tv Bloomberg Markets Americas Bloomberg May 22, 2019 10:00am-11:00am EDT
3:00 p.m. in london and 30 minutes into the trading session in the united states. i'm vonnie quinn. scarlet: and i'm guy johnson. vonnie: equity markets in the u.s. are looking something like this, we are in a down day today. although, it is very moderate. as our blogging team puts it, it is like fighting a many headed hydra. as the trade war lingers, we get these repeating headlines. more chinese companies are in the administrations sites. we will see if that carries throughout the day and if it has an impact on trading. it looks like earning and guidance are having the most impact. target had a great quarter, up almost 9%. department stores are feeling the pain. nordstrom down 10%, one of the worst performances in the s&p 500. the qualcomm stories also fascinating. we will speak with jennifer reed on the decision about qualcomm's
licensing and patents and qualcomm plus response as well. a lot of other -- qualcomm's response as well. even activision, blizzard was a downgrade. scarlet: we were talking about what is happening with the china feed into all of this and what it will do to corporate earnings. story out of london is theresa may. will she quit? that's the big question being asked in london today. the foreign exchange market is responding to this story. we are looking at a cable rate that is 136.34. we are down another .6%. the rate of decline is i watering. we've never seen a decline of this length for the british pound, going back years and years. let's take a look at where
european markets are more broadly. we are only down .1%. we are off of our lows. will theresa may go and will she go today, bonnie? -- vonnie? vonnie: minutes from last month's fomc meeting is out at 2:00 p.m. eastern. we make it insight into the discussion on what it might take for a rate cut. bloomberg spoke with jim bullard. >> rates are at a good place in the u.s. right now. if anything, we are a little restrictive and i'm concerned slightlyay have overdone it with our december please thebut committee pivoted. vonnie: he said it would be quite some time before tariffs start to impact the fed's thinking. ellen. us now is those comments were surprising. what would it take for the fed to make an insurance cut? >> at this point in the cycle,
it has to be something more than just inflation is low. factorse transitory there, and the fact the labor market is still strengthening means the economy must be growing above potential. and, therefore, no insurance cut is needed to lift inflation. on the growth side, what does it take to lose the fact that the economy is growing above potential? you look for deterioration in the labor market. let's say trade disputes linger on, hits corporate decision-making, capex in a way that you see it hit the labor market, and unemployment rate stops falling. that is the kind of scenario that gets you to the so-called a coinsurance cuts -- so-called " insurance cuts." the fed would be heading off her, so to speak. we are not there yet. the bar is high today for them to move up or down. dismissingeep
trade saying we don't see it in the real data. that is similar to what they did last summer. last summer, they weren't quick to react to trade. the last thing you want to do is cut, and two weeks later, everything is ok. vonnie: you have to think there was a discussion about the potential for cutting rates. he talked about being a little premature -- the fed being a little premature. would we see that on today's minutes? >> the fact that bullard has said that, he was in that meeting, so it might be noted that a couple of participants, a few participants talked about what it might take for the fed to cut, and that would be, in keeping with the numbers we heard of talked about, insurance cuts. the overwhelming majority are not going to be in favor or will express they don't keep -- see conditions today that warrant a rate cuts. least withront, at my conversation with investors, is where they are more focused.
if it follows the spirit of the meeting, the minutes, it would talk about trade in a way that was more positive. i don't think we get that. if it were to happen, it would be old news. i don't think we would get that, because these minutes are revised up until the day of release. it gives participants a chance to say, "that sounds to flip it on trade. i think we were a little more worried on trade at the meeting." so, it would affect the tone. the tone could end up sounding more dovish than the meeting did. the meeting came out sounding quite hawkish. scarlet: in aggregate, do you think that speak is confirming current market pricing, and if not, how big is the gap between fed speak and current market pricing? ellen: that's a great question, guy. i don't think -- the fed with the current market pricing of
more than 60% chance of a rate andin the next six months, i don't think the fed agrees with that. medium participant on the fomc believes the move will be up, though it won't come for quite some time. they don't have an appetite to push back against that. one of the things attenuating tighter financial conditions is the fact that treasury yields, the 10-year, is low. that has been offsetting equities and the strengthening and the dollar, in terms of the battling of what is easing financial conditions and what tightens financial conditions. i don't think the fed wants to push against that. that is keeping initial conditions easy as we wait to see how the trade tensions play out. scarlet: can i ask you a broader question? the pboc and the communist party in china are joined at the hip. they are both acting in concert in dealing with the effects of the fallout from the trade war. how close are u.s. authorities?
