1
00:00:03,040 --> 00:00:07,680
Speaker 1: Broadcasting live to New York, Bloomberg to Washington, d C.

2
00:00:07,920 --> 00:00:13,880
Speaker 1: Bloomberg to Boston, Blumberge under to San Francisco, Bloomberg nine

3
00:00:14,000 --> 00:00:19,320
Speaker 1: to the country and around the globe. The Bloomberg Radio

4
00:00:19,400 --> 00:00:23,520
Speaker 1: plucks and Bloomberg got gone. This is taking stock, coming

5
00:00:23,600 --> 00:00:26,680
Speaker 1: upon taking stock. What's next for the Bank of England

6
00:00:26,720 --> 00:00:29,240
Speaker 1: after it failed to buy all of the government bonds

7
00:00:29,240 --> 00:00:31,680
Speaker 1: it wanted at a reverse auction. This is the first

8
00:00:31,920 --> 00:00:35,800
Speaker 1: shortfall since the Bank of England started its quantitative easing

9
00:00:35,800 --> 00:00:39,680
Speaker 1: program in two thousand and nine. Investors they are not

10
00:00:39,840 --> 00:00:43,360
Speaker 1: willing to part with their holdings of longer dated bonds.

11
00:00:43,400 --> 00:00:45,960
Speaker 1: We've got details right now. We've got more details from

12
00:00:46,040 --> 00:00:48,479
Speaker 1: Charlie Pellett in the Bluemberg news room. All right, thank

13
00:00:48,479 --> 00:00:51,159
Speaker 1: you very much. Pim Fox, the DAL, the SMP, NEZDA,

14
00:00:51,320 --> 00:00:55,600
Speaker 1: they are all declining right now. SMP five index falling

15
00:00:55,840 --> 00:00:58,120
Speaker 1: the most in more than a week. It is down

16
00:00:58,200 --> 00:01:01,920
Speaker 1: nine points to pulling back from that record, down four

17
00:01:02,000 --> 00:01:05,440
Speaker 1: tenths of one percent. Energy producers are tumbling along with

18
00:01:05,480 --> 00:01:08,440
Speaker 1: the price of crude oil. West Texas Intermedia Crew down

19
00:01:08,800 --> 00:01:11,640
Speaker 1: a dollar one of barrel forty one seventy five right now,

20
00:01:11,720 --> 00:01:14,360
Speaker 1: That is a drop of two point four percent. Bank

21
00:01:14,440 --> 00:01:18,480
Speaker 1: shares sinking on speculation interest rates will not rise this year.

22
00:01:19,240 --> 00:01:22,240
Speaker 1: Yelped gaining the most in three months after better than

23
00:01:22,360 --> 00:01:26,080
Speaker 1: estimated quarterly profit and revenue spurred analysts to raise their

24
00:01:26,120 --> 00:01:30,720
Speaker 1: recommendations on the user review site, citing strong local advertising

25
00:01:30,800 --> 00:01:35,640
Speaker 1: and partnership deals. Yelped surging now by thirteen point one percent.

26
00:01:36,240 --> 00:01:38,960
Speaker 1: The Walt Disney Company is paying a billion dollars for

27
00:01:39,000 --> 00:01:42,280
Speaker 1: a one third stake in band Tech. That's a technology

28
00:01:42,319 --> 00:01:46,240
Speaker 1: and screaming business formed by Major League Baseball, and I

29
00:01:46,440 --> 00:01:49,840
Speaker 1: launched a new web based e sp and service this year.

30
00:01:50,360 --> 00:01:54,920
Speaker 1: Paul Sweeney is director of North American Research at Bloomberg Intelligence.

