tv Bloomberg Daybreak Americas Bloomberg July 10, 2018 7:00am-9:00am EDT
nominates brett kavanaugh to the supreme court, a washington insider. theresa may's brexit plan triggers the resignation of multiple officers. erdogan namesdent his son-in-law as a commerce minister. happy tuesday, everybody. welcome to "bloomberg daybreak." i'm alix steel in new york. david westin is in washington. what was the big surprise to you last night? david: i think the attorney general for ronald reagan being there. brett kavanaugh was not a big surprise. he clicked for justice kennedy -- he clerked for justice kennedy. it was quite a drama that the president put together down
there, including justice scalia's widow present. alix: it was really the reality tv star selecting the supreme court nominee. walk it forward for me. were you watching over the next few weeks? david: you mentioned it has the effect on regulation. senate see in the confirmation process, it will be nasty, but i think it is inevitable. the question is what this will really due to the court for the regulation. we have john malcolm coming up, one of the key outside advisors from the heritage foundation, why he thinks it is a good thing. one of the issues is health care , the democrats saying this could really hurt health care of a particularly obamacare. we have an expert in catherine baker from the university of katherine baicker from the university of chicago on that. it is a broadly stronger
dollar story. ,uro-dollar down 4/10 of 1% dollar 10 taking a big leg higher above 111 here. the 210 spread maybe even a little steeper. up a whopping 1%. a sleeper when you have the oil and the dollar rallying together . david: timeout for the morning brief. first of all, president trump is going to europe, the first stop in belgium, where he will join the nato summit in brussels wednesday. from there, he will go to the u.k. for meetings with prime minister theresa may and queen elizabeth, and then to helsinki for that meeting with russia's president putin. finally today, the united states
treasury will be selling $35 billion in three-year notes. time now for the bloomberg first take. we are joined by rachel evans and marty schenker. this is the big first story, the nomination of rick kavanaugh to these the court of the united states. this is how president trump explained why he made this decision. trump: i do not ask about a nominee's personal opinions. what matters is not a judge's political views, but whether they can set aside those views to do what the law and the constitution require. it is hard to disagree with that general principled approach. at the same time, the president was quick to say this judge has issued 300 decisions. it is not like we don't have some idea on what his views are on the law. >> that is right. it is true that he was on the list of four that donald trump
was going to consider. to me, he is the most establishment of all of those candidates. it is sort of a surprise to me that donald trump went in that direction. he is the ultimate washington insider. andorked for president bush it up in washington. his mother taught in the washington schools. one of the things i think businesses might react to is what he's done in the regulatory area. he was the author of the opinion that struck down the consumer financial protection board because it didn't have enough influence from the president. >> it is going to be interesting to see what position he does take on regulation. we've seen him push back against epa regulations, net neutrality. it seems that from a regulatory perspective, he very much does lean towards removing regulations, speeding up the process for businesses. it will be interesting to see
what the approach. he's very able to navigate the political environment around some of those decisions. it is not like he's going to be very naive in approaching this senate confirmation. he's somebody who understands the white house. he understands washington and the congress. alix: if i'm an investor waking up this morning, what do i pay attention to? >> you probably need to be looking at those sectors that are affected by environmental regulations, so that would be energy and health care, certainly, in terms of the regulatory environment. he is clearly someone who believes the executive branch should take a prominent position in legislating how this country works. david: that is --alix: that is kind of the theme through our top story today. our other is brexit.
we had some big resignations yesterday, david davis and boris johnson. it is a kind of similar question here. the leader had to go to the opposition to get anything wow, looku would say at that emerging-market. theresa tremendous that may is pretraining herself with confidence. it is really in the eu's court now. she really needs them to engage in her softer brexit plan. there is really no when in the wings to take over in the u.k.. may is it for the foreseeable future. alix: if you go inside the bloomberg, you can see the positions for sterling. very short positions. i wonder what the short covering
rally looks like, how that plays out. >> it really remains to be seen, given what we've seen on the political side. the pound has been relatively stable. it really didn't plummet or do anything like what we saw when we had the referendum. if you look at volatility, you are seeing people pricing in potential weakness in the pound. i think it is going to come back to the political situation. we haven't seen a vote of no-confidence in theresa may as of yet. reports thata few they have been some letters calling for that vote, but she seems to be holding people together on the basis that goes, we might see another general election, leaves open the
possibility of a labor government. alix: was turkey, take a look at the lira. this is the dollar lira. big jump for the lira overnight. now we've kind of pulled back overnight. the idea is that president erdogan is taking control of the central banks. >> that's right, he's taken the step of declaring that he alone can appoint central bankers, where previously it had to go through an approval process. in his interview with us about a month ago, he raised the prospect of a non-independent central bank. he retracted those comments pretty much, and now he's back doing it after the election. david: so it is not just a monetary policy. it is also fiscal. of uber-economic
position and appointed his son-in-law to the position. he had people that were perceived as more market friendly. >> absolutely. in combining the finance and the treasury functions of the government, he's effectively consolidating this two very powerful positions as part of his family. now we have somebody who is very much an insider with the prime minister. therefore i think it is going to be difficult for investors to get comfortable. currenciesing-market are generally are having a bit of a rally. it is interesting to see turkey become a black spot amid that
u.s.-china traits that, tesla had to raise prices by as much as 20% in china, while sales in china have been slowing to 15% of the company's total sales. plan a tesla is going to china plans with 500,000 cars a year capacity. , this is howiffs companies may be reacting. david: exactly. they are pulling agm. -- pulling a gm. there's a great deal of irony that president trump wanted to create new u.s. jobs and the most immediate effect may be having tesla build them overseas instead. alix: china obviously a very important market, especially with their clean-air policy, over the next few decades. for tesla toant get in on the ground floor. david: exactly. elon musk has said we will do
some other things the past, so we will see how long it takes. alix: and the question, how much is that going to cost? how much debt do you need to issue to go and build that plant and how long is that going to thing so another the company needs to spend on. let's turn over to london. british prime minister theresa may had an eventful day yesterday as she saw her brexit minister and foreign minister quicker cabinet in this agreement over her approach to the u.k. departure from the european union. we welcome now from westminster the anchor of "bloomberg surveillance" francine lacqua. i was fascinated by some of the discussions you had because i woke up thinking this is really bad theresa may, but maybe not. francine: maybe not. that is the point the market is looking at so we are not seeing that kind of movement.
