tv Bloomberg Markets Americas Bloomberg March 6, 2019 10:00am-11:00am EST
york. i'm vonnie quinn. from london, i'm guy johnson. welcome to bloomberg markets. vonnie: the bank of canada is about to announce its interest rate decision. no change from the bank of canada. that was anticipated. interest rate staying at 1.75%. the impacta look at on the canadian dollar. it is continuing to weaken further. 1.3 for a moment ago. it was about .25% weaker than the american dollar. in terms of how u.s. stocks are performing today we are a little lower on the major indices. the s&p 500 down .2%. a 24 hour reversal.
first it was a deal with willis towers watson and then given irish regulations, aon had to confirm that was happening and they are not going ahead with it for right now. the worstan is one of performers in the s&p 500 down 4.6% after sales missed for the whiskey maker. course giving back some of the gains of yesterday. it is the worst performer in the s&p 500 right now. nothing is moving in europe at a headline level today which is fascinating. what we got earlier on was a spike around the bloomberg scoop that the ecb star projection tomorrow's are going to be weak enough to justify action in terms of long-term financing for the banking sector. what happened when we got that announcement was we got a spike in the banking sector. that has faded. we also saw a move in the euro.
that has faded as well. the market took this on board and has moved past it. i think that's fascinating in itself. we do have potentially good news coming out of fiat chrysler today. talking about the possibility of alliances. auto sector is down. nothing is moving at a headline level. europe feels very quiet today despite some sort of pending really big news coming tomorrow from the ecb. vonnie: president trump pressuring trade negotiators to cut a deal with china soon in the hopes that it will continue to fuel the market rally. we are joined by deputy cio from minneapolis. days weast couple of have seen several growth warnings. today the bank of canada keeping into street study. yesterday it was china. what's the biggest concern to market participants where you
>> sitting these days you go i think the biggest concern is that investor perception and attention is starting to shift from the geopolitical headlines towards those economic fundamentals and as you mentioned some of the fundamentals are ready muddy and even the numbers coming out of the u.s. have been mixed. we have had really good numbers in the last couple of days. much of it spawned by severe weather in much of the country for big chunks of the year so far and the government should down. vonnie: where are we in the cycle? with are plenty of people fears of recession out there even as there are people saying capex has room to run. there may be a fiscal boost for the u.s. economy and consumers this year. at the same time it doesn't really feel like those pieces of optimism are warranted.
feel asnk it doesn't heavy as it did a year ago when we had the text field impetus going into the market. piece feels like it's leveling off. it's coming back to a level that's much more sustainable because the heat that we had in the first couple of quarters last year it spawned the fed to step in and raise rates and cost a lot of concern about inflation and margin pressure has moderated somewhat and we don't believe that it's indicating recession. it's indicating a much more sustainable long-term rate. whether we are in the seventh or we, the ninth inning go into extra innings for this remains to be seen. to put a more constructive tone on all of it. guy: have you been taking profit on your portfolio recently? we have seen a very strong rally
. are you taking some chips off the table? some -- late last year. put some of that in the market rate as we suspected you would have a rally early in the year as the wash selling pressure ended. from a taking chips off the -- we never go all in or all out. there have been some adjustments going on at the margin and we have always maintained a globally diversified structure and we maintain a growth bias in our portfolios. for those clients unduly unnerved by what went on in december and january, sitting on a little bit more cash isn't necessarily a bad strategy either. guy: you talk about the global portfolio. the chinese equity market has rallied incredibly strongly since the start of the year. 50% off theirup lows. did you take part in that?
upside theto portfolio around some of those positions? when you go back and look at emerging-market performance during the domestic meltdown in december emerging markets performed very well and actually supported the portfolios. we were already invested there. we maintained that investment. key thing is we six backed -- we suspect that given how poorly they performed over a number of years that there is still a lot of value to be had in those markets. the valuations are there. particularly if china stabilizes and is successful in its or evenn efforts stabilization that supports the immediate and longer-term because for our investors trimminghe issue of right, replacing it with something else and being proficient with taxes in that occasion as well.
