1
00:00:00,480 --> 00:00:07,720
Speaker 1: Broadcasting live to New York, Bloomberg to Washington, d C,

2
00:00:07,960 --> 00:00:13,200
Speaker 1: Bloomberg to Boston, Bluemberg, dwell Unders to San Francisco, Bloomberg

3
00:00:14,080 --> 00:00:19,000
Speaker 1: to the Country Channel, and around the globe. The Bloomberg

4
00:00:19,079 --> 00:00:23,120
Speaker 1: Radio Plus happened. Bloomberg dot Com. This is Bloomberg Surveillance

5
00:00:23,840 --> 00:00:26,560
Speaker 1: wanting it say thirty on Wall Straight I Michael McKee

6
00:00:26,560 --> 00:00:29,480
Speaker 1: along with Tom Keane. Economic indicators brought to you by

7
00:00:29,480 --> 00:00:32,800
Speaker 1: Commonwealth Financial Network. When it's time to change the conversation,

8
00:00:33,159 --> 00:00:35,320
Speaker 1: talk with a broker dealer r I A that's ready

9
00:00:35,360 --> 00:00:37,760
Speaker 1: to listen callee six six four six two three six

10
00:00:37,800 --> 00:00:41,479
Speaker 1: three eight or visit Commonwealth dot com to learn more. No.

11
00:00:41,640 --> 00:00:43,800
Speaker 1: Eight thirty numbers this morning, But we do have a

12
00:00:43,800 --> 00:00:46,880
Speaker 1: boatload of indicators coming out over the course of the morning,

13
00:00:46,880 --> 00:00:49,920
Speaker 1: starting at nine o'clock. The smp K Schiller Home Price

14
00:00:50,000 --> 00:00:52,320
Speaker 1: Index that is four December. So again we have talked

15
00:00:52,320 --> 00:00:56,680
Speaker 1: about that a lot. How that's a delayed number. Consumer confidence,

16
00:00:57,120 --> 00:00:59,520
Speaker 1: this is the conference board. A lot of people are

17
00:00:59,520 --> 00:01:02,840
Speaker 1: going to be interested in that, uh, to the extent

18
00:01:02,920 --> 00:01:07,000
Speaker 1: that it reflects what people may expect about buying plans

19
00:01:07,040 --> 00:01:10,440
Speaker 1: going forward. Richmond Fed is out this morning at ten

20
00:01:10,640 --> 00:01:14,959
Speaker 1: and existing home sales, which a lot of people are

21
00:01:14,959 --> 00:01:17,800
Speaker 1: watching to see for their not con effects. Tom has

22
00:01:17,840 --> 00:01:20,560
Speaker 1: been talking about home Depot this morning, and of course

23
00:01:20,720 --> 00:01:24,639
Speaker 1: as homesales go up, home depot does better. David Kelly

24
00:01:24,920 --> 00:01:27,680
Speaker 1: is with us JP Morgan Funds, chief global Strategist, and

25
00:01:27,680 --> 00:01:30,320
Speaker 1: I want to weave these things together because while we

26
00:01:30,319 --> 00:01:32,240
Speaker 1: were in the break, you started to say something about

27
00:01:32,240 --> 00:01:35,840
Speaker 1: people looking at the wrong indicators, and I want you

28
00:01:35,880 --> 00:01:39,479
Speaker 1: to expand on that. Yeah. I think that in financial

29
00:01:39,480 --> 00:01:41,720
Speaker 1: markets there's always the shortcut of saying, oh, well, look

30
00:01:41,760 --> 00:01:44,120
Speaker 1: at the yield curve or look at how this stock

31
00:01:44,240 --> 00:01:46,800
Speaker 1: is performing, and that tells you about the whole economy.

