♪ sydn i am paul allen in ey. shery: good evening from bloomberg global headquarters in new york, i am shery ahn. sophie: and i am sophie kamaruddin, in hong kong. asia." to "daybreak: paul: our top story, u.s. stocks reach new highs, but oil slumps denies further cuts. president trump names two new fed.rs to the board of the

thechristine lagarde says ecb could need fresh stimulus. shery: a quick check of the markets closing, we saw fluctuations in the session. the s&p 500 moved higher in the last hour of trading or so, moving to a record high. at one point it fell to session lows after we heard from the cleveland fed president loretta mester, saying she was not ready for cuts yet, which sent markets lower, but communications stocks are leading the gains on the s&p 500. volumes were lower, heading into the fourth of july holiday. wednesday is a shorter trading day as well. the nasdaq finished 0.2% higher, and u.s. futures are unchanged at the moment. let's see how we are setting up for the markets in asia. kiwi stocks are

under fire this morning, and looking at a potential retreat at the start of cash trade in tokyo and sydney. the aussie dollar staying steady this morning, in the wake of the rba rate cut. the government's second-half economic forecast to consider later today, export data looking shaky and pointing to continued weakness. the global bond rout continues after the 10-year treasury yield tested lows, and the aussie 1%, the yield below five year moving in on that level. lowslimbing off overnight after an industry report showed tighter u.s. supplies, and gold extending gains over $1400. paul: let's get the first word news. >> imf boss christine lagarde is

set to become the first woman to lead the european central bank after being nominated to succeed mario draghi, taking over in december. the german defense minister has been nominated to become the european commission's next president, the first german to hold the post in over 50 years. more reaction to christine lagarde's new role in a moment. oil had its worst reaction to a opec meeting in four years, prices tumbling after the cartel and allies agreed to extend production cuts into 2020. russia and other independent nations backed the saudi arabia plan, although divisions remain over deeper curbs. the decision came with shale surging and the u.s. close to being a net oil exporter. marketw has its lowest share since 1991. >> in order to maintain the current state of the market, and avoid buildup of

inventories, we have decided to keep the level and magnitude of cuts intact. much people have died and of india's financial capital has ground to a halt, leading to the city declaring a holiday in mumbai. flights were delayed or canceled after a plane overshot the runway. $.35 meters of rain in 24 hours, the second-heaviest downpour on record. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: we had breaking news in the fed, president trump announcing he will nominate julie shelton and christopher waller to the board of the federal bank. waller is director of research at the st. louis fed,m and

recently served as a professor of economics at the university of notre dame. shelton has been an informal advisor to president trump and is the u.s. executive director for the european bank of reconstruction and development. for more on what this means for policy and the markets, cornerstone macro founding partner roberto perli. great to have you with us. of course, a lot depends on whether or not these candidates finally pass senate confirmation. that hasn't been easy. but what does this tell us about how president trump wants to influence the fed and monetary policy? roberto: well, let's distinguish a little between the two nominees. waller should be relatively uncontroversial, having been director of research for the st. louis fed. he's clearly qualified, hard to argue he is not. he has expressed in the past and written papers and other forums, pretty standard views, so i don't think it should be

controversial. on the other hand, remember that being qualified is not a guarantee for congress confirmation. remember, the nobel prize winner who was deemed not qualified by some senators, and more re cently. so we will see how it goes. shelton is a little different, she has expressed some views that are a little controversial, in particular her propensity for going back to a gold standard. i think that would be a little more complicated. picks arethese two better from the point of view about the fed, compared to the previous two trump tried to push through and did not succeed. shery: right now, we are pricing in full rate cuts, as soon as

july by the fed. if the rate cuts to go ahead as expected, we could see rate cuts at a time when liquidity and financial conditions are already pretty loose. where do you put the expectations of what the fed will do for the rest of the year? roberto: so the market is convinced that the fed will cut rates this month, the july 31 meeting, and that i think is a little controversial. i don't think the probability of be ahappening, it might little above 50%, but not by much. if you look at the notebook from the last fomc meeting, you had nine fomc members out of 17 who said rates would be unchanged by the end of the year, one person thought they should actually be higher, and seven thought it

would be lower. it is not an easy decision, hearing today they are not ready to support a rate cut in july, so i think the market is a little ahead of the fed's course, and at this stage i don't think a july cut is as assured as the market thinks. but i the end of the year, a lot of things can happen, we might see a cut later, but not as soon as the market seems to think. paul: roberto, let's talk about christine lagarde, lined up for her new job heading the ecb. a continuity candidate, really. what will that mean for the eurozone? roberto: i think that she's the closest possible substitute to mario draghi as we could possibly have hoped to get. she is an incredibly skilled politician, and let's not forget

the ecb is an extremely political institution, so that was a very wise choice on the part of the european leaders. so, her views on monetary policy are fairly on the dovish side. remember, late 2015 she pretty publicly urged janet yellen not to raise rates until there was clear evidence inflation was not a risk. of course, the fed did not do that, but that is what christine lagarde believed at the time and likely still believes. so it means the market expectations for low rates, no hikes until rate 2023, quite possibly a rate cut in the near term, fairly likely. paul: she's an accomplished politician, and commands

international respect. lacks,hpaps what she unlike jay powell, a phd in economics. will that be a barrier? roberto: as a phd in economics myself i should defend the category, but let me tell you, it's no evidence that you need a phd in economics to run a central bank. by all accounts, jay powell is doing a great job at the fed. i think christine lagarde would do a terrific job at the ecb as well. let's not forget that the president, the chairman matters, but the staff and the other ambers, in policies done in collegial center at central banks, so i'm not really concerned about the lack of a phd in economics. shery: given what you consider to be a very dovish stance of christine lagarde, what are you expecting in terms of bonds,

especially peripheral bonds? roberto: i think that peripheral bonds have rallied, on the assumption, corroborated by draghi and other ecb speakers, that there will be a good probability of qe. the nomination of christine lagarde does not change that view, and if anything actually supports and corroborates it. should be very good for peripheral bonds. shery: roberto, thank you so much for your views. roberto perli, cornerstone macro head of global policy research. a recordad, tesla sets for quarterly vehicles delivered. we speak to our analyst later this hour. paul: up next, with u.s. stocks at all-time highs, advice from wells fargo's asset management president. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: and i am shery on in new york. u.s. stocks edged higher to a fresh record on tuesday as investors await a slew of economic data around the fourth of july holiday. let's look at the market moves now with wells fargo's global cio. great to have you with us. given where yields are now, valuations, does it make sense the s&p 500 keeps record highs? >> i think when you have the 10-year treasury below 2%, 18 p multiple, it makes a lot of sense. the answer is yes, i think that stocks are where they should be. it has been a phenomenal year, and the old adage that it is difficult to put a big markets. we are happy. shery: where are you expecting them to go from here, and who