31
00:01:55,080 --> 00:01:56,520
Speaker 1: I think this is a you know, a big bet

32
00:01:56,720 --> 00:01:59,600
Speaker 1: on tech. Technology is Bob Bobier suggested, this is a

33
00:01:59,680 --> 00:02:02,800
Speaker 1: technol that they believe can bring their content over the top,

34
00:02:02,840 --> 00:02:05,440
Speaker 1: make them competitive in the marketplace where they really haven't

35
00:02:05,440 --> 00:02:07,680
Speaker 1: had an offering yet. And we've seen HBO go over

36
00:02:07,680 --> 00:02:10,040
Speaker 1: the top, of seen CBS go over the top, going

37
00:02:10,080 --> 00:02:12,639
Speaker 1: directing a service, but we haven't seen necessarily anything out

38
00:02:12,680 --> 00:02:15,280
Speaker 1: of the what this can't coming, particularly with ESPN, But

39
00:02:15,320 --> 00:02:16,679
Speaker 1: I think this is the first step that kind of

40
00:02:16,720 --> 00:02:18,880
Speaker 1: move them down that road, and Disney shares are up

41
00:02:18,919 --> 00:02:22,400
Speaker 1: one point four percent. Ralph Laurens surging today after an

42
00:02:22,400 --> 00:02:25,120
Speaker 1: earnings beat. The forty nine year old brand known for

43
00:02:25,200 --> 00:02:29,400
Speaker 1: preppy fashion and premium prices, reported first quarter profit that

44
00:02:29,480 --> 00:02:33,519
Speaker 1: exceeded analysts estimates. Ralph lauren up nine point three percent,

45
00:02:34,160 --> 00:02:37,239
Speaker 1: SMP down nine to seventy two. A dropped there of

46
00:02:37,360 --> 00:02:41,160
Speaker 1: four tenths of one percent. It is to thirty two

47
00:02:41,160 --> 00:02:43,440
Speaker 1: on Wall Street. Now, let's look at other news from

48
00:02:43,480 --> 00:02:46,800
Speaker 1: around the world. Thank you, Charlie from the Bloomberg newsroom.

49
00:02:46,840 --> 00:02:50,120
Speaker 1: I'm Ramy in essentio. Delta Airline says it hopes to

50
00:02:50,160 --> 00:02:54,200
Speaker 1: return its operations to normal by tomorrow. CEO Ed Bashton

51
00:02:54,280 --> 00:02:57,600
Speaker 1: issued a video statement promising customers they can rely on

52
00:02:57,680 --> 00:03:00,520
Speaker 1: the carrier in the future. I'm sorry we you down.

53
00:03:00,800 --> 00:03:02,840
Speaker 1: We'll do everything that we can to make certain this

54
00:03:02,880 --> 00:03:06,359
Speaker 1: does not happen again. Delta has canceled another two five

55
00:03:06,400 --> 00:03:09,160
Speaker 1: flights today and it's still working to find seats for

56
00:03:09,200 --> 00:03:13,160
Speaker 1: stranded customers. The federal government and Baltimore Police say they

57
00:03:13,160 --> 00:03:17,000
Speaker 1: will negotiate reforms after today's release of a Justice Department

58
00:03:17,040 --> 00:03:21,280
Speaker 1: report it criticizes officers for using excessive force and routinely

59
00:03:21,320 --> 00:03:25,040
Speaker 1: discriminating against blacks. The city's police commissioner says he and

60
00:03:25,120 --> 00:03:28,000
Speaker 1: all their officers are upset by the findings. There are

61
00:03:28,000 --> 00:03:31,640
Speaker 1: officers right now that are just as offended as we

62
00:03:31,720 --> 00:03:34,640
Speaker 1: are to see the details that are laid out in

63
00:03:34,680 --> 00:03:40,040
Speaker 1: this report. Why because they wear this uniform proudly and

64
00:03:40,080 --> 00:03:43,960
Speaker 1: they serve the citizens of Baltimore honorably each and every day.

65
00:03:44,120 --> 00:03:48,360
Speaker 1: In Venezuela, the National Election Council has derailed opposition hopes

66
00:03:48,600 --> 00:03:52,119
Speaker 1: of holding a recall referendum on President Nicholas Maduro this year.

