Exchange, we bring a market moving news from around the world. Kong ifus from hong enda curran, we have Annmarie Hordern and emma chandra, and Michael Mckee joining us in new york. I want to show the slowdown. Bloombergs enda curran has more. Enda . Enda i think it was quite weak across the board, alex. The worst single month meeting retail002, which saw the sales side of things confirming that even though a lot of it was due to the slowdown in the car market, the auto market, there is a feeling that consumers are starting to track as well. The activeixed, investors side of it, we saw that lacking, pretty soft reading, setting up the economy for a pretty slow in to the year. Putting pressure on the government to respond. Alix thanks so much, enda curran come in hong kong. Saudi Oil Facilities were attacked. Annmarie hordern have the latest. Tomarie that is right here 5 of global supply, 5. 7 Million Barrels a day, but half of the kingdoms net exports. The biggest infrastructure that d was theke facility that is the heart of the Saudi Oil Production and the heart of the exports. Most saudi oil goes through this is silly, and that is what you see prices jump today. Biggest intraday we are seeing on brent this morning, and it is moving equities as well. Oil and gas stocks are higher in europe and likely to be higher in the u. S. The big question now, alix, is when we will see saudi return to full capacity. The big question for the market and the kingdoms customers around the world is when will we be at full capacity . Alix and when will we see a strategic release of stockpiles . Here is what the head of opec had to say. This issue will be a of not onlyecision the opec realm but the opec plus. Moment toature at the begin to contemplate on what will be done in terms of volume and when. Alix annemarie, much more sanguine than what the markets are saying. Annmarie yes, and just last week, we were talking about when will opec have to cut deeper . The markets were so focused on china, the trade war, and what demand me and him and now the market is currently focused on well, does opec need to boost production . As he said, it is premature. Saturday, saudi and aramco said they would update. Hopefully we will hear from them today. But countries like nigeria, thatries like iraq, promise they will comply, will it be more lenient for them . What we have to see them possibly boost production . Joiningnmarie hordern us there. The biggest intraday gain ever when it comes to brent. Bloombergs emma chandra keeping everything in the markets. Emma . Emma you said it, the biggest intraday jump for brent, recently serving about 71 a barrel. Good 8 to 9 when we look at brent, the biggest intraday move in about three years. We have seen similar moves for wti as well. There is no surprise this is obviously having an impact on Energy Stocks, too. Here in europe, we are looking at a negative day overall. It is the oil and gas sector rising some 2. 7 , the biggest gain since earlier this year, and it is the emp companies within that posting the biggest gains. If you look at the premarket in the u. S. , we see similar moves there, oil and gas leading the way. Also oil and gas some of the best performers on a percentage basis. They are rising significantly this morning. Alix bloombergs emma chandra joining us from london. Thank you so much. The fed meets this week with other Central Banks like the boe and doj. Mckee hass michael that. Beginning with the surge in oil, what does it mean on an economic level . Michael you asked the same questions as the oil industry and stock analysts. How much oil will be taken off the market, and for how long . It is much less than we used to, because we use much less oil than we used to on a per capita basis. We are also worth watching inflation, because as you can see in this chart, oil does have a relationship to inflation, even core prices, because so much oil is used in the manufacture of goods and the transport of goods. Take a look at the right hand side there, the oil price moving, the big as it is on a day, barely registered. It will take some time and a bigger move than that to get into the economy. Alix in the meantime, we have the big three Central Banks meeting. Do they follow the ecb . Michael everyone will be following the fed at this point. On track for a quarterpoint cut. It is not what they say they will do but what they will do next. Everybody wants to know if these that is going to continue cutting rates Going Forward. The bank of japan has to follow the fed. Will the fed affect the markets . Bank of england, how can they move . They do not know what is going on with brexit at this point. No move forecast there. One of the biggest moves will be the Swiss National bank. Ecb. Have got to follow the it puts more pressure on ecb economy, swiss economy, alix. Alix thank you so much, Michael Mckee. British Prime MinisterBoris Johnson meeting with the own code younger with john carter loo Jeanclaude Juncker. Well, we are cautious, cautious. Stalled on have been the contentious issue of the irish border backstop. Johnson planning to tell juncker he will not talk if they are not productive. Their lunch, snail, famine, and shes. I just hope they are not salmon, and cheese. I just hope they are not all mashed together. This is bloomberg. This is bloomberg. Condo for bloomberg first take, time now for bloomberg first take. Arry and Tracy Alloway with benjamin cignarella. The news has been all morning. Ben, youre a traitor, and last night, we started trading futures. What you do today at 7 10 . One thing the traders are watching very carefully, talks are coming back down, but this is not the first time it happened. They are threatening to happen again to it i think the markets are way too complacent. They are trying to sort out where you stand on this, because, look, it is not going to happen again tonight, but it will happen again, and how do you prepare for this Going Forward . It will be a big sea change in the shift when you look at emerging markets and developed countries. Is one of myat takeaways third there has to be massive defensive on all the defenses and saudi arabia, particularly, the ones that are hit. Is it a blip in the missiledefense system, or this is a very sophisticated attack, which leads to more issues. Note, real that quick a my buddy of mine said the same thing, when you travel to saudi arabia, you think wellcrafted, wellprepared, it is just not that. It is easier than you think. Tracy for sure. The sophistication of the attacks will be under scrutiny, but i think at a minimum, this changes the longterm potential for saudi arabia. Saudi arabia was always the worlds swing producer, and even though we talk about geopolitical instability in that region, Saudi Arabia Oil assets were always considered stable. All of this changes as of today, and you will get geopolitical intopremiums built back the market, but from a saudi arabia perspective, what could disastrous as this of us aspire start thinking, oh, we need to ramp up our own means and source from elsewhere. Alix iran . Like, where are they going to source it from. Barry what is your take on all the news, . Shale well, first of all, fundamentally changed the elasticity of supply, right . I mean, saudi arabias ability to be a swing producer has been mitigated, to a large extent, by all of that. Oilwhen you think about an price supply chart like this, it is actually disinflationary, and i have been writing a lot about how actually you had a changing mix of growth this year away from investment, toward consumption, you are finally starting to see what chair powell called the fake heartbeat of the phillips curve, ppi has been picking up, so you start to get this cost push inflation. This actually works in the other direction could although it looks inflationary, it actually is disinflationary, just like tariffs are. I think it gives the fed a little more room to cut this week, but i have been arguing that you probably should get a rally in Energy Stocks due to some cooling of the trade tension. It kind of works in the same direction, so while i think the tendency is going to be to say no, do not chase the energy stop today, if the trade tensions fall further, and they really do need to, at this point, if President Trump goes much further with that, he is going to lose the election, right . I think there is a recognition that the economy is vulnerable. Energy stocks have been absolutely funneled humble. Mmeled. Wo that opu alix to that point, Energy Stocks, they will look somewhere else. Hopefully they will come online. Tracy the irony is the market, when it is trying to ascertain how tightly oil market actually