tv Bloomberg Markets European Close Bloomberg August 11, 2017 11:00am-12:00pm EDT
this is the european close on bloomberg markets. nejra: european stocks about to post their worst week since november as president trump ramps of the rhetoric against north korea and we will look at what is really worrying traders across the globe. is at the beginning or the end of the junk bond rally? we will talk to a morgan stanley analyst who says a correction could be imminent. in commodities, oil prices take a dive, they are cutting demand estimates and a key technical signal may bring better news for opec. we will explain coming up. let's look at where european equities are trading now, under 30 minutes to the close. u.s. equities recovering.
european equities still lower, down 8/10 of 1% on the stoxx 600 , every industry group heading lower except for health care with health care stocks in the green. energy very much underperforming and telecom and financials closely following in terms of the worst performers with the stoxx 600 heading for its worst week since november. we have also seen volatility spike on the euro stock 50, this is an interesting chart, this is looking at 20 day realize volatility. showing the spread between s&p 500 and stoxx 600. showing european equities are more volatile than the u.s. by that measure. in the bottom half, you see the spread fear a few days ago, the widest spread in one year which
has tightened up. you see the difference in volatility. i am looking at sterling and currency markets, we saw broad-based dollar weakness following the u.s. data coming in soft beard euro stronger in the session against the dollar and sterling. sterling unchanged. the five day chart to give you context, down 5/10 of 1% with cable heading for a second weekly loss. , talking about risk appetite versus risk aversion, what thisgreat one, is is an index compiling a number of things -- a number of global stock indexes, a number of global sovereign yields, dollar-yen, the bloomberg dollar index, and brent crude and gold. it gives you a picture of risk. risk on or risk off.
this is showing risk appetite falling as north korean tensions are rising. you see the drop off. , a bit of antioned recovery for the major averages in the u.s. with divergence on the losses in europe a nice bounce back from yesterday's selloff or major averages, the worst in three months. dow and s&p 500 and nasdaq trading modestly higher with the nasdaq up a half a percent. told these, i was gains represent the fact investors share in the u.s. are able to decouple from the geopolitical tensions from the underlying fundamentals that is benign inflation which now seems to be a bullish tailwind for stocks. on the day. losses with, weekly the s&p 500 on pay sports worst week since march. a great chart in the bloomberg
that talk to back that we have not seen so many days like yesterday. more days like today. this is a long-term chart. white ande s&p 500 in the monthly tally of the number of days where we saw a 2% gain or drop. the white lines represent big intraday or daily volatility. on the crash of 1987, huge volatility, the same thing on the grass in 2000. -- crash in 2000. climbing to record highs with not a lot of volatility. calm is good for the bulls. helping the nasdaq the most today are some of the technology stocks. gains for apple and some of the apple suppliers. apple is up more than 1%, one and one quarter percent. a rebound after the 3% yesterday selloff, a higher name tends to react so more when there is a risk off tape.
taking the suppliers with the shares. biotech up strongly in the nasdaq. let's look at the five day chart of the 10 year yield. this tells the story of risk off. risk off environment in these times of geopolitical tensions, the 10 year yield down about six basis points. trying to make a small move higher with says bonds are of a little bit. they are rallying on the week as investors are seeking the safety of treasuries. vonnie: fascinating that 2.2 level is just in the 10 year yield. thank you. let's turn to a big question for the credit markets -- are we starting to see the beginning of the end for the 18 month rally in junk bonds? morgan stanley says recent softness and bonds as a chance of turning into a legitimate correction in the fall. joining us is adam, their head
of u.s. credit strategy. your view is predicated on a tilt towards tighter monetary policy and no doubt that the direction we are going in. does this morning data leave you with any doubt that the pace may be even more glacial and this cycle may be extended? >> certainly it could lead in that direction. isbelieve that the fed intent on starting to shrink the balance sheet, that will be set in motion in september. almost regardless. as you mentioned, we are cautious on credit markets and think the correction could really turn into something more material that lasts until the fall. our caution on credit is based on a couple of straightforward point. we think we are late in the cycle and think there is evidence to that effect. we think investors have been too
complacent on central-bank policy. central-bank stimulus in the cycle has been massive and hugely supportive of credit markets. now you have the fed still tightening an unprecedented and untested way through the balance sheet. you have global central banks tilting and a half is direction. assuming a smooth process is a mistake. violations and credit we would argue are still rich. chart in one is a of your notes that shows the flaws into -- flows into investment grade and out of high yields. what is that telling you? where is the smart money going? adam: it is hard to read too much into small changes inflows. we have had meaningful flows in credit this year, especially mutual fund. modest, had outflows, unmet from high yields since early march.