67
00:03:52,400 --> 00:03:54,800
Speaker 1: The council set a new date for Madua's opponents to

68
00:03:54,880 --> 00:03:58,480
Speaker 1: collect signatures. Then there would be a ninety day verification

69
00:03:58,600 --> 00:04:01,600
Speaker 1: period that would push a reference him into the coming year.

70
00:04:02,200 --> 00:04:04,200
Speaker 1: And the jury is deliberating the fate of a Yale

71
00:04:04,280 --> 00:04:07,760
Speaker 1: educated investment banker who insists he never told his father

72
00:04:07,880 --> 00:04:11,640
Speaker 1: to trade securities based on the insider information he shared.

73
00:04:12,040 --> 00:04:15,200
Speaker 1: The Manhattan Federal Court jury began deliberations yesterday in the

74
00:04:15,240 --> 00:04:18,599
Speaker 1: case against Sewan Stewart. In an afternoon note, jurors asked

75
00:04:18,640 --> 00:04:22,320
Speaker 1: for a definition of insider trading. Global News twenty four

76
00:04:22,360 --> 00:04:25,600
Speaker 1: hours a Day, powered by more than journalists and analysts

77
00:04:25,640 --> 00:04:28,560
Speaker 1: in more than one twenty countries. I'm Rainy in Essensio.

78
00:04:28,760 --> 00:04:31,960
Speaker 1: This is Bloomberg, Charlie, and we thank you and again

79
00:04:32,040 --> 00:04:35,520
Speaker 1: recapping stocks are trading law SMP five. How did it

80
00:04:35,560 --> 00:04:39,560
Speaker 1: index down? Nine? A drop there of four tenths of

81
00:04:39,600 --> 00:04:43,560
Speaker 1: one percent. I'm Charlie Palett and that's a Bloomberg business

82
00:04:43,600 --> 00:04:48,560
Speaker 1: flash Bloomber j Stock. Fed in Focus. There's certainly a

83
00:04:48,640 --> 00:04:50,560
Speaker 1: lot of discussion about whether or not the Fed is

84
00:04:50,560 --> 00:04:52,919
Speaker 1: going to try to hike race again this year. We

85
00:04:53,000 --> 00:04:55,240
Speaker 1: think the Fed by December will be ready to do

86
00:04:55,279 --> 00:04:57,880
Speaker 1: another hike. That sounds like a big difference from the markets,

87
00:04:57,920 --> 00:05:00,440
Speaker 1: but it's not that big a difference. Think at this

88
00:05:00,480 --> 00:05:03,000
Speaker 1: point the Fed is going to remain on the sideline

89
00:05:03,120 --> 00:05:07,720
Speaker 1: through and most likely that better part of because they

90
00:05:07,720 --> 00:05:10,960
Speaker 1: have a huge communication problem with the public about what's

91
00:05:11,040 --> 00:05:15,080
Speaker 1: driving their policy decision. They basically have no strategy. The

92
00:05:15,200 --> 00:05:19,640
Speaker 1: Fed in focus on gloom Word Radio, The Fed in Focus,

93
00:05:19,760 --> 00:05:22,200
Speaker 1: Central Banks in Focus. What happens if you throw a

94
00:05:22,240 --> 00:05:26,840
Speaker 1: party and nobody comes well. Chris Whalen, Senior Managing Director,

95
00:05:26,920 --> 00:05:31,400
Speaker 1: Crow Bond Rating Agencies here to tell us more. Chris Whalen.