a lot of people saw this is trouble for theresa may. -- brexite oceans negotiations are pretty chaotic. even if they do a confidence and she comes out triumphant, it would mean that she can then have no leadership challenge for at least 12 months. david: in the united states, there is a saying that you can't beat anybody with nobody. boris johnson is probably the known member of parliament in the united states. but perhaps he is not as well-known as we thought. francine: we were trying to
figure out who would replace theresa may, whether boris johnson would still have this kind of appeal and the public at large. his image -- >> boris is quite popular with the party, but nothing like he once was, and he was never that ability itself that's in the populace itself -- in the populace itself. francine: if you are theresa may you want to hold onto power, but if you are a challenger, do you really want the job? on we don't have a position the white paper, basically a blueprint of what the u.k. wants in this negotiation with the eu
ramy: -- the eu. it seems it is going to be very difficult for whoever takes this job. a lot of people that may want to be promised her the future may not want this job now. david: thanks, francine. there's nobody i would rather hear it from that you. alix. alix: it has been kind of a wild day. you can see the movie lower yesterday havoc been kind of moved higher coming out kind of treading water. joining us now is did week -- is daniel kaztzvie of bnp paribas. the markets have been trying to understand the possible equation that can be solved here, or you come up with a brexit soft enough to sell the cabinet and the
parliament. if there is a brexit plan that works with all parties, you could see it recover from current levels. if the problem can be solved, a lot of rooms are starting to fall. it is a very difficult investor choice right now. alix: if you look at the gilt market, we are seeing pretty points.ll that is also a rate hike expectation because of high data, especially gdp. how does that square with continued brexit dysfunction? guest: this is the other tricky part of the story. find the noisy part, life goes on. hiking in august should be good for the sterling. there's a lot of room to recover. we think it will ultimately get to some sort of soft-ish brexit.
it will be tricky, as we will .ee this week alix: as we come inside the bloomberg, i will show you overnight volatility over the last 24 hours. nonetheless, do you expect volatility on the emerging-market currencies? are we talking about sterling as an emerging market currency? guest: i don't think they'll. there's still plenty of liquidity and independent support that comes from the pound. if we really crashed out of brexit, the worst-case scenario would be it will be a pretty wild time in the market. that is still far from base case scenario. that leads us to turkey. guest: perfect segue to turkey
david: -- perfect segue to --david: perfect segue to turkey . president erdogan has assigned his son-in-law as the treasury of ministry in finance, inectively putting him control of commerce. with us is constantine cou rcoulas. reporter: maybe will not move so fast with extending his control over monetary policy, which is ,omething he had promised to do
but i think markets were surprised. monday going into the announcement, there is a big rally. i think investors were caught off guard. david: so it is us monetary policy. it is also fiscal policy. >>policy. monetary policy is only half of the story. turkey has also been boosting its fiscal spending and all of that extra supply has been weighing on prices. saw again today the 10 year yield pushed to a record high, so that is part of it. david: thank you so much for your time today. alix: we did a look at what happened over the lira over the last two days. you can really see the movement if you take a look at our era. that's if you take a look at the dollar year a best the dollar
lira -- the dollar lira. >> it is an unforgiving environment, no matter the structure behind the currency. it would make sense that the market reacted when it did to the news. we do think lira is quite cheap on the levels on a real effective exchange rate bases. the seasonal flows are little bit better for the currency over the summer than other parts of the year, so we could see some are current. -- some recovery. but the news this week is narrowly constructive. alix: i'm glad you brought up the dollar. this takes a look at weekly performance of the bloomberg dollar index. -- the weeklye influxes have caused a lot of pain. what is your prediction for the
dollar, and how does that wind up affecting might we really see? guest: for the dollar, we think the second half of the year is going to be weaker than what we saw for the first half. i think the fed is pretty comfortably priced at this point. there's not a lot of room for the has to move. it will be baked into the rate .orecasts we think that economics will it better in the g10 generally, some of those trends will fade. trade is the big question mark. we know from the trade war for lack of a better word, will be hurt rather than any other economies. if that happens, the dollar may hold up better than we are expecting. david: if you look at
emerging-market currencies, what that?tter than guest: the ones where there's any question about the institutional framework behind the policy process, said turkey obviously moved into the vulnerable category if it wasn't already over this week. argentina is the neoliberal -- a vulnerable currency as well. our yields are attractive. payments are not bad. if the dollar is stable, the have a lot of scope to recover. alix: if the dollar does roll over, what currency have the most to make up. looking at dollar-yen here in a big breakout. guest: dollar-yen has a lot of room on the downside if the dollar rolls over. there's some volatility and financial markets. we have a 124 target for the end of the year, lower than we
thought we would get a fairly good-sized move. the u.s. economy is slowing, the fed has finished his cycle and gotten an opportunity to accelerate. that is more of a story for next year. daniel.hank you what you were cap breaking headlines from just a few moments ago. tesla is planning a china plant with a bout a 500,000 car a year capacity. they are due to sign that odu according to people with knowledge of the matter. you see people really taking a place of free-market. david: this is just a starting step, and there's a long way to go. it does raise questions about whether the president is actually disrupting his supply chain.
the goal is let's have things made here and sold here. david: and how much --alix: and how much it is going to cost. china sales are slowing first tesla, and they have a 20% increase in how much they are going to charge. china is the place for allegedly vehicles. they got a real premium on those over there. alix: they really do, and they are really going to ramp up. that is where the growth is going to be. david: up next, president trump takes bret to fill a vacant seat on the supreme court. we will talk about that with some of the people who make that had been -- who helped make that decision. this is bloomberg.
well which is interesting considering the german investor expectations survey actually fell but equity is getting a lift, particularly from stronger oil as well. strong dollar, strong dollar. the dollar-yen at 4/10 of 1%. that is where we are sitting. u.k. gilt selling off because of bader -- better data out of the u.k. in terms of gdp and that potential meeting for more rate hikes. 20 basis points is where we come in and brent up over 1%. just for some color, the nfib --vey that came out earlier the hardest thing on their list right now. david: maybe they should pay more. alix: there you go.
