The United States have. Mposed extra sanctions we will be discussing the possibility of further sections on some of the Syrian Military figures and on some of the Russian Military figures who ine been involved coordinating the Syrian Military efforts. Johnson has canceled a planned trip to moscow over the conflict. It russians call the decision to cancel absurd. Egypt, the president is ramping up the fight against terrorism after deadly bombings at two christian churches. ,t least 43 people were killed the Islamic State claimed responsibility. A threemonth state of emergency in a new antiterror unit with sweeping powers. Global news 24 hours a day powered by 2600 journalists and analysts in over 120 countries. This is bloomberg. Live from bloomberg world headquarters, im vonnie quinn. Max im joe weisenthal. U. S. Stocks are trying to hang onto small gains. Joe the question is, whatd you miss . Vonnie investors looking for forward guidance. Livell take the remarks from the university of michigan at 4 p. M. A fourway race in france. Withing up with republican less than two weeks before voting begins. A major player in energy, the deputy minister opens up to bloomberg about the nations Oil Development deals. Stay tuned for that exclusive interview. Lets look at where the major averages and. It julie hyman is standing by. The major averages hanging on to gains. We have seen a little bit of bouncing between gains and losses today. We see a balancing act between Energy Shares which are going higher and financials which are turning a little bit lower. Many of the individual components are going throughout the session. Decline,st percentage they are all lower. In a Morgan StanleysBetsy Graseck said the forced quarter earnings are going to be a bumpy ride. Slower loanbout growth as well as originations and the reason why. We have three of the big banks kicking things off. That, theport on markets blog. It may have been getting cheaper. Here is an index ratio of the pricetoearnings ratio versus the s p 500. Goes, the cheaper u. S. Banks are versus the broader s p 500. We have seen a drop in the past couple of weeks ago in into earnings season. It coincided with the slowing of the reflation trade that has been in effect since the election. This chart goes back to october and comes from and why here. Which isar breakevens a market reflection of Inflation Expectations in the tent to five year treasury yield spread, both have been trending lower and about the lowest we have seen this year. Market, coming back to the banks, not necessarily good news for earnings outlook. It will be interesting to see what the banks have the say. Not just about last quarter, but the outlook as well. Joe we will stay on that team. The cio of the loophole Group Join Us to talk about a key piece of hard data for equity. Hes in minneapolis. Julie there was talking about some of these postelection reflation moves that we saw fading. High in early march and they have been doing nothing since then. What will break us out of this . Ery quiet slumber us market goodink you will get very First Quarter earnings. And they were really good. More back up to operating margin at the s p 500 of 9. 2 . That is with the major sector. Energy very depressed. There have only been a handful of quarters that have been higher than that. I think it will be stronger in the First Quarter. I think a stronger earnings, the technical position is very strong. Virtually every important bellwether group and sector and index probably other than the utility stocks join the s p 500 at the latest high. We just dont see any signs of the traditional distribution that normally accompanies an important bull market top. Distribution that process has even started. We have a chart from Goldman Sachs pointing out that negative earnings revisions in 2017 are really impressive. Earnings so far, they always get revised down throughout the year. Is this really the key thing to watch . We talk about the hard data, the soft data, fiscal policy, geo policy, uncertainty. Should we just focus on this line to sort of explain everything . Think earnings are going to be ok. Not great this year like some of the bulls are arguing. Mentioned, there is the broad market strength that is very bullish. And i also think what may overwhelm a weaker or middleoftheroad earnings performance is just a return in confidence. Rate think, you know, rises historically, when you get three of them. Three steps and the stumble has been negative for the market. When you are coming from crisis levels, i think a return of shortterm rates to more of the normal level. Getting to one handle here on shortterm treasury instills confidence in economic players. I know that you are dividing the year and to have, on that front, the bull market to keep going until the midpart of the year. Weird you stand now . The bloomberg shows us high data versus low stocks. Is thatferred crowded trade . Is that played out . Think it is crowded now but in hindsight, it probably was at yearend. The energy work has faded. It would not recommend overweight currently. With tech and financial at the top of that list, it is appealing a relative valuation. The lowball marking time here moving sideways, it is still very expensive. The high dividend trade, the bond like stock appeal. They are historically very inflated multiples. I would continue to avoid the low volatility areas. What do you like about tack . What parts of tech and why . Summer in that high beta sector, for example. Conductors. Semi they also rate attractive. We dont on them because we have a big enough position on what the Semi Conductor manufacturer is themselves. But they look very appealing. Tech right now is the number two ranked sector right behind financials with a lot of attractively rated industry groups. Of groupsa number that rate very highly. So i think it is reasonable valuations and the earnings are really coming through. The high margins, the margins and