closely, and we will act as appropriate to sustain expansion. alix: vice chair rich clara says ita says -- richard clar the case has increased. analysts start to question a sub 1% 10 year. trump's you turn on iran. the president ordering a strike on iran, than calling it off. david: welcome to "bloomberg this friday, june 21. there was uncertainty not just in iran, but in the white house overnight. the president ordered a strike, then pulled it back. alix: the question is why. it seems to indicate reports iran a windowave that said i do want to talk. i don't want war. iran took him up on it by talking to the swiss ambassador. david: we got a clips of that

yesterday with donald trump in the oval office and he talked both sides of the question. pres. trump: fortunately that drone was unarmed. there was no man in it. we didn't have a man or woman in the drone. it would have made a big difference, let me tell you. it would have made a big difference. i have a feeling -- i may be wrong and i may be right, but i am right a lot -- i have a feeling it was a mistake that shouldn't have been doing what they did. i want to get out of these endless wars. i campaign on that. this is a new fly in the old meant -- in the ointment. this country will not stand for it, that i can tell you. david: but i don't to get into a war. we see two kinds of the sewing -- two sides of the coin within the presidents and min -- within the presidents own mind. alix: let's take a look at what is happening in the markets. gold crashing up against 1400,

and that is paired back a little bit as the missile strike was called off. you've got s&p rebalancing. all of that means a lot more volatility into the open and the close, so watch that as we sit at record highs for equities. a broadly weaker dollar story, right around the 200 a moving average. it was the moment of truth for the dollar. i don't know what that means, but it is very dramatic. [laughter] david: let the good times roll when it comes to equities. alix: that's true. this morning we will get market pois for the month of june -- market pmi's for the month of june, then existing home sales for the month of may. today is quadruple witching day, when options and futures expire, with a rebalancing of the s&p

500. ,inally, today is the solstice marking the first day of summer in the northern hemisphere and the first day of winter in the southern hemisphere. alix: happy summer, then. that's great. it is only a torrent of rain outside in new york. nguyen inined by lanan nguyen andee -- michael mckee. gold spiked back up to 1400, and now below that level. do you see a safe haven bid in the market continuing in asset classes, and where? gold is a perfect example of the federal reserve signaling potential cuts, so rallying above 1400. if you need more uncertainty to push brent higher, looking ahead, there's going to be an

opec meeting next month. tensions in the straits of hormuz and around iran are not going to help markets in terms of feeling the risks. if the fed is worried about uncertainty, buttons will strike on iran is not going to help -- uncertainty, potential strike on iran is not going to help. david: we have the central banks, and then you have iran. how do you sort out what is driving markets and what isn't? michael: it is hard to do because different markets may be driven by different things. it is hard to see what is driving the u.s. equity market. if you are building a rally on the idea they might cut rates 30 days from now, that is kind of a thin read. obviously gold is was bonding to the idea that they might be cutting and might push inflation higher. the -- where did german securities go from here? you can't get any yield. they are way lower. in the dollar, we want the

dollar to weaken, and in theory it should if the fed is going to be cutting interest rates, but you have nowhere else to put your cash. it is very hard to separate all of this out. it is the sort of rocky period. i saw some comments yesterday from investment folks saying if you are smart, the best thing is to take cash, go to the sidelines, and wait this out. alix: the 30 year is like 27 basis points below zero, which means all of the duration in germany would be below zero. david: at the same time, let's go to the everything rally. when mike says you should just sit it out, with everything rally in, that takes a lot of courage. lanan: it does. i want to come back to comments on the dollar as well. we were talking to analysts who said you're looking at a dollar bear market. obviously everyone is watching for key points, and now because of the fed, people are saying it is time to go bearish on the

dollar. alix: that all brings us back to the fed. thatu have a neutral rate has been lowered, it is re-rating what premium you're going to pay for equities. where you hearing about that, nation? -- about that combination? michael: that is something the fed is worried about. the idea that you are increasing multiples by lowering said rates, and you don't have fundamentals on the economy because if the fed is cutting rates, the economy should be slowing, then you are creating a bubble. the fed is worried about financial stability. if they do go ahead and cut rates in the economy isn't really collapsing, are they just shoving money into markets that are overheated already or could easily overheat? there's some real concern about what happens in leverage loans and other fixed income areas. weredea that people we just talking about would need courage to stay in you need courage to sit out at this point

, and there are people who said i'm not going to take that last 20%. i'm just going to wait because it is too hard, too dangerous. david: is it too simple to say the equity markets don't believe what the bond markets are telling them? lanan: i think it probably is. we are in this postcrisis environment where asset prices really dominated and dictated by what the fed does. in the treasury market and dollar markets, we are seeing this very immediate effect where equities, i think people in that market are just used to that punch bowl, so they are just going to keep it going. i think right now, investors especially are feeling that inflection point and are looking for when the cycle is going to turn. it is something that's been a huge focus for us looking at markets in the last few days. david: let's go back to the increased uncertainty. keene just spoke with rich claride -- tom keene just

spoke with rich clarida. >> there has been elevated uncertainty about the outlook. the economy is hitting some crosscurrents. there's been a marking down of global growth prospects. there is uncertainty about international trade. there's some evidence that is weighing on sentiment. we are monitoring that closely, and we will act to maintain expansion. david: you asked a great question of the chair. if you do cut rates, what is it going to do? michael: that is the sort of question tom asked, and he didn't have an answer either. the problems, as the fed describes them, are that there is business uncertainty, so they are not spending, and the cost of capital isn't contribute into that, so lowering rates may not help. 30 to 50 is running

basis points below their target, and he wants lower rates to push up inflation, but the question is, will it do that either? even if the dollar comes down, if the european central bank is acting and they keep that spread wide, you're not going to get much inflation out of a lower dollar, so where'd you get the inflation from it this point? alix: great point. are you seeing anyone start to hedge against any potential inflation, buy any kind of tips? is there a reverberation effect? lanan: i don't think it is that clear yet. i haven't delved deeply into the treasury market besides looking at the headline. a drop below 2% is something everyone is talking about, and now the treasury market is trying to pressure the fed to act early. they want the fed to go in july. that is going to dominate the narrative for the next few weeks. i also want to mention the dollar is a relative game. the fed is ahead of other central banks and has more room to go relative to other central

banks. also going tos dominate the pricing. alix: i read an article that said basically the dollar is going to go down, and you can then go ahead and cut in your currency won't go down as much as it would have before. thank a lot. really appreciate it. you can find all of the charts we just used and more at gtv on your terminal. coming up, the s&p touching a record high. more on the bullish weak in equities. -- the bullish week in equities. this is bloomberg. ♪

