what is opec's strategy?an: they do not like low prices, they are struggling as they try to increase production. very do not want to cut production and cut sales and bear the brunt alone. they want other countries that are not in opec to go in with them and have a unilateral cutting of production so that the pain is shared. if they can get that kind of agreement, they are willing to find a "fair price" for oil. angie: the u.s. says that oil production has not been as high as previously reported. what prompted the revision and what does it mean for the market? energy department has basically been using tax data and computer formulas to project forward and the data is very old. they started surveying companies directly and they say that over the first five months of the year, they overestimated about 13 million barrels of production which breaks down to 100,000 barrels a day. that means that the difference between the global oversupply and the global demand is a little smaller than previously thought. along wit

supports calls for an emergency opec meeting in december. opec production is near a record.atesssed analyst with its first set of results since a demerger. it was spun off as part of bhp attempt to cut costs after a tumble in commodity prices. shares have tumbled 30% since its debut in may. breaking news for you right now. we have fortis q metals full-year net income coming in miss.7 million, a big million. call for $417 ortescue revenue coming in at $8.5 billion, but they have been hit by the iron ore prices, which have been whipsawing this year. shares are down 30% this year. the marketst of turmoil that all of this is happening. for some observers, it is feeling a lot like 1994. we have stephen engle joining us with more. you lived in asia in the 90's and witnessed the 1994 devaluation, precursor to the financial crisis a year after. there are similarities. stephen: but there are stark differences as well. wasturmoil happening now not triggered by the devaluation. china devalued in the middle, harkening back to what happened in 1994. there was a chain of events after that

opec released its monthly report today.t's a hundred-page long report that goes into every aspect of the world's oil economy and the global economy itself. and the one thing it doesn't really get to is why they would boost production. there's some seasonal reasons, a lot of the middle eastern countries burn crude oil in the summer months to fuel power generations for air conditioning, it's so hot there. and the biggest increases came from countries like iraq and iran, iran as you know signed a nuclear agreement back in july that's going to allow it to sort of slowly ramp up production toward the end of the year. opec basically -- its members don't want to get left out of the market share business. even with oil down in the $50's and $40's even. angie: very quickly, do you think opec is going to see the oil market falling back into balance any time soon? reporter: probably not. opec sees -- for all of 2015 they look at the global supply and they look at global demand and they think that opec is going to be needed to produce

this is opec an others as well.of the talk leading people to believe that production numbers will come down. add to that the fact that u.s. production numbers on a monthly basis did come down in june. 9.3 million barrels. we have some production setbacks in canada and this is what just stoked the rally here. although i will mention that it is probably a lot of short covering as well. people who just don't want to be in this trade right now. >> there was a goldman sachs note out this morning, jackie and everybody else, i sent out to the team this morning. it's interesting. goldman sachs, by the way, has been more right about oil than any other major firm because they called the $45 level when it was going back to $60 and everybody said goldman got it wrong. in their note they predicted higher production in the first quarter of 2016 because you look at rig counts, they're up one, down one, whatever. but based on deferral rates of rigs, et cetera, they think we could still get higher production. we just had someone on

you have to understand how opec works.has to come up with a unanimous decision, any time that one person disagrees, the whole conference doesn't come to a decision and everybody's on their own. before saudi arabia used to play the role of cutting the market it was two-week balance the market. >> sure. >> in 1980 -- mid-1980s, they cut the production from 10 million all the way down to 3.5, 4 million barrels a day to balance the market. but now i think they're realizing that that's not going to be very helpful because eventually it's going to take longer time solvent not cutting production at this point. also there's internal conflict between opec, the different countries particularly saudi arabia and iran. and that may play a role in this decision. >> okay. but at the moment don't expect to see opec find religion and start cutting production. it's a pleasure to have you, professor. former chief economist for opec. okay. we're about 28 minutes from the close. dow jones industrial down 68 points. the political world still ci

day,et: at the end of the opec nations are open to discussing this.ou make a good point because who would actually cut is opec did? iran has come out and just wants the sanctions lifted. saudi arabia has pared back it production by about 5000 barrels per day. it is really up to them. why would they want to pair back whyuction to support rivals would they want to do that -- to support rivals? why would they want to do that. warren buffett took a 20% stake of full 66. talk about how low the prices have become an saudi arabia being willing -- unwilling to cut production. the way that smart money has been able to capitalize on falling oil practice -- falling oil prices is through the refining sector. >> that is right, when oil prices fall, there is a huge demand in gasoline stop there are a lot more people getting on the road, driving, community -- habitsng and changing from when oil was higher. profits in gasoline are up 12%. scarlet: a quick interruption here. you just spotted a headline that we should mention about wti. we talked about how the prices s

