loans, they are performing better than high yields and equities. david: there's no search for yield going on anywhere. alix: i also heard that part of the issue is a lot of companies aren't issuing any high-yield at. they are just going right to the leverage loan market because there is so much demand.

you lose the ability to be up on the scale because it is just leverage loans. sonali: that's right. we are seeing a lot of discerning, and this is definitely little different for some people. others are saying this is kind of late cycle. let's go off the curve a little bit and fly to safety. david: fear of missing out. exactly, and these guys know how to do this. they are a private equity firm. they have a technical market division. they are very big players in the leverage loan market. they are choosing their spots that maybe cannot perform in the market, but we've heard that before. third story.is our we should tell you, the is anerg capital arm

investor in slack. sonali: $26 is an interesting number. we reported that they wanted a $1 billion valuation, 25 forward revenue. david: i keep thinking about earnings. i shouldn't be. sonali: exactly. we've been hearing a lot that , growth has been slowing for a number of years, so there's a big question whether this is going to go upward or downward. the good news for slack if they already have their first buy rating at $37. alix: how does direct listing work on today the stock starts trading? do we get that pop that we are expecting? lale: i'm on my way --sonali:

i'm on my way to the stock exchange after this, so i will be waiting. sittingtanley will be in times square, talking to investors, and figuring out what the buying and selling demand would be. for an ipo, there isn't some opening above that pricing. the reference price is really based on private share interests, so we will see what investors really want to buy and sell today in a couple of hours. anything toere justify that kind of market cap? sonali: actually don't know the number. at best report would be atlantic equity today. that is kind of the standard here. but they are growing at 100% just a couple years ago. alix: in the 10 year is at 2%.

david: oh yeah. have a great day at the stock exchange. bloomberg's sonali basal/ basak.k with -- sonali ceoill speak with slack's and cfo. mmit, joinsmark ki us. this is bloomberg. ♪

david: here's what we are both watching this morning. in iran, reports that a u.s. drone was shot down by iranian forces. iran claims it was over iranian airspace, the u.s. claims it was not. we welcome now retired brigadier general mark kimmitt. he served planning for central command and as assistant secretary of state under

president bush. thank you for joining us. sense of is this a further escalation, or a back-and-forth between the united states? guest: i certainly hope it is the latter. iran wants to continue to fight this war at the margins. they know they can't men a military confrontation with the united states. david: at the same time, is it important for the united states to really draw a line. cottonto some other tom -- to senator tom cotton, and he said we thought we have to draw a line with the ayatollah. war has been waging a against you know seats for the last 49 years, in the exact kind of behavior. what we cannot to do is allow --n to continue to chip

allow iran to continue to chip away. we will only see more escalation. david: he said we cannot continue to allow it. we have a choice. how do we stop them? mark: the president's rhetoric is clear. it is one where he will prevent iran from developing nuclear weapons. anything short of that he is willing to stand up to, but not go to work for. david: as we put more and more pressure for sanctions and iranian oil, clearly the regime over there is going to ramp up

the response. we also have reports of a missile attack from rebels backed by iran on a saudi power plant earlier today. how do we avoid escalating? mark: i don't think we do. i think they are trying to provoke us into unnecessary great risk byng doing that because they are trying to keep this low-level come about at the same time, they are shooting down drones, attacking oil companies inside iraq. they are doing everything they can short of provoking us. it sums like the president is making the right decision to take a deep breath and rush headlong into another war. alix: what does an overreaction look like? i think it would be more than response.

i thicket would be some big well sort of regime change come about there is significant hurt put on the iranian regime, and its military capabilities. they are not going to fight with the same sort of high-tech approach that we take. are we equipped to really deal with an opponent like that? >> i think we are. we are running cyber operations, -- we havemical criminal investigations against them. we are very strong in the epidemic, diplomatic, and cyber level -- the economic, diplomatic, and cyber level. that: do you have the idea troops can protect the straits of hormuz?

