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Speaker 1: Broadcasting live to New York, Gloomberg to Washington, d C,

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Speaker 1: the Bloomberg Radio BLUs Bloomberg dot Com. This is Bloomberg Surveillance.

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Speaker 1: Good morning, It is A thirty on Wall Street. I

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Speaker 1: Michael McKee along with David Gura. Alrightcondomic indicators are brought

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Speaker 1: six three eight or visit Commonwealth dot com to learn more.

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Speaker 1: A lot of numbers out this morning. Initial jobless claims

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Speaker 1: two hundred fifty seven thousand. That's down eleventh that that

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Speaker 1: is up by nine thousand, rather from the revised two

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Speaker 1: hundred and forty eight thousand last week, but still near

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Speaker 1: historic glows. Big number of the day g d P

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Speaker 1: comes in at half a percent annualized for the first quarter.

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Speaker 1: That's a little bit lower than the consensus forecast for

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Speaker 1: a seven tents game. Remember this number is revised quite often,

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Speaker 1: so we will probably see that number change over the

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Speaker 1: next two months. Personal consumption is part of g d P.

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Speaker 1: Stronger than forecast one nine percent. The forecast was for

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Speaker 1: one point seven percent. Looking at prices, the quarterly pc

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Speaker 1: e GDP number up by seven tenths of a percent,

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Speaker 1: which puts a year over year quarter on quarter number

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Speaker 1: at two point one percent. So a move up in

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Speaker 1: a significant move up in inflation, but that's on a

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Speaker 1: quarterly basis. Tomorrow we get the month over month numbers

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Speaker 1: that the Fed will be looking for. David someone bringing

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Speaker 1: nearman veravesh He is the chief economist at I h

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Speaker 1: S joining us from outside Boston, Massachusetts and there and

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Speaker 1: let me ask you about that personal consumption number first,

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Speaker 1: as Mike said, a bit stronger than expected. What do

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Speaker 1: you read into that, Well, certainly, the consumer is the

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Speaker 1: mainstay of the US economy. I mean, it's about of

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Speaker 1: the economy. So the good news is consumers are still spending,

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Speaker 1: perhaps not at quite the rate they were last year,

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Speaker 1: which was around three but they're still spending. I think

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Speaker 1: they pulled back just the pad not terribly worried about that.

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Speaker 1: The real drags are still inventories, which we're in the

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Speaker 1: middle of an inventory correction, and of course the continued

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Speaker 1: declines in especially energy sector capital spending, and of course

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Speaker 1: because of the strong doll of the net exports, but

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Speaker 1: consumer spending and housing are are pretty solid. Um. So

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Speaker 1: in that sense, I think the zero point five under

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Speaker 1: states or over states, should we say the weakness of

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Speaker 1: the economy, Uh, we're we're still pretty solid grounds. When

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Speaker 1: you look at the numbers, inventories fall to sixty point

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Speaker 1: nine from seventy eight point three, you can see the

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Speaker 1: effect there. Net exports not a big deal, five sixty

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Speaker 1: six point six billion, it was five fifty one point nine.

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Speaker 1: You can see the rate of change from previous quarters

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Speaker 1: has slowed down. Something I guess is the dollars stretch

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Speaker 1: to get a weaker But boy, the business just snapped

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Speaker 1: its first shut this time of gross private investment down

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Speaker 1: three and a half percent, nonresidential fixed down five point

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Speaker 1: nine percent, structures down ten point seven And as I remember,

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Speaker 1: correct me if I'm wrong there, I mean, but I

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Speaker 1: think oil rigs fall under structures, right, And that's that's

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Speaker 1: exactly right. That's a huge part of this story is

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Speaker 1: that that's where the real drag is still. I would

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Speaker 1: say through the through the first quarter, coming from remember

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Speaker 1: the huge plunge in oil prices in the first quarter,

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Speaker 1: and that recount that you're referring to drop further, which

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Speaker 1: which is an indication of the continued uh plunge in

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Speaker 1: capital spending in the energy sector. It's been huge. I mean,

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Speaker 1: it's like at thirty percent of what it was two

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Speaker 1: years ago, So it's like a seventy drop in capital spending.

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Speaker 1: That's really the biggest drag right now on the US economy.

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Speaker 1: How big a drag is what's going on globally? Again,

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Speaker 1: you look at the U s economy, it seems like

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Speaker 1: it's showing uh many signs of of strength here to

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Speaker 1: what degree is what's going on globally affecting this number?