vonnie: what areas are you liking at the moment? inwe retained interest industrials, technology, health care, consumer staples. a lot of those oriented towards a still constructive environment and it's interesting when you look at how individual sectors have performed in the volatility of this year. a lot of them would seem to indicate that maybe congress get something done on infrastructure bill as well once they get through all the other issues because those are the kind of names participating. financials are also on our favorites list. it's being reported that the president would like a trade deal with china because it would boost the equity market. would it boost the equity market? >> i think it might support the equity market i think we saw in trading on monday when the tweet came out over the weekend about
advancements in the china u.s. chineselks and the market rally and our market didn't on monday and actually was down. i think a lot of that indicates that investors are taking a wait-and-see approach. they want to see the actual deal that gets signed. much of it has already been discounted in the rally that we have seen your today. thank you, deputy cio of abbott downing. guy: let's check in on the first word news with kailey leinz. >> the u.s. trade deficit is resisting president trump's promise to shrink it. ae gap widened last year to 10 year high of $621 billion. that's 12.5% higher from the previous year. the president frequently cites the deficit as evidence of the failure of his predecessors trade policies but economists don't dwell on the number.
carlos ghosn walked out of jail in tokyo today after 108 dale is behind bars. the former nissan chairman posted one of the highest amounts of bail ever in japan. freedom will give him a chance to work closer with his defense lawyers on the allegations of finance of misconduct. rustic years could still try to extend his detention by arresting him a new charges. north korea reportedly is restoring facilities at its long-range missile site. the regime had dismantled the site last year. last week's summit on nuclear weapons between kim and president trump roque up without any agreement. british prime minister theresa may risks another defeat in parliament over the revised brexit deal. whip warns he is not confident to have the numbers. julian smith told mays top ministers that next week's vote will be tight to -- tight. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700
on its longest losing streak since february of 2009. investigators looking for clue -- investors looking for clues after this big rally. the dax is also slightly lower. the shanghai composite up from the december low being added to certain indexes helping. gaming ideas around coming back a little bit stronger. it will be interesting to see whether those gains continue. but take a look at the losing streak because it is pretty remarkable. a row.wn days in not a huge decline. the last time we had eight down days was august of 2011. that was around the time of the u.s. credit rating downgrade and we had a huge selloff in stocks overall. again? weat happen will know it's time. it is something to keep in mind for sure.
are seeing a bit of a bid with this stalemate suggesting maybe the bearers -- bears will take it today. a little bit of a gain for the yen against the dollar. finally, a two day chart of ge. ge down atwo days for .3% since november of last year. this on that update from larry coker at the conference talking about the power unit was longer. the industrial unit would be negative for the year. a bit of a surprise to analysts. jpmorgan saying their low price target of six dollars now seems generous. vonnie: thank you for that market up day. recently took over as ceo of cqs. joining us now to talk about that move and the current investing varmint is xavier
rolet, -- environment is xavier cqs ceo. he was head of the london stock exchange for many years. you have been in the business for 35 years. you knew michael way back from goldman sachs and credit suisse days. what else do you bring to the table as ceo of cqs now? why were you recruited? >> thanks for having me on your show. michael and i have known each other for a long time. we see huge opportunities ahead. .he world is recalibrating the geopolitical situation is evolving and the company's thanks to mike's founding principles and is very strong imprint on the company has developed a range of capabilities that we feel today we can really scale up. that is really for that .pportunity
we have known each other a long time. we started actually in the same firm right here in new york at goldman sachs. we thought now is the time to take advantage of that opportunity. will bring the distribution capabilities. institutional relationship. management expertise including in the asset management area. you might recall the london stock exchange was the owner for a couple of years of the russell investment. we also built the largest passage index business in the world. it is i think that global expertise and personal partnership that michael is looking for. known: michael of course as an excellent market timer. cqs primarily known for its credit focus. now at $18 billion and looking to expand, those strategies will also have to expand. what strategies will cqs look to do very well and looks develop
-- look to develop. equities perhaps? >> it's a very good point. michael's imprint on the company, he really has a quantum mind. range ofok at the strategies the company has, it's 31 strategies today. not all of them are operating at gale -- scale. rather than announcing expansion are strategy is to offer solutions to our global investing clients. pension fund, insurance companies, sovereign funds. using the expertise the company has built. know for ourl credit expertise. record, the performance is there. we have an excellent macro geopolitical analytical team. we do have expertise in equities and a range of other strategies
which we will use to create global solutions for our customers. guy: good morning. nice to see you. what's next for this business in terms of the ownership structure. the story around cqs according to some people is that you've been brought in to deliver an ipo. i guess the question that follows on from that is can he qs grow with its current ownership structure? grow with its current ownership structure. wouldould see why people ink that. but the truth is michael and i are committed to long-term partnership. michael is configured -- committed to continuing to run the business side. we see substantial business