is is of course relying on saudi arabias own published figures, and saudi arabia has been quite keen on saying it is in full compliance with the opec agreement. Now we will see is the published figures about stockpiles are actually true. Are they as low as they claim them to be . Or are we suddenly going to discover a bunch of extra barrels out in the desert . Demand i do not think has been soft as the market has been discounting, either. Some softeningad of growth in demand in china, but not really hit the demand. By the way, the same thing happened in 1998, in 2014 through 2016. You slowed the growth demand. You had those precipitous declines in the price of oil was because of, you know, the supply check. Building up 4 million, 5 Million Barrels over the course of a few years, and market got worried about demand. Prices came off. I do not think demand is that weak. Demand numbers for china in august were pretty ok. Vincent you brought up a good point earlier about politics and the elections, and when the president comes out and says locked and loaded, i am concerned about, with the complacency of markets, are we going to pin this on iran . Does russia have something to do with this, being an ally of iranians . Unitedreaction of the states and International Community i think is going to be very significant in assets Going Forward. Alix it is so hard to hedge, right . If you hedge any political risk, you did not get paid. Vincent no. Alix as a traitor, how do you look at that . Barry you do not hedge the political risks. You hedge the assets. Last week, i was starting to get the sense that the rally in the dollar was over could you could look at emergingmarket currencies, perhaps capture some yield there, as you saw u. S. Rates coming down. When u. S. Rates pop back up again, you see a situation like this. Maybe emerging markets are attractive once again. It is a very confusing mix. Barry here is something for you to think about is the west dollar becoming a petrol currency. Vincent a petrol currency. Barry that would change a lot of relationships with emerging markets in particular. If you look at the 1970s, 1980s, 1990s, the 2000s, 2010s, the strong oil decades were the weaker dollar decades. That was the biggest source of our current account deficits. That is no longer the case, so if you switch that on its head, think about places like india, that run a current account deficits, and if the dollar were to rise when Oil Prices Went up vincent india is one of the economies right. That is it was disrupt a whole series of correlations and relationships. Alix so is it . Barry it could very well be we are moving that direction for sure. The history of this is pretty profound, right . Because the single factor that drove our current account deficit from 1 , where it was from world war ii all the way through the middle 1960s, was when we started Running Energy trade deficit. And then we had the big deficits in the 1970s when the dollar was decidedly weak. That was finding of work i did black rock back in 2010, what does the shale revolution mean . At that point commitment of the dollar was going to have a big rally when oil prices collapse, but i no longer think that is the case as we go to Energy Balance and net energy surplus, we become somewhat of a petrodollar currency, and that is a sea change. Tracy but it almost does not matter if the dollar is a petrol or not. Safe haven balance of risk off. We have seen that continuously over the past couple of years where if something happens in current market, we see that with trade, and what is interesting now is we see a bunch of people in the Global Markets and among Central Banks talking about how to shift the currency away from the dollar so thiswe start to decrease barry that was the best thing at jackson hole, christian paper, how he went through the dollar making of the safe assets world, the Global Financial crisis, so it has become even more of a safe haven currency. I suspect that some point there will be a currency regime agreement with the europeans and the eu such that there is a pseudopeg between the two, which would allow the euro to become a bit more and take some of the pressure off the u. S. Vincent i think the euro needs to find his legs first. Barry i agree. Vincent theres a lot of political risk. What is going to happen with the u. K. , italy . I would not look at the euro as a safe haven e. M. I agree. I was not barry i agree. I was not implying when we get to the next significant Global Financial crisis, the dollar will have such a move that there will have to be some sort of an agreement to mitigate some of the pressure. It cannot be the only source. When those countries run a current account, surplus, you think about the ecb buying more than 100 of government securities, there is only one place for the money to go. Vincent when you talk about Central Banks, i think this is the biggest risk for central bankers, to get the kind of inflation they dont want. It is not controllable, it is out of their reach. All they could do is try to raise rates to push up against it, but it is the wrong kind of inflation. It is not that demand pull that they like to see that shows really good, strong, economic growth. It is the kind of underlying pangs that we did see in the 1970s, the beta the existence of central bankers. Alix all right, we have to leave it there, Tracy Alloway and vincent cignarella, thank you, guys, barry knapp of ironsides is staying with us. Run the chart that bloomberg gtb go. This is bloomberg. This is bloomberg. Viviana this is bloomberg daybreak. I am Viviana Hurtado with your Bloomberg Business flash. Charges against j. P. Morgan officials after an investigation into rigging Precious Metals markets. Bloomberg has learned the government is looking to charge people higher up the chain at the bank, getting help from at least two jpmorgan traders who pleaded guilty. Another setback for the Hong Kong Exchanges unsolicited in the billion dollars takeover for the London Stock Exchange group. Praisingfficial daily the rejection of the bed. One of the reasons, it says, current protests are prompting persistent worries about hong kong. China controls about half of the forces on the hong kong exchange. Purdue pharma filing for bankruptcy to protect itself from more than 2000 lawsuits accusing it of fueling the opioid epidemic. The painkiller oxycontin, valued at more than 10 billion, purdues owners are the Sackler Family. They would hand over the company to a trust controlled by the state, cities, and counties that have sued the company. That is your Bloomberg Business flash. Alix . Alix thank you. What was your take away from the headlines yesterday . Guest i think we know this coming for a long time here we have seen the sacklers in talks for a wild. What is the right amount, how much it should the sacklers pay, how much of this should come from the company, or was somebody going to try to drive the company into something more dramatic it appears to be heading toward a resolution. Weo not think this filing have seen is by any stretch of the imagination the end of this discussion, and it will probably be a long discussion in Bankruptcy Court over what exactly happens with these assets, if the proposal goes ahead. Alix and what is the point for the other players . Drew i think there is a lot of discussion right now about how much you can extrapolate. I think purdue holds a special place in the popular and legal imagination of a lot of people who say these are the guys who helped create the Opioid Crisis, and the sacklers are, in particular for some people, kind of the family village behind this, and so on family villains behind us, and so on and so forth it is difficult to read through what this means. Clearly some would like to see the company disappear. Obviously they will have to rely , continue to operate on generous cash to repay the settlement for years and years. I would say it is a little tough to extrapolate exactly what it means. Proceedings,. T central bankruptcy, everyone is negotiating. Each company will be assigned a different amount of liability. If it is before, maybe the 10 billion number is scary for a lot of folks. I am sure we will see some reactions to that in the market today, but i think it is tough to get an exact read on what this means. Alix j j, they sold the least, right . But they are getting penalized, in some ways, the most. Were they did, but they also responsible for manufacturing a lot of raw ingredients in opioid spirit that is the oklahoma opioids. That is the case in the oklahoma case that we saw a wrap up. It is going to be a lot to figure out in the coming weeks and months. Alix definitely