as we have been saying, president is leaving for brussels for the nato summit. some headlines about things he is saying. he says he thinks the visit to the u.k. is going to be interesting. he says he thinks it might be harder than his visit with president putin. finally he goes back to his nomination of brett kavanaugh, saying he never talked about abortion which is not a big surprise. alix: how is talking to may harder than putin? i don't understand. david: why is he positioning it that way? it is not appear to have a very high expectation of what is going to happen with theresa may . it sounds like he is positioning
us to get let down. maybe he is just very comfortable with vladimir putin. let's get an update on things happening outside the business world. emma: in thailand, three more boys have emerged from a flooded cave today. that makes 11 of the 12 boys rescued. one more boy and the soccer coach are still inside. president trump has triggered a major showdown over the future of the supreme court. the president nominated judge brett kavanaugh to fill the slot left open by the retirement of justice anthony kennedy. if confirmed by the senate, it would be the most conservative court in generations. democrats are promising a fight. opec says it is doing what it can to supply the oil market but it is a tough balancing act. it is important to avoid
bringing the market back to the same supply that brought prices down. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. this is bloomberg. court of appeals judge brett kavanaugh is president trump's choice to succeed justice anthony -- anthony kennedy on the supreme court. announced at a primetime event last night. we now welcome greg stohr. great to have you. is -- judge kavanaugh is well-known. he has a stellar career. anyoneertainly somebody president -- any republican president would consider nominating. he has voted to strike down environmental regulations, voted
,o limit internet regulations and he has said that the director of the consumer financial protection bureau should be fire for any reason by the president, given the president more control over those agencies. david: he has to get through the senate. we just heard that chuck schumer said he is going to oppose this with everything he has. how much does he have? greg: he has 49 votes in his party, which are not enough. you are starting to see some liberals say they support kavanaugh as a matter of deferring to the president. an op-ed in the new york times said he was as well credentialed as anybody could be. david: thank you for this coverage. as we say, there was a dramatic announcement in the east room of
the white house. president explained before he even announced it would be brett kavanaugh. this is what he had to say. rump: in keeping with president reagan's legacy, i do not ask about a nominee's personal opinions. but whether they can set aside those views to do what the law and the constitution require. i am pleased to say that i have found without doubt such a person. tonight, it is my honor and privilege to announce that i will nominate judge brett kavanaugh to the united states supreme court. the president whittling down his list, the president relied on his white house team, but he also included some influential conservative
legal experts from outside the governor -- government. one of those was john malcolm, heritage foundation vice president and also a former deputy assistant attorney general. good to have you here. give us as much insight as you can because you have an outside advisor and closely involved. john: i prepared a list about a month after justice scalia died of people i thought would be supreme -- superb supreme court justices and by colin -- brett kavanaugh was on that list. he has been quietly effective, and he brought it excellent advisors. tonarrowed that field down four outstanding men and women and in my opinion went with the best one. david: how much is the legal pedigree?
how much is an established track record? john: judge barrett was on that list and had only been a judge for about eight months but she was a distinguished academic with a long history of scholarly publications. slouch andn was no winsted -- and went to georgetown law school. some people were questioning his pedigree. the president was focused on the qualifications of all of these people and looking at their body of work and brett kavanaugh certainly has the pedigree and distinguished body of work. david: how important was the administration -- demonstrate a component. be --ve that important cf cfpb decision. john: the white house has
stressed that he is skeptical of so-called chevron deference to executive branch agencies in interpreting ambiguous laws. he believes in a strict separation of powers and think that administrative difference blurs the lines. judge kavanaugh has spoken eloquently on those topics including a prominent speech he gave at the heritage foundation. david: it is impossible to know what any individual will do on the supreme court. as you look forward, how far could this go, because it is not just a chevron doctrine. it is also the question of how subject to presidential order the independent agency should be. that was the cfpb problem. fcc ort extend to the the justice department? john: no one has called for
looking into independent agencies although brett kavanaugh made a reference to a famous supreme court decision that dealt with independent agencies and said perhaps it is time to revisit that. the fact that was a -- that there was a single director could only be removed for cause that struck brett kavanaugh as violating the separation of powers principle. i think he was right about that. ,avid: if you were to guess would we be more likely to see a difference in just being receptive to challenges and regulations or really fundamental changes? john: i think a conservative justice will be looking to apply the law whether it is statutory or constitutional without importing their own personal or political values and i think that provide certainty with should -- which should be of
importance to the business community and things like intellectual property, arbitration. a lot of it has to do with terms of implying the law as written. david: do you think there is a serious chance that he could not be confirmed? john: the margins are very slim with john mccain not in washington. the democrats are throwing a lot of mud on the wall to see what sticks. david: how much of this do you see as part of a longer process that the conservative legal step -- legal establishment has really undertaken to change the supreme court. think that barack obama tried to do the same during his eight years in office. there are only nine supreme court justices. they frequently set for decades. it is a very important confirmation fight. david: really good have you here today, john malcolm of the heritage foundation.
thank you very much. judge kavanaugh will not become senate kavanaugh without confirmation and democratic senators wasted no time challenging the nomination. senator harris saying justice kavanaugh would pose an existential threat to the health care of millions of americans. we will come on the phone theerine baker, from chicago school of public policy. said senatori just harris said. is there a serious prospect that depending on how the supreme court goes, we could be depriving hundreds of millions of americans of health care? catherine: the pieces of the aca really work together to improve insurance coverage. insurance companies cannot cover people with pre-existing conditions if there are not mechanisms to promote wrought insurance coverage like mandates or subsidies. if the mandates and subsidies fouled away and people only take up insurance when they are sick,
insurance companies will not be able to cover pre-existing conditions and will lose that exclusion. david: of the we had a famous decision by justice roberts who upheld a lot and said at a tax, it was ok. are there still serious challenges to the affordable care act? what is promoting the insurance companies are the subsidies along with the medicaid expansions by state. if the subsidies go away, i think we will lose a lot of insurance companies and of states have the flexibility to change medicaid coverage substantially, that a lot of people who are enrolled in medicaid now they lose their insurance coverage. a lot of that is going to hinge on congress but some of it hinges on a legal basis for those mandates and for those medicaid expansions. david: some breaking news we have to go to. always great to have you with
us. president trump is departing the u.s. for the nato summit. a short time ago, he spoke before leaving the white house. trump: frankly, putin may be the easiest of the mall. the u.k. certainly has a lot of things going on. boris johnson is a friend of mine. he has been very nice to me, very supportive and maybe i will speak to him when i get over there. i like boris johnson, i have always liked boris johnson. that is certainly up to the people, not up to me. we do have a lot of allies, but we cannot be taken advantage of.
