Supply. Question is how quickly they could get full capacity back. We are hearing from people they are seeing less optimistic, this could take weeks if not months. The second biggest question i feel is important for your show, this is a country that has the thirdbiggest military budget. It has a u. S. Built missileDefense System. Happenedow this attack and was able to infiltrate Saudi Security measures. Is how otheron producers might react. They are not in any big rush to up production. The saudis have reserved not just in the kingdom and japan. We are talking about the fact that this narrative, saudi arabia, and its partners need to cut the defendant prices. The market has been so focused on the trade war and china. Are going toy comply. When you have a situation like this you can expect these countries not to comply with air out but. That remains to be seen. There have been no calls for any sort of emergency meeting. Opec is in dialogue with the saudis and they are going to be monitoring the situation. No need to protect the oil price. Kevin, we have the crown prince. I assume oil will be high on the list in the agenda. President trump setting to bahrains crown prince later today. It comes at a time in which the president is very that is trying to very quickly understand what happened over the weekend. This will be the first high profile meeting. A lot to talk about. Sources connected to the Energy Department of trumps friend in street and has said china postural is weighing heavily on the president s mind. What do we expect there, what is the purpose of this . Open to pick up some key votes there. Its something that as democrats are trying to win back taxes, democrat or try to pick up another state as well. This is typical, where they try to figure out where they might be able to put the pieces together to pick up extra electoral votes. London o back over over to london. Big report expected on the vis. Is the surge,ing it is quite a surprising number of 6. 6 trillion. Than 29 surge from the previous reading and 20 t 16 2016. Have spoken about low volatility in the fx market, all this geopolitical risk. This would come as a surprise to a number of people. How much does geo a lot of how much specifically is geopolitics . That is one thing we are going to be asking strategists. Soft markets now account for ethics swap accounts for 49 of all transactions. Down toansactions are liquidity. All these various trade wars, et cetera. The other important but in this japan,is the u. S. , u. K. , they are to they are still the top centers. The United States is using this whereas thereity, are quite a few political issues. They continue to grow at a faster pace. Lets bring in david welch on detroit. You have an oldfashioned labor strike here at General Motors. Workers want job security. They want investment plans. Thats part of the reason they are angry. In midnight last night. Key generalrs motors came out in gave us a statement. Thats not typical. It looks pretty generous. What is it they are not getting that they really want . Worker. Were 8,000 per of those would be new hires. Were lumpsum payments to workers and raises throughout. The Health Care Plan was not going to be touched. The economics all looked good. Sticking points and things that werent mentioned was what was going to happen with temporary workers. Gm wants of the other way around. They have these entrylevel wages for workers. The top workers make 30 per hour. The union wants a much shorter path. That also didnt appear to be addressed. Couple of key issues for the union. Someone is going to have to compromise. Is under a lot of pressure. Theres this corruption investigation into union leaders. A lot of is under pressure. They have to look tough to the rankandfile. Find out whats going on in the markets. At this point we are looking at a modest risk off tone. Had small losses for stocks overall. Down half a percent or more after that attack on the Saudi Oil Facilities. Certainly showing a big bid for bonds. On friday we had a bonds hacking backing up for eight days in a row. Broken now as investors are fearful. Attack on that saudi oil facility, thats causing oil to surge. Up the most on record. Not surprisingly having an influence on the sector competition. See energy is the top sector of the day. The only other up sector is real estate. This is a true risk off picture. Most sectors are lower. Investors do have a defensive state of mind. Less than 5 waiting. Take a look at that s p 500 exploration ets. Best day since 20s 2018. Remarkable for the s p 500 overall. The top names all energy related. Thank you so much to abigail doolittle. Blackstone is said to be in talks to buy two casinos. Shares of the current owner of mgm resorts are on the news. Live from new york, this is bloomberg. This is balance of power, i am david westin. We turn to Mark Crumpton for bloomberg first word news. President trump has promised allies help in the wake of that attack on a Major Saudi Oil facility. The u. S. Is no longer directly reliant on middle eastern oil. Oil posted its biggest ever intraday jump today. Although it has since fallen back. A saudi military official says weapons used in the attack the british Prime MinisterBoris Johnson and the European Commissioner Jeanclaude Juncker agreed to wrap up talks securing a brexit deal. By the two sides theyve assessed gave different assessments about how far apart they are. Minister johnson said there is a good chance of a deal. Leaders are far more skeptical, saying the u. K. Must produce concrete proposals. A special United NationsFactfinding Mission wants myanmar to be held responsible for alleged genocide against its muslim row hinging authority. Myanmar Security Forces killed thousands of people