1 00:00:03,080 --> 00:00:06,760 Speaker 1: This is Bloomberg Surveillance. It's not the job of finance 2 00:00:06,840 --> 00:00:09,640 Speaker 1: ministers and central bank governors to accelerate a crisis. It's 3 00:00:09,640 --> 00:00:12,080 Speaker 1: our job to try and avoid a crisis. The danger 4 00:00:12,280 --> 00:00:15,520 Speaker 1: of what's going on in market at the moment is 5 00:00:15,560 --> 00:00:19,320 Speaker 1: that it does feed back to the real economy. Right now, 6 00:00:19,560 --> 00:00:23,000 Speaker 1: I don't think we need to do any new fiscal policy, 7 00:00:23,239 --> 00:00:26,240 Speaker 1: so it's really a question about what's going to happen 8 00:00:26,280 --> 00:00:29,800 Speaker 1: in the future. Bloomberg Surveillance your link to the world 9 00:00:29,800 --> 00:00:35,320 Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good morning, 10 00:00:35,479 --> 00:00:38,519 Speaker 1: Michael McKee. It is seven on Wall Street, eight pm 11 00:00:38,560 --> 00:00:41,920 Speaker 1: in Shanghai, where the yuan is falling after China cuts 12 00:00:42,000 --> 00:00:46,040 Speaker 1: bank reserve ratios by fifty basis points. The rest of 13 00:00:46,080 --> 00:00:49,239 Speaker 1: the world so far ignoring it. The G twenty of 14 00:00:49,280 --> 00:00:51,880 Speaker 1: course over the weekend telling investors they worry too much. 15 00:00:52,440 --> 00:00:55,040 Speaker 1: This morning, markets throwing their toys out of the pram 16 00:00:55,080 --> 00:00:58,880 Speaker 1: in response. Tokyo finished down one point three. Europe at 17 00:00:58,880 --> 00:01:01,200 Speaker 1: the moment is lower the Star six hundred by three 18 00:01:01,240 --> 00:01:04,600 Speaker 1: tenths about a point. The Dacks is down ninety five 19 00:01:04,680 --> 00:01:08,880 Speaker 1: points uh full percentage point lower. We are at the 20 00:01:08,920 --> 00:01:13,120 Speaker 1: moment looking at a headline from the Bloomberg Professional federal 21 00:01:13,200 --> 00:01:16,600 Speaker 1: mogul getting a merger proposal from Icon Enterprises. Will check 22 00:01:16,640 --> 00:01:20,480 Speaker 1: that out and get you more details as they become available. 23 00:01:20,720 --> 00:01:23,800 Speaker 1: In the US, futures are lower, although they have paired 24 00:01:23,800 --> 00:01:26,319 Speaker 1: their losses. S and P futures down by three points, 25 00:01:26,640 --> 00:01:28,440 Speaker 1: a little over a tenth of a percent. It's a 26 00:01:28,480 --> 00:01:30,800 Speaker 1: two tents drop for down futures. They're off thirty one 27 00:01:30,800 --> 00:01:34,360 Speaker 1: and Nasdaq futures of fourteen points now three tenths of 28 00:01:34,520 --> 00:01:39,120 Speaker 1: eight percent. The yel curve moving lower in the US 29 00:01:39,240 --> 00:01:42,479 Speaker 1: and in Germany right now. The two year at seventy 30 00:01:42,520 --> 00:01:44,880 Speaker 1: eight basis points to five year one point to three, 31 00:01:45,240 --> 00:01:48,520 Speaker 1: the tenure going for one seventy five in the US 32 00:01:49,040 --> 00:01:52,880 Speaker 1: eight from two years to eight years. German yields dropped 33 00:01:52,880 --> 00:01:55,800 Speaker 1: to record lows. The two year in Germany now negative 34 00:01:55,920 --> 00:02:00,480 Speaker 1: fifty six basis points. Dollar strengthening today a little bit. 35 00:02:00,760 --> 00:02:03,160 Speaker 1: The d X Y index is up by two tents 36 00:02:03,160 --> 00:02:08,480 Speaker 1: of a percent. The yen is lower one, the euro 37 00:02:08,760 --> 00:02:13,080 Speaker 1: is lower five, the pounds lower one thirty eight, fifty two. 38 00:02:13,720 --> 00:02:17,079 Speaker 1: So um, that's the currency reaction to the G twenty 39 00:02:17,200 --> 00:02:22,519 Speaker 1: Right now. Oil is mixed West Texas Intermediate sent nine unchanged, 40 00:02:22,520 --> 00:02:26,359 Speaker 1: Brent Crew thirty up thirty cents on the day. So 41 00:02:26,520 --> 00:02:30,880 Speaker 1: who will be proved right G twenty policymakers or financial markets. 42 00:02:31,040 --> 00:02:34,519 Speaker 1: Ben Emmons as a managing director at Leader Capital and 43 00:02:34,600 --> 00:02:38,000 Speaker 1: he's been watching the reaction to the G twenty statement. 44 00:02:38,480 --> 00:02:41,680 Speaker 1: Ben G twenty said that the fundamentals are better than 45 00:02:41,720 --> 00:02:47,040 Speaker 1: the markets think. The markets today don't agree. Hi, good morning, Mike. Yes, indeed, 46 00:02:47,080 --> 00:02:50,120 Speaker 1: Marcus Stone agree. I think the G twenty statement was 47 00:02:50,240 --> 00:02:53,600 Speaker 1: kind of clear about the global monetary policy can be 48 00:02:53,639 --> 00:02:57,919 Speaker 1: useful evaluations and kind of carry all of the carry 49 00:02:58,000 --> 00:03:01,560 Speaker 1: the you know, sort of four or the economy. In 50 00:03:01,600 --> 00:03:04,160 Speaker 1: other words, you can keep relying on mont policy. I 51 00:03:04,200 --> 00:03:06,440 Speaker 1: think markets are maybe reacting to that a little bit. 52 00:03:06,680 --> 00:03:09,520 Speaker 1: I would say though, that what happened overnight in China 53 00:03:09,760 --> 00:03:13,960 Speaker 1: isn't necessarily positive because as the u Wan weekends with 54 00:03:14,160 --> 00:03:17,239 Speaker 1: the night, the manufacturing data and non manufacturing data coming 55 00:03:17,240 --> 00:03:19,760 Speaker 1: out in China may be linked to that too. People 56 00:03:19,760 --> 00:03:21,919 Speaker 1: are looking at this very closely. Each time that you 57 00:03:22,040 --> 00:03:25,639 Speaker 1: want weekends, it's maybe a precursor to that. The data 58 00:03:25,720 --> 00:03:29,200 Speaker 1: there is week two and we get this week non 59 00:03:29,560 --> 00:03:31,679 Speaker 1: I s M data out as well. So I think 60 00:03:31,680 --> 00:03:35,560 Speaker 1: markets are wary of that type of data. WHI responding negatively, 61 00:03:36,000 --> 00:03:38,800 Speaker 1: right as you said, the G twenty, it's typically not 62 00:03:38,880 --> 00:03:41,560 Speaker 1: a really strong statement. I think this time I felt 63 00:03:41,560 --> 00:03:43,600 Speaker 1: that the statement was very much about central banks. You 64 00:03:43,680 --> 00:03:46,600 Speaker 1: can't do this all by yourself, you know, it needs 65 00:03:46,600 --> 00:03:49,840 Speaker 1: to be more coordinated. And because there's no real clear 66 00:03:49,840 --> 00:03:52,640 Speaker 1: agreement about the coordination, at least with unclarity, and so 67 00:03:52,880 --> 00:03:56,360 Speaker 1: that uncertainty doesn't help market China. So markets disagree a 68 00:03:56,360 --> 00:03:59,520 Speaker 1: lot of people suggesting central banks are kind of at 69 00:03:59,680 --> 00:04:04,040 Speaker 1: the point of diminishing returns, if not worse. And I 70 00:04:04,080 --> 00:04:06,960 Speaker 1: don't think anybody thinks that there's the political weald for 71 00:04:07,040 --> 00:04:11,200 Speaker 1: fiscal response. So is this really less about what's going 72 00:04:11,240 --> 00:04:14,080 Speaker 1: on with the G twenty than it is the markets 73 00:04:14,160 --> 00:04:18,760 Speaker 1: looking at the economic situation, say, looking at the GDP 74 00:04:18,880 --> 00:04:22,159 Speaker 1: report in the US that was better than expected, but 75 00:04:22,279 --> 00:04:25,599 Speaker 1: the composition wasn't so great. Yeah, I would agree with 76 00:04:25,600 --> 00:04:27,040 Speaker 1: you there, And I think you know one of your 77 00:04:27,080 --> 00:04:30,080 Speaker 1: stories on Top Stories this morning about that the fat 78 00:04:30,160 --> 00:04:33,919 Speaker 1: stuffs don't connect is a really good point there. Markets 79 00:04:33,920 --> 00:04:36,559 Speaker 1: are completely moved away from what the fellers are thought 80 00:04:36,560 --> 00:04:40,400 Speaker 1: the path would look like, and that indicates that markets 81 00:04:40,400 --> 00:04:44,000 Speaker 1: have set like this dack amounted policy isn't any more 82 00:04:44,080 --> 00:04:49,080 Speaker 1: the solution for economic problems that we have. Even negative 83 00:04:49,160 --> 00:04:51,960 Speaker 1: rates have been clearly rejected by markets. They look at 84 00:04:51,960 --> 00:04:55,000 Speaker 1: this as a negative other than a positive. And yet 85 00:04:55,839 --> 00:04:58,919 Speaker 1: what we have left with is just monte policy. And 86 00:04:59,480 --> 00:05:02,159 Speaker 1: I think the view has become too is like what's 87 00:05:02,200 --> 00:05:05,159 Speaker 1: going on in China will matter even more from here on. 88 00:05:05,480 --> 00:05:08,120 Speaker 1: Whatever the People's Bank of China, the Central Bank of 89 00:05:08,160 --> 00:05:11,200 Speaker 1: China is going to do in terms of his multipolicy 90 00:05:11,240 --> 00:05:15,280 Speaker 1: will have a big impact on the markets. So markets 91 00:05:15,279 --> 00:05:18,440 Speaker 1: are wary of that multi polians. The belt markets has 92 00:05:18,520 --> 00:05:22,280 Speaker 1: run its course. Negative a film work at Tigning isn't 93 00:05:22,279 --> 00:05:24,839 Speaker 1: a gifting. They have to look at other central bank. 94 00:05:25,080 --> 00:05:28,400 Speaker 1: That's the China Central Bank for them. Ben Emmonds with 95 00:05:28,480 --> 00:05:32,599 Speaker 1: this Leader Capital, Good morning everyone. Bloomberd Surveillance were brought 96 00:05:32,640 --> 00:05:36,320 Speaker 1: to you by Investco. Factor based strategies can help investors 97 00:05:36,360 --> 00:05:40,440 Speaker 1: focus on high quality, low volatility and more. Learn more 98 00:05:41,160 --> 00:05:44,800 Speaker 1: at investco dot com, Slash High Conviction, invest go I 99 00:05:45,000 --> 00:05:51,360 Speaker 1: n v s CEO Investco dot com slash High Conviction. 