that could mean a lot of things but could be some bubble we are seeing under the surface that indicate tighter central-bank policy, the fed has hiked a couple of times this year, is starting to impact the most levered credits in markets. that is one of many examples of how we think there are some issues bubbling under the surface that signal that this could be more than just a couple of days of volatility. about theant to talk specific issue of idiosyncrasies , in terms of the correction, i am wondering, i know it is hard to say, when exactly is that going to come? a lot of people are saying, with treasury yields where they are now, and particularly, low following the u.s. cpi data, not barack 2017 lows, the hunt for yields means we will keep seen credit spreads tighten. adam: i do not think it is just
about treasury yields. even in the best of times, remember credit markets are still correct at least once a year. you have a scenario where i would argue complacency has been elevated. all i hear about is this wall of cash and there is not a catalyst. we havento september, the fed balance sheet, which will get set in motion at the same time the debt ceiling will come to a head, and the same time the seasonally weakest time in the year, those factors can drive a modest pullback, which we are longer overdue for. cycle risks arising sooner than the consensus believes, which is a possibility, then it can turn into something more material. not just about treasury yields, they could fall. rates do not have to move higher. nejra: what about the divergence between high-yield credits and equities? adam: it is another one of the
late cycle signals. there has not been a massive the virgins but high-yield credit -- .h equities continue to make highs almost daily. that is one of the late cycle signals you watch. spreadsand 2007, credit dropped before stock speak and similar in 2014 and 2015 before market sold off. i itself, not the end of the world but you should watch. vonnie: you talk about the asymmetric risk in different example, industries are much better off than they for justin b than c's one person more. you talk about tale names and non-tail names, how do investors find those?
names in can find tale every sector throughout the market. , if you point is that think about this year, spreads have gotten tighter. you have had idiosyncratic issues almost everywhere. auto, retail, pockets of telecom and pockets of health care. this is how cycles work. issues pop up early on in areas which experienced the week is fundamental trends or the weakest underwriting quality in a bull market. investors treat those issues and initially as idiosyncratic and it spreads more probably when credit conditions tighten, which is why the central bank is pulling back faster in the cycle. nejra: you see the correction coming in the u.s., what about in europe? is a correction coming there too? adam: credit markets will be
correlated globally, unlikely you have markets moving in different directions and in different regions. i do not cover europe. there has been -- we have been getting questions about comments with respect to the fact how europe. low are they in more of a statement to treasury yields versus bond yields. not a statement on credit risk, credit spreads are tight everywhere and central banks have distorted credit violations everywhere. we are more constructive on europe, fundamentally, and easier story. .etter balance sheets europe is earlier in its credit cycle and less default risk. from a fundamental perspective, we are less concerned in europe. markets will not move in different directions. vonnie: thank you. more insight on the bond market coming up today on
-- at noon eastern and 5:00 p.m. london time. in on the first word news with courtney donohoe. >> a report that president trump will leave his vacation for a quick trip to washington. he will fly to washington from new york on monday and return monday evening with no word what the reason is. the president has another warning for north korea. he said military solutions are fully in place, locked and loaded. should north korea act unwisely, hopefully kim jong-un will find another path. that came not long after the north korean news agency accused president trump a driving the world towards nuclear war. the president has warned nuclear -- north korea. angela merkel says the heated rhetoric over north korea is not the right answer. she spoke at a press conference in berlin. convinced i am firmly
that an escalation of the rhetoric will not contribute to a solution of the conflict. i do not see a military solution to the conflict but also work as we have seen with the majority counsel would be members of the security council, with resolutions regarding north korea. >> she says the united nations security council needs to be working on the issue. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: thank you. coming up at 1:30 eastern, kevin brady, he will join with an extended conversation with -- about tax reform, president trump, and much more. 1:30 eastern. this is bloomberg. ♪