will be right? kirk: you are right. as it is, the stocks and bonds are moving in sync, so the question will be for investors, what will be the correlation or lack of correlation between the two? my expectation is that bonds have probably hit bottom in terms of their yields and the yield curve will steepen a bit, especially if the fed in fact starts to cut rates. do you think the trade is been a little overcrowded? we have gold performing very well, and it's getting hard to understand, really. will that unwind? kirk: not in an environment of monetary support. cash,rkets are flush with which has to go somewhere. in my view we have an inflation of financial assets, and not in the usual areas, so i think that

some caution, and some flight to treasuries, to makes some sense because everybody is scratching their heads and saying, how does this end? paul: and to your point of how this ends, i want to bring up this chart on the bloomberg terminal, coyote run, named coyote, who runs off the cliff not realizing there is anymore ground underneath him. is that the risk of what is happening here? can it really continue? kirk: i think you have to have a little bit of caution here, but i don't think we are at the edge of the cliff, to use the analogy. i think things may actually run a little more. but there is no point to try to push the envelope. this is a great year, and most investors when you're up 18% to

20%, we have some small cap growth funds up 30%. what a great market. you can't complain about that. shery: how much impact has macro data had on the equity markets, as opposed to other factors, like oil prices, which have been really volatile this year? kirk: well, i think that's right. i think the technicals are very much in support of stocks. there's so much money, especially in the u.s. there used to be 8000 equities, and now there is something like 4500, and all the money in the system is going to share buybacks, financial engineering, so i don't think it is any surprise that financial assets, to my earlier point about inflation and financial assets, i think that makes a lot of sense. shery: we have seen the nomination of christine lagarde for head of the ecb. many people take that as a dovish turn, that it could be a continuation of what mario draghi has been doing. what is your take on what that means for global monetary

policy? kirk: more of the same and a continuation of the practice. there was quite a rumor in the bond market this week prior to the nomination of christine lagarde that the european central bank would consider buying etf's, a la japan. so it would be interesting to see what happens. i expect christine lagarde will follow the same policies as mario draghi, which means a lot of stimulus, a lot of support for the markets. the ecb, is itof starting to run out of ammunition? kirk: that is a great question. the ecb owns a lot of the market, something like 30% of the corporate market. so i agree with your point. i think at some point the balance sheets are going to become too large, and then it will become a negative effect, but in the short run, it is very positive for markets. to your point, just like the enormous debt loads around the

world, central-bank balance sheets and debt both public and private at some point will rear their angry head. shery: we saw a knee-jerk, bearish reaction on the euro, which didn't last long but was still down against the u.s. dollar. is this because of potentially more stimulus from the ecb, and what does that spell for dollar strength later this year? kirk: that's a great question, and i have been wondering that in my own mind. i think the dollar has reached its peak but, a lot of it is interest rate differential. negative 35 at basis points, the french 10-year at negative 10, the 10 year spread still looks good, but my view is the dollar has reached a maximum. it will bounce around, but at some point the dollar has to slow down. paul: all right. kirk hartman, president and global cio of wells fargo asset

management, thank you for joining us. you can get a round up, bloomgerg subscribers go toda on the terminal, customize so you only get news about the industries and assets you care about. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: and i am paul allen in sydney. in advanceid to be talks to buy cyber security software company symantec, whose shares are searching. peter joins us from san francisco. tell us what this is about. peter: it is certainly a surprise deal. broadcom hasn't been a very acquisitive company over the

years. it has expanded in chips, has tried to buy rivals, but this is a surprise, their second deal moving into software. it's not obvious how a chip company like this would be able to use security, software like symantec. it's a very expensive deal for them, but it is not exactly clear what synergies they will get. broadcom of course has tried to make acquisitions in the past. they tried to buy qualcomm, and that got shut down by the u.s. government, so now they are pivoting and looking at software their secondeing major software deal and a bit of a surprise. shery: you say it is difficult to see synergy between the companies. do we have any idea what the reason is for going ahead and doing this? peter: yeah, it is a surprise. the companies of course are talking about it at this point. it has not been officially

announced, so we will have to see how they justify putting these companies together. the closest parallel is that a few years ago intel bought mcafee, another security company, an expensive deal for them. investors were pretty skeptical, and the deal didn't really work out that well. intel portrayed as a possibility to bring more security to computers and chips, and they ended up spinning off the business in the end, because they couldn't really make the synergies work the way they thought. so the companies have a burden here to really explain how the companies are going to fit together and why it makes sense to pay this money, including what is certainly a premium, to make the acquisition happen. paul: you mentioned broadcom has been on the acquisition trail. what else could be on the horizon? peter: the ceo really built broadcom through a long series of acquisitions, so there is no question he will continue.

after the qualcomm deal was stopped, and they could not expand within chips at least with that size of a deal, a lotta people thought they would take a breather and hold off on acquisitions, but now this is the second deal of over $10 billion in a couple years, so he' showings he is determined to continue growing through acquisitions. shery: peter, thank you so much. our bloomberg tech executive editor. let's get a quick check of the latest business flash headlines. deutsche bank is sounding out potential buyers for a wide range of assets as it prepares for its most dramatic overhaul in years. they are gauging interest for both performing and sour loans and equity related securities and interest rate delivered of's -- derivatives. the ceo is expected to announce a new strategy this week after a series of turnaround plans failed to boost profits >>. paul: saudi arabia is restarting

preparations for the ipo of oil giant aramco. the world's most profitable company has held talks with investment banks. aramco put the ipo on hold last stakeand instead bought a in a local chemical giant. worth $2uld be trillion. shery: its first rupee-denominated bond sale. to raise over $3 billion and see bids from ban kers, half of that through notes, and the government will service the remainder. the airline carries a total debt of over a billion dollars. paul: fiat chrysler's ram brand enjoyed a good june, with a surprise gain in a shrinking market, deliveries up 56%, to 60,000 units, a level normally

only reached by the ford f-series. has been the only major automaker to beat sales and forecasts. shery: we are seeing kiwi stocks down 0.1%, a bit of pressure on the futures market. on thefutures down 0.2%, back of wall street reaching new highs. we had seen haven assets move, treasuries, gold, so perhaps the risk off mood having some impact on the asian markets. kospi futures gaining 0.1%. we will have more, especially when it comes to wti, as we saw the worst reaction to an opec meeting since 2014. we will have more on the moves