♪ payana: walmart agreeing to

$282 million in penalties to end a seven-year bribery probe. the retail giant partially owns a brazilian holding company. it failed to keep accurate records. the u.s. justice department and the sec faulted walmart for payments made to fast-track store openings in mexico, china, brazil and india. united airlines suspending service between newark and mumbai because the route regularly flies through iranian airspace. the faa issuing a flight restriction after iran shot down a u.s. military drone. airwaysklm, and british have also rerouted a number of planes to avoid the area. slack soaring on its debut after shunning an initial public offering. shares closing around 50% higher than the price set before the direct listing. ofs gives the maker workplace collaboration software

a volume of around $19.5 billion. the venture capital arm of bloomberg lp is an investor in slack. alix: thank you so much. nice datadirect list. -- nice day to direct list. the fed was a lot more dovish and he saw record lows in certain bond yields across the world. david: as i recall, uber was exactly the opposite. timing is everything. alix: why do you need revenue when you have the entire german dones -- german bun curve under zero? the road of negative yielding bonds grew to 13 trillion bonds for the first time this weekend. bank of america says overall, equities saw $15 billion in inflows this week before the fed's dovish announcement. joining us from pittsburgh is linda bakshian, federated investors portfolio manager.

how do you fight this bond market? how do you by equities at record highs and higher valuation when there is $13 trillion of negative yielding debt? linda: debt is an issue, but a lot of that is residing in rates, given that there are essentially in negative territory, germany being close to -30 basis points, france around zero. if you look at underlying u.s. economic growth, however, we are optimistic. yields, those negative debts will have a lot once growth rates start to appear again in the underlying economy. david: so you are optimistic about the economy overall. it appears that given the p/e p/e ratios are that as they have been in years.

linda: at the moment the s&p 500 is trading around six to eight times the years numbers. the market is certainly not cheap at the moment, but it is not expensive, either. even though we do have more optimistic longer-term view, we see there is volatility in the short run that could create potential opportunities for the investors to move into the market. where would those opportunities be? for the most part, the rallies we have seen are quite expensive. how do you balance those two things? linda: for the whole year, what we have been advocating his balance between value and growth. really concentrate on companies that have strong balance sheets, cash flows, management teams, and pricing power. when you have those companies in

your portfolio, if you are slowing down, they will be able to defend their market position. they will be able to invest and prosper through that. technologyally like on the growth side. technology is really driven by structural trends that are going to keep growth rates pretty solid. but of course, you have to be a lot more selective given the valuations in technology are not exactly cheap either. on the defensive side, we like -- we like reads. we like data centers and housing related reads as well. david: i will put a chart up

that shows large caps and small caps. the top curve is the growth rather than the value. are you thinking those may converge or come near another? linda: i think as a value manager, i will be waiting for a number of years now, but i think what you need at this point given the issues around trade and global growth, i think you want to be balanced. within balance, you want to be careful to have really strong companies in your portfolio. we do like value. we are a value manager. but at the same time, value needs to have economic growth attached to it a little bit more. that once we start seeing the trade agreements signed, we come through this inventory correction we are seeing right now and toward the end of the year, and it's 2019,

i think value is going to shine. there is no argument that value is cheaper than growth, but there is an issue of timing. alix: that is a bet on a better outcome for trade, but what about if we go with what the fed talked about? andhey wind up cutting securities are looking for cuts, what kind of mobile do you put on the s&p if you're looking between two and six rate cuts over the next 12 months? linda: i think at the moment, even though the market is pricing in a rate cut, are they going to cut? most likely. i think the fed when ahead and said everything other than we will cut, essentially. but in my opinion, the --erlying opinion the sen underlying opinion doesn't need a rate cut.

of the u.s. economy continues to remain strong, getting employed, getting pay increases. they are getting savings and health is increasing. i think those expectations for thosed cut, if we see with more balanced manufacturing growth over the next couple of years or quarters, i think that will come down considerably. ofid: linda bakshian federated investors will be sticking with us. warning the administration of retaliation if they consider more sanctions on wally. this is bloomberg -- on huawei. this is bloomberg.

♪

david: shares of apple lower in premarket as the company warned

in a letter to u.s. and bessette are lighthizer that more tariffs on chinese imports would tilt the playing field in favor of our global competitors. of federatedn investors is still with us. we talked a little about about trade as an overhang on the market. when you look at the tech area, what is the risk posed by having to redirect the supply chains? itda: in the shorter term, will create a lot of disruption. it is not just the supply chains, but also apple has a lot of exposure to selling its goods into chinese market as well. any kind of disruption at the end of the supply chain is also an issue for apple. however, i think with apple they are also talking about a potential surge of 40% of the manufacturing out of china and into other countries. they are starting to diversify their supply chain. i think if you look through the

next 12 months, maybe threw two it is a company you want to hold in your portfolio long-term. [no audio] david: -- the biggest supplier to apple. overnight saying, "i am urging apple to move to taiwan." is it easier to do then maybe we thought? move: anytime you want to supply chains, it is going to be difficult. regulatory get approvals, manufacturing facilities, get products through . is it going to be taiwan or

other countries? i think apple is going to have to diversify its supply chain and use other companies as well, by the way. alix: when you take a look at companies, do you avoid companies that have exposure to china, that need to rebalance their supply chain, or do you invest through it? depends on they fundamentals of the company. if we like some of the characteristics i mentioned before, we will be holding true and potentially adding threw two some weakness. however, if there are other companies that are severely going to be impacted by the chinese trade issue, such as some of the industrial companies, we will probably just watch what the implications are, and see what their reaction is. over the last couple of quarters, what is important is that management teams have been preparing for this disruption as

opposed to those who have not. some really strong teams have already started to prepare their manufacturing civilities -- there are many factoring facilities. ofx: linda bakshian federated investors, thank you. with a earnings season coming up, if the outlook is bad, that fuel for the fire. now we get trade in the weather. coming up, what it is like to run the single largest american institution, the pentagon. we will sit down with ash carter, former u.s. secretary of defense. this is bloomberg. ♪ hey! i'm bill slowsky jr.,

i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in?

ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. alix: this is "bloomberg daybreak." a pretty exciting few hours in the market. we could see a lot of activity

within the s&p. you are taking a pause overall as this may close at a record yesterday, but it feels like not that far away now from 3000 on the s&p. european banks are weaker today, down by 5/10 of 1%. 30 year german bund yields very close to zero. that is what every single direction in germany was across the level. euro-dollar, i woke up this morning and saw the headline that the european parliament couldn't agree on commissioner, so they scratch the three they had and will start over. david: they essentially cancel each other out, now they are down to someone from croatia or bulgaria. is going to be instrumental for banks and european growth as well. david: and they want parliament to name their candidate first because they want to give them more influence. alix: anyway.

david: now let's turn to the defense department. having worked for 30 years in and around the pentagon, including the top spot, he's now director of the harvard candied "lessonsnd author of from a lifetime of leadership inside the panic on." we welcome the secretary back. thank you for joining us. we have to start with the wrong. trump made aident against iran. you addressed the question of a possible war with iran in your book. i want to quote exactly what you said. "how might a war with iran breakout? the most likely causes would be iran stepping out too far in the

groups, andy disrupting navigation in the air and sea in that area. " david: how much more likely are we to be in a war with iran then six month ago? ash: it doesn't look like we are more likely for me intention perspective. war,ssue is unintentional as the book said. the iran's take a step that they don't realize is going too far. what they've done so far is some interference, and then taking that american drone is the transition from attacking shipping and somebody else's stuff to attacking our stuff. i am more concerned about unintentional war. our forces are really up against one another.

we have tens of thousands of forces there in the gulf. it only takes a few minutes for something to develop very quickly. i was in office when 10 sailors mistakenly went into the iranian waters and were taken prisoners, and in those minutes we were winding up. that's just the way we do things. fortunately, we were able to diffuse that crisis very quickly and get the sailors released. i do know that if it is a dustup , they would lose, but nobody once that. david: you suggested that u.s. military assets were in that drone. does president trump have any alternative but to have some action back?

ash: i think you require some sort of pushback. he's repeatedly talked about economic and political retribution. he seems to want to confine it that he doesn't need to come up but that appears to be the way he's going down. that's why i say intentional conflict is much less likely than unintentional conflict. alix: dave and i spoke with retired brigadier general david kimmitt yesterday. here's what he had to say. >> united states has significant spy capabilities, so they could put the hurt on the regime and its military capabilities. they may be strong at the proxy are very strong at other levels. alix: can you lay out what the pentagon would think about that?

we have plans for all of these things. -- alix:one of art what is going to be more effective with iran? is it going to be back channels, or these new kinds of ways like cyber? ash: we don't have much in the way of channels, but both options are available. but again, he seems disinclined to do that right now. i am much more worried about the forces coming into contact. our guys will protect themselves breakthat unintentional out of a conflict in the midst of what is a very confused situation, the iranians are probably confused by our response, and we are not exactly sure what we're up to that's what they are up to. david: we can put up some

numbers about exactly how big this enterprises, at $700 .illion a year half the money we spend is spent on defense. another $3 million from other contracts you let out. that is in a normal separation, in part because we don't know where the next one will come up from. ash: that's right. they are all focused on us. they only have to worry about one thing. we have to worry about all of that. roper. -- you mentioned cyber. space. warfare is going to change. the other part of my job was to transform what we do to anticipate the changes that are

going to change in warfare. things that the russians do with little green a gray trying to draw zone between war and peace come all of the information, cyberspace come all of this is going to transform. me to bothrtant to deal with today's situations and also make sure we were moving into the future. david: if this were a private company, we would be talking about is it too big to manage? how do you manage something that big. we had mr. shanahan, who was acting. we now have a new acting head. what happens if a leadership organization that large is dumped? internally i think we were be ok -- we will be ok.

there's good military leadership. you can't do that for too long. the big gap is the president doesn't have a signatory of defense. i'm not sure he listens much to his cabinet, so maybe it doesn't make a big difference but internally it will be all right for a while. but you are right, the place news to be run. i always told people, my book is not a washington memoir, it is about running the pentagon. i told people that policymaking was only a piece of the job. the second part is implanting the orders of the president. your running wars, running operations around the world. the third part is running the largest in our price on earth. so you can have three jobs, not one. you got to do all the rest of that stuff, too, and it's not a game. you've got kids, moms watching

kids. you've got to recruit and retain almost 3 million people. you have to spend $750 billion, half the discretionary .overnment google,d do more than microsoft, and amazon combined. it is a huge enterprise, and it just so happened in running that i've been in every corner of it. , howgic the reader around do we recruit and retain? ighter jetsby f or sniffer dogs? i think it is a very diverse place.

i looked up market cap of s&p companies, and if you look at the $700 a year budget, you get the fourth biggest in the s&p, behind some of the tech giants. if you considered our entire capital stock, we have for many decades. david: tell us about how you spend that money. you were charged with all of the buying and stuff. e a fed chair from boeing. i think it is a fine qualification. it is one -- it is among many. make sure you have no conflict

of interest. i think i can be taken care of. it is a good background. i had a little bit of that. i am a physicist. dick cheney was a legislator and a white house staffer. bob gates was a cia director. we've had a lot of different kinds of people. they were all qualified. i've been pretty proud of all of my predecessors. i've known every secretary of defense since robert mcnamara. alix: wow. david: who was a car guy. [laughter] ash: he was. he was an automotive executive, another category. the question is whether you know enough about the place that you can seize the reins. some it is a very

button-down place. -- eight clarence he craves clarity and consistency. alix: if they do what you say, that's different. [laughter] mr. secretary, thank you so much for being here. now let's find out what is going on outside the business world with viviana hurtado. kong, protestsg resumed at a police station at the immigration tower in the city center. demonstrators demanding chief executive carrie lam step down. they also want the government's controversial extradition bill be completely withdrawn. the democratic led house ways approvingcommittee purs a series of deals that includes dick fuld house

