1 00:00:03,560 --> 00:00:07,040 Speaker 1: This is Bloomberg Surveillance. What I think the markets are 2 00:00:07,040 --> 00:00:09,200 Speaker 1: doing is adjusting to the fact that things are going 3 00:00:09,280 --> 00:00:11,680 Speaker 1: to be lower longer. Interest rates going to stay lower 4 00:00:11,760 --> 00:00:15,880 Speaker 1: longer than people anticipate. Low inflation is very good for stocks. 5 00:00:15,880 --> 00:00:18,520 Speaker 1: That has proven to be over the last fifty plus year. 6 00:00:18,640 --> 00:00:21,360 Speaker 1: The biggest banks are still in my judgment, too big 7 00:00:21,360 --> 00:00:23,880 Speaker 1: to fail, and if we had multiple banks run into 8 00:00:23,880 --> 00:00:25,920 Speaker 1: trouble at the same time, they would still get bailed out. 9 00:00:26,000 --> 00:00:30,240 Speaker 1: Bloomberg Surveillance your link to the world of economics, finance, 10 00:00:30,320 --> 00:00:34,560 Speaker 1: and investment on Bloomberg Radio. Good morning everyone, Good morning worldwide. 11 00:00:34,560 --> 00:00:38,720 Speaker 1: The most amazing morning for global markets with Sterling leading 12 00:00:38,720 --> 00:00:41,440 Speaker 1: the way off the Bruxit fears, but other news as well. 13 00:00:41,880 --> 00:00:44,360 Speaker 1: We had a one thirty eight handle on cable right now, 14 00:00:44,400 --> 00:00:50,680 Speaker 1: one um on pound Sterling Bloomberg Surveillance this morning. It's 15 00:00:50,720 --> 00:00:55,720 Speaker 1: brunched by Cone Resident. Accounting. Tax advisory is economic policy changes, 16 00:00:55,760 --> 00:00:59,680 Speaker 1: So do business decisions? Speak to the experts the CONE 17 00:00:59,720 --> 00:01:02,200 Speaker 1: Resident for the forward thinking advice. You need find out 18 00:01:02,240 --> 00:01:06,840 Speaker 1: more at kon Resnik dot com. Without further ado, we 19 00:01:06,880 --> 00:01:09,880 Speaker 1: need to bring in Martin Feldstein of Harvard University. Of course, 20 00:01:10,760 --> 00:01:13,560 Speaker 1: the founder of the force of n b e r 21 00:01:13,680 --> 00:01:17,520 Speaker 1: R National Bureau of Economic Research, and leading acolytes of 22 00:01:17,640 --> 00:01:23,200 Speaker 1: ECT ten in teaching basic economics to young upstarts at Harvard. 23 00:01:23,240 --> 00:01:27,480 Speaker 1: Professor wonderful speak to you that we could talk to 24 00:01:27,520 --> 00:01:30,040 Speaker 1: you this morning. I think, Mike, we could go three, 25 00:01:30,120 --> 00:01:33,440 Speaker 1: if not four hours with a good professor. Let me 26 00:01:33,520 --> 00:01:36,800 Speaker 1: ask the fiscal question of the morning. If we all 27 00:01:36,840 --> 00:01:43,280 Speaker 1: assume our monetary institutions are exhausted and you're reading of 28 00:01:43,400 --> 00:01:49,160 Speaker 1: political history, is there any way of society or monetary 29 00:01:49,200 --> 00:01:57,400 Speaker 1: authorities jaw bone good politicians to affect fiscal policy. Well, 30 00:01:57,520 --> 00:02:00,240 Speaker 1: right now, I don't think we need to do any 31 00:02:00,280 --> 00:02:04,880 Speaker 1: new fiscal policy. So it's really a question about what's 32 00:02:04,880 --> 00:02:10,000 Speaker 1: going to happen in the future. Uh. If this recovery continues, 33 00:02:10,280 --> 00:02:14,880 Speaker 1: if the Fed normalizes interest rates, then it will be 34 00:02:15,160 --> 00:02:21,400 Speaker 1: just like any other uh past downturn. UH, and monetary 35 00:02:21,480 --> 00:02:24,120 Speaker 1: policy will be able to do the job. Will you 36 00:02:24,160 --> 00:02:26,480 Speaker 1: make an interesting point you wrote this week in the 37 00:02:26,480 --> 00:02:30,240 Speaker 1: Wall Street Journal that the Fed should continue to raise 38 00:02:30,400 --> 00:02:32,959 Speaker 1: interest rates, that the US economy is in better shape 39 00:02:33,480 --> 00:02:37,240 Speaker 1: than people think. And uh, you seem to be a 40 00:02:37,280 --> 00:02:40,880 Speaker 1: lonely voice out there calling for additional rate moves by 41 00:02:41,160 --> 00:02:44,640 Speaker 1: the central Bank. Well, of course, if if you're the 42 00:02:44,680 --> 00:02:48,280 Speaker 1: stock market or the investors in the stock market, you 43 00:02:48,360 --> 00:02:52,840 Speaker 1: want another pumping up of equity prices by the Fed. 44 00:02:52,919 --> 00:02:55,800 Speaker 1: But I think that's a dangerous strategy. I think the 45 00:02:55,840 --> 00:02:59,160 Speaker 1: Fed got it right last December when they said they 46 00:02:59,240 --> 00:03:04,080 Speaker 1: would have for increases this year, and I don't think 47 00:03:04,120 --> 00:03:07,720 Speaker 1: things have changed significantly since then. Might pick it up here, 48 00:03:07,760 --> 00:03:10,440 Speaker 1: but this is critical. How do you ret what Madame 49 00:03:10,520 --> 00:03:15,160 Speaker 1: Legarde says, which is Janet Yellen must worry about the 50 00:03:15,200 --> 00:03:21,080 Speaker 1: contagion of global slowdown and it's certainly not having a 51 00:03:21,120 --> 00:03:24,480 Speaker 1: big impact on the United States. If you look at 52 00:03:24,520 --> 00:03:28,959 Speaker 1: what's happened to our net exports the last two quarters 53 00:03:28,960 --> 00:03:32,120 Speaker 1: for which we have data, the cumulative effect over the 54 00:03:32,200 --> 00:03:36,120 Speaker 1: last two quarters was to reduce GDP by one quarter 55 00:03:36,240 --> 00:03:40,280 Speaker 1: of one percent. So this is not a problem for 56 00:03:40,320 --> 00:03:44,360 Speaker 1: the US. It is certainly true that Japan is in trouble, 57 00:03:44,600 --> 00:03:48,440 Speaker 1: that the Eurozone is in trouble. China has slowed down 58 00:03:48,520 --> 00:03:52,000 Speaker 1: a bit, but who wouldn't like to be growing at 59 00:03:52,040 --> 00:03:55,640 Speaker 1: six and a half percent? Are you afraid that the 60 00:03:55,840 --> 00:04:00,520 Speaker 1: Fed is afraid of financial markets? At this point, they're 61 00:04:00,560 --> 00:04:03,200 Speaker 1: acting as if they are The question is is that 62 00:04:03,200 --> 00:04:05,480 Speaker 1: what they're really afraid of, or is it that what 63 00:04:05,600 --> 00:04:09,680 Speaker 1: they're looking for is a further reason to keep money 64 00:04:10,600 --> 00:04:14,160 Speaker 1: very loose, keep interest rates super low so they can 65 00:04:14,200 --> 00:04:19,760 Speaker 1: squeeze another few tenths off the unemployment rate. Well, that's 66 00:04:19,880 --> 00:04:25,200 Speaker 1: that's what they say they want. But given the the 67 00:04:25,240 --> 00:04:27,640 Speaker 1: forecasts that the FED made for what happens to the 68 00:04:27,640 --> 00:04:32,800 Speaker 1: economy in two thousand sixteen, there doesn't seem to be 69 00:04:32,839 --> 00:04:35,599 Speaker 1: a reason to hold off in March, given the data 70 00:04:35,680 --> 00:04:38,680 Speaker 1: you're sighting. But they're giving every impression that they're going 71 00:04:38,720 --> 00:04:42,120 Speaker 1: to do that. Well, you're right, But as you said, 72 00:04:42,120 --> 00:04:44,240 Speaker 1: if you look at their forecast, if you look at 73 00:04:44,240 --> 00:04:47,920 Speaker 1: the administration's forecast, if you look at the CBO's forecast, 74 00:04:48,040 --> 00:04:51,200 Speaker 1: if you look at private forecast, they're all saying, this 75 00:04:51,279 --> 00:04:52,919 Speaker 1: is going to be a year in which we're going 76 00:04:53,000 --> 00:04:58,400 Speaker 1: to have two plus percent real GDP growth. So I 77 00:04:58,440 --> 00:05:01,880 Speaker 1: think the fetish about whether we have an inflation rate 78 00:05:02,400 --> 00:05:04,839 Speaker 1: measured the way the FED likes to measure it with 79 00:05:05,000 --> 00:05:09,440 Speaker 1: the PC deflator, whether we have one point three or 80 00:05:09,440 --> 00:05:13,680 Speaker 1: we have two. Gosh, who cares about that other than 81 00:05:13,720 --> 00:05:18,200 Speaker 1: the Fed? Can you put on your ten had and 82 00:05:18,279 --> 00:05:21,960 Speaker 1: explain why we are better off with higher interest rates 83 00:05:22,040 --> 00:05:25,400 Speaker 1: at this point. Well, I think the way I would 84 00:05:25,400 --> 00:05:28,719 Speaker 1: put it is, we're in trouble with these super low rates. 85 00:05:29,279 --> 00:05:33,480 Speaker 1: The super low rates helped us get this recovery, so 86 00:05:33,560 --> 00:05:39,560 Speaker 1: that was a good thing. But we are causing financial instability. 87 00:05:39,640 --> 00:05:46,880 Speaker 1: We're causing risk taking that could uh come home to 88 00:05:46,960 --> 00:05:50,599 Speaker 1: create serious problems for us in the future. So we're 89 00:05:50,600 --> 00:05:54,680 Speaker 1: seeing the stock market gradually unwinding. Do we want to 90 00:05:54,720 --> 00:05:58,839 Speaker 1: give it another another boost so that when it starts 91 00:05:58,839 --> 00:06:01,600 Speaker 1: to fall, it has to fall old faster? I don't 92 00:06:01,640 --> 00:06:05,440 Speaker 1: think so. We we've reached a point. And again with 93 00:06:05,440 --> 00:06:07,680 Speaker 1: the different attitudes that are out there, I think our 94 00:06:07,720 --> 00:06:11,440 Speaker 1: heads are spinning and our listeners as are spinning about 95 00:06:11,440 --> 00:06:15,120 Speaker 1: this polarity between what the FED should do. I go 96 00:06:15,200 --> 00:06:19,600 Speaker 1: back to global events. In your doing the history, professor 97 00:06:19,680 --> 