32
00:01:47,360 --> 00:01:49,320
Speaker 1: And I believe that in order to see the big picture,

33
00:01:49,320 --> 00:01:51,640
Speaker 1: you actually have to have a pretty wide lens. You

34
00:01:51,680 --> 00:01:54,440
Speaker 1: have to look at literally all the pieces of a

35
00:01:54,560 --> 00:01:56,520
Speaker 1: of a macroeconomic model. You've got to look at all

36
00:01:56,520 --> 00:01:59,680
Speaker 1: the piece of consumption and investment. Government spending in the

37
00:01:59,760 --> 00:02:01,400
Speaker 1: short run is all about demand, but it's a very

38
00:02:01,440 --> 00:02:04,200
Speaker 1: wide uh landscape. We have to look at all of it.

39
00:02:04,240 --> 00:02:06,160
Speaker 1: And I think a lot of people made a mistake

40
00:02:06,320 --> 00:02:08,400
Speaker 1: earlier this year when they saw that, you know, the

41
00:02:08,440 --> 00:02:11,680
Speaker 1: markets are down and there are some market related indicators

42
00:02:11,680 --> 00:02:14,840
Speaker 1: which in the past have indicated economic troubles, and they say, Okay,

43
00:02:14,840 --> 00:02:17,320
Speaker 1: the economy is in recession. The economy isn't in recession.

44
00:02:17,320 --> 00:02:19,400
Speaker 1: It's not even close to recession. But the way you

45
00:02:19,440 --> 00:02:21,560
Speaker 1: can see that is actually by adding up all the

46
00:02:21,600 --> 00:02:24,000
Speaker 1: pieces of demanding the economy rather than trying to take

47
00:02:24,040 --> 00:02:28,360
Speaker 1: the shortcut of looking at financial market indicators. We're looking

48
00:02:28,400 --> 00:02:31,920
Speaker 1: at uh speaking of the event um credit, you know,

49
00:02:32,000 --> 00:02:35,240
Speaker 1: as part of this whole exercise. And I hadn't quite

50
00:02:35,280 --> 00:02:37,799
Speaker 1: realized until it's been pointed out to be a last

51
00:02:37,840 --> 00:02:39,960
Speaker 1: couple of days for all the talk of a credit

52
00:02:40,000 --> 00:02:44,639
Speaker 1: crisis out there. Bank credit in terms of loans, in

53
00:02:44,720 --> 00:02:49,280
Speaker 1: terms of commercial real estate UH and c any loans

54
00:02:49,639 --> 00:02:52,240
Speaker 1: up more than eight percent at a year over your

55
00:02:52,280 --> 00:02:56,400
Speaker 1: basis in the latest suite. Yeah. Yes, And and in fact,

56
00:02:56,560 --> 00:03:00,120
Speaker 1: in general, our banking system is extremely well capitalized. I

57
00:03:00,120 --> 00:03:02,239
Speaker 1: think there has been a lot of reluctance to lend

58
00:03:02,280 --> 00:03:05,040
Speaker 1: money party because of the need to build up a

59
00:03:05,080 --> 00:03:08,440
Speaker 1: capital to deal with the um you know, regulatory standards.

60
00:03:08,480 --> 00:03:11,160
Speaker 1: But overall the banks are trying to lend more money.

61
00:03:11,520 --> 00:03:14,200
Speaker 1: We're seeing that in We're also seeing it in credit cards,

62
00:03:14,200 --> 00:03:15,880
Speaker 1: which I think is very interesting. I think that that

63
00:03:15,960 --> 00:03:18,320
Speaker 1: maybe what are you seeing credit cards? You're with JP Morgan.

64
00:03:18,480 --> 00:03:20,919
Speaker 1: You've got a conduct to Mr Diamond on this. Well,

65
00:03:22,200 --> 00:03:25,920
Speaker 1: uh no, I'm not going to talk about our understand

66
00:03:26,200 --> 00:03:27,959
Speaker 1: Jason's business. But but what if you look at the

67
00:03:28,200 --> 00:03:30,640
Speaker 1: government's numbers on credit card debt? They have turned around.

68
00:03:30,760 --> 00:03:33,440
Speaker 1: What's happened is for years the banks were just cutting

69
00:03:33,440 --> 00:03:35,440
Speaker 1: back in credit card debt because it wasn't worth doing,

70
00:03:35,680 --> 00:03:38,040
Speaker 1: and now they're actually lending to lower income and middle

71
00:03:38,080 --> 00:03:40,920
Speaker 1: income people and that's helping the economy. David Kelly help

72
00:03:41,000 --> 00:03:44,720
Speaker 1: us then with the general idea that things are pretty good.