100 00:05:51,720 --> 00:05:55,240 Speaker 1: That Ben Emmonds, where are we on our theory? We 101 00:05:55,320 --> 00:05:57,800 Speaker 1: have a theory of China. We have a theory of 102 00:05:57,880 --> 00:06:01,320 Speaker 1: G twenty, we have a theory of monitory policy. I've 103 00:06:01,320 --> 00:06:03,560 Speaker 1: got a theory of negative rates with a German two 104 00:06:03,640 --> 00:06:07,080 Speaker 1: year negative zero point five seven at one point a 105 00:06:07,200 --> 00:06:10,880 Speaker 1: ten year German point one zero eight clearly heading towards 106 00:06:11,880 --> 00:06:15,560 Speaker 1: near or at negative interest rates. Is there a theory 107 00:06:15,600 --> 00:06:17,679 Speaker 1: to what we're doing now? Are we just just making 108 00:06:17,720 --> 00:06:21,000 Speaker 1: it up as we go? Well, there's a theory is 109 00:06:21,040 --> 00:06:24,240 Speaker 1: about that. These negative rates in theory ready work well. 110 00:06:24,480 --> 00:06:28,080 Speaker 1: But I think, as you're saying, as we're kind of 111 00:06:28,120 --> 00:06:30,960 Speaker 1: assessing as we go along from here each time these 112 00:06:31,160 --> 00:06:34,479 Speaker 1: policy measures are announced. So we're going to get the 113 00:06:34,640 --> 00:06:37,600 Speaker 1: ECB on March tenth, and they have signaled the hat 114 00:06:37,640 --> 00:06:40,640 Speaker 1: that they're going to make changes to their policy and 115 00:06:41,240 --> 00:06:43,719 Speaker 1: probably more negative rates, probably more qualm than a vis. 116 00:06:44,040 --> 00:06:47,400 Speaker 1: Probably markets are kind of trying to asessimas is really 117 00:06:47,440 --> 00:06:51,239 Speaker 1: going to change things from here on. The data ultimately 118 00:06:51,240 --> 00:06:54,120 Speaker 1: doesn't does doesn't matter. I think the data tonight in 119 00:06:54,240 --> 00:06:56,600 Speaker 1: China be my data as well as in the US 120 00:06:56,680 --> 00:07:00,120 Speaker 1: as elsewhere, it's gonna be a big deal from arc 121 00:07:00,160 --> 00:07:04,480 Speaker 1: of direction, because that's really forwardlooking data and and so 122 00:07:04,520 --> 00:07:07,160 Speaker 1: far what we've experienced a few weeks ago when the 123 00:07:07,279 --> 00:07:10,640 Speaker 1: non I s M manufacturing data in the US drop, 124 00:07:10,840 --> 00:07:13,880 Speaker 1: which is pretty sharply was a period that markets got 125 00:07:13,880 --> 00:07:17,360 Speaker 1: into a very negative environment. So I think that data 126 00:07:17,440 --> 00:07:21,360 Speaker 1: really matters. Said that these policy measures that they put 127 00:07:21,400 --> 00:07:24,240 Speaker 1: in place sort of yeah, that's the theory, but the data, 128 00:07:24,240 --> 00:07:26,800 Speaker 1: to me determines that. And think that's about your article 129 00:07:26,880 --> 00:07:30,400 Speaker 1: this morning. So it's to the connection between the dots 130 00:07:30,400 --> 00:07:32,960 Speaker 1: and the markets and there really because markets assessing the 131 00:07:33,040 --> 00:07:36,920 Speaker 1: data is very differently than the well, of course the 132 00:07:37,000 --> 00:07:42,000 Speaker 1: dots were you know, published in mid December. Even FETE 133 00:07:42,040 --> 00:07:45,239 Speaker 1: officials all pretty much everybody who's spoken since then has 134 00:07:45,440 --> 00:07:48,080 Speaker 1: moved away from those Is it a mistake to be 135 00:07:48,200 --> 00:07:52,440 Speaker 1: still comparing uh you know, uh for for markets to 136 00:07:52,480 --> 00:07:54,520 Speaker 1: trade off the idea that the FED is wedded to 137 00:07:54,600 --> 00:07:58,600 Speaker 1: for four moves. No, that's true. I mean marks have 138 00:07:58,800 --> 00:08:01,680 Speaker 1: left early on already decided to say, well, you know, 139 00:08:01,960 --> 00:08:05,680 Speaker 1: that's that sounds pretty optimistic to do have four hikes 140 00:08:05,720 --> 00:08:08,280 Speaker 1: this year. Although if you take us back in you know, 141 00:08:08,400 --> 00:08:11,480 Speaker 1: let's say, since September or so October, the word views 142 00:08:11,480 --> 00:08:13,320 Speaker 1: out there that the FED would hike as much this 143 00:08:13,400 --> 00:08:16,200 Speaker 1: year has all changed. Now we give this data change 144 00:08:16,200 --> 00:08:18,800 Speaker 1: and obviously it's just said like yeah, party, this projection 145 00:08:18,880 --> 00:08:20,760 Speaker 1: is a bit still now because of the data has 146 00:08:20,880 --> 00:08:23,640 Speaker 1: changed that set. I think markets are just looking forward 147 00:08:23,720 --> 00:08:26,240 Speaker 1: to the next points of data to look at, like 148 00:08:26,400 --> 00:08:29,400 Speaker 1: WEALTHA can really be vindicated in that kind of a path, 149 00:08:29,480 --> 00:08:33,360 Speaker 1: yes or no market to judge. Yeah, that's not true, right, 150 00:08:33,520 --> 00:08:35,600 Speaker 1: You're not going to be vindicated the data it simply 151 00:08:35,640 --> 00:08:38,800 Speaker 1: doesn't doesn't really match your projection. And then we keep 152 00:08:38,840 --> 00:08:41,480 Speaker 1: being in this situation and it haven't really I've been 153 00:08:41,480 --> 00:08:44,360 Speaker 1: in this before of the last or year, two years. 154 00:08:44,640 --> 00:08:47,120 Speaker 1: We'll keep facing this again and the fat won't won't 155 00:08:47,160 --> 00:08:51,160 Speaker 1: be able to really make his projection at work. Well, right, 156 00:08:51,600 --> 00:08:53,680 Speaker 1: Ben Emmon's with this leader Capital. I'll come back and 157 00:08:53,679 --> 00:08:57,760 Speaker 1: we'll continue this discussion. Setting up the template for Monday. 158 00:08:57,800 --> 00:08:59,920 Speaker 1: A little bit of politics folded in here today as 159 00:09:00,080 --> 00:09:03,560 Speaker 1: believe there's a few elections tomorrow. Mike out on Twitter 160 00:09:03,640 --> 00:09:08,440 Speaker 1: Javier bloss with a blue, beautiful Bloomberg terminal chart Thenezuela 161 00:09:08,960 --> 00:09:17,840 Speaker 1: foreign exchange reserves. It is Selthier negative rates, I sadly 162 00:09:17,840 --> 00:09:20,800 Speaker 1: almost just do with constant foreign relations. She puts in 163 00:09:20,840 --> 00:09:24,600 Speaker 1: his Summer Fall. It is where but she said it's 164 00:09:25,320 --> 00:09:28,800 Speaker 1: hugely open to debate. The question is what's the what's 165 00:09:28,800 --> 00:09:32,920 Speaker 1: the impact? Um, it's it's so well advertised and uh 166 00:09:33,440 --> 00:09:37,480 Speaker 1: there their foreign trade is so small that at this 167 00:09:37,559 --> 00:09:40,560 Speaker 1: point people are sort of like suggesting this is the 168 00:09:40,559 --> 00:09:44,160 Speaker 1: best idea, which you don't often see. Yeah, is well, 169 00:09:44,240 --> 00:09:47,520 Speaker 1: but what else do you? Let me bring people up 170 00:09:47,520 --> 00:09:51,280 Speaker 1: to date here Federal mogul Uh Carlton owns about of 171 00:09:51,480 --> 00:09:53,880 Speaker 1: the company right now. He wants to buy the rest 172 00:09:53,880 --> 00:09:57,400 Speaker 1: of it. Uh, he's bidding seven dollars a share in cash. 173 00:09:57,480 --> 00:10:01,840 Speaker 1: That's a premium of for Friday's close of four dollars 174 00:10:01,840 --> 00:10:08,079 Speaker 1: and cents. The stock halted for the news at the moment, 175 00:10:08,160 --> 00:10:10,040 Speaker 1: So we'll keep you up to date on how it 176 00:10:10,120 --> 00:10:13,839 Speaker 1: reacts to that. Um. Federal Little gonna appoint a special 177 00:10:13,880 --> 00:10:18,520 Speaker 1: committee to review proposal. A major shout out Peter Rmant 178 00:10:18,520 --> 00:10:21,560 Speaker 1: of stern Angie who made us brilliant Friday on U 179 00:10:21,559 --> 00:10:25,199 Speaker 1: t X Honeywell, that is a podcast. Michael McKee and 180 00:10:25,280 --> 00:10:29,439 Speaker 1: I are pleased to tell you free podcasts iTunes is 181 00:10:29,480 --> 00:10:33,760 Speaker 1: the best way to get them. Free podcasts iTunes are 182 00:10:33,800 --> 00:10:38,080 Speaker 1: complete programs which some people like Michael John you like 183 00:10:38,160 --> 00:10:40,920 Speaker 1: to hear all forties, some second forty some minutes of it, 184 00:10:41,520 --> 00:10:45,000 Speaker 1: and then yeah, and then the individual podcast is well, 185 00:10:45,040 --> 00:10:52,920 Speaker 1: including the important ut X Honeywell interview. A Friday, scided 186 00:10:52,920 --> 00:10:54,400 Speaker 1: to check in with Michael byr now and get the 187 00:10:54,480 --> 00:10:57,080 Speaker 1: latest world of national headlines. Michael, Mike, Tom, thank you 188 00:10:57,160 --> 00:11:00,200 Speaker 1: very much. The day before the Super Tuesday primaries, there's 189 00:11:00,240 --> 00:11:04,080 Speaker 1: a controversy about an endorsement from Republican front runner Donald Trump, 190 00:11:04,160 --> 00:11:07,000 Speaker 1: and he is squarely in the middle. Rivals say Trump 191 00:11:07,040 --> 00:11:11,319 Speaker 1: hesitated to denounce an implicit endorsement from former ku Klux 192 00:11:11,400 --> 00:11:15,080 Speaker 1: Klan leader David Duke. Marco ruby L and Ted Cruz 193 00:11:15,120 --> 00:11:18,200 Speaker 1: both slammed the Trump. The State Department is releasing what 194 00:11:18,440 --> 00:11:21,800 Speaker 1: it's calling the final batch of Hillary Clinton's emails. The 195 00:11:21,840 --> 00:11:25,319 Speaker 1: Democratic front runner was Secretary of State. Clinton used a 196 00:11:25,320 --> 00:11:29,160 Speaker 1: private server to handle official messages. Republican opponents say it 197 00:11:29,240 --> 00:11:32,480 Speaker 1: was a risk to national security. Spotlight one for Best 198 00:11:32,520 --> 00:11:36,000 Speaker 1: Picture at last night's Academy Awards Leonardo DiCaprio one for 199 00:11:36,040 --> 00:11:39,160 Speaker 1: Best Actor. Bree Larson won for Best Actress. Global It 200 00:11:39,280 --> 00:11:42,440 Speaker 1: was twenty four hours a day, powered by our journalists. 