opec will protect its own, but it's the first indication that opec might be willing to cut production impact on prices. good news for stock today too, the market may be overall down, but energy did not see a decline today. phillips 66, up big, conocophillips, chevron, several oil stocks did very well today. i didn't even mention gas prices which are down, so i guess it's good news all around, what can i tell you? connell: i guess so, jeff. thank you very much. i want to go straight into our next guest, constitute for energy research senior fellow, and, charles, you know, as jeff said, it's very difficult -- and he's right. he and i aren't trading oil and wouldn't want to, try and predict it, but it's very difficult for anybody to predict day-to-day moves in markets. to get away from that at least for a second, what's the major trend look like to you for oil over the next however many months? where are we going from here? have you learned anything from the last crazy week we've had? >> i don't think so. listen, i'm the guy who always gets in the wrong line at the checkout counter, so -

it's going to take that long based on opec's policy.he markets oversupplied by a million and a half barrels a day. if you go back to the november opec meeting when they didn't cut that made a lot of sense to us. we anticipated that and down fwrad graded our group in front of it. the market was oversupplied by a million and a half barrels per day. since that time opec racheted up it's production by a million and a half barrels per day so had they maintained the market would be close to balance now but based on the policy they have taken particularly in iraq and saudi arabia which really fuelled all the growth within opec the market remains about a million barrels a day oversupplied. with iran coming back online it looks like it's going to take some point in late 2016 before demand is allowed to catch back up in july. >> thank you for joining us this morning. should be an interesting ride going forward. research analyst at stifel. the other stories at this hour, goldman sachs raised it's rating of google from neutral to buy this morning a

it is the major supplier in the market and that has changed the equilibrium for opec.c used to be marginal supply. their optimal answer was to raise revenue by restraining supply. today, shale is the marginal supply, which means a petrol best solution is to supply the rest oil. they have more rigs in the ground than any time during my professional career. so the between low-priced shale and the new production of opec, we will see lower oil prices for a very long time. scarlet: all right, steven strongin, thank you very much. joe: and we will be right back. ♪ scarlet: -- i'm scarlet fu and scarlet: -- i'm scarlet fu and -- joe: i'm joe weisenthal. scarlet: macy's earnings fell 7/10 of 1% in the first quarter and that has put pressure on macy's. because it did not revise its forecast. joe: lots of data coming out of china tonight, retail sales and industrial sales. it's a perfect snapshot of the economy. scarlet: that is all for "what'd you miss?" thanks for watching. ♪ >> from our studios in new york, this is "charlie rose." charlie: we continue with our conversation of

one thing in the the opec meeting which was kind of bullish, opec showed some surprise about strong globalemand. they were surprised demand was as strong as it is, demand growth won't be as strong as it was in the first half of the year, they are raising demand estimates though opec see strong demand for oil, a lot stronger than anticipated the reason we're seeing downward pressure. maria: of opec output of a three year high. pressuring prices. we will check back, phil flynn, a big story, cover story in barron's magazine by commodity is now. dagen: maybe not today because use of a rally in oil stocks which gave the dour and overall mark a lift but to bring it back to china china is doing with its currency, it reveals the weakness in that economy. that will put pressure on. >> china is the marginal buyer in commodities. milk, new zealand suffering right now. they bred too many cows to feed milk to china. china is not considering it. we had downward pressure. if you look at iron ore mines in australia. the commodities and it's all comes back to china. as long as the china slowdown is in plac

opec may see crude oil output rise to a record 33 million barrels per day. whichs according to iran, says it can boost output by 500,000 barrels per day, just one week after sanctions are lifted. that would lead to the existing global circle -- global supply glut. in november countries decided to maintain production rather than sacrifice market share. indonesia's aviation safety is once again in focus after the crash of a domestic flight in the country's easternmost province, with 54 people on board. emergency search teams are on their way to the region where villagers reportedly have found wreckage from the downed turbo airline. another tragedy in the sky. guest: raising questions about the air safety regime. we're talking about the city here. this is the mountainous region, unforgiving terrain. experiencing heavy rain and strong winds at the time this flight was scheduled to land. just to put this in perspective, this is 3300 miles east of jakarta. the distance from new york to london. this is a long distance, far away. residents rely on small local airlin

oil is sliding after two opec members vowed to keep pumping. iraq set of production boost is needed. angolan exports are headed for level not seen since 2011. 30% from its june peak, dragging emerging-market stocks to a four-year low. the human cost of the devastating explosion and tiajin has risen to 114 deaths with more than 70 people missing for the economic costs may reach as much as $1.5 billion. fitch expects chinese insurance companies to be hit hardest. tiajin is the 10th biggest port in the world. much of it remains close with importer seeking alternative facilities. and carlsberg shares have plunged after the world's fourth biggest brewer missed estimates for a second-quarter profit. the company says it expects 2015 organic profiting -- operating profit to drop as western europe and pressure weigh on sales. point -- forone one-time items is $232 million. pacific has recorded net income that lagged behind estimates. it comes after the company suffered losses from fuel hedging. we will speak to the cathay pacific ceo. and vladimir putin