73
00:03:44,760 --> 00:03:47,480
Speaker 1: Home depot is good, credit cards are good. The stock

74
00:03:47,520 --> 00:03:49,240
Speaker 1: markets actually had a hell of a running here the

75
00:03:49,320 --> 00:03:53,560
Speaker 1: last number of days, and the cacophony of fears wrapped

76
00:03:53,560 --> 00:03:56,880
Speaker 1: around Most Americans don't know how to spell brexit. We're

77
00:03:56,960 --> 00:04:00,960
Speaker 1: learning too quickly. How do you adapt to the noise

78
00:04:01,080 --> 00:04:06,560
Speaker 1: that's out there given the underlying good economy. Well, it's

79
00:04:06,600 --> 00:04:10,200
Speaker 1: a tough job because not only do we have have

80
00:04:10,440 --> 00:04:13,680
Speaker 1: all the foreign issues, we also have a very heated

81
00:04:13,920 --> 00:04:16,560
Speaker 1: election campaign. Of course, from all sides. The last thing

82
00:04:16,600 --> 00:04:18,520
Speaker 1: you want to say is that you're pro the establishment,

83
00:04:19,080 --> 00:04:21,560
Speaker 1: or that you think things will muddle through and be okay,

84
00:04:21,640 --> 00:04:23,680
Speaker 1: so you have to talk about why everything is going

85
00:04:23,920 --> 00:04:26,240
Speaker 1: in a terribly wrong direction and needs to be fixed.

86
00:04:26,240 --> 00:04:29,279
Speaker 1: I think that is actually stoking fear. But there is

87
00:04:29,360 --> 00:04:32,360
Speaker 1: there's a lack of fundamental understanding of what's actually going

88
00:04:32,360 --> 00:04:35,240
Speaker 1: on in the economy. UM. I don't think good news

89
00:04:35,279 --> 00:04:38,080
Speaker 1: never gets much coverage, and I think people just hear

90
00:04:38,160 --> 00:04:42,719
Speaker 1: all the fear stories. A commentary out from black Rock

91
00:04:43,200 --> 00:04:48,200
Speaker 1: this morning that says in investors, fond traders are underestimating

92
00:04:48,200 --> 00:04:50,640
Speaker 1: the FETE. They're going to get hammered because the FET

93
00:04:50,800 --> 00:04:53,480
Speaker 1: is going to be forced by inflation and economic data

94
00:04:53,760 --> 00:04:56,280
Speaker 1: to raise interest rates more in two thousand sixteen than

95
00:04:56,320 --> 00:04:59,200
Speaker 1: the zero times the market is now expecting. Would you

96
00:04:59,320 --> 00:05:01,240
Speaker 1: agree with that? I would agree with that, But I

97
00:05:01,279 --> 00:05:03,960
Speaker 1: think it's very important to understand where the futures market

98
00:05:04,040 --> 00:05:08,480
Speaker 1: is not telling us um. Futures markets are drivative markets.

99
00:05:08,560 --> 00:05:12,000
Speaker 1: Drivative markets are anchored by arbitrage to cash markets. If

100
00:05:12,040 --> 00:05:14,880
Speaker 1: you have a completely distorted fixed income market because the

101
00:05:14,880 --> 00:05:17,400
Speaker 1: actions of central banks all over the world buying long

102
00:05:17,480 --> 00:05:19,719
Speaker 1: term bonds, and you have a central bankage, of course

103
00:05:19,720 --> 00:05:22,279
Speaker 1: anchors the short end. Then you've got a distorted cash market.