♪ vonnie: live from bloomberg world headquarters in new york, i am vonnie quinn. nejra: we are counting you down to the european close. a key sign that opec may finally be catching a break while oil prices are lower so far this year and remain near the $50 level, the market for brent futures may be telling us the oil price is finally -- the oil market is finally starting to rebalance. joining us is alex, and oil trading reporter for bloomberg news. >> we saw yesterday a big move in the oil structure. the first time since the middle of 2014. slightly further down the oil curve we received a backdated structure and that means supply traders tois causing
bid upwards to buy the nearest teachers contract. interesting is the length of time it has been without seeing that structure. when we were last there, we went to $100 a barrel which tells you something about the way the physical oil market is looking. things have suddenly got a lot tighter and more bullish. vonnie: what is causing that? opec on my bloomberg terminal. is it the threat of more sanctions and constraints on supply? what is it? >> rather than supply, demand is the story this time. we have seen rocketing refinery inputs and things looking good in the u.s. that, when youea see buying on the ground, it is taking off and cargo is moving, even in the north sea where
things were more tricky earlier in the year. more demand side looking up. as long as demand is dictating supply, the oil market will come into balance record. nejra: we have had a cut in estimates from the iae. >> they made big provisions for historical demands and inventory klein that was supposed to have happened at the end of last year disappeared according to them. there are some negative factors. iae called into question the idea that demand is rocketing. when you look at bank statements this week, they are buying into the idea that demand is looking good. where it goes is the problem. nejra: market seems to be reacting to the report with bret lower and others. -- brent and others lower. vonnie: big banks are in a
♪ live from bloomberg world headquarters in new york, i am vonnie quinn. nejra: live from london i am nejra cehic. a european been awfully market research will be imposed in a couple of months and 1 wall st giant making a move to grab market share from its rivals. toorgan said to be proposing charge as little as $10,000 per year for equity research, the lowest price so far. we broke the story. great work of breaking the story.
this -- is this a race to the bottom? >> the lowest price for equity research in europe we have seen. as a comparison, barclays proposing for the bottom level research $40,000, four times as much as jpmorgan. and it's an by one of the biggest investment banks to have the largest portion they can, hoping that the little subscriptions will add up and fund their massive research operation. vonnie: the head of research for bank of america has said that this effectively means banks will finance europe when it comes to research. what does that mean for clients? andore compliance headaches thousands more staff monitoring do they are doing business with and make sure they're up to date with regulations. in addition to added pressures, it will increase cost for the
finance industry. nejra: five months away from the deadline. 3, how willjanuary it work? >> we have seen some trading organizations and lobbying organizations called for the deadline to be pushed back because there is a scramble to get ready in time. one of new regulations they have to try to get in compliance with over the next two years. , stille from the crisis trying to sort out the financial system to make sure it is safer and more fair. industry,e research does this spell the death knell for the industry? jpmorgan will give research for $10,000 per year, does that mean it will not be something banks will invest resources in? >> it depends on the strategy, i , thosee will see players
who were not that big in research, will probably leave the big -- business and leave it to those able to keep doing this. this is an entry-level read-only research price, if you want custom research, if you want to be introduced to corporate executives, you will have to pay prices.-- hefty nejra: one of the big questions is what sort of premiums will be charged. do we have any details of what this will mean for small and mid-cap? >> small and mid-cap coverage will fall into the read-only. all the prices will be different , if you want to be introduced to a ftse 350 company, it will not cost as much because they will be happier to meet you that if you are trying to get in with the cfo of bp. nejra: thank you so much, great work breaking that story.
let's take you to all the market action today. just want to show you this contextual chart. you know the cliche sell in may. this chart showing it is alive and painful in europe. this is normalized from the start of may. since then, the index in yellow and s&p 500 have both gained by what looks like 6% and 2% respectively over the past few days. onhave seen some losses geopolitical risk, but the stoxx 600 underperformed. it is down about 4%. european equities not performing great since the beginning of may. if you look at u.s. stocks, we have seen them recover in today's session, but your team equities are still down. it is the worst week since november this week and every industry group lower now or at least flat. health care was in the green earlier and now is flat.
