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Speaker 1: This is Bloomberg surveillance. We don't feel that we're necessarily

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Speaker 1: on the cusp of a recession. Business is okay and

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Speaker 1: pretty good in some places. Because the FETs kept raps

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Speaker 1: down here at Vera for so long. It's distorting how

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Speaker 1: people finance themselves. What happens in the market is it

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Speaker 1: only looks at the positives, and it interprets everything positively

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Speaker 1: as long as it can, and then it gives up

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Speaker 1: the ghost and it flips one eighty. Bloomberg Surveillance your

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Speaker 1: link to the world of economics, finance, and investment on

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Speaker 1: Bloomberg Radio. Good morning everyone, Michael McKee and Tom Keene

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Speaker 1: Bloomberg Surveillance worldwide, indeed nationwide. I'm Bloomberg twolve in Boston,

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Speaker 1: Bloomberg eleven three oh New York, home of the New

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Speaker 1: York Mets, Bloomberg FM, Washington and Baltimore, Good morning, Baltimore.

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Speaker 1: Orioles ascended that according to Minty vensuchi ace Orioles viewpoint

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Speaker 1: here at Bloomberg and of course Bloomberg nine sixty the

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Speaker 1: Bay Area as well, San Francis. I had no what

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Speaker 1: the giants are doing. I've got to get sted. Giants

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Speaker 1: have won the World Series the last three even years,

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Speaker 1: so there is some thought that just that coincidence alone,

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Speaker 1: aside from the fact that they have players, might might

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Speaker 1: push them forward. We're gonna talk to the Clayton Kershaw

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Speaker 1: of Equity Investments, Douglas Cast to join us here momentarily

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Speaker 1: Bloomberg Surveillance. Much of my con a resuc accounting tax advisory.

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Speaker 1: To minimize risk and capture value in private equity, you

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Speaker 1: need cone residuct or forward thinking creates results. Find out

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Speaker 1: how a cone residuc dot com O h N R

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Speaker 1: E C N I c K. It's gorgeous February morning.

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Speaker 1: The sun is up, it's staying up longer. It's a

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Speaker 1: good time to speak to Douglas Cast of Seabers. Doug,

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Speaker 1: good morning, Pictures and catches last week. I know it's

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Speaker 1: like a good thing. And in America, UM, let's frame

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Speaker 1: Doug right now within pictures and Catchers. Obviously l A

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Speaker 1: is spending more money than anyone. That's the one way

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Speaker 1: that in baseball. Where's the one way that you are

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Speaker 1: a feared of Right now? In the equity markets, I

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Speaker 1: would um, I think we're in a in a in

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Speaker 1: a very difficult and confusing period. UM I mentioned to

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Speaker 1: you in a memo to you and Lee the producer,

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Speaker 1: that um I was at a James tell a concert

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Speaker 1: of all places at Donald Trump's Morrow Lago House in

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Speaker 1: Palm Beach on Saturday night, and he was He was

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Speaker 1: singing Fire and Rain and invoked to me the obviously

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Speaker 1: the Robert Frost poem Fire and Rain, which discusses the

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Speaker 1: familiar question about the fate of the world whether it's

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Speaker 1: more likely to be destroyed by fire ice. But I

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Speaker 1: got back to a famous memo of that our mutual

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Speaker 1: friend Barton, the late Barton Biggs Road of Coal Fire

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Speaker 1: in I think it's time to fear the ice. Well,

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Speaker 1: we are in a period of substandard economic and tempted

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Speaker 1: profit growth, and that's our destiny. We have am and

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Speaker 1: a broken market mechanism which is dominated by leverage ets

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Speaker 1: and by these machines and algois who are agnostic to

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Speaker 1: balance sheets, private market value and income statements. So we

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Speaker 1: get this market with note what I call no memory

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Speaker 1: from day to day. Um. These investment strategies of mass

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Speaker 1: destruction tend to exaggerate short term market moves like we've

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Speaker 1: experienced in Jabuary to the downside, upside, and now today

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Speaker 1: to the upside. So I'm I'm basically fearful that we're

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Speaker 1: in um um. You know, we have this upward reevaluation

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Speaker 1: of multiples between O nine and to fifteen, and I

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Speaker 1: think that the recent rerating of stocks lower themes to

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Speaker 1: reflect the recognition that profits too will be lower for longer.

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Speaker 1: The critics Doug will say, you go short, you go along,

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Speaker 1: you move in and out. Tell us where you are

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Speaker 1: right now and what it would suffice the Frankie that's

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Speaker 1: the last line of the Robert Frost poem, and what

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Speaker 1: would suffice to bring you forward to a new direction? Um.

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Speaker 1: I would be more optimistic if I had a sense

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Speaker 1: that the secular deterioration and growth prospects um um uh

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Speaker 1: morphed into a more rapid period of economic growth at

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Speaker 1: our dependency upon monetary policy makers are central bankers to

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Speaker 1: stimulate um self sustaining growth and escape philosophy velocity. Uh,

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Speaker 1: we're successful, and I just don't see it. So I

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Speaker 1: am modestly bullish near term, but embarish into media term.

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Speaker 1: I expect the SMP to decline to a low double

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Speaker 1: digit percentage this year. I'm currently to answer your question,

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Speaker 1: positioned only slightly net short, preferring to see a more

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Speaker 1: rapid build up an optimistic investor sentiment before expanding my

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Speaker 1: short exposure. It's interesting to note that a bunch of

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Speaker 1: the investor surveys came out and market bain bowls remain

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Speaker 1: at very low levels. The consensus and um of of

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Speaker 1: bears actually rose last week, which is bulisha for the market.

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Speaker 1: As a contrarian, would it be I think everybody can

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Speaker 1: agree we're not going to see the fiscal policy action

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Speaker 1: that the world is calling for. So would it be

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Speaker 1: better if central banks just sort of shut up and

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Speaker 1: got the heck out of the way, Because yeah, I

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Speaker 1: think I think, Mike, it would have been much better

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Speaker 1: if we did this a year ago. And first of all,

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Speaker 1: if they stopped easing a year ago and um and

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Speaker 1: basically let the let the market have have natural price

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Speaker 1: discovery as opposed to this artificiality. And you know machines

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Speaker 1: that are um um um and algorithms which are moved

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Speaker 1: by the next announcement with regard to drag or the

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Speaker 1: intention to stay lower for longer. It's just not a

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Speaker 1: natural sequence of events. And I think that this whole

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Speaker 1: thing has led up that I think the recent market

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Speaker 1: weakness reflects the loss of confidence in all central bankers

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Speaker 1: and concerns that monetary policy in the US has lost

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Speaker 1: its effectiveness and or has pulled forward corporate sales and

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Speaker 1: profits and economic activity. I call this the aha moment.

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Speaker 1: It's it's not a market friendly moment for valuations. How

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Speaker 1: do you filter out the noise? Then? Um As Richard Bernstein,

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Speaker 1: you wrote a great book called Navigating the Noise, which

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Speaker 1: which I really recommend. It's tough. I just think it's

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Speaker 1: where it's really tough, Mike and Thomas for the buying

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Speaker 1: whole crowd. It's easy for the traders if you approach

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Speaker 1: the market in a kind of emotional less way, buying

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Speaker 1: the stream dips, selling or shorting the extreme bouts of

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Speaker 1: your four and we've seen four or five of those

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Speaker 1: of consequence in the year. So I think the odds

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Speaker 1: of a recession on mounting. But I want to add

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Speaker 1: an important point I think that was made on Bloomberg

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Speaker 1: on Surveillance last week. It's important to note that a

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Speaker 1: precondition for a bear market is not necessarily a recession.