201 00:11:42,800 --> 00:11:45,160 Speaker 1: More than a hundred fifty news bureaus from around the world. 202 00:11:45,520 --> 00:11:48,280 Speaker 1: I'm Michael Barry. Michael Barr, thanks so much. The end 203 00:11:48,320 --> 00:11:51,080 Speaker 1: of the Risk Free Rate was Ben Emmon's important book 204 00:11:51,520 --> 00:11:54,320 Speaker 1: on the reality of how we invest today. Coming up, 205 00:11:54,880 --> 00:11:58,960 Speaker 1: Ben Evans a leader's Capital on our search for the 206 00:11:59,000 --> 00:12:06,560 Speaker 1: new risk for You rate. This is Bloomberg's Surveillance. Bloomberg 207 00:12:06,600 --> 00:12:08,360 Speaker 1: Surveillance is brought to you by a Mercedes Benz Tri 208 00:12:08,400 --> 00:12:10,280 Speaker 1: State Dealer. When it comes to winter elements, put your 209 00:12:10,280 --> 00:12:13,280 Speaker 1: best four wheels forward with Mercedes Benz Formatic All Wheel Drive. 210 00:12:13,360 --> 00:12:15,520 Speaker 1: Is it your Mercedes Benz Tri State Dealer for a 211 00:12:15,600 --> 00:12:25,000 Speaker 1: test drive? Today? Global Business News twenty four hours a day. 212 00:12:25,160 --> 00:12:28,160 Speaker 1: If Bloomberg dot Com, the Radio plus Mobile Act and 213 00:12:28,280 --> 00:12:32,400 Speaker 1: on your radio. This is a Bloomberg Business Flash And 214 00:12:32,400 --> 00:12:35,160 Speaker 1: I'm Karin Moscow. This updates brought to you by American 215 00:12:35,280 --> 00:12:39,360 Speaker 1: Arbitration Association. Business disputes are inevitable. Resolve faster with the 216 00:12:39,360 --> 00:12:44,000 Speaker 1: American Arbitration Association, the global leader in alternative dispute resolution 217 00:12:44,040 --> 00:12:46,800 Speaker 1: for over eighty five years. Learn more at a d 218 00:12:47,120 --> 00:12:51,920 Speaker 1: R dot org. And Federal Mogul Holding's largest shareholder, activist 219 00:12:51,960 --> 00:12:54,480 Speaker 1: investor Carl Icon offering to buy the rest of the 220 00:12:54,480 --> 00:12:57,840 Speaker 1: Auto parts maker for seven dollars a share. Global stocks 221 00:12:57,880 --> 00:13:01,880 Speaker 1: meanwhile moving lower as investors proved underwhelmed by VACA moments 222 00:13:01,920 --> 00:13:03,560 Speaker 1: to spur growth at a meeting of a group of 223 00:13:03,559 --> 00:13:07,240 Speaker 1: twenty finance chiefs and a cut in China's reserve acquirement ratio, 224 00:13:07,520 --> 00:13:11,240 Speaker 1: Japan's yen strengthening with gold and government bonds on haven demand. 225 00:13:11,600 --> 00:13:14,080 Speaker 1: We checked the markets every fifteen minutes throughout the trading 226 00:13:14,160 --> 00:13:17,400 Speaker 1: day on Bloomberg SNP eveny futures down four points, Dow 227 00:13:17,480 --> 00:13:20,319 Speaker 1: eveny futures down forty two and NASDAG E many futures 228 00:13:20,320 --> 00:13:23,400 Speaker 1: down sixteen decks. In Germany's down one point two percent 229 00:13:23,640 --> 00:13:25,960 Speaker 1: ten Your treasury up three thirty seconds, the yield one 230 00:13:26,000 --> 00:13:29,600 Speaker 1: point seven five percent. Nimex Crew crude oil little change 231 00:13:29,640 --> 00:13:32,040 Speaker 1: down a cent to thirty two dollars seventy seven cents 232 00:13:32,040 --> 00:13:34,920 Speaker 1: of barrel comes Gold up one percent or eleven dollars 233 00:13:35,000 --> 00:13:37,920 Speaker 1: ninety cents. At twelve thirty two thirty announced the euro 234 00:13:38,080 --> 00:13:40,320 Speaker 1: A dollar O eight nine to the N one twelve 235 00:13:40,320 --> 00:13:43,400 Speaker 1: point nine nine. And that's a Bloomberg business flash. Tom 236 00:13:43,400 --> 00:13:46,280 Speaker 1: and Mike ver Mosco, thank you very much. We're talking 237 00:13:46,280 --> 00:13:49,720 Speaker 1: with Ben Emmons from Leader Capital there are a number 238 00:13:49,880 --> 00:13:54,040 Speaker 1: of news events this week that, now that the G 239 00:13:54,200 --> 00:13:57,240 Speaker 1: twenty is over, markets can focus on, and let's run 240 00:13:57,240 --> 00:13:59,360 Speaker 1: through a couple of them. Been a lot of people 241 00:13:59,400 --> 00:14:03,920 Speaker 1: focused on tomorrow's Super Tuesday results, but so far the 242 00:14:03,960 --> 00:14:07,600 Speaker 1: market seem to be relatively sanguine about what's going on. 243 00:14:08,520 --> 00:14:11,040 Speaker 1: That may be, according to some elms, because at this 244 00:14:11,080 --> 00:14:14,559 Speaker 1: point nobody thinks Donald Trump could actually win the presidency, 245 00:14:15,000 --> 00:14:18,040 Speaker 1: and yet you've got Hillary Clinton likely to be the 246 00:14:18,040 --> 00:14:20,560 Speaker 1: front runer for the Democratic domination, who has made a 247 00:14:20,560 --> 00:14:26,400 Speaker 1: lot of proposals that would affect business, including financial financial firms. 248 00:14:27,040 --> 00:14:29,600 Speaker 1: When does Wall Street start trading off of who may 249 00:14:29,600 --> 00:14:32,480 Speaker 1: be the next president and what may happen. Yeah, I 250 00:14:32,480 --> 00:14:35,800 Speaker 1: think that's a great question, Mike, because if you look 251 00:14:35,800 --> 00:14:38,480 Speaker 1: at what Donald Trump has said in the past. Now, 252 00:14:38,600 --> 00:14:40,840 Speaker 1: he was in a few years ago very much about 253 00:14:40,960 --> 00:14:43,040 Speaker 1: you know, I'm a I'm a real estate developer. I 254 00:14:43,120 --> 00:14:45,560 Speaker 1: like cheap money. I've always loved it. And if you 255 00:14:45,600 --> 00:14:47,680 Speaker 1: think about that, then you think, well, that's what Marcus 256 00:14:47,680 --> 00:14:51,080 Speaker 1: would probably like, right, because who doesn't like cheap money. 257 00:14:51,120 --> 00:14:52,680 Speaker 1: That was sort of a statement by him. He was 258 00:14:52,720 --> 00:14:55,600 Speaker 1: also about saying that, you know, I'm going to cut 259 00:14:55,760 --> 00:15:00,120 Speaker 1: core protection to zero and I'm gonna first stimulate US 260 00:15:00,120 --> 00:15:01,960 Speaker 1: and spending it said US. So all these things are 261 00:15:01,960 --> 00:15:05,440 Speaker 1: actually I would think positive for markets. But you're right, 262 00:15:05,440 --> 00:15:09,000 Speaker 1: it's currently not clear who will be obviously the next president. 263 00:15:09,080 --> 00:15:10,920 Speaker 1: We have a long way to go. But what is 264 00:15:10,960 --> 00:15:14,600 Speaker 1: really the policy from after the Obama administration from here on? 265 00:15:14,640 --> 00:15:17,640 Speaker 1: How the markets going to interpret them? Back to the 266 00:15:17,720 --> 00:15:21,480 Speaker 1: earlier discussion, if monetary policy is no longer that effective 267 00:15:21,480 --> 00:15:24,440 Speaker 1: anymore and markets are starting to come around that idea 268 00:15:24,480 --> 00:15:27,840 Speaker 1: and say, well, that's not really going to drive market direction. 269 00:15:28,160 --> 00:15:30,720 Speaker 1: It's going to have to be fiscal policy. And I 270 00:15:30,720 --> 00:15:33,480 Speaker 1: think Marcus, currently are not clear about what the direction 271 00:15:33,560 --> 00:15:36,480 Speaker 1: fiscal policy will be because we don't know who will 272 00:15:36,520 --> 00:15:40,960 Speaker 1: be the president. Clear is that probably as each let's say, 273 00:15:41,120 --> 00:15:46,000 Speaker 1: hypothetically Donald Trump gets elected or Hillary Clinton, you would 274 00:15:46,000 --> 00:15:48,880 Speaker 1: expect it would be some fiscal stimulus coming around, because 275 00:15:49,040 --> 00:15:51,920 Speaker 1: that's the latest stimulate econ me quicker right, So either way, 276 00:15:52,600 --> 00:15:54,440 Speaker 1: something like that would would would be in the car. 277 00:15:54,480 --> 00:15:56,840 Speaker 1: So now how this political analysts who disagree with me 278 00:15:56,920 --> 00:15:59,240 Speaker 1: quickly saying like, wow, it's not possible because of Congress 279 00:15:59,280 --> 00:16:02,400 Speaker 1: and all these other hurdles. But the fact that you 280 00:16:02,760 --> 00:16:05,640 Speaker 1: put that idea out there openly saying and stimulate the 281 00:16:05,640 --> 00:16:08,120 Speaker 1: economy with fiscal stimulus is gonna be picked up. I 282 00:16:08,160 --> 00:16:11,200 Speaker 1: think this rhetoric probably will start to pick up this summer, 283 00:16:12,000 --> 00:16:15,840 Speaker 1: because that's when when youry Clinton and Donald Trump will 284 00:16:15,840 --> 00:16:18,040 Speaker 1: be out there on the on the campaign. Again. I'm 285 00:16:18,040 --> 00:16:21,280 Speaker 1: making statement, Donald Trump will be the gup Canadate. You know, 286 00:16:21,360 --> 00:16:23,240 Speaker 1: he may he may not. I know, it looks like 287 00:16:23,280 --> 00:16:25,320 Speaker 1: he has a lot of momentum and that that that 288 00:16:25,320 --> 00:16:27,600 Speaker 1: that's uh, that he will be the main person to 289 00:16:28,440 --> 00:16:31,080 Speaker 1: put the Republicans. But you would think that the radorick 290 00:16:31,120 --> 00:16:33,000 Speaker 1: about fiscal policy is going to pick up in a 291 00:16:33,000 --> 00:16:35,640 Speaker 1: couple of months from now, and and it's all about 292 00:16:35,680 --> 00:16:38,920 Speaker 1: the stimulus and how to stimulate. He calmly against taking 293 00:16:38,960 --> 00:16:42,760 Speaker 1: measures such as Clinton has said about moll streets and 294 00:16:42,800 --> 00:16:46,600 Speaker 1: about health care and etcetera. Let me just take a 295 00:16:46,680 --> 00:16:48,560 Speaker 1: quick break here toime to do that. A headline that 296 00:16:48,600 --> 00:16:51,760 Speaker 1: has just crossed Tribute Media announcing his fourth quarter results 297 00:16:52,280 --> 00:16:56,080 Speaker 1: uh and saying they are exploring their options. The company 298 00:16:56,160 --> 00:17:01,800 Speaker 1: said that they look at the splitting into various components. 