. >> the comments of opec and opec stressing in their monthly publication today, once again they're lettingll the oil producing nations globally know that they're willing to come to the table if other parties are interested in a fair dialogue regarding what the fair value of crude oil prices should be. that's why oil is jumping right now. i think as it relates to the market, you're seeing a lift in the energy equity names, but this has been a story developing over the last five or six days. i think what you want to do right now with this strategy is look at energy names if you've had them over the last week, congratulate yourself, i think this is part of the equation that will leave the federal reserve to make that token hike in september. >> you're leaning at the fed policy. >> i could totally. i think you're finally going to have the concerns alleviated globally as they relate to the commodities story and the concerns regarding inflation not able to meet their target. >> josh, if you were a bull on the stock market, are you excite body this move higher in oil? >> i'm always excited, sara.

what is the difference now with a weaker or fractured opec versus 30 years ago? have the folks in the gulf states -- tom: is there one half? third, two is one thirds. you have seven or eight other opec members who do not have the funds, and they are just exposed to whatever the oil price is day to day. layoffs athave seen large companies already like exxon. we are going to see more. is it enough to move the needle this friday? skip: i don't think so. decline in at the the rig counts and the number of jobs associated with the rigs, we have 80,000 jobs lost this year, but we are adding 200 to 220 a month. tom: do the big oil companies lose confidence in reduced but persistent investment just because of market turmoil? skip: if you are one of the big ones like and some mobile or a shell, you are saudi arabia, you are playing this for the long-term. their portfolio is not built on what can i do for the next six months. tom: where is the terminal value of oil, in your opinion? skip: we think that you have to got that you have got to get back up in an oil price environ

the big question is will it do that inside opec or at the expense of the rest of opec? >> opec is an interesting entity here. everybody is trapped, right? they are all players of the same game. they all need cash desperately to service their balance sheets. it makes it worse for everybody else. who blinks? who stops this? >> i think number one we have to recognize only saudi arabia was kuwait and united arab emirates can afford that play this game. everybody is losing money. there has been a considerable amount of excess production and excess exports beyond individual countries, opec monthly quotas. one of the reasons why the saudis have increased their production is to cover up the fact there is no cohesiveness left in the cartel. >> they are borrowing money. they are showing the wires now. they're not the strong swing trader they once were for opec. >> absolutely not. you are quite correct. the overall debt market internationally in crude oil is going to experience a major change by the time we get into october. the first element of that is going to be a whammy for sm

see a huge spike here after the opec announcement.are down to dollars, and now up two dollars and last week we were down $10 from this. that is pretty serious, a $10 move and oil in just a week. and a lot of it coming today. that is why he see a big game in the energy index. every chart that showing people earlier. it shows you over the long-term. here today, the white is the price of oil. can see this big bounce at the end. you can also see in the orange what has happened to refiners right they have done quite feel while the oil has done poorly. you see big gains for refiners today. i will hand it back to you. betty: warren buffett taking the big stake. we will talk about that in a moment, but he does not have been best luck in the oil and gas fields. alix: we will stay on oil after the break. leaping late last week and erasing all of august slices rate can you trust the reb ound? ♪ betty: this is an bloomberg market day. alix: now for a look at the top stories. at odds inill silicon valley need first with new technology. their opera

there is no control over opec supply growth. that is the wildcard in the market when you think about how iran might join next year. on opec supply growth is decelerating. we have forecast to decline next year. this, combined with the stimulus , the low gasoline prices to retail consumers, it is addressing the balance. thekey thing to consider is demand numbers are consistently being operated and the numbers have started to be downgraded. that does tighten the market and that should eventually impact prices. mark: let's talk about the devaluation of the yuan. what will that do for the demand for oil? simply, that should stunt demand. the chinese economy has been fighting against the fact that competing currencies like brazil and russia have become lower and it has damaged their export markets. do, it should boost the economy. hence not support of demand -- the problem for the market right now is the admin's of guilt -- admittance of guilt of how bad the economy is doing. the chinese economy is struggling. right now, it might hit

as you said, opec has provided quite a bit as well.know in the next coming months opec will not produce at these levels. saudi arabia has summer requirement news. we'll possibly see less production from there. iraq i'd say is the other key opec producer to look at. they are having issues in the north and the south. and having infrastructure issues. and they're having local unrest as well, as much as they're using a lot of oil, the localization they don't have that with ramadan and the summer season. even in the north, relations are not good as well. so expect two things. this is what we're saying constructing the balances because opec production will not be as high going into the next six or nine months. and the other main factor is demand. in terms of the data that we're seeing at the moment is very much underestimate at these prices these we the catalyst works to help out. >> i want to talk to you about a couple things. first of all, demand with china date and did europe data it just doesn't look good doesn't it? on the supply side y