how closely do you think they will work together in teams of dealing with the fallout? i appreciate that these are all independent organizations, how would you characterize the way these two countries are going to respond, internally, to the threats of the trade war -- to the threats the trade war pose. ellen: the pboc can be a more quick, coordinated effort on the part of china, compared with the u.s., where views on trade can be all over the place, even within the administration itself. what we see in the u.s., from time and time again, is that, when there is an emergency, when faced with an emergency like financial markets falling apart, let's say, that is when people come together and we get a concerted, coordinated effort on the part of the u.s. to do something. then you have to ask, what does the pain point? for president trump, the equity market. there's only so far you can blame the fed for what is going on with the markets.
it's clear it is trade, not fed policy. the fed removed itself from that equation. what is the pain point for chair powell? if trump does not respond to his pain point equity markets, it is credit. we saw that with the january pivot where the fed came off of the tightening and moved to the sidelines. across financial conditions broadly, we are not seeing credit markets fall apart, but that is chair powell's point. watch -- pinpoint. -- pain point. vonnie: when you say credit, do you mean generally? point, in be the pain your opinion, if we take this two-year, tenure, or other? -- other spreads? ellen: think about corporate credit spreads. a blowout there. something more than 50 paces points widening -- basis points
widening. think back to december, corporate credit spreads have the most powerful predictive power, in terms of payrolls in the u.s.. think of funding pressures in the u.s. like things like payrolls and capex. it's that widening in corporate spreads which would create the most pain and contagion across corporate credit, more broadly. that would feed into the economy quickly, and that is why the fed responds so quickly when credit conditions deteriorate. vonnie: in actual fact, the market could end up deciding the market of this trade war, right? as you say, there will be a pain point for donald trump at some point. we don't see it in equity markets, but at some point, could it be the markets that solves this? ellen: it could be the markets that's, let's say, forces .omething, forces the solution that is what finally happened late last year into early
january, where it was finally -- when credit conditions deteriorated. the market was shut down in december. that is not healthy. when you think of what parts of financial conditions translate into wealth in the economy, the wealth in the u.s. is not that large. and --a can go up equities can go up and down, but credit markets, you have a direct transfer mechanism to the real economy. that's why the fed has to respond when things i can happened. it's a little bit of the market leading the fed, but the fed is following because it knows how credit affects the real economy. vonnie: ellen zentner, always a pleasure to speak with you. ellen zentner, morgan chief u.s. economist. let's check in with bloomberg's first word news. >> theresa may is facing more pressure to resign within days. bloomberg has learned senior
government officials were shocked may's new brexit proposal was rejected so quickly. may's allies are set to nknow -- know there is little chance to pass or ban. the u.s. may widen its ban on technology to china. the trump administration is deciding whether to add five chinese tech companies to the blacklist. a memo from the irs reportedly exposes the disagreement within the treasury department on president trump lost tax returns. according to the "washington returns must be turned over to congress if requested. ifly way to not comply is the president claimed executive notilege -- the only way to comply is if the president claimed executive privilege.
qualcomm's licensing practices violate antitrust laws, and the judge said the company abused its position and charged cell phone makers excessive fees. qualcomm has the most advanced 5g modems in the market. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. live pictures from capitol hill, where steve mnuchin is testifying before the house financial services committee. among the things he said, he said he spoke with walmart's chief financial officer, who told him he was concerned because tariffs lead to increased prices. mnuchin told the committee he is monitoring the impact on tariffs -- up tariffs on consumer prices. he also suggests congress should
raise the u.s. debt ceiling as soon as possible. he sees late-summer default risk without that happening. on other matters, he says it is unlawful to give democrats trump's tax returns. bloomberg subscribers can continue watching the treasury on the terminal at live go. this is bloomberg. ♪ >> you have to go backwards before you get forward -- go forward. the two presidents -- two presidents will see each other most likely in june. the idea is not to have tariffs. ♪
modest risk offer global equities on the day. look at the s&p 500, down fractionally well off of its lows, but getting punished on the day, once again, the stoxx, down 1.6 percent. down 15% from its all-time high as trade tensions ratchet up an d the dax has been mainly lower. the shanghai composite in china, in the asian session, down .5%. a bit of a risk off tone, but mildly so. the stock is somewhat worrisome. taking a look at a multi-your chart, the recent trading pattern fits what we saw in 2014, 2015, and 2016 when we saw a move higher, down, recovery, and then back down. inn, we had the big rally 2016 and 2017. look at the battle. an all-time high last april, now
down 16% from that area. stocks are confirmed to drop toward the bottom range, should that happen -- range. should that happen, it would be a drop of 20%, a bear market. those components are used in everything we use and that could be a weakness for the broader market. then qualcomm, the big story in the day, here is a today today -- here is a chart -- here is a two day chart. they may have to restructure their licensing. chairs are getting punished on the day. -- shares are getting punished on the day. vonnie: for more, we bring in jennifer reed who is almost through the 233 page ruling. what were the ftc's issues with qualcomm particularly? >> the ftc claims qualcomm was