opportunities focusing on solutions for investors and our global capability. capital structure is always part of the equation. we think of ourselves not so whichust as a hedge fund of course is the original dna of the company but as a global investment company. there are some possibilities that over time we might strike some strategic relationship with investors, absolutely. that's completely possible. that's not the focus of this partnership and mike coming on board is really scaling up the business organically to develop mobile solutions. of tomorrow.ies quantum computing and to medications. credit of course but also equities. excitedonally very about being able to work with an old friend again. guy: the fact that cqs is moving ofards more long in terms
the structure, can i take that as a signal that you think and may be cqs thinks the hedge fund story has now peaked? can talk in general terms about the hedge fund industry. we are not particularly attached to these old definitions. think the asset management industry and the investment industry is changing beyond recognition. we can talk a long time about what indexes and the passive side. we can talk about the relative lack of growth of the hedge fund industry. we think of ourselves as an investment company driven by absolute returns. in aat can be encapsulated long release strategy, and a combination of strategies. it's fundamentally about solutions that will enable the biggest asset owners in the world to achieve their investment objectives, meet their liabilities, meet their
internal hurdle rates or discount rates. vonnie: where does cqs think we are in the credit cycle? >> that's a very good question. the reality is the cycle has been running for a long time. still see some potential for this credit cycle to continue. we think the growth environment in the world is improving. some of the geopolitical deals are being worked out sometimes with some temporary difficulties will add to the upside in the growth environment. we do think the credit cycle still has a few more years to run. vonnie: we got so many growth downgrades. i know china is for you a bellwether for the credit cycle. tell us more about why you think there is still a good picture for growth out there. a very good question. we believe the growth cycle will continue. the picture is mixed if you look at europe.
an economic recovery that we saw, fairly tepid economic recovery that we saw has now essentially flattened out. monetary policy is likely to be more supportive going forward in the monetary sense. the eu in terms of liquidity will see a renewal of central-bank action. china is really quite a different situation. i think what we heard earlier with your colleague talking about the shanghai exchange picking up, something really important is happening in china. of course you don't expect an economy of that size to grow at 7% forever. china is looking today at ways it could recalibrate its economy towards consumption, towards innovation. for this needs vibrant equity and capital markets. we think the opportunity in china is very substantial. assets under
management growth last year was in china. last year remains by and large the largest market in the world with over 55% of all financial assets owned here. growth opportunities particularly focusing on technology, green debt is a trillion dollar market in china. means these opportunities and capital markets and investment are there. the economy has obviously forged ahead. we are at the stage for capital markets are catching up in the opportunities we believe over the next few years particularly be very china will substantial. guy: the volatility in china has been extreme. how much volatility will global investors tolerate given what we have seen in china bus far? -- thus far? >> that's a very good question. the chinese market was under very severe pressure and i think those investors will be rewarded
this year in china. something very important is happening. you will recall that the chinese government president xi did crackdown on shadow banking and capital markets. those policies are evolving today and there's definitely a renewed focus on funding innovation. technology with the help of capital markets. i think china is making an important decision to open up its capital markets to fund growth which is unfortunately not the decision that historically is made in europe. the economy remains essentially defending on bank funding and bank debt to it has undersized capital markets. this year will be a transformational year potentially in china and one certainly to look at with a great deal of care. for investment opportunities in domestic industries, technology lead industries.
guy: i'm going to ask a slightly related quest in. is goingal markets nowhere in a hurry at the moment. the rank channel to provide funding. he be is expected to liver another -- tomorrow. given the capital markets history that you have with that be mistake in terms of generating forward momentum in the general markets process? good question. it seems the ecb has become the first and last line of defense in terms of propping up economic growth. there's a structural job deficit of about 20 million in eu and there are 23 million small and enterprises. framework iny disadvantageous to long-term capital, particularly at these.
equity markets represent $40 billion a day in terms of daily turnover throughout the eu. in the u.s. it's five times that and china has $500 billion days. in my view europe needs to urgently recalibrate its fiscal and regulatory regime to give equity a better chance in order to help scale up these technology-based businesses that could create the jobs of tomorrow. and relying almost exclusively on monetary policy i think can protect the economic situation in the short-term but will not create the growth of tomorrow that is needed to achieve political stability in the eu. vonnie: xavier rolet, thank you. this is bloomberg. ♪ want more from your entertainment experience?