i think venezuela wants an emergency opec meeting for ten minutes. algeria called one for last month. even iranians, they would have open mind to emergency meeting. but at the end of the day it will come down to saudi arabia. how bad are things in saudi arabia. that's what we'll wait for. >> middle eastern companies basically want oil companies at $100, right? let's put things in perspective here. last august oil was at $95.96. the oil trade has been a really difficult one. we've watched gasoline prices as well. what else is on your docket next week or so? what is front and center for you? >> we have to see if we maintain gains we saw yesterday in commodities. we want to look at the dollar. we want to look at gold, to be honest with you, to see if the risk appetite is back. at the end of the day when oil prices were up $100 a barrel, that was too optimistic. when they were down below 40 that was too pessimistic. the truth is somewhere in the middle. i think we start head in that direction. >> phil flynn, price futures group. thanks for coming on. >>

production and opec production. talk about u.s. production first. >> i think that's the bottom line david it is a combination of west oil period. starting with u.s. oil, this is the eia numbers latest ones now, this is an update of what they thought the june number down about -- well it was in may. 9.4 million barrels per day. in june 9.2 million. a significant drop there indication of west oil out there. that combined just a little bit ago we have that da it out, and then talk about opec maybe beginning to think about cutting its production. that's when this market flipped totally around from down a dollar 60 a barrel to now up $2.20 a barrel. what does this mean for refinery stocks? well phillip 66 already it was getting boost today. take a look at that up 2.6%. up as well. with all of this surround, you know at the beginning of last week we were down what six and a half year lows for oil and now we have another 5% rise on top of the 6% last friday and a 10% on thursday. i'll leave you with gas prices. particularly here in the mi

let's start with opec, dan. is opec going to pull back on production a little? >> i don't necessarily think so, to be honest. just this monthly report that came out today is bulletin gave a glimpse there may be cracks appearing within opec. the market really jumped on to that. that could be a sign they may try to balance this market. reality, everything we've heard out of saudi and out of these other gulf states they are trying to really keep their production strong, keep their market share strong so i think theres being too much emphasis placed on the news today. david: do you think the market has it wrong? are we in for another drop? >> potentially, so, yes, we have rallied close to 30% the last three days. it seems a little bit excessive, you know. we were stretched so far a couple days ago in terms of short positions. the market was facing in one direction. it was a one-way street. everyone was bearish saying we're going to $30 and going to $20, suddenly as we saw selling spurring on selling, we're seeing buying spurring on buying to cover the short-covering

it stopped them on opec growth.obody is out there looking for oil today. 100,000 or more people have been laid off. but what it's done as a side effect is it's really hurt some of its members. venezuela is in disarray and if you look at what happened in 2011 when we saw libya broke down, with 2.6 million barrels, if that breaks down and that supply doesn't come, it doesn't take much for the market to turn around. who is to say the saudi will continue on this policy. he has some damage to its own members. it stopped the production. maybe we'll see an emergency meeting, we see a change of positivity that would be hugely significant. i think saudi watch but you need something bigger going up and down for us to get any sort of excitement back. >> i see you nodding your head. >> i would watch saudi closely. at the opec meeting in june, all the energy ministers were saying prices will recover into the mid-70s. dark days for oil are over. the recovery they forecast, a mirage, i think it raises the chances of a december cut

it has allowed opec to assert control over the markets. olivia: sticking with --modities, they could give commodities, a 56% drop for glencore. china was a lot weaker than .nyone had expected it doesn't matter they are a big producer because they have massive trading to offset production. cory: it worked the last quarter. when your biggest seller is: oil, you have problems is coal .nd oil, you will have problems watching global markets, the cello in emerging markets spread to europe, sending stocks that there lowereek -- this week. -- destan has the valued valued their currency. olivia: we do not cover kazakhstan in up. w-- enough. we will cover norway because we have an exclusive this morning. they posted it a billion-dollar losses in the second-quarter. that is the first of the decline of the year. >> both of those influence different variants. then there is the currency. we see the opportunity. olivia: we like to talk about negative yields and european sovereign debt. guess who holds a lot of european sovereign bonds. fund.rwegian they

it is something we have seen in opec itself.ee of and they want to guarantee particularly in asia there is demand for the crude. francine: how difficult is it it is difficult to collect the bottom at the moment. amrita sen: it is a number now. you are hoping producers are getting at 50. a number.oming china is playing a bit part. a macro story. everything off of oil. we could go into the low 30's, wide not into the 20's? --why not the 20's the 20's? -- i wanted toer the e-mail. the number of active rigs raised in the u.s. there's no stopping the u.s. there is whole host of negatives here. amrita sen: the issue is a problem for the market is there betweenk between -- lag the decision and when you see the rigs go up. rally asr earlier, the that is kind of where we are. prices and wed a would've seen response. people are saying, the bottom is in. and turning points here. and they starting to say we will bring the rigs back. now they will take them back off again. [laughter] it is so difficult to predict. it is a guessing game for t