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♪ firstis daybreak asia, word headlines. president trump has announced his latest nominations to the fed board, naming st. louis assistant christopher waller as one of his next picks, previously a professor of economics at notre dame university. trump is also backing judy shelton, u.s. executive director for the european bank for reconstruction and development. the long-running dispute between airbus and boeing has spurred the u.s. to add more products to a list of potential tariffs,

identifying $4 billion of e.u. goods. that adds to $21 billion of products the u.s. published in april. the e.u. has a similar case pending against boeing and has tariffs of its own readied. the state of arizona is kicking back at nike for pulling fourth of july sneakers from stores after facing criticism that the design was offensive. it carries the logo of a old u.s. flag with 13 stars rep resenting the first u.s. companies, an emblem embraced by white nationalists. arizona governor doug ducey said nike has bowed to political correctness, and ordered financial incentives for a new manufacturing plant to be withdrawn. top -- a top iron ore miner might face indictments over the january dam disaster. proposed charges after an investigation in the collapse

that killed him as 250 people, saying vale was negligent and that risk controls were flawed. cale disagrees -- vale disagrees with the report and the potential indictment. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. shery: thank you. we could be seeing a mixed picture when major markets are trading in asia. let's go to sophie in hong kong for a check of what to watch. sophie: shery, sticking to iron ore on the back of the vale story, which is part of what has driven iron ore prices higher in the disruption to the brazil supply. topping $120ter for the first time since 2015. strong chinese steel mill demand supporting the picture, and recent environmental curbs also

boosting prices, buying hybrid products. you can see from the blue bars on the chart. checking on bonds, aussie yields nudge lower, two-year below 1%, five year nudging lower again as investors await more rba rate cuts even as the governor signals a pause in easing. -year yield further below 2% amid volatility before the friday jobs report. paul: thanks very much, sophie. oil had its worst reaction to an opec meeting in over four years, prices sliding after the producers agreed to hold off on production curbs. sufficiently long to bring inventories down and balance the market, very positive and very optimistic and i think we are in a good place. >> we believe we can achieve

optimal results by avoiding another oversupply of the market. >> hopefully it will erode some of the volatility, and it will and a message of clarity and removal of confusion and uncertainty. paul: joining us now, from senior energy and commodities reporter. david, talk us through the reaction in oil today. david: as you said, a severe reaction, futures falling about 4.8% overnight in new york. as you said, that was the worst reaction to an opec meeting since november 2014, and the steepest decline in oil since the end of may, so a pretty marked response there. oil we see this morning is

starting to recover some losses, and there are a couple key factors at work. you heard from the interviewees, more optimism about oversupply being addressed, opec agreeing to extend production curbs for another nine months. so in terms of addressing oversupply, what seems more important right now to investors is the prospect for weaker demand, so concern over global growth, the outlook of the global economy, overwhelming any sense of optimism on the supply side, so demand is very much in the driver's seat. shery: that is weighing on boast -- most commodities, and tin is bearing the brunt? what exactly is going on there? david: across commodities, they're concerned about growth having impact, and we see that in tin, which fell over 6% in trading on tuesday, the most since the end of 2011.

and a lot of that is down to worries about the global economy, feeding into manufacturing. it is also bearing the brunt of specific issues. demand for semiconductors is on a steep decline, which particularly hits tin. tosaw this when japan moved restrict some exports to south korea, certainly impacting that market. shery: -- paul: iron ore continues to be the exception. how sustainable is this, though? we talkeduess, through some of those factors earlier, and overnight iron rose another 2%, now just below $126 per metric ton, the highest since january of 2014. it really has been quite a startling rise, and even in re

cent months. a lot of this we understand, particularly on the supply side. we had the big dam disaster in brazil in january that impacted supply. hurricanes and other issues in australia. so the top two producers restricted, and now we see the impact of very strong demand. arel mill margins particularly strong in china right now, incentivizing production. also, environmental curbs are favoring some of the benchmark iron ores, so strong demand anytime of weak and uncertain supply. while that persists, i guess it is conceivable that iron ore can continue the rise. shery: thank you so much for that. senior energy and commodities reporter david stringer. up next, tesla jumps after announcing its at a record for

quarterly vehicle deliveries. more on this next. this is bloomberg. ♪

♪ this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. tesla jumped in late trading thanks to record fourth quarter 90,000ies, handing over -- 95,000 vehicles, easily beating estimates. so, was elon musk right, there was no reason to be concerned about demand? 3 may be.the model on the model s and model x, you still have reason to be concerned.the second worst showing on the model butd model x since 2016, you have to hand it to them on the model 3 side, with the model 3 exceeding all the cars they

delivered in the first quarter combined, including the s and x. thehis is really a show of amount of demand there is for the car outside of the u.s. this was the first full quarter in which they were delivering these cars in china and europe. so that suggests there's going to be staying power for the car, even though there is an incentive here in the u.s. that is halved as of january 1 to under $2000, so a little less of a tailwind in that regard. paul: craig, is there risk baked into that? is the model 3 cannibalizing demand for the s and x? craig: that is the question, and the concern you heard from wall street, which may be over did it with the pessimism about demand. but they are still concerned about if the company can make money, and musk before this quarter said he didn't expect tesla to be profitable in the

second quarter, and it remains to be seen whether he continues to think that theyt are not going to be able to be profitable. the company has said they will earn money in the second half of the year, but they do have a lot of costs in terms of getting a plant up and running near shanghai, they want to add a plant in europe, there is a lot of meat to put on those bones, and they have new models to bring to market, including the model y, which is smaller than the model x, the semi truck, the roadster. this is a company that is growing, has a lot of fixed costs built in that you were sort of use to if you are a typical automaker that has been around for decades or more than a century in a lot of cases. shery: of course we saw after hours trading up more than 7%. is that sustainable? what are you hearing from analysts, given the stock is down over 30% this year already? craig: a lot of the analysts say