we are being taken advantage of by the european union. we lost $151 billion last year on trade and on top of that, we andd at least 70% for nato frankly, it helps them a lot more than alike -- a lot more than a helps us. wasll say also, last night an incredible evening. brett kavanaugh has gotten rave and is from both sides think it is going to be a beautiful thing to watch over the next months. i really cannot say right now. as far as i'm concerned, a competitor. i think that getting along with russia, getting along with china, getting along with others is a good thing, not a bad thing. we will see. we are meeting with vladimir putin on monday.
they did not give it. it will be given at a certain period. have a little gift for him. you will find out what that gift is when i give it. i really haven't. we have not discussed it. i have a solution. tell people not to come to our country illegally. that is the solution. don't come to our country illegally. come like other people do, come legally. i am saying this very simply. we have laws and we have borders.
don't come to our country illegally. it is not a good thing and as far as ice is concerned, the people fighting ice is a disgrace. there is nobody in greater danger than the people from ice. what they do to ms 13 and everything else. ice.ght to support david: listening to president trump on the lawn of the white house. that is in the left, prerecorded. on the right is live, he is going to the nato summit. he says he likes forest johnson a lot which is interesting to tee up this meeting with recent may considering boris johnson just quit. theresa may considering boris johnson just quit. david: it will be easier, apparently.
-- first of all, derivatives in disarray. derivatives broker plunged the most on record after ousting their ceo. try to managelso your money. the swiss knife strikes. insulin's prosecutors crack down on one -- alix: joining us now is jason kelly, bloomberg's new york bureau chief. cap. the share tank ceo is out. what was the problem he was trying to fix that he did not do a good job in? jason: this is voice broking as they say. people are calling their broker to place an order.
this may come as a surprise to you, it is not a fast-growing business. alix: people still do that? jason: some people still do. what happened here is the cost has gone up. the company will say this is about brexit, about the roles that come with transparency and but you seeatnot, the chart right here. alix: it hurts. jason: the profit warning and the ceo leaving, investors are not psyched. david: let's go from derivatives to goldman sachs. a report that they want to get their wealth management business and they are going to do it by having their dealmakers referred the guys you make a lot of money on their deals over to the wealth managers. they have some catching up to do when it comes to wealth management. that was one of the
surprising things to me because goldman is a bit of the gold standard on wall street, when it comes to deals. i was surprised at the story because i thought isn't that what is guys have always done? it felt like this was something that was always going on. it is interesting as you dig deeper in this, to look at the fact that goldman has a very aggressive revenue goal and 20% of that is going to -- is going to come from these types of activities and a lot of work to do, very competitive with some of their big-name rivals. alix: and we don't want to use the dreaded cross sell word but the investment bank was going to try to huddle customers over to their division at the end of the day and you have a pie and a
dish ranking and you have to do something to help yourself. jason: cross-selling always raises questions. it makes sense on paper. the idea of establishing a , let me introduce you to this guy i know. it makes sense and yet it does not always work so well. we will see what happens. it is hard to bet against goldman in just about anything. david: what about betting against them in 1mdb? this story just keeps on giving. thereport saying that former chair of southeast asia for goldman sachs who resigned some time ago may be negotiating with the prosecutors to perhaps plead to a guilty charge. as muchs are now saying as $7 billion might have gone through switzerland involving
1mdb. they $7 billion figure was what jumped out to me as well because it really underscored the scope of this and also the idea that now there is a ponzi scheme of sorts involved in this? it is the story that keeps giving and it went away for a while and is also a really interesting indicator or illustration of how a new government coming in can really change the way an investigation happens. the former prime minister has been indicted. isis free on bond, but largely being investigated because his rival has brought this investigation to the fore. it touches a lot of different parts of wall street. david: the point that all of
this might not have come out without a change in regime. jason: and you have some big-name bankers involved, it certainly feels like there is more to come. alix: ponzi scheme, he actually used those words. jason kelly, great to see you. david: tesla, we want to go back to tesla. used those words. electric automaker is said to be planning on building a factory in china with a capacity of 5000 cars per years -- per year. we are joined by alex webb from london. alex: it has been telegraphed for a little while, something coming in china. the thing that is interesting is of trends in the western hemisphere. they are struggling to meet their production numbers. they finally met them in the last week of june, but they also need more capital. building a factory is not a
cheap enterprise. david: how realistic is it that they can build a plant in the foreseeable future to make 5000 cars? one might say that the lessons they've learned from the mistakes they made with the plant in fremont, perhaps they can apply those going forward but it is a valid question. they have not met any of their targets until very recently, so whichfrom 14,000 vehicles is what they sold in china last year to making 500,000, that is a huge jump. alix: how much would something like this cost? of $5looking upwards billion. they are going to have some cash flow heading into the third and fourth quarter and as you deliver those cars, you get the full lacquer of their value.
they will have cash coming in that theys suggest will need to go back to the debt markets to raise more money. david: how receptive are the debt markets at this point to tesla? in the past, they -- it has been extraordinary. is that still true? it is hard to gauge the appetite going forward. on the equity side, there are a lot more by ratings -- a lot more buy ratings. that the appetite for tesla stock has not been about its profitability, it has been about growth expectations. if you are buying debt to fund the factory with the expectation that it is going to feel more growth, that is cause and effect. that might suggest there would be an appetite for it.
alix: how much competition does tesla with its ev's in china? the interesting thing is the structure of the company makes it harder for people to perhaps boost their technology that has been the case in the rest of the automotive industry. other cars have to be in at 50-50 joint venture while tesla is allowed to own it, 100%. there is a lot of appetite for battery technology that right now, tesla as a brand is far stronger than any competitor in the region. alix: great stuff, alex webb of bloomberg opinions. 2.3%.shares up other breaking news. apparently the thai navy seals have rescued all the boys and the coach from that cave. about two weeks ago, there were 13 members of the soccer team
and their 25-year-old coach trapped in a cave and it appears all of them have been rescued. this was a story that captivated everyone all over the globe and had been rescuing them piecemeal and finally, they are all safe. david: and the more you heard about it, the more it seemed impossible. three miles in, and it took three hours to get each of them out. this was darn close to a miracle. alix: it was a huge mission. thai divers, 50 international divers. all coaches and the boys have been rescued from the cave. ♪ phones have made our lives effortless.