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Speaker 1: Bear markets can occur even if the US fails to

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Speaker 1: fall into recession. It happened in nineteen sixty two, sixty six,

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Speaker 1: and eighty seven and nine and eight. I used to

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Speaker 1: work with a guy when I was at Putnam. When

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Speaker 1: I graduated, Warton called Wally Deemer, who was a fantastic,

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Speaker 1: a legendary technical analyst, and he once said, you don't

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Speaker 1: buy GDP futures, you buy S ANDP futures. Yeah, that's

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Speaker 1: extremely well, said Doug. I I saw the Martian UH

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Speaker 1: the other day and it really, really really I thought

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Speaker 1: was an excellent effort and is. As Matt Damon says

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Speaker 1: in the middle of the movie, let's science this. You

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Speaker 1: are known for being an adult about sciencing your belief

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Speaker 1: what's Doug casts science right now. But my thocts is

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Speaker 1: to be is to be UM basically, to reduce gross

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Speaker 1: exposure in an uncertain, volatile, and unpredictable period. There are

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Speaker 1: times to play, and there's times, as Warren Buffett says

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Speaker 1: to you know what to have your hands on. You know,

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Speaker 1: UM wild so hard remiscent. It's hard because of the

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Speaker 1: aforementioned discussion of these um UM weapons of financial market destruction,

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Speaker 1: the leverage ETFs and UM, the quant strategies gamma hedging,

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Speaker 1: risk parity trading, that that worship at the altar of

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Speaker 1: price momentum. They they sent they tend to exaggerate your

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Speaker 1: term markets, confused investors, they send false market messages, and importantly,

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Speaker 1: they blemished the value of stock charts and technical analysis. Okay,

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Speaker 1: I'll go with all that, and you've nailed it. But

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Speaker 1: what I want to know for traders, and this is

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Speaker 1: not what we do in surveillance. A lot we do

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Speaker 1: more long term investment. But Mr Cass, what I want

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Speaker 1: to know is in the middle of reminiscence of the

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Speaker 1: stock operator, like you know, you're the only ones still

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Speaker 1: alive and was there when the book is written. But

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Speaker 1: there's a point where the guy just says, I'm going

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Speaker 1: to Florida. Where I'm in Florida, I know, but pulling

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Speaker 1: pulling away from the market actively. Yeah, but there's a

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Speaker 1: point I'm trying to capture alpha by exploiting, as I said,

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Speaker 1: in an unemotional way, the gyrations of the market, which

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Speaker 1: are random and unpredictable. Are you clearly people aren't fastible

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Speaker 1: enough and they should just sit on the hand. Are

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Speaker 1: you at a point where it's so uncertain or convoluted

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Speaker 1: to the upsilon so high that you just say I

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Speaker 1: can't do this and you sit off to the sidelines

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Speaker 1: for a while. I think that's the best strategy for

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Speaker 1: the average investors. Boring, it's boring. You'll have a lot

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Speaker 1: of you'll have a lot of silence that markt No, No,

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Speaker 1: we don't want that. We don't want that. But I

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Speaker 1: think it's important advice. We're gonna come back with Doug

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Speaker 1: cass on all the rage right now financial engineering, which

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Speaker 1: is out there, use of cash and you know, someone

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Speaker 1: what the actives are doing here recently, but I really

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Speaker 1: want to talk to him about financial engineering. America Belli says,

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Speaker 1: give me back the money, thank you. A lot of

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Speaker 1: other people say there should be this moral high ground

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Speaker 1: of using it for other sources like convestment, maybe actually

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Speaker 1: creates jobs as well. We'll return with Doug cass of

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Speaker 1: Sea Breeze Investment Futures Up twenty two, jol futures up.

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Speaker 1: All right, let's check in with John Tucker and get

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Speaker 1: the latest world in national news. Michael and Tom. With

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Speaker 1: Jeff Bush's departure from the presidential race, Saturday, fundraisers are

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Speaker 1: facing the question pick another side or retreat. Most Bush

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Speaker 1: loyalist content at Sunday said they were preparing to support

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Speaker 1: Marco Rubio or no One in particular. Apple CEO Tim

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Speaker 1: Cook has jumped back into the prey over FBI demands

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Speaker 1: at the company help hack a locked iPhone used by

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Speaker 1: the shooter in a San Bernardino attack. In an early

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Speaker 1: morning email to employees, Cook says the government should withdraw

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Speaker 1: its demanded. The emerging legal fight is sparked a debate

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Speaker 1: on government power, privacy, digital rights, public safety and security.

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Speaker 1: An epic chair draped in black is greeting Supreme Court

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Speaker 1: justices meeting today for the first time since the death

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Speaker 1: of Justice and Toon and Scalia. The remaining a justices

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Speaker 1: resumed work today. Scalia's chair will remain as a tribute

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Speaker 1: until next month. Global News twenty four hours a day,

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Speaker 1: powered by a twenty jouralists more than one fifty news

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Speaker 1: bureaus around the world. I'm John, Tucker, Michael and Tom John.

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Speaker 1: Thanks so much coming up on use of cash, Doug

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Speaker 1: Cass really looking forward to that next Bloomberg surveillance. Good morning.

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Speaker 1: The news update was brought to you by Fairley Dickton's

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Speaker 1: University Boost your career by getting CFP certified at FDU,

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Speaker 1: begin February four. Visit FDU dot du slash FP Bloomboo

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Speaker 1: Business News twenty four hours a day at Bloomberg dot com,

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Speaker 1: the Radio plus Mobile Lab and on your radio, This

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Speaker 1: is a Bloomberg Business Flash and I'm Karen Moscow. US

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Speaker 1: stock index future is higher, so is oil. Let's go

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Speaker 1: to the first Word breaking news desk for today's morning call,

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Speaker 1: and here's Bill Maloney. Good morning Bill, Good morning Karen.

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Speaker 1: Futures are maintaining their games since the last time we spoke.

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Speaker 1: Dea Futures hired by a hundred and seventy six points,

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Speaker 1: says it He's game twenty one, and Nazak futures rise

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Speaker 1: by forty eight. The US ten yel at one point

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Speaker 1: seven seven per sec main U pay markets are higher,

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Speaker 1: led by two percent gains in Italy and Spain and

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Speaker 1: on the US economic front at a thirty Chicago Fed

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Speaker 1: and at market US manufactur P M. I Smith their

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Speaker 1: fifty two point five. Another news CDC says lumber Liquidated

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Speaker 1: is flooring has increased cancer risk. Shares a down sixteen

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Speaker 1: percent pre market and in deal news, food distributor Cisco

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Speaker 1: to buy break Stroop from Bain for three point one billion.

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Speaker 1: Regarding airings this morning, Algan EPs beat and finally some

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Speaker 1: of your key wallsheet upgrades and downgrades at Bank of America,

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Speaker 1: Genesee and Wyoming raised to neutral. CSX and Union Pacific

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Speaker 1: raids to buy Express Strips, cut to sell at Deutsche Bank,

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Speaker 1: Parago cut sell Goldman Sachs and finally tripped by a

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Speaker 1: Zon Expedia both cut to sell over at Stephle. Live

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Speaker 1: from the First Breaking News desk, go on, Bill Maloney, Karen,

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Speaker 1: all right, thanks to Baillan to hear live breaking news

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Speaker 1: over your Bloomberg type squawk a goo on your terminal.

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Speaker 1: That's s Q you a w K go and that's

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Speaker 1: a Bloomberg business flash, Tom and Mike, Karen, I thanks.

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Speaker 1: Someone's curve flattening. We've seen the two is tens spread

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Speaker 1: come in nicely this morning. N nine point nine five

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Speaker 1: A flatter yield curve. All in all, that's a distance

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Speaker 1: between the ten year yield and the two year yield.

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Speaker 1: You move the decimal point over two places. Doug Cass

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Speaker 1: knows that Bloomberg Surveillance brought you by Investco. Factor based

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Speaker 1: strategies can help investors focus on high quality, low volatility,

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Speaker 1: and more. Learn more at investco dot com. Slash High Conviction.

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Speaker 1: Douglas cast with us with Sea Breeze as we UH

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Speaker 1: go through the emotions of being more active in the

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Speaker 1: market away from activity, UH, the DOUG is a quarterly

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Speaker 1: ballet of financial engineering. It has become cannon that you

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Speaker 1: raise your dividend and you deploy cash, you know, you

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Speaker 1: buy back shares, et cetera. Are you a critic of

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Speaker 1: financial engineering or is it a good idea that they're

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Speaker 1: moving money back to shareholders? Well, I I disagree with

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Speaker 1: Mario because there ain't many Henry Singleton's from Televigne around anymore.