--brig. gen. kimmitt.: we are old enough to remember the tanker war in the 1980's. we've done it before. we can certainly do it again. david: thank you for joining today. alix: they can do it, but will they do it? much more over the next hour. also coming up, nathan sheets will be joining us. what a dovish fed means for yields in the u.s., but also emerging markets. the trade war coming out front and center next week. this is bloomberg.

when you rest on a leesa hybrid mattress, bedtime is no longer simply the time you go to sleep. it's time to switch off and catch up. enjoy me time, and we time. 40 winks or 8 hours solid. the leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket springs provide edge to edge

support, responsiveness and comfort, while premium foams relieve pressure. keep you comfortably cool and limit motion transfer. leesa's hybrid mattress is not only recommended by experts, experts choose to sleep on it too. try it yourself in any west elm store. or order online and we'll ship it to your door so you can try it risk free. the leesa hybrid is american made. built to last. and, because everyone needs a place to rest, we donate tens of thousands of mattresses to those in need. live healthier, live happier by resting deeper. right now, you can get 10% off, plus two free pillows. go to leesa.com today. ♪ >> we will like as appropriate

to sustain the expansion. alix: this is what it sounds like when doves cry. chair powell sets the stage for a fed rate cut. gord soares and emerging markets ande -- gold soars emerging markets slide. ceos take on trade. we talk about steel and aluminum tariffs ahead of justin trudeau's visit with president trump. david: welcome to this "bloomberg daybreak>" an hour ago -- with "bloomberg daybreak." an hour ago we got the by commend lynn decision. banke bank of a man -- the of england decision. alix: they are also saying they'd it would knowledge the market is taking a different view than the bank when it comes acknowledging we are thinking a little differently on that. david: all of the heads of state around the world appeared to have gotten together to agree that interest rates are too

high. president erdogan of turkey now saying a 24% is unacceptable. he's been leaning on the central bank for some time to try to cut down. alix: in some ways, also a little bit of an olive branch to in u.s. on sanction threats, terms of weapons as well. relations with president trump are really good. david: whenever they had that conversation a while ago, trump says on the phone we will pull our troops out of syria altogether, and it was really a big problem. at the same time, he saying you're right, we can fix this s4ng, but he says the hundred, the russian antimissile thing, is going to start early july, so time is a wasting. alix: in the markets, if your reaction to that dovish press conference yesterday. as in be futures flying higher, up 1%.

it looks like we will break intraday and closing record highs. euro-dollar also soaring up 8/10 of 1%. the equities market catching up finally to this, and the yields at the lower sliver -- and bonds at the lowest level since 2016. crude flying with risk, flying with the weaker dollar, and that is also the geopolitical side we are watching. david: now let's turn to viviana hurtado. she is here with first word news. viviana: the u.s. says none iranian attack on a drone was unprovoked. iranian media describing it as a spy drone in iranian airspace, but the u.s. says it was over the straits of hormuz in international airspace. president donald trump telling confidantes he think see has the authority to replace u.s. federal reserve chairman jerome powell. bloomberg has learned the president believes he could demote powell to a fed board

governor, but isn't planning to do that now. despite the criticism, powell says he intends to serve his full term. today, conservative members of britain's parliament will choose the final two candidates to succeed prime minister theresa may. after three rounds of voting, boris johnson has increased his lead. of the 313 vote count, johnson asning 143, the same amount the last remaining candidates. 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: obviously one of the geopolitical stories of note is what is happening in the middle east and the debate over where the your wrist drone -- where the u.s. drone was shot down. iran really ratchets up the tensions in the region. david: also, we had the report

of a missile attack on perhaps a arabia byion in saudi by houthi rebels, who are backed by iran. i know i merkel says iran maybe was responsible for the vessels attacked last week, but they have to make a decision very soon if they will do business with a run -- with iran. know that situation much better than i do. it is very hard for the europeans to break. at the same time, they are not eager to support military action in the straits of hormuz. alix: that is definitely one of the risks in the markets. that echoes what we heard about the uncertainty from the fed. the fed flipping the script