iran said opec production may climb to a record and nymex ande is down 4/10 of 1% brent crude is down 6/10 of 1%. a gauge of manufacturing, the fed bank of new york state slumped at the fastest pace since the reception -- the recession. oil is down over 5% in that time3 e. betty: checking on the bond markets, this is across the yield curve today. the two yield is lower and the 10 year is trading at 2.15%. the fed will continue to raise interest rates this year. commodities are looking sour after china d valued its currency and the currency markets, watch the dollar which had been treating at a tor-month high continuing get the safe haven status amid the concerns about the global economy and particularly in china with the increasing worries that the rate of growth there is much less than 7%. let's take a look at the top stories -- the federal reserve bank of dallas has named robert kaplan is a new president and ceo. he is a harvard business school professor will soon post on december 8 and will replace richard fisher who was president from 2005-2016. he will not be voting on policy unt

--st: i think we see sims some response from non-opec right now.nk the big wild car is iraq and saudi arabia are producing at record levels, but iranian levels concert coming into the marketplace as sanctions he's. increasewe see a small and we see declines moving into the second quarter of next year. pimm: you just mentioned mexican prices responding. can you talk about that? guest: the count has fallen by 60% since the price began. supporting u.s. oil production, so i lack of drilling will result in the decline starting to kick in and u.s. production moving from what has been a steep incline into a declining situation. we are seeing the eia is reporting they expect production from shale plays to be down about 90 euros a day. does the strength of the u.s. dollar have a role to play in what's going on in the oil markets? to a certains extent. we generally expect a negative correlation but it doesn't always have to hold true. particularly in a situation where the dollar is strong, you see a devaluation in the chinese currency. it does have significa

opec. we will drill down on where prices are headed next. scarlet: a new poll shows hillary clinton's lead-ish ranking at the current democratic competitor. scarlet: good afternoon. i am scarlet fu here with alex deal. i cannot miss i last week. alix: so good to have you back. one of the longest weeks i have known it quite some time. i even had a baby. scarlet: if you look at how stocks are doing today, it is like ignoring what happened last week in the previous prided. we are only down 147 points. -- like ignoring what happened in the previous week. volume is decreasing. something so fascinating is how immense the volume got. it was almost double the amount of a 10 day average. now volume off anywhere between 20% and 30% for all of the major indices. a much lighter environment. alix: there is a lot of nervousness and tiptoeing. we got a big data week,: meeting with the big jobs number friday. we had a little bit of a recovery in stocks and then slid back down is about oil prices, the tremendous move on the speculation that opec would talk a

the opec also forecasting no extra demand this year for crude oil.that supply glut. there's very few reasons here to be bullish on the price of oil. most everyone is just looking for oil to continue to fall into that $30 a barrel range. it's not really a matter of if but just a matter of when at this point. we're also seeing other non-precious metals slide here. most especially copper, which is down almost 4% on the day. again, also out of that china news. so it's pretty simple why we're seeing the action that we're seeing down here today, but it's pretty mag nooid donified down the nymex. >> thank you very much, courtney reagan. >>> nfl team owners in chicago today and one hot topic would be the possible move of a franchise to los angeles for the first time in 20 years. our next guest is at that meeting. he was involved in the relocation of both the rams and the raiders from l.a. in '95. mark gamas is the president of sports corp. he joins us on the phone. mark, it's great to talk to you again. good morning. >> good morning. >> they're calling this

opec production last month was the highest in more than three years. bring in our bloomberg chief energy correspondent. as you stepped down and caroline hyde is over there as well, as you sat down, you said the driving season in the united states, may through september, has never seen as much of a drop. >> this is pretty extraordinary. prices the lowest since the global financial crisis. periodk at that driving where they usually see the strongest races of the year -- strongest prices of the year, you look at what the price was in may, and where we are heading today, we have never seen a decline as long as we have seen at the moment. francine: talk to us a little bit about when the route will end. chart, itk at the doesn't look like it is going up anytime soon. >> if you look at the current situation, let me put it on simple terms. in the second quarter of the year, we have 3 million barrels a day of extra production that the market didn't need. there was no demand for that. that is equal to all production from the north sea. -- you it disconnected cou

it is why opec cannot control prices anymore. it is why the u.s. lift a 40-year-old ban on crude exports. here's how fracking works. a well is drilled into sedimentary rock, typically shale. water, chemicals, and sand are injected at high pressure, fracturing the rock and freeing trapped oil and natural gas. the government estimates that the u.s. has 48 billion to 58 billion barrels of recoverable shale oil. that is enough to produce at current rates for at least 14 years. and those estimates are probably conservative. america has a lot of shale formation. the bakken in north dakota, the marcellus in pennsylvania and new york, the woodford in oklahoma, and in texas, the barnett, the eagle ford, and the permian basin. >> chevron's history in this basin goes back to the early 1920's. almost at the start of the basin. we are fortunate that we have been here for a long time and have been here consistently. this basin has seen a lot of ups and downs in terms of production. it had been on a gradual and kind of slow decline. and then a number in the indus

