Confidence fell on concern over ukraine. In the u. S. , we will get our own measure of confidence at 9 55 a. M. Courtesy of the university of michigan. Oute got kb homes coming and eu leaders are gathering in brussels talking about russian tensions. Its back and forth with the russian sanctions. There have literally been three round trips of discussions. There are important discussions going on. Hans nichols is over there and we will check in with him later. Secretary of state john kerry is in saudi arabia. Thats an important meeting. Will get the weekend started. Lets get a data check. At4 and the two year yield is moving lower. Is churning. Ar address the geopolitics of oil in iraq in this hour. 11. 63. The weaker dollar is confounding the dollar bulls. Lets look at the 10 year yield as the litmus for the Financial System. This is arbitrary, 2. 5 . Down,e last year, we come we come down and you wonder in the last couple of days if we finally break through to new lower yields. All of that is hinged on Economic Data and what the fed will do. Is that sitting on resistance . That its about to sit on support. Very good, there is some Technical Analysis from adam johnson. And wehe papers scoured the papers. Outhe big banks are pulling of the barclays dark pool trading venue which is the second a guest secondbiggest. Attorneyafter new york general Eric Schneiderman filed a lawsuit against barclays claiming that barclays lie to clients about highfrequency trading in that dark pool. Is pledgingarclays to conduct an urgent investigation. I saw a conversation with arthur levitt, the former chairman of the sec. He did not mince words. He said any attorney general in their actions has a political tinge. That was his exact language. He did not take a shot at schneiderman. He took a shot at the office of attorney general. Therein. E goingson undertonehis other that we were talking about yesterday which is how curious that would keep going after nonus banks. Paribas, archelaus barclays. The european banks run the bigger dark pools. Can barclays do business within the star call if these other banks pull out . Barclays shares are rising after a fiveday decline. Our second big frontpage story is a big win for the nyse and a loss for the nasdaq. Alibaba list on the New York Stock Exchange. It is likely to be the largest ipo ever with an estimate of value of 168 billion. It would make it the thirdlargest tech company on the nyse. Is this a loss for the nasdaq . Yes, the nasdaq was where all the Tech Companies went. Problem. Had a did you get your shares . You got like 10,000 shares. Yeah, i got zero shares. A great conversation with robert nardelli, the former ceo of home depot. That the nyseters got this listing. Its weird to be on the floor of the stock exchange. The stockrted on exchange, there were many people down there and now it is much less. People were so is he people were so busy that you bumped into the inkwells. The president is asking congress for half 1 billion to train and arm moderate rebels in syria to help rein in sunni extremists because the fighting has spilled over from iraq. The president has been criticized for not doing enough. The question is whether any kind of arms or weapons could end up in the wrong hands. We have seen this happen before. Think about the other side of this that yesterday we read that Nouri Almaliki, the primus or of iraq which and there he is an ally of the united states, is welcoming help from the Syrian Government in the form of airstrikes to fight against the sunni insurgents. All of a sudden, the sunni government we oppose and might be fighting against visit shifting alliances or being opportunistic . It is up for debate. Those are your front page stories. M it is aess. Expect the unexpected. We are now two weeks on from the collapse of normalcy in iraq with brent crude at 109 and that is now 114 dollars. The administration reversed years andrereversed gears and decided to fund moderate level that rebels in syria moderate rebels in syria. A clue where iraq will be in five days or 10 days . I dont think anybody does. Everything changes so quickly. Two weeks ago, we sought isis storm out of nowhere and take over major cities and we saw expectations the battle would be brought to baghdad and they stalled out and now we see iran and syria getting in on this. It is hard to imagine where we will go next. They talk about destroyed borders. Of newframe the idea borders drawn across this . Ever since the syria conflict started, the borders in the middle east have been weakened between the kurds establishing your claim on new states in iraq and the sunnis are trying to do the same. Are the saudis the elephant in the room . They have so much power and force within the sunniislam that they will call the shots eventually . Isis is not just a saudi puppet. They will do what they want. The saudis are afraid of they pull their support now, it will backfire on them. Lets bring in lisa abramowitz. When you talk to people and the bond market, are they talking about the backandforth tensions in iraq . Relegated toly geopolitical risk. Dont understand why it isnt in the forefront of their minds. It feels like a disaster. It feels like there is a lot of moving pieces that could potentially broke does blow but embroil the countries in the region. The bond market is fixated on what the fed says which means Interest Rates will stay longer lower for longer. They are still funneling money into the Financial System and thats all people are focused on. Pollack has been open for a lot of criticism. What will you listen for on the sunday talk shows . There will be so much anger looking back and accusations. What do you actually listen for among the chattering heads . You have to look for concrete steps we will do in the future. The key is coalitions and alliances and how we will put together a Political Group that can fight isis and also keep iraq from splintering. What Nouri Almaliki doesnt tuesday will be important. Does on tuesday will it be important. We have an amazing nonconsensus bond call for the six months of the year. Have you ever seen the bond troops be this wrong . Everyone is. Think about the comments we got out of the Credit Suisse ira jersey said we have all been wrong on bonds. All the banks are admitting it. They are lowering their forecast for yields year and then increasing their forecast for returns on Investment Grade bonds. Is today june 27 we are almost at the end of the first half. Children dont get out of school until july 20. Yesterday was the last day of school. European leaders are meeting and on their agenda is the turmoil in ukraine. Will there be more sanctions on russia . We will go live to brussels for the latest. This is bloomberg surveillance , on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Good friday morning. Coming up later on Bloomberg Television, timothy armstrong, the chief executive officer of aol at 8 a. M. This morning with the loop. Looked on the future of an upanddown company. York, this is bloomberg surveillance ergo in a europe, eu leaders are meeting in brussels today. There to do list is pretty long but they want to find out who can run the eu as a commissioner. Hes the wrong person. He has been at the heart of the project to increase the power brussels and induce the power of nationstates are his entire working life and is not the right person to take this forward. Theot the person to take Organization Forward hans nichols joins us from brussels with more. There is a divide between the u. K. And the rest of the eu. It is the u. K. At risk of leaving eu membership . Its going to be increasingly difficult for David Camerons government to make the case that the u. K. Needs to stay in the eu in part because of these attacks on junger. You heard the sanitized version and all the british papers this morning have allegations that a probleme junger has with drinking and wants to turn smoking rooms here inside the ou so he can continue smoking. It has shifted her a policy argument to one that is personal and quite nasty. Im sure you will agree with me on the irony of this. Arent british Prime Minister supposed to drink . Before breakfast isnt that what Winston Churchill . Said emphasis. Is confused its positively. Adam johnson starts every show with cognac. I do start with a double espresso accepted a because i woke up late. T its factually incorrect because i believe adam starts with armagnac not cognac. That has been corrected. Does the United Kingdom or to what extent does it lead or follow the eu agenda . They want to influence it but they are having a difficult time. David cameron is in a predicament at home and being attacked by the right for being too close to europe. He has always said that he can have more implements inside the eu and the u. K. Can be better reforming it from within them without area of the problem with that argument is is more difficult to make when privately and publicly you have been very critical of this man, primelaude junger, former minister of luxembourg and he will now be the face of the eu. In my conversation with Christine Lagarde 10 days ago, the french seem to be involved in the calculus. Who are the alternatives to mr. Juncker the alternative was a socialist, Martin Schultz who was the had left of center candidate but he lost his party came in second place. This process never got far along so that there could be an alternative candidate. Both sides dug in. Angela merkel was initially open to a different candidate but she dug in on supporting juncker even though privately they dont have a great rapport. You have this giant proxy fight whot Jeanclaude Juncker was a Prime Minister for 18 years and left in a scandal not of his doing and is the Prime Minister of a country with half a Million People and thats with the big fight is about. You can see both sides marshaling their forces and having a fight over someone other than him. Now we happen to have all the stories about his drinking and his wine closet and the smoking. There are old phone booths that have been converted into smoking lounges all around here. I will save them for you. Thank you so much. Silly but to europe is it is important. It is, if only to guide the conversation. Weve got more coming up on surveillance, including the tle willfounder of chipo join us. Our twitter question of the day is this is bloomberg surveillance. Good morning, everyone. Futures are 4 and dow futures are negative five. Of ukrainians are fleeing their country hoping to find safety in russia. They are crossing the border and those living say they fear their children are not safe and they will never return, they say. The ceasefire did little to stop the fighting between prolet prorebels and the government. President obama hopes to train and equip writers who want to bring down theassad regime. Half 1king for billion. Is bringing back its bestselling cars for repairs. 29,000 chevy cruze models are being recalled. The airbags had defects. Recalled plenty of cars based on the ignition switch problem. It reportedly caused 13 deaths. What has not been recalled . A 66 corvette . Its way over 20 million. Barraf that is mary getting ahead of that and just saying they are going to recall any car that had a problem. After that a live set demo down with dan sat gilbert about his one Million Dollar investment in real estate we have over 1 billion invested in real estate that is in technology and existing billions that buildings and new construction. Inre is 100 occupancy downtown admit 10 nine young people cannot find a place. So far, he has invested more than 1. 