abusing a dominant position in chip, modems needed for cellular phones and in operability, that they have the chips and also had the necessary patents that all cell phone makers need for all of the phones to interact. they would threaten to withhold the chip to get the kind of license terms they want, terms that were good for them and owners for the licensee's. they also said qualcomm's refusal to license chip rise rival was also a monopolization. scarlet: if this sticks, is it possible to quantify and what it means for the hit for the bottom line? jennifer: it's impossible to quantify. they have to renegotiate licenses before they negotiate new licenses. it is impossible to say what that will do. one of the things they have to do that will take away leverage when they negotiate for licenses, is they cannot withhold chip supply -- threaten
to withhold chip supply to get what they want. it's unclear how that will change the bargaining negotiation between qualcomm and its licensees. they are likely to appeal this and likely to ask for a stay of this order, pending the appeal. that appeal could take up to eight months, maybe longer than that. they may win a stay, so nothing would happen until that appeal is finished. there is some chance they could win on appeal. a lot of things are still in the air here with respect with how this will impact them. vonnie: to quote the general counsel with qualcomm, "we strongly disagree with the judge's conclusions, her interpretation, and -- her interpretation of the facts, and inclusion of the law." littleseeing something a like that here as well. explain this unusual aspect the department of justice weight in and asked for leniency. jennifer: it is unprecedented.
it was shocking in the antitrust community. they said qualcomm was behaving as a monopolist. the department of justice, which enforces the same laws the ftc does, came in and filed a motion out of the blue, saying to the judge, if you find liability against qualcomm, have a separate hearing. we would like to weigh in, and they asked the judge to go easy on qualcomm, saying there were national security implications, implications for the advancement of 5g. the head of the antitrust division at the department of justice has been open about the fact that he disagrees with a lot of the ftc's positions. he thinks this is a contract dispute and not an antitrust issue. vonnie: for now, it looks like the judge is not in agreement with them. jennifer rie, thank you for joining. it is time for our latest bloomberg business flash, a look at some of the biggest stories in the news.
target has solid first quarter performance. they posted four point 8% gain in comparable sales. customer traffic rose a yearan it did ago. --e's is raising lowe's says demand is fine, but results are dying down. that is your latest bloomberg business flash. scarlet: the british pound continues to remain under pressure. this, as we watch political development in the u.k. much pressure on theresa may to leave downing street, leave immediately, and not pursue her withdrawal agreement. 1.2638.d is trading
scarlet: live, from london. i'm guy johnson. vonnie: i'm vonnie quinn. time for uni moments. here's taylor riggs. taylor: so much of what were talking about in the last few weeks has been the outperformance of -- relative to the bloomberg agate index. joining me now is john carney from blackrock. this is not only high-yield, but muni is outperforming a lot of the other bond sectors. what is driving it and can it continue? >> it can continue. muni has had a good run, not only contained to this year, but as you recall, they picked -- muni picked up in 2018 as interest rates fell and they have been an outperform or of other asset classes while maintaining low volatility and high credit quality. here today investment grade muni's are up a little over 4%
with excess return. that excess return is a calculation of duration matched treasuries to munis. high-yield munis with a little more to -- a little more duration and credit is up about a quarter. had a: last week, we guest on talking about hitting record lows. tradingee the muni rates to treasuries continuing as well? they look very rich. sean: the narrative has been that munis are rich. while i can understand the argument, i pushback on it, in a sense that it is retail driving trading levels today. retail is determining where bonds trade and we can stay here for a longer period of time. if we rely on a nontraditional buyer of the si class to trade prices, there's a chance we could see more volatility --
asset class to trade prices, there's a chance we could see more volatility. we can stay at ratios that, historically, would read as tight or rich. taylor: we have about 30 seconds. walk me through what is driving demand. we have had inflows every week this year. we are five or six months through the year, so what is driving demand? sean: retailers put in about 36 36 million your today. that's larger than any number going back to 2012. we have seen sensational demand, retailers looking at the asset class differently, post tax reform. taylor: thank you, john carney. we will have more next. -- sean carney. we will have more next. this is bloomberg. ♪ ♪
releasing the latest on crude inventory. double ti -- wti down about 1%. economists we surveyed are looking for a draw down and once again, we are getting the opposite of that, a build of 4.7 4 million barrels -- 4.74 million barrels last week. a quick look at refinery utilization, that was negative by .6%. gasoline inventories saw a build as well, 3.71 million barrels. after the data, we see crude deteriorate further, down 1.4%. at 62.34 --ng
62.24. >> president trump and xi jinping are likely to see each other at the end of june. that's according to treasury secretary steven mnuchin and. mr. trump had planned to meet his chinese counterpart when the two countries were on the verge of reaching a trade deal, but talks ended earlier this month with no agreement. facing newi is pressure from democrats to open impeachment proceedings. hello see meets with party members today behind closed doors. they will discuss president inmp's defiance investigations. several democrats have called on an impeachment inquiry. president trump will name ken cuccinelli the second to coordinate immigration policies. he is an immigration hardliner who was an unsuccessful candidate for governor in 2013.