of representatives. if they pass, a lengthy conversation with senate republicans is expected over whether or not the past the cuts. it is less than two weeks before the deadline to conclude the next prime minister. juneare scheduled to meet 30 to find a solution. 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. david: thanks so much. coming up, she brings in more advertising revenue than dr. phil and kelly ripa combined. more on ellen to generous and walmarts partnership, and what it says about shifting consumer attitudes. alix: and if you are leaving and

heading out, tune into bloomberg radio across the radio and on the free bloomberg radio app. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." in the next hour, ihs market vice-chairman. this is "bloomberg daybreak." rising astrain line much as 29% in the uk's second-biggest listing this here. the stock was trading between 53 and $54 shortly after its london

debut. the ipo near the top end of the targeted range. the company's market value exceeds $2 billion. "the wall street journal" reports that united health will probably merge into its of services arm. quyen says it handles more than $500 billion in health care claims data annually. teamifa world cup women's reaching the semi final stage, on a roll after three shut out victories to begin the tourney. american fans are along for the ride. thanand nothing more 130,000 tickets have been allocated to visitors from the u.s., second only to people from the host country of france. team usa gets back in monday

against spain. i'm viviana art. and that your bloomberg pencil/. -- that is your bloomberg business/. david: you've got -- this is your bloomberg business flash. you've got to be happy about this. alix: you told me this morning it is not just their pay, but also their facilities. it is a bigger inequality in the sport. david: democratic candidates are talking about this, saying it is really unfair and wrong. the one place i think where that doesn't happen in professional sports is tennis. i think billie jean king really is was possible that. alix: tennis and soccer. we can do it. we turn now to our weekly businessweek feature. president trump says central banks in europe and asia are using currency as tools to

compete against the u.s., but many economists this agree. generous --the ellen to generous -- ellen degeneres to just say change for american retailers. and rock stars battle it out in court over copyright. david: going us now is bloomberg's taylor breaks. let's come back -- is bloomberg's taylor riggs. president trump says mario draghi is manipulating currency. draghi says no i'm not. it has nothing to do with currency. they are not specifically targeting a certain exchange rate. when he went to lower interest rates, it is usually because the economy is slowing down. you're not purse folk -- you are following aully

down. coy does a good job looking at the fed reserves, and they have not been increasing foreign reserves, selling your currency come most would weaken domestic currency. they've actually had to sell u.s. treasuries. one theory is if you sell u.s. treasuries to support the u.n., you should be grateful so we don't have a massive devaluation. taylor: we watched that seven dollar dollar you on level very closely when it came out, and at trying to do a good job making sure it doesn't leak beyond that seven dollars alix: threshold level. the next story i -- seven dollar threshold level. alix: the next story i find completely fascinating. a deal withres has

walmart, and is crushing it across the board. abc as head of the network when they put "ellen" on the air. we were worried about advertising pulling out. it just shows how big a change there's been in the culture. taylor: and how big the perception has changed. as we slip into the corporate perspective, look this week for example at a place like walmart, who even as recently as the 1990's and early 2000's, really hesitated to route -- hesitated to talk about it, and now going all in and doing advertising in closing with her, and have a pride online shop, and really coming out for it, if you will. had $17d it was nine

billion, the lgbtq community for and it was 917 billion dollars, the lgbtq community for the economy. about now we want to talk a fascinating story. it appears there was a copyright trial with jimmy page, the founder of led zeppelin. they put him on the stand and he said, can you show us in the sheet music where the solo in "stairway to heaven" is? it's not in there. it turns out a lot of the documents in the copyright office don't have the classic solos in them. lawyer well, you are the , so if anyone knows this, it is you. what i found fascinating is a lot of the classic songs we hear and have recognized, not all of those specific tones are actually in the music filed with the copyright office. tot is the law, that it has be written down somewhere.

includes bruce springsteen, leonard skynyrd. it is a really incredible thing. taylor: is it worth the risk to copy it if it isn't actually filed with the law? may become a baby not -- may, maybe not. david: thanks to taylor riggs. this is bloomberg. ♪

david: this is what i'm watching again. facebook's crypto push, libra. they are starting to talk to some of the big banks. even michael corbett has said he would be open to talking to them. alix: what do you think that would be? you would think banks want to do their own thing. david: it was surmised that that was why they weren't in.

at the same time, we have a goldman sachs executive that says there are two kinds of income a bank's, banks that are shrewd and banks that -- banks that are screwed and banks that don't know their screwed. basically saying the retail banking business is dead. alix: you do need the bank backing in some way that is going to be used in a bank, and not just giving you $10 in bitcoin. it was a really fascinating point this whole week. coming, katie stockton, a managing partner on technicals, heading into quadruple witching and rebalancing. this is bloomberg.

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>> the case for providing more accommodation has increased since our may meeting. alix: fed vice chair richard clarida.- richard analysts question the 10 year as investors flood into u.s. 10 year. u-turn on iran. the president approves a strike and then calls it off. david: welcome to "bloomberg daybreak" on this friday, june 21. it is the summer solstice, so happy summer. we did have this interview with richard clarida. he talked about the independence of the fed. >> we are just doing our job. it helps that we have a very crisp and clear mandate. we have a toolkit, an excellent

staff. we have 12 reserve bank presidents around the country. we sit at that big table across the hall. we have an objective. we have the tools, and we have a very collegial committee, and we reach good decisions. david: that is a great piece of that interview, but that was actually a response to a question about paying attention to the fiscal side. he basically said we are doing our job, they are doing their job. alix: if trump winds up affecting things with china on the downside, and the market once lower rates and gets really nervous, they wind up buying bonds, which moves the yields lower, which pressures the fed to act. in essence, there is a feedback come about regardless of the rhetoric from president trump. david: in chairman powell said we are paying attention to trade. that is one of the uncertainties we are talking about as we think about a possible rate cut as early as july. alix: let's get to where markets are trading right now, a little softer on u.s. equities after the s&p closed at a record

yesterday. we have technical things happening over the trading session, so there might be some volatility. euro-dollar hire. better pmi's across the board. that is helping sentiment. dollar index sitting at the 200 day moving average. yields go nowhere. crude up i 1% due to geopolitical tensions we've seen over the last eight days. david: it is time for the morning brief. at 9:45 we will get u.s. market pmi's for the month of june. at 10:00, existing home sales data for may. today is quadruple witching day, when options and futures expire, with a rebalancing of the s&p 500 and expected increased volume. and it is the solstice, marking the first day of summer in the northern hemisphere today and the first day of winter in the southern hemisphere. markets right now are taking a

breath after the s&p 500 rose to a record high on the feds dovish shift. here to take us through is taylor riggs. theor: u.s. versus rest of world. after yesterday we are now outperforming global markets by about 8/10 of 1%. we are having our best month since august. this after the s&p is up about 7% alone this month. we still have 10 days left in june. we are having our best june since 1995. what that means is we've talked about equities at record highs, the 10 year falling through to percent briefly yesterday. what do you do? looks like a classic 60-40 portfolio is working just fine. you are having your best month going back since january. still 10 days left in june.

