1 00:00:02,880 --> 00:00:06,279 Speaker 1: Global business news twenty four hours a day. If Bloomberg 2 00:00:06,320 --> 00:00:09,400 Speaker 1: dot com, the radio plus mobile app and on your radio. 3 00:00:09,680 --> 00:00:14,200 Speaker 1: This is a Bloomberg Business Flash and I'm Karin moscow Bart, 4 00:00:14,320 --> 00:00:17,480 Speaker 1: exploring a potential bid for US competitor Montcento and a 5 00:00:17,560 --> 00:00:20,000 Speaker 1: deal that would create the world's largest supplier of seeds 6 00:00:20,000 --> 00:00:22,720 Speaker 1: and farm chemicals, according to people familiar with the matter, 7 00:00:23,040 --> 00:00:25,480 Speaker 1: mon Santos shares higher, up twelve and a half percent 8 00:00:25,560 --> 00:00:29,960 Speaker 1: in early trading. Applications for unemployment benefits unexpectedly increasing last 9 00:00:29,960 --> 00:00:34,159 Speaker 1: week to the highest since February. Initial jobless claims rose 10 00:00:34,200 --> 00:00:37,000 Speaker 1: by twenty thousand to two ninety four thousand, and the 11 00:00:37,040 --> 00:00:40,239 Speaker 1: weekending seven, the Bank of England cutting its growth forecast 12 00:00:40,320 --> 00:00:42,640 Speaker 1: and issuing its strongest warning yet that a vote to 13 00:00:42,720 --> 00:00:46,720 Speaker 1: leave the European Union would hurt the economy, possibly causing 14 00:00:46,800 --> 00:00:50,280 Speaker 1: a recession. US dock Indise futures are higher. SNP E 15 00:00:50,360 --> 00:00:53,440 Speaker 1: Many futures up eleven points now e Many futures up 16 00:00:53,440 --> 00:00:56,560 Speaker 1: sixties seven, NASH deck EMNY futures up twenty decks. In 17 00:00:56,600 --> 00:00:59,280 Speaker 1: Germany's up three tenths per cent. Ten year treasury down 18 00:00:59,320 --> 00:01:01,560 Speaker 1: eight thirties sec. It's the yield one point seven five 19 00:01:01,640 --> 00:01:04,720 Speaker 1: per cent, Nimex crude oil up nine tenths percent or 20 00:01:04,720 --> 00:01:07,479 Speaker 1: forty four cents to forty six sixties seven A barrel 21 00:01:07,800 --> 00:01:10,080 Speaker 1: comes gold is down two tens per cent or two 22 00:01:10,080 --> 00:01:12,800 Speaker 1: dollars eighty cents to twelve seventy two seventy an ounce 23 00:01:13,280 --> 00:01:15,720 Speaker 1: the euro at other thirteen ninety nine AGIN one oh 24 00:01:15,800 --> 00:01:19,280 Speaker 1: nine point one four, and Honeywell International planning to spin 25 00:01:19,319 --> 00:01:22,120 Speaker 1: off its one point three billion dollar resins and chemicals 26 00:01:22,200 --> 00:01:25,040 Speaker 1: business by early next year, creating a new company that 27 00:01:25,080 --> 00:01:28,520 Speaker 1: will be a major manufacturer of a polymer resin used 28 00:01:28,520 --> 00:01:32,319 Speaker 1: to engineer plastics, fibers, and filaments. That's a Bloomberg business flash, 29 00:01:32,400 --> 00:01:36,560 Speaker 1: Tom and Mike Karen, thanks so much. It is on 30 00:01:36,640 --> 00:01:41,520 Speaker 1: Wall Street. The following is from Bloomberg View, opinions and 31 00:01:41,600 --> 00:01:45,000 Speaker 1: commentary from Bloomberg columnists and Megan mccartell, a columnist for 32 00:01:45,040 --> 00:01:47,680 Speaker 1: Bloomberg View. The Piers. Facebook may have been tinkering with 33 00:01:47,680 --> 00:01:50,960 Speaker 1: its trending news module injecting stories about Syria