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Speaker 1: There are a lot of people like Caterpillar. The as

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Speaker 1: they stock at a hundred and five dollars a share,

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Speaker 1: I think they bought even of the stock a year

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Speaker 1: and a half ago. I've been short for that period.

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Speaker 1: The chefs have gone from a hundred and six to

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Speaker 1: sixty one. I think it is the broader question. The

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Speaker 1: broader issue is that the risks and the unintended consequences

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Speaker 1: of ever lower interest rates arising. The primary issue is

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Speaker 1: that capital spending. Capital spending has been abandoned in favor

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Speaker 1: of financial engineering. But there are other issues too. You know,

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Speaker 1: the risk of savings ourselves into a recession is expanding.

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Speaker 1: You know, they call that the paradox of thrift. And

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Speaker 1: when you get low rates like this, people are hoarding

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Speaker 1: cash and reducing the personal consumption expenditures. And finally, as

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Speaker 1: Brad Hinton talked about earlier in an earlier segment, when

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Speaker 1: you have rates so low with sixty of the world's

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Speaker 1: sovereign yields in negative territory, banknet interest margins and profitability

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Speaker 1: suffer may become challenged and lending his curd tailed. So

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Speaker 1: you know, we're in a tough stew As James Taylor

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Speaker 1: said in Steamroller or in a demolition derby, well, hefty

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Speaker 1: hunk of steaming junk, Mike, what we like to do

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Speaker 1: is have the hefty hunk of steaming junk. Doug Casson,

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Speaker 1: because he used his history. Henry Singleton, who you just

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Speaker 1: heard Mr cass speak of, is not only one of

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Speaker 1: the heroes of American finance, but a giant of engineering.

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Speaker 1: He was at Annapolis first in his class, had to leave,

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Speaker 1: went to m I t reinvented himself and then did

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Speaker 1: the oddest of things. Mike. He bought shares when the

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Speaker 1: stock was cheap and issued them to the public when

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Speaker 1: the shares were expensive. Is this This is a rare

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Speaker 1: and beautiful thing. And then and then when rates interest

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Speaker 1: rates declined, he issued an enormous amount of bonds in

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Speaker 1: order to buy back stock in the future. Just a

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Speaker 1: just a brilliant guy in a billionaire when a billion

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Speaker 1: dollars really made meant something? What what you would be? No,

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Speaker 1: but what you see today was invented by Mr Singleton.

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Speaker 1: There was no other way to put it. A tele

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Speaker 1: Omega's Lee Kooperman had done a great job. In fact,

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Speaker 1: he's to courses at Columbia Business School talking about Singleton's

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Speaker 1: allocation of capital strategy. Everyone should get a hands on

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Speaker 1: their hands on it. By the way, Tom, I noticed

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Speaker 1: you don't talk about the Red Sox anymore. You talking

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Speaker 1: about the Dodgers. You're talking about the giant to come. Well,

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Speaker 1: you remember last year, Doug He said in the beginning

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Speaker 1: of April that the Red Sox were done for the year,

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Speaker 1: and he actually turned out to be right. So he

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Speaker 1: thinks he's a baseball prognosticator. Now, a lot of people,

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Speaker 1: a lot of people would suggest maybe this year the

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Speaker 1: Red Sox are going to play a little better. I

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Speaker 1: didn't really know. Angel. Oh No, it's like Mike save

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Speaker 1: me or play Bowden? Did you get my we wandered

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Speaker 1: off the reservation. So let's just ask Doug as you

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Speaker 1: keep an eye out on on the National League in particular. Um,

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Speaker 1: your uncle had sort of a soft spot for the

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Speaker 1: New York National League team, your cousin and and the

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Speaker 1: UH and the Los Angeles team. UH, do you have

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Speaker 1: a view on either one of their um performances coming

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Speaker 1: up in two thousands sixteen? I think the God just

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Speaker 1: could go on defeats. It's like the Warriors, you know,

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Speaker 1: you know at this concert Saveny night, I know we're

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Speaker 1: running out of time. James Taylor saying Angels of Fenway,

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Speaker 1: and I love the opening line, which is a killer

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Speaker 1: to you, Tom A six Summer's Gone by, Bambino put

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Speaker 1: a hex on the bean. We were living on, a

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Speaker 1: tear and a sigh in the shadow of the Bronx machine.

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Speaker 1: That's hateful, hateful. Can our global technical director cut the

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Speaker 1: line right now? Is that feasible? Did you see the

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Speaker 1: Yankees have the by far the highest season ticket price

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Speaker 1: in all of baseball, and the baseball they're playing does

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Speaker 1: not justify Doug Cash. Thank you so much, greatly appreciated.

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Speaker 1: Sea Breeze Partners and I do spring training and we

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Speaker 1: can lead Cash. He can guess hosts with us for

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Speaker 1: like the five or six days it will need for

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Speaker 1: us to visit every park. Yeah, exactly. Um, I think

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Speaker 1: anybody's listening, they could affect that trends act. Yeah. Yeah,

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Speaker 1: our boss is saying, are you out of your mind

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Speaker 1: at this point? Okay? Features up twenty, Features up seventy one.

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Speaker 1: It's a very nice correlated screen with one screaming exception,

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Speaker 1: and that is curve flattening. Two is ten spread nine

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Speaker 1: point seven, the difference of deal between the tenure and

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Speaker 1: the two year point points. That's a big deal. Curve

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Speaker 1: flattening is something different this morning. Economic data next, Bloomberg

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Speaker 1: Surveillance coming up there, with all due respect, highlight brought

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Speaker 1: you by land Rover. If it's in your nature to

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Speaker 1: Bloomberg eleventh Rio to Washington, d C, Bloomberg to Boston

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Speaker 1: Bloomberg twelve hours to San Francisco, Bloomberg nine to the

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Speaker 1: Country Series Exam Channel one ninety and around the globe

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Speaker 1: the Bloomberg Radio plus Happen Bloomberg dot Com. This is

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Speaker 1: Bloomberg Surveillance is a thirty Michael McKee along with Tom

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00:20:47,400 --> 00:20:49,800
Speaker 1: Keene and our economic indicators are brought to you by

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00:20:49,840 --> 00:20:52,959
Speaker 1: Commonwealth Financial Network. When it's time to change the conversation,

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00:20:53,160 --> 00:20:55,280
Speaker 1: talk with the broker dealer r I A that's ready

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00:20:55,320 --> 00:20:58,920
Speaker 1: to listen. Call eight six six four six to visit

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00:20:59,000 --> 00:21:03,360
Speaker 1: Commonwealth dot com to learn more. No major indicators today.

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Speaker 1: The Chicago Fed National Activity Index is out at zero

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Speaker 1: point to eight. That's up from a negative zero point

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Speaker 1: three four in December and is much better than the

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Speaker 1: survey of a negative zero point one zero. Not sure

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Speaker 1: how much it tells us about what's actually going on

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Speaker 1: the market. US Manufacturing p M I do out later

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Speaker 1: this morning. Marks Andy is with us now and of

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Speaker 1: course uh Mark is chief economist at Moody's Analytics, and

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Speaker 1: he keeps track of all things going on around the world,

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Speaker 1: which makes him the perfect person to follow Doudcasts who

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Speaker 1: suggested that we may have about a thirty five pc

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Speaker 1: chance of recession and is extremely worried about the stagnant

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Speaker 1: economic growth prospects for the world and what central banks

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Speaker 1: are or are not doing about it. Mark, would you

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Speaker 1: share the pessimism, or at least the lack of optimism

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Speaker 1: about where we are going over the next six months

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Speaker 1: to a year, Well, I'd be I'd be a bit

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Speaker 1: more optimistic, you know, subjectively. Put the odds of recession

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Speaker 1: in the United States that's somewhere between fift no. Globally,

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Speaker 1: there's more concern uh, And I would concur with some

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Speaker 1: of the worries about what's going on overseas. But here

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Speaker 1: in the US, I think we're fine, We're okay shape. Well,

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Speaker 1: are we able to be an island and we continue

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Speaker 1: to grow if the rest of the world is having trouble? Yeah,

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Speaker 1: I think, and we're the engine of growth. We're driving

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Speaker 1: the train now, and it's really the American consumer that's

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Speaker 1: driving the train and the American consumers doing their part.

