breakevens earlier. say even in japan, 10-year breakevens are cheap. is that a reason to buy them? have been wrong about the move in bond markets and breakevens. there's certainly a lot of value in breakevens globally. even in japan. nejra: one more comment from corrado -- kuroda. there is no change in the boj's main scenario. we will keep you updated. our guest stays with us. the middle east. saudi arabia intends to issue $32 billion worth of bonds next year to finance its deficit. bloomberg spoke exclusively to the saudi finance minister, he told us that the kingdom has the ability to reach investors around the world. we have a fantastic relationship with our investors. locally and internationally. we have access to a wide network of investors. the primary market, but also in europe and asia. we are expanding. we are likely to go to the international market early next year. it all depends on the market. >> wouldn't be more likely the first half or the second half? can you give us a ballpark range of how much you are likely to issue? will it be similar to past issuances? >> genera

which is why i think it breakevens are showing you not a lot of conviction. this is mostly a supply issue, not so much much demand. it should start heading higher at some point, but there is not a lot of conviction. jonathan: no one is talking about the ecb either. in a couple of weeks, a big, big meeting, i think, for president draghi. krishna: i think ecb is in a far worse situation than the fed. the underlying strength in the european economy with emerging markets doing far worse than they were a few years ago. i think the strains there are quite significant. my expectation is still that at some point, they have no choice but to stop, and rates will remain lower for an extended period of time. jonathan: can i get a positive rate above zero at the ecb? priya: i think they would love to, but a lot goes into that. they need a lot of things to go in their favor. every quarter, we have a one-off issue that the markets attributed a weakness to growth. that is a little suspect, right? when my kids make a mistake again and again, i don't buy the one-off argument.

i think breakevens have to be higher. jonathan: jim, what is your view?ur expectation for the fed is basically in line of where the market is now. we thought they would hike in december. one or maybe two next year. he has optionality to take advantage of the market data. we think he is aligned with what the markets expect and the markets will react favorably. jonathan: krishna? krishna: a lot of what was getting priced in in terms of not going to stop the visual has -- stop at neutral has been priced out. therefore if the tips are rolling over and expectations are trending lower, from an optionality standpoint, buying that option may not be such a bad thing. jonathan: let's talk about how this has been priced in to the treasury curve. we have gone from a flatness driven by the front 10 to something a little bit differently recently. priya: the bull flattener maybe a policy mistake. it might not be on the hike front. i think the balance sheet runoff is another form of policy. the fed is saying that's not an active form of policy. they are letting it run of

we have been talking about breakevens coming right down, rolling over.dman and citigroup clashing with bond traders dimming inflation view. goldman sachs saying inflation breakevens continue to be under pressure. they say the fundamental case for owning them appears to be intact. the only scenarios were there on attractive to own our in situations were growth is decelerating more sharply. that is the key. fed policy is already restrictive. let's check on the markets with dani burger. tell us what's happening in the asian session. >> volatility. when we have this asian session declining for the fourth week, gains at one point were over a week earlier. this is the 60 day volatility on the msci asia-pacific index. it has been hired in general this year. we are ending the week here at about a 17 level. the last time the asia-pacific index was all the way back here in 2016. to give you an idea of the positioning, most people are flipping to short. chinese officials deciding policy next week for 2019. theyis the type of picture are going to need to take some h

the breakeven suggests absolutely not.market in general suggests the market doesn't believe we will get sustained inflation. james: that is the lesson we have learned of the last 10 years. we can talk about inflation for the next hour easily, and would not exhaust all that's going on there. but suffice to say, it doesn't work the way the textbooks suggest, and there is huge asymmetry. we believe the fed can hike rates dramatically and kill the economy, and that will hurt prices, but i don't think they can create inflation, certainly not in this globalized world with outsourcing to the cheapest marginal producer. the role that technology plays, the role that disruptors have played in keeping prices down, all that is disinflationary, in a positive sense, by the way. but it means prices can't run away in the way they did in the 1970's. nejra: thank you so much to james athey, senior investment manager at aberdeen standard investments. great to have you with us. let's get to the bloomberg business flash. vinci has agreed to ac