opec accounts for 40% of the world oil supplied.ts lowestrading at level since march 2009, a six year low. that is a look at the top stories this hour. mark: coming up in the next half hour, shake shack and will open -- says it will open 12 new restaurants. revenue rose in the second quarter, but investors are concerned about the lofty valuation. betty: google shares soaring after the announcement of reorganization. how the new structure will work under the company, alphabet. china shocked the world markets overnight devaluing its currency , causing it to drop markedly. it is leading investors to wonder if china is done or for the yuan to be cheaper compared to its investors. john of dialectic capital has short positions on iran and the chinese box. he says he anticipated this kind of move for a about a year and joins us from connecticut. mark: john, thank you so much for your time. you have anticipated this for about a year. what were the warning signs that you have seen that others have not? looking at the always right sometimes e

and the obituary of opec has been written too many times.ine: are we at the bottom for world commodities? 8000t with iran bringing barrels a day on the world market. the story remains the supply side glut, with demand continuously undershooting across the world. so, i think we are going to test much lower points than what we are currently at. i think 30 is a realistic target, and in six months forward from here, the question is whether opec and collectively get to a position where saudi arabia -- the big swing producers -- are prepared to take physical pain, revenue pain in order to return that is more sustainable for a lot of the members'budgets. caroline: thank you very much. it has been great having the panel. tim, mark, staying with us is simon french. now to stay with us throughout the next hour. coming up, more of our exclusive interview with the french economy minister. including his thoughts on potentially the future of china.. when he returned. we are back after the short break, we going much more after the china rout. ♪ caroline: r

brendan: let's talk about the opec headlines.saudi arabia says that 203,000rude out by barrels a day in july. is that diplomacy, them sending a flare, saying we are willing to consider cutting production? vince: you could think of the quota as a low point. a low end threshold. no incentive for them to cut back. opec overall will likely see iranian barrels coming on over the next 12-18 months. you have a country that at one point was producing roughly 3.8 million barrels for day. now somewhere around 2.8. they can get on back to that 3.8 million barrel number in the next 12-18 months. tom: michael hansen. chinaan oil, plus devaluation is for the division at the fed over inflation. world,lation in vince's foreign exchange, has to be something that ends up at the desk of carney and yellen. has the the fed standard of reasonable confidence in the inflation outlook. means,ey said is that while deflation does not fall, we are ok with liftoff. the challenge will be the next step in the step after that. if inflation numbers not pick up,

it comes at the expense of opec's care capacity.xtra oil to keep in their piggy bank for a rainy day or some kind of outage. he has a longer-term effect as well. but short-term, it is the continued oversupply. scarlet: that story is not going to go away anytime soon. i wonder if the weakness has anything to do with the prospect of mexico and the u.s. swapping oil. first of all, explain what happened in the oil swap. alix: the u.s. is able to spot 100,000 barrels of oil a day with mexico for about a year. we would give them light sweet crude, they would give us heavy crude. it is not a real export. it is a swap. the reason the market really took to this came at the end of last week, is that it means it is one kind of crack in the u.s. export ban. congress to repeal the export ban -- it has been pushed by congress to repeal the export ban. although wells fargo said it is not significant but it is that crack. if a volume grows over time, that is the issue. however, icicle has to exercise this right and it also -- mexico has to exercise

i think there is two issues in opec.particular have a feeling that they are going, taking production of the market would raise prices and bring more non-opec supply. brendan: skip york, we have got to go. this is bloomberg "surveillance." ♪ ♪ tom: good morning, everyone. dollar strength is what we see on bloomberg "surveillance." the first week of february. brendan: we could go the first week in december, i am flexible on when we go to san juan. we are talking about puerto rico and its creditors. ricoweekend, when defaulted on a $58 million payment on its public finance corporation bond. rico at risk is the puerto power authority. erik schatzker is with us. you have tim coleman from blackstone on with you today. what are we going to find out? he is head of the restructuring group and black hawk is advising, -- blackrock is advising. what we are going to be talking about with tim is the difference between the moral obligation bonds, that is what puerto rico defaulted on this weekend, and bonds like kofi know bonds, which

opec is notorious for overproducing at this point. it's going to have to come from within them, december 4th they have their meeting. i don't expect production cut because it seems at this point they weathered the worst part of it. at the same time, i expect oil to test that $30 handle again before the year's out. >> that's what we were going to ask. we'll leave it there. testing $30 again. anthony, appreciate it. >> let's catch up on the broader market which is cutting its losses. bob pisani has more on the floor. >> want to show you the s&p 500. we had the usual midday 1:30 to 2:00 swoon. we are not far from the lows of the day. off that right now. the important thing is we might get help at the close. there is a modest buy side imbalance on the market on close to buy stocks at the close. modest buy side. might get help. i want to pick up your theme on oil and show you what's going on here. exxonmobil is positive for the day. it had a huge gap down at the open with everything else. this was $66 last week. we moved $10 in oil as you