104
00:05:22,279 --> 00:05:25,760
Speaker 1: A distorted cash market is actually leading to a distorted

105
00:05:25,920 --> 00:05:28,360
Speaker 1: derivative market. So the Fed funds futures market is not

106
00:05:28,440 --> 00:05:31,040
Speaker 1: really what the average on Wall Street or even the

107
00:05:31,040 --> 00:05:34,160
Speaker 1: average bond trade. I thinks it's brilliantly explained, and it

108
00:05:34,200 --> 00:05:39,520
Speaker 1: goes back to within these distortions. No one within economics, finance,

109
00:05:39,680 --> 00:05:44,160
Speaker 1: or investment knows where the risk free rates. It's been destroyed.

110
00:05:44,520 --> 00:05:47,080
Speaker 1: When do we get it back? Well, I'd certainly like

111
00:05:47,160 --> 00:05:49,800
Speaker 1: to see come back. I think I think there's this

112
00:05:49,800 --> 00:05:53,840
Speaker 1: this nonsensical notion that the that somehow the equilibrium of

113
00:05:53,920 --> 00:05:56,600
Speaker 1: a neutral federal funds rate has fallen to some level.

114
00:05:56,760 --> 00:06:00,240
Speaker 1: I don't think the Federal reservebody understands how the federal

115
00:06:00,279 --> 00:06:03,039
Speaker 1: funds rate actually impacts the economy, or had that shorter

116
00:06:03,160 --> 00:06:05,000
Speaker 1: m interest rate impacts the economy. I think the whole

117
00:06:05,040 --> 00:06:08,160
Speaker 1: concept of a low neutral rate on it um just

118
00:06:08,400 --> 00:06:10,720
Speaker 1: you know, if you actually examine it, it doesn't It's

119
00:06:10,760 --> 00:06:13,640
Speaker 1: kind of a complicated subject, but it's we we really

120
00:06:13,640 --> 00:06:16,280
Speaker 1: don't know where it is. And I think there's saying

121
00:06:16,320 --> 00:06:20,120
Speaker 1: that it's that low is is probably wrong. Let's come back.

122
00:06:20,160 --> 00:06:21,800
Speaker 1: I think This is really important, Mike. I think we

123
00:06:21,800 --> 00:06:23,600
Speaker 1: need to update the markets here as a churning to

124
00:06:23,640 --> 00:06:26,279
Speaker 1: the markets, but some real subtle east within it. Look

125
00:06:26,279 --> 00:06:29,400
Speaker 1: at oil, Mike, you just can't figure out what to do.

126
00:06:29,520 --> 00:06:33,360
Speaker 1: There was some legit green in oil today really butchersing

127
00:06:33,520 --> 00:06:36,800
Speaker 1: up against all the weeks even months of resistance, and

128
00:06:36,839 --> 00:06:41,520
Speaker 1: it's just ebbed back. Brent in Europe rounded up the

129
00:06:41,640 --> 00:06:45,680
Speaker 1: thirty five barrel thirty four sixty one. I'm stretching their folks,

130
00:06:45,680 --> 00:06:47,920
Speaker 1: that's a joke, but there it is. Brent down for

131
00:06:47,960 --> 00:06:52,159
Speaker 1: actually West Texas down thirty six cents oil rather gold

132
00:06:52,200 --> 00:06:57,799
Speaker 1: rebounds fourteen thirteen dollars three the ounce. Uh. This morning,

133
00:06:57,839 --> 00:07:01,800
Speaker 1: Mike and I are watching again stronger, much stronger earlier

134
00:07:01,800 --> 00:07:06,000
Speaker 1: one twelve zero six on a strong end. That's certainly

135
00:07:06,000 --> 00:07:09,880
Speaker 1: anti obanomics. We're gonna come back. David Kelly with JP

136
00:07:10,040 --> 00:07:17,600
Speaker 1: Morgan Funds with futures negative for this hour of survalance

137
00:07:17,680 --> 00:07:21,320
Speaker 1: party by MASDA White Plains. Visit Musda White Plains dot com.

