Lows with the indexes off by at least. 10 . The dow pretty much little changed. Last week we saw the s p 500 rebound from a sevenweek low. We are having nasdaq dont difficulty gaining any kind of traction without the catalyst of earnings anywhere. Alix the stocks you would think would selloff, you will see an Interest Rate rollover. Volume was light, all by double digits at this point in the trading day. Up not even. 10 , the smallest range in exactly a year. Was the last day summit move this little in a trading session. A couple of the big movers, the materials sector led the way today. Stories, months and so monsanto had a big move on the buyout announced today. The deal on oci is not going to , investors like the idea that they will not be putting that cash out there to make the deal happen. The stock got a little bit of a boost as a result. In the bond market you did see the two year yield into its way little higher, the 10 year yield relatively unchanged. That pattern remaining today. Eal action was over in greece take a look at the 10 year yield for greece, its now at its lowest level since november. Lawmakers approved additional austerity measures to try to unlock the bailout fund. We saw that reflected in the bond market. Scarlet the dollar slightly lower. The pound was in focus today because were one month away from takerakes it scheduled to placed on june 23. Were looking at the measure of the Options Market in one months time for the town. Its at its highest since going all the way back to be wary. Think at a twoyear low. Imports into china were down 49 in a and 10 also down. China did by a lot of nickel but it was not able to shake off the downtrend from its peers. It worries me when we see that unable tos participate in any kind of rally. That is a warning sign to me. Scarlet lets take a deep dive into the bloomberg. Alix im looking at the price difference between brent trading now and that in one month. When it goes into positive territory, that means the price right now is more expensive which implies a tighter market. Itn you go below this level implies more oversupplied because prices now are weaker. Does this chart make any sense . You have almost 4 billion barrels a day of supply, twice the average yet you do not see tighter prices today versus next month. That is a big question in the markets. Why is that, or people not paying attention, or is there so much oversupplied at the out just cannot soak it up . Scarlet people cant get over the fact that the outages will have a material effect. Im taking a look at financials. Up as it has goes , theres that 16 move straight up, that means financials are out arming the s p 500. Last week we had better than expected economic data. It prompted investors to reprice for increases in that will be good news for Financial Companies whether they, big brokerages, or insurance companies. A lot of stuff still need to resolve with those be cap financials. Im looking at whats going on in the m a space. Themes,at one of these shareholder friendly activities are showing signs of slowing of what this year. , so far thiss here back to 2008 you can see a huge jump last year in 2015. Now those deals are falling apart due to regulatory concerns , due to prices getting a little elevated in some of the companies you have the white line showing the number of deals down this year. The First Quarter the slowest going back to the First Quarter 2014. The question is whether or not these things cause slower Dividend Growth and if it will have a negative impact on stock. Its a bearish sign in the market scarlet . Scarlet you can see all these charts and more on twitter. Lix lets bring in our guest michael, good to see you. You were with us in late march and you said you were worried about credit risk, but that seems to have eased a little bit. What are you worried about now . Michael looking in the months ahead, i think we are shifting to a situation that people will be concerned about. Weve moved a tremendous amount of money into the long end of the yield curve. Its a relative value story. I think weve got to the point 2016 it in mid to late will start to be an issue. I think we will see steepening yield curves globally and investors understanding the battle against deflation has largely been one in the developed world. Scarlet youre looking at the cleveland median and the atlanta fed. Thats where youre seeing the risk, not taking into account that things are getting better. There are two kinds of inflation statistics, the kind that shoot up and down and then theres the much less cyclical numbers. Cleveland atlanta fed have a couple of measures, both somewhere between 2. 5 in three percent. Thats almost exactly where the 30 year yield is. Its abnormal to have the long enough the u. S. Yield curve and this sticky inflation in the same year. The only other time it happened was in 2008 when the Financial Market were hike had our first rate last year and treasury yield has come down even though this been hawkish speak lately. What is going to make those yields jump up if we have negative Interest Rates around the world and all these other nonus related influences keeping the yield low . It would have to be a global phenomenon. Times in thisew long, messy cycle that the yield curve come down and move back up. The most obvious reason would the affirming of Global Energy andrices, food. That would make global inflation metrics look a lot stronger than they are today. If you have a global move away from the overarching on the long edge of the curve. U. S. Other developed countries have things beyond 30 years. Should the treasury be looking into Something Like that . Michael i read your story this morning, the treasury makes a good point, is there a smaller amount of demand for the 50 or 100 year u. S. Bond . Im sure the market would buy it. Its not going to have a significant influence