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Speaker 1: It is of course having an effect, there's no question

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Speaker 1: about it, but again you have to put it in context.

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Speaker 1: Exports are about of GDP compared with the say the

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Speaker 1: seventy that's consumer spending. So there's an effect of course,

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Speaker 1: wheat growth overseas strong dollar hurting US, but it's not

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Speaker 1: a it's not a recovery killer. I guess there's the

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Speaker 1: way to say it. Well, if you leave out exports

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Speaker 1: and they leave out the effects of inventories as well.

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Speaker 1: You get real final sales of nine tenths of a percent.

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Speaker 1: That's the worst performance in a year. That's lower than

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Speaker 1: the fourth quarter, which was one point one percent. But

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Speaker 1: again I suppose that could be revised. Yeah, a lot

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Speaker 1: of that and and again a lot of that is

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Speaker 1: because of this energy sector of capital spending collapse that

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Speaker 1: we were just talking about. But you know, I have

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Speaker 1: to say these numbers are a little on the weak side.

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Speaker 1: The big surprise, perhaps, so the concern not a concern,

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Speaker 1: is yet consumer spending UH at at one point nine,

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Speaker 1: whereas you know in the third and the second and

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Speaker 1: third quarters, let's say last year, it was well over three.

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Speaker 1: So consumers seem to be pulling back a little bit.

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Speaker 1: I don't know how long that continues, because there's still

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Speaker 1: a lot of tail winds and a lot of things

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Speaker 1: helping consumers and job growth, good interest rates, low, gasoline

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Speaker 1: price is still low, even though they've come up quite

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Speaker 1: a bit. Consumer finances and strong shape. So I suspect

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Speaker 1: we'll go back to that sort of two and a

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Speaker 1: half to three percent range on consumer spending, which will

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Speaker 1: help the economy. Obviously, government spending year Uh. On defense

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Speaker 1: spending up one and a half percent. Payout defense spending down,

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Speaker 1: uh spending the state local level up though two right,

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Speaker 1: A lot of the a lot of the federal government.

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Speaker 1: I mean, it's a little bit of a surprise here because, uh,

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Speaker 1: perhaps if there is a super eyes it's it's on

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Speaker 1: that side. Is that. Uh yeah, they removed the so

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Speaker 1: called sequester if you're one of these caps on on spending.

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Speaker 1: So we had thought and as as others did, the

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Speaker 1: Congressional Budget Office and so forth, that would be a

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Speaker 1: bit of a spurt in spending in the first quarter.

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Speaker 1: It hasn't happened. Um, So uh, you know, it has

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Speaker 1: a little bit maybe on the non defense side, but

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Speaker 1: certainly defense is still a drag um. So yeah, the

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Speaker 1: federal spending, I would say it's probably one of the

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Speaker 1: bigger surprises in the number today. Well you wonder if

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Speaker 1: maybe and this is just speculation, and you know, the

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Speaker 1: all so much of the wars and in Afghanistan were funded, uh,

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Speaker 1: not as part of the general budget, but as supplementaries,

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Speaker 1: and so maybe it was difficult to account for the

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Speaker 1: winding down of that. Defense spending down three point six

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Speaker 1: percent in the first quarter of course, we'll we'll continue

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Speaker 1: our conversation with Nerriman Varius. Well, actually we will know,

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Speaker 1: we'll know. We thank the Ariman for joining us. We'll

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Speaker 1: continue our conversation with you in Justin Mollent the listeners

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Speaker 1: here on Bloomberg Surveillance, We're gonna go back and take

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Speaker 1: a look at the Bank of Japan decision or lack thereof.

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Speaker 1: John Vale of Nico is going to join us in

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Speaker 1: just a moment here on Bloomberg Surveillance. All right, it

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Speaker 1: is a thirty seven on a Wall Street to this

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Speaker 1: hour of Bloomberg Surveillance, brought you by BMW Montisco. Visit

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Speaker 1: BMW mont Kisco dot com. Here's Michael Barre with international

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Speaker 1: and national headlines. Mike, thank you very much. Bernie Sanders

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Speaker 1: says he's not quitting the race, but hundreds of staffers

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Speaker 1: are being laid off. Sanders spokesman says they will go

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Speaker 1: from about a thousand paid workers to more than three hundred.