>> guest: it's always hard because remember the exact price now but the breakeven price even today is below what the taxpayers would've been -- taxpayers would've been getting dividends every quarter and so i don't know if you can puke it all and over the last ten years of the taxpayers would have been made whole. they would've lost less than 11 billion. >> host: was anybody pushing the federal can to stay in longer on that always idea to get out as quick as possible? >> guest: i remember during the 2012 campaign i invited negron and he said he wanted to share self-assuredness is possible. he said he felt one of the reasons the obama administration was the length was it was a campaign issue. it was a loss on paper, not a book lost until the taxpayers sold their shares. if i recall, the end of 2012 after the election taxpayers sold the final shares. realistically, given where the prices were, in the short term we were not going to recover all the money. >> host: tom, good morning. >> caller: good morning gentlemen. i love c-span. i've got out and should expect a both of my family. my m

at theually looking five-year five-year forward breakeven versus the 10 year yield. basis points in the session. are you on the side of the market on inflation or the side of goldman and citi? : if you arejeremy to take those trade tensions to the nth degree, you have a potential upside risk and labor markets remaining relatively tight. also, it would suggest that there may well be inflationary consequences coming through. the pull that we have seen in the oil price will have an overall reduction effect in terms of headline inflation. i think there is a real the station between the headline and the core dynamics going forward. i think we are going to see core inflation remaining relatively sticky. we are going to see those wage dynamics starting to come through. i think that is what to be the factor that is going to cause central banks to be a little more wary going forward in certain instances. that: goldman's, was although they continue to be under pressure, the fundamental case for amin them appears to be intact. the reasoning is the only scenario they are unattra

nejra: it off each back to the in then around breakeven environment the fed would be hiking in. are expecting that hike. if the fed were too high today, it would be the first time for a long time it has done so when equities were this bad. let me take you to my chart. the today average is that something like 26%. what is it going to take to lift equities from here? exactly what kind of messaging from the fed would taking a gradual hikes? is the fed going to out hawk are out does the market? -- dove the market? tom: of course, the press conference, our michael mckee will be there. >> you look at inflation, it is very low. hopefully, the fed will be raising interest rates anymore because if you compare us to president obama, he had zero interest rates.anyone can make money on zero interest rates . i'm almost at a normalized interest rate and get our economy is soaring. the biggest threat is the fed because the fed is raising rates too fast. it is independent, so i don't speak to them, but i'm not happy with what he is doing. i think the fed is far too stringent, and they are makin

we need to deliver 400,000 vehicles to breakeven.you see xpeng serious contender versus tesla in the chinese market? >> i expect we will be able to compete with tesla in the global markets in the next couple of years. is there a risk of overcapacity in china's electric vehicle market? will we get to a point where there is rapid consolidation? see ahink we expect to process in two years or more. i think this will lead to bigger companies. tom: is the financing environment more challenging for a company like yours? he: there is abundant free capital out there. is a new and smart industry. we are seeing many investors that are interested in it. they are more cautious than before. tom: the chinese government might do a favor to tesla by cutting the tariffs from 40% to maybe down to 15% as a result of these trade negotiations. is that a setback for xpeng? do you lose an advantage? he: we hope the government will lift subsidies and tariffs. it could benefit us in the short-term, but in the long term, it would damage us. company were a tech

if you look at the breakevens, five-year breakevens, they dropped the most since june last year. one-day drop. inflation expectation over the next five years. this is a growth story. alix: interesting. the finance minister in france says, china and france must and with.t. property, the vice premier. they are in it. he says, they are welcome in france. we will take it. third story. oil. indecision from opec. gina, volatility, hello oil. what is the bleed through from oil to other asset classes? gina: equities specifically, persistent and earnings. oil clearly the number one driver of energy sector. 500, market cap of s&p expected to be strongest grower in terms of earning on index over the coming year. negative revision already impacting the sector. it is catch up. this goes back. bond market volatility catching up to equity market volatility. energy stocks catching up in terms of revision momentum, to what has been happening to the rest of the index, last three months. it did not express negative through october. alix: now $100 oil maybe. gina: this big drag we are expecting in t

i don't think it will become a big problem, we should be expecting higher inflation and breakevens goingorward. vonnie: the job data -- the good job data is now moving in. why now? last month was also lower. data have turned . if you look at almost any measure of wages, we are running about one half to a percentage point faster than a year ago. there is a slow acceleration in wages, but i don't think workers have caught up yet to the improved negotiating edition, to tell you the truth. there are low expectations for unemployment. they are reacting to the labor shortage by leaving jobs open rather than waiting -- raising wages. this will be a slow, incremental process. my guess is that by the end of the year wage growth will be up by 3.5%. perhaps in the cycle we will get as high as 4%. it is a slow process but we are moving in that direction. at the margin, how much is donald trump affecting things when it comes to opec and saudi arabia and the federal reserve? in terms of policy, we have to wait until something happens but in terms of these comments and tweets? think the markets are bei