watching as we head into the open. Bloombergs drew armstrong, thank you so much good our top story of the day, oil jumping the most in one day. With a founder who lives petrobras here. This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. Reacting to a big spike in oil prices, risk off in the market, energy shares. Take a look, up a whopping 3 . Can kind ofets, you guest the move here, and move into safe haven and to oilrelated currencies. Like i mentioned now, crude up by 10 , saudi aramco says they are less optimistic on the speed of output recovery, how fast they can come online, what it means for stockpiles. It is a big one. Joining me now on the phone, mark rossano, c6 capital ceo and founder. What is the best trade you are going to put on today . Mark at this point, i think you want to start looking at the spreads, and you want to start looking at, as we get further out into the threemonth, fivemonth range, because you are starting to hear them talk about how this is going to be an extended down period. There is going to be a timeframe to get these cargoes back onto the water, which will really start to spike things as people prepare for their winter cargoes. A large part of that will have to do with the quality of crude. The quality of crude taken out of the market, if you replace it come up where do you go . Now, the people with the most spare cargoes are angola and nigeria feared angola, five days, 10 days ago, had about nerdy cargoes that were still available. Nigeria had about three, and the u. S. And russia also had spare capacity. The problem is logistics. How far are you from your end user and getting where we are versus endusers in asia, there is to be that time gap of, call it anywhere from 10 days to 30 days, depending on the travel. Alix the real question for the u. S. Players is how fast they can bring shale online. If it makes a difference, can they export it . Would you be buying these today . Mark i think some of the integrateds are going to have the better play at this point, because they will have some flexibility in their offshore facilities. You have petrobras, who has brought on a significant amount over the last you years, those are floating storage in production units, that have the ability to really make up some of the difference. Then you have kuwait and the uae, which has about one Million Barrels a day that they can bring on over the next 30 days. Alix mark, thank you so much, mark rossano of c6 capital. Still with me as barry knapp of Ironsides Partners. You mentioned that Energy Stocks is still good for a trade. How long do you play that . Barry that is the idea. The thesis was, first of all, what we think happened last week with a massive shift in equity market factors and sectors was really driven by the reversal in rates, which itself was not a function of improvement in the u. S. Growth outlook, we think it is sort of soften back toll the trend of 2. 3 quarter percent 2. 75 . The growth has shifted and is an important driver of this change in rates and change in sectors are the Energy Sector in particular has been really sensitive to trade policy expectations. The that, i think some of narrative that is developing is that President Trump really has only one path to reelection, which is a fairly strong economy, at least as strong as it is now, if not, trying to get some take back up on there. Fixated on Capital Spending in his trade war. Any of an interim deal with china. I doubt it will be a comprehensive deal, but an interim deal that included energy purchases, agricultural purchases, and a currency deal. That should create something of a trade to taunt, which, given how much Energy Stocks have underperformed, how cheap they have gotten, it looks like there is a fair bit of upside. I do not think you can get anything sustainable going in Energy Stocks for, say, something that will last for a year or two, just because, if you think about the last four decades, the Business Cycles, we have had these big investment ,ooms and then subsequent busts and those sectors have underperformed for the next Business Cycle because of excess capacity. The same thing is true in energy. I think a threemonth rally come a rally through the end of the year is entirely plausible. I would not buy them on opening sites this morning, but if you get something of a pullback, there is a chance for pretty decent rally that last through the balance of the year. Alix something that is relatively similar, basically the Fourth Quarter will not be as bad as we think it will be, because we get some inventory. It is a little different from what other strategists are talking about. Is that true . Is it buy value, buy cyclicals, is that part of the skull . This call . Barry it is for sure. The Financial Sector said three selloffs for sure, each one predicated by flattening in the yield curve, but then we have gotten to the yield curve, and they had higher highs, and they think the same thing is going to happen now. The Technology Sector still has strong, secular tailwinds. The industrial sector has been making a series of higher highs now, and, for decades you know, there is a good story to be told there. Deeperat, the dealer cyclicals ought to be better. So i agree with tobias call. When i speak to people i know in the oil industry, the fiscal market was fairly tight before any of this happened. That was the call on friday. I obviously had no idea it was going to be attacked over the weekend. That sort of confuses the call a little bit, but i do think that there is a chance for a decent rally in the stoxx to develop per year. Alix all right, very, hang with me stocks to develop per year. Hang all right , barry, with me, we got a tweet from President Trump. We are now the number one exporter in the world. We do not need middle east oil and gas. Very few takers there, but will help our allies. He takes credit for that, but it was actually started under president obama. Viviana . Viviana south korea confirming a word to visit pyongyang. The offer was made last month. There has been no response yet from the white house. The economy and china is slowing down again, and that is putting pressure on authorities to do more to support growth. Last month, industrial out put rising of the slowest pace since 2002. Fixed Asset Investment also exhilarating. Citigroup lowering its forecast for china for this year and next year. More than 49,000 auto workers have gone on strike against General Motors. It is the United Auto Workers first strike against gm in 12 years and it could cause the company 50 million a day. Gm offering 7 billion of investment in eight u. S. Factories, more than 5400 jobs, but the union said that offer fell short. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. I am Viviana Hurtado. This is bloomberg. Alix . Alix thanks so much, viviana. Barry knapp from Ironsides Partners stay with me. What a significant you of the gm strike . Barry to me, i have actually been writing about this mix of growth shift in how we are starting to see lots of signs of activity. I did not view the economy that way in 2018, because investment was picking up. But this year, it has been more about consumption, less investment, and so you are starting to see this pickup in inflation, avi over the last few epi over the last few months, 3 , 4 , late stage cycle. And of course an auto workers strike just fits in with that when the last one was to any07, was in 2007, i suppose. The labor markets are starting to get tight. Chairman powell in his latest speech said the phillips curve is exhibiting a fake heartbeat. A chart i had showed average Hourly Earnings at the lowest for the cycle. It is one of those, you know, business week covers where you consider it a contrarian indicator, but you see the activity that is another sign that we are fairly late stage. Alix definitely cut this week, 25 or 50 . Barry they will go 25 this week for sure. I dont think they should. I dont think it is necessary. I think they may find themselves in a box, particularly if there is any kind of interim trade deal, where they dont go any further this year, because of the inflationary pressures building, but this week, it seems like a done deal. Alix barry, always great to get your perspective, barry knapp from Ironsides Partners y 2019 is a crucial year for our environment. We will speak to the man who coined the term biodiversity, Thomas Lovejoy, a United Nations senior fellow, will join us next. Interact with us directly. You can interact with us directly on the terminal. There it is. This is bloomberg. Viviana this is bloomberg daybreak. I am Viviana Hurtado in the hewlettpackard enterprise bring room. Coming up, watch for the managing partner. Now to your Bloomberg Business h m posting ar Second Straight Quarter of sales growth, ending in august, sales rising 12 . Of the inventory buildup, ending a threeyear slump in earnings. This week, apple five the world of the biggest tax case and luxembourg. It will say it is more taxes than any company in the world. The will not be enough for chief. They ruled that the company pays businesses. N other reportedly may make changes in the way the company is structure. According to the new york times, a small group of directors will move to focus on safety. The directors will also ask for changes in the reporting arrangement for engineers to identify problems. I am Viviana Hurtado, and that is your Bloomberg Business flash. Alix. Alix thank you very much. Bloomberg is for dissipating and covering climate now, an initiative began by the school for Climate Change, and it gives attention to crucial subjects whose importance is only growing. 