this is one of the most intense bull-bear debates you come across these days. [laughter] some analysts say give them credit, they should really lead to a significant value, and some say to sell off the bounce, and that this is not necessarily going to be sustained tomorrow. there are still reasons to be concerned about whether they were able to do this profitably, and whether they are able to sustain demand going forward with the smaller incentives in the u.s. craig trudell, thank you for joining us. despite mixed results, the auto market remains strong. rebecca joins us now from stamford, connecticut. we want to start with the blowout in delivery numbers from

vehicles.000 elon musk tweeting congratulations to the team and thanking all the owners, resisting the urge to rub the short-sellers' faces in it. rebecca: it is a success for him. i think tesla's success is important in the industry. nobody wins if tesla fails, and i think they've really pushed the industry to make a better product, to make better technology, to introduce vehicles that maybe have an edge or a sharpness to them that would not be there if tesla was not there, so i like the fact that they are succeeding. i don't know if it is scalable, that is one of my biggest concerns, on a global basis. but i congratulate them. i think it is terrific. paul: in terms of u.s. sales, is there a chance the reduction of

the u.s. tax credit could impact third quarter deliveries? rebecca: it absolutely will impact the third quarter deliveries. you know, one of the issues i had with these incentives, it motivates all the wrong people to buy these vehicles. you are motivating people who are early-adopters, who would buy these vehicles anyway. and just a time that we are trying to make electric vehicles mainstream, we take the incentive away, so we end up incentivizing the wrong people. so i would love to have us re-examine how we incentivize electric vehicle buyers. in a perfect world, we don't need incentives at all, we have enough demand. but we are not finding that yet. we're still pushing these from a regulatory standpoint onto the market, as opposed to consumers pulling on the sleeve of auto manufacturers to say, i want an electric vehicle. shery: given the results today

reflected overseas demand including china, does this give you hope that this could actually be sustainable for tesla? rebecca: you know, i think when you look at a market like china, which is very regulated, i think there is opportunity there for all electric vehicles, not just tesla. my concern with tesla is whether they can get the shanghai facility up and running, the european facility up and running. that requires an incredible amount of capital outlay, so that is one of the barriers they are facing right now, the ability to logistically distribute and service these cars. this is not just something that you drop off at somebody's house and walk away. these are vehicles that need a healthy service environment and service network, that i don't know if tesla is set up to satisfy yet. shery: looking at the broader markets, we saw june, second

quarter u.s. auto sales, seeming to show an ongoing narrative of a softer market. trend we will continue to see for the time being? rebecca: i think we are just past peak on new car sales. but keep in mind, we had 17 million new car sales the last two years, so if we drop to 16.9 million, it's not catastrophic. we're not looking at the recession we saw in 2010, 2011, where we had 9 million units, 10 million units. we also have to remember that with the healthy sales we have had the last few years, we're starting to see new or used cars come onto the lots, so we're seeing an abundance of three-year-old, four-year-old cars that have a lot of the new technology, a lot of what consumers want, at a fraction of the price. so we are seeing used cars

putting a lot of pressure on the new car market, that we had not seen in the last few years. paul: in terms of healthy sales, we can't pass by fiat chrysler's ram, deliveries up 56%. how significant was that result? what drove it? rebecca: well, one of the things we may see tomorrow when ford reports, we could see a battle for first-place. theford f-150 has been best-selling vehicle in the u.s. for 40 years. literally decades. so the question is whether ram outsold the ford f-150 or not. if it did, that would be a huge, huge shift in the marketplace. itmay only be one month, but breaks a record that has stood for decades. paul: we will be watching closely those numbers. more broadly as well, is there

any impact you see coming ofm the extra $4 billion tariffs trump announced on the e.u.? rebecca: that will impact the consumer. what we are concerned about, will the manufacturers be forced to raise prices as a result of these tariffs, or will it cut into their profitability? there is a balance we are watching carefully, to see tyhe impact. this is not an industry that can turn on a dime, so when we see threatened or applied tariffs, we have to look carefully at the balance sheet to see the impacts. shery: thank you so much for that. the founder of rebeccadrives.com. if you missed any of the interviews throughout our shows, tv is your function to

watch past conversations and watch us, or dive into any of the bloomberg securities and functions, for bloomberg subscribers only on tv . this is bloomberg. ♪

shery: paul: this is -- shery: this is daybreak asia. i am shery ahn in new york. paul: i am paul allen in sydney. a huge potential in new drugs research driving astrazeneca's return to growth, leading the charge to focus on cancer treatments. they revitalized the fortunes of astrazeneca. ♪ as work boosting tookzeneca's drug pipeline

off, a fresh threat appeared, pfizer. >> it would be one of the biggest deals in pharma history. >> we know that pfizer made a approach in january. >> a very keen fire but perhaps not a keen seller. >> the u.s. rival made four attempts to buy in under six months, the final offer for $117 billion which would have been the biggest pharmaceutical takeover ever. >> i arrived in london, opened my phone, and i had a message, my wife was at the hospital, so i called her, and she was fine, but it was a stressful day. then we arrived at the office and worked the whole day with the lawyers. day,e end of the first the bankers said, you have to know you will have less than a 10% share. so at the end of that day --

>> you didn't believe them, clearly. [laughter] mesometimes when people tell a project has a rate of success, i tell them, 20% is not bad, actually, if i only had a 10% chance of remaining independent. eateontinuing to try to crt the largest drug maker by sales, and lawmakers got increasingly critical. >> the most important intervention we can make is to back british jobs, british science, british r&d, british medicine and british technology, and that is why i asked the cabinet secretary and my ministers to engage with both companies right from the start of the process. >> astrazeneca rejected the bid, disappointing many investors. case, the pipeline,

we believe the pipeline will deliver value to shareholders. >> the investors, many of them said it was the wrong thing to do, but i also understand you managed to use the situation as a way of galvanizing the staff. what happened next? >> it worked out. it was a stressful time for us at the company, but also a great time, a time when we had the could of showing we deliver value not only the patients but also for our shareholders, focusing on what we were doing. it really galvanized everybody. so actually, they did their best. shery: more from astrazeneca's ceo in "turnaround," airing tonight at 6:00 hong kong, 8:00 p.m. in sydney. a look at the latest business

flash headlines a look at the latest business flash headlines. -- symantec, a maker of cybersecurity software, is surging amid talks it be bought by broadcom. symantec up 20%, and broadcom is falling. there is no deal yet but a agreement could be reached within weeks. the two companies have not confirmed the reports. paul: ab inbev has kicked off the year's biggest ipo so far, a $10 billion share sale in its asia-pacific unit in may. to billion shares at 40 47 hong kong dollars each, on par with heineken. trading will start on july 19. shery: tencent is teaming up with india's paytm to invest in streaming service mxplayer.