96
00:05:31,560 --> 00:05:34,159
Speaker 1: That party at the Bank of England was inviting all

97
00:05:34,200 --> 00:05:37,039
Speaker 1: of those bondholders too. It seems as though not all

98
00:05:37,080 --> 00:05:39,520
Speaker 1: of them were willing to relinquish their bonds to the

99
00:05:39,560 --> 00:05:43,000
Speaker 1: Central Bank. What do you make of this? Definitely not

100
00:05:43,600 --> 00:05:46,560
Speaker 1: there's a shortage of yield out there, Keim. There's a

101
00:05:46,600 --> 00:05:50,479
Speaker 1: shortage of cash flow. That's what we're fighting about here. No,

102
00:05:50,920 --> 00:05:53,560
Speaker 1: they didn't want to sell the bond, so you know,

103
00:05:53,640 --> 00:05:55,680
Speaker 1: to me, that's such a big deal. But the bigger

104
00:05:55,720 --> 00:05:58,080
Speaker 1: issue is why are we doing this in the first place. Well,

105
00:05:58,200 --> 00:05:59,760
Speaker 1: that's what I was gonna get to is that you know,

106
00:06:00,440 --> 00:06:02,960
Speaker 1: whenever you you know, you throw a party, or whenever

107
00:06:03,080 --> 00:06:06,080
Speaker 1: you look to buy something, you do a lot of

108
00:06:06,120 --> 00:06:09,760
Speaker 1: work to figure out whether they are ready sellers. Did

109
00:06:09,760 --> 00:06:13,960
Speaker 1: they not really canvass the market? Do they not recognize

110
00:06:14,000 --> 00:06:19,040
Speaker 1: that people are yield starved? Their yield starved? Him? And also,

111
00:06:19,120 --> 00:06:21,320
Speaker 1: I think the bigger issue that no one wants to

112
00:06:21,360 --> 00:06:25,120
Speaker 1: focus on is that the dealer community in government securities

113
00:06:25,160 --> 00:06:29,320
Speaker 1: and agency securities has been decimated. JP Morgan is going

114
00:06:29,400 --> 00:06:31,440
Speaker 1: to stop clearing treasuries at the end of the year,

115
00:06:31,960 --> 00:06:34,840
Speaker 1: and the street has just said no, we can't continue

116
00:06:34,880 --> 00:06:38,120
Speaker 1: to lose money to tight spreads, no carry on the

117
00:06:38,160 --> 00:06:41,160
Speaker 1: book right because rates are zero, so you know, the

118
00:06:41,200 --> 00:06:43,560
Speaker 1: street has had to essentially get out of that business.

119
00:06:43,560 --> 00:06:46,480
Speaker 1: There's literally a handful of dealers now who will handle

120
00:06:46,560 --> 00:06:49,640
Speaker 1: this business. So in a way there's a liquidity issue too,

121
00:06:49,680 --> 00:06:53,560
Speaker 1: because and nobody facing the Fed has any inventory. Nobody

122
00:06:53,640 --> 00:06:56,039
Speaker 1: facing the Bank of England has any inventory, so of

123
00:06:56,080 --> 00:06:59,160
Speaker 1: course they can't fill the auction. You see what I'm saying.

124
00:06:59,560 --> 00:07:01,680
Speaker 1: They want what I want you to You just hang on, Chris,

125
00:07:01,720 --> 00:07:03,600
Speaker 1: because I want you to just explain and perhaps in

126
00:07:03,600 --> 00:07:06,160
Speaker 1: a little more detail, or maybe even give an example

127
00:07:06,240 --> 00:07:08,080
Speaker 1: for those that are not familiar with the way that

128
00:07:08,160 --> 00:07:12,240
Speaker 1: government bonds are traded and the role of the central banks.

129
00:07:12,640 --> 00:07:17,280
Speaker 1: You talk for just a second there about the bond

130
00:07:17,560 --> 00:07:20,640
Speaker 1: clearing operations and how JP Morgan was getting out of

131
00:07:20,640 --> 00:07:23,840
Speaker 1: the Treasury bond clearing operation. Tell us about that. How

132
00:07:23,840 --> 00:07:27,080
Speaker 1: does that work? The process? Well, it's it's a back

133
00:07:27,120 --> 00:07:30,320
Speaker 1: office sort of process. You're confirming orders, You're you know,

134
00:07:30,400 --> 00:07:35,920
Speaker 1: sending a variety of different electronic communications. You're trusted third party.