2019 is a crucial year for the climate crisis, and what is being done to tackle it . We are now facing a dramatic climate emergency. Toare track for 2015 to 2019 be the five hottest years on record. The Climate Change risk is very predictable. We have a good models. It will happen with a certainty. We are killing our planet. Ultimatelychange is an economic issue. I will put together a deal for europe in my first 100 days in office. Public money will not be enough. Alix joining me now from london is bloombergs emma chandra. Emma . Emma thank you, alex. The accord calling this the global issue of our time, global the most abundant of those Greenhouse Gases in our atmosphere being co2, largely that product of burning fossil fuels, directly linked to the rising Global Temperatures and rising sea level. It should be no surprise that it is the most populous and the most developed nations that are responsible for the biggest they are the biggest emitters of Greenhouse Gases. If we take a look at china, the and the u. S. , responsible for 56 of Greenhouse Gas emissions over the last decade. China, the white line here, still rising. Notably, the u. S. Leveling off and the eu seeing a decline. If we focus more closely on the u. S. , we can see that it is still generating most of its electricity from burning coal, but that has been declining. That is the orange yellow line here, declining as power generations from renewables, the green line here, rises. Interestingly, in april of this year, the u. S. Generated more from renewable sources than ever before. There is still a long way to go. Alix indeed. Thank you so much, bloombergs emma chandra. Thomas lovejoy, United NationsFoundation Senior fellow, joins me now. He served on Environmental Councils under reagan, bush, and clinton administrations. Great to get is so your perspective as we dig deeper into the topic. Why does it feel like 2019, the Climate Conversation has in some ways come to a head. Dr. Lovejoy well, it took its time to get there, but when you look at the biology of this planet, we need to stop at 1. 5 degrees and go no further, and now is the time to make that change. Alix what do you feel like will be the leader in this . We have seen president macron be the leader. We have seen china take on a lot of proposals to help their own admissions. Dr. Lovejoy i think it important piece of this, beyond the fossil fuels, which are nothing but ancient ecosystems, is what we do with the biology of the planet, because this planet works as a linked biological and physical system. Alix what does that mean . Dr. Lovejoy well, what it means that there is not an amount of co2 in the atmosphere right now from detroit destroyed ecosystems that is equal to what nature, and if we restore some of those ecosystems, we can pull some of that co2 back and end up with the soft landing for the climate. Alix so in laymans terms, does that mean we have to plant more trees, or is it something more sophisticated than that . Dr. Lovejoy it is actually restoring the natural ecosystem productivity, and there is always a benefit when you do that. Think of degraded agricultural ecosystems. When you restore them, you get more productivity, you get increased oil fertility, but it is also reinforcing coastal wet life. Alix so if we use the amazon and what happened there as a test study, a case study, how would you sort of fix the fires there and rebirth the biodiversity system there . Dr. Lovejoy the critical thing about the amazon right now is it makes half of the rainfall, and the amount of deforestation that place is veryn close to a Tipping Point, where some of it will die that, so the incredibly important thing to do ther is actually to do somee before his station, b some build it back up. Alix typically we wind up hearing about Companies Cutting back commissions, or if you are china, retiring coal plants. That does not seem like it is the real answer for you. So what is the response . Dr. Lovejoy one of the interesting things is a week ago, this past friday, there was a meeting of all of the amazon heads of state, and the amazon really beginning to look forward to a more cohesive approach. Alix what is the pushback . Dr. Lovejoy well, the pushback is a lot of illegal deforestation going on, and essentially shortsighted views that look at the rain forest as not productive, something to be removed and replaced with cattle shorttermsome other production. Alix over the last two years, wind and solar have become Something Like they were not five years ago. How much money what is spent to rehabilitate, say, the amazon, and what is the propensity for countries to want to do that . Dr. Lovejoy so, in the end, tha budget will be in the billions. I do not think the world really expects those countries to do it entirely on their own, so maybe something to a Multilateral Development institution could engage those countries in a soft landing. Alix do you feel like that is realistic . Dr. Lovejoy well, you know, if you look at the g7 offer of 20 million, it does not seem realistic at all. If you took hand, one week of Oil Production on the planet and averted that to that purposes, diverted to these purposes, you would nd of therally 1 52 annual budget. Alix fair, but like i mentioned before, it is hard to get countries and companies to do things that are not profitable for them yet. Do you think there is a Tipping Point where companies will then think differently of that, and if so, what is it . Dr. Lovejoy i think we are very close to an economic Tipping Point. You see it in the language of corporate leaders, let alone the secretarygeneral of the United Nations. And, indeed, many heads of state. Alix well, thomas, it was really great to talk to you, Thomas Lovejoy from the u. N. Foundation. And bloomberg is covering climate now, a global collaboration where more than 222 news outlets will highlight Climate Change. And we will dig deeper into various areas affected by Climate Change. Coming up right now on this oilram, the surge in boosting energy. This is bloomberg. Alix President Trump aggressively taking to twitter, talking about a stronger dollar and the fed cuts and Higher Oil Prices. We have the crude Oil Prices Surging to the most we have seen ever. Also, interestingly, boosting demand for certain currencies. Joining us is bloombergs vincent cignarella. What are we going to learn . Vincent this has obviously thrown a wrench into the whole thing. You have the benefits with Higher Oil Prices, russia with the currencies that hurt the most, and that will be the turkish lira and the indian rupee. I think one of the text that i think is the strongest take of this is the complacency in the market is, i think, a little too relaxed. Traders honestly do not know how to approach this immediately. You know what to do really quickly, but on the longer term, broader term, the hit was too easy. It has happened before. It will probably happen again for what will be the u. S. Response . What will be Oil Producers response . A major asset shift that will go forward. Is the dollar once again the place to be . It is kind of an on known unknown at the moment. If you look at u. S. Equity futures in the last four hours, complete sideways trade. No one really knows what to do. Is it an opportunity, do you buy the dip, or are we looking at a longer run cost push inflation story, which is negative for equity, or is this the time to exit . Some of that for sure. Alix and this is something central ba about. Vincent this is a centralbank nightmare. For years, we have heard, give me inflation. We miss the days of inflation. Take this off our hands. Deflation, they think, is there nightmare. The real nightmare is this cost plus inflation. Will we get