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Speaker 1: Growth last year was very strong. Real consumer spending growth

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Speaker 1: was over three and as we've been seeing in the

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Speaker 1: recent data retail sales, vehicle sales, housing activity, I think

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Speaker 1: the consumer is going to continue to do their part.

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Speaker 1: You know, Tom, this reminds me of well is it

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Speaker 1: about a decade ago? I remember a book came out

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Speaker 1: called Flying on an Engine as an ancient home immediately

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Speaker 1: went to the bargain visiones. Tom Keane put that together. Um,

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Speaker 1: look at how the States was the only engine of growth.

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Speaker 1: Well there's another engine. Europe is okay too, you know,

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Speaker 1: it's you know, it's not gamebusters in Europe, but they

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Speaker 1: are growing solidly and uh, you know, I think everything

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Speaker 1: suggests that they'll continue to push forward. So it's not

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Speaker 1: just the US. But but you know, your sentiment is correct.

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Speaker 1: The global economy is is troubled. Mark. I want to

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Speaker 1: go back a little bit within your optimism and and

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Speaker 1: your immense chops in the books that you've done on

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Speaker 1: the New American Century and such, what happened in the

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Speaker 1: last two years. You were a great optimist, not an outlier,

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Speaker 1: but but you were looking for three percent plus real

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Speaker 1: GDP growth. You even voiced I don't want to put

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Speaker 1: in your mouth, but you've voiced a four percent real

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Speaker 1: maybe six percent nominal. It didn't happened. I'm fascinated. What's

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Speaker 1: your why for what we've experienced? Hey, A good question. Well,

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Speaker 1: you know it's interestingly not. The job market has done

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Speaker 1: better than I would have thought. Yes, we produced more jobs.

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Speaker 1: Unemployment fell faster, we've gotten back to full employment are

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Speaker 1: close to pretty quickly. Wage growth is picking up. So

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Speaker 1: do you look at the economy to the prison of

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Speaker 1: the labor market, No problem. You know, we're doing very

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Speaker 1: very well. So the you know, the the arithmetic suggests

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Speaker 1: that the reason that uh that I'm I was wrong

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Speaker 1: without GDP is productivity. Productivity growth has been very weak

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Speaker 1: and it has not picked up. And you know that

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Speaker 1: goes to you know, some pretty deep questions as to

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Speaker 1: what's going on. My sense is that we will see

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Speaker 1: productivity growth pick up, but that's still very much a forecast.

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Speaker 1: I knew you would go there. And if you tear

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Speaker 1: apart capital dynamics, labor dynamics in the strange thing total

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Speaker 1: factor productivity, which is which did we miss? Son? Well,

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Speaker 1: you know, I think it's all of the above. Uh,

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Speaker 1: you know, my sense is here, I'll give you a statistic. Um.

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Speaker 1: When we look at the productivity, it's the top line

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Speaker 1: numbers non farm business productivity, and since the recovery began

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Speaker 1: six and half years ago, that's grown just under one

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Speaker 1: percent peranum over the periodes for context that we've non

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Speaker 1: farm business product has grown two percent per enm on

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Speaker 1: ever since World War Two. So that's you know, half

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Speaker 1: the growth, less than half the growth. But if you

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Speaker 1: look at non financial corporate productivity, so think about that

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Speaker 1: for a second. Non financial so exclude the financial sector,

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Speaker 1: and the non corporate sector productive growth has been one

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Speaker 1: point seven percent prem during the recovery. That's that's what

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Speaker 1: I would expect, one point seven percent. So what's going on?

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Speaker 1: I think it boils down to There's lots of reasons,

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Speaker 1: but I think the key reason is what the financial

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Speaker 1: sector has been going through a post crisis. Because of

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Speaker 1: the crisis and because of the change of the regulatory environment.

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Speaker 1: I think that's the key weight on productivity. Can you tell, um,

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Speaker 1: when we're talking about this with brand Hens about how

427
00:26:00,520 --> 00:26:03,560
Speaker 1: the financial sector has been hurting, can you tell whether

428
00:26:03,760 --> 00:26:07,080
Speaker 1: the troubles in the financial sector in the you know,

429
00:26:07,119 --> 00:26:12,520
Speaker 1: Corporate Treasurer's office, Uh in the chief financial officers office,

430
00:26:12,840 --> 00:26:16,800
Speaker 1: are affecting the economy. Yeah, I mean the financial system

431
00:26:16,920 --> 00:26:19,760
Speaker 1: is like the circle story system of the real economy, right.

432
00:26:19,800 --> 00:26:23,560
Speaker 1: I mean that's credit flows are a key to growth,

433
00:26:23,640 --> 00:26:27,280
Speaker 1: to innovation, change, business formation, you know, all those key

434
00:26:27,400 --> 00:26:30,720
Speaker 1: dynamics are vital to productivity growth. So yeah, I think

435
00:26:31,160 --> 00:26:34,879
Speaker 1: that the financial sector is impaired or adjusting in essentially,

436
00:26:35,840 --> 00:26:38,080
Speaker 1: you know, the banks are big banks have gone from

437
00:26:38,160 --> 00:26:40,800
Speaker 1: have had to significantly increased amount of capital they hold.

438
00:26:40,840 --> 00:26:43,399
Speaker 1: And I'm not arguing that's a bad thing. I mean,

439
00:26:43,440 --> 00:26:46,639
Speaker 1: our banking system is now a fortress, but you know

440
00:26:46,840 --> 00:26:48,960
Speaker 1: there is a cost to that, and I think it's

441
00:26:49,000 --> 00:26:51,520
Speaker 1: been moored in prouctivity growth. We'd like to get shown more.

442
00:26:51,760 --> 00:26:54,359
Speaker 1: Is we wandered through and into the summer. Marks Andy

443
00:26:54,760 --> 00:26:57,879
Speaker 1: with this Moody's analytics, and uh really look forward to

444
00:26:57,880 --> 00:27:01,159
Speaker 1: talking to him through the rest to the year. His

445
00:27:01,240 --> 00:27:04,320
Speaker 1: title us macro look no recession, he minces no words

446
00:27:04,359 --> 00:27:09,720
Speaker 1: about it with with optimism as well. Um, we're gonna

447
00:27:09,720 --> 00:27:11,520
Speaker 1: come back. Let me do a daty check. Michael McKenna

448
00:27:11,560 --> 00:27:14,320
Speaker 1: are sorting out the Monday morning here, Uh, futures up

449
00:27:14,320 --> 00:27:18,400
Speaker 1: twenty down features up one seventy. Euro one ten six

450
00:27:18,520 --> 00:27:23,359
Speaker 1: is a weaker euro with dollar strength. Um sterling is

451
00:27:23,520 --> 00:27:28,240
Speaker 1: as sterling is really headline one forty five Sterling one

452
00:27:28,359 --> 00:27:37,600
Speaker 1: forty is weaker. Uh this morning, Yeah, this hour of

453
00:27:37,600 --> 00:27:40,200
Speaker 1: surveillance is brought to you by Volvo Cars, White Planes.