yesterday. how will all throughout the year preaching patience in monetary policy. >> we are in a place where we can be patient and flexible. a patient approach regard to future policy changes. it is a great time for us to be patient, and watch and wait and see how things evolve. we will be patient as we consider adjustments. alix: now singing a different tune, opening the door to a july rate cut. chair powell: we will act as appropriate to sustain the expansion. have been mindful of crosscurrents that have reemerged. uncertainties surrounding the baseline outlook have clearly risen the case for a somewhat more accommodative policy. alix: joining us is nathan sheets and bloomberg's michael mckee. you were there in the room. what was the biggest take away?

did markets echo what you actually heard? michael: you kind of walk out of there feeling that maybe the fed is being bullied into doing something it isn't, necessarily ready to do by the financial markets, and that is why they are couching it as we are prepared to cut rates come about our forecast is we don't. sort of trying to have it both ways. the market is obviously taking this as a license to price and a lot of rate cuts going forward. but as i've been saying, the hard thing is will it work? that jay powell suggested, the crosscurrents he talked about, or things not necessarily affected by monetary policy. the trade wars, lower interest rates aren't going to solve that. david: we just had a former fed governor on who said maybe there was a connection to the trade war because if you get the capital down, maybe that encourage capital investment. is that right?

it seems like pretty much a bank shot. it is not a direct response to trade conflict. nathan: i think that the first order of fact in the trade war his negative. i think it kind of gets to michael's point of how responsive is business investment to lower interest rates anyway? i think housing responds to lower rates, and i think fed rate cuts provably stimulate animal spirits in the economy, but i don't think there's a whole lot of evidence out there that low rates have that big of an effect. for: does it do anything inflation expectations? i think we've learned jay powell is committed to getting that number up. that clearo believe

message from the federal reserve that we are committed, regardless of all else, to hitting our inflation target to the extent that we can. believe that is a powerful message, and i think people hear that. areeven that, they struggling to keep inflation expectations where they want them. this question of how does monetary policy matter anyway, it is a tough one. it is beyond housing and animal spirits. it is tricky to find those channels of transmission. michael: and consumer confidence figures are near record highs. and what effect will this have? but to the numbers, other than the bond yield, do the numbers really justify a rate cut at this point? michael: no, and that is the interesting thing. nobody on wall street is protecting a recession ahead, with the caveat that economists always miss the turning points,

but you don't see the traditional drivers of recession building in the economy come up with the exception of perhaps inventories that were trade war induced. it is hard to see what they get out of it. there forecast is that even with rate cuts, growth stays the same and goes up next year, so they are not protecting a drop off either. nathan: i think that is the challenge right now. i don't remember a time when it was so difficult to separate the noise from the signals. if the signal that the underlying economy, the consumer labor market, looks pretty good, and the noise is the trade war? or is it the other way around? are those numbers lagging indicators? alix: the obvious yet done year -- yet unfair question, what is the bottom for the 10 year? nathan: we know it is below 2%. how low it ultimately goes i think is an open issue.

if the fed is successful with the effort to put a floor on inflation expectations, i think we will be somewhat higher and closer to 2%. if the fed is unsuccessful, maybe we are on a path toward japan and germany. that is not my base case, but it is certainly possible. alix: bloomberg's michael mckee, thank you very much. nathan sheets of pg im fixed income will be staying with us. some updates on the potential leadership in the u.k. boris johnson winning the last round in the leaders race. david: we will get to two and have the general election, but we are now at three. boris johnson has been adding votes every time. i think the writing might be on the wall here on what the two candidates will be. i think the general election is july 22. alix: coming up, the fed dovish.