energy underperforming. we followed by telecoms and financials. if we look at the industry groups, imap this chart. what it is showing as the ratio between cyclicals and defenses. you have risked off, but how risk off what we looking at? this chart is really showing the cyclicals actually underperforming. it is interesting to see versus the defensive what is the risk off move in the market. finally, just looking at the that for would reason some of the weakness in the european equities today is the stronger euro. we have seen the dollar weaker against the euro in the session . i have this over five days because we are seeing the euro for a fifth straight week. allie: we are approaching the levels that of a significant
in u.s. when it comes to some of these risks signals, including the vix at 15.5 now. it does not seem to be anything worth panicking about, but it's a big difference from below 10 where we were a few days ago. the dollar index is slowly growing lower. time where it really stuck around the 2.2%, but we are seeing more treasury buying, just another indicator as our gold futures are approaching the $1300 marke mark. our futures trader was saying, will gold reached 1303 and stabl stay above that? we have got some major risk off places and no surprise this china as well. and you can see the ruble is
rising a little bit. the dollar ruble is rising, which means a weaker ruble. we are back below that mark for the ruble. the canadian dollar as well approaching 127 is interesting t. look to the rest of the securities by typing in gmm . ratcheted up trump his war of words with kim jong un after a week of tension and global markets. bill joins us from washington. one have been focusing the latest tweet saying that military solutions are now fully and placed, locked and loaded should north korea act unwisely . hopefully kim jong un will find another path. are the military solutions really locked and loaded? bill: the u.s. has long had a presence throughout the pacific region and south korea and
japan. it has always trained and the hearst to these kinds of scenarios. a lot of that is not new. what is really new this week and what has been startling markets a bit is how aggressive and public the president's comments have been. every administration has dealt with over-the-top rhetoric from north korea. they have tended to let that slide or let it reflect more north korea that anything else. this is the first time we have seen a president come back just as hard and being very public about what the u.s. is capable of doing. vonnie: bill, there are reports out there now that there have been back channel negotiations, actually very active ones for several months. what do you know about these channels and how successful they might be in calling anything? bill: that has been a question for all of us whether despite all this public bluster there something going on behind the scenes that we don't know about. the ap report that you are
referring to those says a lot of that focused on getting an american prisoner out of north korea a few months ago. whether thoser officials are really discussing the current situation or not. wouldg picture here i point out that in the last few days, secretary of defense james mattis has been on a tour of the west coast. he visited amazon's headquarters. he is visiting google today. if u.s.think that military action were more imminent, you would expect the secretary of defense to be jumping on a plane and heading back to washington. so far, that's not what we are seeing. vonnie: what are we hearing out of north korea itself? we have not heard much of anything really, have we? bill: it has been a bit moderated. we did get the statement two days ago now where they really detailed this plan could they they said they will have ready by the middle of august and they will launch a series of missiles into the waters off guam.
in the past it has taken north publicly toact big events, sometimes a week or more. i would not be surprised if they have been taken off guard a little by this president's comments. , thank you sories much. the conflict over north korea has spilled over to europe to a certain extent, were reaction is pouring in. angela merkellor says the escalating tone is the wrong answer. she spoke a short time ago. >> i think that i'm firmly convinced that an escalation of the rhetoric will not contribute to a solution of the conflict. i also don't see a military solution to this conflict, but i see constant work as we are seen in the un security council with the members of the security council with resolutions with regard to north korea. nejra: for more, let's bring in patrick donahue, bloomberg's government reporter in berlin. merkel being dragged into this
debate when she is just about to start her election campaign. patrick: that is right. she is back from a three week vacation. she was off the grid for three full weeks. the polls have not budged. she is still at least 15 points ahead of the rival democrats in most polls. six weeks ahead of the election, she has got a strong lead as she begins the campaign this weekend. nejra: now in terms of the issues for this campaign, what are the main things that are going to sort of dominate over the next six weeks? patrick: the economy is strong. the migration issue will be something that people are talking about, but not as much as a crisis as it was in 2015. a lot of people talk about that as merkel's achilles heel. the refugee crisis that dominated up to year ago has receded. merkel's position in german politics has bounced back. patrick, how much will
the economics of the next two quarters determine the outcome of this election? germany has obviously been the stalwart of your europe, but faltering a little bit. patrick: it is faltering a bit, but if you look at the labor markets, employment levels are very strong. germany with its fiscal discipline still has a fiscal surplus that will last another couple of years. merkel is campaigning on a fairly conservative platform of no tax increases and in fact tax cuts for the middle class. and note new debt. vonnie: how much voter appetite is there for increased europe integration, so a fresh alliance with france? would that go down well on the stump? patrick: it is difficult politics here in germany. i think a lot of that will be determined by who merkel forms a coalition with.