tencent has invested heavily in movies and tv shows and launched its first overseas video streaming service last month in thailand. indian e-commerce platform paytm reported over 5 billion transactions in the last fiscal year. the markets are about to open in japan, south korea and australia. let's get a preview. sophie: ahead of the start of cash trade, stock futures pointing lower in tokyo and sydney. investors see fresh news from the u.s. and china later this wednesday. stocks to watch, keeping an eye on iron ore miners. asian automakers are also in toyota reportedly is boosting fuel-cell capacity. and japan is considering stricter export control on items to south korea, including

electronics parts that are vital to the tech industry. the rally in treasuries is expected to continue, australian bonds advancing, an oil and gold much higher. that is a look at snapshots of markets ahead of the open. this is bloomberg. ♪

paul: good morning. asia's major markets are about to open for trade. shery: good evening from new york. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories, asian markets look set for modest declines over doubts over the pace of rate cuts and renewed warnings about global growth. president trump prepares to nominate new members of the fed board.

they both support lower rates. shery: from washington to frankfurt. with the for the ecb euro zone slowing and in need of fresh stimulus. let's get right to the market action with sophie. sophie: over in tokyo stocks are on the retreat. the nikkei 225 down .3%. we are keeping and i on auto stocks on the back of that drop. yields onyear treasury's looking steady this morning after a move to the low 2% we saw overnight. jt be is in focus. traders will be looking to the first buying of the month. -- kospinder pressure under pressure this morning. government'se second-half economic forecast. outlooks looking shaky.

looking at the asx 200 this morning. just a little change. bond yields are continuing to nudge lower. two year slipping below 1%. as they rate cuts even signaled a pause and easing. stocks under pressure as well. paul: let's check in on the first word news now. worst opecits meeting in four years with prices tumbling after they agreed to extend production into 2020. russia and other independent nations backed saudi arabia's plan although divisions remain. with shalen came surging and the u.s. close to seeing a net oil exporter. opec now has its lowest market share since 1991. order to help maintain the current state of the market and avoid the buildup of

inventories, we have decided to keep the level and magnitude of the cuts intact. airbus and boeing has spread the u.s. to add more eu products to a list of potential tariff targets. washington identified $4 billion of eu goods ranging from cheese to tubes and pipes. $21 billion the u.s. published in april. the u.k. has readied tariffs of its own. ofpeople died and much india's financial capital has ground to a halt as the heavy mudslides led to the city declaring a holiday. flights to mumbai were delayed or canceled. departmenteather called 37 --

the second heaviest downpour on record. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. banks made the headlines today with president trump announcing he will nominate julie shelton and christopher waller to the board of the central bank. waller is an executive vice president at the st. louis fed and previously served as professor of economics at the university of notre dame. an informalbeen advisor to president trump and is a u.s. executive director for the european bank for reconstruction and development. latestiscuss all of this development with bloomberg opinions columnist dan moss. great to have you with us. these candidates become relevant only if they actually get senate confirmation. president trump has not been to lucky lately. -- too lucky lately. candidates,t two

herman cain and stephen moore, imploded. shery, that was largely to do with the legal and cultural baggage that they brought with them. neither of these two candidates quite have that. within theretty much mainstream of fed thinking. he is a head of research, a substantive role. they get to attend the fmoc meetings every six weeks. if you look at the minutes, christopher waller was certainly there for some of those meetings. julie shelton has some somewhat unconventional views, but again, none of the incendiary extracurricular baggage that some previous two had. these two probably have a better shot. paul: dan, to what extent do these two nominations send

across the bow of jay powell? might beably less than initially imagined. again, waller is a senior official at a fed district bank. if we take a step back, one thing i learned in my years of being responsible for fed and new york is the federal reserve is essentially run by five people. the chair, the vice chair, the head of the new york fed, and two folks who are not household names. the person who runs the system open market desk at the new york runs thethe chap who powerful staff at the division of monetary fair -- fed. divisions at the fed hq are referred to as barony. right now he is enormously influential.

these five people are the core of fed decision-making. others manner but these five are the core. it is important not to lose sight of that. shery: what are we expecting in terms of her policy outlook? the market seems to think this is pretty dovish. dan: one of the significant takeaways is there is not a lot daylight between what she and the imf have said about monetary policy and the direction that mario draghi has pursued during his term. remember there was a bit of a itsas when the fed started policy of raising interest rates, that the imf had said they thought maybe they should hold off until there was a bit more sign that inflation might be a problem. term,r lack of a better

there is a dovish, pragmatic term she would bring to the job. she has also proven an expert at forming consensus around issues. opinionoomberg columnist dan moss, thank you. haven assets from treasuries to gold. rising concern about the global economy and lingering doubts about the pace of fed rate cuts. .et's cross to singapore thank you very much for joining us. we are seeing the 10 year yield dropped further. 1.972% now. this is the lowest since december 2016. i want to jump into the bloomberg and look at this chart. we have the three-month to 10 year curve flattening, the most since december. what is this telling us? us is thatis telling

there are concerns out there and we need to be, as investors, cognizant of how to strike the balance between risky assets and being adequately well prepared for downside risk. of course positioning is still about further rally and risk assets. still about equities, corporate and bonds. we have been balancing that position with risk hedges. that has become increasingly important. whether it is a yield curve, the indicators, they are telling us go to the concern. we think this is a midcycle slowdown but we are at a fairly its dance stage in the cycle, the longest on record in the u.s. it pays to be prudent. looking for are yield in treasuries right now there are still a few places you can go. i want to show a slightly more encouraging chart. bonds have done

so far in 2019. this is something you like, isn't it? manpreet: absolutely. when you look across the yields asset spectrum, that is one regardless of if you are looking within bonds or loans, extending to assets. one is thinking about valuations. a few areas where you still see a bit of value. and it has a really good track record in terms of doing well after fed rate cuts. given conversation about whether the fed will cut rates, we look back and say regardless of if one towards the end of the cycle. 12 months out e.m. bonds did really well. that for us puts it in the top ranked position. looking for income earning assets. shery: we have breaking news.