00:06:24,280 Speaker 1: Feldstein or you're reading of history, Can there be a 98 00:06:24,320 --> 00:06:28,760 Speaker 1: global central banker? Is that something in our history? No, 99 00:06:28,960 --> 00:06:34,159 Speaker 1: we don't have a global monetary system. We have a 100 00:06:34,200 --> 00:06:39,640 Speaker 1: system in the Eurozone. We have a monetary policy for Japan, 101 00:06:39,839 --> 00:06:42,960 Speaker 1: for China and so on. So no, there is no 102 00:06:43,160 --> 00:06:48,720 Speaker 1: global monetary policy. But does the FED have any The 103 00:06:48,720 --> 00:06:51,440 Speaker 1: FED or the United States have any responsibility to the 104 00:06:51,440 --> 00:06:54,720 Speaker 1: rest of the world given our status as the world's 105 00:06:54,720 --> 00:07:01,880 Speaker 1: reserve currency. Uh, well, the status is a local reserve currency. 106 00:07:01,960 --> 00:07:05,240 Speaker 1: To the extent that that's important, it is to maintain 107 00:07:05,240 --> 00:07:09,640 Speaker 1: the value of the currency, and that means not allowing 108 00:07:09,680 --> 00:07:13,080 Speaker 1: inflation to get out of hand. And right now inflation 109 00:07:13,240 --> 00:07:18,040 Speaker 1: is low. Um, it's it's not worryingly low, but it's low. 110 00:07:18,240 --> 00:07:21,040 Speaker 1: But it's beginning to pick up. And we're seeing that 111 00:07:21,160 --> 00:07:24,840 Speaker 1: in wages and we're seeing that in prices. So the 112 00:07:24,960 --> 00:07:28,680 Speaker 1: core cp I was up two point two percent relative 113 00:07:28,720 --> 00:07:33,560 Speaker 1: to twelve months ago. It's picking up speed, average hourly 114 00:07:33,640 --> 00:07:37,680 Speaker 1: earnings picking up speed. So to the extent that we 115 00:07:37,760 --> 00:07:41,960 Speaker 1: have an obligation, it's to prevent future inflation. Professor Felstone, 116 00:07:41,960 --> 00:07:43,520 Speaker 1: I want to switch gears here. I know Mike's got 117 00:07:43,560 --> 00:07:45,320 Speaker 1: a bunch of themes he wants to address as well 118 00:07:45,320 --> 00:07:47,840 Speaker 1: this morning. I think all of our listeners would like 119 00:07:47,880 --> 00:07:51,920 Speaker 1: to know your experience how you plug in future economic 120 00:07:51,960 --> 00:07:55,480 Speaker 1: growth into our budget calculations. We've got a great deficit 121 00:07:55,520 --> 00:07:58,920 Speaker 1: to GDP right now, but real concerns moving forward. CBO 122 00:07:59,000 --> 00:08:02,080 Speaker 1: and others sad testing UM to be kind to use 123 00:08:02,120 --> 00:08:05,360 Speaker 1: the cliche storm clouds on the horizon. How can we 124 00:08:05,400 --> 00:08:08,880 Speaker 1: know where the horizon is if we're plugging in GDP 125 00:08:09,200 --> 00:08:12,440 Speaker 1: estimates that are all over the map, depending on one's 126 00:08:12,440 --> 00:08:16,960 Speaker 1: political persuasion. Well, of course, what matters is the medium 127 00:08:17,000 --> 00:08:19,320 Speaker 1: and longer term, not what's going to happen for the 128 00:08:19,360 --> 00:08:23,320 Speaker 1: next quarter or two quarters. So what's going to happen 129 00:08:23,440 --> 00:08:26,480 Speaker 1: to the debt to GDP ratio, which is the thing 130 00:08:26,560 --> 00:08:30,360 Speaker 1: I worry about um depends on what's going to happen 131 00:08:30,440 --> 00:08:34,240 Speaker 1: to future nominal GDP growth and what's going to happen 132 00:08:34,320 --> 00:08:38,280 Speaker 1: to the deficit. So what we've seen is that the 133 00:08:38,360 --> 00:08:42,360 Speaker 1: debt to GDP ratio has more than doubled in the 134 00:08:42,440 --> 00:08:46,360 Speaker 1: last ten years. Used to be thirty five percent. That's okay, 135 00:08:46,440 --> 00:08:50,079 Speaker 1: we can live with that, But now it's over and 136 00:08:50,200 --> 00:08:53,320 Speaker 1: the Congressional Budget Office tells us ten years from now 137 00:08:53,400 --> 00:08:56,560 Speaker 1: it's going to be six percent. If anything, I think 138 00:08:56,600 --> 00:09:00,600 Speaker 1: that's too optimistic. So where it goes depend on just 139 00:09:00,760 --> 00:09:05,800 Speaker 1: two numbers. What's happening to the deficit ratio share of 140 00:09:06,240 --> 00:09:09,880 Speaker 1: GDP that our deficit is, and second, what's happening to 141 00:09:10,000 --> 00:09:15,400 Speaker 1: nominal GDP? And I think the CBO's estimate and they 142 00:09:15,480 --> 00:09:17,439 Speaker 1: try to do the best job they and I think 143 00:09:17,480 --> 00:09:20,439 Speaker 1: they're straight shooters. But I think what they're telling us 144 00:09:20,720 --> 00:09:23,400 Speaker 1: is that based on the assumption that we're going to 145 00:09:23,480 --> 00:09:27,360 Speaker 