and Black 34 00:01:50,960 --> 00:01:54,080 Speaker 1: Lives Matter, a suppressing ones by conservative outlets. As you 35 00:01:54,120 --> 00:01:56,880 Speaker 1: can imagine, this created quite a stir among conservatives and 36 00:01:56,920 --> 00:01:59,720 Speaker 1: now Senate Commerce Committee Chairman John fun the send a 37 00:01:59,800 --> 00:02:03,080 Speaker 1: letter to Facebook asking questions. There's no question Facebook has 38 00:02:03,080 --> 00:02:05,240 Speaker 1: more power over its media is based than any company 39 00:02:05,240 --> 00:02:07,520 Speaker 1: and living memory. That means liberals who are fond of 40 00:02:07,560 --> 00:02:10,520 Speaker 1: both press freedom and vigorous anti trust enforcement are going 41 00:02:10,560 --> 00:02:13,000 Speaker 1: to be forced into making one of two arguments, neither 42 00:02:13,040 --> 00:02:15,560 Speaker 1: of them perfectly satisfying. The first is that media is 43 00:02:15,560 --> 00:02:18,520 Speaker 1: a special exception to the arguments for heavy handed regulation 44 00:02:18,720 --> 00:02:22,520 Speaker 1: is plausible because the alternative politicians deciding how journalists should 45 00:02:22,520 --> 00:02:26,600 Speaker 1: cover politics is so obviously problematic. It's not entirely comfortable, either, 46 00:02:26,720 --> 00:02:29,640 Speaker 1: because exempting the media and maybe academia and the arts 47 00:02:29,720 --> 00:02:33,240 Speaker 1: is so easily snacks of special pleading. Government regulation just 48 00:02:33,360 --> 00:02:36,400 Speaker 1: happens to be necessary everywhere except for the handful of 49 00:02:36,400 --> 00:02:39,200 Speaker 1: industries that lean most heavily liberal. My word, that certainly 50 00:02:39,280 --> 00:02:41,560 Speaker 1: is convenient. Isn't it the greater dangerous that liberals will 51 00:02:41,600 --> 00:02:43,520 Speaker 1: end up falling back on an argument that's gaining more 52 00:02:43,520 --> 00:02:46,040 Speaker 1: and more currency on the left, saying yes, absolutely, the 53 00:02:46,120 --> 00:02:48,440 Speaker 1: left should have control over what people are allowed to 54 00:02:48,440 --> 00:02:50,160 Speaker 1: hear them know, because that's how we're going to build 55 00:02:50,160 --> 00:02:52,920 Speaker 1: a better world. The first argument may be unsatisfying, The 56 00:02:52,960 --> 00:02:55,600 Speaker 1: second is downright or well Ian. I'm Megan McCardell. For 57 00:02:55,680 --> 00:02:57,560 Speaker 1: more view please go to Bloomberg View dot com or 58 00:02:57,639 --> 00:03:00,600 Speaker 1: view go on the Bloomberg terminal. This has been Bloomberg 59 00:03:00,720 --> 00:03:04,240 Speaker 1: View and bloom Review commentaries can be heard hourly weekdays 60 00:03:04,600 --> 00:03:08,040 Speaker 1: on Bloomberg Radio. Sterling stronger, right now, back and forth. 61 00:03:08,040 --> 00:03:11,799 Speaker 1: Don't want to make too much about seventy seven off 62 00:03:11,800 --> 00:03:15,520 Speaker 1: the tenseness of the Kearney press conference. Thanks to our 63 00:03:15,560 --> 00:03:19,000 Speaker 1: British team. Thanks to John Farrell for helping us out there. 