he wants proposed to denying citizenship to american-born children of illegal immigrants. iran could surpass enriched uranium limits set under its nuclear deal within weeks. that's likely to escalate tensions with the u.s.. the 2015 deal cut iran's enriched irani and by 97%. iran announced it was scale back some of its commitments. that was after the u.s. evoked measures that allowed iran to remain limits by shipping nuclear material overseas. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. vonnie: thanks. back to the trade war between the u.s. and china. in his latest blue break opinion says, myron scholes president trump may have picked a fight he has a diminishing
chance of winning. we are joined by the global head of -- explain to us what these ratios now onling you right the trajectory of the trade war. >> what we see through the options markets -- and they are really just insurance markets. the markets are indicating that the potential upside to chinese equities, compared to the potential downside to chinese equities, is sitting at a much higher ratio than that of u.s. equities. that's indicating the risk premiums or the attractiveness of chinese equities is more attractive today, according to the option market and current pricing, than u.s. equities. that leads us to the conclusion that, potentially, this trade battle between the u.s. and china, the potential winner could come out to be china. vonnie: could that change on a dime, ash? we are already seeing headlines
day after day and they have markets in turmoil, even as the vix index is low right now. ash: excellent point. we believe trade is the single greatest risk to the markets for that exact reason. the tides are changing quickly. it is remarkable. just a few weeks ago, the trade issues were expected to be close to resolved. today, what is very clear, we are very far having a resolution here because the trade issues have become more ideological than economic -- economical. dealing with an ideological beast is difficult. this is going to be a fluid environment, and, day after day, uncertainty is increasing. the more prolonged to the trade battle is, the more uncertainty will be in the market. going forward, in the short run, the markets may flatline where
you have days where the market goes up, days where the market reverts, and that is what we have experienced over the last one to two weeks. scarlet: ash, good morning -- guy: ash, good morning. ash: the option markets on chinese equity indices are liquid. obviously, the option markets on u.s. indices are liquid. efficient, the fundamental definition of efficiencies, there is no free lunch. the market prices those insurance contracts accurately and fairly. the price people are willing to pay to expose themselves to the upside in chinese equities is priced fairly. the price people are willing to pay to protect them against the downside of chinese equities is fairly priced. as long as the prices are fair,
it is an apples to apples comparison. if there is evidence which suggests the option market liquidity on chinese equities is poorer or limited, then you are right. it is an apple store just comparison and is not fair. -- apple toords oranges comparison and it is not fair. it is very liquid and very deep. guy: is this a sign of the existence of the chinese plunge protection squad? people talk about the fact that the chinese authorities are out there to ensure, basically, that the equity markets, which is driven by margin and has a big retail --, is actually protected. ash: i think you are right. --hink china does have outside of the speculation and one-time buying that happens by state owned enterprises in
china, there are fundamental and structural tools that china has which are very powerful in bolstering growth and stimulating growth. namely fiscal spending, government spending, as well as monetary stimulus, i.e. cheapening the price of money. those two tools in the u.s. are quite limited. on the monetary side, it is hard for the fed, in our opinion, the cut rates aggressively and further bring liquidity into the system with unemployment sitting at generationally low points. tariffs are inflationary. particularly when the r&b doesn't really flow. and chinaely the rmb will allow the rmb to appreciate . if you have this environment, can the fed do much? probably not. on the fiscal side, u.s. debt is all -- is already high.