299 00:17:01,880 --> 00:17:04,920 Speaker 1: They may sell off some of their real estate portfolio. 300 00:17:04,960 --> 00:17:08,000 Speaker 1: Of course, they own the Tribune Tower in Chicago, and 301 00:17:08,440 --> 00:17:12,960 Speaker 1: they may split off some of the radio television properties 302 00:17:13,000 --> 00:17:15,280 Speaker 1: they have. Maybe it shows the immediacy of the markets. 303 00:17:15,560 --> 00:17:17,960 Speaker 1: It has been a train wreck for I think it 304 00:17:18,080 --> 00:17:20,280 Speaker 1: Ben and Emmons. There was a book put out years 305 00:17:20,280 --> 00:17:24,040 Speaker 1: ago sold like the Bible of Financial Domino Effect by 306 00:17:24,080 --> 00:17:27,919 Speaker 1: Ben Emmons, How to Profit Now in the VAULTI global economy. 307 00:17:27,960 --> 00:17:31,080 Speaker 1: Tell me about the dominoes falling right now? How do 308 00:17:31,119 --> 00:17:36,840 Speaker 1: you link up our global dominoes? I think before highlighting 309 00:17:36,840 --> 00:17:41,040 Speaker 1: that again, I yeah, the domino is really about the 310 00:17:41,040 --> 00:17:43,439 Speaker 1: three dominoes. Basically, I talked about in that book the 311 00:17:43,440 --> 00:17:47,520 Speaker 1: political domino, economic domino, and the financial domino there linked 312 00:17:47,520 --> 00:17:50,359 Speaker 1: to each other. So I think what we're at now 313 00:17:50,480 --> 00:17:53,760 Speaker 1: is that it is the economic domino really because the 314 00:17:54,119 --> 00:17:57,600 Speaker 1: global economy is weak, and continue to see evidence coming 315 00:17:57,640 --> 00:18:00,760 Speaker 1: out from that, and as that happens, the financial markets 316 00:18:00,760 --> 00:18:04,080 Speaker 1: respond to that. And obviously a number of weeks ago 317 00:18:04,280 --> 00:18:09,159 Speaker 1: we've had distress in the German banking system as a 318 00:18:09,160 --> 00:18:13,040 Speaker 1: result of unclarity about whether do Bank itself others could 319 00:18:13,080 --> 00:18:16,480 Speaker 1: make payments on the bonds they have outstanding. But that 320 00:18:16,600 --> 00:18:20,600 Speaker 1: was really resolved from the idea that the negative interest 321 00:18:20,680 --> 00:18:22,800 Speaker 1: rate environment that we're in as a result of the 322 00:18:23,000 --> 00:18:27,120 Speaker 1: economic environment that we're dealing with, are now impacting banks 323 00:18:27,440 --> 00:18:30,440 Speaker 1: and margins and banks have to lay off people and 324 00:18:30,800 --> 00:18:34,399 Speaker 1: their business models are falling, and as a result, people 325 00:18:34,400 --> 00:18:36,760 Speaker 1: are downing now about banks being able to pay off 326 00:18:36,760 --> 00:18:40,200 Speaker 1: their debt until there was a policy reaction, and that's 327 00:18:40,200 --> 00:18:41,880 Speaker 1: what we saw. I think the last show we talked 328 00:18:41,880 --> 00:18:44,560 Speaker 1: with each other right at that moment that they came out, okay, 329 00:18:44,680 --> 00:18:46,240 Speaker 1: when to buy back someone that that and then the 330 00:18:46,280 --> 00:18:49,240 Speaker 1: dominant briefly stuff. I think that's the that's the dominant 331 00:18:49,320 --> 00:18:52,879 Speaker 1: ramber in the domino of of economic data that drives 332 00:18:52,960 --> 00:18:58,200 Speaker 1: financial markets and that leads into further effects. That's the domino. Davons, 333 00:18:58,240 --> 00:19:00,359 Speaker 1: thank you so much. Appreciate with Leader Capital getting it 334 00:19:00,440 --> 00:19:03,159 Speaker 1: started on a Monday. Lots to talk about Michael. We 335 00:19:03,240 --> 00:19:08,720 Speaker 1: will be in Washington tomorrow FM Washington conversation with the 336 00:19:08,800 --> 00:19:11,840 Speaker 1: chair Chairman. I should say he's not the chair the 337 00:19:11,920 --> 00:19:15,280 Speaker 1: chair Yellow Sherman Green's been chairman Green, former chairman, chairman 338 00:19:15,320 --> 00:19:18,560 Speaker 1: emeritus whatever. I am dying to talk to him about 339 00:19:18,600 --> 00:19:22,120 Speaker 1: his thoughts on the theoretical foundation of negative interest rates. 340 00:19:22,119 --> 00:19:26,800 Speaker 1: Absolutely wait to do that. And the congratulations to the 341 00:19:26,800 --> 00:19:29,720 Speaker 1: folks of twelve Hunterday am Boston, Actually not to them, 342 00:19:29,800 --> 00:19:33,240 Speaker 1: but to the Boston globe of people who are listening 343 00:19:33,240 --> 00:19:40,600 Speaker 1: to us. UM Spotlight wins Best Picture. It caught fabulously, 344 00:19:41,280 --> 00:19:44,040 Speaker 1: by far and away, the best Boston movie I've ever seen. 345 00:19:44,680 --> 00:19:47,199 Speaker 1: They caught it. There's a scene at a Catholic charity 346 00:19:47,280 --> 00:19:50,040 Speaker 1: late in the movie. It was just brilliant. They just 347 00:19:50,200 --> 00:19:54,600 Speaker 1: absolutely uh now, just an extraordinary movie. Good morning to 348 00:19:54,640 --> 00:19:58,359 Speaker 1: all of your Bloomberg t Boston. Michael McKee and Tom 349 00:19:58,440 --> 00:20:02,800 Speaker 1: Keane with the yield in two as points one. Bloomberg 350 00:20:02,880 --> 00:20:08,160 Speaker 1: Survenans Bloomberg Surrounds brought you by Bank of American Mary 351 00:20:08,240 --> 00:20:10,919 Speaker 1: Lynch is Global Cash Management Solutions, helping you manage, protect 352 00:20:10,920 --> 00:20:13,600 Speaker 1: and invest your global cash wherever the road to growth leads. 353 00:20:13,800 --> 00:20:16,600 Speaker 1: That's the power of global connections. Bank of America, North America. 354 00:20:16,720 --> 00:20:25,879 Speaker 1: Remember f D Price broadcasting live to New York, Cloomberg 355 00:20:25,920 --> 00:20:30,920 Speaker 1: eleventh Rio to Washington, d C, Bloomberg to Boston, Bloomberg 356 00:20:30,960 --> 00:20:34,920 Speaker 1: twelve unders to San Francisco, Bloomberg n to the Country 357 00:20:35,080 --> 00:20:38,639 Speaker 1: series Exam Channel one ninety and around the globe, the 358 00:20:38,640 --> 00:20:43,240 Speaker 1: Bloomberg Radio Plus happened. Bloomberg Dot com This is Bloomberg Surveillance. 359 00:20:44,440 --> 00:20:47,760 Speaker 1: Good morning, It's seven thirty on Wall Street. I'm Michael 360 00:20:47,800 --> 00:20:50,359 Speaker 1: McKee along with Tom came two hours away from the 361 00:20:50,400 --> 00:20:53,040 Speaker 1: opening of trading. Hard to tell exactly what's going to 362 00:20:53,080 --> 00:20:55,960 Speaker 1: happen because features are pairing losses at this point. Has 363 00:20:55,960 --> 00:20:58,760 Speaker 1: some few features down just three points a tenth of 364 00:20:58,800 --> 00:21:01,560 Speaker 1: a percent. They were down as much as nine points earlier. 365 00:21:01,880 --> 00:21:03,960 Speaker 1: Some of the news you need to know about what 366 00:21:04,080 --> 00:21:07,960 Speaker 1: maybe happening in markets today. Federal mogul says Carla Cohn 367 00:21:08,320 --> 00:21:10,639 Speaker 1: is offering seven dollars a share for the part of 368 00:21:10,640 --> 00:21:13,000 Speaker 1: the company he doesn't own. He owns about eighty two 369 00:21:13,000 --> 00:21:16,840 Speaker 1: percent of it. Also a Tribute Media announcing this morning 370 00:21:16,880 --> 00:21:21,640 Speaker 1: it is going to explore strategic options for the broadcaster. 371 00:21:21,840 --> 00:21:27,560 Speaker 1: It's also talking about continuing to monetize its properties, including 372 00:21:27,560 --> 00:21:31,479 Speaker 1: the Tribune Tower. Nissan Motor shares up significantly after the 373 00:21:31,600 --> 00:21:34,680 Speaker 1: Japanese automaker says it plans the biggest share buy back 374 00:21:34,840 --> 00:21:37,800 Speaker 1: ever in its company's history, the first and more than 375 00:21:38,040 --> 00:21:41,560 Speaker 1: four years. And Valiant Pharmaceuticals. The CEO is coming back, 376 00:21:41,640 --> 00:21:45,920 Speaker 1: gonna withdraw its financial forecast, will delay releasing its fourth 377 00:21:46,000 --> 00:21:49,960 Speaker 1: quarter results now lets check in with Michael Barr and 378 00:21:50,000 --> 00:21:52,720 Speaker 1: get the latest world and national headlines. Mike, thank you 379 00:21:52,800 --> 00:21:56,359 Speaker 1: very much. Ahead of Super Tuesday, Republican presidential candidate Marco 380 00:21:56,440 --> 00:22:00,640 Speaker 1: Rubio is blasting rival Donald Trump for not rejecting support 381 00:22:00,680 --> 00:22:04,280 Speaker 1: from KKK Grand Dragon David Duke and other white supremacists. 