anna: it is wednesday, june 1. stocks drop and jamie dimon casts doubt on the economy. the countdown to the european close starts now. >> countdown is on in europe. this is bloomberg markets "european close," with guy johnson and alix steel.

[bell ringing] anna: welcome to bloomberg markets the european close. guy johnson is off today. i'm anna edwards with alix steel in new york. after an hour until the close of the european markets. we are weaker across europe right now. on the stoxx 600, down by .7%, but this seems to be a story coming through the u.s. that has pushed its way across the atlantic. lots of this session we have been without lots of direction, then we have the data at the top of the last hour from the u.s., which seemed to be decent, reinforcing expectations the fed could hike. got gloomy headlines on the economy from jamie dimon. they are all hitting and about the same time, so the net result was weakness in risk appetite. down by .7 percent, most sectors in negative territory. brent crude up another 1.2%. we are showing you the august

contract now. trying to get a sense of how much further higher we can go on oil prices. we -- we talked to a guest who said she still sees further upside on oil prices. the markets life team have a different take on things here at bloomberg. this is the picture on the pound. the pound was looking sluggish before we got that good data in the u.s. and those comments from jamie dimon, and as soon as we got that dated the dollar jumped, and not just against the pound, also the euro. pound weakness as we head into a long weekend, something to do with in the u.k.. alix: in the u.s. you are mentioning that risk-off mood. the s&p around the lows of the session. we are still off by .6%, at two year yield off its highs, but still up by nine basis points after that good news in bad data when it comes for the fed. it means they can go if u.s.

unemployment is holding up relatively well, and the dollar jumping to the highs of the session. best performing stocks in the s&p is salesforce. it is an earnings story from yesterday. company raised its full-year forecast for adjusted earnings strong demand for business software and all of that propelling that stock higher by about 12%. anna: let's get to some breaking news. this is about the euro zone. the eurozone commission has recommended that croatia joins the euro next year. this has been a little bit in the works for years. the euro zone moving closer to adding its 20th member after growing to be in good enough shape to join the club next year. there are some hoops to jump through to enable that decision or mentation to be reached. we see the recommendation from the executive branch of the european governing body, then that recommendation goes to the individual countries, and they have to vote on it.

the european commission recommending the adriatic nation should be allowed to adopt the common currency after finding it fulfills the necessary requirements, such as inflation and public that. earlier the european commissioner spoke about croatia's prospects of joining the euro. >> croatia is meeting all of the criteria, and correspondingly is ready to join eurozone as of january 1 next year. of course, it is still subject to confirmation by member states. clearly that is positive news. i would like to congratulate the authorities and people for this remarkable achievement. anna: joining us now, alexander weber. very nice to talk with you. it was the size and scope of how significant it is that the euro zone is now considering its 20th member. alexander:.

it is confident in the stability of the euro area. the debt crisis now sufficiently in the rearview mirror. european officials are applauding. the rhetoric is positive about somebody wanting to join. it is the first accession of a country since 2014, when lithuania joined. it is a very positive move for the euro area. alix: how does croatia get the thumbs up? what are some of the requirements it has to show to get it? alexander: there are four main requirements. you already mentioned on public debt, for example, the exchange rate, but the biggest obstacle was probably inflation. in other parts of the world inflation has spiked as a result of the war in ukraine. ultimately it was ruled as a sufficiently close to the rest of europe to be able to join. anna: the conversation around inflation has had everywhere,

hasn't it? what is in it for croatia? why have they decided they want this, they want to be part of a much bigger monetary union? some other eastern european countries, not so sure anymore. alexander: exactly. like for the baltic nations, the move is partly motivated by desire to align with the world, to cement this alignment with west after the end of communist rule. there is also strong economic logic, because croatia is a popular tourist destination, and it is going to be more popular for european tourists if they do not have to exchange currency. the croatian central bank governor has also lowered interest rates. that will help the economy. also we should not forget that croatia will get access to all of the architecture, like the european stability mechanism. it has this insurance against shocks hitting the economy. alix: thanks very much.