currencies seeing their best games. where you go in emerging markets, next. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." today, slack technologies taking the unusual route to the trait r and -- to the trade floo will start trading on the new york stock exchange via a direct listing. the key goal of a direct listing is to avoid volatility. bloomberging arm of is an investor in slack. deutsche bank reportedly facing a criminal investigation in the

u.s. over money laundering allegations. authorities want to know if the german lender complied to stop money laundering and other crimes. to presidentks trump and son-in-law jared kushner. today, shares of carnival falling. the cruise line cutting its earnings forecast for the year. carnival sees lower ticket prices in the second half of 2019. that is your bloomberg business flash. alix: the dollar's best run in four years, is it coming to an end? you have the fed signaling a willingness to cut rates in the second half of 2019. em currencies now heading for their best gain since 2013. still with us is nathan gim fixed income. why would you want to buy emerging markets when you have

trade issues, and that is where the risk is? nathan: one key factor is that it diversifies portfolios, and it gives new and different kinds of possibilities for gains, but diversification is one big one. i think another one is that emerging markets have a particularly soft year last year. i think there is normalization going on in many of those economies. if you haveon is particular views on a given economy, that beyond em nearly as an assetely class, there's a lot of differentiation. if you have a view on argentina's election, for example, i think there is a good case that that is going to happen. argentina at current prices

seems pretty attractive. david: there is yet another possible factor. is our shirt getting a little dirtier? that is to say, we are coming down a little bit, which means em is relatively little better? nathan: yes. when we used to thing about emerging markets, they were coming towards us. thein many respects, features that long ago were associated with emerging markets or uncertainty about fiscal situations and so forth or are of thosecharacteristic economies. the stock of global debt is too high to boost inflation. if monetary policy is not enough, is it possible to witness a deflationary since scenario -- a delusionary

scenario over years -- a deflationary scenario over years? nathan: 25 years ago we would have said it is all about monetary policy, and monetary policy has to be vigorous enough. the experience in japan gives one pause that you can get to a place if inflation expectations move toward the downside. even the vigorous monetary policy is not sufficient, so i think there is that risk, and it behooves central banks to be vigorous. i think many of them are doing their best, and we will see about the power tools at -- about the power of the tools at their disposal. there are supposed to be tools they can use in a growing economy that has more demand. are we seeing that greater

demand, either in the united states or globally? nathan: it is hard to know the counterfactual. i would characterize global demand right now as soft, sluggish, lackluster. but we don't know what it would look like if central banks hadn't been as stimulative. it probably would be worse. but it kind of gets back to the point of, well, are these tools right now? what is the transition mechanism? i don't think it is translating through business investment the way it used to. business investment in the united states and europe and japan has been quite soft. david: one of the things that struck me in jay powell's news veryrence, he was instructive on trade affecting that confidence right now. can we stoke trade conflicts because the state actors, through donald trump the president, can say it is ok? nathan: i think the answer is yes.

i think one of the key reasons why president trump is leaning on the fed as hard as he is is because he once more room to be able to pursue his trade war. reserve allowsal him to be more vigorous, gives him more margin to be vigorous against china. alix: wrapping that into the deflationary conversation, that is where china has the advantage. even yesterday we heard about more potential fiscal stimulus coming from china. they don't just have to throw it all on the pboc. how do you view that? nathan: china's strength in the trade war is one of political will, and they have a multiplicity of tools. some of those tools come with long-term costs for them, so that means they will be accumulating further debt and leverage in their economy. china's weakness in the trade ,ar is at the end of the day

they are more exposed to global trade and to the united states then the united states is to global trade and to china. in some sense, that is the terms of engagement that china has tools in its economy and will grow, but the shock to their economy is larger. david: that also raises the question of timing. we had an enormous tool in the tax cut. we used it. you can't go back on another one politically. did we play that a little too early in the game? nathan: typically you wouldn't think that the timing of a large procyclical fiscal package would be at the top of the cycle, so i think that is a compelling case. you would want to hold it back for a time when the economy is looking a little softer. there's also an argument for those tax measures as a tax reform. there are corporate tax rates that were structurally too high,

but i think it could have been shiftured as a zero-sum in fiscal policy, with the re-profiling of rates. david: nathan sheets of pgim fixed income is going to be sticking with us. coming up, airbus edges back into a lead at the paris air show after a deal with paris airlines. with american airlines. this is bloomberg. ♪ es. this is bloomberg. ♪