leveraged opec countries will continue to produce the cash flow.lso have the end of the drivetime in the states where we see they'll. you have the fact that the u.s. will vote on whether to allow then to export the commodity. that structural glut in the oil market will remain. i think you will see it had even lower and get down to those december 2008 lows. stay right there. we will get you on the other side of the break when will continue our chat. stay with us. talking more about commodities after the break. ♪ >> i tell people to be cautious because i don't think china can come up that easily with a solution. they face a complicated situation and financial markets are not the first thing on their radar. that is why this market is trying to find its own level and clearing at a much lower level than expected. >> there is not a single catalyst for this. this is about concerns over china, global growth, about the fact the probability the hike is already receding. and unless you believe the chinese economy is so bad that it is going to hold the global

opec, shell, and the rest.c production -- shot of rest is the biggest. -- rishaad: the rest is the biggest. ivan szpakowski: that is true. iraq is increasing. she'll has been much more resilient. oil rigs in the u.s. have been ticking up. china,look at russia, brazil, and the north sea, production has been going on for recently. even in canada was on the ithest costs and the world, is stable. we are looking for people to cut back on production. rishaad: we talk about a currency war, are we seeing an oil war? ivan szpakowski: absolutely, a war for market share. it is explicit and nobody wants to back down. rishaad: what will change things? and the other part is structural, are we using less oil per capita now? but szpakowski: some degree much more driven by supply rather than demand. the shell revolution and very flexible. when you saw the rebound from january into june, relatively modest on a long-term basis but enough to incentivize the morers to come in and pump oil. how we get it is a balance, she'll is will

and in the revenue that's being lost, not only by saudi arabia and opec but u.s.ducers has been astronomical. i think this is a sign the saudis are getting ready to wave the white flag of surrender in the price war. they can't continue to take this hit. not only are they losing money from the oil prices, they're fighting a war in yemen right now and that's going to take its toll right now. saudi arabia is under pressure domestically and from foreign enemies right now, and to be honest with you, they have to keep their people happy by feeding a lot of money into the economy. they're getting pressure from bahrain and iran, and so this is very significant happening today. the other thing too, deirdre, i think we have to mention, saudi arabia dropped hints they're getting ready to cut production. they laid that out a few weeks ago, maybe getting prepared for more iranian oil coming back on the market or maybe it's a sign that maybe just maybe opec is getting ready to rein in the overreduction and try to get rid of the oil on the globe. deirdre: we're closer to 35 and

>> members of opec are concerned. we have the iranian oil minister saying we are going to produce no matter what the cost is and on the other hand we need an opec emergency meeting. i don't look for help out of opec though they are feeling the pain. >> just to go back to what kate kelly was reporting, there could be more stress across firms. do you have a sense of what break-even prices look like? >> the break-even cost was far lower than today in their main producing counties. if you look in canada, they need about $35 to $40 for oil production that's under way and $80 to $90 for new investment. the same is true in the gulf of mexico. i think the big story here is that the fracking revolution is here to stay. it's this deep water investment in the gulf, offshore west africa or the north sea that we are not going to see for a long time. that's the high cost producer. >> guys, thank you. >> the jackson hole summit begins thursday and focuses on inflation. all eyes turn toward what might come out of asia. people telling

oilis opec still producing and is talking about potentially $39 oil?tt: opec is -- i do not look to say they are being stubborn -- but at this point, they are defending their asset, right? they could easily cut back but they are not going to. they're taking their lumps but defending their asset. we certainly have seen cutbacks in shale production. again, what is the outlook? $2030 a barrel? is down the -- is that outlook $30 a barrel? $60 a barrel? we will see more consolidation in the u.s. shall producer marketplace and we will see consolidation, but opec is really defending this and they are not cutting back. they are not cutting back their production here because what are they going to do? this is their asset, if they throw in the towel, all bets are off, but so far, they are sticking to their guns and they are being pretty stubborn. until, if and when, they ever cut back, that will also help put in this base, this bottom in the low 40 area and oil. ramy: hopefully it is not too far race. thank you very much. erik, over to you. erik: thank you. time

opec is pumping at a record pace already.tion wants to maintain its piece of the market share. precisely why iran wants to pump at its maximum capacity. millions of additional barrels of oil being added to a supply glut, not necessarily what the market wants to see. it is having an impact on the nation's themselves, but those companies that do business in oil, whether they are upstream or downstream. , sharesina, falling down 3.6%. south korea, on the refining , shares down 6% today. seeing a 3% drop in that market. you see the impact on the market space and the company space. the london benchmark brent crude down 1.6. add a run into the mix and a lot of questions as to how this will play out in the global markets. maybe good for american drivers. the u.s. has its own oil revolution, shale oil. that is why these middle eastern producers, saudi arabia, russia, all looking to protect their turf. now iran getting into the act. rishaad: thank you very much. having a look at tensions between seoul and north korea. high onnsion is