that ahead . Alix did you have hair in the 1970s . [laughter] vincent i did. Alix coming up, Marc Chandler of Bannockburn Global Forex, will join me on the program. This is bloomberg. Gram. This is bloomberg. To bloomberg daybreak on this monday, september 16. I am alix steel. Here is everything you need to know at this hour. Oil has never risen this must before. Crude rose 20 after the attack on a saudi refinery. Bloomberg was told in an exclusive interview that it is too early to talk raising productions to make up for the shortfall. It will be a decision not only of opec but the opec plus, and it is premature at the moment to begin to contemplate on what will be of volume and when. Alix and President Trump took to twitter saying the hit from oil would mean the fed would need to cut rates. An auto workers strike against General Motors for the first time in 12 years. More than 49,000 assemblyline workers are expected to protest come up to 50 million a day which may cause gm up to 50 million a day. Police used tear gas and Water Cannons to disperse crowds. And Prime MinisterBoris Johnson discussing exit over a lunch of snails, s brexit over a lunch of snails, salmon, and cheese with young club juncker. Jeanclaude juncker. Optimistic . Ou so pm johnson pm johnson well, we are cautious, cautious, cautious. Alix that was before the snails. Under 3000, down. 3 , all about safe havens as we had the saudi oil strike. 3 , huge down by move in the bond market, the long a particular getting the most of that bid, and brent still up 11 feared joining me now is Marc Chandler, Bannockburn Global Forex managing partner. I am obviously watching oil spill spirit what are you watching . Marc besidesmarc oil spills. What are you watching . Marc besides oil, the true safe haven is the japanese yen. We got to 1. 08 for the weekend, 07. 40. Expiring about 1 alix do we get to come alike, 105, 104 . Marc i do not think so. The rumor is that the boj is going to cut rates. Alix oh, good point. Speaking of oil, surging on the attack of the saudi facility, as we recently heard opec secretary general Mohammed Barkindo say it is a to early to talk about the increases, he spoke extensively to bloombergs Annmarie Hordern. Mohammad in order to remain oil,dent upon supplies of we have to secure our facilities and our operations, and this is what we have learned from the kingdom, and i am sure we are going to use this to ensure that such an incident does not repeat. Barkindo, i just want to clarify, do other opec nations need to increase to make up for the lost production we are seeing out of the kingdom . Mohammad it will be a collective decision of not only the opec realm but the opec plus and the doc, and it is premature at the moment to begin to contemplate on what will be done in terms of volume and when. Annmarie mr. Barkindo, what about what the United States is doing, capping the spr. Does that worry you and your partners and opec plus . When we also heard in the news that the u. S. Is thinking of leaving from the spr, depending on the influx, if the media, i think they if needed, i think they quantified only if needed, so really continue to wage and give the saudis enough time. There is no need to punish us at the moment. What we see in the markets today is an initial reaction from the community, but Going Forward, i think the updates that will be willg from saudi arabia further harm the markets. Alix that was bloombergs Annmarie Hordern with an exclusive interview with opec secretarygeneral Mohammed Barkindo. It seemed like a very calm mr. Barkindo, but the oil needs to remain in place. That seems to be the question in the market. Annmarie yes, the big question in the market is how fast can saudi arabia replacing get to full capacity . People familiar with the matter say it is going to take longer than expected, and that is why aramco officials were less optimistic. Speaking to francine and tom earlier, she was saying you could see about 40 of the days facility come back online, 5. 7 Million Barrels of oil a day, about 50 of saudi arabias complete production, but the big question is the full capacity, and she was saying that could take weeks, if not months. Is the suspicion, if the saudis are claiming greater inventory levels than what are likely, yes . Annmarie that is a great points are we a scene those levels come down to it we are not at a level we have seen really since 2000, 2008, so they have less inventory to draw on their they did, say, three years ago, and they have millions of barrels in the kingdom, but they also have rotterdam, netherlands, open outlook japan, also egypt. Japan, also egypt. At the facility, they have less to play with at this point in time. That is what a lot of people are looking at. The other quick thing we should mention as they are already saying to some customers they might have to expect a different rate of crude than what was going to the facility, the surety from crude makes it a lot purityr the from crude makes it a lot lighter. That is something to keep an eye on. Alix was it hard for fed officials to decide on something . Talk about opec, because no one is deciding on that. Joining us now is a bloomberg chief strategist. What are you doing . Guest i think it is a bit too early to decide. We are not in the position of too much knowledge yet. I think once it comes about, that will start to suffice. If we start seeing that it is taking a while to come back, and they take Oil Production is back up and running, then i think we will have to return to risks we have seen over the next week or so. i think traders should view this, Rising Oil Prices are really inflationary, is this going to list general price levels, or is this another deflationary win, given the Global Economy . Seema i think that is the most important lesson to be asking at this stage. I think it is deflationary. We have to consider in the same way that we considered trade standards as well. It has not impacted global demand. At this stage, the only thing that should be standing between the u. S. And discretion is a strong consumer. You do you do see oil prices for a sustained period of time, then you will see a creeping back in the market, like last week. Alix sort of pivoting off the rotation last week, we saw convergence, a similar conversion will take place across asset classes, that will put pressure on momentum assets like government bonds. Now,whole seems to early given the spike in oil and the deflationary worry . Seema i do not know it is it is too early, but i suspect, as i said, it is sustained, and that rotation may very well go back pretty quickly. Alix marc, what do you think . Marc this is a dangerous cycle, because we are in the late expansion shared the euro, the u. S. Is late expansion. Europe, the u. S. Is struggling, it is more concerning. Alix the pushback for me, seema, is, hey, the percent that we spend on gasoline is so much smaller than it was 10 years ago. We will not really feel it at the pump. What is wrong about that statement . Seema historically, we always thought of them, 80 a barrel was the threshold before the Global Economy tipped into a recession. It is that there is more Energy Efficiency in the economy, probably that number is a little bit higher than it was. It is so concerned, the fact that the consumer is the most important help of the Global Economy, not just in the u. S. , but also in asia as well, so we cannot afford the consumer to be coming back home with less money to spend. Alix great point. Marc chandler of Bannockburn Global Forex and seema shah of crystal Global Investors will be sticking with us. This is bloomberg. Up until recently, the market has been very focused with supply demand fundamentals, oversupply next year, and having factor enough of this geopolitical risk. Betweend that mismatch that and price, how much to get into after this weekends attacks, there is one take away, and that is infrastructure, infrastructure is highly vulnerable to the attack, and markets have been consistently mispricing oil. Anding me now is jerry ross Marc Chandler of Bannockburn Global Forex with me as well. Do you think, totally underpriced . I think so. Based on fundamentals, the price should have been 10 higher anyway. Alix i think we lost you. Lets fix your microphone. Jerry ok, great. Alix what are the saudis saying right now . Gary they are trying to bring production back as soon as possible. That is the number one priority. The number one thing to put arms . Round is can they do that if it is 3 billion a day, plus, but they have a lot of storage, around Something Like 60 million they can access, they have storage offshore, also, so i think it is manageable. Market was