if she goes in with a social democrat again kumal which would be difficult, she would probably have a bit more leverage in terms of integration whether it's a finance minister or something like this. if she formed a coalition with the free democrats, her party's national coalition partner, she would be more limited more likely. nejra: talk to us a little more about what a potential coalition would look like. well, she has got a grand coalition now of social democrats. those are the big rivals. that could be difficult to turn back to because the social democratic base on the centerleft has not had a huge appetite to rekindle a coalition with merkel because she is so dominant. on the other hand, polls show that a coalition with the free democrats, the pro-business party, is possible. they're looking like they would have a pretty slim majority.
that's the wide-open question. if you look at the polls going into the next six weeks of the election, that is the big question. nejra: patrick donahue, bloomberg government reporter in berlin, thank you so much for joining us. do not miss our 30 minute special every monday at 8:30 a.m. u.k. time -- germany decides. we will bring you the latest political and market analysis in the lead up to the election. coming up, more headache for uber. vonnie: a major investor sues to get the former ceo travis kalanick kicked off the board. the details next. this is bloomberg. ♪
york, i'm narejra cehic. vonnie: i am vonnie quinn and this is the european close on "bloomberg markets." tesla has been quiet, but that may change as the carmaker is issuing its subprime debt. the books are set to close sometime last night on the west coast and soon in new york. here's bloomberg's taylor rigs. we have been waiting with bated breath for this. taylor: we were talking about this one ceo elon musk hinted that they may use debt financing. you do see that they're looking to this bond sale to ramp up production to about 10,000 model threes by next year. vacancy overall on a one-year basis that you have the technicals that look pretty good. are above 50 on the 100 and 200 moving the average. on the fundamental side, a few concerns from analysts.
vonnie: really? shocking. taylor: there surprised that tesla had to come to the market this soon. they thought they could wait another year. using debt to fund negative free cash flow is pretty speculative. overall, just a few concerns here. if you want to take a look at my chart and look at the debt, we have been talking a lot about tesla's balance sheet and the makeup of that. that come to market quite a bit with him a $6 billion in fiscal year 2016. that up from the year before. nejra: what does this say about the high-yield market in general and the concerns about it being overvalued? taylor: yeah, great question. if you come into my terminal here at g #btv 9099, you see that contract a little this year. it picked up a little this week as you heard comments from howard marks that maybe high-yield is a little bit overvalued. all these deals i am hearing are
increasingly getting done with fewer protections for the investor and fewer documentations. that is the demand that you are seeing for this type of debt. vonnie: it is fascinating, taylor. what happens? --we know when the process obviously it's priced in the books will close in. does it happen next week? we should haveultaylor: pricing at a 4.25 coupon and it may be higher. vonnie: you can come tomorrow. i will be at home. taylor is going to come in tomorrow and give a special report. face for that. nejra: that's a great chart showing that even we have seen that widening out in high yield spread, it is still below the average over the past five years . g #btv 9099. time now for a look at bloomberg business flash. another department store has bad news. jcpenney posted a second-quarter
loss that was bigger than expected and comparable sales fell more than estimated. that comes after macy's, kohl's, and dillards reported declining sales. improvingexpects results, but the stock still getting hammered. buying a time to be new car or truck in the u.s.. car dealers are cutting prices on new vehicles by the most since the last recession. according to a government report on consumer prices, vehicles cost six template percent less in july from a year ago. that is the biggest drop since 2009. island and apple are close to an agreement that could involve close to $18 billion at stake. that is according to people .amiliar with the matter last year apple was ordered to pay back taxes saying that ireland was cut none failed deal. it once apple to identify any losses.
and that is the latest business flash. vonnie: thank you. oes keep was -- uber's w piling on. travis kalanick is now being sued by early investor benchmark capital. we want to turn now to cory johnson for a little bit more perspective on this. to some extent, this was to be expected. cory: this is so out of the ordinary. high-profile names and big firms like benchmark, you just never see this kind of thing. right after the news crossed come i was talking to an entropy nor saying that benchmark capital was one of the premier firms in silicon valley. that goes all the way back to ebay and little things like that. the best investment of all time was uber. their investment is currently valued at $10 billion, larger than the fund itself.