today it was opec. so opec was out there saying frahm they could come to market, they could bring non-opec or the entire oil community together if it was a level playing field they would think about that conversation. they also said they were concerned about the infrastructure and the investment in oil infrastructure and the fact that while oil prices will not allow people to invest if n. it. also the eia saying their methodology has changed enough and that they actually see that u.s. production peaked in april and that's at 9.6 million we're down to 9.4 or something like that. you've seen u.s. production come back and that's something for people who were shorting oil you have to be very careful right now. >> let's say the shorts are out. that doesn't necessarily mean we're going to see a higher trade. the question people are asking after this big rally in oil is is it time now goat into oil stocks? you're never going to be able to pick a bottom. so is now the time? >> i think just because i think we ca

perhaps trying to get some sort of collaboration with russia to get opec together again. it'sis not venezuela that wants to cut production. they want to get these gulf states to cut production. while we have been hearing increasing rumors and murmurs has to opec members with their disdain about what has happened, there is not anything that venezuela can do because they are not willing to cut production. >> nothing coming out of that. thank youthank you for joining us. thank you so much. vice president joe biden basically making a good solid showing against hillary clinton and a recent poll. will these new numbers finally push the vice president closer to announcing? we will tell you all about that next. don't go away >> i recently launched a snap chat account. [applause] ii love it. i love it. those messages disappear all by themselves. >> my use of personal e-mail was allowed by the state department. it clearly was not the best choice. i should have used to e-mails, one personal, one for work. i take responsibility for that decision. >> have the american people had enoug

too much supply, for opec and saudi arabia.really wants to come back as much as it can, and that is really driving the prices. jonathan: another reason -- oil just keeps going lower. how realistic is it that they can move the dial in terms of global supply? javier: later we are expecting a movement around late year, early next year. they could increase production very quickly. only two or three months ago, you were thinking about maybe 200, 300,000 barrels. now they are getting more optimistic that it is doing its homework. sanctions have lifted to repair the oil fields in the moment they are lifted it could really ramp up production. jonathan: a big difference between now and january. the curve looks a little different. javier: it looks very different whatu look at the back -- has changed dramatically since the beginning of the year is not butprice of the very front, the view of the market. january, the markets were going to go back to 75, 80 or higher. today the market is beginning to inc. that we will have $50. jonathan: a b

opec production is not rolling at this point. and demand has been strong. so frightening about this market, is demand may be up by 1.5, 1.6 million barrels year on year and we are in this price environment. they cannot soak up all these barrels that are floating around. >> let me ask, kalima about specific companies. the saudis are kind of driving this, right? so i've been told. at what point do the saudis go, you know what -- >> we are out! >> yeah. at what stage do day go, this is enough? >> what i find amazing is, they resorted to borrowing this week for the first time in like, you know, since 2008. i mean, there's been a view that the saudis didn't want to go back to the 90s, didn't want to borrow, didn't want to run down their reserves like this. it doesn't seem like right now the pain is deep enough for them. what could potentially make them call it quits, i think? you've got to move a leg lower, stay lower. so brent crashes below 40. maybe they reconsider. and maybe they're waiting for another country to go off the cliff first. >> venezuela! >> venez

opec doesn't want to halt the price slide on its own even if it could. indeed the desire is probably too hurt the u.s. market by keeping prices low. i think iran coming into the market is a bigger factor. matt: and the chinese economy is probably the biggest factor of all. as far as the sliding oil prices. chinese stocks tumbled. the most in three weeks. traders reducing -- the shanghai composite index sank over 6%. the biggest loss in late july. matt: massive rout. you wonder what the chinese government is doing here. they started to sell. julie hyman has number three for us. julie: we are looking at housing. we have some economic data in half an hour. building permits come out at 8:30 this morning for the month of july. we have seen blockbuster housing data. a streak of relatively strong housing data. that could continue. we got home depot. releasing second-quarter earnings of 9% with a gain in profits. sales growth of up to 4.9%. really strong given what we are seeing elsewhere in retail. it is good to be in housing retail right now. matt: that's bigg

but opec production is at a three-year high right now.uld we say -- sorry to interrupt you, breaking news closer to the top of the hour, venezuela is calling for an emergency opec meeting, why? >> well, they're calling for it because the market is giving you odds of 99% chance that venezuela is going to default within the next five years and 78% chance they're going to default within the next year. these are desperate people at this point. they need to continue to put oil onto the market. i don't think that's going to happen. i know i'm going against the grain against a lot of people in this market, but i insist that saudi arabia wants to continue to put oil on the market, saudi arabia wants north american crude oil production to succeed want and that for two very obvious reasons. first and foremost, it's a heck of a lot easier to coexist with a producer i.e., in the crude oil export market than it is with, say, elon musk that could make opec obsolete within a generation, and easier to coexist with north america than iranian counterparts