454
00:27:40,280 --> 00:27:43,160
Speaker 1: Visit Volvo Cars, White Planes dot com. Here's John Tucker

455
00:27:43,200 --> 00:27:46,240
Speaker 1: with headlines. All right, Michael and Tom. After predicting he

456
00:27:46,280 --> 00:27:49,959
Speaker 1: could pull off a political upset Nevada had more than

457
00:27:50,000 --> 00:27:53,680
Speaker 1: a week before potential wins on Super Tuesday, Bernie Sanders

458
00:27:53,760 --> 00:27:56,240
Speaker 1: is assuring supporters he is working hard to close the

459
00:27:56,280 --> 00:27:59,600
Speaker 1: gap on Saturday's primary in South Carolina. No polls in

460
00:27:59,680 --> 00:28:03,280
Speaker 1: South Carolina have shown Sanders closer than eighteen points down

461
00:28:03,359 --> 00:28:07,359
Speaker 1: from Hillary Clinton. Apple, resisting at court order requiring the

462
00:28:07,400 --> 00:28:09,840
Speaker 1: company to help unlock the iPhone of a dead terrorists,

463
00:28:10,160 --> 00:28:12,840
Speaker 1: says the US Congress should form a committee to discuss

464
00:28:12,880 --> 00:28:16,439
Speaker 1: privacy and personal freedoms. Apple would gladly take part in

465
00:28:16,440 --> 00:28:18,760
Speaker 1: such an effort, the company saying in a statement on

466
00:28:18,800 --> 00:28:22,440
Speaker 1: its website. Today. The US Auto Safety Regulars says it's

467
00:28:22,480 --> 00:28:26,160
Speaker 1: investigating all Too Kotter Corporation, the airbag inflators that use

468
00:28:26,160 --> 00:28:29,240
Speaker 1: a chemical propellant ban from future models, and will compile

469
00:28:29,359 --> 00:28:34,120
Speaker 1: data to determine whether to expand the industry's broadest recoil. Ever,

470
00:28:34,840 --> 00:28:37,960
Speaker 1: Syria's main political opposition will meet today to discuss a

471
00:28:38,000 --> 00:28:41,920
Speaker 1: proposed ceasefire whose potential for even limited success has been

472
00:28:42,000 --> 00:28:45,840
Speaker 1: undercut by a spike in violence claimed by Islamic state,

473
00:28:46,320 --> 00:28:48,760
Speaker 1: and the head of the UN Nuclear Agency says another

474
00:28:48,880 --> 00:28:51,720
Speaker 1: eleven nations need to step up to make the world

475
00:28:51,720 --> 00:28:54,400
Speaker 1: a safer place from the threat of nuclear material falling

476
00:28:54,400 --> 00:28:56,920
Speaker 1: into the hands of terrorists. That's a number of countries

477
00:28:56,960 --> 00:28:59,080
Speaker 1: needed to sign on to the Amendment to the Convention

478
00:28:59,160 --> 00:29:03,080
Speaker 1: on the Physical a Protection of Nuclear Material. Global News

479
00:29:03,120 --> 00:29:05,480
Speaker 1: twenty four hours a day, powered Buyer twenty four hundred

480
00:29:05,520 --> 00:29:08,160
Speaker 1: journalists and more than one hundred fifty bureaus around the world.

481
00:29:08,480 --> 00:29:12,360
Speaker 1: I'm John Tucker, Michael and Tom. Thank you John. Time

482
00:29:12,400 --> 00:29:15,960
Speaker 1: now for the Rakadina Outo Group. Bloomberg NBC Sports Update.

483
00:29:16,080 --> 00:29:19,840
Speaker 1: Here's Rob Bush, Good morning, Mike, Tom. The Rangers thrilled

484
00:29:19,840 --> 00:29:22,080
Speaker 1: the fans at Madison Square Garden as two of the

485
00:29:22,120 --> 00:29:24,959
Speaker 1: marquee golten Er squared off the Red Wings. Jimmy Howard

486
00:29:25,160 --> 00:29:28,440
Speaker 1: had twenty nine saves to Henrik Lundquist twenty two, but

487
00:29:28,480 --> 00:29:30,800
Speaker 1: it was a defenseman of all people, Kevin Klein, who

488
00:29:30,800 --> 00:29:33,880
Speaker 1: netted the game winner one nothing in overtime. It's it's

489
00:29:33,880 --> 00:29:36,800
Speaker 1: a different game, obviously, and we don't practice it really,

490
00:29:36,840 --> 00:29:39,120
Speaker 1: so it's it's it's tough and you just have to

491
00:29:39,160 --> 00:29:41,680
Speaker 1: make sure when they've got the part defensively or on

492
00:29:41,680 --> 00:29:44,040
Speaker 1: the right side of your guys, because you know, two

493
00:29:44,040 --> 00:29:46,040
Speaker 1: on one like that can can turn to a two one,

494
00:29:46,360 --> 00:29:48,560
Speaker 1: you know the other way. So it's difficult. You try

495
00:29:48,600 --> 00:29:50,600
Speaker 1: and you know, just make the most of your opportunities

496
00:29:50,600 --> 00:29:53,320
Speaker 1: when you get a chance. It was Klein's fifth goal

497
00:29:53,520 --> 00:29:56,680
Speaker 1: of the year. As the Rangers are just one point

498
00:29:56,720 --> 00:29:59,239
Speaker 1: behind Florida for the second seed in the East, they

499
00:29:59,360 --> 00:30:02,560
Speaker 1: visit New Jersey on Tuesday. The Aisles also played Tuesday

500
00:30:02,560 --> 00:30:05,840
Speaker 1: in Minnesota. The basketball, the Nets fell to eleven and

501
00:30:05,880 --> 00:30:07,560
Speaker 1: twenty two at home of the one on four ninety

502
00:30:07,600 --> 00:30:09,880
Speaker 1: six lost to Charlotte. Brook Lopez, who led the way

503
00:30:10,080 --> 00:30:12,560
Speaker 1: with a double double, wanted this one bad as a

504
00:30:12,600 --> 00:30:14,640
Speaker 1: team gears up for a nine game road trip. We

505
00:30:14,880 --> 00:30:18,240
Speaker 1: had a great concentration in certain parts of the game tonight,

506
00:30:18,360 --> 00:30:20,239
Speaker 1: and uh we we need to come with as much

507
00:30:20,280 --> 00:30:22,680
Speaker 1: as possible. You know, we're definitely going to stick together

508
00:30:22,760 --> 00:30:24,960
Speaker 1: obviously being on the road so long, and just take

509
00:30:25,000 --> 00:30:26,680
Speaker 1: it a game at the time. The Nets won't return

510
00:30:26,720 --> 00:30:29,400
Speaker 1: to Brooklyn until March thirteenth. Nicks entertained the Raptors of

511
00:30:29,480 --> 00:30:31,920
Speaker 1: seven thirty. Jimmer Fred debt he'll join the team on

512
00:30:32,000 --> 00:30:34,920
Speaker 1: a ten day contract. College Troops St. John wiped out

513
00:30:34,920 --> 00:30:37,959
Speaker 1: a nineteen point deficit at home, but Isaiah Whitehead hit

514
00:30:38,000 --> 00:30:40,600
Speaker 1: two game winning free throws as Seaton Hall beat the

515
00:30:40,600 --> 00:30:44,640
Speaker 1: Red Storm sixty one, and NASCAR Denny Hamlin won the

516
00:30:44,640 --> 00:30:47,240
Speaker 1: closest finish ever at the Dayton of five. And that

517
00:30:47,440 --> 00:30:50,840
Speaker 1: is your NBC Bloomberg Sports Update. Mike tom rab Bush

518
00:30:50,880 --> 00:30:52,720
Speaker 1: can thank you so much again. Shure to the market.

519
00:30:52,760 --> 00:30:55,640
Speaker 1: I'm noticing Kurve flattening as well. Coming up, we're gonna

520
00:30:55,640 --> 00:30:59,440
Speaker 1: continue our discussion with Marcus Zandy of Moody's on a

521
00:30:59,560 --> 00:31:02,960
Speaker 1: most interesting American economy. If you go, ya will C

522
00:31:03,120 --> 00:31:06,160
Speaker 1: plus I plus G plus ICs you can talk about

523
00:31:06,200 --> 00:31:09,440
Speaker 1: any parts of that equation. I'm most interested in Mark

524
00:31:09,520 --> 00:31:12,640
Speaker 1: Xandy on what it will take to get an investment

525
00:31:13,600 --> 00:31:21,520
Speaker 1: Going from New York this Monday, Bloomberg Surveillance. The sports

526
00:31:21,520 --> 00:31:23,960
Speaker 1: report was brought to by Katina Auto Group. Everyone deserves

527
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Speaker 1: to drive a Mercedes Bens from Rakotina. Make it happen

528
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Speaker 1: at Katina Motorcar in Edison, Katina of Union and the

529
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Speaker 1: new Katina of Freehold. Or go to Rakotina dot Com

530
00:31:37,280 --> 00:31:40,680
Speaker 1: Global Business News twenty four hours a day. If Bloomberg

531
00:31:40,720 --> 00:31:43,800
Speaker 1: dot Com the radio plus mobil and on your radio.