alexander weber joining us on croatia being the euro's 20th member. let's get more on this and all things europe, particularly when it comes to the ecb. ubs investment bank chief strategist. it is always a pleasure to see you guys. i want to start with croatia joining the euro and how you understand that from a broader sense. why now? what stability-wise, when economic-wise leads croatia to do this? >> let's start with what it means for the euro zone. the euro zoneould do with any incremental good news it could get. the central bank of russia was sanctioned. there has been a real question on, what is hot currency, what is money, really? you see that in the break of relationship between gold and real rates. the fact this is one incremental step that helps establish the euro as money in the context of

international investors, that should be taken as positive. i don't think this is a day-to-day trading event. the bigger questions remain whether or not we have seen peak fed pricing, and what we are seeing, what is not being talked about is that european currencies are in a deficit for the first time since 2012. these are the things that are going to drive the euro in the near term, this is unambiguously a small positive step for the euro. what is in it for croatia is much easier trade, not just of goods, but particularly of services and tourism. anna: so that is the positive. good to see. the european currency, that is something we need to focus on. in terms of how high inflation is allowed to get in the euro zone, this week we have been woken up once again on the inflation front. then we have the ecb talking about, or the topic of 50 basis

points is now being thrown around when it comes to the euro zone. one bank, deutsche bank, has that as their base case for the june meeting. do you think the conversation is shifting to 50 basis points? bhanu: it is a little bit of deja vu. we have seen this with the fed saying, never 50, and now a string of 50's is on the table. they are still expanding their balance sheet. the first thing they need to do is stop the app program. there is enough doubt, because the nature of inflation in the u.s. and europe is different. in the u.s. it really is quite broad now. this is not what the fed had expected last year. she has not changed her mind. she said this is broader and about demand as much as it -- as much as it is about supply. in europe wages are still under 2% to 3%. that is not similar to the u.s..

a very different situation, and he don't have the same pressures on rent, you do not have the same pressures in autos, so it is about energy. therefore they are going to be a little bit more cautious. the markets are pricing in a rate of about 1.5 percent, so that is incrementally about 200 basis points, which i think it's fair. it could get higher, but i think they're going to start at 25. alix: how quickly do you think the ecb is going to action just to get to that 200 basis points like you are talking about? and how quickly does the implication that a recession scenario take hold? bhanu: stagflation is a central fear for markets, but most people don't actually think about a percent inflation with a deep recession. that is very unlikely. it doesn't usually happen. they're talking about is a poor growth, inflation makes. the mix is going to persist in

europe until at least q3. in q3 we think things will improve substantially. the lack of crude oil imports, if that trend -- if that transpires into an embargo, that is a game changer. when you have today the price of natural gas trading reasonably heavy and the storage is actually increasing, contrary to the narrative, vc prices come down there is no real need, no imminent trigger that leads us toward stagflation in europe. within that context we should see reasonably strong growth in q3 and we think the ecb will be able to deliver 50 basis points this year, 100 basis points next year. that is the case. the ecb still believes that growth is going to be above 2.75%. if you are not thinking about stagflation at all, they are well ahead of the consensus. anna: sticking with the gas

theme, russia cutting off gas to the netherlands, denmark. a smaller contract to germany. not the main one, but a smaller contract. poland and bulgaria already cut off. this would be huge. bhanu: there is a lot of downside risk, because the countries you mentioned still constitute a significant minority of the overall. if you cut off nord stream one, if you cut off france, if you cut off italy, that is the channel through which you see stagflation pressures. i don't think you see stagflation pressures through china or the u.s., the housing market. those could be recessionary events, the stagflation event we need to focus on is natural gas flow. if you get that embargo that has a much larger impact as opposed to oil prices going higher with the flow still continuing. if the flow continues you get inflation but you still have growth.

if you get a natural gas embargo that is something to worry about in terms of stagflation. alix: then we are looking at factories shutting down, electricity not being able to get through my etc. what do you do then? what is an -- what is a good investment thesis when you have to play that wildcard and we are in an increased yield environment? bhanu: it is a difficult one, because i think first you have to think about, how do you protect against stagflation? in my mind it is a low probability event with a very high negative payoff, and you have to buy protection in sectors that work in stagflationary periods. on the one hand, consumer discussion does get destroyed. we have to think about two separate horizons. one is the tactical horizon on which i think the growth inflation makes would moderately improve. on the context you probably see

chinese equities, european equities pickup. then there is the second horizon, which is anything beyond three to six months. on that horizon it is unambiguous that the mix is worsening. that growth is coming lower from a very high level. not in the last quarter, but the last couple of years. and real interest rates are going to be rising. that gives you equity returns that are half of what you have analyzed in the last 10 years. anna: the headwinds are increasing. we will pick up on the conversation next. thank you very much. venerable asia, ubs. -- bhanu baweja, ubs. this is bloomberg. ♪