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johnson. vonnie: and i'm vonnie quinn. president trump has been tweeting in the last few days. we've been talking about opec. right now we have crude oil ating study, we have wti 55.61, crude oil inventories are moving down to 7.6 million. -- million barrels. 1.3market can expect million barrels, as is bigger than the market was anticipating. crude oil continues to selloff. according toarrels the eia, this is inventory that's down 2.3 9 million barrels. vonnie: -- guy: let's look at what is happening at the goldman sachs headquarters, apart from the change in dress code. taylor riggs is there. or: the markets are not on
the dress code, and i am joined by charlie, the chief markets economist here at goldman sachs. thetalk a lot about deterioration of risky assets at the end of last year, has that changed in 2019? -- the fed'su turn u-turn made a big difference. there was a misconception i think, by the markets, that the fed would be inflexible if growth continued to trend down. i think the clearest way to see that, if you look at the price action in february, it was down 9% and the treasury was flat. it is hard to square how the equity market appeared to be taking growth expectations down, but not pricing any change in the forward path. talk aboutn you growth expectations we talk about earnings versus economic recessions, arguably the
economics of -- recession is harder to get to. it is a risk, late cycle expansions typically put a pressure on earnings as wage pressers are to -- wage pressures start to pick up steam. and we have been expecting to see some of that margin erosion. we have plateaued years back. having said that, there is some surprising resilience in the corporate sector. it would not be out of our view that the margins would fall off after that. r: another bold call has been the 10 year yield nearing its peak. what does that mean in terms of the sectors you like in terms of the rotation may be into some of the riskier assets? >> that it is in a peak year is symptomatic of the fact that we think the fed is done or close to done. it's hard to judge if we will get another hike, it is possible.
for all intents and purposes, we are done. and there is a huge break from markets. fromassets always suffer the fed raising rates. taking a break will obviously breathe some wind into risk appetite. but where will it go in 2019? willie: to growth assets or carry assets -- will it grow -- go to growth assets or carry assets? --think u.s. growth will be rating and it will be a hard market for equities. but i think for credit spreads, which are only in the 40th percentile for history which is a generous spread with various forms of being short wall. carry trades have a three to six month window where they can do quite well. it is hard to imagine that the fed deviation will --. talk about theou
fed you say that it has hiked more than we think. on the curve, or ahead of the curve, versus others saying they are behind? >> i think it's hard to say they are behind the curve, i think they are in the right place. i have made that point that if looktart from -3% and you at 250 basis points, 500 50 basis points of removal of monetary accommodation is actually a meaningful hike. that would exceed the last three hiking cycles. i'm not claiming that's the it canetric but i think reframe why risk assets were having a hard time absorbing the expectation that the fed was going to be on the hiking trajectory. since the start of the year we are in a better place. i think they are going to be patient, and they can afford to wait and see, we are not seeing
the kind of inflation we would normally see at this stage of expansion. that is what is different at this time. taylor: what does that mean for credit, we've talked about triple b's making up a big portion of it. on it and theiew high-yield sector? >> the concerns, and it's a common one, is that the triple dramaticallygrown over the last decade. and there are some names or sectors that are soft and vulnerable to downgrades if the economy turns over. some sectors had disruption. i think the concern is that you have a chunk of downgrades with a drop in the high-yield, that's a lot of supply to absorb and that would reprice the spreads. i want to dismiss the scenario, i think it's a low probability
ended underestimates how well markets can absorb that big of a downgrade. most investment grade managers has basically mandates that will allow them to fold the debt if it does get downgraded. and it is not your father's high-yield market. still has inflows and outflows that could be meaningful. does that market also translate to the leverage loan market? >> which is the second market that people like to worry about lately. i think the concerns about leverage loans are overdone, i don't want to claim there has not been some erosion or protection in those documents, there has been. i think this reflects the of -- which is dominated by companies that are sponsored. they put a lot of value on the flexibility they gain from
without having too many heavy incumbents on the debt. i think this is more of a trend then a late cycle arose in. there are elements of both, -- a late cycle erosion. there are elements of both. i don't think this is precipitating a major credit problem. a reportyou put out about liquidity being a -- being the new leverage a year ago. how does it feel now? >> that was a report where we were pointing out the parallels between the close crisis liquidity environment versus the pre-credit crisis environment. i would make a few comparisons. just like credit was characterized by innovation precrisis, liquidity has been characterized by financial innovation in the post crisis.