president trump nominates brett kavanaugh to the supreme court. prime minister teresa makers the resignation of multiple officials. can hold on to her office. erdogan namesent his son-in-law as prime minister. a warm welcome to you on this tuesday. i am alix steel in new york and david westin is in washington. the news was what is going to change in the supreme court. you were there last night for the announcement. david: it is fascinating, the emphasis on administrative law. the fourth branch of government, these independent agencies. brett kavanaugh has issued some rulings suggesting he would like to trim back on that, and that fits with president trump progrowth deregulatory agenda.
not a coincidence. alix: not at all. it is about health care, potentially going forward and even energy. david: some senators already raised the health care issue. we're going to have a great is bretting up, it kavanaugh's former boss, ken starr it was a former independent special counsel. brett kavanaugh worked very closely for and with ken starr. alix: could not be a better guest to speak with. s&p and thets, the dow had their best day yesterday in about a month. s&p futures up by about four points. the euro dollar is weaker. a broadly stronger dollar story. pretty much flat on the 210 spread. a little bit of a selloff in the bond market, more particularly
in the gilt market. we talk about the reflation theme, chinese ppi coming in strong. david: time now for the morning brief. president trump going to europe. we just saw him depart on air force one. he is going for the nato summit in wednesday and will be visiting -- visiting with theresa may as well as queen elizabeth. today, -- will be kicking off its annual media conference and also today, the u.s. treasury is going to be auctioning off $33 billion of three your notes. -- three-year notes. theresa may had an eventful day as she saw her brexit minister after foreign minister quit her cabinet in disagreement over her approach to the u.k. departure from the european union.
we welcome caroline hyde. we wondered if theresa is going to make it through as prime minister. what are the prospects for her now? we have not seen this since the 1980's and there was concern this would topple her as prime minister. looks as though many feel we will not see any effort to dislodge her as prime minister as long as we do not see any further resignations. the clock is ticking. many don't want to oust her as a prime minister because there is no clear person to take her lead to step in and notably, you've got 15 weeks to get some sort of agreement with the eu on a brexit deal. the clock is ticking and i don't think anyone wants to take her place. david: we know one person who
would love to take her place, the leader of the labour party. what is the labor strategy? a key question because we know that theresa may does not have a majority in government. she needs either the whole of our government to back her new brexit plan which is a softer plan or get some of the labour party on board. they had been briefing the labour party about this new brexit deal. it is softer and is therefore meant to be closer to the eu attempts at regulation that some ministers might like. deputy,heard from the maybe another referendum is even on the table. that is the only thing that would would stop any impact or disarray we currently see in parliament. if you have another question of a referendum in play, that means she is unlikely to get labor ministers on board. david: it work so well the first
time, why not have another referendum -- it worked so well the first time, why not have another referendum? alix: please don't do that. theresa may trying to stay strong in the face of her cabinet crisis. here is a two day chart and you can see the weakness we have seen. joining us now is neil dwane, andanz global strategist brent schutte of northwest mutual. neil, what was your interpretation? as an englishman, i am nervous about politics. there is a concern over whether the conservative party can challenge theresa may and win and still hold on to the reins of power.
i think that is a very delicate calibration. -- feet at about the beginning of this year but clearly, we are in a difficult stage and as davis said, it is a situation nobody wants. she is probably regretting becoming prime minister. alix: on the flipside, the data was pretty good and part of it was the world cup. neil: i am even supporting. alix: but the data has come in pretty solid and you can make an argument sterling could be some -- could be stronger because of rate hikes. brent: they do the world is coming in fairly strong. with regard to the u.k., you have the political noise, the fundamental economic data which is fundamental to this country as well. from an -- from an investor standpoint, the politics are great to talk about but the impacts are more micro than
macro. alix: when you had not seen was the same for sterling and inside see -- mberg, you what is going to trigger that snap back? brent: two sterling in general? better economic data and tightening. alix: we were talking about the position in sterling and you also had shorts in the dollar as .ell add as with how the politics and the negotiations on brexit unfolds, we give them 50 billion pounds
and an extra two years of transition, i could see sterling remaining relatively out of favor because of the huge uncertainty from so many companies that so many countries. the u.k. has used cheap credit from the central banks to keep the wheels going and at some point that cost is going to rise as people max out their credit cards which is definitely true in the u.k. and with the its -- uncertainty around unemployment that around employment that is building, it is fairly bullish to explict -- to expect the u.k. to do well. when people are worried about jeremy corbyn or brexit, the currency will weaken and the fundamentals of the you cable reassert themselves and sterling will look a cheap currency. alix: it is not just about the u.k., all of the eu has to agree. a no deal scenario would have substantial cost but the idea
that may has to take whatever comes out of her government to the eu, how do you position for some kind of stalemate that is never going to end? think with currencies, i most currencies or more intermediate. most are about where they should be because most central banks are lined up and nobody wants to go too far ahead of anybody else. that is more of a central bank play even. brent: again, i think for all this talk about the strong dollar, it is about flat. we have these moves that are more shorter-term focused. i think for more intermediate i care an investor about, currencies around the globe are about where they should be and i don't think the federal wants to push too far on the button. alix: meaning the dollar could have peaked? brent: i think so. alix: the other part of the
conversation has to deal with the global synchronized growth recovery rate. you were bearish on the u.k.. do you still feel like that hold? all year, we have been saying we do not see the global synchronized story. goldilocks is dead. the u.k. is in trouble. i think europe has peaked. the question i think we all have is just how good is the u.s.? the president has thrown over $1 trillion in the economy and a look at the more cyclical side of it, the housing side, i don't see the boom in valuations in the market. if we don't see momentum through say theink we would president has set the economy up to boom and then bust. once that sugar high flows through next year, what is there to keep it going? the economy is in a very
interesting position and to your point, i think the fed is very conscious that it knows inflation is coming and that has a lot more stimulus in the system -- that it has a lot more stimulus in the system. it gets the boom and the inflation. people are going to say you are asleep at the wheel. alix: we will be us -- we will be discussing that later on. neil dwane of allianz global and brent schutte of northwest mutual will be sticking with us. david: coming up, president trump has tapped brett kavanaugh to fill the vacant seat on the supreme court. we will discuss how we could change the high court with someone he used to work for, ken starr from the d.c. circuit heart of appeals. this is bloomberg. ♪
david: president trump's nomination of court of appeal judge brett kavanaugh -- brett kavanaugh has a long and distinguished record in washington including of the office of the independent counsel investigating bill clinton, working with independent counsel ken starr. when i welcome judge st -- we now welcome judge starr. he is also the author of a book coming out this month. welcome. ken: good to be here. david: we have heard a lot about brett kavanaugh, so we know a fair amount about his track record. you have worked closely with this man. tell us what we don't know about him. ken: we began to see this last