anna: welcome back to bloomberg markets. i'm anna edwards with alix steel. let get back to our question of the day. where is the biggest risk from qt? stay with us is behind her but wager -- is bhanu baweja. bhanu: it is going to continue,

and we are going to see the footprint of the fed as a portion of the overall markets. over this period it is going to decline by about 10 percentage points. between 17 and 18 is where they end up by 2024. we have a data point of one previous occasion in which the fed has done a -- done this. the way to think about this is in three steps. the impact qt is going to have on premiums. the impact it is going to have on credit steps, and then the impact that both spreads are going to have on equity valuations. we have done the math we think that in the worst case where the fed does increase -- the treasury increases the supply of duration, that is a five multiple headwind, which is 10% over a three-year period the s&p, just coming from qt.

lots of qualifiers, but that is the bigger picture should the treasury increase, which is not a derivative -- which is not a given. which is what they are likely to do in the near term. eventually it will catch up, what in the near term the increase, they had to the market may not be instantaneous. alix: the last time we had quantitative tightening we ran into some plumbing issues, particularly in the repo markets. you anticipate that happening this time? what are the indicators you are watching for that? bhanu: great question. liquidity is going to become a problem not just for some of the esoteric parts of the market, but even for mainstream markets. one of the things i have been watching for is the spread between treasuries. for tips in particular. that is one part of the market where the fed was a large component. in addition to that we got etf

coming in, saying ratio in this market is great. now because the fed is exiting and it may print a smidgen below things on the tips market, that leads to risk of etf inflows. as that happens wall automatically moves in the other direction. you could see an overshoot of the market i am most focused on is the tips market. you could potentially see an overshoot on real rates if the liquidity comes out of there, which is going to be consequential for markets. what you are saying is the risk-free rate of the world is at risk of significant volatility as a result of qt. alix: that is definitely a statement. we will get you back. love talking to you. but her but wager -- bhanu

baweja, ubs. this is bloomberg. ♪ g from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want —your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with comcast business. powering possibilities.™

alix: some breaking news. a panel of investors have ruled that russia failed to meet its bond obligations in fall, triggering an insurance payout potentially worth billions of dollars. here is damian sassower. dumbness with down for me. does this mean russia is technically in a default and credit swaps need to be paid out? damian: yes and no. we had about $41 billion notes outstanding. the committee ruling this way on a mere $1.9 million investment last month. what it means is he might have a net $3.2 billion payout on the derivatives only. it does not mean you are going to have a default where the country is going to be in default. so they may not have defaulted necessarily, but the kind of defaulted on their obligations. that is a put a big deal,

because when we $.2 billion changes hands that is a meaningful amount of money and creditors are not going to long forget that. it is going to be incredible for russia to overcome this. a lot of the corporate's, b2b, for example, are nearing default as well. anna: just to go through that a little more slowly, if we are looking for that moment where the cddc says that said, russia is in default, we haven't necessarily got there, because they have not included in .9 million dollars of extra interest in a late bond payment last month. so they did make the payment, but it wasn't enough? damian: it is early days, but that is absolutely right. they missed a little bit of accrued interest, so technically they are in default. that triggers the event on the determinations committee perspective. anybody holding that, i guess 1.40 billion sovereign cds, they are going to be about a $3.2

billion payout. again, it is early days. it just hit the headlines. alix: is russia going to be ok with this? are they going to admit this is a default? there is other issues of whether or not they think they are in default if they have not paid. damian: the market has long been pricing in a default. the implied probability was 99%, so the market thought something like this would happen. we were going to be placed into technical default either because the u.s. government is forcing them in that direction, which is what everyone is saying, or they don't want to pay anymore. in this instance i think what is going to be interesting here is, who they point the finger at. is this the government forcing russia into a default or not, you know? i think it is going to be interesting as this saga rolls on we are going to see. anna: who owns this debt at this

point? some years ago, pre-2014, maybe it was a different profile. who owns it now? we certainly had a lot of buildup. damian: it is a good question. you have to believe that dealers are holding the bag here. certainly you might have some real money investors who have some protection on their books, but a lot of it has been whittled away. certainly not the hedge fund community. i don't think there are speculators out there who have a lot on their books, but we will see. again, that is what the auction is all about. it is early days, we are going to find out more. anna: thanks so much with a quick some up. damian sassower, bloomberg intelligence. we thank him for that. let's take a quick look at european equity markets as they get ready to close for today in london. five or so minutes away from the end of the training session. we were pretty flat, then we got some good news out of the u.s. that turned out to be bad news as far as fed hike expectations.