382 00:22:04,680 --> 00:22:07,200 Speaker 1: When asked about Duke, Trump said, I don't know anything 383 00:22:07,200 --> 00:22:10,000 Speaker 1: about David Duke, okay. But in a two thousand New 384 00:22:10,080 --> 00:22:13,199 Speaker 1: York Times op ed piece, Trump said Duke was part 385 00:22:13,240 --> 00:22:17,080 Speaker 1: of her fringe element of the Reform Party. Democratic presidential 386 00:22:17,119 --> 00:22:20,360 Speaker 1: candidate Hillary Clinton is turning your attention to her Republican 387 00:22:20,480 --> 00:22:24,040 Speaker 1: rivals after winning the South Carolina primary over Bernie Sanders. 388 00:22:24,440 --> 00:22:27,840 Speaker 1: During your visits to to Memphis churches yesterday, Clinton called 389 00:22:27,880 --> 00:22:31,240 Speaker 1: on Republican Donald Trump to unite the nation, and she 390 00:22:31,440 --> 00:22:36,200 Speaker 1: asked worshippers to reject the demagoguery, the prejudice, and paranoia. 391 00:22:36,600 --> 00:22:39,159 Speaker 1: The Royal Caribbean cruise ship that was damaged in a 392 00:22:39,240 --> 00:22:42,800 Speaker 1: storm earlier this month was forced to abandon its latest trip. 393 00:22:43,240 --> 00:22:45,560 Speaker 1: The Anthem of the Seas was forced to announce its 394 00:22:45,560 --> 00:22:48,719 Speaker 1: return to port in New Jersey because of weather issues. 395 00:22:49,160 --> 00:22:52,480 Speaker 1: The drama Spotlight has one best Picture at the Academy Awards, 396 00:22:52,720 --> 00:22:56,040 Speaker 1: the film about the Boston Globes investigative reporting on sexual abuse, 397 00:22:56,280 --> 00:22:59,960 Speaker 1: a Roman Catholic take Priests took the picture. Leonardo DiCaprio 398 00:23:00,119 --> 00:23:02,080 Speaker 1: won the Best Actor Award for his role in the 399 00:23:02,080 --> 00:23:05,760 Speaker 1: movie The Revenant. Climate change is real. It is happening 400 00:23:05,840 --> 00:23:10,200 Speaker 1: right now. It is a most urgent threat facing our 401 00:23:10,359 --> 00:23:14,880 Speaker 1: entire species. B Larson won for Best Actress. Global News 402 00:23:14,920 --> 00:23:18,679 Speaker 1: twenty four Hours a Day. I'm Michael Barn, Thank you, Michael. 403 00:23:19,280 --> 00:23:26,359 Speaker 1: Now it's time for the Bloomberg NBC Sports updates. It's 404 00:23:26,720 --> 00:23:29,040 Speaker 1: John Stesh all right, thanks Mike, and night after the 405 00:23:29,119 --> 00:23:32,840 Speaker 1: NBA's m v P. Steph Curry put on that shooting clinic, 406 00:23:32,920 --> 00:23:35,960 Speaker 1: making seventy five percent of his three pointers. The Knicks 407 00:23:36,000 --> 00:23:39,680 Speaker 1: made thirty seven percent of all their shots. Carmelo Anthony 408 00:23:39,720 --> 00:23:42,760 Speaker 1: just nine of twenty four. He's under thirty three over 409 00:23:42,760 --> 00:23:44,880 Speaker 1: his last three games and at the guard. Nicks never 410 00:23:44,960 --> 00:23:49,160 Speaker 1: led lost to Miami, now fourteen losses in the last 411 00:23:49,160 --> 00:23:52,240 Speaker 1: seventeen games. Dwayne Wade led Miami with twenty six points. 412 00:23:52,320 --> 00:23:54,600 Speaker 1: Joe Johnson scored twelve and his heat debut. He was 413 00:23:54,640 --> 00:23:57,840 Speaker 1: released last week by Brooklyn Bad loss for the Islanders. 414 00:23:57,880 --> 00:23:59,600 Speaker 1: They had the lead been within the third period and 415 00:23:59,680 --> 00:24:02,400 Speaker 1: gave up three goals in less than seven minutes, fell 416 00:24:02,480 --> 00:24:06,000 Speaker 1: three one at Edmonton. Oilers had lost their previous seven. 417 00:24:06,040 --> 00:24:08,359 Speaker 1: This ends the Aisles three game win stake. Rangers tonight 418 00:24:08,359 --> 00:24:11,240 Speaker 1: ho was Columbus. They just acquired veteran Eric Stall from 419 00:24:11,280 --> 00:24:14,080 Speaker 1: Carolina for a prospect and through draft picks. Stalls a 420 00:24:14,160 --> 00:24:16,680 Speaker 1: four time All Star. He'll debut for the Rangers tonight 421 00:24:16,920 --> 00:24:20,480 Speaker 1: against Columbus. With the Bloomberg NBC Sports Update, I'm John Stapship. 422 00:24:21,720 --> 00:24:24,360 Speaker 1: Thank you John. Right now, as we mentioned, futures are 423 00:24:24,440 --> 00:24:27,760 Speaker 1: pairing their losses and in Europe we're looking at the 424 00:24:27,800 --> 00:24:32,199 Speaker 1: stock six hundred just about flat. This is Bloomberg Surveillance 425 00:24:32,280 --> 00:24:40,720 Speaker 1: on Bloomberg Radio Worldwide talking back to Bloomberg Surround sign 426 00:24:40,760 --> 00:24:44,200 Speaker 1: Michael McKee along with Tom Keane. Hard to tell exactly 427 00:24:44,240 --> 00:24:47,160 Speaker 1: how we're going to start the day. We were significantly 428 00:24:47,200 --> 00:24:49,719 Speaker 1: negative in the overnight hours in the futures markets and 429 00:24:49,920 --> 00:24:52,560 Speaker 1: in Europe. Europe is still down a lot. The decks 430 00:24:52,600 --> 00:24:55,159 Speaker 1: by eighty five points right now, but S and P 431 00:24:55,359 --> 00:24:58,680 Speaker 1: futures are now down just a point. Doubt features off 432 00:24:58,720 --> 00:25:03,119 Speaker 1: by eighteen and features by eight. That is much less 433 00:25:03,320 --> 00:25:06,280 Speaker 1: than we were down before on the day, So we'll 434 00:25:06,320 --> 00:25:09,920 Speaker 1: see how things work out at nine when the markets open. 435 00:25:10,359 --> 00:25:12,800 Speaker 1: Right now, The Bloomberg n j I T STEM Report 436 00:25:12,800 --> 00:25:15,200 Speaker 1: brought to you by New Jersey Institute of Technology, partnering 437 00:25:15,240 --> 00:25:17,960 Speaker 1: with government and industry to apply the university's world class 438 00:25:18,000 --> 00:25:21,200 Speaker 1: research assets to innovate and spur economic growth. Learn more 439 00:25:21,440 --> 00:25:24,240 Speaker 1: at n j I T dot e d U. Here's 440 00:25:24,240 --> 00:25:26,800 Speaker 1: Bob Moon, Michael thank you At seven thirty five on 441 00:25:26,840 --> 00:25:29,960 Speaker 1: Wall Street. Here's what's making news in science, technology, engineering 442 00:25:30,040 --> 00:25:33,080 Speaker 1: and math. Something that Apple chief Tim Cook told ABC 443 00:25:33,240 --> 00:25:35,440 Speaker 1: News caught our ear last week. Here's what he said. 444 00:25:35,560 --> 00:25:39,639 Speaker 1: There's probably more information about you on your phone than 445 00:25:39,680 --> 00:25:42,320 Speaker 1: there is in your house. As lawmakers prepared to take 446 00:25:42,359 --> 00:25:45,920 Speaker 1: up the privacy versus law enforcement question on Capitol Hill tomorrow, 447 00:25:46,040 --> 00:25:48,919 Speaker 1: sparked by Apple's refusal to help crack a dead terrorist 448 00:25:49,000 --> 00:25:51,199 Speaker 1: I phone, you might want to think about, if you 449 00:25:51,240 --> 00:25:54,760 Speaker 1: haven't already, what your phone can tell anyone about you 450 00:25:55,400 --> 00:25:57,840 Speaker 1: more than you might think. It knows where you've been 451 00:25:57,920 --> 00:25:59,960 Speaker 1: and who you were with the birthday gift you bought 452 00:26:00,040 --> 00:26:02,240 Speaker 1: your mother, and quite possibly who you plan to vote 453 00:26:02,280 --> 00:26:05,280 Speaker 1: for sex last night, it knows that too if you're 454 00:26:05,359 --> 00:26:08,160 Speaker 1: using one of the applications for couples, trying to conceive 455 00:26:08,680 --> 00:26:11,160 Speaker 1: from pre installed apps that count your steps to save 456 00:26:11,200 --> 00:26:14,880 Speaker 1: passwords for banking accounts and social media. Smartphones have evolved 457 00:26:14,880 --> 00:26:18,080 Speaker 1: from devices to make calls into digital repositories for the 458 00:26:18,080 --> 00:26:20,080 Speaker 1: most intimate details of your life, and not just your 459 00:26:20,119 --> 00:26:23,239 Speaker 1: personal life. Security experts point out their windows into your 460 00:26:23,280 --> 00:26:26,639 Speaker 1: professional life as well. The world seven point three billion 461 00:26:26,680 --> 00:26:30,560 Speaker 1: people now haven't estimated three point four billion smartphones, according 462 00:26:30,600 --> 00:26:34,000 Speaker 1: to data from communications company Ericsson. And we're all carrying 463 00:26:34,040 --> 00:26:38,080 Speaker 1: around computers the process more information faster than the computer's 464 00:26:38,160 --> 00:26:41,440 Speaker 1: NASA used to put humans on the moon. And that's 465 00:26:41,480 --> 00:26:44,320 Speaker 1: this morning's Bloomberg and j I t Stem report. Michael, 466 00:26:44,840 --> 00:26:49,600 Speaker 1: Thank you, Bob. Philip Swegel was formerly at the Treasury 467 00:26:49,600 --> 00:26:52,920 Speaker 1: Department as a six and Assistant Secretary for Economic Policy. 