night, that he is first and foremost, a great human being and what you saw last night is really what you get in brett kavanaugh. he is intellectually honest. he is not full of himself like some people in washington, d.c. and everywhere. he has this wonderful spirit and kindness but he is always worried about the other person. that heng about him is is so incredibly hard-working. he paid tribute to his father last night. he is smart. to say he is smart is an understatement. ands as prolific a worker prodigious a performer as i have ever worked with. david: one of the other things you get a glimpse of is what i would call the judicial temperament question because anyone it comes to the bench comes with their experience. you want them to. at the same time, you want them
to be open to challenging their prior views and being persuaded. take a look at the other eight people on the supreme court. is he willing to be persuaded that what he thought was the case is no longer the case? ken: absolutely. i have found he is very open-minded. this goes with intellectual honesty. as opposed to bringing an agenda , i think you will find in judge interest ingenuine what is the issue, let's analyze it carefully and let's see if we can't find the best answer. at times, you even get the right answer, but you can usually find all things considered, the better answer. he believesing is very much in the process of deliberation and reasoning. his training on the 12 years as a judge, he was obviously a law there is nothing like
actually being in the conference room as a judge in deliberation with your colleagues, that you are is nothing like actually being in the conference room as a having a very serious conversation that you know is so important not just to the parties but to the law. david: at the same time, he does have quite a body of record. 300 opinions, 300 decisions on the record. how he thinksed about some of the situations. place him in a larger context. where does he stand and what does that tell us about how he might make decisions going forward? like tostands in line think of as the grand tradition of constitutional law. and what wereomes they saying? let's allow the legislatures and we the people to govern
ourselves, but then let's take the bill of rights very seriously. i think you will see a very capacious interpretation of the bill of rights, not grudging. people were surprised about justice scalia being such a robust defender of fourth wendment rights and said no, the people are to be free from unreasonable searches and seizures. the interpretation of that was given in a number of decisions in the supreme court, a surprisingly broad grant -- breadth. will fitudge kavanaugh mode as same kind of somebody who takes democratic processes very seriously and will be a defender of individual rights. david: because he served on the d.c. circuit, there is a track
record with administrative lawss somebody who takes democratic processes very seriously and will, the rulings of agencies and the extent to which agencies -- independent agencies can or cannot do things. he is well known for striking them down. challengeant is this as it is being made to what some call the fourth branch of government, the independent agencies that are not subject to the congress or president directly? ken: one of his big issues is accountability, power being executed in a accountable way. especially with the growth of the administrative state getting in the new deal but then continuing without any interruption whatsoever in the development of independent brett is rooted in self-government values and wants accountability in government and i think that is a unifying theme and we are likely to see it on the supreme court. david: you talk about chief justice accountability in roberts. is there a growing majority for
this notion that we need to take a look at how far the administrative state has gone? ken: i don't think there is any question. even justice kennedy who had embraced principles of deference to it miss rate of agencies began expressing concern as time went on. i think this is going to be a lively conversation among the justices and we will see that in the case law. i expect there to be a trend toward much greater accountability on the part of agencies. agencies being reversed by the duringthan was the case the age of justice white. i would like to use him as an anchor. i call him the last new dealer. he went under president kandi and his view was the agencies are almost always right. david: given your experience with judge kavanaugh, there is
entirely possible that we will have more questions about the separation of power when it comes to investigating a president. we have investigations right now of president trump involving so-called russian collusion. he went to spit the possibility that there would be issues coming out of an investigation that would go to the supreme court that really question the executive prerogative? ken: it could be. it is speculative, but i do see the possibility if there is a confrontation, the issuance of a subpoena to the president of a major separation of powers issue. can an officer in the executive branch actually subpoena a president of the united states? it is an unresolved question. david: which judge kavanaugh has written a long article on. ken: yes he has. david: that was ken starr, a member of the d.c. circuit court of appeals. alix: some breaking news during that time.
-- speaking in new york on brexit. he is preparing for no brexit deal. he is prepared for a no deal brexit. they have to find a compromise on the irish border and the no deal brexit outcome is the worst. he is still talking about protecting the single markets and including services. the single market will be based on common rules. firm words coming from michel barnier, saying they are prepared for no deal. on the other side, you have a potential trade war. the impact is a great concern to the u.s. economy according to former treasury secretary jack lew. >> the tax policy that was cheered by the business community is a little bit like pouring kerosene on a fire. there is a flare and then it burns off.
the aftereffect of the tax cut will be chileans of dollars in dollars --ions of trillions of dollars in debt. i think that is going to be a burden on the economy as we are getting to the end of the economic cycle. alix: also still with us is neil dwane of allianz global investors. how quickly will the fed have to react? neil: the economy is running hot. it is going to run a little hotter. i think you have to assume that the fed will look through anything and assume that the phillips curve is eventually going to work and we will see the rates. definitely two more coming. despite the concern around the yield curve, it has become a redundant indicator. we all know that the inversion is not necessarily going to be the precursor to the recession that everyone is worried about. of -- isnt schutte
still with us. ken: i think they have carved out room to let it run as hot as they want. janet yellen one said she is going to let the economy run hot. i think jerome powell essentially said inflation is going to go around the 2% target in a medium-term and it only becomes an issue if it is persistently above 2%. i think they have plenty of room to let it go hot because they fed does not want to cause the next recession. alix: it also comes in terms of trade and there was a note out of the bloomberg talking about television sets and those prices came way down as trade barriers were removed. neil: i think over time, the feedthrough is potentially quite material. one of the issues between the u.s. and china is everything that president trump can tariff
is everything we buy. he can even force up the price because the entire consumer supply chain touches china one way or the other. i was in beijing in june. i think the attack or focus was a shock to the chinese. forink they will be going the operating systems and we will suddenly have two competing it ecosystems. companies will have to choose. do you have it made for sale in the u.s. and the west or for china and their friends in asia and probably russia and that is something that the markets have been complacent about. i know like brexit, we are waiting to find out the details but i think some of the devil is already out there in the ramifications that could come through this trade war. alix: if that winds up happening
and the fred looked -- and the fed let's inflation run hot, what kind of hot -- what kind of hikes are we looking at? i think the path the fed will follow in becoming more data dependent is to do it like they did in the 90's. i think as investors have only been around for so long, we whereer the hikes of 04, i believe he did 25 basis points. alix: talk about overshooting. neil dwane of allianz and brent schutte of northwestern mutual are staying with me. this is bloomberg. ♪
like rock has been selling risk out of europe and equities are moving higher. business confidence -- investor surveys came in worse than expected. in the currency market, it is a strong dollar story, a powerful dollar rally. inelloff in the bond market the g10, particularly in the u.k., with yields moving higher three basis points. potentially rate hikes coming down the pipe. to --30 spread continues brent crude up over 1%. that is a norway supply issue, but it is weird when you have oil and dollar rallying together. , but are may be weird we going to make 80 today? alix: i do not know about today.