david: time now for the bottom line, where we look at three comedies worth watching this morning. -- three companies worth watching this morning. i'm watching huawei. mitt romney has introduced legislation in the congress that would forbid president trump on measures off against them. i don't know if it is going to go anywhere. alix: i'm taking a look at

deutsche bank. a report this morning talks about federal authorities now investigating whether deutsche bank complied with some laws that were meant to stop money laundering, as well as other crimes. it is the latest misconduct, whether here or in europe, that is continuing to play deutsche bank. who is and what role anymore? i have no idea. to seei wouldn't want their executive search bill or their legal bill. the third come at a watching his american airlines and airbus -- the third company we are watching is american airlines and airbus. with us now is brooke sutherland. yesterday it was all about going. now it seems -- all about boeing. now it seems to be all about airbus. brooke: that's right.

airbus stepping in with a great order from american airlines for its new jet that it unveiled at the air show, the longer-range version of its a320 family. they got a number of orders for that plane. some of those are converted from previous commitments, but still, pretty healthy demand for that plane as they unveiled it the airshow. alix: what is not being talked about right now it the airshow? what's missing from other years? brooke: i think orders. we are talking about some now, but you are really not seeing the numbers you saw even last year. numbers are down pretty significantly. i think that is sort of in line with what we were expecting going into this. you had some really not inspiring numbers on passenger commercial air traffic -- passenger and commercial air traffic growth, down from the pace we have seen on average.

talking to executives on the show, they were cautiously optimistic that it is still growing faster than gdp, and when you look at some of the other markets, especially on the industrial side, that is still pretty good. i think they feel comfortable with where they are, but the big question is have boeing and airbus already pretty much saturated the market? their backlogs are ok, but will they continue to grow their backlogs? alix: brooke sutherland, thank you so much. coming up on this program, what a difference a year makes. you've got the darlings of president trump's tariffs struggling a year after he touted the deal. this is bloomberg. ♪

when you rest on a leesa hybrid mattress, bedtime is no longer simply the time you go to sleep. it's time to switch off and catch up. enjoy me time, and we time. 40 winks or 8 hours solid. the leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket

springs provide edge to edge support, responsiveness and comfort, while premium foams relieve pressure. keep you comfortably cool and limit motion transfer. leesa's hybrid mattress is not only recommended by experts, experts choose to sleep on it too. try it yourself in any west elm store. or order online and we'll ship it to your door so you can try it risk free. the leesa hybrid is american made. built to last. and, because everyone needs a place to rest, we donate tens of thousands of mattresses to those in need. live healthier, live happier by resting deeper. right now, you can get 10% off, plus two free pillows. go to leesa.com today. alix: this is "bloomberg daybreak." i am alix steel. equities flying this morning over in asia as well as europe. it is all about stimulus and dovish talk from central banks.

as an be futures look to be opening in a record intraday high. europe following asian markets higher. more stimulus out of china. the dollar has to watch. the dxy city and its 200 day moving average. have we seen the dollar top? 10 year yields sitting right at two. gold up a whopping 3% as you want up having a safe haven bid front and center as the fed goes on a dovish track. david: now let's find out what is going on outside the business world with viviana hurtado. viviana: tension between the u.s. and iran has gotten worse. command hauling the shooting down of an american drone unprovoked. the military says the drone was shot down by an iranian missile over international airspace. the drone wassays

over its airspace when it was shot down. turkey is warning the u.s. not to oppose sanctions for it purchase of a russian missile defense system. president aragon saying turkey will retaliate. erdogan saying his relations with trump are good but his relations with the people under trump are different. for the first time in 14 years, a chinese president is visiting north korea. xi jinping is there for talks with kim jong-un. it is therefore kim jong-un to demonstrate he has options other than a meeting with the u.s. president xi is sending a message to the u.s. before the leaders are set to meet at the g20 summit. 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 am viviana hurtado. this is bloomberg. break a bit want to of initial jobless claims numbers. they are slightly elevated this month, 216,000 -- slightly under