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Speaker 1: The campaign says it's putting its resources in the remaining

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Speaker 1: states that have not held a vote, especially in Delegate

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Speaker 1: Rich California. Republican presidential candidate Donald Trump outlined as foreign

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Speaker 1: policy vision during a speech in Washington. Trump's formal speech

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Speaker 1: yesterday called for investing more to beef up the US military,

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Speaker 1: also called for scaling back US involvement around the world.

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Speaker 1: Trump also mocked Republican rival Ted Cruz for picking a

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Speaker 1: running mate even though no one has been selected to

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Speaker 1: be the party's presidential nominee. He has set a record

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Speaker 1: though he is the first presidential candidate in the history

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Speaker 1: of this country who's mathematically eliminated from becoming president who

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Speaker 1: chose a vice presidential candidate. Yesterday, Crews picked former Youwlett

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Speaker 1: Packard CEO and former presidential candidate Curley Fiorina to be

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Speaker 1: vice president. Global News twenty four hours a day, powered

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Speaker 1: by our twenty four hundred journalists and more than a

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Speaker 1: hundred fifty news bureaus from around the world. I'm Michael Barr,

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Speaker 1: Mike David, Thank you, mich Time now for the Bloomberg

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Speaker 1: NBC Sports Update with John Stashion. Thanks Mike. Becoming a

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Speaker 1: familiar script for the Islanders, John taveras a goal and

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Speaker 1: assists wrong play and goal from Thomas Gryce a win

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Speaker 1: in the state of Florida. After asking the Panthers, they

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Speaker 1: took Game one at Tampa Bay five to three, the

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Speaker 1: only difference for the first time since their Game one

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Speaker 1: win over Florida. They didn't need overtime. St Prince two

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Speaker 1: goals in a two and a half minute span league

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Speaker 1: first period to Variss goal in the second knocked out

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Speaker 1: lighting goalie Ben Bishop. The Aisles hung on. They were

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Speaker 1: outshot in the third period seventeen to five. Came to

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Speaker 1: his Saturday fourth strade year Anaheim blew a three two

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Speaker 1: league fourth funeral. They lost a game seven at home.

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Speaker 1: Nashville won two to one, NBA Charlotte one at Miami

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Speaker 1: and Portland one of p l A Clippers and the

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Speaker 1: Hornetson Blazers have three two leads. Golden State moves on

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Speaker 1: easily over Euston. Over the last game and a half

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Speaker 1: of that series, the Warriors outscored the Rockets by sixty points,

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Speaker 1: and they played that entire time without the injured Steph Curry.

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Speaker 1: The Knicks have interviewed ex Cleveland coach David Blatt to

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Speaker 1: be their new coach. Mets made it sixth straight wins

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Speaker 1: five two over Cincinnati and other. Neil Walker home run

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Speaker 1: is ninth. Matt Harvey six sittings for the win. Yankees

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Speaker 1: lost three two at Texas. Three it for Alex Rodriguez,

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Speaker 1: including career home run number six ninety, but not much else.

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Speaker 1: The Yankees have reached four runs in a game one

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Speaker 1: once in their last fifteen games. In Chicago tonight first

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Speaker 1: round of the NFL Draft, that Giants picked ten, the

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Speaker 1: Jets picked twenty at the Los Angeles Rams have the

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Speaker 1: first pick with the Bloomberg NBC Sports Up. I'm John Stamps.

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Speaker 1: All right, thank you, John. We are tracking the stock

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Speaker 1: markets ahead of the open today. Uh. We are not

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Speaker 1: seeing a lot of progress. It's a down day around

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Speaker 1: the world. Started in Tokyo with the Nick off by

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Speaker 1: three point six percent as the Bank of Japan decided

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Speaker 1: not to do anything, did not add additional stimulus. That

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Speaker 1: has Europe down. The Sock six hundred, off by three

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Speaker 1: uh almost four points right now one in US futures

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Speaker 1: will lower the SMP even he's off by fifteen the Dow,

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Speaker 1: even he's off by a hundred and forty four. We

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Speaker 1: will check in with John Vale of Nicos Securities and

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Speaker 1: find out how the whole idea of not adding stimulus

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Speaker 1: is going over in Japan. Come up, John Vale of

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Speaker 1: Nico Securities, as Mike mentioned, will be looking at the

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Speaker 1: Bank of Japan's decision, also the economic data surrounding that

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Speaker 1: decision that came out overnight here consumer prices, household spanning,

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Speaker 1: and industrial production all coming up next year on Bloomberg

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Speaker 1: Surveillance