1: be growing in nominal terms at about four two percent 146 00:09:27,440 --> 00:09:31,960 Speaker 1: real plus two percent inflation, and that deficits are gonna 147 00:09:32,080 --> 00:09:37,080 Speaker 1: come up only slowly, given that there putting us on 148 00:09:37,160 --> 00:09:41,679 Speaker 1: a path toward a hundred percent of GDP reaching scent 149 00:09:41,800 --> 00:09:44,680 Speaker 1: of GDP in the next ten years. I think that's 150 00:09:44,720 --> 00:09:50,600 Speaker 1: too optimistice with this one, like you've got like eight things. Yes, 151 00:09:50,640 --> 00:09:52,400 Speaker 1: I do. As as we come back, I want to 152 00:09:52,480 --> 00:09:54,080 Speaker 1: jump right in to follow up on what he was 153 00:09:54,160 --> 00:09:56,320 Speaker 1: just saying about the debt to GDP ratio, but I 154 00:09:56,360 --> 00:09:59,880 Speaker 1: did need to pass this along. Jeffrey Lacker, the Richmond 155 00:10:00,040 --> 00:10:03,640 Speaker 1: FED president, speaking in Baltimore, says there is no evidence 156 00:10:04,040 --> 00:10:08,439 Speaker 1: that a US recession is imminent. He thinks that the 157 00:10:08,559 --> 00:10:11,800 Speaker 1: decline in inflation expectations maybe more a decline in the 158 00:10:11,920 --> 00:10:15,000 Speaker 1: term premium than anything else. What does that mean? That 159 00:10:15,080 --> 00:10:19,439 Speaker 1: means the that you're not getting compensated as much for 160 00:10:19,480 --> 00:10:23,079 Speaker 1: holding onto things for a longer time, not necessarily because 161 00:10:23,080 --> 00:10:26,400 Speaker 1: there's higher information. My church, John Tucker, my term premium 162 00:10:26,520 --> 00:10:32,839 Speaker 1: is is under the mattress in a matter of months. 163 00:10:33,120 --> 00:10:35,160 Speaker 1: I was gonna say minutes or hours. We're going to 164 00:10:35,240 --> 00:10:39,520 Speaker 1: continue with Professor Felt Signy of Harvard University, a little 165 00:10:39,600 --> 00:10:42,880 Speaker 1: bit better tape than an hour ago. Futures negative fifteen, 166 00:10:43,000 --> 00:10:48,160 Speaker 1: DAL futures negative one thirty six, Sterly one nine oh seven. 167 00:10:51,880 --> 00:10:54,120 Speaker 1: All right, let's bring John Tucker in now with a 168 00:10:54,200 --> 00:10:57,240 Speaker 1: world in national headlines, John Well Donald Trump getting a 169 00:10:57,240 --> 00:11:00,480 Speaker 1: major boost heading into Super Tuesday contest next week. Is 170 00:11:00,559 --> 00:11:04,000 Speaker 1: dominating victory in the Nevada Caucus is pushes him further 171 00:11:04,080 --> 00:11:07,520 Speaker 1: out ahead of his nearest competitors for the Republican presidential nomination. 172 00:11:08,200 --> 00:11:10,360 Speaker 1: Still a lot left to resolve, has the effective date 173 00:11:10,400 --> 00:11:14,520 Speaker 1: of Assyrian truce edges closer, the agreement range shaky at best, 174 00:11:14,960 --> 00:11:17,920 Speaker 1: The US Russia proposed truce is supposed to begin funny, 175 00:11:18,040 --> 00:11:23,200 Speaker 1: Major questions or enforcement are still unresolved. And Coca Cola's 176 00:11:23,280 --> 00:11:26,600 Speaker 1: latest bid to win European Union trademark protection for a 177 00:11:26,640 --> 00:11:30,640 Speaker 1: new version of its iconic bottle has fallen flat. You 178 00:11:30,840 --> 00:11:36,560 Speaker 1: judges say it's curvaceous design isn't distinctive enough. Global News 179 00:11:36,679 --> 00:11:40,480 Speaker 1: twenty four hours a day, powered by our fouralist You 180 00:11:40,600 --> 00:11:42,800 Speaker 1: heard what I said in more than one fifty news 181 00:11:42,800 --> 00:11:48,600 Speaker 1: bureaus around the world. I'm John Tucker, curvaceous, curvacious, Okay, 182 00:11:48,880 --> 00:11:57,319 Speaker 1: YouTube Okay, Futures negative, Futures negative. We will return with 183 00:11:57,480 --> 00:12:02,160 Speaker 1: Martin Feldstein on the nation's debt and deficit Bloomberg Surveillance. 184 00:12:06,120 --> 00:12:08,080 Speaker 1: This news update brought to you by your Mercedes Benz 185 00:12:08,080 --> 00:12:10,120 Speaker 1: Tri State Dealer. When it comes to winter elements, put 186 00:12:10,160 --> 00:12:12,640 Speaker 1: your best four wheels forward with Mercedes Benz Formatic All 187 00:12:12,640 --> 00:12:15,240 Speaker 1: wheel Drive visitor Mercedes Benz Tri State Dealer for a 188 00:12:15,320 --> 00:12:25,080 Speaker 1: test drive. Today. Global Business News twenty four hours a day. 189 00:12:25,280 --> 00:12:28,240 Speaker 1: If Bloomberg dot Com, the Radio plus Mobile Act and 190 00:12:28,360 --> 00:12:32,200 Speaker 1: on your radio. This is a Bloomberg Business flash and 191 00:12:32,240 --> 00:12:35,360 Speaker 1: I'm