the estimate. 220,000 was the estimate. i am more -- alix: i am more into the philly fed. the hall index sitting at .3. the employment index is down, prices received are down, prices paid are down. definitely the trait affect affecting real business conditions on the ground. let's go back to the story of those altercations in the straits of hormuz. the u.s. has said iran has shot down an american drone flying of the entrance to the persian gulf as tensions escalate in a region that has been on the brink of a military confrontation for weeks. earlier we spoke to retired brigadier general mark kimmitt. >> i think the iranians are trying to provoke us into an over response. they are taking a great risk by doing that because they are

trying to keep this low level, that at the same time, they are shooting down drones, they are attacking oil companies inside of iraq. they are doing everything they can short of provoking us. it would sound like the president is making the right decision to take a deep breath and not rush headlong into another war. >> we welcome rice debt energy senior partner and head of analysis. give us a perspective from the energy community as it views these developments over in the persian gulf. it is clear that these iranian actions are adding to the nervousness in oil markets. every time something happens in the middle east you see a reaction of the oil price, and today as well. there is nothing that can change the fundamentals on the supply side from the middle east.

this adds to the psychological fear that this will escalate into something that can threaten oil supply from the gulf of persia. it is quite a lot of looseness in the markets. i think the market is more robust to these kind of events than what we have seen in the past. also if you look at this in a longer perspective, the middle east oil is not as important as it used to be because the u.s. can respond and produce more oil relatively quickly. i think that even if it is de-escalating, i think the market will be relatively robust to what is going on and i think it is a long time until we can see anything changing on a mentally speaking on the oil supply from the middle east. will it feels like europe

have to come down one way or the other, particularly if they decide whether they want to trade with iran. in your work, do you feel like europe is going to back the u.s. or do you feel europe will continue trading with iran? >> i think more and more countries have to move away from iran. we saw turkey used to buy oil from iran. they have stopped buying oil from iran. right now it is only china that buys oil from iran. i think it has more or less in the other way. the iranian actions will trigger more countries to stand along with the u.s. and the reaction from the government that they will not overreact and stay calm, i think that adds to the

corporation willingness from other countries. david: that is very helpful. thank you so much for being on the telephone with us. steel stocks this week climbing after u.s. steel announced it will idle two furnaces in the u.s. and one in europe. it is a move that will better align quote local production with their oil books." four lead on how trade leebow joinstodd us now. still with us is nathan sheets of egypt fixed income. when you have plans idling from where you sit, is it a demand or supply issue or are steel companies overproducing or is demand not holding up? todd: demand has been stable year-over-year. the issue is increase capacity in the united states.

when you have excess supply in the marketplace what happens is these integrated mills have to make steel. they're fixed costs are too high. still prices have come down so significantly it does not make sense for them to make steel at those prices. president -- david: president trump promised you would save the steel industry. have his terms work? -- have his tariffs worked? the price of the stock of the steel companies never went up. has it worked from your perspective? todd: a lot of people think trade action will save an industry but the reality is it is not going to. trade action is a short-term fix. i cannot believe wall street ever bought into the tariffs in terms of supporting the domestic steel industry. the biggest misperception is the domestic steel industry is a

dying industry and still america is dead. it is far from dead. the steel industry has invested a lot of money into invest -- and innovation in steelmaking. in order to bring new still capacity online, you have to make new steel. while you are doing that, you have to support it with additional demand. it has not been in line. imports year-over-year are low. it is not an import situation. the issue is you have excess capacity for the current demand. the biggest thing is we get more still demand in the united states. alix: nathan, you are not a. nathan: -- you are nodding. just saidat he conforms perfectly with what economic theory says. what determines and industries success, it's innovation, that is what will drive is long-run performance. createriffs will do is

variability and volatility that will make it harder to do business in that industry. that is what we have seen in steel and more importantly, more broadly for the economy, all the consumers of the steel that is produced have experienced this. david: can we talk about steel? globally there's excess capacity and steel production? other subsets the u.s. producers could excel at and do better than other parts of the world? todd: we are already seeing that. there's been a major transformation in the domestic steel industry. today we produce 70% of our seal we've steel using -- invested new technologies to make higher strength steel at better costs. i think the trade action is necessary in terms of preventing people coming here subsidized by other countries.