i feel like maybe later, maybe tomorrow. if i was a betting girl i would not have this job. david: let's find out what is making headlines outside the business world. emma: a drama that lasted more than two weeks and had the world riveted is over in thailand. rescued 12 members of the soccer team and their coach from a flooded cave. u.s., president trump triggered a major showdown over the future of the supreme court. he has nominated brett kavanaugh to fill the slot left open by the retirement of justice anthony kennedy. if he is confirmed by the senate, it could be the most conservative court in generations. ,emocrats are promising a fight and chuck schumer says he will pose -- oppose with everything he has. president trump is heading to
brussels for what me a contentious nato summit. payaid nato countries must more defending europe and u.s. must pay less. spendingboost defense is having an impact. 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 emma chandra. this is bloomberg. erdoganurkish president wasted no time in asserting his , combiningded powers the treasury and finance ministries and leaving his son-in-law in charge, effectively putting him in charge of all government policies related to the turkish economy. thank you so much for being here. on thismberg report story basically said this is the last of the market friendly people in the cabinet of er
dogan. is that true? we should think about how influential they have been in the run-up. they are not influential enough to change the dynamic of policy, but when the market pressures --ame substantial, i think for the rate hike. there were more orthodox forces who were able to argue in time -- argue in favor of rate hikes in times of market stress. those voices are now out of the picture. i think this explains quite a lot of the market reaction after yesterday's cabinet announcement. david: if you are president , whatgone -- erdogan
messages are you getting from the market that might slow you down or deter you and those initiatives? messagesse previous are exactly the reasons that the markets have been concerned about turkey. turkey has been growing too fast for its own good in recent to a, leaving -- leading large external deficit and high inflation on the markets. they are looking for tighter fiscal policy, higher short-term rates, and a cut back on fiscal spending. promiseshe president's have been to the contrary. i think the task for the new administration is to reassure the markets at the central bank ,ill be able to operate freely will be able to set its policy rates freely, and there will be
some fiscal rate adjustment. seeink until we actually proposals to that effect, the markets will not be willing to give the benefit of the doubt to the new administration. david: should they be giving the benefit of the doubt? has he really taken any concrete steps that would point in the direction that you say the markets are asking for? he has committed to massive infrastructure spending, borrowing against that, and he keeps saying he thinks lower interest rates will cut inflation. thinkthat is right, and i having won an election on those promises essentially, further spending on infrastructure projects and lower interest rates, he will naturally try to deliver. in the past, we have seen the him allowingead to
higher rates. it means to be seen whether this will be the case this time around. i think the key point to remember is he won the election on these premises. he will try to deliver on them, and only market pressures will push him to give up on those promises. david: thank you so much for your time today. that,investors digesting and you can see what happened to the lira over the last 48 hours. you see that big gap higher with dollar-lira. now weaker about 3% over the last two days. still with us hard meal and brent. same questions. at what point are you getting compensated for the risk? neil: i would say not yet. the geopolitical region that
arkey is -- represents is reason the oil prices are going higher. that makes me nervous. i think as the other guest talked about what he will effect is uncertainty. what will keep me out of turkey for the moment is the corporate's are hugely levered in dollars. i think any sense of the rollover risk or the credit risk behind turkey is very high. i think we are seeing a bad move aa.m the spanish bank b i think at the moment i am happy to sit and watch and wait as i am in south africa and brazil and mexico, where the risk is not a risk i want to navigate. neil on agree with turkey, but the rest of the emerging market -- there was
fear it would spread like a contagion, and i do not think those conditions are in effect. alix: we have seen emerging markets underperform, whether you are looking at equities or fx. where would you be compensated for the risk? brent: some of the countries he mentioned, brazil, india, places like that, i think global growth will continue led by the u.s. i do not think we are at the end of the cycle and most importantly, i do not think the central bank or any other wants to up and that. that.nd what you are seeing in em typically happens before tightening cycles. i think the recipe is somewhat the same this time. while we have been tightening a while, we are starting to get more fearful the fed will pick up the pace, which i think they
will only if the market allows them. with em trading at discounts and global growth set to continue, em is a decent place to be. david: factor in the wild-card of trade. which emerging market economy's assets are most honorable if things escalate on the trade front? neil: i think it is asia. i agree with what brett was saying. i would prefer asia to latin america. in em, they are not as leveraged as the west. their governments are trying to be reformist and keep growth going, but we like fundamentally asia and the mood music of a higher oil price hurts the consumption story, but that is where the value probably sets, whilst the narrative of the stronger dollar and the fed, many will say, i will just wait where the fault of
complexity are beginning to lift. alix: this feels to be a broader question of in general, how much risk do you want for your portfolio. it boils down to if you think the global growth story is still in tact or not. >> i would not be as much in the eurozone as the past, but in em, the risks are well-known and i would be more likely to invest heavier in em then and develop countries. alix: thank you both very much. coming up, second-quarter earnings season for u.s. banks. betsy graseck will join us for what to watch and her favorite picks. this is bloomberg. ♪
♪ emma: this is bloomberg daybreak. i am emma chandra. coming up on bloomberg markets balance of power, travis linker. now here bloomberg business flash. a shakeup at the world's largest derivatives broker, fired ceo and warned that returns will be lower than expected this year. shares fell more than 30% in early trading. increasing expenses would push earnings-per-share at the lower end of analyst expectations. its firstconsidering year being an investment since being seized by the government. they are exploring a sale of a aschina seized the company
part of a campaign to curb risks in the financial system. walmart is ramping up the fight for grocery customers in new york city. the subsidiary will be making same day grocery deliveries in new york. make same day grocery deliveries to parts of the city. alix: earnings season kicking off this week. the largest companies are due to give results on friday and overall, the financials have underperformed into this earnings season. andorange line is the s&p the other line is s&p financials. joining us now for more on what to expect is betsy graseck. she covers large-cap banks. i have literally been wanting to talk to you for years and i am so grateful to have you with us. set the stage, why do you see
the broader underperformance of financials? betsy: there is a couple of questions investors are asking. number one, is an inverted curve coming and how do banks perform? , which is notrve what the forwards are looking for, is a tougher environment for banks. the second thing is around credit quality and how much do you think credit quality will deteriorate. we think these fears are a bit excessive relative to what we think will happen over the next year, and our outlook for the banks is more positive than how they have been performing. alix: let's get to one of those areas, what we see in the credit market. i want to pull up the high-yield versus investment-grade and what has been going on. you can see they have not really been doing much, maybe some widening here in there, but overall you are still tight, so where do you see the risk? betsy: the question is, will
there be an even wider spread and some of the parts of credit, in particular? my colleague in richmond is looking for wider spreads in ig and high-yield. if you look at our models on the bank stocks, we are expecting over the next two years the credit costs will increase. we have something on the magnitude of 60% to 80% increase. that sounds like a lot in commercial real estate and c&i loans, but it is often extraordinarily low base, and the fact that the fed has been raising rates, that is good for your nims. we anticipate we will see continued revenue left with nam's expanding and growth continuing to accelerate. look at the take a earning expectations, financials are not the top. what is your expectation for second quarter, and has that filtered through 2019/2020?