64 00:03:19,080 --> 00:03:23,000 Speaker 1: Bloomer Surveillance this morning brought you by van Eck Vector's 65 00:03:23,120 --> 00:03:27,239 Speaker 1: et F Expect more from your muni's target tax exempt 66 00:03:27,240 --> 00:03:31,600 Speaker 1: income by maturity, by credit quality all of low cost 67 00:03:32,200 --> 00:03:36,280 Speaker 1: e t F s. Visit Vanak dot com slash Muni 68 00:03:36,400 --> 00:03:41,040 Speaker 1: Vanek v A n e c K Vanek access the 69 00:03:41,120 --> 00:03:44,560 Speaker 1: opportunities lots to talk about. We're gonna jump to Brazil. 70 00:03:44,600 --> 00:03:48,440 Speaker 1: But Mike, a massive asterick you got on the phone, 71 00:03:49,480 --> 00:03:52,880 Speaker 1: you dialed up your Verizon cell phone and what is 72 00:03:52,880 --> 00:03:56,880 Speaker 1: an asterick around the claims report? Yeah, and I want 73 00:03:56,880 --> 00:03:59,240 Speaker 1: to whack myself upside the head for not even taking 74 00:04:00,080 --> 00:04:04,400 Speaker 1: talking with Chris Rupkey. But folks at RBC Capital Markets 75 00:04:04,720 --> 00:04:07,920 Speaker 1: and also Neil dead over Renaissance Capital, both pointing out 76 00:04:08,280 --> 00:04:12,480 Speaker 1: that the Verizon strike has put some thirty thousand people 77 00:04:12,640 --> 00:04:17,640 Speaker 1: on the unemployment lines. They are eligible for jobless benefits 78 00:04:17,640 --> 00:04:22,000 Speaker 1: and they have filed. New York last week claims jumped 79 00:04:22,040 --> 00:04:27,200 Speaker 1: by almost fifteen thousand. So, uh, you do have to 80 00:04:27,200 --> 00:04:30,360 Speaker 1: take the big rise in jobless claims with a bit 81 00:04:30,400 --> 00:04:33,920 Speaker 1: of a grain of salt. We'll see when that strike settles, 82 00:04:34,640 --> 00:04:37,840 Speaker 1: how this affects the numbers were you raise your group, 83 00:04:38,120 --> 00:04:41,880 Speaker 1: Craig Garman, we talk on Christopher, Christopher Garment. Excuse me, Christopher, 84 00:04:41,880 --> 00:04:44,719 Speaker 1: I'm so sorry for that. It's been wild here, Uh 85 00:04:44,760 --> 00:04:48,920 Speaker 1: this morning. It's fascinating to me how far out front 86 00:04:48,960 --> 00:04:53,000 Speaker 1: you raise your group was on this mess. Is the 87 00:04:53,160 --> 00:04:56,840 Speaker 1: mess this morning in Brazil? Where you thought it would 88 00:04:56,920 --> 00:05:01,280 Speaker 1: be a year or two years ago? Uh, probably not 89 00:05:01,839 --> 00:05:05,400 Speaker 1: last year. Um, you know, we always you know, I 90 00:05:05,560 --> 00:05:07,599 Speaker 1: saw that there was a there was a risk that 91 00:05:07,680 --> 00:05:10,640 Speaker 1: the president was gonna lose her term in office and 92 00:05:10,640 --> 00:05:13,160 Speaker 1: and being impeached by the Congress. But but we were 93 00:05:13,200 --> 00:05:16,520 Speaker 1: attributing the probability of that kind of scenario and anywhere 94 00:05:16,520 --> 00:05:19,760 Speaker 1: between thirty over the course of last year. So you know, 95 00:05:19,839 --> 00:05:21,919 Speaker 1: we we saw the risk we flied into our clients. 