south korea coming out with their second half policy statement from the finance ministry, saying they are cutting their 20 gdp growth view 2.5%, down from the range of 2.6% to 2.7%. they have also cut their 2019 inflation forecast to 0.9% from 1.6%. of course we have seen weak demand and south korean economy. inflation year on year just yesterday coming in, 0.7%, which was much below expectations and lower than the 2% inflation target. not to mention that we continue to see weak exports for south korea. seven months of decline for south korean exports. now the finance minister coming out and cutting their 2019 gdp 2.5%, view to 2.4% to

down from as much as 2.7% growth including inflation forecast. let me just turn back to you, manpreet. we continue to seek headwinds for the economy not just in south korea but globally as we were talking about. where does this put us in the bond markets? we continue to see negative debt yields going up to $13 trillion safety, gold. next we see gold gone the positive yielding asset in this environment? mepreet: much as it causes discomfort, yes, that is possible. yields are at the heart of it. of the risk of gold is trump trade. what we think is driving gold is we see adjusted bond yields

moving lower. that has been a really good predictor of gold. that has already moved lower. we think there is a risk it could continue to move lower. we think that could bring down the dollar and that could be another driver for gold. we still limit exposure in any kind of allocation to know more than 5% to 7%. when thinking about getting the balance right this late in the cycle, we think that is a really good balance to an allocation of otherwise riskier debt. gold is one. closer to this part of the world, asia dollar bonds. a greater china concentration, greater credit risk, but the track record is incredibly stable. think those are the kind of asset classes that make a lot of sense where you want to stay exposed to risk late in the cycle.

we think this is just a late cycle slowdown. we don't want to take too much risk when you are already in the longest expansion on record. shery: when you say you are starting to turn bearish on the u.s. dollar, how does that stand to the fact that if we continue to see the global economy slowing down, the dollar could be the only game in town? us, it comes back to bond yields an interest rates. think about the dollar value the past few years. we think it has been by and large driven by the fact that on yields nominally or through inflation has grown more than the u.s. if we are right about that turning, that takes away source of support for the dollar. if you are in the u.s. we think that could be one additional tailwind. but for an emerging market asset that is quite positive. strong environments are really bad for e.m. assets. if we do seek attorney dollar or at a minimum a pause, we think that starts breaking the outlook

for e.m. assets. asian dollar bonds will be our top call but the reality is equity markets we will also be looking at. we like the more domestic-oriented. but we can see the benefits to the broader e.m. asset class easily. paul: all right. manpreet.cc strategy, still to come, we will look at the hong kong ipo markets and why analysts say they will claim the global ipo thrown for the second year. this is bloomberg. ♪

shery: let's turn to sophie in hong kong for stocks on the move. sophie: in tokyo we are seeing fast retail climb as much as 3.4% after reporting a 27% jump

in same stale -- sale stores growth. the biggest increase since august of 2013. full-year sales and profits during sales have generally dipped in the month following in the high teens or 20% range. in sydney, woolworths is rising 3.5% on its plan to separate drinks and hospitality businesses after first combining into a single entity. which isrgy as well, off by 3.2%. one of the biggest laggards this morning as it moves to 50-50 ownership. thank you very much. on the subject of energy, oil had its worst reaction to an opec meeting in more than four years. prices sliding after independent producers agreed to prolong production curves. >> the length of this agreement

was nine months, sufficiently long to bring down inventories and balance the market. i am very positive and optimistic, and i think we are in a very good place. >> we believe it allows us to achieve an optimal results by avoiding oversupply of the market in a low demand season at the beginning of the year. >> hopefully it will erode some of the volatility, and it will and a message of clarity removal of some kind of conclusion and uncertainty. paul: joining us now from melbourne with more is our senior energy and commodity reporter david stringer. we heard a lot of optimistic voices book oil is not playing along, is it? david: that is right. futures fell about 4.8% overnight in new york, the worst reaction to an opec meeting

since november, 2014. it was the steepest decline for futures since the end of may. quite a marked reaction there. this morning we are seeing oil recover some of those losses, up about .5% in early trading. what we are really seeing this kind of a push and pull between two key factors. we heard a lot of talk there about reduced prospects for oversupply. opec of course agreed to extend reduction -- production curbs another nine months. that has dampened down some fears there will be a supply glut. balanced against that is broad pessimism about the global economy, concerns about growth and concerns about the impact of that on demand. what we seem to be seeing now is it is those pessimistic concerns over demand that have the upper hand. shery: is that what is hitting tin as well then? david: that is right.

whole suite of metals hit by similar concerns. weaker growth will mean weaker manufacturing, weaker prospects for the industrial complex. tin absolutely being hit by that sentiment. it was down about 6% on tuesday trading. that was the worst performance since the end of 2011. tin also being dented by a specific factor. tin used mainly in sold during, one of its -- soldering, one of its key markets is semiconductors. that is having a real impact on tin. paul: senior energy anchor -- plenty more to come. this is bloomberg. ♪

shery: we have been tracking on

broadcom set to be in advanced talks to buy cyber security software maker symantec. shares of broadcom fell after hours while symantec searched. -- surged. we are joined here in new york. this would be the second big bet in southport. why are they doing this? >> when you look at broadcom you know they acquired another company last year, $4 billion in revenue. second-half growth is mostly coming from that acquisition. you can see the playbook. symantec is not a fast growing company but at least it has exposure to cybersecurity markets which is a pretty attractive market for any technology company right now. essentially they are trying to buy another $4 billion in revenue and get two to three points in growth. paul: synergy is particularly obvious here. will broadcom have trouble

selling the story to the markets? mandeep: symantec has been a really hard company to turn around. tsey have had four ceo exi since 2012. what it tells you is this thing is not easy for anybody to turn around except for a company like broadcom. kind of specializes in deals like this. tot wasn't an easy company integrate. is right we know, this in broadcom's ally when it comes to turning around a legacy company and helping them migrate to cloud and really driving it. i think this is perfect for broadcom. shery: there is a lot of speculation about the acquisition strategy. are there still concerns? mandeep: we never know how it will get reviewed because the deal is not announced yet. obviously broadcom is an