can trump really get something theed when the house in u.s. is controlled by the democrats? probably not. trump couldn't get an infrastructure spending bill passed when the house -- the entire congress, house and senate, controlled by republicans. i think the ability of the u.s. to engage in that type of stimulus is there, but it is limited, relative to what china can do. vonnie: ash, we have to leave it there but thank you. i urge everybody to read this piece. our thanks to ash alankar, global head of asset allocations at janis henderson, coming to us from number. stephen nguyen -- denver. stephen nguyen is testifying before the house financial services committee. let's get to capitol hill -- steven mnuchin is testifying before the house financial
services committee. let's go to capitol hill. mnuchin is talking about xi and president trump meeting in june. >> steve mnuchin is testifying that, as of now, he himself has no plans to travel to beijing, but president trump and president xi jinping will come face-to-face do 28th, june 29, at that g20 summit in japan. questionsry is facing from democrats and republicans, republicans who are increasingly skeptical. one of the lawmakers is a republican serving rural tennessee. he asked the treasury secretary about what he should tell farmers about the impacts of those tariffs. take a listen to what the treasury secretary said. >> if we can get a good deal, it will also be very good for the farmers. unfortunately, we were on track for that and have gone
backwards. the president and secretary perdue are looking at various different programs to make sure, as we taken tariffs, we can use some of that money to support the farmers. i can assure you that the president is very focused on this. mnuchin alsoary urging for ratification on usmca or nafta 2.0. he says the lift of tariffs will help some americans, canedy and's, and mexico. is chairman of the committee pressing secretary mnuchin to hand over president trump's tax records. the treasury secretary is testifying that he did not see the reported irs internal memo, which was the reasoning the treasury department provided as to why they are not releasing those tax records. that, according to chairwoman waters, is her new political leverage to look into this
matter. take a listen to what chairwoman waters had to say when she briefly stepped out of the hearing room. >> with the recent information we got about the memorandum, i think that gives us some additional information to go after him with. the secretary just said he has never seen it, he didn't know about it. i want to make sure he understands what he is saying. i think investigations may prove differently. mnuchin will go back to the white house where he will meet with president trump and top democrats as they try to craft some infrastructure package. we are expecting he will make brief comments within the next half-hour. talkedvin, the secretary about the fact that there could be exemptions to the latest round of tariffs. has he given any more details there? byin: he is impressed
republicans to provide some of those exemptions. he said he would announce those details in the coming weeks ahead. this has been something that the treasury department has been working with the business community on. the treasury secretary is testifying that he met with walmart executives pertaining to tariffs, so we should note a large portion of athletic wear companies are also writing to the treasury department earlier, coming out against those tariffs. in the senate, there are top democrats working with republicans to try to provide tariff offramps, but this is something discussed in the halls of congress daily. vonnie: kevin cirilli, think you for that. you can continue to watch -- thank you for that. you can continue to watch live on your bloomberg. guy: let's figure out exactly what is going on. we have the pound lower. the dax is trading recently
vonnie: live, from new york, i'm vonnie quinn. guy: and in london, i'm guy johnson. this is bloomberg markets. let's get caught up with the latest bloomberg business flash. some of the biggest doors we are watching, let's kick things off with the man who ran mercedes-benz's parent for years. .e is stepping down
his successor takes over at an unprecedented time. for boeing over the grounding of the 737 max. of the 96perate 53 max planes lying idle in china. that was your bloomberg business flash. vonnie: as the trade tensions between the u.s. and china rage on, many investors wonder if, or when, tariffs will impact federal reserve policy. jim bullardoke with about where the pressure is falling in the u.s. economy. have a listen. jim: our farming communities are the trade war, soviet issue, and exports are done a lot if you look at the charts. the government is trying to come back and offer some payments back to farmers. those are usually considered
barely enough or not enough, so i would say, overall, u.s. agriculture is not one of the stronger sectors of the u.s. economy. we've had other parts do well, but not the agricultural sector in the last couple of years. guy: is that something, which, do you think will be reflected across the board? this is something you have to be concerned about. because it is such a headline grabbing thing here, how much do you think about the trade war as a fed body? jim: it is an important issue. for this to affect fed policy, these tariffs would have to stay on for quite a while, something like six months, and at the end of six months, if there was still no prospect of a resolution, that is the point at which it would weigh on fed policy. but, at this point, we are too early in the process. guy: you say that, but people
hold off from investment and have this wait and see approach. that itself is more damaging. jim: i agree about that. i guess my sense, being over here, is that the chinese side would benefit a lot from getting this deal done, and you would incite more confidence and investment in china, and more of the feeling that they are going to protect foreign investment. i could see a boom in china. vonnie: that was st. louis fed president, jim bullard. let's get a quick check of the markets. we are down, but down small. about .3% apiece for the major u.s. indices. plenty of stocks higher in the s&p 500, including some of the retailers. target, for example. twitter, also putting in a good performance, up 4% even as department stores try to drag things down.