quite a run-up. it is worth mentioning, today is a special day, quadruple witching day. we are going to see some rebalancing within the index of the s&p 500. typically on these days, you do see some volume and volatility spike. last quadruple witching day we had was december 21. that volatility doesn't necessarily translate into big price swings. that is perhaps why we are only seeing futures off by four tents of 1%. alix: thank you. joining us is katie stockton. good to see you. i want to start with the s&p hitting record highs. if you come inside to bloomberg, we are testing this resistance level that we've bumped up against. do we get a sustained breakout? guest: i think we probably will, and i say that because earlier this week, the market broke out from a slagged pattern, a

bullish consolidation stage that marks an interruption in a strong rally, and then a little short breakout. short,end to have immediate follow-through. so today's weakness i don't see is really interruptive in that trend. i do think we will see a confirmed breakup whether it is the week -- whether it is this week or the week after, i am not sure. alix: a lot of talk over the last few days is how utilities have been some ways outperformed. when you take that lens and look at a growth versus value portfolio, you can see how growth has really grown when -- growth has really broken out. seen thesee really breakouts work. it is happening on both the small caps and large cap front. think we can expect continued

outperformance, growth overvalued. yields are down trending, and yet that trend may lose its downside pace, so we do have some signs of downside exhaustion, at least in the short term on the 10 year treasury yield. it doesn't mean it will avoid a breakdown below that 2% level, which is very key as you can imagine, and i think we will see a loss of downside momentum at least. showswe have a chart that that in the terminal. we tested it. it would always come back up. what would you look for technically that would say there would be some more downside for the 10 year? katie: it is import to differentiate between a test or a breakout or breakdown. testing is flirting with a level of support or resistance, but haven't really posted a couple of closes above or below it. that is what we are seeing in the s&p 500.

neither have a confirmed breakup or breakdown. what we would require for that in our work is a couple of weeks below a certain level for 10 year treasury yields, and that would be about 2%, based not level ofhe significance, but the long-term -- the long-term. alix: wrapping up, gold, what does that all mean for the breakout and chili of gold? is testing an important resistance level ,round 1380 on this chart multiyear resistance. this defines the upper boundary of a very long term trading range. if we did see a couple of weeks above that level, that would mark a very important breakout

and would likely be associated with the breakdown below that 200 day leaving average -- the 200 a moving average. david: thank you so much for being with us today. joining us now is state street global advisors' deputy coo. we heard what was just talked about their. we also heard about the what drupal witching hour coming up today. it is interesting -- the quadruple witching hour coming up today. it is interesting. this friday close might be subject to more volatility than when usually see -- then we usually see. guest: the fed is not sounding any warning signals. we think some of the market movement in response to the fed earlier this week is going to follow through as we see good economic data. the bond market would indicate tough times ahead. the stock market is not sending me that message. where is the disconnect? guest: first of all, we haven't

seen a lot of inflation, so yields aren't really pressured by any kind of inflationary pressure. growth has slowed -- economic growth has slowed, but it hasn't exactly fallen off a cliff. re-rating the valuation based on a fed that may be closer to neutral than we thought. we thought.ore than based on that, do you want to buy the breakout? lori: we have been overweight equities, but we are looking for quality, low volatility, some of the interest intensive sectors. alix: we will come back and jump back on that. marketsp, more in the and a $13 trillion world of negative debt? this is bloomberg.

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viviana: this is "bloomberg daybreak." a london appeals court dismissing charges against former brock place -- former barclays ceo related to a qatari investment to help save the lender during the 2008 financial crisis. barclays allegedly paid qatar more than 1400 million dollars -- more than $14 million. malaysiaachs offered 241 million dollars in compensation for its role in a scandal. dismissed thester offer, telling bloomberg a more

reasonable amount would be the full commission may on bond , close to $600 million. power -- a electric general electric power corporation in china announcing that it will build a plant on -- border between david: thanks so much. that is one big project for ge. the other is to get you to reboot your smart lightbulbs. evidently they have some software in them, and you have to reboot it. there's a video they put on line to explain what you can do. this is what it says. >> start with your bulb off for at least five seconds. turn on the bulb for eight seconds. turn off, turn on, turn off,

turn on, turn off, turn on, turn off, and then turned on one last time. [laughter] david: i'm not making that up. alix: the best part they say if it doesn't work, try it again. maybe you left it on for seven seconds versus eight. like, how does that even happen? you are in the back office and the science lab and think this is the most efficient way to fix this bulb? david: exactly. [laughter] alix: back to the markets. the world of negative yielding debt route $213 trillion this week for the first time -- negative yielding debt grew to 213 -- grew to $13 trillion this week of the first time. .till with us is lori heinel how does this negative debt inform your asset allocation? lori: we still like equities

because we think there is more room still to run. within that, we are going to be more defensively positioned. we are looking for certain sectors of growth, but also thing at things like reads and utilities. one of the things we also have to keep in mind is part of the reason why u.s. treasuries are so low is because there is $13 trillion of negative interest rate debt, so investors globally are looking for sources of income. david: growth versus value, where are you? everyone says value is coming back. is it going to? lori: in the short-term term, growth seems to have momentum. value has been so out-of-favor for so long, that now might be a good time to start adding to those positions. alix: but it is expensive. lori: well, it depends. alix: how much are you willing to pay up? lori: it depends on where you are in value.