inquisitive company. any deal will be reviewed carefully. so, we do not know how the regulators will view this, but again, i think they have made their intentions fairly clear at this point what they want to do. paul: all right. mandeep, thank you for joining us. let's get a quick check of the latest headlines. is weeding out potential buyers as it prepares for its most dramatic overhaul in years. they are gauging interest for loans asg and stalled well as equity-related securities and interest rate derivatives. the ceo is expected to announce a new strategy this week after a series of turnaround plans that failed to lift profits. shery: they kicked off the year's biggest ipo this year with a mere $10 billion share sale at its asia-pacific beer unit. it is set to top uber's listing

in may. aty offer 1.6 billion shares $40 to 40 seven dollars hong kong apiece. to $54t value of up billion u.s. on par with the second largest brewer heineken. trading is expected to start july 19. jumped inflate trade after setting a new record for quarterly deliveries things to demand for the model three at home and in europe and china. deliveries topped 95,000 in the three months between june and the previous best of 90,000. it was well above forecasts of 88,000. u.s. demand was helped by the imminent halfing of a federal tax credit on july 1. shery: coming up next we will have more on south korea's growth concerns, and what it is doing to boost the economy. the south korean government has just cut their 2019 gdp growth forecast. this is bloomberg. ♪ ♪

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♪ this is "daybreak: asia." trump has announced his latest nomination to the fed board. backing the u.s. ecbutive director for the party. european bank for construction redevelopment. leaders have

nominated a german defense minister to become the next president. the trump administration has abandoned plans to add the question about citizenship in the years senses. the supreme court blocked the attempt. the administration has now dropped the fight. in a 5-4 ruling, the court said it was contrived and did not meet legal requirements. is set for april 1. the state of arizona hitting back at nike after criticism that a shoe design was offensive. the issue carrying the logo of an old u.s. flag representing the first u.s. colonies is an emblem embraced by white nationalists. ayers and the governor said nike had bowed to political correctness and ordered all

financial incentives for a new manufacturing plant to be withdrawn. vale may face criminal indictment over january's fatal disaster. targetstee is proposing after an investigation into the collapse that killed almost 250 people. 's risk ande compliance controls were flawed. the says it disagrees with report and the potential indictment. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ paul: thank you. time now for a market check. >> checking in on the mood, the dollar under pressure, the yen gaining ground, up 0.2%.

to five set to day advance. water as treading investors digest the government cutting its growth forecast to reflect declines in exports and investment. the finance said they will be investment in tech. this, as canada is mulling export curbs to south korea. the government will invest one trillion won annually. let's track the mood and treasuries. the 10 year yield slipping further near 20-month lows. u.s. five year yields all three basis points in early trade. oil extending gains, recovering from its worst reaction to an opec decision since 2014.

brent and wti on the advance this morning. shery: thank you. about south korea lowering its growth and inflation outlook this year to reflect worse than expected declines in exports and investments. let's look at this with end occurring. karenthe are you setting up the market to signal a rate cut coming soon? one of the reasons that everybody watches south korea is that it is seen as a bellwether for global growth. half of its economy is made up of exports. that is what we are seeing in these forecasts. exports have fallen for seven straight months. it is not only about the trade war. downturn as we have seen a cooling demand for

smart phone handsets. hurting semiconductor exports out of south korea. they have lowered those growth forecast and taken a knife to inflation. we are two weeks from the bank of korea meeting. you have to say at the police this will ramp up expectations of central bank will lower its benchmark interest rates. paul: the government cannot just leave it to the bank of korea to do the heavy lifting. >> they are trying to push through measures that it will make it easier to promote activity to promote companies. hoping for a break on the u.s.-china side of things. that is why the commentary this morning said there is similar

relief expected from the truce in the ongoing trade war. breakse negotiations down, then south korea is caught in the middle of the supply chain story, the demand story. when you add in the slowing world economy, it creates downward pressure on south korea. they can take steps, but they have a lot of external headwinds out of their control. shery: when you compare to other economies like japan, what is the difference with south korea. we see a lot of government support for anything within south korea, including job nottion, and yet we are getting the momentum for the south korean economy. more export reliant than some neighbors like japan. half of south korean gdp comes from exports. that is a big driver of economic growth. one headwinds it faces is consumer debt is high.

it is very hard to get the animal spirits going when you have household settled with the debt that is over 100% of gdp currently. that is a constraint on growth. more generally, it is not just there is this shift in technology at the moment. they were of the boom of the semiconductor story. now we are at a shift as the world is waiting for the next generation of 5g products and the like. as i mentioned earlier, there are plenty of issues with south korea for sure. they are at the whim of the global economy too. , thanks forurran joining us. issuance at the high as the people's bank of china sold

billions. they were sold primarily in hong kong. selina wang has the story. how significant is this? this wouldentioned, be equivalent to 80 billion yuan in bonds sold out of sight of china, and 50 billion was sold by the pboc, offsetting the depreciating pressure over the currency. if you look at this chart, this would be the most yuan bonds sold out of china in any quarter since 2014. economist noted this part of china's effort to stabilize the currency before the g20 meeting that happened with trump, who has repeatedly accused china of being a currency manipulator despite the fact that the treasury department has declined to label china as such, but calling china a currency and if you been one of trump's key

economic pillars. china wants to take every measure possible to not provoke trump, so stabilizing the currency is one method to do so. shery: thank you so much. our china correspondent. appetite for ipos is hot in hong kong. we will add up what could be another big year for public offerings. this is bloomberg. ♪

♪ the wave of protests in hong kong, including storming of the city legislature is creating a headache for banks facing soaring funding costs, and that could weigh on upcoming listings. our colonist joins us with her take. hibor rising?