Karen Moscow. Future is moving lower this morning. Let's 192 00:12:35,360 --> 00:12:37,520 Speaker 1: go to the First Word Breaking news desk for today's 193 00:12:37,559 --> 00:12:40,640 Speaker 1: morning call, and here's Bill Maloney. Good morning, Bill, Good 194 00:12:40,679 --> 00:12:44,120 Speaker 1: morning Karen. US features are under pressure today. Doubt you 195 00:12:44,240 --> 00:12:46,319 Speaker 1: just currently lowered by a hundred and forty three points 196 00:12:46,320 --> 00:12:50,240 Speaker 1: sp STROP sixteen and as a futures fall by forty nine. 197 00:12:50,480 --> 00:12:53,080 Speaker 1: The US ten year falls to one point seven percent, 198 00:12:53,400 --> 00:12:55,840 Speaker 1: and Europe is also training lower, led by gray than 199 00:12:55,880 --> 00:12:59,599 Speaker 1: two percent losses in France, Germany, Italy and Spain. The 200 00:12:59,720 --> 00:13:02,560 Speaker 1: pretty pound sinks to its lowest since two thousand and nine. 201 00:13:02,840 --> 00:13:07,920 Speaker 1: Will Credit Agricole lowered Brazilian GDP forecast to a minus 202 00:13:08,120 --> 00:13:11,200 Speaker 1: three point eight per cent. On the US economic front, 203 00:13:11,280 --> 00:13:14,280 Speaker 1: night forty five Market Unit Services and Composite p m 204 00:13:14,320 --> 00:13:17,040 Speaker 1: I at ten o'clock new home sales and at ten 205 00:13:17,120 --> 00:13:21,120 Speaker 1: thirty dewly energy numbers Regarding earnings this morning, low z 206 00:13:21,160 --> 00:13:25,800 Speaker 1: EPs was in line Mobile I B and target EPs missed. 207 00:13:26,200 --> 00:13:30,120 Speaker 1: Finally some yearly walsheet upgrades and downgrades at Jeffreys PTC 208 00:13:30,280 --> 00:13:34,040 Speaker 1: Therapeutics upgraded to hold, Radius Health cut to hold at 209 00:13:34,040 --> 00:13:37,920 Speaker 1: Goldman Sachs. Norwegian Cruise Line raised to neutral, Macy's cut 210 00:13:37,960 --> 00:13:40,520 Speaker 1: the whole versus by over at steeple Ford, cut to 211 00:13:40,640 --> 00:13:43,840 Speaker 1: underperform at Created SUITEE, and Find the Drill Clip cut 212 00:13:43,840 --> 00:13:46,839 Speaker 1: to neutral over at sun Trust. Live from the first 213 00:13:46,840 --> 00:13:49,400 Speaker 1: breaking news ask go on, Bill Maloney, Karen, All right, 214 00:13:49,440 --> 00:13:51,920 Speaker 1: thanks billan to hear live breaking news over your Bloomberg 215 00:13:51,960 --> 00:13:54,439 Speaker 1: type squawk ago on your terminal. That's s qu A 216 00:13:54,679 --> 00:13:57,160 Speaker 1: w K go and that's a Bloomberg business flash. Tom 217 00:13:57,240 --> 00:14:01,480 Speaker 1: and Mike, Karen, thanks so much Sterling chen that March 218 00:14:02,320 --> 00:14:06,000 Speaker 1: two thousand nine low for Sterling weakness one thirties seven 219 00:14:06,640 --> 00:14:10,520 Speaker 1: fifty three was daily low. Bloomberg Surveillance runch you by 220 00:14:10,559 --> 00:14:15,720 Speaker 1: Investco factor based strategies can help investors focus on high quality, 221 00:14:15,880 --> 00:14:19,440 Speaker 1: low volatility and more. Learn more and investco dot com 222 00:14:20,040 --> 00:14:24,520 Speaker 1: slash high conviction. Michael, we have an esteemed guest on 223 00:14:24,640 --> 00:14:27,680 Speaker 1: our debt and on our deficit, fell sign the Harvard 224 00:14:27,800 --> 00:14:33,680 Speaker 1: University Economics professor and Chairman Emeritus, National Bureau for Economic Research. 225 00:14:34,160 --> 00:14:36,960 Speaker 1: Before the break party, you were talking about the debt 226 00:14:37,000 --> 00:14:43,760 Speaker 1: to GDP ratio becoming worrisome, and given the austerity that 227 00:14:44,760 --> 00:14:48,360 Speaker 1: we have been through, and given the fact that spending 228 00:14:48,440 --> 00:14:52,360 Speaker 1: is gonna have to rise as entitlements rise with the 229 00:14:52,400 --> 00:14:57,240 Speaker 1: baby boomers retiring, I would presume that your argument would be, 230 00:14:58,640 --> 00:15:02,080 Speaker 1: it's less about lowering the debt than raising the GDP 231 00:15:02,720 --> 00:15:06,200 Speaker 1: to try to take care of the problem. Well, it 232 00:15:06,240 --> 00:15:09,560 Speaker 1: would be nice to get faster GDP growth, and that's 233 00:15:09,600 --> 00:15:13,400 Speaker 1: obviously an important goal in itself, but in terms of 234 00:15:13,520 --> 00:15:17,600 Speaker 1: reducing the debt to GDP ratio going forward, it has 235 00:15:17,680 --> 00:15:23,400 Speaker 1: to be done by either cutting spending, raising revenue, or 236 00:15:23,520 --> 00:15:26,920 Speaker 1: some combination of the two. You cannot continue to run 237 00:15:27,440 --> 00:15:31,960 Speaker 1: primary deficits and expect to see the