for all americans. weaponizing the irs is a dangerous thing. the third branch of government, the courts will ultimately decide the constitutional issue here. when the courts decide, we will abide by that. >> are you casting doubt on the legitimacy -- >> i know farmers, but why not industries -- other industries as well? our processese and look at exceptions area people talk about diapers and other things, and we will be careful on this. the farmers are being personally retaliated for political reasons. >> are you seeing any nontariff retaliations from china now? >> i have not. >> what other retailers have you spoken to about the tariffs? >> i spoke to the cfo of walmart. they are the largest. i've spoken to others and i won't comment on all of them. we are working closely with them to understand where they can resource things and what the consumer impact is. >> on the issue of huawei and z
te, is there any -- is there anything huawei could do -- >> i will not comment on that. times, i multiple don't know how much clear i can get. i have had no conversations with the president or other people at the white house about the issue of delivering the president's tax returns. i don't know how more clearer i can be on that. >> are you drawing any plans to eliminate the interest rule? >> we are not doing anything. that would require a legislation, and we will see. maybe during a technical corrections bill, if we ever get something through congress. thank you. those rely pictures from capitol hill. stephen mnuchin just finished testifying before the house financial services committee. a couple of our own reporters are asking a couple questions in the gaggle at the end.
aboutcirilli asks mnuchin huawei and said he was not going to comment on specifics on the trade tensions or the blacklisting of huawei. he mentioned irs, tax returns, and so on. during the hearing, he did talk about late-summer being a time when we should watch for defaults as congress raises the debt ceiling. the president and xi jinping will meet at the end of june. shift of focus. joining us is larry. as oil priced correctly given the inventory data we saw today? me, no.o the consents is that people want that higher and expect there scratching their head. the new slow we hear every night
is that they think wti should be much higher. i think it should be lower, and eventually gets there, but we have missed, again with api, they are expecting a drop of almost 2 million barrels. i'm expecting flat. that will be about 32 million barrels, year to date, of additional inventory. vonnie: there are so many surprises, week after week. when it comes to this data, much more so than i ever remember. why is that? larry: i think that's why the market -- how the market works. if you look at the lower 48, it has gone down two weeks in a row, but production is really good. 1.2 5mply growth of about million barrels per day. not as great as last year, but it is defying expectations. that said, people are being
caught the wrong way in this. vonnie: how much does opec plus factor intosions your forecasting of oil prices these days, larry? it feels like there is so much production in the united states but that is where the focus is. larry: exactly. the production -- that that is where the focus is. larry: exactly. the production, after a flat quarter, growth rates will be much higher than most expect. that said, it is not enough to get oil prices of wti down to $55, where i think it should be. it will require something else. keep in mind, oil prices, to get to where they are today, required a lot of heavy lifting. i don't think the same events will occur twice. i think oil will drip lower by year end. vonnie: briefly, how much does the strong dollar feature in your forecast? larry: i think the dollar has a lot to do with it, but not just because the dollar is flirting with three-week eyes, -- highs,
more the implications and entrails of what the dollar is doing to the entire market, whether it be macro investing or commodity prices. vonnie: larry, thank you. that is larry shover of efficient advisors. guy: the pound is down 13 days against the euro. it is off its lows against the u.s. dollar, but still moving down as we await news from number 10. speculation as theresa may is on the verge of stepping down. we will wait and watch and bring you the news if it comes in. this is bloomberg. ♪
guy: 30 minutes left in the european trading day. from london, i'm guy johnson. vonnie: from your, i'm vonnie quinn. this is european close. guy: equity markets globally seem reasonably calm ahead of the fed minutes. these are your boards, but we can talk about what is happening in europe in detail. we are getting a ftse 100 up a little bit, a dax down a little bit. the stoxx 600 is down. in terms of what we are seeing for sterling, it is a different story. sterling is down .4%. there is a great deal of speculation that theresa may is under pressure to leave office, not in a few weeks time but in a few days. ast is driving down sterling the market tries to work out exactly what the implications are for the brexit process. ftse 100 trading up.