>> the central bank was trying to defend its currency peg last month when the hong kong dollar was weak. hibor to rise. thanks for offering higher local interest rates by the end of june to boost hong kong dollar deposits. so what we see is at the end of june that the hibor was about libor for the first time since june 2016. shery: some seasonality there as well, right? what does this say for future ipo's? where expecting big offerings, including alibaba and ab invev. bankss is problematic for because investment banks have

been assuming the hong kong dollar would be stable and the cost of funding in terms of hong kong dollar would be much lower than the u.s. dollar someen you do an ipo, margin financing in hong kong can be aggressive. in late 2017, some were telling washat 90% margin financing given to investors willing to buy into ipo's, but now the cost of interest rates, the cost of barbering is twice as -- borrowing is twice as high in the which means new hong kong ipo's, the investment banks have to price the ipo's aggressively so investors have some gains to participate. basically, at the end of the day,, like all the other central ,, where as hong kong seems to be going the other way. that cannot be good for the ipo

market. shery: thank you. pricewaterhousecoopers said total funds raised in the hong kong ipo market this year could be greater than that in 2018. 'sining us now is pwc entrepreneurial and private business regional lead. >> the companies have submitted their ipo applications to the

hong kong exchange. this number is a similar level compared to the beginning of the year. there are already 84 companies listed in the first half of 2019. also, we expect there will be two mega ipos coming to hong kong and the second half of 2019, so with this momentum, hopefully hong kong will continue to secure the top three positions in terms of fundraising for the entire year, and there is a chance hong kong will be able to continue to be in top position this year. shery: one of the reasons that alibaba could list in hong kong was because of those regulation reforms we saw last year. these new listings are a direct consequence of those regulations being changed? >> the reform last year has helped a lot. sector where that

we see a lot of momentum this year. we have seen three biotech companies listed in hong kong. we expect there will be around 10 companies. we are seeing morton new economy more new go for ipo -- economy companies going for ipo. on kong is one destination on the table for them to choose. week there was a high-profile arrest of the former joint head of the hong teamexchange's ipo fitting and others on charges of mismanagement. does this sort of thing give hong kong's reputation a knock as a center for ipos? >> i don't think there is any momentmpact, but at this we do not have a lot of information. system hong kong vetting

has been in place for many years. have otherhat, we vetting. also, this momentum, there have been rumors about a situation before, but we still see that strong pipeline. just in the month of june, there listed as of friday. we see the momentum there. hopefully this issue is an isolated case in the market can continue with this momentum. the recentbout political unrest in hong kong, the uncertainty of what might happen next, is that affecting the environment at all? >> we have not seen any major impact. there is not much fluctuation in terms of the hang seng index. in june, we still have a lot of

ipos and a number of companies have submitted applications to the hong kong stock exchange. if this issue continues on for some time, there is likely going to be some impact, but it is difficult to know at the moment. shery: biotech companies have been pretty in the ipo market. what are we expect in terms of industry listings? >> in terms of the numbers in fundraising, the first half is dominated by the retail consumer. this trend will continue for a number of ipos, but fundraising in the second half, we believe other sectors will pick up again. this year, it will be the retail and consumer sector and another sector will be the two leading sectors in terms of fundraising. wong,all right, benson

thanks for joining us. more on ipos just ahead. saudi aramco planning its mega listing. we have the details next. this is bloomberg. ♪

year it has been almost a since saudi arabia put its aramco ipo on hold. it was seeking a $2 trillion valuation. now it looks like the ipo process is heating up again. our reporter joins us from hong kong. how do we know this time it is for real? >> exactly. that is the question. they have restarted work on laying the groundwork for this massive ipo to take place either later this year or more likely early next. dislikee been

of seeing -- discussing such a make a deal with banks. remember they were considering that a while back and had to put it on hold for various reasons. those challenges still lie ahead. trillion valuation they are seeking. that is not an easy goal. keep in mind that investors will .raw a lot of scrutiny they need to learn a lot about how the company operates, so it will be challenging, but they are starting preparations again. we will see over the coming months whether they are able to political this time around. just: is this determination to diversify their economy? oil prices have been volatile. the $2 trillion valuation seems ambitious. >> it is, indeed.

that is one of the main hurdles to succeed. saudi arabia has been vocal they want to diversify its economy and bringing new sources of aramco isd saudi perhaps the biggest jewel they have. it is a great asset. a lot of investors will look at it and considered this as one of the most prized assets in the coming months, yet, there will be questions about it, and also keep in mind that for institutional investors to pour a lot of money into a fossil fuel company, amid all the climate change, it is going to be challenging, but we will see over the course of the coming months whether they are able to political off. -- to pull it off. paul: besides investors, what

are the main challenges for aramco in the kingdom this time? challenge is the valuation, whether or not this current ipo environment, they are able to achieve the $2 trillion value. not they caner or make the numbers work and whether or not saudi arabia feels comfortable by selling at aone of their jewels certain valuation. i think that is the main sticking point. then you will have attentional regulatory scrutiny for investors and so on and so forth, but that should come at some point. i guess the main point is whether or not demand for such an asset is out there or not, and that, we will see what happens. volatile oilthe

prices can also affect this ipo immensely, so it is still early stages. lots of work to do, but it is encouraging that work is being done again. shery: thank you so much for that. our asia deals reporter with the latest on saudi aramco. india planning its first bond sale to refinance its ballooning debt. says its aim is to raise more than $3 billion. it has sought for bids from bankers. the note will carry a sovereign guarantee, while the government will service the remainder. the airline is carrying total debt of more than $8 billion. teaming up tois invest $100 million in a

streaming service. talks are in the final stages. tencent has invested heavily in movies and tv shows and launched its first overseas video streaming service last month in thailand. paytm reported 5 billion transactions in the past year. joins ahe ram brand good june with a surprising gain in a shrinking market. to 68,000oared 56% units, close to sales reached eries.y the ford f-s to a 2% rise in deliveries, making it the only automaker to boost sales in the forecast. markets are mixed across asia. let's get a preview. >> was chinese markets come online, resilience will be tested.

no signs ofgns -- panic despite corruptions. 7%,hang seng has advanced even with protests during that time, to add more than $300 billion in market cap. property players could come under pressure. may raise concerns on traffic and safety issues. spacealf of the office is limited. i market coverage continues. this is bloomberg. ♪

tom: welcome to "bloomberg markets: china open." yvonne: we're counting down to the open of trade. regionmarkets across the over the pacebts of rate cuts and renewed warnings over global growth. ,vonne: treasuries gain dragging the 10 year yield to the lowest since november 2016. tom: oil off close. reports suggest the u.s. contracted 5 million barrels last week. ♪