there are other places like financials where it is not that expensive, and most recently you have seen some of those stocks underperform. there may be attractive entry point for certain financials here. david: there's a reason why they are cheap right now. got the fed saying we are going to cut, so banks don't look what is attractive. lori: that is definitely true. we are looking for opportunities where we think there has been a lot of cost cutting, some regulatory pressures going away, and these are select places were isthink their opportunity. alix: in terms of the potential downward revisions, it seems like we troughed in the first quarter, which put a lot of pressure in the back have to deliver. do you think we see it? u.s. we think we do in the , which is held up better than other places, like emerging markets. one of the things is this rally

cannot really continue unless we do get an early follow-through. so much of it has been on re-rating. david: next week we had the g20, and president xi meeting with president trump. what comes out of that and those meetings? lori: as long as there is no n -- no moree negative news, we think it is constructive. there is some opportunity for a compromise. as long as they don't do something traumatically negative , we think we have followthrough here. alix: where does that leave the dollar? do you feel like the dollar has peaked? lori: we felt the dollar was somewhat overvalued for a while, and yet it has persisted. i think that is because of the fact you have seen so much

weakness still by the u.s., even against a more dovish fed backdrop when you have other bankers being more dovish as well, and you don't see a lot of growth outside the u.s. it is hard to make your argument -- make the ark meant that the dollar has weakened significantly in the short term. bound?is there no zero obviously we have gone past the zero bound come about how much further can we go? lori: they are talking about further south still. here in the u.s., we've got the luxury because the fed did raise rates so many times that they can implement a rate cut or two ofhout picking away all their bullets, so to speak. alix: how does that stuck up for multinationals versus small caps? multinationals have been outperforming despite the dollar hanging in there. do you have to rethink that, or can they continue? lori: first of all, global

growth is generally still you ok. even multinationals have a lot of exposure to the u.s. and are benefiting from that. they tend to be more resilient in terms of having access to costs, andwer debt you are seeing share buybacks. that has been supported for the markets as well. a number of things still lift multinationals. david: what about u.s. versus the rest of the world? in that interview with rich clarida this morning, he said we are so much better than the rest of the world when it comes to unemployment, consumer situation, retail sales. is he right? lori: we still think the u.s. is the best place to be. we've tempered that a little bit and taken a little more risk in things like high-yield. there are sectors where we think there is more followthrough. still the, this is

best looking house on the block. david: coming up, iphones at risk. the world's second largest smartphone maker warns of tariff risks. more on that in today's bottom line. this is bloomberg. ♪

david: time now to look at three companies worth watching this morning. carnival has had a really tough time. they were down almost 13% yesterday. siegel called their forecast awful. they have cuba problems, lower ticket prices. they are really getting hit. there was just a cruise ship hanging out in cuban waters because they couldn't it to cuba because of new travel restrictions. that isn't good. i'm looking at tesla. you have basically one of the of teslaulls or fans reluctantly cutting their price target by 1/4. this comes from jeffrey's.

they say they love the stock still, but the share price decline this year has been humbling. there is value longer-term, but there is so much excessive pessimism around demanding competition that they had to slash it. so hit-or-miss. david: you don't every day here in analyst cut it by $100. they are positive on the condom he -- on the company. alix: but the sentiment is still bad. david: the third cavity we are looking at -- the third company we are looking at is apple, and for that we welcome taylor riggs. taylor: this was interesting for me and what i thought was a shift on apple's part. we kept hearing that tariffs would affect them in their supply chain, and this felt more consumer safety. they said, this is how much we

contribute to the u.s. economy, this is how much revenue we pay, this is how many employees are americans, really making the case to get consumers and the public on board with speaking out against this. i thought that was an interesting approach by apple, talking about their contribution to the economy and making the case that way. david: and maybe speaking a language that the trumpet menstruation speaks, that you are disadvantaging us against foreign competitors, that you are hurting american companies. we heard foxconn and han foxconn talking about exporting to taiwan. we know it would take a couple of quarters to actually move manufacturing out of china. we don't know how sticky or

elastic those supply chains are. but you have people really speaking out about the global supply chain disruption. alix: maybe a cynical point of view here. so they do that, and they are complaining to lighthizer about hurting the economy, but their average selling price keeps going up despite the fact that they are selling less phones. why not just take a hit on your margin, don't fire anybody because of the tariffs, and move on? taylor: and apple has so much cash. cash --1 $5 billion in $225 billion in cash. taylor: as apple likes to talk about how much they are a services company, 60% of their bottom line comes from the iphone. they really are still very much exposed to the iphone. david: the critical question for them has then will they cut price. they do not want to do that. alix: because you want to keep the nice margins, but maybe you

have to if the tariffs wind up going through. bloomberg's taylor riggs, thank you for joining us. coming up, our bloomberg exclusive interview with fed vice chair richard clara clarida.rd david: more uncertainty. alix: we will be talking more about that, and $13 trillion of negative yielding debt. germany's 30 year flirting with the zero. oft happens if you have all germany's yields in zero? much more. this is bloomberg. ♪

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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. you made it took friday. a lot of news in the last couple -- you made it to friday. a lot of news in the last couple of days.

the rebalancing has to happen before the monday open. there could be movement today in shares. banks down .4%. you are looking at continued record low yields in europe. , 27 basis points away from the 30 year in germany turning negative. that would be all of the duration turning negative. euro-dollar up .2%. better pmi's, which i thought was interesting. you had mario draghi backstopping the european economy and laid the groundwork for we got this. -- then youd up wind up having better pmi's in france and germany. david: it is one of the problems with central banks around the world. they say it will be bad and then they get good news and they look foolish. alix: what is leading what? david: let's talk about the

federal reserve. richard carrin a -- richard clarida spoke to tom keene in washington, addressing the positives and potential negatives of the u.s. economy. mr. clarida: looking for sustained economic expansion, and that is important, because as of about a week from now this will become the longest expansion in u.s. history. strong growth in the first quarter. we could see moderation and growth this year but the economy's baseline outlook is good. growth, a strong labor market, and inflation near our objective. tom: then why are we speaking of cutting interest rates? thislarida: in environment, there has been elevated uncertainty about the outlook. the economy is hitting crosscurrents. there has been a marking down of global growth prospects. uncertainty about international trade. some evidence that is weighing on sentiment a bit. we are monitoring that closely