96 00:05:21,920 --> 00:05:24,320 Speaker 1: But at the same time it's hard to to fully 97 00:05:24,320 --> 00:05:27,039 Speaker 1: handicap it because at the end of the day, with 98 00:05:27,120 --> 00:05:30,599 Speaker 1: the mess that we're seeing is largely driven by a 99 00:05:30,640 --> 00:05:35,679 Speaker 1: criminal investigative probe in the car wash scandal over kickbacks 100 00:05:35,680 --> 00:05:38,400 Speaker 1: from Petrobrass, and that's just hard to fully just at 101 00:05:38,400 --> 00:05:39,960 Speaker 1: the time, Mike, I want you to jump in here, 102 00:05:39,960 --> 00:05:42,520 Speaker 1: But that's brilliant. This has nothing to do with the economy, 103 00:05:42,600 --> 00:05:44,960 Speaker 1: I guess, is what I just hear. Yeah, it's a 104 00:05:45,000 --> 00:05:48,200 Speaker 1: combination of both, right, obviously, the fact that the Brazil 105 00:05:48,279 --> 00:05:51,360 Speaker 1: is in the multi year very deep procession and UH 106 00:05:51,360 --> 00:05:54,520 Speaker 1: and the government's very unpopular matters. But really the straw 107 00:05:54,600 --> 00:05:57,320 Speaker 1: that broke the camel's back is a is A is 108 00:05:57,360 --> 00:06:01,360 Speaker 1: a billion dollar corruption graft probe in the state on 109 00:06:01,520 --> 00:06:04,680 Speaker 1: enterprise Petro Brass and implicating party leaders of the governing 110 00:06:04,680 --> 00:06:09,400 Speaker 1: party of the Workers Party, including the party treasurer, that 111 00:06:10,000 --> 00:06:13,960 Speaker 1: that that kind of organized. President Jiler was staffs presidential campaign. 112 00:06:14,040 --> 00:06:16,640 Speaker 1: So it was a combination of both really that that 113 00:06:16,760 --> 00:06:20,159 Speaker 1: led to her downfall. Now the UH, the important point 114 00:06:20,200 --> 00:06:22,920 Speaker 1: to make here is not that Dylan Russef is suspended 115 00:06:22,960 --> 00:06:27,080 Speaker 1: from office as president, but that it doesn't solve Brazil's problems. 116 00:06:27,160 --> 00:06:30,960 Speaker 1: Growth is non existing contraction this year, inflation is running 117 00:06:30,960 --> 00:06:35,440 Speaker 1: it almost the country has a budget deficit. And now 118 00:06:35,480 --> 00:06:38,600 Speaker 1: that they're gonna have a new government that has to 119 00:06:38,720 --> 00:06:41,520 Speaker 1: make legislative changes to try to bring down the deficit 120 00:06:41,560 --> 00:06:44,400 Speaker 1: and increased growth in a legislature that is also tainted 121 00:06:44,400 --> 00:06:50,479 Speaker 1: by corruption. So Resil's problems, I guess not easily fixed. Now. 122 00:06:50,480 --> 00:06:52,440 Speaker 1: This is going to be a very long and painful 123 00:06:52,440 --> 00:06:56,279 Speaker 1: adjustment now for sure. Right and UH, And the Vice President, 124 00:06:56,400 --> 00:06:59,800 Speaker 1: Michelle Tamer, assumes office today, UH in the context where 125 00:06:59,800 --> 00:07:02,919 Speaker 1: his own party is also liable with this, with this 126 00:07:02,960 --> 00:07:07,080 Speaker 1: investigative probe. That's said, However, we do think that that 127 00:07:07,160 --> 00:07:10,240 Speaker 1: the vice president and that the reforms he will put 128 00:07:10,280 --> 00:07:14,520 Speaker 1: forth will represent an important step forward in the right direction. Uh. 129 00:07:14,640 --> 00:07:18,280 Speaker 1: The vice president is clearly adopting a strategy that that's 130 00:07:18,320 --> 00:07:20,360 Speaker 1: the only way that he can survive politically is if 131 00:07:20,360 --> 00:07:22,880 Speaker 1: he delivers a SOCOL conferdence to the product sector. So 132 00:07:22,920 --> 00:07:24,400 Speaker 1: the reforms that we're going to see are going to 133 00:07:24,480 --> 00:07:27,720 Speaker 1: be very well received by market participants. And second, what 134 00:07:27,840 --> 00:07:31,080 Speaker 1: we're also seeing is that is that Timor will assume 135 00:07:31,240 --> 00:07:34,440 Speaker 1: with a pretty large majority in Congress. Uh, legislators are 136 00:07:34,440 --> 00:07:36,480 Speaker 1: looking at two thousand and eighteen, they're very worried. Having 137 00:07:36,520 --> 00:07:39,440 Speaker 1: access to the executive office is important, and there's a 138 00:07:39,440 --> 00:07:42,280 Speaker 1: lot of support for for Timor in the private sector. 