it is a simply amazing return that they don't want to spoil . i talked to a startup entrepreneur yesterday when the news crossed and he said i will never accept benchmarks money. if they're are going to sue the ceos, those aren't the investors and want to have. vonnie: it is all blowing up and suddenly do they feel like they have to get in the first court case because there will be a reverse court case otherwise? cory: what's interesting here is this notion of abuse, the notion that travis kalanick defrauded fellow board members. travis kalanick has about 10% of the chairs and benchmark has 13%. benchmark has even more skin of the game and the founder and ceo the company. we are for these rumors and these chickens on the roof and the sound of travis not too far away even though he's not the ceo anymore. it's beengesting and reported that he wanted to have a steve jobs like return and come back and take over the company as ceo. the idea that he stacked the
board and defrauded and deceitfully had done so and it will play out in court is not amazing development. yet another amazing development at uber. the ceo, no cfo, no general counsel. the founders are gone. yet they are bigger and better as ever. it is amazing to see this company, a frankenstein's monster, speeding ahead without the brain that brought it here . nejra: what kind of response have we had from travis kalanick and uber on this? cory: not much yet. we will wait to see what happened. what's interesting is what we see in terms of discovery and what we learn about what's going on with this case through the court documents. it's going to be a wonderful read i think for anyone except for those involved. it is fairly amazing that this thing has been such a business success and such an utter mess on the corporate level. nejra: obviously this is a
private company, but for people you have been speaking to, any sort of potential investors or any investors in the tech space, what has there response been to this? cory: for founders of companies, it is rate disconcerting to sort of see what has always been true. when the money comes in, the money is going to be in charge. phil gurley, who was on the board, representing benchmark as one of the very earliest investors come up until recently he step down from the board and travis let the company as well. the new representation from benchmark has a different feeling than what phil gurley himself had. you cannot understate the drama. you cannot understate the importance of uber. i think it is certainly the most interesting business in the world. what they have done in a very short time in terms of global domination and inventing a new market and changing the way that
cities that about public transportation, changing the way people are moving and living, it's just an incredible thing. you don't see many of these in your lifetime. for uber to do this and have so much from a on the corporate see of sexuals charge harassment is amazing. vonnie: you'll wonder if it will create some kind of turn and silken valley -- in silicon valley. i do have good news. soundcloud is keeping ongoing. they got the infusion that are needed by the end of the day. otherwise it was going to have to shut down. cory: we will keep our playlists now. vonnie: cory johnson, thank you. nejra: coming up, battle of the charts time. today is a venezuela hunger bonds versus the big short. we will split all that next. this is bloomberg. ♪
nejra: it is time now for global battle of the charts where we take a look at some of the most telling charts of the day and what they mean for investors. charts oncess these the bloomberg by running the function featured at the bottom of your screen. kicking things off his dani burger. what have you got. ? dani: i'm looking at something that a lot of investors have been looking it, titling it the big short. 7 julie: it is people shorting the vix. vix shooting potential could a majority of people short, bringing that things will not change much. you make money essentially when the vix is unchanged and remains low, which it has all this year. this is 2017 over here. the vix has not moved. this is something we know. we saw the vix scrape up above 16 for the first time, judging by this past performance. still a big move up, which means that this right here is the most net short vix that traders ever
have been. this is 338 billion contracts short the mix. all these people an in so up. pain when the vix rises that means that people will be hedging that trade right there, which can cause for a little more volatility, which might explain why the markets are moving so much on different geopolitical news. 9376.n see that at g #btv nejra: vonnie, what have you got? vonnie: i'm talking about venezuela and so-called hunger bonds or at least the equivalents. it turns out that credit suisse has just banned the trading of certain bonds including a tenure sovereign bond and also a bond that expires in 2022. i tried to put the equivalent of pyrenees can see the prices dropping substantially here in the last couple of days. andit suisse is banning it hsbc is considering it and
goldman sachs is under fire for having done a deal with the central bank on $3 billion worth of bonds back in may. the idea is that these banks and traders are helping the government really keep people under heads of the government to make its debt payments. the actual citizens of venezuela are going hungry. you can see that chart if you want to see that chart at 9374. nejra: a little bit of pain on a friday. the winner is dani burger. we talk so much about the vix and that's a great chart. coming up next, "bloomberg real yield." you do not want to miss this. this is bloomberg. ♪
♪ scarlet: i'm scarlet fu. l: i michael mckee. jonathan ferro is off today. let: for 30 minutes dedicated to fixed income, this is "bloomberg real yield." ♪ gundlach saying the time to reduce risk is now. and he u.s. inflation numbers for fed chair janet yellen to chew on. where does that leave the central bank now? we start with a big issue.