532
00:31:44,120 --> 00:31:48,280
Speaker 1: This is a Bloomberg Business Flash and I'm Karin Moscow.

533
00:31:48,320 --> 00:31:50,680
Speaker 1: This updates brought to you by Sector Spider e t

534
00:31:50,880 --> 00:31:52,520
Speaker 1: f S. Why buy a single stock when you can

535
00:31:52,560 --> 00:31:55,400
Speaker 1: invest in the entire sector of visits? Sector spd R

536
00:31:55,600 --> 00:31:58,760
Speaker 1: said dot com are called one eight six sector one

537
00:31:58,920 --> 00:32:03,600
Speaker 1: eight six six Sector et F. We are watching oil.

538
00:32:03,680 --> 00:32:06,480
Speaker 1: Oil is rising with global equities and its speculation that

539
00:32:06,520 --> 00:32:09,120
Speaker 1: a production freezes by some OPEC members in Russia could

540
00:32:09,120 --> 00:32:12,640
Speaker 1: eventually help to abate the surplus. Nimax screwede oil is

541
00:32:12,680 --> 00:32:15,800
Speaker 1: currently up six point three percent. It's been extending its

542
00:32:15,840 --> 00:32:18,440
Speaker 1: gains throughout the morning. It's up a dollar eighty seven

543
00:32:18,440 --> 00:32:21,360
Speaker 1: to thirty one dollars fifty one cents a barrel. Brent

544
00:32:21,600 --> 00:32:23,840
Speaker 1: is up five point two percent or a dollar seventy

545
00:32:23,840 --> 00:32:26,440
Speaker 1: four to thirty four seventy five of Barrel u S

546
00:32:26,400 --> 00:32:29,479
Speaker 1: stock index futures higher as well. SNP E mini futures

547
00:32:29,520 --> 00:32:32,200
Speaker 1: up twenty one points, DOWIE mini futures up a hundred

548
00:32:32,240 --> 00:32:35,120
Speaker 1: eighty five, and NASA documni futures up about forty six

549
00:32:35,400 --> 00:32:38,120
Speaker 1: dots in Germany's up one point nine percent ten. Your

550
00:32:38,120 --> 00:32:40,840
Speaker 1: Treasury down five thirty seconds. That yelled one point seven

551
00:32:41,000 --> 00:32:44,040
Speaker 1: six percent. Comax Gold is down one point six percent

552
00:32:44,120 --> 00:32:47,680
Speaker 1: or nineteen dollars to twelve eleven eighty announced the euro

553
00:32:47,800 --> 00:32:51,080
Speaker 1: a dollar ten twenty, the En one thirteen point one seven.

554
00:32:51,560 --> 00:32:54,640
Speaker 1: Dean Foods, the largest US milk processor, posting fourth quarter

555
00:32:54,760 --> 00:32:57,320
Speaker 1: profit that beat analysts Esta Mids after it paid less

556
00:32:57,320 --> 00:33:00,520
Speaker 1: for dairy supplies. It shares up almost four percent this morning,

557
00:33:00,520 --> 00:33:03,920
Speaker 1: and Allergan also beat. And that's a Bloomberg business flash.

558
00:33:03,960 --> 00:33:06,680
Speaker 1: Tom and Mike Karn, thanks so much again. I'm looking

559
00:33:06,720 --> 00:33:11,040
Speaker 1: at Kurve flattening today within a better risk and field again.

560
00:33:11,120 --> 00:33:13,800
Speaker 1: West Texas up a dollar ninety one, gets your attention.

561
00:33:13,880 --> 00:33:18,680
Speaker 1: Mark Sandy with us with moody and analyts us as

562
00:33:18,680 --> 00:33:23,440
Speaker 1: we continue forward right now, though it is on Wall Street.

563
00:33:24,520 --> 00:33:27,960
Speaker 1: The following is from Bloomberg View. Opinions and comment arry

564
00:33:27,960 --> 00:33:31,920
Speaker 1: from Bloomberg columnists. I'm Clive Crook, columnist for Bloomberg View.

565
00:33:32,000 --> 00:33:34,640
Speaker 1: How to account for the success of Donald Trump? Part

566
00:33:34,680 --> 00:33:37,200
Speaker 1: of the answer is class. I'm a British immigrant and

567
00:33:37,240 --> 00:33:39,920
Speaker 1: I grew up in a northern working class town, moving

568
00:33:39,960 --> 00:33:42,440
Speaker 1: to Oxford and then London in the nineteen seventies. I

569
00:33:42,560 --> 00:33:45,960
Speaker 1: learned something about snobbery, but I never witnessed the naked

570
00:33:46,040 --> 00:33:50,360
Speaker 1: disdain for the working class that America's metropolitan elite finds

571
00:33:50,400 --> 00:33:53,600
Speaker 1: permissible in two thousand and sixteen. The targets of this

572
00:33:53,800 --> 00:33:57,640
Speaker 1: disdain understand they're seen as bigots, too stupid to know

573
00:33:57,800 --> 00:34:00,400
Speaker 1: what's good for them. They don't like being looked down on,

574
00:34:00,640 --> 00:34:04,120
Speaker 1: and many of them are supporting Trump. Trump is outrageous,

575
00:34:04,240 --> 00:34:07,840
Speaker 1: and that's the point. This isn't about policies or promises.

576
00:34:08,000 --> 00:34:10,560
Speaker 1: He delights in offending the people who look down on

577
00:34:10,640 --> 00:34:13,760
Speaker 1: his fans. The more he offends those people, the better

578
00:34:13,840 --> 00:34:16,920
Speaker 1: his supporters like it. Supporting Trump is an act of

579
00:34:17,000 --> 00:34:20,400
Speaker 1: class protest, not just over hard time, the effect of

580
00:34:20,440 --> 00:34:24,400
Speaker 1: immigration on wages, or the depredations of Wall Street. It's also,

581
00:34:24,560 --> 00:34:27,640
Speaker 1: and perhaps most of all over lack of respect. That's

582
00:34:27,680 --> 00:34:30,800
Speaker 1: something no American will stand for. I'm Clive Crook, a

583
00:34:30,880 --> 00:34:34,320
Speaker 1: colonists for Bloomberg View. For more Bloomberg opinion and commentary,

584
00:34:34,400 --> 00:34:37,000
Speaker 1: please go to Bloomberg View dot com or view go

585
00:34:37,280 --> 00:34:40,840
Speaker 1: on the Bloomberg terminal. This has been Bloomberg View and

586
00:34:40,880 --> 00:34:43,719
Speaker 1: Bloomberg View commentaries can be here in hour early weekdays.