and caused more than 700 thanhe thousand more 40,000 to return. Begun. Dfire season has the winds combined with low humidity and high heat can trigger fires and caused them to spread rapidly. Fuel18 the winds helped more than 6200 fires in california that destroyed nearly 900,000 acres. Campfire, killed 86 people. Global news 24 hours per day on globaln twitter news, 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Collect as marc reported, the attacks on Saudi Oil Facilities gave markets no choice but to pricing a new level of geopolitical risk. Point researcher in trading, welcome back, tell me what your clients are asking you today about this new level of geopolitical risk. Isthe conversation thus far focused on three different prongs within this attack. Everyone in washington is waiting to see what our response is going to be. As you know, those things can turn on a dime. Number two, there is a fair amount of conversation and concern, rightfully so, about the mechanism of this attack. This is a novel and amorphous threat that is outside the confines of normal warfare. That isa point i think worth hammering home, the conversation we are having here and the markets reaction would be drastically different if it werent for the u. S. Shale revolution. I think i would return to my military and say why dont we see this coming . There have been isolated drone strikes before. Dome. Has an iron to be agoing to have wholesale holistic review of the security measures in the region. Shape hat is what what is shaking policymakers. This was an incredibly important facility. Foresighta lack of there. Its going to result in modesty makers and participants. Until there is clarity about how to set the proper defense. That is one big story thats going to go on for some time. Not quiteory that is as exciting is fannie and freddie. My colleague earlier today talked with someone who oversees fannie and freddie. Heres what he had to say. Can make this a safe and sound system. You can be sure they dont fail again, because the current situation, they will fail during the next crisis. How do we build them up in a way that is sustainable . I think a number of the higher risk products they do dont have really good returns on equity. Of course, its worth keeping in mind the smaller they are the less capital they will have to raise. They are talking about spinning it out, the treasury department. Me a lot of give confidence in that. Points, theof fannie and freddie of 2019 are not the fannie and freddie of 2007. There have been serious and substantive reforms that have taken place. We are talking about different creatures. Here im really talking about the director and treasury secretary are committed to taking tangible steps. The next step will be capital retention. Beyond that we are going to have to see where the conversation i goes conversation goes. We have to keep in mind, housing is 15 of gdp. The process is a long time coming, 10 years now. York, this is bloomberg. Right to our political panel, General Motors has been doing the best. President of accountable you accountable new york. Saying, they get hit with a strike. How could this read . What position are they going to take . The democrats are going to take a stand strong on the side of labor. They are going to stand firmly for fair wages, competitive benefits and a Retirement Security for workers. Gm has an offer that is pretty generous. Dont, theions workers dont. Democrats are going to stand firmly with workers. I think it goes in the right direction. Of dollars of investments into factories in the United States. Situation in the high 60s. This is also the benchmark for ford and fiat chrysler. Goingd of the day youre to see this going very well. Is President Trump going to pull a Teddy Roosevelt and get involved . Thats what they are going to do. They do this periodically as part of the negotiation process. It was a lot about health care. Obviously jobs is right behind it. Democrats generally demonize our that benefits are competitive. We will continue to hear those types of messages. He also wont move Office Numbers either. His numbers are not that strong. Is the final fire. You have a three hour debate last week. Do to keepu want to yourself awake. Ask the question whenask the qut the trump economy looks like we may be heading toward a polls. T he has been that way for several months. Warren and sanders are running strong. What happens if the economy does go south . It always is its the economy. Polls. Its also what the president says or does. Cooks what are you going to do to get the economy going again . They are talking about this thing going on for weeks. The uaw has issues. Day, also of the supporting the democratic nominees. How much can you raise the rates . That will be an issue. Thank you so much. This is bloomberg. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Willy davis, who has alzheimers. I decided to make shirts for the walk with custom ink. The shirts were so easy to design on the site. The custom ink team was super helpful and they just came out perfect. Seeing my family wearing my shirts was such an amazing reminder of all the love and support that everyone has for my dad. [narrator] check out our huge selection of custom tshirts and more, for teams, businesses, and every occasion. Youll even get free shipping. Get started today at customink. Com. David this is balance of power on bloomberg television. We turn now to Mark Crumpton. Mark british Prime MinisterBoris Johnson skipped the Plant Press Conference with his counterpart from luxembourg today. It was set up close to a noisy group of anti brexit protesters. The luxembourg Prime Minister called brexit a nightmare and said it was up the johnson to find a way out of