they are using us as a dumping ground while they are overcapacity. the u.s. is under capacity for what future demand needs will be based on infrastructure, and manufacturer in the united states. to get there takes time. steel is investing not for today, but for the future. today if you bring in capacity that is not utilized, you will have an imbalance. short-term we have an imbalance where u.s. steel brings furnaces back online, but those furnaces are old furnaces and they are going through a transformation themselves. the demand today is not supporting it. longer term when you think about the infrastructure in this country, and then bringing manufacturing back to the united states as well as steel is a superior product, and a lot of people are still using inferior products. steel should be used over those products. alix: nathan sheets and todd

leebow, a pleasure to see you both. there will be much more on trade and commodities at commodities edge. we will be digging into that steel plant closure but also taking a look at inequality in the clean energy world. david: really? alix: who would have thought. your block to cover on "commodities edge." coming up, the markets going public. slacks direct at issue on today's all of the lead. -- on today's follow the lead. this is bloomberg. ♪

viviana: i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up on balance of power, representative steve scalise of louisiana. this is "bloomberg daybreak." investors in oracle are breathing a sigh of relief. the world's second largest software maker returning to sales growth in the last quarter. it gave a forecast indicating the momentum may continue. oracle has been going through an uneven transition to cloud-based computing. if you want to buy a tesla in black it will cost you $1000 extra.

musk tweeting the standard color of one of the cars will be a simple white. next weekend disney will try to close the box office cap between its avengers blockbuster and the all-time champion, avatar. avengers and game will reenter theaters that was not included in the -- with additional footage not included in the original release. i am viviana hurtado. that is your bloomberg business flash. david: i know you're excited about avengers. alix: i want to go see it again. i will see it. i'm excited. thank you for releasing it. david: it is time for follow the lead. a deep dive into headlines making headlines and moving markets. today we look at the ipo market and direct listings. workplace messaging

application is set to start trading on the new york stock exchange today in a direct listing, not an ipo. , andng us is rett wallace bloomberg intelligence senior technology analyst. bloomberg data is an investor in slack. let's start with valuation. they are talking about $17 billion. it sounds like a lot of money. think the market is pricing these companies -- there's been a lot of success on the cloud. this is a crowded space. when you look at crowded markets , it is getting fragmented. you have zero communications, now with slack. i think you are getting a point where you'll see more consolidation. david: are they making any money? rett: here is what we see that is interesting.

we look at this company and we see doc you sign or dropbox, both of which are profitable. this when the growth is slowing and they are not profitable. they have $800 billion of cash on the balance sheets. they are a good position relative to their loss ratio. do your point on valuation, this seems expensive given that the company has not crossed over and a profit. profitsy we care about when you have potentially more than 15 million users by 2025? mandeep: look at the percentage of paid users. these companies were line of premium model -- rely on a freemium model. revenue is concentrated. a lot of the customers are just freemium. they have taken the service but they are not paying customers. slacks customer acquisition

costs are high which is eating up their margin. you look at dropbox, that is not the case. point.hat is exactly the dropbox have the same freemium model and was still carrying 10 service.eemium when you're losing as much money as you are if you are slack, deciding not to raise proceeds because they are not raising what they could raise today if they wanted to, they much -- they must have a path to profitability in their own minds. today is about liquidity, not about fundraising. david: that is my question about path to profitability. out,uber and lyft went they said they did not see the prospect of making money. does slack have a plan? rett: there are two things. the first is the direction of the trend and the second is the aggregate amount. if you look at lyft, you could