not screaming tightness anyway. It should have been higher, but it was not, because of all of the global pessimism about 2020. I think basically prices have moved up, and they are probably higher than where they are now. Say the geopolitical risk is unappreciated in the oil markets, but this was a drone attack on a stationary facility. Is this really a broader issue . Would you say u. S. Aircraft carriers other large entities are becoming military targets in this new kind of asymmetrical warfare . Are hightech big stocks against more hightech drones and this kind of thing . Gary i think the fact is that the infrastructure is vulnerable to these kinds of attacks, whether it be drones or it looks like it is a cruise missile. It is hardture to protect 24 hours a day, everything will day, the infrastructure, so i would just highlight that is vulnerable, and there should be more in the middle east, some kind of geopolitical risk. Trying to expand, it is not just what happened in saudi arabia, but i think about the way china defends its borders, its shorelines. I was reading a book over the weekend, chinas great and hey by kashkari, says china has a flexible, hightech, hightech but low, like, very flexible, very mobile compared to what the u. S. Had. Comparing saudi arabia like 9 11 r the United States, the level of warfare, and saudi arabia is the next target. Gary i think that is possible. Expert, i war am on oil expert, but the geopolitical risk should be in the market, and it has not been, because there is a some of them. The market is tight. Prices were 15 a barrel lower. Brent own at 16 sexy dollar brent anyway before President Trump was thinking of embracing president rouhani, so it is only that fear that stopped us last week of going to 65 brands. Where are we now, 60 . Alix if you know the saudi government really well, how do you think about this . Do they wait . Do they talk to the u. S. . Gary well, they are talking to the u. S. For sure. Havinghard for me to see their back. I think right now it is hard for me to see without the u. S. Having their back. With iran. We are locked and loaded. I was just reading another book. That wed vehemently should have attacked iran for the terror attack that they were planning to blow up the restaurant in washington, d. C. So we are overdue for some kind of reaction by the United States for this kind of behavior. We will have to see whether or not something happens. Marc this is part of amarc war that has been going on below the surface, the iranians and the saudis, for many years, is not this a new element, a continuation of what we have already seen . Is the iranians reaction to maximum u. S. Pressure. Even under obama, their exports were higher, Something Like 300,000, 400,000 barrels a day, so there is tremendous economic pressure. This is their reaction to maximum economic pressure. Not surprisingly, who with a hit . The most vulnerable would be the saudis. Alix what you and i have been talking about own mornings crew quality matters. It is really easy to say all morning is crude quality matters. It is really easy to say it is easily replaceable. If you walk through the technical part of the oil world when it comes to this, or does it make it a big nothing . Gary well, it is lifestyle oil, and also cutting back, not getting a lot of put out. Refinery runs,he because they do not have the Hydrogen Sulfide processing capability, and you cannot process crude, so they probably cut crude runs in the kingdom by seven one million, 8 Million Barrels a day. Diesel, andghten up of the same time, we are supposed to be going into refinery maintenance in october, and at the same time preparing for the new imo regulations in january 2020, so this could really tighten up the diesel market in the shortterm. At the same time, what they will do is give their customers, they have already talked to some of their asian customers about being arab heavy. They were running these, running medium and heavy, and substituting that for some of they will produce also obviously from their storage terminal on the coast. Gary, thank you for digging and with it, black Gold Investors ceo, thank you. Mark chandler of banner drive global forex Marc Chandler of Bannockburn Global Forex will be sticking with us. They are definitely still looking at it or it we will dig in the that headline in a few minutes. The uaw planning to play hardball. In 12l motors for strike years. More on that in todays bottom line. This is bloomberg. Line. This is bloomberg. Alix time now for a bottomline, looking at three Companies Worth watching this morning. Were joined by emma chandra in london. We are looking at purdue pharma. Emma has got the latest. , the makere pharma of oxycontin, filing for bankruptcy protections, partly by the Sackler Family to do with thousands of lawsuits fueling with the Opioid Crisis in the u. S. The filing includes a deal that would seek to dissolve the proceeds from 10 billion to 12 billion needed to settle those lawsuits. Minimum 3ludes a billion cash investment from the Sackler Family itself. This has been approved by some 24 states and five u. S. Territories, but 25 states oppose it, and they will get a chance to oppose it before the judge and approve that filing. Purdue saying over the weekend that bankruptcy is inevitable, given the wave of lawsuits it 200 50aying it spent million alone this year in legal fees. Alix thanks so much, bloomberg s emma chandra. We are looking at the London Stock Exchange. The London Stock Exchanges down 2 already, so andrew , sayingthe head o they will be scrutinizing the hong kong the position they have taken on this deal yet. I also want to point out that andrew daly is also scrutinizing for repetitive as well, which is a big part as we watch the takeover drama continued. Alix great point. I should point out that , the parent of bloomberg intelligence, competes with them. Sonali, thank you so much. Lets check in with gm. Sarah is taking us through the strike. The United Auto Workers is leading a strike against General Motors for the first time in 12 years. Overd the backandforth the years, President Trump event timing on twitter, get a deal, however, no such deal was made, and the strike did take effect at midnight. Offer the uaw did 7 billion worth of investment that was supposed to be used across a different United States plans, including 850 4 million, mostly new hires. However, the uaw said no, that is not enough. It did not hit key components like health care, and Credit Suisse is estimated that the cost General Motors 50 million a day. As we just saw, shares her lower as investors try to figure out how long this is going to go on. Vincent thank you so much alix sara, thank you so much, sarah ponczek. Sha is still with us ofh principle Global Investors. What does this signal to you . Seema the labor markets, are they going to slow down . Are we looking at the end of the market . Gm, what we may be looking at, idiosyncratic, but what we see is a slow, slow, slow down in the labor market. It is not something to be particularly worried about. There is some pressure on the markets, but i do not think there is too much. I think there is some concern. Alix marc, what do you think . Things occurred to make a mandatory that the saudis may not have committed seems like gm has prepared for they strike, and it has about 80 days of inventories and the large Profit Margins for suvs, while they have lower inventories in the lowermargin products, so it looks like gm is prepared for this. Alix good point. They have more inventory than the saudis do. All right, seema shaw is sticking with me, as well as m c rc. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Alix this is bloomberg daybreak. I am alix steel. In the market is all about oil. Here are the repercussions from the drone strike that hit saudi arabia. S p futures down. 3 . Off the lows of the session. Energy stops Still Holding onto a nice bid in europe. In other asset class, move into the dollar and yen. And a move into the treasury market. A Slight Movement of gold. I feel like we have been relatively range bound. Eurodollar around the levels of last week. You see it move into the bond market but only lower by five or six basis points. Holding steady to the gains we have seen. Investors also focus on Central Banks. The fed meets with other Central Banks. President trump took to twitter, saying that the u. S. Because of the fed is paying a much higher Interest Rate than other competing countries. They cannot believe jay powell and the fed do not have a clue. Still with me, Marc Chandler and seema shah. Call . Shah, what is your seema no surprise. I think therell be a 25 basis point cut. What the market will be focusing plot say . Do the dot are they saying there could be another rate cut . Whenat do you think the Federal Reserve says jay powell says midcourse correction. Greenspan used that word in the 90s, it meant three rate cuts. Do you think that is still the base case . A cut later this week and then cut in october or december . Seema i agree. One this weekend another later on this year. The data is starting to come to a point where you could be seeing a trough. Will be focusing on the new orders index on the ism pmi. If we see that rise above 50, that is a good sign. Alix marc, do you agree . Will it be a midcycle correction or something more dramatic . Marc i say both. We get the midcourse correction, and then i think we have not had a president have a recession during their last year in office since jimmy carter. That is what the danger is, that the u. S. Economy is slowly rolling over. We have this energy shop, you have the slowing down the labor market, and i think we are heading, at least at first, for a midcourse correction. Alix why are we so worried about the Oil Price Shock . Thisu look this terminal, is fiveyear forward breakevens versus oil. They move in tandem. From allete i point of view from a luddite point of view you would say this is great, they move in tandem. Seema it is the wrong kind of inflation. It is the inflation Central Banks dread. It is where Central Banks are struggling to fight it. We already have global Central Banks firmly in easing mode. There is very little else they can do. When looking at risk assets, we could see further gains in risk assets as long as everything goes right. You cannot afford to have a no deal brexit. You cannot afford to have the trade tensions. You cannot afford a major Oil Price Shock. Deflation risks of the prices of the higher oil when the fed sits back and looks at its oil price shop, they will look, this week is too early. What is the impact of consumers . That has to be their main focal point. If they feel it will hit the consumer, they have to act quicker and more aggressively than they expect. Marc talking about the price of gasoline, is this a question of the Strategic Reserves . Seema absolutely. I think the Central Bank Policy makers will have to do whatever they can to try to take away a lot of the pressure on consumers. I agree. We are getting to the point where Central Banks are coming up there is very little else they can do. , anday is fiscal policy with oil prices it is about releasing emergency areas which will help consumers. Alix if the call is going to be is not about the fed, it is about sbr, we are in a tough spot. That does not bode well for the conversation later this week. I also want to point out from a call from citigroup talking about where we are in the inventory cycle. Ending andduction is production will pick up moderately so Fourth Quarter results may not need additional trimming. Counterintuitive to what we have heard of the market, advocating rotation we have heard last week. What you think about that . Seema we would be in general agreement with that. Assuming there is not an Oil Price Shock, we were considering the central bank easing you have had since the beginning of this year should start to take effect for the end of this year. Q4 is when we are expecting a slight turnaround in the Global Economy. There are a few signs this will happen. If there is a disappointment, markets not price to that, we have that disappointment on the earnings estimate. Alix marc, what do you think . Marc i am mixed. I worried the economy was not picking up steam anyway before this and this becomes another hurdle we have to get over. I am also suspicious the economy is that sensitive to Interest Rates. It does not seem that high Interest Rates are the main hurdle for the economy. Im not sure the drop in Interest Rates, which have been sharp, at least over the last two weeks, would be enough to give the Global Economy much support. Alix wrap it up, what is your top trade . What we have been saying, up until now we have been staying defensive. At this stage, when you feel like there is no deterrent coming, you may take exposure to defenses and also increase that exposure in cyclicals. What we have had in terms of overweight defensive and hedging by global bonds is an outright risky bet and that is something investors need to start moving away from. Alix you will be sticking with me. Lets get an update on what is making headlines outside of the business world. Viviana iranian backed rebels in yemen claiming responsibility for the attack on a saudi refinery that sent oil prices soaring. Officials say iran itself is responsible. They say the weapons used are too sophisticated for the rebels. Oil posting its biggest intraday jump ever before falling back. The attacks removing about 5 of the global oil supply. Kim jongun is making another attempt to restart stalled talks with the u. S. South korea confirming report kim jongun invited donald trump to visit pyongyang. The offer was made last month. No public response yet from the white house. Boris johnson and Jeanclaude Juncker agree brexit talks must intensify. The two meeting in luxenberg. They agreed the talks must be daily. Boris johnson also reiterated he will not request a brexit extension past october 31. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg good alix this is our favorite topic. Brexit. Marc, your base case . Marc the market got very excited last week. Sterling got to the best level in a month and a half. The market is trading more on hope. Ive not seen anything concrete from the british about the irish backstop. Until we do, they will more likely try to fate the rally in sterling. Alix what do you think . Seema absolute agreement. I think the market has got ahead of itself believing a deal can be done before october 31. I think therell be a general election, which means uncertainty continues a while longer. Marc it looks like an election may be in early november. It is a month away before the eu summit in the middle of october, which everything should be decided by, or parliament has told the Prime Minister to request an extension and now the Prime Minister says he will not obey parliament. A constitutional crisis. If there was a constitution in the u. K. Alix some say this is where you want to buy up some u. K. Assets. When would be that time for you . Seema you have to wait until brexit actually happens. Once the brexit position happens and you know what the direction is from their if we have a no deal brexit, there are going to be a lot of opportunities to buy cheap stocks. You have to have a very strong stomach and be waiting to stick through the volatility that will continue for an extended time. Alix i should point out that johnson and juncker agree that brexit meetings will soon be daily. Thank goodness. I was worried. Marc a steady drip feed of this for the next month or so. I am concerned which sectors will look most attractive in the u. K. I am attractive to the real estate sector because the pound exit attractive. Postbrexit, or post whenever these things get decided, i think the people still want to have Real Estate Holdings in the u. K. Alix fair enough. This also brings up the larger issue of global trade and the slowdown. It is not just about u. S. And china. It is u. S. And europe, u. K. And europe, japan and south korea, et cetera. Seema we went into this weekend thinking maybe things had improved, but then over the weekend we get another significant geopolitical hit. With brexit, i do not think you can take your eyes off it. I wouldve hoped those meetings between boris and juncker were daily anyway, but it is positive they are. Alix johnson said he would not expect a brexit extension. More headlines coming. Seema shah, always a pleasure. Marc chandler is dipping with me. Coming up, saudi aramco ipo. What the attacks could mean. Bloomberg users, check out gtv. You can browse the charts featured on Bloomberg Television throughout the day and save charts for future reference. Gtv. This is bloomberg. Viviana i am Viviana Hurtado in the hewlettpackard enterprise greenroom. Coming up later today, an exclusive interview with the ibm ceo. Now youre Bloomberg Business flash. Sixiler h m posting a straight quarter of sales growth. The chain says that in the quarter that ended in august sales rose 12 . H m is trying to reduce an inventory buildup. Apple fighting the worlds biggest tax case this week and luxembourg. The iphone maker will tell the Eu General Court it pays more taxes than any company in the world. That will not be enough for eu champion who has ruled antitax rules with ireland help the company pay pay far less than other companies. A small group of boeing directors may call for new groups. There focus on safety. The directors will act for changes in the arrangement with engineers who identify problems. I am Viviana Hurtado and that is your Bloomberg Business flash. Alix we turned wall street beat. First up, saudi aramco staying the course for now despite the recent attacks on the facility. Todays hottest hedge fund is now open. Six to revivey the fortunes of his firm. Goldman leads the pay slump tax. ,ccording to companies compensation for employees at Goldman Sachs is down 61 . Joining us is bloombergs sonali vasebasek. Sonali right now saudi aramco is dipping to their plan. They are supposed to be on the road next week. Right now, we have a sticking to our reporting, they are continuing with the plan. November considering stock sales. Dow jones also reporting they may consider a delay. What is not up for debate is what the valuation looks like. There is a huge range people are considering. Over 2 trillion is what the crown prince had considered. It is what a lot of banks had considered. A lot of analysts weighing in at 1. 