technology are just extraordinary and look to be on the rise. Many are saying that the grateful market and bond is over. But we have a chart in the terminal that suggest maybe its not. The is 5215, a chart of long haul showing a very strong downtrend. Suggesting we could see yields drop in the 10year go back to low 2 . Would you think about what that would mean for the markets . Oh would not completely rule that out over the next number of months. We had a book of economic surprises over lead overlaid with 10 year bond yields. They have run at an extremely high level. Suggesting the economy drop, would were to it be on some sort of economic surprise or some sort of volatility risk off of them . Or do they go handinhand . Rate of change in the economic surprises has been so off the chart. It might just be that we go through two or three months where the numbers just come in in line. Albeit at higher growth levels. It might prove to be a little bit of a disappointment. Shortterm, i would not be surprised to see a little bit of a bond rally. 2 would be a stretch. Is view on the secular trend that you are not really going to get a definitive break in yields than after weve had the next longterm. I think we certainly havent made a formal for past forecast. We could be looking at the end of the cycle. Early 2019, you can be talking about entering into a u. S. Recession. Joe we will be talking to you. On bloomberg,ow blackstone ceo steve schwarzman, speaking with david westin after meeting with President Trump and other ceos. That interview at noon tomorrow. Coming up, mexicos Deputy Energy minister says there is a lot of interest for Deepwater Oil and Shale Exploration in the gulf of mexico. We will hear from him next. This is bloomberg. Joe a deepwater shale option will be taking place this december and investors want to know where exploration stands in the gulf of mexico. The policy correspondent set down with the mexican Deputy Energy minister and asked whether this option will be the biggest ever. It might be. It depends. A we did was, for the first time, what we have for upcoming options. What were asking the industry is to nominate in three months, those blocks or areas where we think it has more potential. It might be interested in that information. We will decide which will be going for auction in december in the deep waters and the onshore unconventional areas. Youhat kind of reaction are getting in the reception so far . It is very good. We went to the innovation phase the last year and a half. The first round of bids for various types of blocks. These were smaller bits and we were proving our infrastructure and processes and regulation as we were moving along. We can go from innovation to standardization. Setting up a process that is streamlined with contract that are well understood. We will continue improving as we move along. But for now, this type of process, we can begin thinking about scaling up our own activity. Michael given the interest you have gotten so far of the more than 500 walks, how many do you think are drawing serious interest . At nine. F of them are our blocks in the deep and shallow waters, the other half are onshore. Inreceive a lot of interest the shallow and deep waters, proceeding Significant Interest in the potential. For unconventional blocks or blocks of unconventional resources. A new game, there is a lot of resources to exploit. We hope that the enthusiasm is reflected in the coming rounds. People contacting you, the majors, are you seeing interest . Aldo from all sides. They, medium, all companies. From asia, from europe. Aboutst combined brought 50 billion in potential investments for these new projects. It will be executed throughout the lifecycle of the project. And we expect more to come along. This was just the beginning. Another were going to phase two with a lot of resources. In the nomination process, we expect to have as much enthusiasm as we can. Michael are you getting as much enthusiasm as from north america . Are the chinese interested . Aldo the bidding round for the deepwater in december a Chinese Company won two blocks. We have a Malaysian Company participating. We have the european majors and the north american majors. All of them are willing to participate in what we believe is a very exciting new energy model. Flores quias aldo roga. Joe the first round of residential elections is nearing and the race is heating up. Lets open up. The far left candidate made a little bit of a rebound. Joe thats right. We have been talking about the three main candidates. The polling that redline, its kind of appropriate for the far left guy. He is surging and up to 18 . People are starting to wonder if they figured to be le pen versus the mainstream candidate or it may be le pen versus the far left. Abigail we are seeing that in the american markets, the highest levels of the year and another piece of uncertainty here. An unknown. The french german spread widening. Vonnie and selling french bonds now because if we get the base case, that the threads are going to move up. Joe interesting. Abigail janet yellen speaks of the university of michigan today and we will bring that to you live on Bloomberg Television and radio. This is bloomberg. Joe what did you miss . Fed chair janet yellen is expected to field questions at the university of michigan today and about seven minutes. The event appears to be oriented towards broad, big picture scenes. And the specifics of nearterm policy. Ahead of this today, lets bring in a chief economist for bloomberg intelligence. What would you ask the fed chair today . You have to ask questions very carefully. They wont give you a good answer. But i would try to pick around the edges to see if there was any sense of buyers remorse. They brought everyone on board for the right move. Close, theyre forecasting about 1. 