468 00:26:52,960 --> 00:26:55,199 Speaker 1: He was there December two thousand six to January two 469 00:26:55,200 --> 00:26:57,959 Speaker 1: thousand nine, which put him square in the crosshairs of 470 00:26:58,280 --> 00:27:02,520 Speaker 1: financial crisis. He helped write the original TARP Plan. He 471 00:27:02,680 --> 00:27:04,560 Speaker 1: is now a senior fellow and professor at the University 472 00:27:04,600 --> 00:27:06,320 Speaker 1: of Maryland School of Public Policy, and he has a 473 00:27:06,320 --> 00:27:09,080 Speaker 1: new report out published by the Milk And Institute about 474 00:27:09,080 --> 00:27:12,000 Speaker 1: the last crisis, the next crisis, and the future of 475 00:27:12,320 --> 00:27:15,960 Speaker 1: large banks. And I found it kind of fascinating your 476 00:27:15,960 --> 00:27:18,679 Speaker 1: look at the future of large banks because in a 477 00:27:18,760 --> 00:27:21,160 Speaker 1: nutshell you kind of point out that banks fought tooth 478 00:27:21,200 --> 00:27:26,560 Speaker 1: and nail against having to adopt the additional regulatory burdens 479 00:27:26,680 --> 00:27:29,760 Speaker 1: of Dodd Frank, and yet Dodd Frank maybe all that's 480 00:27:29,800 --> 00:27:32,800 Speaker 1: standing between them and dismantling at this point. It is 481 00:27:32,840 --> 00:27:36,160 Speaker 1: an irony and good morning. Thanks for having me on that. Yeah, 482 00:27:36,240 --> 00:27:38,480 Speaker 1: I mean you look, I think bankers after the crisis 483 00:27:38,600 --> 00:27:41,840 Speaker 1: understood that more regulation was needed, but many of them 484 00:27:41,880 --> 00:27:44,080 Speaker 1: looked at U Dodd Frank and said, you know, this 485 00:27:44,240 --> 00:27:46,520 Speaker 1: is just way overboard. You know, things like the vocal 486 00:27:46,600 --> 00:27:51,280 Speaker 1: rule and fause push out, which has been repealed. Uh. 487 00:27:51,400 --> 00:27:53,439 Speaker 1: But now with the calls to break up big banks, 488 00:27:53,480 --> 00:27:56,320 Speaker 1: and including possibly from my former colleague in Minneapolis, you 489 00:27:56,359 --> 00:27:59,919 Speaker 1: know now in Minneapolis, Uh, the regulatory system has to 490 00:28:00,000 --> 00:28:02,000 Speaker 1: work because if it doesn't work, then the banks are 491 00:28:02,000 --> 00:28:04,399 Speaker 1: really in trouble. Well, you take that part apart and 492 00:28:04,440 --> 00:28:07,520 Speaker 1: you talk about would this system have worked to prevent 493 00:28:07,560 --> 00:28:10,280 Speaker 1: the two eight crisis, And your conclusion seems to be 494 00:28:10,440 --> 00:28:13,680 Speaker 1: maybe maybe not. Yeah, it's really too soon to tell. 495 00:28:13,720 --> 00:28:15,120 Speaker 1: And of course we're not going to know for sure 496 00:28:15,160 --> 00:28:17,800 Speaker 1: until the next crisis. Um, you know. To me, the 497 00:28:18,240 --> 00:28:22,200 Speaker 1: key is the new resolution authority that the so called 498 00:28:22,200 --> 00:28:26,200 Speaker 1: Title too of Dodd frank And if if one big 499 00:28:26,240 --> 00:28:29,520 Speaker 1: bank fails, I'm pretty confident that's gonna work, right that 500 00:28:29,600 --> 00:28:31,640 Speaker 1: the it's almost like a i G. Is gonna happen 501 00:28:31,640 --> 00:28:33,280 Speaker 1: all over again, you know, which no one will like. 502 00:28:33,800 --> 00:28:36,600 Speaker 1: But the FDA, c the FED, the Treasury, other regulators 503 00:28:36,600 --> 00:28:40,320 Speaker 1: can can handle. That will impose the losses that that uh, 504 00:28:40,640 --> 00:28:42,880 Speaker 1: you know, have to be meted out to make sure 505 00:28:42,880 --> 00:28:45,760 Speaker 1: there's no bailout if a couple of big banks fail 506 00:28:45,800 --> 00:28:47,880 Speaker 1: at the same time, which is really what Title two 507 00:28:47,960 --> 00:28:51,200 Speaker 1: is meant to address. It's just not clear that regulators 508 00:28:51,240 --> 00:28:53,840 Speaker 1: are going to be willing to dole out those losses 509 00:28:54,240 --> 00:28:57,240 Speaker 1: if that sparks another panic, and so that in some 510 00:28:57,520 --> 00:29:01,120 Speaker 1: there's a choice then between bailout or of failure of 511 00:29:01,200 --> 00:29:04,280 Speaker 1: the financial system. And you know, until we resolve that 512 00:29:04,320 --> 00:29:06,360 Speaker 1: and know for sure to work, we just don't know 513 00:29:06,400 --> 00:29:08,760 Speaker 1: that we've addressed too big to Fail. Well, so much 514 00:29:08,760 --> 00:29:11,840 Speaker 1: of this, I guess depends on how the markets react 515 00:29:11,920 --> 00:29:16,080 Speaker 1: to these developments confidence in what might happen in a 516 00:29:16,080 --> 00:29:20,040 Speaker 1: bank failure situation. When when a bank goes down, it's 517 00:29:20,080 --> 00:29:22,280 Speaker 1: not that people think that the government is going to 518 00:29:22,320 --> 00:29:24,400 Speaker 1: be able to save them. It's that the fd I 519 00:29:24,440 --> 00:29:28,040 Speaker 1: see is there with bank deposit insurance. That's exactly right, 520 00:29:28,080 --> 00:29:30,200 Speaker 1: and that's right. That's the reason that you know, when 521 00:29:30,200 --> 00:29:32,920 Speaker 1: the bank at the corner of fails, it's orderly. You know, 522 00:29:32,920 --> 00:29:35,320 Speaker 1: it's not that people have any special trust in the 523 00:29:35,400 --> 00:29:37,959 Speaker 1: FT I see too, you know, to do the financial workout, 524 00:29:38,120 --> 00:29:40,920 Speaker 1: although they actually do it pretty well. Is that because 525 00:29:40,920 --> 00:29:43,880 Speaker 1: as you said, that the deposit insurance is there, and 526 00:29:43,920 --> 00:29:46,320 Speaker 1: what Title to God Frank does is as there's no 527 00:29:46,400 --> 00:29:49,880 Speaker 1: deposit insurance, it's the opposite all these you know, um, 528 00:29:49,920 --> 00:29:54,080 Speaker 1: all all the non deposit funding that's all uninsured. And 529 00:29:54,120 --> 00:29:56,640 Speaker 1: so you know, Title two says if a big, big 530 00:29:56,720 --> 00:30:00,000 Speaker 1: bank gets into trouble, the people put their money there 531 00:30:00,000 --> 00:30:03,080 Speaker 1: and than the insured deposits, you will expect to take losses. 532 00:30:03,600 --> 00:30:05,840 Speaker 1: And uh. And we we've seen at least one example 533 00:30:06,280 --> 00:30:08,880 Speaker 1: during the financial crisis when has a treasury of the 534 00:30:08,920 --> 00:30:11,360 Speaker 1: panic that can ensue, and that was when when Wambo 535 00:30:11,400 --> 00:30:14,280 Speaker 1: failed and the f D i C imposed losses on 536 00:30:14,360 --> 00:30:17,040 Speaker 1: the senior bondholders, but that they probably didn't expect to take. 537 00:30:17,600 --> 00:30:20,200 Speaker 1: That led to the media failure of Wakovia, and so 538 00:30:20,240 --> 00:30:23,280 Speaker 1: that that's the kind of panic that the hows who 539 00:30:23,320 --> 00:30:25,560 Speaker 1: is meant to address, but instead it might spark it 540 00:30:26,360 --> 00:30:30,640 Speaker 1: in UH inadvertently. Let's come back with Phil Swegel. He's 541 00:30:30,680 --> 00:30:33,480 Speaker 1: a professor of the University of Maryland School of Public Policy, 542 00:30:33,560 --> 00:30:36,640 Speaker 1: formerly at the Treasury Department. His new paper, The Last Crisis, 543 00:30:36,720 --> 00:30:39,240 Speaker 1: The Next Crisis, and the Future of Large Banks. We'll 544 00:30:39,280 --> 00:30:42,520 Speaker 1: talk about the next Crisis and the future of large 545 00:30:42,520 --> 00:30:47,360 Speaker 1: banks coming up on Bloomberg Surveillance right now. JP Morgan 546 00:30:47,440 --> 00:30:52,240 Speaker 1: Chase Centers today UH slightly higher for the previous week. 547 00:30:52,280 --> 00:30:55,800 Speaker 1: At that's the biggest of the big banks. People wondering 548 00:30:56,240 --> 00:30:59,880 Speaker 1: what's going to happen to them if there is a crisis. Well, 549 00:31:00,320 --> 00:31:03,680 Speaker 1: right now the markets are telling us that there's no crisis, 550 00:31:03,680 --> 00:31:06,480 Speaker 1: but there is reason for concern SMP features down by 551 00:31:06,800 --> 00:31:10,000 Speaker 1: two points, down features twenty points, a little deterioration in 552 00:31:10,040 --> 00:31:13,280 Speaker 1: the last ten minutes or so. This is Bloomberg Surveillance 553 00:31:13,560 --> 00:31:22,600 Speaker 1: on Bloomberg Radio worldwide. We're counting it onto the opening 554 00:31:22,600 --> 00:31:24,160 Speaker 1: ball less than two hours to go. Brought to you 555 00:31:24,160 --> 00:31:26,680 Speaker 1: by n y C v ask about their my community 556 00:31:26,680 --> 00:31:29,520 Speaker 1: interest checking with free n y CB online and mobile banking. 557 00:31:29,600 --> 00:31:37,840 Speaker 1: Learn more, Get more. Visit NYCB family dot com for details. 558 00:31:37,840 --> 00:31:41,200 Speaker 1: Global business news twenty four hours a day at Bloomberg 559 00:31:41,280 --> 00:31:44,360 Speaker 1: dot com, the Radio plus mobile app and on your radio. 560 00:31:44,640 --> 00:31:48,479 Speaker 1: This is a Bloomberg Business Flash and I'm Camra in Moscow. 561 00:31:48,560 --> 00:31:50,920 Speaker 1: This updates brought to you by Sector Spider e t 562 00:31:51,160 --> 00:31:53,360 Speaker 1: F by by a single stock. When you can invest 563 00:31:53,400 --> 00:31:56,960 Speaker 1: in the entire sector. Visits Sector spd r s dot 564 00:31:57,000 --> 00:32:00,880 Speaker 1: com are called six six Sector e t F. Tribune 565 00:32:00,960 --> 00:32:04,680 Speaker 1: Media says it intends to explore strategic and financial alternatives 566 00:32:04,680 --> 00:32:09,000 Speaker 1: for the broadcasting company and Federal Mogul Holdings. Largest shareholder, 567 00:32:09,040 --> 00:32:11,760 Speaker 1: activist investor Carl Icon offered to buy the rest of 568 00:32:11,800 --> 00:32:14,760 Speaker 1: the auto parts maker for seven dollars a share, and 569 00:32:14,880 --> 00:32:18,600 Speaker 1: futures are pairing their earlier losses following a second weekly 570 00:32:18,680 --> 00:32:21,600 Speaker 1: game for the SNP five index. This is after China's 571 00:32:21,600 --> 00:32:25,400 Speaker 1: Central Bank stepped up efforts to cushen the country's economic slowdown. 