the impasse. The Prime Minister met with the European Union union commissioner Jeanclaude Juncker. Iran is taking a step to ease tensions. Tehran says within days, it will release the british tanker it has detained for two months. The ship was held after the british seized the ship carrying iranian order iranian oil. In haiti, demonstrators burned tires and barricaded streets protesting the last of the lack of gasoline supplies. Demonstrators are demanding the Government Take Action to end the situation. Suppliers have refused to deliver Refined Petroleum products until the government makes good on some one hundred Million Dollars in past due payments. There are signs the worst Measles Outbreak in the United States in 27 years could be coming to an end. Health Officials Say they were no new cases reported last week. The brakes are typically when 142 days pass without an infection. Most of the cases confirmed in new york. 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. Hi Mark Crumpton. This is bloomberg. The energy world was rocked over the weekend when saudi arabia and Oil Facilities were attacked from the air. Apparently by drones with yemeni rebels claiming responsibility. Hyland,now Michael BrookingsInstitution Senior fellow. He comes to us from washington. Thank you for being with us. What do we know about through these attacks came from . I have heard three different versions. Michael we believe the Damage Assessment shows the attacks came from the north. All that means is the final approach was from the north. If we are talking about drones or cruise missiles, those technologies could be flying zigzagged. They could be programmed to make it look as though they came from one direction when they came from somewhere else. I think we have to keep an open mind. My guess is the rebels in yemen do not have the technology to do that kind of deceptive maneuvering. Who knows . Firedtself could have their weapons had they come in from a direction that looked like it had been from iraq. We know that iran is probably the source of the technology, probably the source of the whole idea. Certainly wanting to maintain some degree of plausible deniability as well. We have to do some forensic testing on the weaponry. We have to bear in mind that when it is drones, you usually do not get a clean visual indication from satellite about where the bunch point was. You are doing this based on evidence that allows you to infer things later on. It is circumstantial. David the world seems to be shocked by this. Why is the world shocked . We have had various drone attacks. We are confident they came from the rebels before on various Oil Facilities. Why are they shocked there is a big one . They sent a message they were coming. Michael i do not believe we should be shocked. I think that iran only has this kind of card to play at the moment. Assuming it is Iranian Technology and probably iranian instigation, whether it is iran pulling the trickle the trigger to speak or not. Iran is trying to drive up oil prices. The main thing it is realized is that u. S. Sanctions are working. They are applying severes severe pressure. U. S. Does not do that much business with iran. Our banks are crucial for other companies around the world. We have given those companies and countries an ultimatum. Do business with iran or do business with us. You cannot do both. We are seeing many governments in europe who want to keep the nuclear deal alive, who oppose washington and the administrations pullout from the deal. They have little ability to make their own companies. Private Sector Companies go in and invest to do business with iran because the economics do not work with those companies. Iran is trying to throw a hail mary, essentially disrupt the situation. The best idea is to drive up Global Oil Prices to the point where everybody gets so worried about how things are going that there is some effort to remediate the situation. If nothing else, they put the Global Economy into a weaker state and improve the odds for a democrats win the white house next year. That is the kind of game iran is trying to play. David why werent we prepared for this . There is the iron dome Defense System in israel. Is it that hard to defend against drones . Is an excellent question. You will see some serious defense planning about whether there will be defense for more of the key oilproducing facilities, the keyport. My sense is that there are some gaps. We should be able to shoot down some of these technologies. There is the possibility that if enough rockets or missiles or drones are fired, they could saturate any defense. Required to use all of the battery. The next weapon comes in for free and does the damage after the defenses are exhausted. In that sense, i am not sure ultimately we can prevent this sort of attack. It makes sense to try. Generally speaking, drones and cruise missiles are the kind of technologies we should be able to shoot down. This will lead to some reassessment about whether we are defending some of the key sites. David if we cannot defend against some of these attacks, is the only alternative retaliation . Michael i do think we can defend. Second, if the oil economy is only disrupted for 24 to 72 hours, iran is showing its own weakness, not just its own strength. That may be one of the few place it has. It does not work apparently. They can escalate further. And then run the risk of a definite military response by that United States. They can realize they are in a feckless position. With all that said, i do not think we are going to have to retaliate in response to this incident unless we choose. If there is a way to elliott against launchers, against production facilities for these rockets where the casualties can