on the total cost in the united states. People inng a lot of the equity market have been talking about is the idea that environment. Ard i have a chart that looks at standard deviation quarterly going back a couple of years. Weve seen some variation among returns but in the First Quarter we know it was a difficult time for Fund Managers across the board to go in and find the stocks they want. What makes it so difficult even now there is more opportunity . Leadership within the s p 500 has switched without warning three or four times over the last couple of years. Our guess is that leadership is about to switch again. If theres been one thing thats the right thing to do over the last couple of years is to have looked at what has really worked and realizes not going to work going forward. The safe stuff. The money really poured into utilities, staples. Possibleanks are one beneficiary and the materials sector is the other. Theyre starting to do a little better against the index even on days you wouldnt expect it. Where at some point do you think the money will end up flowing into . Back towardt goes some kind of economic sensitivity. In the sense that inflation is normalizing. Its not going higher but it will go to normal levels. Alix michael, good to see you. Scarlet coming up, venezuela on the brink. It has more poverty than brazil and more money than saudi arabia. Mark its time for first word news. Republicans are following the president ial election much more closely than democrats, according to a new gallup pole. Sayy half of republicans theyre following the election news very closely, but only 39 of democrats answered the same way. The irs commissioner plans to skip tomorrows house impeachment committee. Fire by some republican lawmakers for allegedly failing to cooperate with an investigation after the irs reportedly targeted conservative groups. Benjamin netanyahu is again Opposition Leader into his coalition saying a partnership could lead to a peace agreement, but he says the doors close, citing the earlier education to hardliners. Accused netanyahu of backing away from the Peace Process and being a hostage to political extremists. A Veterans Group says an american held by japan during World War Two will accompany president obama to her roast them at this week, but the white house said to hiroshima this week but the white house said no such imitation was issued. Local news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. Back to you. Alix venezuela could be the next catalyst to rock oil markets. The countrys economic prospects are at risk. We ask an Energy Economists what can happen to Venezuela Oil production if its economy continues to spiral out of control. I think venezuela could go all the way to zero. It is just falling apart. They dont have any investment. Of that is not priced into the market right now. Lets not at all. Alix joining us is that the director of latin american development. Is a lot of debate on whether venezuela were really give up Oil Production because they need to keep pumping for the cash flow. What do you think . Experiencingis worsening economic, social, and political problems, but oil is the governments lifeline. It accounts for 96 of the governments foreign exchange. The government will do everything in its power to make sure oil keeps pumping. The government is experiencing serious cash flow constraints, problems with Service Providers and financing. Were seeing some decline in production this year that we think will continue. Do you think it will go to zero . It would have to be a real political crisis driven by a social explosion, chaos in the streets, that leads to a more significant disruption in output. I dont see a scenario where it collapses entirely. We could see the staterun oil Company Becoming a bargaining chip during negotiations between the countrys various stakeholders, or you could see in a maybe violent scenario when there are massive protests and lyrical uncertainty that its partners and workers just stop showing up to work. Capitald have human issues, potentially strikes causing a disruption in output. But scenario will really be the catalyst to watch. I was talking about the time spreads and how they are not factoring into the disruption. There are so many questions surrounding the direction of oil , and one thing weve looked at, you mention cash flow. There was an article today about how it starting to have an with economic factors. Cocacola saying it cannot produce there because theres not enough cash coming in. The question now is what is the next chip to fall. If the government has upon payment coming up, is that going to determine the direction that things go here . Has provenrnment extremely willing to service its international debt, more so than the commercial debt it had with Companies Like cocacola, which is one reason we see companies locally and venezuela scaling back production. Theyre facing serious scarcity in terms of the goods to keep production going and in terms of debt the government owes them. In terms of International Bondholders the government has continued to prioritize those payment due to concerns about the impact the assault would have and the governments ability to maintain the cash flow. We think the government will continue to do everything in its power to service that debt. Theres a lot do in the fourth in terms ofhis year the Debt Service Schedule but the government is going to continue to aggressively imports and deplete reserves to meet those commitments. In 2016 . So no default i think it is contingent on where social dynamics head here, much like the destruction scenario i was outlining. The first couple of months of the year and five have contracted by 42 imports have contracted. The population is bearing the brunt of this adjustment in terms of rising goods scarcity. So far social conditions are becoming more