135
00:07:36,040 --> 00:07:39,720
Speaker 1: Essentially you're the clearing agent for both sides in many cases,

136
00:07:40,120 --> 00:07:43,880
Speaker 1: so it's a very important function. But the more interesting

137
00:07:43,880 --> 00:07:46,920
Speaker 1: issues in the front of JP Morgan, the dealer doesn't

138
00:07:46,960 --> 00:07:49,320
Speaker 1: keep a lot of inventory. They don't trade their own

139
00:07:49,320 --> 00:07:52,360
Speaker 1: book anymore. They can't since the whale, remember the vocal

140
00:07:52,480 --> 00:07:55,200
Speaker 1: rule and all of this. So there's there's no inventory

141
00:07:55,240 --> 00:07:57,360
Speaker 1: for the central banks to take because they have to

142
00:07:57,400 --> 00:07:59,640
Speaker 1: go to the dealers. They're not going to go directly

143
00:07:59,680 --> 00:08:02,680
Speaker 1: to call and these other owners of paper and say hey,

144
00:08:02,680 --> 00:08:05,280
Speaker 1: sell me the paper. They could, I suppose they typically

145
00:08:05,280 --> 00:08:08,280
Speaker 1: deal with the dealer. So that's traditionally how they buy papers.

146
00:08:08,320 --> 00:08:10,760
Speaker 1: So they do an auction, and the dealers didn't fill

147
00:08:10,760 --> 00:08:13,200
Speaker 1: in this case. That's you know, they didn't They didn't

148
00:08:13,240 --> 00:08:16,400
Speaker 1: respond to fill the order. And I think, to me,

149
00:08:16,520 --> 00:08:18,720
Speaker 1: I worry about the liquidity aspect. I was just at

150
00:08:18,720 --> 00:08:22,080
Speaker 1: a mortgage conference left two days. I'm worried about the

151
00:08:22,080 --> 00:08:25,280
Speaker 1: market for Jenny Mays. For God's sake, you know, that's

152
00:08:25,320 --> 00:08:29,720
Speaker 1: that's a problem. And that G in Jenny May means

153
00:08:30,040 --> 00:08:35,640
Speaker 1: government yep. And there's no liquidity. There's no liquidity in

154
00:08:35,679 --> 00:08:38,160
Speaker 1: the in the back of that market for for mortgage

155
00:08:38,200 --> 00:08:41,560
Speaker 1: servicing rights. And it's a real issue because that whole

156
00:08:41,559 --> 00:08:44,520
Speaker 1: market is now non banks. All the banks are getting out,

157
00:08:44,559 --> 00:08:47,360
Speaker 1: there's no liquidity, there's no balance sheets that market anymore.

158
00:08:47,960 --> 00:08:51,360
Speaker 1: So again, you know, all of these regulations and the

159
00:08:51,440 --> 00:08:54,720
Speaker 1: QI and the low rates and the asset purchases I

160
00:08:54,720 --> 00:08:58,240
Speaker 1: think have combined to actually constrict liquidity PIM and that's,

161
00:08:58,280 --> 00:09:01,080
Speaker 1: to me, is very worrisome. We've written about this a lot.

162
00:09:01,120 --> 00:09:03,360
Speaker 1: If you go, we did a piece of mortgage servicing

163
00:09:03,440 --> 00:09:10,200
Speaker 1: rights last week. Is this a case of unintended consequences? Yeah?

164
00:09:10,200 --> 00:09:12,959
Speaker 1: And I think also just over reaction. This is what

165
00:09:13,000 --> 00:09:16,720
Speaker 1: we do in democracies. You know, Glass Steagle was very harsh.