we see european equity markets down. the dax down .4%. also helping that particular market to outperform the others just a little. this is bloomberg. we will see a close of european markets next. ♪

anna: welcome back to bloomberg markets. 20 seconds to go until the close of european equity markets. let's have a look at where we are trading. this is the end of our trading day, and the ftse down by -- let's show you what that looks

like in graphic form. this is the intraday session chart of the stoxx 600. just last week we ended the month of may, toward the end of the month we had a slightly more positive sentiment toward risk asset. yet we were still struggling for direction. then we got that positive data coming through on the united states, on the u.s. economy, and that got people thinking, maybe the fed can hike as expected. he also got jamie dimon with gloomy comments. a few weeks ago he had been talking about storm clouds that could dissipate, and now he is talking about hurricanes. we see all of that sent risk appetite down in the u.s. and europe as well. let's take a look from a sector perspective. some different performers across the various geographies. auto parts moving up by 1.7%, one of the only sectors in positive territory. that plays well for germany, of course. travel and leisure, i mentioned

this with abigail, and she was saying this was a weak spot in the u.s. as well. on the travel and leisure sector in europe, it is partly travel, it is also leisure. that means gaming companies, a different story there. let's pick out some of the movers we have seen. utilities is one area of weakness for european stocks. this is one of the businesses that buys a lot of the gas for germany. and this contract is still in place. juniper found a way to pay in euros and keep themselves on the right side of the rules. they have not been cut off when it comes to russian gas. they are right at the heart of all of those developments as we see russia picking on individual countries and treating them slightly differently. that is the view of mario draghi in italy get -- in italy. doc martens, of course the iconic footwear, which i'm sure you are familiar with, up 18%. it is not a huge company, but a

nice story. they are upgrading guidance. it seems they have pricing power to increase the price they charge for those boots. i wonder if that has anything to do with the fact the sex pistols are releasing "god save the queen to tie in with the jubilee celebration? i put in ews as well. this is the german wealth management, part of deutsche bank. that is off 5.9% as the ceo agreed to resign. seems to be the word coming from one of the members -- memos bloomberg has seen. allegations of greenwashing. we are going to get more on that now. alix: steven arons on deutsche bank joins us from frankfurt. talk to me about the readthrough of the ceo change. who takes the place? does it help to mitigate the greenwashing allegations, etc.? >> it certainly is an attempt by deutsche bank to draw a line

over a number of allegations that have been spoiling around. some of them personally are linked, so there is going to be less of a focus on those, however the greenwashing allegations are about dws as a company, and the probes in germany, and the criminal probe here in germany is still going on and putting in a new ceo will not change that. the new one is sort of a lifer at deutsche bank and a trusted confident of the ceo. he will try to clean up this company. he has a noon -- a new mandate. alix: steve? anna: we have a problem with steve's line there. that sounded ominous, didn't i? stephen, i don't know if you can still hear me? i don't think he can, or at least we cannot hear you. thank you very much. oh, he can. excellent. he is back, wonderful. on the esg side of this, how

much is the esg community, i suppose, shaken by this? i much to people who want to sell esg products and wealth management, how much did they say this is just a dws issue? how much is the whole space being shaken by people shining a light on it and saying, what exactly is esg and what is not? steve: it is certainly a big wake-up call to the industry as a whole. it has been for some months, ever since the u.s. is probing the statements dws has been making on esg. that alone was a warning to the industry. now the ceo leaving, essentially admitting allegations of greenwashing, means they are going to take it more seriously. i'm pretty sure they have already been making changes. anna: thanks very much, steven

arons joining us with the latest on each -- latest on dws and deutsche bank narrative. let's check out where european equity markets are. this is a picture across european equities. down just over 1% on the ftse 100. the dax has been sheltered by some of those names in the auto space, however the biggest upside coming from scandinavia. that is the look on the major markets right now. alix: you are looking at the s&p 500 up one percentage point. jamie dimon talking about hurricane for the global economy. i'm going to talk about all of this later on today in the cable show. that is at 5:00 p.m. in london. if you cannot catch us there you can join me on spotify and apple podcasts. we will be talking about inflation, as well as the ecb. then, of course, jamie dimon's head scratching comments on the economy. oil is higher.