say these are colossal losses. it does not seem to be getting better. . it does not seem to be getting better. we do not know how this would get better. with slack, you can look at this and say i have many presidents for companies like this crossing over into profitability plus the loss ratio is not as big as the colossal losses we have seen. mandeep: cash burn is not an issue with slack. in this case it is marketing costs. they have to spend because you need to wire customers. with a single product company, if you are not acquiring customers, your growth will taper down. they can get leverage over time that they acquire customers. rett: we will see a shift direct sales strategy where they are hiring salespeople are expensive and they're are trying to close enterprise accounts. tose are good but you have invest into that strategy before it produces dividends. given that it is somewhat unproven, we do not know what the expense sales productivity

is going to be at this company. alix: what is the payoff? rett: bigger accounts that are more profitable? alix: how long? rett: sales cycles can be a year or two years. you give them a credit card to buy stakes in golf games and they spend a year with customers. david: box and -- mandeep: fox and dropbox went public. the reason they are running into microsoft. anytime you're competing with clout guys you have a problem because over time they will price you out. that is the problem for dropbox, slack, because microsoft is a competitor, facebook is a competitor in this market. rett: one thing i would say as far as slack is concerned that once your team is using lack and your people are on it, it will be harder to tear it out and move to something else. zoom is the kind of thing you

could switch overnight. even drop box, you can move your smiles -- move your files. value, is it in that sticky? alix: rett wallace of trying been -- of triton research, thanks a lot. ceor we will speak to slack today at 10:30 in new york. david: breaking news. china national cold said of the weighing a bit for canada's i am gold just in time for "commodities edge." alix: this is the second iteration of gold m&a. you have a huge gold m&a and a potential takeover of barrick gold and newmont that went into a joint venture instead. this also goes to the conversation of central banks buying gold. china likes to secure its resources whether or not you're

looking at lithium or oil and gas and gold. it is not a surprise they would go for a canadian company. they want to secure that supply. david: lots of attempts of consolidation. commodities edge is on today at -- alix: 1:00 p.m.. coming up, the fed dovish shift going throughout the market. more on what i'm watching next. this is bloomberg. ♪

alix: here is what i'm watching -- markets, specifically the s&p. yesterday you had a big move on the two-year yield, a big move on the dollar index, but not a huge move in the s&p. now the s&p looks to open at a record high, up by about 1% in premarket. to me it will be about what is

leading the way. yesterday, utilities, health care, and real estate. if you have yields of the lowest level since 2015, you will look defensive'snd -- have been leading the s&p rally for the last few weeks. if the defensive's are leading the rally, they are getting quite expensive. what does that mean for the other rotation? david: why doesn't it mean the equity market is listening to the bond market? the bond market is saying we do not see a lot of growth. you're going for more defensive stocks? alix: but then why would you happen s&p at a record high? david: because a lot of stocks are defensive? i don't know. alix: have we seen that kind of same movement in the equity market we have seen in the bond market? the bond market is telling you you will not have any growth. should you have more optimism in the back of the curve in particular not sitting at 2%?

our economic indicators that bad or should it be higher? other technical factors like what is going on with europe. how much do we have a negative rates? alix: $12 trillion. that is something i will be watching, how low can we go. if we break below that, it has implications. an interesting session developing. that wraps it up for bloomberg daybreak. coming up on the open, he will hit on all of this with peter tchir and we look at a market sent open as yields continue to grind their way lower. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪

jonathan: coming up, the federal reserve meeting high expectations, setting the stage for rate cuts. the everything rally continues. stocks nearing a record. 10 year treasury yields reaching 2%, leaving the dollar on offer. the greenback weakening against every single g10 currency. good morning. here's your thursday morning price action. we are about to reclaim all-time highs of the cash open with futures up 28 and positive around one percentage point. treasuries with a bit of a bid again, yields coming into basis points. 2% is your yield. let's begin with the big issue. the era of patients is over. >> they set up the stage to be able to move in july. >> july. >> action at the july meeting. >>