debt GDP ratio 238 00:15:32,160 --> 00:15:38,120 Speaker 1: come down. Where would you cut um if what's left? Well, 239 00:15:38,200 --> 00:15:40,040 Speaker 1: that's a very good way to put it, because if 240 00:15:40,120 --> 00:15:44,080 Speaker 1: you look at the outlook for defense, and you look 241 00:15:44,120 --> 00:15:47,880 Speaker 1: at the outlook for non defense so called discretionary meaning 242 00:15:47,920 --> 00:15:53,040 Speaker 1: annually appropriated programs, both of those are now forecast to 243 00:15:53,160 --> 00:15:56,000 Speaker 1: head down to two and a half percent of GDP. 244 00:15:56,600 --> 00:15:59,560 Speaker 1: Those are the lowest numbers we've seen for spending in 245 00:15:59,640 --> 00:16:04,320 Speaker 1: those programs since World War Two. So what that means 246 00:16:04,480 --> 00:16:07,360 Speaker 1: is that the only way to slow the growth of 247 00:16:07,440 --> 00:16:12,200 Speaker 1: government spending is to slow the growth of so called entitlements, 248 00:16:12,320 --> 00:16:16,800 Speaker 1: meaning Social Security, Medicare, and Medicaid. And now, folks would 249 00:16:16,840 --> 00:16:19,760 Speaker 1: go where we fear to tread a Professor Feldstein. You 250 00:16:19,840 --> 00:16:23,000 Speaker 1: are known to be of the elephant persuasion within your 251 00:16:23,080 --> 00:16:27,200 Speaker 1: service to America and your service particularly with President Reagan. 252 00:16:27,800 --> 00:16:29,480 Speaker 1: Have any of them, I mean, I assume you're not 253 00:16:29,640 --> 00:16:34,080 Speaker 1: campaigning for the senator from Vermont super Tuesday in Massachusetts. 254 00:16:34,360 --> 00:16:36,280 Speaker 1: You got okay, I got it right? Good, I got 255 00:16:36,440 --> 00:16:39,640 Speaker 1: one thing right today? Have any of the candidates called 256 00:16:39,760 --> 00:16:44,760 Speaker 1: upon you for fiscal wisdom. Yes. I I spent some 257 00:16:45,000 --> 00:16:49,680 Speaker 1: time talking with Jeb Bush, and you can work them 258 00:16:49,800 --> 00:16:54,960 Speaker 1: in the country. Is there any Yeah, I mean if 259 00:16:54,960 --> 00:16:57,720 Speaker 1: you want to name names, fine, If not, just give 260 00:16:57,800 --> 00:17:00,440 Speaker 1: us policies. But is there anybody out there who has 261 00:17:00,480 --> 00:17:03,880 Speaker 1: suggested anything by way of an economic policy over the 262 00:17:03,960 --> 00:17:06,359 Speaker 1: next four years that would do anything for the country. 263 00:17:06,880 --> 00:17:11,840 Speaker 1: Several of the Republicans have said quietly that, um, whatever 264 00:17:11,960 --> 00:17:14,760 Speaker 1: else they do, we're going to have to going forward 265 00:17:14,840 --> 00:17:20,080 Speaker 1: slow the growth of Social Security benefits. So Bush said that, 266 00:17:20,880 --> 00:17:26,560 Speaker 1: Christie said that, others have said that. So and I think, um, 267 00:17:27,040 --> 00:17:31,639 Speaker 1: I think that has to happen. What about uh in 268 00:17:32,040 --> 00:17:35,640 Speaker 1: the short run to raise the GDP? To get back 269 00:17:35,640 --> 00:17:38,000 Speaker 1: to what I was talking about, Is there any policy 270 00:17:38,119 --> 00:17:41,359 Speaker 1: that you would advocate or that anybody is talking about 271 00:17:41,400 --> 00:17:44,440 Speaker 1: at this point? Well, I think some of the tax 272 00:17:44,560 --> 00:17:48,000 Speaker 1: reforms that have been discussed would help. I think if 273 00:17:48,080 --> 00:17:52,680 Speaker 1: we changed the corporate tax rules, we got rid of 274 00:17:52,840 --> 00:17:57,000 Speaker 1: this strange system that only the United States practices and 275 00:17:57,119 --> 00:18:01,800 Speaker 1: which funds coming back from UM from U S subsidiaries 276 00:18:01,840 --> 00:18:05,240 Speaker 1: abroad get hit with the second round of taxation in 277 00:18:05,280 --> 00:18:11,280 Speaker 1: the US. I think that prevents companies or discourages companies 278 00:18:11,400 --> 00:18:14,879 Speaker 1: from bringing those funds back, and that hurts the growth 279 00:18:15,080 --> 00:18:19,639 Speaker 1: of corporate investment and the economy in the United States. 280 00:18:19,720 --> 00:18:24,960 Speaker 1: So moving to a so called UM global system of 281 00:18:25,400 --> 00:18:30,200 Speaker 1: taxation UM the way other countries do, I think would 282 00:18:30,280 --> 00:18:33,800 Speaker 1: be something that would help, not overnight, not in the 283 00:18:33,880 --> 00:18:39,879 Speaker 1: first quarter, but over the next several years. Are you, 284 00:18:40,760 --> 00:18:43,840 Speaker 1: as we go into the rest of two thousands sixteen, 285 00:18:43,920 --> 00:18:48,680 Speaker 1: optimistic or pessimistic given all the uncertainty out there? Well, 286 00:18:48,760 --> 00:18:53,000 Speaker 1: I'm as I look at the election situation, I'm pretty pessimistic. 