and will act as appropriate to sustain expansion. tom: beginning with this new word -- uncertainty. uncertainty are non-policy shocks. the trade war, the president, but there are many other shocks. mr. draghi is dealing with his shocks. the norwegian bank just yesterday raising rates because of the shocks they have. what is a non-policy shock that matters for the vice-chairman? mr. clarida: we have uncertainty in the sense there is geopolitical uncertainty but there is also uncertainty about how the global economy navigates. negative interest rates in the eurozone and in japan. those countries are away from where they want to be. that is a factor as well. tom: when you ran columbia economics, some would say reinvigorated columbia

economics, there was a demand at columbia about a study of economic history. haven our economic history we ever had an american central bank that is central banker to the world because of negative interest rates? mr. clarida: that is an interesting question. i think the fed has played a dominant role in central banking throughout most of my professional career. perhaps what is unusual this time is that the u.s. is much closer to where it wants to be in terms of employment and inflation than our other major economies. because we have a much more globalized capital market than we did four years ago when i began my studies, that also has an impact that is probably different than in the past. mr. clarida: -- tom: when i do these interviews i always bring in bloomberg. michael mckee asked an important question and chairman pile gave

a graceful answer but maybe dodged what you hope to accomplish. if we have one rate cut, two or three rate cuts, what does that accomplish for the american economy given your 2% statistic for growth? mr. clarida: at her most recent meeting we may no adjustment policy but we did say we are monitoring closely the :00 parents that are back -- the crosscurrents that are affecting the economy. agreement around the table that the case for providing more accommodation has increased since our may meeting. clearly we will be looking and being very in tune to the incoming data flow. the important point about our policy is we have the tools ,ecessary to sustain expansion a strong labor market, and stable prices. as appropriate, we will deploy those tools to achieve those goals. alix: that was richard clarida

in an exclusive interview with tom keene. joining us is michael mckee. it is sort of like chairman powell, totally dodging your question. here you have rich clarida saying let's look at this thing over here. michael: the argument seems to be we cut rates of the confidence measure and everything will be ok. everyone to trace the impact of monetary policy it is a much diverse out because the interest rate sensitive sectors of the economy are not in trouble at the moment, nor are rates particularly high. it is hard to see how much bang for the buck they get. the cost of capital is not the problem for the economy. david: one of the big concerns is capital investment. they picked up some and then turns it back off. it does not seem to be a question of the rates are too high. how is a rate cut going to cause the ceo to say i will invest?

>> absolutely. they did not say the fed would not be in play in terms of ending the recovery. that was what we had in the fall, a fed that was too aggressive and we would have bad things happen. what we are seeing is the market likes the fact that the fed is saying they will be dovish, that they will take action and that will provide monetary intervention. i also wonder how accommodative the fred -- the fed is there was a great chart about the neutral rate. the longer that goes down, the less they are accommodative versus their fed funds rate right now. what is your take? michael: it is a function of that and where inflation is. low, theation so neutral rate will be lower than it otherwise would be. at this point there is not a lot they can do about that.

it is not an observable rate, it is a guesstimate of where things are. their view was that with the economy strengthen it would rise. thatarket started betting it is not rising, it is falling. the question is are you are appropriately priced for were the neutral rate is at the moment? the argument is they were at the bottom end of that when they stopped tightening and now people want to argue their over it? i'm not sure. david: you said the fed will not stop recovery. not stopping the recovery is different from growth. are we looking at the export to japan, not much inflation, not going anywhere anytime fast. lori: we do not think we will be japan. we think we will come in above 2% for 2019 and maybe a little below that for 2020. the consumer is still healthy. highera retail sales

than they have been since 2003. you stop unemployment low. you still consumer confidence high. the business investment is not following through. david: today is the day big banks get the first round of their stress test results. over the next week they will be releasing the results, including thursday, when they tell us how much money the banks to return to shareholders. joining us is a bloomberg investment banking reporter. a big day and even bigger one next thursday. >> we're expecting a lot of people with passing grades. year morgan stanley and goldman sachs had fallen below the capital requirements. it was a technicality because of the tax code. the thing here is we will want to see higher payouts. there is criticism. people want to retain their

earnings in tough times. that is a debate moving forward. a greathere was bloomberg opinion piece that came out that showed more and more banks were passing more using data. is that banks getting better or the tests getting easier? li: this test is supposed to be one of the hardest yet, however the investment banks should fair fairly well. shows the net pretax losses as a percentage of assets. how they passed the test. you can see how much that has changed in the last five years. forward, -- make the test harder or different scenarios they have to start predicting? sonali: that is a good question. a has been the same test for long time and we have seen banking regulations get lighter

and not more aggressive. there are other regulations changing for the bank as well, volcker being one of them. the stress test, we will see him much real change there will be. administrationp came in saying we want to reduce the regulation and banks. the question is at what point is it to lose? -- too loose. the blue line is 10 year yield. some people say you have to indicate less growth. some are saying we should be more cautious. michael: is an ongoing debate about what you need in terms of equity capital? how much you need and how much is safe? how much of that is offset by regulation? i would not put all of this on the trump administration. it has been a debate within the fed because it went up to the great financial crisis and passed dodd-frank and through in the kitchen sink.

now people are stepping back in saying what makes sense. to a certain extent that that has gotten better, they have raised their capital levels. li, the stress test scenarios will be the toughest ever. they do still have some hurdles to pass. the question is how much is too much and the various kinds of regulations, you need a supplemental leverage ratio at the same time you have a liquidity capital, and how they need to be calibrated? those debates will be going on whether it is the trump administration or not. the bottom line is you get some people who say make them have 25% equity capital ratio and dump all of the regulations. david: there are some saying we cannot anticipate where the problem is going to be. some micromanagers have a big reserve requirement.