5 billion in detroit. Budget wasannual 1. 2 billion in 2013. He owned to the Cleveland Cavaliers. He also owns quicken loans. He is a selfmade entrepreneur kind of guy. There is a curious distinction within detroit. The downtown area around the Renaissance Center and the hotels is beautiful and clean and its busy. There are people in detroit that are productive. Large parts of the city are not that way but its not all bad. Market ando the bond you buy detroit or california at the bottom. Lisa abramowitz is with us. Muni bonds of the story of the year, arent they . Thats right, people are looking for yield anywhere. This is where people are nervous about them for a number of years. Now they are piling in and seeing value their. They still offer some yields. I know you are not on speaking terms with a structured loan people but you do say to the meniscal bond people. They are doing amazingly. If you look at Corporate Bond funds, they are moving into munis. Its a place that seems to have value. What you get a jump on puerto rico like cathy burton . Its amazing to me that you have 200 traders and hedge Fund Entrepreneurs moving to puerto rico to avoid taxes. We heard from the governor no said if we just give them taxes in puerto rico, they can move their. Then they are raising taxes within puerto rico for the middle class. Whats going on . We will be right back with more on bloomberg surveillance. Good morning to you on this friday morning. Is the end of june in new york. 80s today from the but a beautiful photograph downtown of the metlife building and Grand Central station and the empire state building. We welcome you worldwide, bloomberg surveillance, thank you for watching us across america and worldwide. I am tom keene. Nike is reporting an increase in quarterly profits. Results were slightly better than analysts anticipated. They credit strong sales of apparel and footwear in western europe. 777ng is finding out its airline is hurting sales of its own cargo jet. The passenger plane has a large Cargo Capacity synthetics another Delivery Companies are shifting shipments to the hold of the airliners. One broker says he has not sold a widebody jet in years. Philip morris wants to take advantage of the ecigarette trend. They are developing a product that heats tobacco instead of burning it. It will debut later this year with plans to add more markets next year. Unlike ecigarettes, heat sticks contain real tobacco. Lets do a data check. Usually friday is a little slow. The 10 year yield is 2. 5 . That is a real backdrop. Lets look at the geopolitics of iraq and what it means for oil and americas future. , the middle east has always been about oil. Isre is the prize that oil regional politics that would make International Politics week. The middle east is complicated. I have to admit that i try to keep my eyes glazed over. If i look at the great divide of sunni and shia in iran, which part of sunni are you most focused on . We are focused on their internal competition with Different Countries backing different extremist sunni groups fighting assad. The saudis have stepped up and supported isis and will they continue to do that or will the sunnis back off of that and go for regional stability . This is a chart from eight or nine years ago. Of light. R there is the nonmovement in the 50s and 60s and the opec collapsed in 1986 and the persian gulf war and up we go with the grand boom. We are focused on oil in the grand debate. Is the rest of the middle east focused on not . I think they are but we have not seen prices go up further because the fighting has stayed away from the southern part of iraq were most of the oil fields are. If this continues further and becomes a regional secretary of war in iran and syria fighting with the shias in iraq, we will see much higher prices i think. Saudi arabia is the largest producer in the region, the largest in the world. Is theren, shiite any chance that iran and saudi arabia come together for the betterment of the region . That is hard to imagine. The u. S. And soviet union. Theyre locked in a struggle of dominance and that extends to oil. Saudi arabia produces more so they want to see stable prices and people hooked on oil. Iran exports less and they want to see higher prices so they can fill their coffers. There is a Different Energy strategy between those two. In other words, what we are seeing withisisl is this is an extremist sunni group that wants to eradicate shiites. Can you bridge this 800yearold gap between them i think you can. They have picked up a disaffection between the iraq sunnis who feel they are not represented. What about israel . What kind of role is it playing . It is taking a step back and has clear priorities in terms of protecting its homeland. It seems if it seems weapons in syria, it will take action but it is watching the two major foes fight it out. This initiative by the president to supply 500 million of weapons that help the syrian the president ,f could that draw israel in . The bigger question is who will bes rebels be fighting . Will they fight assad or isis and is that a priority . Do we have an informed Foreign Policy . Making adople who are hoc decisions actually listen to people like you at the council of Foreign Relations or brookings . Do they Pay Attention . Everyone listens to me. Seriously, do they Pay Attention to what pros say . I think they do but the problem is so complex and you also have Public Opinion which is divided. The American People said they dont want to go into iraq and the president s Approval Ratings are plummeting because