572 00:32:25,720 --> 00:32:27,960 Speaker 1: SNP eveny Future is now down one and a half 573 00:32:28,000 --> 00:32:32,200 Speaker 1: points down. EUNI Futures down fifteen, naz Documny futures down nine, 574 00:32:32,560 --> 00:32:36,160 Speaker 1: Dax in Germany down one percent, Tenure Treasury up three 575 00:32:36,160 --> 00:32:39,360 Speaker 1: thirty seconds, the yield one point seven five percent. Nimex 576 00:32:39,400 --> 00:32:41,440 Speaker 1: corn oil up six tents per cent or twenty one 577 00:32:41,440 --> 00:32:44,200 Speaker 1: cents to thirty two ninety nine. A barrel comes gold 578 00:32:44,280 --> 00:32:46,600 Speaker 1: is up nine ten percent or ten dollars eighty cents 579 00:32:46,600 --> 00:32:49,520 Speaker 1: to twelve thirty one thirty announced. The euro a dollar 580 00:32:49,600 --> 00:32:52,400 Speaker 1: oh eight eight six, the n one thirteen point oh nine. 581 00:32:52,680 --> 00:32:56,320 Speaker 1: That's a Bloomberg business flash. Tom and Mike, thank you. Karen. 582 00:32:56,640 --> 00:32:59,600 Speaker 1: We're talking with Phil Sweigel, Senior Fellow and professor at 583 00:32:59,600 --> 00:33:03,240 Speaker 1: the University of Maryland School of Public Policy. Formerly Assistant 584 00:33:03,240 --> 00:33:06,520 Speaker 1: Secretary for Economic Policy at the Treasury Department. He helped 585 00:33:06,560 --> 00:33:10,400 Speaker 1: write the original TARP legislation that bailed out the banks. 586 00:33:10,560 --> 00:33:13,960 Speaker 1: Now he's looking at what happens next and arguing that 587 00:33:14,360 --> 00:33:17,440 Speaker 1: DoD Frank had better work, or we could be in 588 00:33:17,600 --> 00:33:21,480 Speaker 1: a lot of trouble. Uh, the next crisis you suggest 589 00:33:23,080 --> 00:33:26,040 Speaker 1: is out there. It will happen. But the thing is, 590 00:33:26,080 --> 00:33:28,600 Speaker 1: we never know exactly how it's going to happen. So 591 00:33:28,680 --> 00:33:33,520 Speaker 1: how do we know that DoD Frank addresses the right things, right, 592 00:33:33,520 --> 00:33:35,640 Speaker 1: I mean, that's that's the problem. If we knew, of course, 593 00:33:36,040 --> 00:33:37,840 Speaker 1: people would address it. I was just thinking doing the 594 00:33:37,920 --> 00:33:40,480 Speaker 1: n G I T commercials that that's you know, the 595 00:33:40,520 --> 00:33:42,520 Speaker 1: kinds of things they're talking about are super important. We 596 00:33:42,560 --> 00:33:45,600 Speaker 1: could have a cyber related crisis. Uh you know something 597 00:33:45,640 --> 00:33:49,640 Speaker 1: from China. Uh you know who knows. Um, there's a 598 00:33:49,680 --> 00:33:51,640 Speaker 1: lot of important steps that have been taken that the 599 00:33:52,040 --> 00:33:54,440 Speaker 1: banks are are in much better position now than they 600 00:33:54,440 --> 00:33:58,080 Speaker 1: were before the crisis, much more capital um, they're much 601 00:33:58,120 --> 00:34:02,680 Speaker 1: more resilient, and that's Horton's um. The FED is imposing 602 00:34:02,680 --> 00:34:05,520 Speaker 1: a new requirement on them for essentially convertible capital, the 603 00:34:05,560 --> 00:34:10,360 Speaker 1: so called TLAC UH laws absorbing capital um. And you know, 604 00:34:10,480 --> 00:34:12,840 Speaker 1: but ultimately we still are going to have a crisis 605 00:34:12,880 --> 00:34:15,160 Speaker 1: at some point. It'll be a big one. And that's 606 00:34:15,160 --> 00:34:17,040 Speaker 1: where the new tools and Dodd Frank that the title 607 00:34:17,080 --> 00:34:19,719 Speaker 1: to the Resolution Authority, that's where they come in. And 608 00:34:19,760 --> 00:34:22,680 Speaker 1: that's why I focus so much on that in my paper. 609 00:34:23,000 --> 00:34:26,600 Speaker 1: Feel good morning, and congratulations on timing your paper. I'm 610 00:34:26,640 --> 00:34:28,879 Speaker 1: sure you knew that Neil cash carry was coming down 611 00:34:28,880 --> 00:34:32,000 Speaker 1: the pike. I did not know that the paper has 612 00:34:32,000 --> 00:34:35,560 Speaker 1: written before I knew anything about Neil, but obviously we 613 00:34:35,560 --> 00:34:38,000 Speaker 1: were like me and I worked together in the crisis, 614 00:34:38,040 --> 00:34:41,640 Speaker 1: and anyone who's there, you know, uh as in thinking 615 00:34:41,640 --> 00:34:43,879 Speaker 1: about these issues, are you going to go to minneapples 616 00:34:43,960 --> 00:34:47,279 Speaker 1: to Oh, you know, I certainly would if if he 617 00:34:47,320 --> 00:34:49,319 Speaker 1: wants to include me. I'm not you know, I'm not 618 00:34:49,360 --> 00:34:51,480 Speaker 1: going to the first one I saw. He's uh, you know, 619 00:34:51,520 --> 00:34:55,160 Speaker 1: he's launching with Professor Maudi from Stanford and Simon Johnson 620 00:34:55,239 --> 00:34:59,080 Speaker 1: from What is your that's wonderful? What is your distinction 621 00:34:59,640 --> 00:35:03,920 Speaker 1: betwe Johnson of thirteen bankers? Uh? Not is is? I 622 00:35:03,920 --> 00:35:08,200 Speaker 1: guess most hated professor coast to coast among bankers? What 623 00:35:08,360 --> 00:35:12,839 Speaker 1: is the Swaggel distinction between those two first class academics. 624 00:35:13,280 --> 00:35:16,680 Speaker 1: I'm sure they're they're excellent academics. Um. You know, Simon 625 00:35:16,760 --> 00:35:18,360 Speaker 1: is a little bit hard to know what he's actually 626 00:35:18,360 --> 00:35:22,360 Speaker 1: calling for. Um. Madi is a very clear message more capital, 627 00:35:22,680 --> 00:35:25,759 Speaker 1: and the problem is that is tough to figure out 628 00:35:25,800 --> 00:35:28,319 Speaker 1: how much more capital? And right, she has a whole 629 00:35:28,320 --> 00:35:30,480 Speaker 1: book that doesn't you know, busy doesn't take that on 630 00:35:30,520 --> 00:35:32,600 Speaker 1: and in fact she actually criticizes the people who try 631 00:35:32,640 --> 00:35:34,759 Speaker 1: to do that hard work. So to me, that's That's 632 00:35:34,760 --> 00:35:37,600 Speaker 1: why I admire what Neil is doing, is that he's saying, look, 633 00:35:37,640 --> 00:35:39,520 Speaker 1: this is an important question, and he wants to do 634 00:35:39,560 --> 00:35:41,839 Speaker 1: the work right. He's got a whole staff out there 635 00:35:41,880 --> 00:35:44,960 Speaker 1: in Minneapolis, excellent staff, and they're gonna do it, and 636 00:35:45,000 --> 00:35:47,719 Speaker 1: it's ultimately his cost benefit analysis, and he wants to 637 00:35:47,719 --> 00:35:49,840 Speaker 1: actually do the work and not you know, not talking 638 00:35:49,880 --> 00:35:52,200 Speaker 1: to him. If he was to break up the banks, 639 00:35:52,239 --> 00:35:54,880 Speaker 1: say he does it by fourth July as a joke, folks, 640 00:35:55,400 --> 00:35:57,560 Speaker 1: But if he was to break up the banks, what's 641 00:35:57,600 --> 00:35:59,920 Speaker 1: he do? Was it like John d Rockefeller and I 642 00:36:00,040 --> 00:36:03,279 Speaker 1: the Tarbo and the breaking up of Standard Oil? I mean, 643 00:36:03,320 --> 00:36:05,680 Speaker 1: help me here, you know that's right. I mean, look, 644 00:36:05,680 --> 00:36:07,719 Speaker 1: a lot of people, when you know IBM and A 645 00:36:07,800 --> 00:36:10,560 Speaker 1: T and T we're having this happened to them, had 646 00:36:10,600 --> 00:36:14,799 Speaker 1: dire predictions and that has worked out pretty well. Um. Look, 647 00:36:14,800 --> 00:36:17,440 Speaker 1: he's got a menu of things in his his launch speech. 648 00:36:17,880 --> 00:36:21,160 Speaker 1: Um breaking them up as one possibility. But as you're 649 00:36:21,200 --> 00:36:24,560 Speaker 1: kind of hinting at, if we had three really big meat, 650 00:36:24,840 --> 00:36:27,840 Speaker 1: really big bangs instead of one enormous JP Morgan Chase, 651 00:36:28,400 --> 00:36:32,200 Speaker 1: would that thing that would that those three energies be safer? 652 00:36:32,280 --> 00:36:36,360 Speaker 1: It's not. Yeah, it's not at all clear the Fed. 653 00:36:36,640 --> 00:36:42,160 Speaker 1: Um are they doing enough right now that Neil needs 654 00:36:42,200 --> 00:36:45,640 Speaker 1: to supplement what they're doing? Um, you know, Dant rule 655 00:36:45,680 --> 00:36:48,960 Speaker 1: seems to have been fairly firm on all of this. Um. 656 00:36:49,440 --> 00:36:51,600 Speaker 1: You know, the FED has done a lot of good things. 657 00:36:52,200 --> 00:36:55,880 Speaker 1: The you know, more capital uh is by far the 658 00:36:55,920 --> 00:36:58,399 Speaker 1: most important thing, and that's what you know, an Ado 659 00:36:58,480 --> 00:37:02,319 Speaker 1: Maddi from Stanford, that's really been her her call. On 660 00:37:02,360 --> 00:37:06,000 Speaker 1: the other hand, the FED is is oddly responsive on 661 00:37:06,080 --> 00:37:08,680 Speaker 1: regulatory issues to political pressures. And I look at that 662 00:37:08,719 --> 00:37:10,960 Speaker 1: and you know, at least two ways right. One is 663 00:37:11,000 --> 00:37:14,319 Speaker 1: on the liquidity rule, essentially making sure banks have have 664 00:37:14,440 --> 00:37:17,640 Speaker 1: adequate high high quality liquidity with the FED is allowing 665 00:37:18,239 --> 00:37:21,759 Speaker 1: municipal bonds to act as high quality liquidity, which you 666 00:37:21,800 --> 00:37:24,360 Speaker 1: know is those things are gonna be liquid until the 667 00:37:24,360 --> 00:37:27,520 Speaker 1: next crisis and then they're then they're not UM And 668 00:37:27,560 --> 00:37:32,319 Speaker 1: instead also essentially eviscerated the risk retention provisions and Dodd 669 00:37:32,320 --> 00:37:34,560 Speaker 1: Frank the sort of skin in the game that you know, 670 00:37:34,600 --> 00:37:37,560 Speaker 1: originators had to keep exposure to the you know, to 671 00:37:37,600 --> 00:37:40,719 Speaker 1: the risk they're they're bundling into securities. So the set 672 00:37:40,760 --> 00:37:44,120 Speaker 1: has done a lot of good but on regulatory policy, 673 00:37:44,320 --> 00:37:47,920 Speaker 1: including Dan Trullo. They're oddly responsive to uh, political pressure. 