587
00:34:44,200 --> 00:34:47,480
Speaker 1: I'm Bloomberg Radio, Michael. Let's bring back Marks Eddie now

588
00:34:47,560 --> 00:34:50,759
Speaker 1: chief economist at Movies Analytics. So we're talking about the

589
00:34:50,800 --> 00:34:53,319
Speaker 1: global economy and how the US is sort of the

590
00:34:53,360 --> 00:34:55,040
Speaker 1: engine of the growth. And I want to get at

591
00:34:55,080 --> 00:34:58,680
Speaker 1: that a little bit, Mark and talk about why do

592
00:34:58,680 --> 00:35:01,319
Speaker 1: you think that will continue? Knew we had a very

593
00:35:01,440 --> 00:35:04,960
Speaker 1: rough fourth quarter. Are you in the camp that suggests

594
00:35:05,000 --> 00:35:08,160
Speaker 1: that was maybe an inventory correction and that we are

595
00:35:08,200 --> 00:35:11,680
Speaker 1: back to it's not a great level of growth, the

596
00:35:11,680 --> 00:35:14,880
Speaker 1: plotting level that we've experienced the last couple of years. Yeah,

597
00:35:14,960 --> 00:35:17,000
Speaker 1: And the fourth quarter was bad in terms of g

598
00:35:17,080 --> 00:35:19,160
Speaker 1: d P. It wasn't bad in terms of jobs. In fact,

599
00:35:19,160 --> 00:35:21,520
Speaker 1: it was fantastic in terms of job growth. And that's

600
00:35:21,560 --> 00:35:25,319
Speaker 1: what's the most important because at this stace of job

601
00:35:25,360 --> 00:35:28,640
Speaker 1: growth for fast approaching full employment, which were months away

602
00:35:28,640 --> 00:35:31,959
Speaker 1: from and I mean stronger wage growth and stronger wage

603
00:35:31,960 --> 00:35:34,799
Speaker 1: growth is the fodder for consumer spending and that's the

604
00:35:34,840 --> 00:35:37,759
Speaker 1: engine for cool economic growth. So you know, as long

605
00:35:37,800 --> 00:35:42,719
Speaker 1: as the American company continue to hire uh and pay

606
00:35:42,760 --> 00:35:45,680
Speaker 1: wills continue to expand will be fine. And every indication

607
00:35:45,760 --> 00:35:47,840
Speaker 1: is that they will uh. You know, we the u

608
00:35:48,080 --> 00:35:51,319
Speaker 1: unemploying terms claims are very low. They remained very very low.

609
00:35:51,400 --> 00:35:54,120
Speaker 1: And the most encouraging thing most recently is that the

610
00:35:54,200 --> 00:35:58,160
Speaker 1: number of people quitting their jobs has skyrocketed, which you know,

611
00:35:58,200 --> 00:36:00,160
Speaker 1: people don't do that unless it's so pretty comfortable they're

612
00:36:00,160 --> 00:36:01,600
Speaker 1: going to find another one. So you know, as long

613
00:36:01,600 --> 00:36:03,520
Speaker 1: as the labor marketings together, we'll be fine. Well, Mike

614
00:36:03,560 --> 00:36:05,120
Speaker 1: jump in here on this year better on the Jolt

615
00:36:05,200 --> 00:36:06,759
Speaker 1: survey and all that. But this was a source of

616
00:36:06,800 --> 00:36:11,040
Speaker 1: conversation at least three times this weekend. Is people really

617
00:36:11,080 --> 00:36:15,799
Speaker 1: have shifted Mike on the enthusiasm to exit the job. Well,

618
00:36:15,840 --> 00:36:19,640
Speaker 1: the the quick rate certainly went up, and you know,

619
00:36:19,840 --> 00:36:22,640
Speaker 1: hiring in theory will continue as long as demand is strong,

620
00:36:22,640 --> 00:36:26,040
Speaker 1: and we saw reasonably good retail sales for the prior month.

621
00:36:26,200 --> 00:36:28,440
Speaker 1: I just want to mark what you hear from companies,

622
00:36:28,440 --> 00:36:31,799
Speaker 1: and uh, once you think the possibility is that with

623
00:36:31,920 --> 00:36:37,000
Speaker 1: the volatility in markets and uncertainty out there, and certainly

624
00:36:37,080 --> 00:36:41,760
Speaker 1: with the crazy turns the presidential campaign has taken, whether

625
00:36:41,840 --> 00:36:44,760
Speaker 1: we will see ceo s just put things on hold

626
00:36:44,840 --> 00:36:47,239
Speaker 1: as they did in previous years when we had these

627
00:36:47,239 --> 00:36:51,279
Speaker 1: black swans come out Greece and other things. Well, I

628
00:36:51,280 --> 00:36:54,239
Speaker 1: think clearly they're nervous. You know, in my business, I

629
00:36:54,320 --> 00:36:58,400
Speaker 1: talked a lot of senior management ceo CFOs, and you

630
00:36:58,400 --> 00:37:00,680
Speaker 1: know they're focused on their stock probably and with the

631
00:37:00,719 --> 00:37:03,680
Speaker 1: decline in stock values, it makes them anxious. And it's

632
00:37:03,680 --> 00:37:06,720
Speaker 1: more in stock prices volatility across all financial markets globally.

633
00:37:07,120 --> 00:37:09,959
Speaker 1: So there's no doubt about that. Uh. But at least

634
00:37:09,960 --> 00:37:13,920
Speaker 1: to this point, Uh, you know, there's no indication sign

635
00:37:14,400 --> 00:37:17,360
Speaker 1: that they've actually called up their human resource head and said,

636
00:37:17,400 --> 00:37:20,200
Speaker 1: you know, stop hiring or certainly no one's saying lying

637
00:37:20,239 --> 00:37:23,839
Speaker 1: off people. That hasn't happened. Uh. Investment spending has been

638
00:37:23,880 --> 00:37:26,320
Speaker 1: on the soft side. But but you know that's mostly energy.

639
00:37:26,360 --> 00:37:33,239
Speaker 1: If exclude energy, why you know, it's it's fine, it's

640
00:37:33,360 --> 00:37:35,440
Speaker 1: you know here, I'll give another statistic. Come you know,

641
00:37:35,680 --> 00:37:40,880
Speaker 1: in this recovery, Uh, investment spending reel all in, you know,

642
00:37:40,920 --> 00:37:43,760
Speaker 1: this whole shooting match. The business investment is four point

643
00:37:43,840 --> 00:37:46,920
Speaker 1: eight percent peranum. That's that's pretty good. I mean in

644
00:37:46,920 --> 00:37:49,640
Speaker 1: the last expansion in a decade ago, and that was

645
00:37:49,680 --> 00:37:53,440
Speaker 1: a six year long expansion, peranum investment growth was four

646
00:37:53,480 --> 00:37:56,279
Speaker 1: point one percent. And if you look at investment in

647
00:37:56,480 --> 00:37:59,279
Speaker 1: R and D and intellectual property, which is you know,

648
00:37:59,320 --> 00:38:03,319
Speaker 1: the most ski stuff with long payoff payoffs, and you

649
00:38:03,320 --> 00:38:05,160
Speaker 1: think people, if their business are really scared to be

650
00:38:05,200 --> 00:38:07,560
Speaker 1: pulling back on that, you don't say it. So, yeah,

651
00:38:07,840 --> 00:38:10,680
Speaker 1: they're nervous, there's no doubt, but they're not nervous enough

652
00:38:10,719 --> 00:38:12,279
Speaker 1: to say, you know, I'm going to pull back here,

653
00:38:12,440 --> 00:38:16,440
Speaker 1: at least not yet. What about the the idea that

654
00:38:17,160 --> 00:38:20,240
Speaker 1: the stock markets problems are going to have a wealth

655
00:38:20,480 --> 00:38:25,600
Speaker 1: impact on spending and that could push us towards our session. Yeah,

656
00:38:25,600 --> 00:38:27,960
Speaker 1: that's I worry about that. You know, we've done some

657
00:38:28,000 --> 00:38:32,640
Speaker 1: recent research that indicates that the stock wealth effect is

658
00:38:32,840 --> 00:38:36,960
Speaker 1: large by historical standards. Uh, you know, historically the stock

659
00:38:37,000 --> 00:38:39,720
Speaker 1: wealth effect is about two three cents, So every dollar

660
00:38:39,880 --> 00:38:43,520
Speaker 1: decline in stock prices would reduce consumers spending ultimately by

661
00:38:43,560 --> 00:38:45,160
Speaker 1: two three cents. That doesn't sound like a lot, but

662
00:38:45,680 --> 00:38:47,040
Speaker 1: you know, just to give a sense of it, a

663
00:38:47,080 --> 00:38:49,360
Speaker 1: temper cent decline in stock values, which is roughly what

664
00:38:49,400 --> 00:38:52,560
Speaker 1: we've experienced or peaked. The current is about two trillion

665
00:38:52,600 --> 00:38:54,680
Speaker 1: dollars in wealth, so that adds up to real money.