in terms of breakeven, way lower than others. arabia is a good example, assuming a price for brent of $80 per barrel next year, courageous. far more bullish than anyone we talked to in the markets. it may happen but based on today, it seems punchy. for consuming countries come a huge windfall, partly because of a deflationary effect come in the new --, -- france, the fuel taxes. for consuming tech -- consuming countries, important. guy: the swing this year has been affect. -- epic. s&p was looking punchy. multiples were high. nobody confident about the price of oil. a question of who is leading who and why we ended up in the situation. do you have a better idea with hindsight as to why the price collapse has been so dramatic and the belt of the rate of change has been so aggressive? >> the short answer is trump. this is the first time in recent history where you have a u.s. president tweeting on a weekly basis what opec should be doing and the oil price. he does it with other things that something never we have had to contend wit

up and down and back and forth over the breakeven lions.nd kind of accelerating into the points. the nasdaq composite is still in the positive. but let me tell you, you mentioned it, volatility throughout the week. and, we closed up 260 points but that was before we fell 600. that intraday move is the biggest in the dallas 120 year history. so big move there and that's where it's been all week. it really volatile. i want to talk about tesla for just a moment. elon musk hiring two new board members. and kathleen wilson thompson, senior vice president for walgreens. tesla is having to comply with an sec agreement to expand their board to include these new members. big questions about ellison though, he is a friendly investor who has put 3 million into the company and a big fan of elon musk. we will see how that works. >> gerri willis on the exchange and we have about 17 minutes of trading. overseas now, there is where that one-time allies in syria are getting you help after president trump announced the u.s. troops would withdraw. they are lo

breakevens,s into feeds into fed fund futures, and then the equity markets have a look at that and price off that. then it all becomes quite circular. is that what we are witnessing at the moment, everything feeding off of each other, no clear narrative, no obvious asset class stabilizing? i am wondering where the leadership is in terms of these various asset classes in these various markets. >> absolutely. that is the question, at least for today's price move you would argue it started in the equity market and then fixed income eventually. currency market, we were not seen that much of a followthrough because we saw little bit of a u-turn. haven currencies like dollar-yen, for instance. it has been reversed now that the americas have come in. as far asi would say, today's concerned, started in the equity market up because we have the narrative of a flattening yield curve and u.s. prior to the break on wednesday, that was also feeding through an compounding on the jitters in the market right now, thus we have this price action today. guy: the next question, when to the authorities start

we cut cost by more than $5 billion, making the breakeven point of the bank lower.stand a drop in revenue and remain profitable. we raised capital and we dealt with our issues. low risk,s us with low cost, a lot of capital, a great position into a difficult environment. things will turn and i am afraid we are getting to that point. francine: this is a market correction or something worse? tijane: a market correction. we still are positive about growth albeit at a lower level , which drives our ability to make profits. profits will be higher than they were in 2015. if you recall, a group where we had 60% of our business in the investment financial. we have a much higher quality of earnings and higher profits. now it leaves us in a much safer position. juliette: coming up on "bloomberg best," more of the week's top company news, including an uncomfortable trip to capitol hill by the google ceo. plus, more compelling conversations. david lipton of the imf sees risk on the horizon for the global economy. david we will surely have : another downturn. the question will be

if oil prices surprised on the upside for the saudi government, because of the , theased spending breakevene for the saudi barrel.s around $95 per even if oil prices increase , it would have to rise to over $95 per barrel for them in order for that. nejra: thank you so much for joining us. our guest is still with us. is there a bullish case to be made for oil from here? it started out with concerns over opec plus and growth. we have api data and a drop of a percent. >> there's a slightly bullish case to be made for oil at these kinds of levels. i don't know if that case get you anywhere near 80. there's a couple of things that could go right. the first is that the speed of the decline is maybe precipitous , the market looks oversold. you will have a small term bounce. the bigger issue is what happens to supply in much more expensive areas of producing oil when we have oil below $50 per barrel. could we see shale production? i wass something discussing with one of my commodity colleagues last night. he said a lot of the shale production is done by the bigger oil per -- companies nowadays. th

the bottom line is, if you look at the inflation breakevens, the recent inflation numbers overall, theconomic data, the sentiment ratings, the bloomberg sentiment ratings. everyone is coming down from the august peak. things that vince talked about in terms of the equity fund flows coming out. these are not things that happen at the top. when we identified a mark that was right for volatility in mid-september, everybody thought we would -- everybody would be comfortable and continue on. you had 61% of newsletter writers bullish. you were in an environment where you are ignoring all the news out there. it seems a clear in the opposite now. that doesn't mean you can predict the low, but you can predict around the time when the risk reward is getting a little better and some of that is getting discounted. scarlet: i'm looking at the moment of the world currency, money mood -- money moving into the yen. the dollar is moving higher against the g10 currencies. the previous currency trader, does the dollar remain a haven when we get the fed taking the foot off the pedal, when we get a signal