3 . It seems like real weak Economic Growth for the fed to be tightening in that quarter. On top of that, we get fridays jobs report. Abigail one of them is 7652, there is pessimism and optimism. It shows the difference between goods and services. This would be the followup question. They are letting inflation run above the feds target. We see the orange line, the Service Sector prices in the cpi. The white line being goods prices. We see this huge divergence between the two. Now that the dollar is stabilizing, there are signs that inflation would be perking up. Even if Service Inflation justnues to move sideways, the absence of good sector deflation will mean that overall inflation reset to a higher level. And we have to know at the appetite is for that to occur. The inflations on theme. Core good cpi versus isn manufacturing. What manufacturers have to pay for their own cause. What is useful about looking at this . We just did the two lines for a bit of a lag. It tends to leave core good inflation. You can see what has happened over the last couple of months. Deflation it has gotten used to over the last three or four years. Abigail what on earth gave you the idea that the fed has buyers are more to even though we see better labor market data that is one of the two parts of the mandate . Was at the donnelly, . The donnelly comment . It is wavering and given the gdp numbers that are for the First Quarter, i think she will dismiss it as the usual noise and q1 weakness. There is a sense of concern on the periphery. Thank you so much. Chief u. S. Economist for bloomberg intelligence. Market close is next. The major averages are slightly toher, trying to hang on very small gains. This is bloomberg. Vonnie we are moments away from the closing bell. Stocks closing in a tight range today. Investors awaiting Janet Yellens remarks from the university of Michigan School of Public Policy. Any minute now. The dow closing unchanged. Am joe weisenthal. Viewers onour twitter, following closing bell coverage. Vonnie we had a little bit of everything. Lets hop into the bloomberg and see what happened with individual movers, looking at the nasdaq 100 or andy index. This is member rate returns. Another 1. 3 , hitting record high. Down in the bottom, some ship chip losers. Taking a closer look at tesla, tesla once again higher. The stock really on fire in a big way this year. Growth investors will not want to miss out on tesla. Higher following a trucking merger. E also have seagate a little higher earlier, but still finishing in the top 10. On the bottom of the board, some chip stocks lower, including micron. It appears there are some bearish comments on nonpricing. Something that could be a little bit of a correction in that pricing. Joe lets take a look at the Government Bond market. Guilds ended lower today. A very interesting action. We saw modest gains in equities. Also, people buying bonds with yields lower. Attack,ake of the syria and also the mediocre jobs report, we briefly what both went below. 2 . Check out the french twoyear yield. We were talking about this in the block before, more concerned about the french election, now of for wait race with the leftleaning candidate joining the pack. No one knows what will happen there. Negative territory for france. A look atm taking currencies today. Obviously, a big week, geopolitically speaking. If you take a look at g20, you the currencies, interesting countries. Look at the rand, erasing all of its gains from last year already. All week, seeing in a race gains from last year. The south korean yuan dropping as well. A similar thing happening in yields. The russian fiveyear, you see, selling with the yield higher up seven basis points. The ruble losing as well. Lets move on to some of the in pairs. Ency crosses looking at the dollar index, this is the bloomberg dollar index. Again, a wide friday of currencies. It is putting in some gains as well. This one week gain is a good half percent. Jobsis ahead of the report. Also, the moderating from the fed and the fed speakers. The dollaryen, a little weakness today, but not Much Movement over all. The euro has reversed. Again, taking a look at the randu. S. Dollar, a little stronger. Joe finally, look look at lets look at commodities. Back over 53 per barrel. March ine big dip in oil. That has been completely a race. We are at the 5250 three dollar range. Some optimism over opec cuts. Inn prices were falling march, everybody was like, that is not going to cut it enough. Now it has flipped over, the story. Gold modestly lower today. Not a ton of action. E see iron ore weak iron ore being clobbered. Lots of concerns on the demand side and also the supplyside coming out of brazil, australia. That is an interesting indicator. Those are todays market minutes. We want to remind you that we will be going to ann arbor, michigan in just a few minutes went fed chair janet yellen begins speaking of the you restate michigan ford school of Public Policy. There is a live look at the auditorium there. We are waiting for her to come on. Vonnie now, lets take deepil now, lets take a dive into the bloomberg. I really want to take a look at volatility. The vix today hitting a level not seen since 2016. We have looked at this chart a lot in the past. In white, the s p 500. We see how they tend to trade in inverse action. Big spikes, stocks fall. Something similar to a lesser degree around brexit. Look at the map of divergence that we have been having for weeks, months between the vix and the s p 500. Markets completely complacent. Being here on set, i cannot resist but to draw a trend line, which will basically be right here. Something important has developed today. We have the vix breaking the bottom area of complacency of. We could see this entire bottom area break on the upside. We could see stocks drop lower. What the evidence will be, who knows. So much uncertainty out there. Lots of macro risks, so to speak. Trende always like when a breaks, so to speak. We have yellen coming up. Here is some good news from the. Ank of Federal Reserve