opec members are considering whether to suspend russia from a production deal. opec-plus also reducing their surplus estimates for this year. details next. this is bloomberg. ♪

ritika: this is bloomberg markets. i'm rate go to. coming up, quincy crosby, the prudential chief market strategist. this is bloomberg. ritika: keeping you up-to-date with news from around the world, here is the first word during the u.s. is ramping up military support to ukraine. president biden says he will give the ukrainians advanced rocket systems and weapons that will allow them more precision. the weapons will light ukraine hit targets as far as 15 miles

away. the u.s. says ukraine has agreed not to use the weapons to attack targets inside russia. in the u.k. consumers are being urged to race for inflation getting worse before it gets better. the british retail consortium said fresh food prices are rising at their fastest pace in a decade. fresh food rose 5.2 percent in the year ending in may. the eu is preparing to impose its partial ban on the country's oil. an option may not turn out well for moscow. malice spoke with maria tadeo. >> lots of emphasis to increasing supplies to china, but what we are seeing, and especially in the situation of russia's week this is vis-a-vis china, china is going to take good advantage of this and it is not going to be very advantageous deals for russia. ritika: russia is currently

selling its oil to china at a 35% discount. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. alix: thanks so much. let's stay with oil. some members of opec-plus are considering whether to suspend russia from an oil production deal. this, as russia is facing western sanctions and that partial oil banned from the eu. joining us now is keshav lohiya, of oilytics. let's pretend for a moment, irrespective of whether or not opec-plus is trying to kick russia out, if russia cannot produce or sell their quota, what happens to that alliance? keshav: thanks for having me. you put the question spot on. it doesn't really matter whether russia is in opec or not. we are sleepwalking into a

supply crisis every day this war continues. and opec does not have the barrels to replace russian production. that is the major news, and not whether russia will be in opec. anna: how high do oil prices get with that in mind? some people are looking for this to be a top for oil, asking themselves whether the supplies are priced in and the demand story will deteriorate because of china? keshav: we are seeing record-high prices in non-denominated currencies. the demand destruction story is taking a bit longer, because we

are getting, you know, political decisions like subsidies, which is delaying how a market should work. as it stands, if this thing gets -- if the trickle down prices take higher, they have to catch up with what markets are telling them. alix: if we end up having russia selling a 35% discount to china, to india. i have read stories about how you are seeing vessels at sea transport russian oil who don't know where it's coming from or have gps locators disable. as long as that oil is around, what does that do for the supply and demand balance? keshav: even theoretically, even if india and china can buy all of the russian oil being consumed by the west, there is not enough logistical capacity to move them. there will be additional roadblocks thrown into that from shipping insurance, from the

u.k. and eu. this discount will only get wider, because you cannot just push one to one from the west to the east. anna: what is the maximum amount there india and china can buy of this russian oil that may be is a little more homeless than it was? keshav: mean, we could see between 30% to 50% in an optimistic scenario, the real supply clip hits in six month's time, when europe faces out completely of russian barrels. we are still not seeing the full impact of these sanctions on russia's oil. this is just the tip of the iceberg of a problem that is about to compound for russia. alix: let's look ahead for the moment. what kind of headlines are you looking to come out of this?

keshav: it will be a non-event. opec is raising production as a can, but even within opec we have two camps. have the gcc companies, the saudi's, the uae that can increase production, and the rest of the countries like angola, nigeria are struggling. as a block there is no magic switch they can increase production dramatically. saudi is producing at 10.5. they have briefly produced at 11 and a one off at 11.7, but saudi production is at multi-month high. i see it as a nonevent in the last few months. anna: it would not be a non-event geopolitically if opec-plus were no more. and if russia is really -- which is the plus -- if they were thrown out of that alliance. are you anticipating that happens then?

keshav: even if opec-plus -- even if russia is thrown out of opec, russia was never able to meet its quota as it stands right now. even if russia is thrown out, what is surprising is that lavrov met with his saudi counterpart, so that bilateral relationship is still strong. despite the pressure from the west. even if we get the headline that opec-plus is disbanded, the relationship between opec and russia remains strong. anna: thanks very much. keshav lohiya, oilytics ceo. we will certainly continue coverage of oil stories and the decisions coming tomorrow. coming up, if you want to keep working at tesla, forget about working from home. that seems to be the detail you

need to know. we will get more on that shortly. this is bloomberg. ♪

>> it is a hurricane. right now it is kind of sunny, things are doing fine. everyone thinks the fed can handle this. that hurricane is right out there down the road, coming our way. we just don't know if it is a minor one or superstorm sandy, or andrew or something like that. you had better brace yourselves. alix: that was jp morgan ceo