let's change this and have a look at breakevens. the story in oil, yields pushing lower. down?wn to inflation expectations, still below 2%. they are pretending to break even. how did the market get this one massively wrong again? as we approached the sanctions kicking in in iran, we had bullish positions racking up. then things cascaded lower. one positions on brent here taking a slap, taking you back to what he 17 in terms of your net long. i do believe we have some movement here and shares up. nope, not this one. can we get the other one up? there we go. here is your lunch break. down to point sent -- , that on getting the two thirds vote for the necessary approval. we talked about oil. singapore, very nice to see you. the last time you are on the the, we were approaching iranian sanctions kicking and. we know -- kicking in. we know by now that did come to fruition. what will it take for the markets to reverse course and for both the come back into the oil price. -- price? wouldald trump said he take it to zero. prepared for, producing too much oil in september and october. n

eroded confidence. , 100 thousandrs different miners are said to have close it down because of your breakevening is for thousand $200 and we had what is putting the floor on this? mike: those are exactly the reasons why it is close to the bottom. i think the economy works where there are enough -- if there are going out of business, the equilibrium is near. when you look at how markets over short with up-and-down -- overshoot up, and down, you can see the bottom close. initially, i thought towards the end of the year, there would be a run-up. you could see that last year and you can see that a year ago. a lot of people predicted that it would go back again later this year starting from november december. obviously, november kim and past, and it was one west months for bitcoin. december, right now, there is no catalyst that will particularly shoot it up to react so i would look at it as flat. starting new year, i think that is when the sentiment and momentum will come back. stephen: what will be the catalyst in 2019? in 2018, you had a number of high-profile hacks here in japan, you had an exp

we have seen what oil prices have done to breakeven. could that go further into negative territory? appreciation in the end recently. this is u.s. dollar stuff, right? i don't think there is a huge issue here. it's just that the boj needs to be seen doing everything at the program. and has gone so far down the road to keep confidence in the market. rishaad: it's the law of diminishing returns. what is there left for them to buy? that cameth softbank, out last week. they had a soft dividend yield. how long can that be sustained, even though equity investors said, look, this is like a fixed income investment. with consumption tax due to come in later next year, are you expecting tweaking? will they be heading for the exit at all or doubling down? >> the bank has done all they can do. -- ofs down to the abenomics. [indiscernible] >> do think there will be some fiscal -- >> yes, there will be some fiscal packages coming out. they haven't got a lot of options. they have to continue to expand. yvonne: what about the ecb? will they face the same pressure that the fed did now that growth is

some producers are probably around their breakeven in the u.s. if it gets worse, you get the industry cutting back spend and output. that won't happen overnight. that is the second half of 2019, 2020. david: speaking of the outlook, what i remember when you were on the program previously was how excited you were over lng. the world doesn't seem to appreciate it at the moment. is that still the case? and why aren't people up in arms about it? >> there is a different outlook for natural gas and oil. we already see a tight lng china has partly driven that with imports up 45%. we think the gas market will grow 15% next year from 17% this year. you could see over 90 million tons of lng projects sanctioned, a third of global supply, because the demand signals the last two years, we should have invested four years ago, but we didn't because the oil price collapsed, and now when china and japan continue to import, that yes, we have a looming shortage in the next few years, and that is why show took lng canada and sanctioned it this year, and we expect mo

you have that coming over opec and then you have potentially more m&a, lower breakevens, more productivitys that prevent opec from setting a floor to prices? >> well, it's a question of at what price. if the floor is $60, $70 -- their ability to grow in a disruptive way i think has been demonstrated. $45 might be the capital discipline, but i think the sentiment at the about-face is a well-made point. >> you will be sticking with us, thank you. line.ow for the bottom we will look at three companies worth watching. pg&e, there are calls from california regulators to potentially break them up, change ceo, do something. who pays for climate change? >> that's the big story, exactly. the other story we are watching his bmw, facing a criminal probe in south korea over engine fires. that they hadlude fire hazards and there's another automaker -- >> you still have demand concerns, it's like a triple whammy. the third company is tesla. we got another tweet from elon musk. >> and it is helping people. to things are happening here. in china, they are cutting prices. it is the third time this year the