139 00:07:42,360 --> 00:07:44,640 Speaker 1: So he's got those things going for him. That doesn't 140 00:07:44,640 --> 00:07:46,320 Speaker 1: mean that he's going to deliver the types of reforms 141 00:07:46,360 --> 00:07:49,080 Speaker 1: at markets needs fully, but he will make some modest 142 00:07:49,120 --> 00:07:55,200 Speaker 1: progress in that direction. Something of federal spending is constitutionally guaranteed. 143 00:07:55,960 --> 00:08:00,080 Speaker 1: So given the political dynamics in Brazil, is he going 144 00:08:00,160 --> 00:08:04,040 Speaker 1: to be able to really make a dent in the 145 00:08:04,120 --> 00:08:08,480 Speaker 1: budget deficit. Yeah, that's a good question. That's probably the 146 00:08:08,520 --> 00:08:11,640 Speaker 1: most important question. Uh. You know, we we fully expect 147 00:08:12,000 --> 00:08:16,080 Speaker 1: that his economic team will put forth constitutional reforms that 148 00:08:16,120 --> 00:08:19,160 Speaker 1: are meaningful and that try to unwind the rigidity of 149 00:08:19,200 --> 00:08:23,160 Speaker 1: physical accounts, which you just described. Now the you know, 150 00:08:23,240 --> 00:08:25,520 Speaker 1: from our perspective, we think he's going to have a 151 00:08:25,520 --> 00:08:28,679 Speaker 1: hard time approving reforms that could lead to a cut 152 00:08:28,680 --> 00:08:31,680 Speaker 1: and spending in the very short term. Legislators, we think 153 00:08:31,680 --> 00:08:33,920 Speaker 1: are going to be hesitant to approve these kind of 154 00:08:33,920 --> 00:08:35,880 Speaker 1: reforms that can be a liability for them. Two thousand 155 00:08:35,880 --> 00:08:38,880 Speaker 1: and eighteen. Now, the sweet spot that we see Timor 156 00:08:39,360 --> 00:08:42,200 Speaker 1: being able to operate is to is to have these 157 00:08:42,200 --> 00:08:45,840 Speaker 1: reforms and try to unwind these rigidities over time. So 158 00:08:46,240 --> 00:08:49,040 Speaker 1: if we're talking about things like implementing a minimum retirement 159 00:08:49,120 --> 00:08:52,440 Speaker 1: Asian pension accounts or kick in some of these spending 160 00:08:52,480 --> 00:08:56,120 Speaker 1: limits over time, Um, there is I think room for 161 00:08:56,160 --> 00:08:57,920 Speaker 1: him to be able to prove something along those lines. 162 00:08:58,840 --> 00:09:01,120 Speaker 1: This is one thing that he can't do anything about, 163 00:09:01,200 --> 00:09:06,000 Speaker 1: and that's eradicating the mosquito population there. The Zeka virus. 164 00:09:06,920 --> 00:09:09,880 Speaker 1: How much of a threat is that to the Brazilian economy. 