138
00:07:21,440 --> 00:07:24,440
Speaker 1: Here's John Tucker with the latest news headlines and Michael

139
00:07:24,480 --> 00:07:27,960
Speaker 1: and Tom. Republican presidential candidates led by Donald Trump are

140
00:07:28,080 --> 00:07:31,840
Speaker 1: drawing cheers at DEVATA by bashing China's policies, even as

141
00:07:31,840 --> 00:07:35,200
Speaker 1: that nation's tourism trade in investment helped lift the state

142
00:07:35,200 --> 00:07:38,560
Speaker 1: for the worst economic decline in the US. Chinese commerce

143
00:07:38,600 --> 00:07:42,320
Speaker 1: has boosted Devata's tourism mining industries at money from China's

144
00:07:42,320 --> 00:07:45,840
Speaker 1: backing a billion dollar auto plant under construction in the state.

145
00:07:46,520 --> 00:07:49,480
Speaker 1: China's foreign minister meets with secretaries at John Kerry for

146
00:07:49,520 --> 00:07:51,720
Speaker 1: talks this week because each country accuses the other of

147
00:07:51,880 --> 00:07:56,320
Speaker 1: escalating military tensions in the Western Pacific, but lends the

148
00:07:56,320 --> 00:07:58,840
Speaker 1: world uses to watch where El Nino events has become

149
00:07:58,880 --> 00:08:02,120
Speaker 1: a bit fuzzier after Japan cut by about half the

150
00:08:02,200 --> 00:08:05,120
Speaker 1: number of buoys in the Western Pacific that monitor changes

151
00:08:05,160 --> 00:08:07,560
Speaker 1: in the ocean. It will take another four to five

152
00:08:07,680 --> 00:08:11,720
Speaker 1: offline next year. It's a money saving move. At Michigan

153
00:08:11,880 --> 00:08:15,520
Speaker 1: and California, each proposing crumbling World War two military sites

154
00:08:15,680 --> 00:08:20,880
Speaker 1: is ideal locations to test robot cars. Michigan secret weapon

155
00:08:21,360 --> 00:08:24,080
Speaker 1: better potholes. The Great Lakes State plans to make a

156
00:08:24,080 --> 00:08:28,600
Speaker 1: test track out of a decrepit three acre industrial ghost town.

157
00:08:29,120 --> 00:08:36,040
Speaker 1: It says will mimic real world driving conditions. We call

158
00:08:36,120 --> 00:08:39,920
Speaker 1: that street in New York, Oh easy Now. Global News

159
00:08:40,000 --> 00:08:42,400
Speaker 1: twenty four hours a day, powered by a two D

160
00:08:42,559 --> 00:08:45,240
Speaker 1: journalists in more than one D fifty news bureaus are

161
00:08:45,240 --> 00:08:49,400
Speaker 1: around the world. I'm John, Tucker, Michael and Thomas. Thank

162
00:08:49,400 --> 00:08:53,360
Speaker 1: you time now for the Katina Outogroup Bloomberg NBC Sports

163
00:08:53,440 --> 00:08:57,600
Speaker 1: Update with John Stash. John Mica was exactly five years

164
00:08:57,640 --> 00:09:00,480
Speaker 1: ago to the next acquired Carmelo Anthony from Denver. Since then,

165
00:09:00,520 --> 00:09:03,280
Speaker 1: he's played for four coaches, with three general managers and

166
00:09:03,400 --> 00:09:06,719
Speaker 1: countless teammates. Anthony, who decided to resign when he was

167
00:09:06,760 --> 00:09:09,080
Speaker 1: a free agent, said last night it is challenging to

168
00:09:09,120 --> 00:09:12,520
Speaker 1: stay positive at twelve Nick loss in the last fourteen games,

169
00:09:12,800 --> 00:09:15,360
Speaker 1: eighth and the last nine Toronto one, going away at

170
00:09:15,360 --> 00:09:19,400
Speaker 1: the Garden ninety five, huge night for Kyle Lowry to

171
00:09:19,480 --> 00:09:21,600
Speaker 1: kind of point guard the Knicks desperately needy at twenty

172
00:09:21,600 --> 00:09:24,400
Speaker 1: two points of the triple double. Knicks coach Kurt Rambis

173
00:09:24,440 --> 00:09:27,560
Speaker 1: on his defense or lack there up We couldn't find

174
00:09:27,559 --> 00:09:30,280
Speaker 1: ways to stop him in in our half court defense,

175
00:09:30,320 --> 00:09:32,160
Speaker 1: and a lot of that just picking rolls. You know,

176
00:09:32,240 --> 00:09:35,400
Speaker 1: we just can't stop the ball high and there's a

177
00:09:35,480 --> 00:09:38,400
Speaker 1: big part of our communication disappeared in this ball game.