the evolution of the dominance of suppliers and the liquidity of the markets. and the question is, is that something to worry about? the reason we ask is that we do see crashes happening on a much more frequent basis then we have seen historically and we have to ask why. is thata good answer liquidity always evaporates in a downturn. but if machines are supplying it i think it evaporates faster and that's why we have these flash crashes. and the risk is that they could be self filling narratives. more: we will have to get next time, that was the chief market economist of goldman sachs. riggs, thank you. she will be at the goldman sachs conference all day long. we will check on those oil inventories again, we had a bigger build on the market was anticipating and it offsets the decline in inventories from last
week. weekyear we have -- this we have a $7 million bill. the market was lower before the inventory came out, and it's lower than that. at 55.78. the price vonnie: it's -- guy: it's worth noting that there's a lot of crude in europe at the moment. let's check in with first word news and kailey leinz. >> it's a gloomy report, an fromization has a outlook 5 -- we .5% to 3.2% and it warns that things could get worse. among the risks, more trade disputes and problems caused by debt. president trump is pressuring trade negotiators to cut a deal with china in hopes that it will have a market rally. we have learned that the president is increasingly
concerned that the lack of an agreement could drive down stock. meanwhile, president trump's former lawyer, michael cohen, is back on a hill -- back on the hill testifying before a house committee behind closed doors. he could be asked about russian meddling and possibly obstruction of justice. while street pay limits are set to get a fresh look. off postcies may dust crisis rules, they were meant to curb bonuses that encourage traders to take dangerous risks. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists in more than 120 countries. i'm kailey leinz, this is bloomberg. vonnie: thank you. ghosn --up, carlos coming up, carlos ghosn and his
vonnie: the u.s. trade deficit is widening, hitting a 10 year high. president trump says the big deficit is a sign of portrayed policies, and he hopes to reach new deals with the e.u. and china. let's welcome our correspondent from washington. the public narrative is about china and the idea that we -- that there is a push to get a deal by the end of the month. in reality is it china or europe that ceos and major companies are worried about? >> the things people are worried about is the trade war is
extending, and the next battlefront that you can see is something lowing up with the e.u. over cars. that seems like a more real and immediate threat then things escalating with china right now. that's important because we need to put the global trade of cars into context. this is 8% of global trade. and the trade between u.s. and china is up 3%. cars, and a lot of that is europe, could be consequential for the global economy. guy: has the president's policies, to what extent are they responsible for the widening trade gap? shawn: there are two points there, the broader economic policies get into tax cuts, the fiscal juicing we have seen of the u.s. economy over the past year, that has boosted growth in the u.s. and has led to a stronger dollar. those things are things that
feed a demand for imports, and therefore, the trade deficit. at the same time, trade policy has also had a short-term impact on the trade numbers. at the tail end of last year we saw a big collapse in exports to china, and a surge in imports to try to get ahead of tariffs on china. that had a demonstrable effect on the trade deficit with china. if we look at the broader forure, the trade deficit goods and services has risen more than $100 billion, or 20% of donald -- from donald trump's first two years in office. by his own metric, he is not doing well. vonnie: we have three weeks left in the month of march, how likely is it we get an agreement with china and movement if he
even gets passed everything else we have to deal with in terms of a china trade deal? there's a possibility that the signing summit that we are expecting, the chinese president has been invited to mar-a-lago and that may slip into april. there's a few reasons for that. the biggest reason is that the chinese domestic political calendar, they are in the middle of the national people's congress, that drags on into the month. it is hard to see the president leaving the country during that and closing the deal. there will also be nerves on the chinese aside, -- chinese side. they looked at north korea and vietnam and said is the deal a done deal? and donald trump is not going to embarrass the chinese president if they travel to mar-a-lago? we think a deal is close but it
is not done yet. thanks to shawn, joining us from the washington, d.c. bureau. carlos ghosn has been released from prison, he is out on bail. the former nissan chair served 108 days in detention and his bail of 8.9 million dollars is among the highest ever in japan. for more on what is next with carlos ghosn, let's welcome our guest, jackie simmons. been08 days he has not able to control the narrative and there is some speculation that he may have a press conference. nissan can no longer control the narrative on its own, so how does this feedback into the relationship between nissan and renault.