betsy: for second, we are looking for a solid quarter. we do not think it will be a blowout that we think it will be solid. net interest margins improving, a slower pace than one q but still good. the second thing is loan growth, and this is important. investors are very focused on loan growth. that will be one of the key drivers of increasing interest in the space. we see a modest increase in overall loan growth this quarter year on year, however importantly, what are the parts? and industrial loans accelerating pretty significantly especially in large banks. we are expecting from 1% year on year last quarter to almost 3% this quarter. alix: we had a chart that showed the loan growth and how large-cap banks will take part in that.
which ones are best positioned and where will the loan demand come from? betsy: we have been seeing loan growth accelerating in commercial for two main reasons. been drawing downlines little bit more. the other part of loan growth is less paydown's, corporate paydown's decelerating. ,hose two pieces are the driver and we see it across the board in large-cap banks recover, in particular in the money centers and the super regional banks. going into the quarter, we are focused on the money centers. on credit, we are markets -- skewed toward the consumer names. alix: walk me through some of the specific names that can benefit. betsy: there is a couple things going on with consumer. we have solid bollard -- borrowing growth. it is not off the charts, which is good. we want to see solid growth rates coming through.
in addition, credit quality is improving from the perspective that the deterioration in credit is slowing down. we get that every month in the master trust data, and what we have seen over the last several months is that lower tax rate that people benefited from ,arlier this year is showing up improving credit quality on a year on year basis. that is the main reason why we like some of the consumer credit names going into the quarter, in particular discover. alix: to wrap this part of the conversation up, you mentioned net interest margins will improve as the fed hikes. you can wind up having a flatter if yound still good nims do not have to increase the deposit rate you are paying for consumers. what is your outlook going forward? how competitive will it get? betsy: deposit betas will
accelerate until the fed stops frankly, its, and is usually two or three quarters after the fed stops raising rates that the positive betas hit their high water mark. we expect he will continue to see deposit betas accelerating. there are some areas of acceleration and deceleration, commercial already pretty high, wealth management already pretty high, so you are more talking about the smaller lot sizes. alix: we will have more with betsy graseck next. this is bloomberg. ♪
money centers. jpm goldman. within consumer, discover. alix: why? flush out the thesis for me. betsy: on the money centers, it is about deregulation. we all know the fed has been out there with their proposals to change some of the rules around see car, some of the capital roles, they may be tweaking around the edges on volker. we think that will drive more activity in the capital markets and we are above the street. as we look into 2019, our estimates for the money centers are 5% to 7% above the street. that is the thesis around the capital markets stocks. two top picks, jp, a very well-balanced business model and lots of management to come in particular.
on goldman, it is more skewed to some of the benefits with deregulation. names,elates to consumer it has to do with the fact that lower taxes, more money in your pocket, slower deterioration in credit quality, and that is a positive for the consumer stocks. ,iscover is our top pick primarily because it is a middle-of-the-road lender to middle america, with a really strong consumer service proposition. alix: what about the regional banks benefiting from rollback of regulation? betsy: we covered -- i covered the super regional banks and my colleague covers a wider swath. our view is that in particular, for the super regional banks i andr, our topic is suntrust that is primarily a function of them being more skewed toward commercial c&i lending, which is
a beneficiary of short-term rate hikes, more than the deregulation we discussed. alix: if you were going to look at which bank is most overvalued in the world you cover, what would it be? betsy: we have a couple of underweight, and they are on valuation reasons, but it is not necessarily the valuation is too stressed. i am just not looking for an increase in the multiple, where eyes and most of my -- whereas in most of my coverage i'm looking at an increase in the multiple. i would not say there overvalued . we just will not see the same kind of value appreciation. alix: betsy graseck of morgan stanley, no one else you would rather hear from headed into bank earnings season. i am looking forward to having you back tomorrow, but it was great having you there, lots of great insight into our potential new supreme court justice. david: back to the real world
tomorrow, but it has been fun. alix: if you don't know, david does not love talking about the yield curve. travel safe. i will see you back tomorrow. that does it for bloomberg daybreak america. coming up, i will be joined by oksana aronov, and as we had to we sawthe rally underway in stocks yesterday, trying to cling onto that. the s&p futures up about four points. in other asset classes, this is all you have to know -- strong dollar story. dollar-yen 111.18. this is bloomberg. ♪
alix: coming up, bulls on the earnings parade. the bulls regaining control of the market. playing offense for defense. president trump reiterating concerns over nato, calling on allies to boost their defense ending. tesla planning a factory in china to produce 500,000 vehicles a year, setting up production in saying -- in shanghai just after the tariffs kick in. the best moves for the dow and the s&p and months. four points up in equities. euro-dollar down 3/10 of 1%. it is a stronger dollar story. yieldsn the 10 year with moving higher about one basis point and curves staying flat.