165 00:09:09,920 --> 00:09:15,559 Speaker 1: The Harvard UH Medical School UH publication put out a 166 00:09:16,120 --> 00:09:20,360 Speaker 1: story yesterday calling on Brazil in the world to call 167 00:09:20,400 --> 00:09:23,600 Speaker 1: off the Rio Olympic Games because they said the danger 168 00:09:23,760 --> 00:09:27,959 Speaker 1: is too great. Yeah. I think that the larger repercussion 169 00:09:28,040 --> 00:09:31,800 Speaker 1: of the of the Zeka uh virus epidemic is, you know, 170 00:09:32,000 --> 00:09:34,040 Speaker 1: is it going to take some of the you know, 171 00:09:34,080 --> 00:09:37,720 Speaker 1: some of the enthusiasm and reduce the tourism flow around 172 00:09:37,760 --> 00:09:39,920 Speaker 1: the Olympic Games. We find it very unlikely of the 173 00:09:39,920 --> 00:09:43,319 Speaker 1: Olympic Games will be cancel will be called off. Um. 174 00:09:43,440 --> 00:09:45,160 Speaker 1: You know, I think that the Olympic committee has already 175 00:09:45,160 --> 00:09:47,240 Speaker 1: signaled with as such, and we're pretty close to the 176 00:09:47,000 --> 00:09:50,520 Speaker 1: to the games themselves. And when it comes to the economy, however, 177 00:09:50,520 --> 00:09:54,160 Speaker 1: it's important to realize that the economic repercussions are relatively mild. UH, 178 00:09:54,480 --> 00:09:57,920 Speaker 1: it doesn't really impact the working population. Um. You know, 179 00:09:57,960 --> 00:10:00,959 Speaker 1: given that the symptoms are are not severe for those 180 00:10:01,000 --> 00:10:03,319 Speaker 1: who are infected. Evidently this is a This is a 181 00:10:04,240 --> 00:10:08,319 Speaker 1: very important health concerned, particularly when it comes to pregnant women, 182 00:10:08,360 --> 00:10:12,439 Speaker 1: but it's not the type of virus and health epidemics 183 00:10:12,440 --> 00:10:15,600 Speaker 1: that can that can impact economic growth in any substantial fashion. 184 00:10:17,840 --> 00:10:22,000 Speaker 1: How unified is Brazil when you look at their regions 185 00:10:22,040 --> 00:10:25,560 Speaker 1: in their Senate? Are they a United States of Brazil 186 00:10:25,720 --> 00:10:30,080 Speaker 1: like US? Are they a confederation more Canadian or Swiss? 187 00:10:30,320 --> 00:10:34,480 Speaker 1: What are they? Yeah? Brazil is a very large federal republic. 188 00:10:34,800 --> 00:10:38,800 Speaker 1: It has a long tradition of a consensus oriented UH 189 00:10:39,040 --> 00:10:43,160 Speaker 1: political decision making. So you know, reforms are are difficult 190 00:10:43,559 --> 00:10:46,400 Speaker 1: proven Brazil in part because you have, you know, a 191 00:10:46,720 --> 00:10:49,560 Speaker 1: federal structure where governors have a lot of autonomy. You 192 00:10:49,640 --> 00:10:52,440 Speaker 1: have twenty five political parties in Congress, so it's very 193 00:10:52,440 --> 00:10:55,360 Speaker 1: difficult to negotiate reforms in Congress. UH. And in fact, 194 00:10:55,440 --> 00:10:58,200 Speaker 1: what we're seeing today is probably a dose of a 195 00:10:58,480 --> 00:11:01,160 Speaker 1: of a more polarized, a little environment and we've seen 196 00:11:01,160 --> 00:11:04,079 Speaker 1: in a long time in Brazil, precisely because President of 197 00:11:04,200 --> 00:11:06,960 Speaker 1: Staff is being demoted from office in the context where 198 00:11:07,000 --> 00:11:09,920 Speaker 1: her part of the PT thinks that the whole process 199 00:11:09,960 --> 00:11:12,920 Speaker 1: are legitimate. Christopher, thank you so much. Christopher Garment with 200 00:11:13,000 --> 00:11:15,000 Speaker 1: euris your group. Good morning.