be minimized by the specific ability to thwart irans future capabilities is promising, then yes. The calculus looks more favorable for a response. If it seems like we are just lashing out, we may want to hold our fire. But the World Opinion continue to galvanize against iran. That is our number one asset. Being able to shut down the iranian oil economy and have few ways for iran to circumvent our sanctions. I would to just redo the forensics, improve the intelligence, see how long the Oil Disruption last. If it does not turn out to be that bad, maybe we force iran to escalate rather than retaliate. David we have a headline across bloomberg now. Aramco is said to face weeks without the majority of the output of one of the facilities. It may take longer than the 2472 hours. What do you make of the timing of this . It is on the heels of john bolton being ushered out of the white house. There is speculation that they may soften the white houses position on iran. Michael if indeed some facilities will be down for a while. How much be a test for surplus capacity there is in the surplus system. Prices have been quite modest for some time. For a certain amount of disruption, we can withstand because of the u. S. Fracking success pin in terms of this being tied to bolton, that is not feel right to me. Jim mattis was on iran hawk. There are a lot of people who believe on putting pressure on iran. There are a lot of people who believe in maximum pressure. See Michael Boltons departure as all that crucial. Bb i am missing something. Any maybe i am missing something. I think iran is trying to deal with the fact that they went to the g7. Emmanuel macron invited them to that. They hoped they would have a diplomatic breakthrough. Get a European Economic fund that would help keep the economy afloat. All that is happening slowly. Wordse having a war of with President Trump. There was speculation there we meet next week. More than likely, they were not anyway because both sides are putting hardline demands in the face of the other prior to any such meeting. The iranians are realizing this is not working well for them. The sanctions are biting hard. They have to make some kind of play as their economy descends into more and more of a quasirecessionary state. That is the timing that matters. Not so much washington are john bolton. David thank you so much. Michael ohanlon from the brookings institution. Coming up, the saudi attacks came at the beginning of the week when the Federal Reserve issues another rate decision. We talk with joseph mentoring of the conference board. That is coming up next. This is bloomberg. David youre watching balance of power. Surging in the aftermath of the attack on Saudi Oil Facilities. Removed 5 of global oil supplies. The opec secretary said it is too soon to talk about in opelka opec output increase. He spoke to bluebird. Remain dependent operations, we have we are going to use this unfortunate experience to ensure such an incident does not repeat itself. Clarify, tont to other opec nations need to increase to make up for the lost production . It will be a collective decision. It is premature at the moment to begin to contemplate on what will be done and when. What about when that United States is doing . Capping the spr. Does that worry you and your partners at opec plus . Newsere he read in the that the u. S. When we read in the news the u. S. Is thinking of leaving from the spr, [indiscernible] it is only if needed. Will continue to wait there is no need to panic at the moment. What we are seeing in the market today is an initial reaction. Forward, the updates that will be coming from saudi arabia [indiscernible] david welcome now to joseph minarik. Former chief of economics. Thank you for being with us. That start with the oil situation. As an economist, what effects might you anticipate further you fromGlobal Economy the u. S. And Global Economy . Joseph we are still looking to find out how long this interruption is going to last. Some people say there are different opinions. We will have to see where that goes. Who can come up with additional supply. Folks are looking at the United States. Fastobably cannot gear up enough for the kind of hit the market has taken at this point. Prices are going to go up. That is going to affect the u. S. Consumer. There is a lot of diversity in terms of who spends a lot of money on gasoline. It is mostly the wide open spaces. Not the urban centers on the west coast and the east coast. For those who are in that position of putting a big portion of their budgets in gasoline, this is going to be a hit. They are going to be affected. It will probably have a perceptible effect on consumer spending. David we have the fed meeting later this week. To what extent if any will the fed take this into account . And leslie might have missed the connection President Trump tweeted, because the Federal Reserve is paying a much higher Interest Rate, they cannot believe how lucky they are that jay powell in the fed do not have a clue. On top of it all, the oil hit. The big Interest Rate drop stimulus. Fate the fed will look at this and say, i do not want to take into account at all . Or could they increase rates because it could increase inflation . Joseph the fed will look at it. The Oil Price Increase cuts both ways. On the one hand, it will probably weaken the economy. The fed is concerned about downside risk. On the other hand, we have been talking about how inflation has been low. That was part of the motivation for the fed to try to juice the economy right now. This is going to increase inflation. Over the last six months, headline inflation number has been low. That has been held down by low oil prices and low food prices. We are getting a kick in