666
00:38:55,040 --> 00:38:58,360
Speaker 1: But if the wealth effect is by six cents, and

667
00:38:58,440 --> 00:39:01,719
Speaker 1: my research suggests that it might have gotten that high,

668
00:39:02,080 --> 00:39:04,920
Speaker 1: then the damage will will be greater. And you know that,

669
00:39:05,120 --> 00:39:07,000
Speaker 1: and that goes right to the heart of my thesis.

670
00:39:07,000 --> 00:39:09,239
Speaker 1: You know that the American consumer's gonna keep spending. So

671
00:39:09,600 --> 00:39:11,399
Speaker 1: that's the key thing I worry about here, at least

672
00:39:11,400 --> 00:39:13,040
Speaker 1: in the very near term. You know what the damage

673
00:39:13,040 --> 00:39:15,160
Speaker 1: is going to be created by the financial turmoil. In

674
00:39:15,200 --> 00:39:17,280
Speaker 1: the last minute that we've got with you, Mark Sandy

675
00:39:17,400 --> 00:39:19,440
Speaker 1: helped me with the Fed. Mike, I think we've been

676
00:39:19,800 --> 00:39:22,799
Speaker 1: It's important to understand with a meeting March sixteen, how

677
00:39:22,840 --> 00:39:27,000
Speaker 1: fed free we've been in conversation in research this morning.

678
00:39:27,040 --> 00:39:32,320
Speaker 1: What will you listen for from FED officials? Mark Sandy, Well,

679
00:39:32,360 --> 00:39:35,960
Speaker 1: you know we're coming in a full employment check. Uh,

680
00:39:36,400 --> 00:39:40,480
Speaker 1: actual inflation is actually picking up, Core inflation is picking up.

681
00:39:41,000 --> 00:39:43,560
Speaker 1: Check We're not We're still below target. But we're moving

682
00:39:43,600 --> 00:39:46,879
Speaker 1: towards target. I think the key thing really will be,

683
00:39:47,760 --> 00:39:50,480
Speaker 1: you know, obviously, what damage will this financial terminal do.

684
00:39:50,680 --> 00:39:53,560
Speaker 1: But and I think they'll be focused on unemployment, turance claims,

685
00:39:53,560 --> 00:39:56,600
Speaker 1: and limber market data to focus on that. But the

686
00:39:56,600 --> 00:39:58,319
Speaker 1: the real thing I think are now focused on is

687
00:39:58,560 --> 00:40:02,440
Speaker 1: inflation expectations. That feels really soft, and that continues to

688
00:40:02,440 --> 00:40:04,640
Speaker 1: be the case. I don't see they're just that, you know,

689
00:40:04,640 --> 00:40:06,160
Speaker 1: they're not gonna be able to check that box, and

690
00:40:06,200 --> 00:40:09,960
Speaker 1: they won't tighten monetary policy. What's your forecast for inflation?

691
00:40:10,040 --> 00:40:13,759
Speaker 1: We have seen a we are definitely moving up of

692
00:40:13,840 --> 00:40:16,560
Speaker 1: core rates. It's gonna pick up. I mean, if he did,

693
00:40:16,600 --> 00:40:19,960
Speaker 1: my script roughly holds together because the labor markets tightening,

694
00:40:19,960 --> 00:40:21,719
Speaker 1: we're going to get wage growth, and then you lay

695
00:40:21,760 --> 00:40:23,960
Speaker 1: on top of that a very tight housing market. Vacancy

696
00:40:24,040 --> 00:40:26,239
Speaker 1: rates are thirty year lows and we're getting very strong

697
00:40:26,280 --> 00:40:29,319
Speaker 1: rent growth. And healthcare costs are going to pick up

698
00:40:29,360 --> 00:40:32,040
Speaker 1: because it's very labor intensive, and his wage costs rise,

699
00:40:32,280 --> 00:40:35,120
Speaker 1: healthcare costs will rise, and effects of Obamacare are going

700
00:40:35,160 --> 00:40:37,560
Speaker 1: to start to fade a bit. So everything is adding

701
00:40:37,640 --> 00:40:40,440
Speaker 1: up for inflation, getting core inflation, getting back to target

702
00:40:40,520 --> 00:40:43,120
Speaker 1: over the next year eighteen months and then something beyond that.

703
00:40:43,320 --> 00:40:46,000
Speaker 1: Mark Sandy, thank you so much. With movies, Mike the

704
00:40:46,040 --> 00:40:51,480
Speaker 1: Speakers starting with Sebruary two, today Potter Fisher, Kaplan Bullard

705
00:40:51,520 --> 00:40:57,040
Speaker 1: and in New York City Lockert Williams, Paul Brainerd and

706
00:40:57,080 --> 00:41:02,120
Speaker 1: finally Stanley Fisher March seven. Before we descend into quiet,

707
00:41:02,360 --> 00:41:06,600
Speaker 1: there will be a lot of opinions expressed what is

708
00:41:06,800 --> 00:41:08,919
Speaker 1: going to happen, And we have a pretty good idea

709
00:41:08,920 --> 00:41:11,800
Speaker 1: of where a lot of people sit at the moment,

710
00:41:12,280 --> 00:41:15,040
Speaker 1: and uh, it was not unrealistic to expect the FED

711
00:41:15,160 --> 00:41:17,720
Speaker 1: to do nothing. On the sixteen, he played twenty minutes

712
00:41:19,200 --> 00:41:23,160
Speaker 1: seconds of hockey. That's a lot for anybody. The other

713
00:41:23,320 --> 00:41:29,560
Speaker 1: night he is forty four in Florida, where you can

714
00:41:30,239 --> 00:41:32,200
Speaker 1: I know what you're talking about. If you say so,

715
00:41:33,320 --> 00:41:38,200
Speaker 1: I would not retire. Four fifty three second period yager

716
00:41:38,280 --> 00:41:43,080
Speaker 1: from Kolakoff, who was born the year Yeami Yager started playing,

717
00:41:43,560 --> 00:41:46,080
Speaker 1: and you see yokin In and then in a third

718
00:41:46,120 --> 00:41:48,880
Speaker 1: period yager from yokin In. And for those of you

719
00:41:48,880 --> 00:41:52,760
Speaker 1: who don't know hockey, it's much different when you score

720
00:41:52,880 --> 00:41:56,680
Speaker 1: when everybody's on the ice, versus a power play when

721
00:41:56,760 --> 00:41:58,640
Speaker 1: the other team as a man in the penalty box.

722
00:41:59,320 --> 00:42:02,560
Speaker 1: Mr Yager's scored two goals to win the game five

723
00:42:02,640 --> 00:42:07,720
Speaker 1: on five. Gotta give him credit, remark remarking that reminds

724
00:42:07,719 --> 00:42:11,680
Speaker 1: one of Gordy Hunt playing into his fifties. You know,

725
00:42:11,760 --> 00:42:16,759
Speaker 1: this is maybe the roughest, hardest sport, and yet the

726
00:42:17,160 --> 00:42:19,840
Speaker 1: performed the longest to have been in hockey. If you

727
00:42:19,880 --> 00:42:22,120
Speaker 1: had power play goals, they'd say, Okay, they set him up,

728
00:42:22,160 --> 00:42:24,719
Speaker 1: the big gun in the slot. Blah blah blah. Two

729
00:42:24,760 --> 00:42:28,239
Speaker 1: goals five on five at age forty four is I

730
00:42:28,600 --> 00:42:33,080
Speaker 1: don't believe I've ever said that at any time or place.

731
00:42:33,200 --> 00:42:38,960
Speaker 1: Futures up, two down, futures up yet one one weaker.

732
00:42:39,040 --> 00:42:41,399
Speaker 1: Yet today with a little bit no nicely stronger dollar,

733
00:42:41,480 --> 00:42:45,640
Speaker 1: I should say, another hour of Bloomberg surveillance. You need

734
00:42:45,680 --> 00:42:46,560
Speaker 1: to be with us. Thank you,