trump with carl weinberg. stay with us.omberg. ♪ >> we have come to the conclusion that the agreement needs to be extended. we will not reach the desired inventory levels by the end of june. therefore, we also came to the -- itsion that ending by will be better at the end of the first quarter, 2018. francine: that is saudi arabia's energy minister, khalid al-falih . russia and saudi arabia favor through the end of the first quarter of 2018. kennedy, what does this actually mean? even if they cut production and extend the output cuts,c a can l stay above $50? >> this is significant twfor tw reasons. it puts flesh on the bones from what we can expect from the opec meetings next week. people were pretty sure they would continue the agreement until the second half of the .ear for i'm not sure the oil market is totally aware of what a big deal this is. these are the world's two biggest producers. 20 billion barrels a day between them, working hand-in-hand. although they are in a slightly weaker position because of shale, it seem

we'll ask carl weinberg in just a few moments.♪ >> this is daybreak asia. >> i am ready lose here in new york. see makes its next great call on thursday. traders think a hike is unlikely. how to unwind the fed balance sheet. let's get more analysis with carl weinberg. byalso joined from yokohama kathleen hays. first, we had some data this morning. the auto sales numbers really taking a tumble. it has people wondering -- have we peaked in consumption? is the company -- is the economy about to peak? maybe these first-quarter numbers were not such an aberration and the red should not be moving as quickly? >> may be and maybe and maybe. the big story on the data is that the economy is doing well and is creating a lot of jobs. that is leaving to an unemployment rate that is below and they target by .2% will have to say something about that this week. seem to suggest it will not stop at 4.5% and will keep going. their mandate will be for the unemployment rate, not gdp growth. as long as we still creating 100,000 jobs a month, something

carl weinberg on daybreak asia said labor markets get better all the time, wages are rising, and themove. listen. acknowledgede fed that this happens and it is driven by data. if prices locum maybe they won't go in june, but right now everybody is ready for it and they don't have to say anything different in order to keep that expectation around 70%. >> the fed may be data dependent, but the idea is they want to normalize, so people expect them to be flexible with that data dependency. haidi: it is interesting, the policy statement from the fed is only a few paragraphs long. doesn't have enough room for it to mention a balance sheet issue? when it comes to the economy, let's start there. you can change a couple of words on the strength of the economy and what inflation is doing and send a signal to the markets. the balance sheets, they may repeat what they said in march, which is they will keep reinvesting the proceeds of the point 5sheet, four trillion dollar balance sheet, until they start normalization and normalization is well underway. something the key rate has to be 1.5%. #555

carl weinberg of high frequency economics. let's start with you, answer the question i just post.where the market is built-in and therefore they sold off or is there some underlying concern about whether it really can support the price of oil? >> a little bit of both. into theitions dropped agreement. see things through. now i think you are seeing real fear in the market as they look the question is is this all they have and have a basically done all they can? oil can fully long way and you are seeing that with the downgrade consistency -- consistently. to what extent is their concern about compliance? will the russians really comply? >> it is a little easier for russians to comply because they did not have the issues with oil in particular. , it has gone back to normalized levels. .pec members, incredibly high they have done everything they can. if one breaks away from the deal, opec would be -- in a bind. jonathan: i will cut back with you a little bit. >> the deal is irrelevant. the economics of crude oil and thentories are so high, countries have 480 million barrels of supply