178
00:09:38,559 --> 00:09:41,800
Speaker 1: Are multiple efforts disappeared in this ball game. But we've

179
00:09:41,800 --> 00:09:43,680
Speaker 1: got to do a much better job of putting pressure

180
00:09:43,679 --> 00:09:46,120
Speaker 1: on the ball so that these guards just can't get

181
00:09:46,160 --> 00:09:48,959
Speaker 1: these great heads of steam. Raptors have won six of

182
00:09:49,080 --> 00:09:51,480
Speaker 1: nineteen and with Cleveland losing it home to Detroit, the

183
00:09:51,559 --> 00:09:53,400
Speaker 1: Raptors are just three out of the East. The Nets

184
00:09:53,440 --> 00:09:55,240
Speaker 1: won't be back home to mid March. They start a

185
00:09:55,320 --> 00:09:57,640
Speaker 1: nine game trip tonight at Portland. The Rangers are gonna

186
00:09:57,640 --> 00:10:00,000
Speaker 1: be without captain Ryan mcdonnot. Tonight they visit The Devil

187
00:10:00,160 --> 00:10:02,760
Speaker 1: have lost their last three college hoops. I only got

188
00:10:02,760 --> 00:10:04,880
Speaker 1: thirty two points of a j English and eight seven

189
00:10:05,240 --> 00:10:07,880
Speaker 1: one win at Sienna. Gales are just a game behind

190
00:10:07,920 --> 00:10:10,120
Speaker 1: Monmouth and the mac. The Jets save eight million of

191
00:10:10,160 --> 00:10:14,120
Speaker 1: their salary cap by releasing cornerback Antonio Crimarti one year

192
00:10:14,120 --> 00:10:16,880
Speaker 1: into a four year contract that was not guaranteed. The

193
00:10:16,920 --> 00:10:21,240
Speaker 1: Bloomberg NBC Sports Update, I'm John Stash John, Thanks so much.

194
00:10:21,720 --> 00:10:24,959
Speaker 1: Jimmy Diamond speaking in an investor day conference. Um I

195
00:10:25,760 --> 00:10:28,720
Speaker 1: this devetails into our discussion. Will continue this forward here

196
00:10:29,080 --> 00:10:31,880
Speaker 1: uh in our next section. Mr Diamonds as u S

197
00:10:31,920 --> 00:10:36,720
Speaker 1: consumer is quote the big winner from low oil prices.

198
00:10:36,960 --> 00:10:39,200
Speaker 1: The counter factual of that's great, which is of oil

199
00:10:39,240 --> 00:10:42,320
Speaker 1: prices have been higher, where would we be right now?

200
00:10:42,400 --> 00:10:46,240
Speaker 1: But maybe we can see some actual tangible evidence as

201
00:10:46,280 --> 00:10:49,720
Speaker 1: we migrate through the summer, A new low oil prices

202
00:10:49,800 --> 00:10:53,480
Speaker 1: oil thirty three seventeen barrel done twenty one since Brent

203
00:10:53,600 --> 00:10:57,760
Speaker 1: fractionally green as well, we are with David Kelly of JP.

204
00:10:57,920 --> 00:11:04,240
Speaker 1: We're gonna stay with the Bloomberg savanas yea. The Sports

205
00:11:04,240 --> 00:11:06,400
Speaker 1: Report brought to you by Racatina Autogroup. Everyone deserves to

206
00:11:06,480 --> 00:11:08,440
Speaker 1: drive a Mercedes ben from Katina. Make it happen at

207
00:11:08,480 --> 00:11:11,160
Speaker 1: Raycatina Motorcar and Edison Raycatina of Union and the renew

208
00:11:11,240 --> 00:11:15,199
Speaker 1: Raycatina Freehold or go to Racotina dot com