tense, people are obviously of that, but we dont see massive protest involving the governments base of support which will be key in for them to rethink the strategy. If social conditions hold out we dont have that social explosion scenario and they continue to make payments and get through this year, but if they do see more coordinated unrest coming from their base of support, then they will reexamine their Debt Service Commitment and think about imports over debt service. We just saw a great chart looking at the misery index of venezuela and how bad it is compared to other areas like ukraine or russia. What happens to venezuela is loyal if oil stays below 50 . Its going to be tough. The country needs a shift in the economic model. The president has chosen not to do any sort of economic adjustment since he assumed office in 2013. Doesnt change the scenario . Venezuelasoint, oil basket is up to 37 and that feels better to the government and 25 which is where it was in the first order. Current Oil Price Environment is providing them with a little bit of relief relative to where they were. Lower oil prices exacerbate discontent. You still have deep structural problems in the economy that someone needs to address. The government has a little bit more risk to maneuver than they did earlier this year. Fertility rates inches to the highest since the mid90s. We have a chart that you cant miss, next. Scarlet japans fertility rate, we know that demographic changes happen very slowly. , but it hasdged risen ever so slightly. They are now at the highest since 1994. On average, the average woman in japan in 25th team was estimated to have 1. 46 children during her childbearing years. They want to get the average up to 1. 8. No amount of yen devaluation is going to help that situation. Scarlet they credit the slight increase to the better economy in 2012 and 2013. That is the Health Ministries ask for nation. Im following my theme of the day which is why is oil not reflecting the tightening apply market with all the outages. One possible theory, the blue line is the oil price and the white line is iranian production. What is more important are the orange bars in the second half of the graph. That is how much more production iran has added in the last few months. 294,000 to 650,000 barrels a day in three months. That is unreal. Its now its highs level since presanctions production. If that continues, you can argue thats why youre not seeing a lot of pressure, but can they ,eep pumping without cash without big oil coming in at putting money into wealth, literally. There are so many conflicting signs, its hard to get a grasp on something so global. If joe here all would have an unsecure commodity somewhere. , not a the midcap index group of stocks that people talk about a lot. Thisteresting trend so far year, if you look at 2016 onwards, a strong rally in the midcap index. His is outperforming the s p so for your to date it did not fall as much since february 11 it has been rewritten rebounding even more. Smaller starts going in the direction of larger indexes. What its about, if you drill down into the actual ratings of the index, midcaps have a pretty big waiting in financials, 27 compared to the s ps 16 . S p financials are not doing that great. They dont have Capital Markets of business that have come under a strain recently. You would think they would be more reliant on Energy Margins but the story has been largely about the Capital Market problems they have encountered. Scarlet great stuff, a forgotten group. Coming up, approach European Union candidate just barely eke out a victory over his rival in austria. We will have the latest from there. Okay, ready . Whoa [ explosion ] nothing should get in the way of the things you love. Get americas fastest internet. Only from xfinity. Mark her month senator Bernie Sanders will have major input in the Democratic Party platform vermont senator Bernie Sanders will have major input in the Democratic Party platform. He has selected five members for the committee that writes the platform. Sixary clinton has selected members. The Party Chairperson selects the final four. The board has decided not to hear an appeal from former illinois governor rod blog lawyer which. Rod blagojevich. Freddie gray died after being injured while in police custody. A judge found officer edward nero not guilty of misconduct in office and reckless endangerment. The other officers will have separate trials over the coming months. President obama has ended one of the last symbols of wartime animosity between vietnam and the united states. The president , lifted the embargo on weapons sales to the country. Mr. Obama this change will ensure that the unum has access to the equipment it needs to defend itself, and removes a lingering vestige that has access to the equipment needs to defend itself, and removes a lingering vestige of the cold war. It improves strong ties with vietnam in the region for the longterm. Mark the improvement in relations is being driven by mutual concerns over chinas influence in the region. Global news on a four hours a day powered by 2400 journalists 24 hours a day powered by 2400 journalists in 150 news bureaus around the world. Betty breaking news tudor investment, the firm run by a Billionaire Hedge Fund investor, is going to cut fees on some funds to keep investors on board. Its fees are among the highest in the industry. The at your investment, fees will now go down to 2. 25 , the fees willt now go down to 2. 25 of assets. Alix amazing. Betty this was according to a letter sent to clients that we obtained. Alix so basically, we will cut it, but still be above the industry average. Amazing. We want to do a quick wrapup on the markets. A relatively quiet day. Now off by about eight points. S p off by four. Dow off by about eight point, s p off by four. Telecom and Health Care Fell the