674 00:37:49,120 --> 00:37:54,080 Speaker 1: Do you think that they have weakened the Frank regulations 675 00:37:54,080 --> 00:37:57,440 Speaker 1: in a way that could be dangerous? You know? In 676 00:37:57,840 --> 00:38:00,239 Speaker 1: some ways the risk retention and that it who I 677 00:38:00,239 --> 00:38:03,680 Speaker 1: just pointed out risk retention and liquidity for sure, you know, others, 678 00:38:03,680 --> 00:38:06,680 Speaker 1: I think they've improved what dog Frank has in there, 679 00:38:07,440 --> 00:38:10,360 Speaker 1: for example, the vocal rule, which is basically a solution 680 00:38:10,400 --> 00:38:13,719 Speaker 1: and in search of a problem. The said implemented that 681 00:38:13,800 --> 00:38:15,920 Speaker 1: in a way that I think is the least damaging 682 00:38:15,920 --> 00:38:19,160 Speaker 1: to the economy, but by turning it into a way 683 00:38:19,200 --> 00:38:22,600 Speaker 1: to improve risk management. Um. So that's you know that 684 00:38:22,719 --> 00:38:25,560 Speaker 1: that's to the sense credit. So it's it's a mix 685 00:38:25,840 --> 00:38:28,799 Speaker 1: and there is good in dog Frank and you know, 686 00:38:28,880 --> 00:38:32,439 Speaker 1: not many Republicans are willing to say that. Uh. And 687 00:38:32,800 --> 00:38:35,400 Speaker 1: you know that's the challenge is to to maximize the 688 00:38:35,440 --> 00:38:40,359 Speaker 1: good within this. How do you respond to banker types? 689 00:38:40,400 --> 00:38:44,040 Speaker 1: And of course Mr Ratner with a week ago, so 690 00:38:44,880 --> 00:38:48,520 Speaker 1: in defense of our international expansion of banks, Phil, do 691 00:38:48,600 --> 00:38:55,560 Speaker 1: we risk losing our international excellence and transactional banking? That's 692 00:38:55,800 --> 00:38:58,839 Speaker 1: absolutely it's a danger and that that I would put 693 00:38:58,880 --> 00:39:01,320 Speaker 1: on the benefits side of the ledger of large banks. 694 00:39:01,560 --> 00:39:03,480 Speaker 1: And to me that you know, this is a it's 695 00:39:03,520 --> 00:39:06,040 Speaker 1: not it's not like a math problem like arithmetic, but 696 00:39:06,080 --> 00:39:08,600 Speaker 1: as an analysis problem in trying to do the cost 697 00:39:08,640 --> 00:39:12,440 Speaker 1: benefit analysis. And that's what you highlighted. We have global 698 00:39:12,480 --> 00:39:15,680 Speaker 1: banks that are excellent, and we have a big trade 699 00:39:15,719 --> 00:39:18,799 Speaker 1: ser plus and financial services suggesting that we have uh, 700 00:39:18,880 --> 00:39:21,160 Speaker 1: you know this this excellence and we don't want to 701 00:39:21,160 --> 00:39:25,359 Speaker 1: lose the good unless it's outweighed by the bad. Is 702 00:39:26,120 --> 00:39:28,640 Speaker 1: it necessary to have banks as big as we have them? Now? 703 00:39:30,200 --> 00:39:33,280 Speaker 1: You know that? To me, that's the hardest question because 704 00:39:34,000 --> 00:39:36,680 Speaker 1: you can say, you know, look, there are some activities 705 00:39:36,719 --> 00:39:39,239 Speaker 1: where you want a global bank with global reach. You know, 706 00:39:39,320 --> 00:39:44,960 Speaker 1: you're you know, some multinational corporation arranging financial facilities around 707 00:39:44,960 --> 00:39:48,720 Speaker 1: the world. On the other hand, Neil in his first speech, 708 00:39:48,760 --> 00:39:51,960 Speaker 1: there's Q and A where he basically said, look, you know, 709 00:39:52,560 --> 00:39:56,440 Speaker 1: multinational corporations have thousands of suppliers and why you know, 710 00:39:56,480 --> 00:39:59,040 Speaker 1: why can they buy nuts and bolts from ten different 711 00:39:59,040 --> 00:40:02,040 Speaker 1: companies but not a pain funding from ten different banks. 712 00:40:02,640 --> 00:40:07,320 Speaker 1: And that's a you know, that's a legitimate question, just 713 00:40:07,320 --> 00:40:09,040 Speaker 1: just great. What else did you learn in your paper? 714 00:40:09,080 --> 00:40:11,960 Speaker 1: One of the things, folks. That's great about Phil Schwegel. 715 00:40:12,000 --> 00:40:14,560 Speaker 1: As he works at his papers, he grinds them out. 716 00:40:15,440 --> 00:40:18,040 Speaker 1: How many times did you rewrite the paper? I'm guessing 717 00:40:18,080 --> 00:40:22,080 Speaker 1: ten times. Yeah, I think that's right. It was originally 718 00:40:22,080 --> 00:40:25,279 Speaker 1: a presentation at the Chicago FEDS Banking Conference, and then 719 00:40:25,280 --> 00:40:27,080 Speaker 1: I had the chance to go back and you know, 720 00:40:27,400 --> 00:40:30,040 Speaker 1: write it up properly. What you learning to rewrite? What 721 00:40:30,120 --> 00:40:31,920 Speaker 1: you learning to rewrite? You didn't know when you started 722 00:40:31,920 --> 00:40:36,200 Speaker 1: the paper, you know, I honest, I have been in 723 00:40:36,880 --> 00:40:39,400 Speaker 1: a defender of large banks against some of the attacks, 724 00:40:39,440 --> 00:40:41,719 Speaker 1: and I have a paper, actually, I have a piece 725 00:40:41,719 --> 00:40:45,640 Speaker 1: in bloom Review from saying we don't want to make 726 00:40:45,760 --> 00:40:49,120 Speaker 1: big banks too small to succeed. And I still think 727 00:40:49,160 --> 00:40:52,120 Speaker 1: that's the case. And that's that's the benefit side. You know, 728 00:40:52,160 --> 00:40:55,520 Speaker 1: As I did the paper thinking about the next crisis, 729 00:40:56,200 --> 00:40:58,320 Speaker 1: that's when I started to think, you know, the title 730 00:40:58,360 --> 00:41:01,560 Speaker 1: to regime it It sounds good on paper, but let 731 00:41:01,560 --> 00:41:03,640 Speaker 1: me think about actually using it, you know, go back 732 00:41:03,680 --> 00:41:06,640 Speaker 1: into policy making, uh, you know, world, and think about 733 00:41:06,719 --> 00:41:09,719 Speaker 1: using it. And and that's where I became, you know, 734 00:41:09,760 --> 00:41:15,960 Speaker 1: some somewhat more um, you know, more worried. Philswegel, Thanks today, 735 00:41:16,680 --> 00:41:19,640 Speaker 1: formerly at the Treasury Partment. Now you oversee School of 736 00:41:19,640 --> 00:41:24,279 Speaker 1: Public Policy in affiliated with the Milk And Institute. Yes, 737 00:41:24,320 --> 00:41:26,440 Speaker 1: the paper came out through the Milk And Institute, and uh, 738 00:41:27,160 --> 00:41:29,279 Speaker 1: a lot of people looking at the banking system these 739 00:41:29,320 --> 00:41:31,640 Speaker 1: days and what could and should be done. What we're 740 00:41:31,640 --> 00:41:34,320 Speaker 1: trying to do, folks, is give you a lack of hysteria. 741 00:41:34,400 --> 00:41:37,360 Speaker 1: Mike and I will manfully try to do that Tomorrow. 742 00:41:37,640 --> 00:41:42,160 Speaker 1: What do they call the elections tomorrow? Super super duper, 743 00:41:42,440 --> 00:41:46,520 Speaker 1: super dupertion new and improved. Now no, well, I don't know. 744 00:41:46,640 --> 00:41:48,360 Speaker 1: You know, there's a political debate on it. Boy was 745 00:41:48,400 --> 00:41:50,719 Speaker 1: it front and center over the weekend. We will be 746 00:41:50,760 --> 00:41:56,120 Speaker 1: in Washington tomorrow and support of FM Washington and Baltimore. 747 00:41:56,160 --> 00:41:58,560 Speaker 1: Thrilled to come down there to see Mcan Murphy and 748 00:41:58,719 --> 00:42:01,640 Speaker 1: Al Hunt the team in Washington. Uh, they will be 749 00:42:01,680 --> 00:42:03,920 Speaker 1: distributed across the nation. We decided to go to the 750 00:42:04,000 --> 00:42:09,319 Speaker 1: nation's capital in conversation with Jason Furman, Chairman of the 751 00:42:09,360 --> 00:42:14,200 Speaker 1: President's Council of Economic Advisors, and then an important conversation 752 00:42:14,880 --> 00:42:18,840 Speaker 1: with Alan Greenspan, our first conversation with the Chairman since 753 00:42:18,880 --> 00:42:23,640 Speaker 1: the advent of what I'm gonna call global negative interest rates. 754 00:42:23,800 --> 00:42:26,120 Speaker 1: Really looking forward to that and maybe Mike we can 755 00:42:26,120 --> 00:42:28,800 Speaker 1: also talk to the chairman about productivity in that mystery. 756 00:42:29,280 --> 00:42:34,200 Speaker 1: Lots to talk about with sure Greenspan get his opinions. Yes, 757 00:42:34,239 --> 00:42:38,000 Speaker 1: we could get an update on spring training Washington style. 758 00:42:38,080 --> 00:42:42,879 Speaker 1: Good morning, Washington, AM, all of you nationwide Series sex 759 00:42:43,040 --> 00:42:46,600 Speaker 1: M Channel one nineteen. This is Bloomberg's Surveillance. We have 760 00:42:46,600 --> 00:42:47,799 Speaker 1: another hour for you.