the renault-nissan relationship was falling after the arrest, and having him tell his version, knowing that the renault side has not exonerated him. they did a corporate governor search of his pay. they have been more on the side lawn and the nissan side has been more aggressive and push the narrative of wrongdoing and financial impropriety. this could raise new questions to an already tenuous situation. vonnie: the defense is also saying that the justice system in japan would be seen as a country risk, and depending on how this trial plays out, it may be a deterrent to other companies from either investing in japan or getting into japan is mr. ghosn is convicted. 99% of the cases are
convictions. >> it is true that one of the big arguments from the defense is that this will not shine a good light on the japanese system. this is one of the business world's biggest icons, he did not have access to legal counsel , he could not make phone calls. he is under more restrictions now that he is out, but he is on a tight leash. ishink one of the big cases what does this look like for japan, when they take one of their biggest and best and they do not give him access to a fair shake? what are the implications of him getting off? they have a very high conviction rate, but now he can work with his new legal team, which is important, and it's becoming more of a coin toss. what happens if he wins? where does that leave us in
terms of this situation? becausea good question no one is talking about him coming out in all of this. rate.ave a 99% conviction if he wins, that upturns the whole system and it changes the whole narrative completely from start to finish. no one is putting their bets on that wager. yet. guy: we will see how that develops, the press conference could be essential viewing for carlos ghosn. thank you very much. ahead, futures in focus, we are watching oil as there are huge bills and inventories following massive declines. this is bloomberg. ♪
johnson. vonnie: this is bloomberg markets. at 55 .87.ing down 1.2% after more than seven barrel -- 7 million barrel bills and inventory. is -- oiljoins us, it is trading sideways, and it doesn't seem to matter if we get a downdraft or an updraft. oil is still trading in the range. what would be the catalyst? >> there are really three factors we need to know for crude oil to rally, first, we need u.s. and china to have a trade deal. some are still very disappointed this morning. donald trump knows it and he has to fix it. we have to get this trade deal, it would boost demand and our economy. you also have to watch the rig count, which is at a nine-month low. if we are producing you are oil
supplies, inventory will get tight. the headline number was a shocker, but i think ultimately you have to dig deeper and push oklahoma. we are at that five-year average so inventories are tight. 40 8 million barrels. as we see more tightening go on, we could see oil prices starting to trickle higher as we come to the driving season. frome: our thanks to you rjo futures. guy: our stock of the hour is making a big move, the british american tobacco investors are hoping for the departure of reduce theieb to pressure on sales of menthol cigarettes. there was talk of a significant reduction. joining us now is our
correspondent from bloomberg news. we saw this resignation yesterday, u.s. tobacco stocks bounced and then faded to rally. but this made a bigger move, why? to 6%, and the5% big reason is because of bad's big exposure -- bat's big exposure. they get a court of their profits from the u.s. and the process of delayed or softer rules on meant and i'll give them a little bit of a reprieve. vonnie: it is a hugely political issue, there are certain demographics that prefer menthol cigarettes. intend to do to expand its offerings, so that this will not affect them as much in the future? has already been moving to increase their cigarette
alternatives, they have a to be -- a heated tobacco device, glow, that has been doing well. they are facing competition. you have juul and others moving into the segment. this is something they could get going,eve from gottlieb because he had been talking about regulation on flavored e-cigarettes and those sorts of products. there is a perception that it is aimed at children, or younger smokers. guy: great stuff. about a half-hour to go of regular trading here, this is bloomberg. ♪ bloomberg. ♪
european trading day. from london, i'm guy johnson. vonnie: and from new york, i'm vonnie quinn. guy: let's look at the markets in europe. the stoxx 600 down 1/10 of 1%. suggesting the ecb will downgrade the forecast tomorrow. justify theough to governing council delivering long-term financing for the your pain -- for the european banking sector. we saw a big spike in the banking sector that has now unwound. we saw a big story with the euro versus the dollar, which has unwound as well. the market has gotten to the parts -- has gotten to the point that they believe brexit is coming and is creating a knee-jerk reaction, telling you where positioning is.