jamie dimon speaking from the autonomous strategic decisions conference. he previously called the economy a storm, but a hurricane feels much different. this comes across when you look at the s&p, down by one point 3%. abigail doolittle is tracking those moves. abigail: very colorful language, influencing the markets here for the nasdaq 100 futures on this session. similar to what we have seen all year. overnight you basically see down, then one point around the time of the open ahead of that ism print, 1.4 percent. i would argue some of this volatility has to do with that other than expected ism print, manufacturing print. it means the fed may be sticking around in terms of cutting and sucking liquidity out of the market longer than had been, perhaps, suggested in the minutes last week, saying they could have flexibility later this year. you see the nasdaq down basically 2.5% intraday. right now the nasdaq 100

futures, down 1% on this session. relative to some of the big movers it is not all bad. we do have some upside movers for the market. if we take a look at what is going on here we are going to see salesforce up 12.5%, its best day since the summer of 2020. the outlook is what is encouraging investors there. they are seeing strong demand for business software. jp morgan encouraged by the fact that their macro outlook, unlike jp morgan's jamie dimon there, very strong. it is interesting to see the contrast in views. amazon, up almost 1%. this as matt miller came back saying, i big tech. conocophillips and exxon, we have oil higher for another day. so, we see both of those oil companies hire. some of the lagging sectors, however, we are going to see most sectors are lacking.

most of the sectors, only energy higher. even up by all that much given the strength for some of those oil names. communications services, tacked toward the top, then financials. this is ironic, but perhaps makes sense given jamie dimon's comment. down 2.5% as yields are going higher. typically that would help the bank. finally a couple of specialty sectors. we have some weakness here too. that you have the banks, but then food, beverage, and tobacco down, and the airlines. this is so interesting. down 4.4 percent. earlier the airlines had been searching higher. delta and southwest boosted the revenue and adjusted earnings at 2019 levels, but it comes at a cost. there are rising costs, and i should say for the second order, adjusted revenue comes at a

cost. they expected the per-seat cost to be up as much as 22%. so there is that margin issue we have been hearing about. anna: thanks very much. abigail doolittle. the richest person in the world still doesn't appear to think much of working from home. elon musk sent an email to the executive staff at tesla with the subject line "remote working is no longer acceptable your come here with more is ed ludlow. he clearly has some strong views and has been getting them off his chest. tell us more. ed: we don't know who is on that speed dow. tesla has 100,000 employees approximately all around the world, from a range of software engineers to assembly-line workers. they employ a lot of contract workers. the subject line did say executive staff. the other thing that jumped out to me is he would personally vet individual cases where they want to -- where they want an exemption.

imagine how busy his inbox is right now. alix: it is different when you look at the big banks, where there is competition among the banks for staff. if you like it is a different scenario when it comes to tesla. if i work at twitter today would i be freaking out? ed: i think so. this is at odds with twitter's policy. it way through 2021 jack dorsey said that even when our office is open in september in downtown san francisco, will have the option to work from home indefinitely. that is the decision twitter made. if elon musk is to buy twitter and take over in some kind of management role we don't know. you would imagine that would change. anna: it is so interesting how these things become so polarized. instead of some happy medium maybe there is some nuanced solution, maybe there are some hybrid solutions, that they become very polarized in some contexts. certainly when they become part of culture wars.

let me ask you about your story on twitter. you have a story about what it is like to work at twitter while they are waiting to find out whether the world's richest man is buying them or not. ed: behind-the-scenes a lot is going on at twitter. sources are telling us that management has moved to -- we knew about a hiring freeze, but they looked at the resources they have, the team they have got, and said, we are shutting down or scaling back certain projects. they have moved staff away from things that just are not gaining traction. spaces audio, for example. one source tells us an edit is coming, and it could come by the end of this year in the form of a time-limited window where you can edit your tweet because you made a typo. but also it would show the history of the tweet. we are getting the sense from sources that management are like, we need to focus on growth and making age met with the platform stronger, irrespective of the takeover bid. there are things we have known are an issue for some time, and

management is shuffling the deck when it comes to talent. alix: thank you so much. bloomberg's ed ludlow joining us. that wraps things up for me and anna. coming up, etsy steven sund will be joining "balance of power" with david westin. i'm also headed to radio, so join me on the cable, or check it out as a podcast. this is bloomberg. ♪

>> from the world of politics -- >> fair debate to at the ar-15-style weapons and whether they should be sold to 18-year-old and whether the limits should be raised to 21. >> to the will the business. >> one of the things the president is saying is we will stay out of the fed and the other things we will do is reduce costs. >> this is "balance of power" with david westin.