166
00:09:16,720 --> 00:09:20,720
Speaker 1: It was passed in the dead of night with no debate. Um,

167
00:09:20,800 --> 00:09:23,920
Speaker 1: and I think similarly the reaction after two th eight

168
00:09:24,040 --> 00:09:26,920
Speaker 1: was quite harsh. Um. But I wonder if we're not

169
00:09:27,200 --> 00:09:29,400
Speaker 1: I guess I would like to see people get together

170
00:09:29,440 --> 00:09:31,560
Speaker 1: in a room in Washington and say, Okay, what do

171
00:09:31,640 --> 00:09:35,880
Speaker 1: we want, and then work together to make sure that

172
00:09:35,960 --> 00:09:38,840
Speaker 1: the different things that they do. You know, for example,

173
00:09:38,920 --> 00:09:42,959
Speaker 1: the Consumer Protection Agency that was created after Dodd Frank

174
00:09:43,040 --> 00:09:46,600
Speaker 1: has been very harsh. They've trebled the cost of servicing

175
00:09:46,640 --> 00:09:49,240
Speaker 1: a mortgage loan. UH and a lot of firms are

176
00:09:49,240 --> 00:09:51,319
Speaker 1: going to get out of business. Tim. I mean, I'm

177
00:09:51,320 --> 00:09:53,599
Speaker 1: telling you. The head of Jinnymate, Ted tos Er, is

178
00:09:53,640 --> 00:09:56,600
Speaker 1: a very dear friend or wonderful colleague. She's been there

179
00:09:56,640 --> 00:09:59,000
Speaker 1: for seven years. He knows what he's doing, and he's

180
00:09:59,040 --> 00:10:01,680
Speaker 1: gonna leave soon. And he's leaving the market with less

181
00:10:01,679 --> 00:10:04,800
Speaker 1: liquidity and with a lot of global investors who owned

182
00:10:04,840 --> 00:10:07,720
Speaker 1: Jenny May paper all over the world, central banks who

183
00:10:07,720 --> 00:10:10,600
Speaker 1: are worried about the quality of that market going forward

184
00:10:10,880 --> 00:10:13,440
Speaker 1: because they can't get a bit if they want to sell,

185
00:10:13,520 --> 00:10:16,120
Speaker 1: even a reasonable size blockage any mays it's hard to

186
00:10:16,160 --> 00:10:19,079
Speaker 1: get a bid today, and that's the result of regulation.

187
00:10:19,800 --> 00:10:23,920
Speaker 1: Give you ten seconds. What's the worst case scenario, doorst

188
00:10:23,920 --> 00:10:26,720
Speaker 1: case scenarios. We keep doing what we're doing and expecting

189
00:10:26,760 --> 00:10:29,240
Speaker 1: a different outcome of science. Stein said, right, Um, I

190
00:10:29,280 --> 00:10:31,520
Speaker 1: think we need to stop chewey. Let rates go up

191
00:10:31,520 --> 00:10:33,439
Speaker 1: in the US. We can we can take the lead

192
00:10:33,480 --> 00:10:36,440
Speaker 1: on this, Thanks very much. Chris Whalen is the senior

193
00:10:36,480 --> 00:10:41,280
Speaker 1: Managing director for Crow Bond Rating Agency giving us his

194
00:10:41,400 --> 00:10:45,600
Speaker 1: views of quantitative easing and the lack of liquidity in

195
00:10:45,840 --> 00:10:49,880
Speaker 1: the government bond market. This is taking Stockheim, pim Fox,

196
00:10:50,240 --> 00:11:01,880
Speaker 1: and this is Bloomberg. The FED in Focus is brought

197
00:11:01,880 --> 00:11:04,520
Speaker 1: to you by Willoughby's since eighteen ninety eight, New York

198
00:11:04,520 --> 00:11:07,440
Speaker 1: City's boutique camera store for precision craft at Hazelblada and

199
00:11:07,520 --> 00:11:11,199
Speaker 1: Lecat cameras, plus a full selection of GoPro action adventure cameras.

200
00:11:11,320 --> 00:11:13,880
Speaker 1: Willoughby's corner of Fifth Avenue and thirty first Street,