5 trillion. We are sitting here with a question mark of maybe 300 billion of a haircut at play with these risks. Alix do you like a saudi aramco ipo . Marc i thought i did but the vulnerabilities underscore it. The cost of production, even though getting oil out is one thing, but now protecting these facilities and the prospect of getting different stories. Sonali if you look at an ipo perspective, this is a risk that was not there yesterday. Alix great point. Lets get to our next story. Christian no day opening up the font to external money. Sonali is concentrated Natural Resource fund that he created in march and now youre seeing him open up to new money. They have said they consider this being over 1 billion at some point. Nearterm fundraising of 400 billion. They made money shorting a lot of energy companies. Also remember, it is up 32 . You have to wonder with so many hedge funds closing, whether the ones opening get a lot more love. It is not that investors are not looking for alternatives. One of the stars we are seeing come to market with new money. Marc this is also part of the issue that the hedge fund s p with private equity, both of them are technically longterm lockups and can do things we as individual investors cannot good sonali the thing individual investors cannot. Sonali you are seeing more demand for alternatives, but for odey he has seen his assets go from 13 billion to closer to 4 billion. It is a good news story for someone from for someone with assets. Alix last week i feel like the story was a lot of hedge funds got hurt. Sonali exactly. This is showing that if you choose Something Different to do, you can bring some money in. How much will upon you . Reporting. In todays i am sure it is in investor documentation. Alix lets get to the third story, which is the pay slump at Goldman Sachs. This is bank wide good sonali it is a bank wide pay slump. What is interesting is Goldman Sachs was leading with a 61 decline on average, followed by Deutsche Bank and morgan stanley. Very interesting to me that the average decline in compensation is only 14 . 61 is quite staggering. There is a Bigger Picture story. A decline among traditional Investment BankingTrading Operations, whereas look at that chart. Bank of america is not on it. J. P. Morgan is closer to the tail end, and you see a real shift of money going toward Wealth Management and consumer businesses are these banks are growing. Marc you think it is a structural shift among investment banks trying to cut cost in Trading Operations and boosting the cost another part of the bank . Sonali i do think it is structural. Certainly for training. The question ive been asking for the last five years, are the costs of banking going up . Youve seen the rainmakers go after the boutique banks, but the trading desks, we always use goldman is now down to about three people. You do not need the people there anymore for training. To be seen for the other parts of investing. Alix always awesome. Thank you very much for joining us. In todays off the beaten street, check this out. Call it the case of the looted loo. An 18 karat gold toilet has been stolen from an exhibit at the birthplace of winston churchill. That was titled america by its creator who thought it was a joke when he heard about the theft. A man has been arrested in connection with the toilet heist and apparently this is a working toilet. How do you run off with a goldplated working toilet . Muscles of steel. Coming up, does the world have enough oil to cover any shortfall . More on what i am watching in the market is watching. If youre heading out, tune into Bloomberg Radio heard across the u. S. On sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix here is what i am watching. Lowboy global oil inventory. The reason i care about this is how long the outage goes on in saudi arabia depends how much oil is in storage. No one seems able to agree. This is the oecd stockpile. It does not count middle east. The point is once you start drawing them, they are drawn quickly. The first column is zero to 30 days, and all of a sudden in 180 days they are gone. It shows how fragile the market can be once you start. East,oecd and the middle and the biggest importer of oil, china. Alix they might be able to release some of their oil and storage, and then they will not be importing oil. They will have to replace their stockpiles anyway, so there is that factor in the market. They will not want to do it if oil is at 70. Marc china can stop part china can stockpile the oil very cheaply. Alix goldman says it needs to be multiple months and oil at 75 for anyone to think about drawing stockpiles. Other people are like we need to get rid of them right now. There is a lot of confusion. Marc it seems like the u. S. Is more eager to Keep Oil Prices lower to keep the market stable. Alix 100 . You are watching the fed and the january 2020 fed fund futures contract. Marc the reason i am looking at it is because it is the best indicator of what the market is expecting for the rest of this year. Interest rates backing up last week saw the market for the first time in over a month have second thoughts about not the september cut, that is a done deal, but what happens afterwards. We have been thinking that maybe three rate cuts good the market having second thoughts before the weekend about the third one. With the shock in oil going up, we see the january contract is back pricing in 100 confidence of not just the september cut, but also in october cut. After september, one more cut for this year priced into the january futures. Alix interesting, because it will still be a question of whether it is a shift in Economic Policy or whether we are in a midcycle correction. I do not know if we have any clarity on that. Three cuts would not tell us. Marc three cuts would not tell us. This is the age we live in. Language seems to have lost some of its meaning. The phrase of midcourse correction harkens back to the fed in the 1990s, and each time it was three rate cuts. I think three rate cuts are autopilot. What is thought about is if there needs to be another one. I would say right now, seeing the strength of the economic data, the u. S. Economy growing near trend, we have another good ending of weekly jobless claims, we had an acceleration of inflation. I think the Federal Reserve is comfortable with three cuts this year. It is how they distribute them. Alix good point. Marc chandler of bannockburn. Us at bloomberg daybreak americas. Coming up on the open, jill terry hall, bank of america u. S. Equity strategist will be joining him. In the market, steady as we go. An immediate selloff from Higher Oil Prices but s p Futures Holding steady at. 3 . Energy stocks continue to gain. In other asset classes, it is the classic by say pavements like gold and the yen. Maybe not in italy. Otherwise, a flight back into the curve in the u. S. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, oil surging following a major strike on Saudi ArabianOil Production. China data disappointing. The premier saying it will be difficult to achieve 6 growth. All ahead of the fed decision this week with chairman powell expected to cut rates once again. Good morning. Here is your monday morning price action. Futures. 33 following three straight weeks of gains. Yields come down five basis points. A major move with crude. Up 11 to 60 . 83. Thats begin with the big issue. Crude pricing surging. Different. Ack was something we have not seen for many years. The largest single disruption in oil supply on record. We will