david: many thanks to our guests for being with us. we turn viviana hurtado with first word news. viviana: iran says it gave the u.s. numerous warnings before shooting down a military drone. iranian state tv is broadcasting images of what it says is to recovered from the aircraft. foreign affairs minister saying the same thing. he is doubling down on iran's claim the drone violated iranian airspace before being brought down. european leaders abandoned the formal candidates to be the next eu commission president. they will now start from scratch with less than two weeks before a self-imposed deadline. bloomberg has learned the heads of state concluded not of the three front-runners would win parliamentary approval. they're scheduled to meet again on june 30. the national corn growing association launched an advertising campaign on

president trump's favorite television news station. the spots on fox news are intended to step up pressure on the white house and the epa to curb exempting oil refineries from biofuel requirements. they began airing yesterday and will continue into next week. 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. alix: thank you so much. i do not know what i love more, the fact that ethanol farmers got an ad or they could fox becauseon they're kind of target president trump. david: kind of smart. why do you think there are so many defense contractors advertising on sunday morning shows? is twofold. blending ethanol with gasoline is a good thing for the farmers, but when you strange the restrictions to the fuel standards and the epa says don't worry about it, you do not have

to have these requirements, that winds up hurting demand. the push and pull for farmers. are rumorse president trump watches fox and react to it. i have heard. alix: coming up, middle east tensions and how they are weighing on the oil market. coming up next in today's follow the lead. this is bloomberg. ♪

viviana: i am viviana hurtado in the hewlett-packard enterprise greenroom. coming up on bloomberg markets, james comey, former director of the of the i. -- of the fbi.

alix: time for a follow the lead. a deep dive into stories making headlines and moving markets from industry veterans and insiders. today's focus is the middle east. two tankers damaged in the gulf of oman last thursday and president trump blaming iran and sending more troops to the region. a few days later you had iran warning of reaching its nuclear cap and then overnight president trump ordering a missile strike and then pulling back. the two minds of president trump were on display in the oval office. >> the drone was unarmed. there was no man in it. we do not have a man or woman in the drone. it would have made a big difference. it would've made a big difference. i have a feeling, i may be wrong, and i may be right, i have a feeling it was a mistake made by somebody that should not of been doing what they did. i want to get out of these

endless wars. this is a new fly in the ointment, shooting down the drone. this country will not stand for it. that i can tell you. alix: for more on middle east tensions and our impact, we have iss markets vice-chairman joining us from washington. always a pleasure to see you. i would say if it is a fly in the ointment, it is a hundred $30 million line the ointment. alix: what is interesting in the conversation with president trump is that on the one hand he wants to defend anything that comes up but he also does not want to go to war. how would players in the middle east look at this question? dan: i think it is very confusing, what is the message. the fear is this could quickly escalate. room for accidents, misunderstandings, future

incidents. ,he iranians are in a corner they are exporting very little oil. you see not just in the waters of the gulf but on the arabian peninsula. david: not so much a war by intention but a war by accident. we talk to the former secretary of defense about it this morning. >> our courses are up against one another. we have tens of thousands of forces in the gulf and it only takes a few minutes for something to develop quickly. that, note add to only in the south china sea with u.s. and china, it is forces up against each other and there are a lot of other players that have their own interest. the possibility for accident is even greater. david: a driven point because we tend to focus on iran and the united states, but you have saudi arabia, you have israel. daniel: you have yemen filing missiles into saudi arabia, who

are allied with iran. david: how can oil markets possibly price in that range of uncertainty? daniel: until a week or so ago the oil market was just shrugging everything off. then you had these incidents combined with the fact that president trump and president xi will meet at the g20 and maybe there will be a trade deal. those things have turned the oil market from the heavy weight of gloom to the kind of strength we have seen in the last few days. alix: it is supply versus demand. g20 deals with demand and the opec meeting deals with supply. i want to do with supply. we have a chart that talks about the amount of attacks on saudi arabia assets through yemen, backed by iran. how is saudi arabia thinking about the iran risk into this opec meeting? daniel: they have to manage iran

because iran is also a member of opec. they have to choose the new secretary general or reappoint the secretary-general. they have a lot on the agenda. seanwhile, i think the saudi are feeling the pressure of being hit. , andines hit, airports hit a sense of vulnerability in the situation. probably they do not want to see an escalation in the region because everything is close together in terms of oil infrastructure. david: let's turn to demand. daniel: i love you are g20 as demandg and supply is opec. very interesting way to differentiate. david: i'm heard the best case scenario is they will not impose more tariffs on china. i've heard that is being the upside. how would the markets react?

daniel: i think that is not the kind of message the market will want. it will want something more firming, an end to the trade war. i feel that is kind of already into the situation. they would like to see a sense of resolution. alix: does that make saudi arabia's job they have to continue to wind up making sure opec -- extending that $1.2 , ition barrel a day cut looks unlikely to get 100% result of the g20. daniel: if that is the case, you are going right to the g20 to opec. you can see the dialogue between the russians and the saudis going on. the saudis are taking the cuts. go supply and demand. this year we see u.s. apply growing by 1.4 million barrels a

day and demand by only 1.1 million barrels a day. , itthe saudi's and russians is accommodating the continuing growth of the united states. alix: and how more they will want to do that. ending on the oil price, do you feel where we are sitting is accurately reflecting the supply demand risks in the market? daniel: i think so. it reflects on the uncertainty in the market. close tocame very something that really has not happened before, and actual direct hit between the united states and iran. the market is poised between where was before, and now the uncertainty and the possibility that demand will be spiked up because there will be some kind of settlement on china. if there is not, there will be real disappointment and that will show up in the oil price. alix: always a pleasure. daniel yergin of ihs markets.

what i am watching is volatile trading data. it has been a crazy week. more i am want -- more on what i am watching, next. this is bloomberg. ♪

alix: here is what i am watching. that is the equity markets. a lot of futures and options that expire so there tends to be a lot of action around the open and close of trading. something you might not necessarily want to see when you have a war of words with iran and uncertainty with the g20. weakness in the futures market. that wraps it up for bloomberg daybreak. coming up, matthew hornbach. bloomberg. ♪ the latest innovation from xfinity

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jonathan: coming up, equity markets back at all-time highs following a week dominated by dovish central banks. lower rates weighing on a bruised dollar, crude headed for its biggest weekly gain of the year as tensions in the middle east continue to linger. 30 minutes away from the opening bell. here is your primary price action. futures down eight. in the fx market, the dollar weaker against the euro. euro-dollar 1.1326. treasuries stable, allowed -- around 2% on the u.s. 10 year yield. the big issue -- does anyone want to fight global central banks? >> don't fight the fed. >> we will see vix collapse. >> if the fed ends up cutting, it will be supportive. it will help earnings. >>