the oil prices. Fed is going to have to they are already in a posture of cutting rates. The markets expect them. It is going to be difficult for the fed to change the mindset of the markets. They do not like to surprise the markets. I would expect the fed to go ahead with another rate cut. It will be a quarterpoint. It will not be anything of the size that some people are talking about. At the same time, as we are looking down the road, the possibility we could knock inflation somewhat off of its moorings is there. An increase in oil prices is not going to help on that front. David how differently is the United States position compared to the 1970 . The president tweeted a separate tweet, we have plenty of oil because of shale, presumably. How much could that limit the effect . Joseph we are better off. There is no question. Among the Oil Resources we have, we have this Strategic Reserve. The Strategic Reserve is mostly heavy oil. It is not universally useful. It has to go to particular refineries. It is not an Immediate Response of great power. But it is there. Using more option of of our oil domestically. If global prices are rising, that is going to be a magnet for some u. S. Oil, which will seek the highest return. Are we in a better position . Are absolutely. Absolutely. Compared to the 1970s, there is really no comparison. But, there are limits because oil is fungible. When prices go up in one place, they go up elsewhere. David lets take a step back and talk about the state of the economy generally. Dings. Re various we have the u. S. Chinese trade policy. We have this oil shock. There are some things that give us anxiety. How is the economy doing despite all that . Joseph the economy is hanging on well. We are in a very mature expansion. For immediateound sources of concern, you cannot really find any. There are these nagging weaknesses. There is the trade war. The trade war is a selfinflicted wound. We have decided to be extremely aggressive with respect to china. Our alliesths, even in canada and mexico. To the extent we have trade policy putting a constraint on the economy and we have Monetary Policy trying to make it go faster, we have created an internal reaction loop. You have to ask the question of, how long we can go in that direction. The realityr term, we all have to face is, the retirement of the baby boom generation. Are looking for exits from the labor force. As that happens, potential u. S. Growth slows. That is going to be a major constraint on u. S. Output going forward. The notion that all we have to do is grow more rapidly to repeat what we did in the 1950s and 1960s is not true. At that time, we had a rapidly growing labor force. Now, we have much lower growth. We are subject to that constraint. David thank you so much. Really good to have you with us. That is joseph minarik. Coming up, opioid producer purdue has declared bankruptcy. What does that mean for others who sold the drugs . That is coming up next. This is bloomberg. David this is balance of power on bloomberg television. Time now for the stock of the r. Were looking at mellon credit, which is still down at about 3 in the aftermath of the Purdue Pharma bankruptcy filing. Kailey leinz is here. A late night last night. Purdue filed for bankruptcy to settle global claims. 2000 cases against the company. This is a reminder of how bad it could get. The stock is already down about 90 in the past year. There is a litany of allegations of lawsuits. Bloomberg reported two weeks ago the company was hiring advisors to consider restructuring for bankruptcy. There have been positive develop its. They settled two cases in ohio for 30 million, avoiding the First Federal trial. That is just two county cases in ohio. They face thousands more. It gives them some time to negotiate a settlement a global settlement are analysts say if you taken the 30 million figure as a proxy, that is about 5 billion. This is a debt laden company. They have 5 billion in debt. They got their greetings the rating sliced by s p. They have a limited ability to refinance because of the risk overhangs. Reminded of that today. David there are other people who produce this will be owed. How are they doing . The likes of endo tether are higher. J down they seem to be reacting well to the settlement. Maybe because the 10 billion is lowered to the floor than what was expected. These are very different stories. These companies have much more stable free cash flows. There is not as much of a risk they would file bankruptcy to deal with the settlements. David fascinating. Thank you so much. This is kailey leinz. Sign up for the balance of power newsletter. Get the latest on Global Politics in your inbox everyday. Check out and i balance is the terminal. Coming up, much more on the attack in saudi arabia. This is bloomberg. Mark greece says the European Union and mediterranean states are in a better position to convince other partners to cope with migrant arrivals. Greece is asking the European Commission to come up with a new migration policy. Officials say it is dealing with nearly four times the number of migrants that anywhere else in the region. North korea says diplomatic talks with the United States could resume in a few weeks. It will not consider abandoning its Nuclear Weapons unless external threats are fully removed. The Statement Today which riveted to a Foreign Ministry official called for economic sessions economic concessions. Negotiations between kim jongun and President Trump collapsed in february in hanoi. In hong kong, protesters took to the streets for the 15th weekend in a row. They set fire to the entrance to a subway station and through gasoline bombs at the Central Government headquarters. Police used tear gas and water cannons