ratese seen breakeven come down with the commodity price decline although there are other factors at where people see inflation? brendan: expectations are coming down and i believe it will come down further in 2019. the underlying story of inflation in this cycle back to 2011 is that inflation has been by the progress of digitalization and globalization. we have not seen inflation in the goods and services markets even in the boom and it has been concentrated in asset markets. we are coming down -- we're coming into the cyclical downturn and we will see inflation below the target rate. we talked about the lack of conviction when it comes to oil prices. some people say, including goldman sachs that commodity should do well at the late cycle. what is the argument goldman makes? stuart: thinking longer-term, if you have a couple of years of , this year has been awful, that stops companies capex and their prices are back up again. the best cure for high prices is high prices and that is where the speculative end of the market is getting more nervous. it is not just in energy, you are see

expectations and those are going to come down and you are going to see the bond market react to that by breakevens narrow a bit and develop market government bond prices going up. the second thing you have to look at is the input cost into corporations and that will go down. corporate profitability will look a little bit better and consumers should also look a bit better. tom: what should pros look at this morning in the bond market? give me some esoteric baloney i don't look at. cameron crise looks at this every day. am i looking at five-year, five-year fords or some swap in the indicator? what is it? bob: i think right now, whether you are a pro or an amateur in the bond market, you are looking at the shape of the yield curve. tom: thank you. bob: and you are looking at the differential from the front end. if there is an increasing preference for investors to buy 10 year securities at a lower --ld, they could get in cash that is telling you there is a serial slowdown brewing. --material slowdown brewing. francine: four weeks ago we had a lot of people talking about 2020. is this a mid-2019 story

you can see that in the breakevens.n a complete collapse partially because we'll markets are down 35%. and portly for the fed, that does affect the big number over the core number. think one of the big problems this week's even though the fed delivered roughly what the market expected, there were a lot of people on the back foot. there is a whole section of market that i've been losing money for the last number of weeks. this is their last chance to get a little bit of relief on year-end. because it is christmas period, normally a capitulation. might just be 24 or 48 hours. it might last until the new year. lisa: thank you so much. us. and janet staying with coming up, william dudley, a former new york fed president. from new york and london, this is bloomberg. viviana: this is "bloomberg surveillance." the maker of budweiser getting into the marijuana business. there is a great three research partnership with a canadian company. spend 100reportedly million dollars to look into cannabis infused beverages. of luxury tv's

50%.t risks by 40% to we cut costs, making the breakeven point lower.in profitable. re-raised a lot of capital. we dealt with our issues. that leaves us really with low risk, low-cost of capital, which i believe is a good position to go into a difficult environment, because everybody knew after the growth thatof things will turn come and am afraid we are getting to that point now. francine: this is a market correction or worse? >> it is a market correction. we are positive about growth, albeit at a lower level, which drives our ability to make profits. we have turned credit suisse into a wealth management machine. profits this year will be 20% higher than they were in 2015. we had 60% of her business in the investment bank, we now have profits higher. so we have much higher quality structure of earnings. we have higher profit. the deal at the right time, and now agilysys in the safer position. in ad now that leaves us safer position. latest ahead of the no-confidence vote later today next. we are live in westminster. this is bloomberg. ♪ loomberg. ♪ see

when we look at it, the interest rate pullback is the inflation component, what's called breakeven inflationfed is not going to be that aggressive with rates, the real yield, what's called the tips yield, it's also going to pull back a little bit. it's going to go below 1. that's good. i think it's a good stimulus for growth. maria: what does that mean for markets? bridge water associates founder ray dalia was with us last week, weighing in on this very subject. listen to this. you just said you don't think that the fed is going to be able to tighten much more. are you saying that you don't think the fed's going to be raising rates consistently next year? >> no i don't think the fed will be consistently raising rates next year. maria: what do you think? >> i think that what's in the curve, i think if they continue to raise rates faster than is built into the curve, that will affect all asset prices because all asset price versus that one interest rate. you know, an asset is the purchase, it's the present value of the cash flow. when you buy an asset, you pay a lump sum payment for future cas

certainly the breakeven price even today is below what the taxpayers would have been required to taxpayers have been getting dividends every quarter. i don't know if the taxpayers would have made whole. they certainly would have lost less. host: is anybody pushing the federal government to stay in longer on that? the 2012 campaign mitt romney said he wanted to sell the shares as soon as possible to he thought one of the reasons the obama administration was the links telling his they were worried it would become a campaign issue. as long as they help the sales -- held the sales it was a loss on paper until the taxpayers sold the shares. taxpayerselection the sold the final shares. even -- given were the prices were, in the short term we were not going to recover all the money. host: tom in virginia. caller: good morning. i love c-span. i have auto industry experience on both sides of my family. we go to michigan every summer and i have watched for the last 30 years where it just seems like there's not a lot of creativity coming out of detroit when it comes to cars. they are good with the bi