287 00:18:53,600 --> 00:18:58,879 Speaker 1: I don't know what would happen if Trump becomes president uh, 288 00:18:59,080 --> 00:19:02,919 Speaker 1: and I don't like what the two leading Democrats are saying. 289 00:19:03,560 --> 00:19:07,480 Speaker 1: So it's hard to be optimistic uh in that environment. 290 00:19:07,600 --> 00:19:10,919 Speaker 1: As far as the UH and again that's that doesn't 291 00:19:11,000 --> 00:19:15,159 Speaker 1: begin to happen until two thousand and seventeen and beyond, 292 00:19:16,040 --> 00:19:19,280 Speaker 1: but it puts a cloud over things. In the meantime. 293 00:19:19,720 --> 00:19:22,040 Speaker 1: We have too many things we did not speak of, 294 00:19:22,160 --> 00:19:26,320 Speaker 1: including your important writings, Professor, on the future of Europe, 295 00:19:26,400 --> 00:19:28,040 Speaker 1: and that is something that we hope to get to 296 00:19:28,200 --> 00:19:31,919 Speaker 1: with you next time. Martin Feldstein is a ten emeritus 297 00:19:32,040 --> 00:19:36,000 Speaker 1: professor at Harvard University and of course serve with the 298 00:19:36,040 --> 00:19:40,120 Speaker 1: Reagan administration, among other public duties. A ten year yield 299 00:19:40,200 --> 00:19:43,840 Speaker 1: one point seven in by two basis points cerve flattening 300 00:19:43,920 --> 00:19:47,080 Speaker 1: this morning, well under a hundred beats. The difference in 301 00:19:47,200 --> 00:19:50,800 Speaker 1: yale between the ten year and the two year basis 302 00:19:50,840 --> 00:19:55,440 Speaker 1: points point nine seven of a percentage point. That's something 303 00:19:55,520 --> 00:19:59,639 Speaker 1: that bears watching. Sterling run the Sterling Watch one eleven. 304 00:20:00,520 --> 00:20:07,560 Speaker 1: This is Bloomberg Surveillance coming up there, with all due respect, 305 00:20:07,600 --> 00:20:09,560 Speaker 1: highlight brought you by Landrover. If it's in your nature 306 00:20:09,600 --> 00:20:11,240 Speaker 1: to cast off the every day and seek adventure, the 307 00:20:11,280 --> 00:20:13,960 Speaker 1: Discovery Sport was built to help your search. Visit Landbrover 308 00:20:14,000 --> 00:20:15,960 Speaker 1: tri state dot com for special offers during the only 309 00:20:16,000 --> 00:20:25,120 Speaker 1: Adventure Sales event. Landrover via broadcasting live to New York, 310 00:20:25,240 --> 00:20:30,800 Speaker 1: Kloomberg eleventh, to Washington, d C, Bloomberg to Boston, Bloomberg 311 00:20:30,840 --> 00:20:35,440 Speaker 1: twelve Honors, to San Francisco, Bloomberg to the Country Series 312 00:20:35,960 --> 00:20:39,400 Speaker 1: Channel one nine and around the globe the Bloomberg Radio 313 00:20:39,480 --> 00:20:44,720 Speaker 1: Plus happened Bloomberg dot Com. This is Bloomberg Surveillance. Good morning, 314 00:20:44,760 --> 00:20:47,440 Speaker 1: It's at thirty on Wall Street and Michael McKee, along 315 00:20:47,520 --> 00:20:51,080 Speaker 1: with Tom Keene Economic Indicators brought to you by Commonwealth 316 00:20:51,119 --> 00:20:53,840 Speaker 1: Financial Network. When it's time to change the conversation, talk 317 00:20:53,880 --> 00:20:56,200 Speaker 1: with the broker dealer r I A that is ready 318 00:20:56,280 --> 00:21:00,680 Speaker 1: to listen, Call six or visit common Wealth dot com 319 00:21:01,240 --> 00:21:04,719 Speaker 1: to learn more. The numbers that we're going to care 320 00:21:04,760 --> 00:21:07,280 Speaker 1: about today won't be coming out for about an hour 321 00:21:07,320 --> 00:21:09,840 Speaker 1: and a half. New home sales at ten o'clock this morning. 322 00:21:10,160 --> 00:21:14,160 Speaker 1: The forecast is for a five and twenty thousand annual rate. 323 00:21:14,280 --> 00:21:16,960 Speaker 1: That would be a four point four percent decline, But 324 00:21:17,040 --> 00:21:20,320 Speaker 1: as we have seen, home sales seem to surprise to 325 00:21:20,400 --> 00:21:23,200 Speaker 1: the upside or downside each month. We have also heard 326 00:21:23,240 --> 00:21:26,840 Speaker 1: from Jeffrey Lacker this morning suggesting there is still a 327 00:21:26,920 --> 00:21:30,840 Speaker 1: reason for the FED to raise rates and that inflation 328 00:21:31,200 --> 00:21:35,320 Speaker 1: is not dead. Could you see Diane Swonk as president 329 00:21:35,400 --> 00:21:39,399 Speaker 1: of a FED, like a regional Fed? Oh? Absolutely, that 330 00:21:39,440 --> 00:21:41,840 Speaker 1: would be something we're gonna have to we can. You 331 00:21:41,920 --> 00:21:45,320 Speaker 1: know she can run in the primaries for that. Um 332 00:21:45,680 --> 00:21:49,840 Speaker 1: she is? She is now the head. I didn't Diana, 333 00:21:49,920 --> 00:21:54,080 Speaker 1: you are you the president? Are you the chief? You know? 334 00:21:54,200 --> 00:21:59,040 Speaker 1: I can be whatever I want. Ims We've got our own. 335 00:21:59,160 --> 00:22:02,960 Speaker 1: We've got our own. Show gratulations. Congratulations on that. Thank you. 336 00:22:03,280 --> 00:22:06,800 Speaker 1: It's terrific. All right, Um, what do we know here? 337 00:22:07,240 --> 00:22:13,000 Speaker 1: The Fed in December? So we might be interested in 338 00:22:13,160 --> 00:22:16,320 Speaker 1: raising rates as much as four times this year because 339 00:22:16,960 --> 00:22:19,520 Speaker 1: I'm gonna see GDP for two thousand and sixteen running 340 00:22:19,520 --> 00:22:21,560 Speaker 1: at two point four percent, the unemployment rate is going 341 00:22:21,600 --> 00:22:24,040 Speaker 1: to fall to four point seven percent, and inflation is 342 00:22:24,560 --> 00:22:29,159 Speaker 1: going to pick up. What's happened since the Fed met GDP, 343 00:22:29,240 --> 00:22:31,640 Speaker 1: according to the Atlanta Fed is now running at two 344 00:22:31,680 --> 00:22:35,280 Speaker 1: point six percent for the first quarter, unemployment has fallen 345 00:22:35,400 --> 00:22:38,400 Speaker 1: to four point nine percent, and inflation. We haven't got 346 00:22:38,720 --> 00:22:41,560 Speaker 1: the pc number the Fed uses till Friday, but the 347 00:22:41,680 --> 00:22:48,760 Speaker 1: CPI has gone higher. So what's wrong with the feds 348 00:22:48,800 --> 00:22:53,040 Speaker 1: initial forecast? Why is everybody on Wall Street suggesting that 349 00:22:53,200 --> 00:22:56,280 Speaker 1: they're idiots? You know? I mean a couple of things here. 350 00:22:56,440 --> 00:22:59,800 Speaker 1: I think five communications have really really suffered. Now Lost 351 00:23:00,040 --> 00:23:03,800 Speaker 1: has been through really a turbulent period, let's as an understatement, 352 00:23:03,920 --> 00:23:06,040 Speaker 1: since the beginning of the year, and as they went 353 00:23:06,080 --> 00:23:08,200 Speaker 1: through that period. I think of the Fed and Wall 354 00:23:08,280 --> 00:23:10,879 Speaker 1: Street is sort of in this kind of relationship, almost 355 00:23:10,920 --> 00:23:14,240 Speaker 1: like being married, and they don't want to be married sometimes, um, 356 00:23:14,760 --> 00:23:16,840 Speaker 1: as some people don't. They they're in desperate meat of 357 00:23:16,840 --> 00:23:19,880 Speaker 1: a marriage counselor and in the communication between each other. 358 00:23:20,000 --> 00:23:23,520 Speaker 1: The first thing in solving that communication gap, if you're 359 00:23:23,520 --> 00:23:26,560 Speaker 1: in a relationship, then I'm and I'm married and I 360 00:23:26,600 --> 00:23:28,879 Speaker 1: know what this is like, um, is you have to 361 00:23:28,920 --> 00:23:31,960 Speaker 1: acknowledge the other person's complaints, right, you know, I gotta 362 00:23:31,960 --> 00:23:34,639 Speaker 1: say to say, hey, I hear you. And at the 363 00:23:34,680 --> 00:23:37,600 Speaker 1: beginning of the year, were you at my house listen? 364 00:23:40,280 --> 00:23:42,040 Speaker 1: You know, I think if I have an eighteen year 365 00:23:42,040 --> 00:23:44,000 Speaker 1: old son, at one point in time, he yelled at 366 00:23:44,040 --> 00:23:46,560 Speaker 1: me and he said, I'm yelling because I don't feel heard. 367 00:23:47,119 --> 00:23:49,000 Speaker 1: Now I realized as an eighteen year old that was 368 00:23:49,040 --> 00:23:51,280 Speaker 1: pretty insightful on his partner. Stopped me in my tracks, 369 00:23:51,480 --> 00:23:53,760 Speaker 1: and he was right. I also realized they probably paid 370 00:23:53,800 --> 00:23:56,560 Speaker 1: for too much therapy for him. Um. But I think 371 00:23:56,680 --> 00:23:59,720 Speaker 1: it's really important that you know. Law Street wasn't being heard. 372 00:24:00,040 --> 00:24:01,960 Speaker 1: The FED was turning in a dusk ear to their cries. 373 00:24:02,040 --> 00:24:03,960 Speaker 1: At the beginning of the year, they're saying, listen, the 374 00:24:04,080 --> 00:24:05,920 Speaker 1: U s a commun looks okay, but we're really scared. 375 00:24:05,920 --> 00:24:08,439 Speaker 1: There's things going on abroad that are affecting our profits, 376 00:24:08,680 --> 00:24:10,399 Speaker 1: that are affecting us and could come back com I 377 00:24:10,480 --> 00:24:13,440 Speaker 1: mean what happens abroad doesn't stay abroad, and the FED 378 00:24:13,560 --> 00:24:16,639 Speaker 1: really has done a poor job of sort of acknowledging 379 00:24:17,600 --> 00:24:20,359 Speaker 1: that reality that Wall Streets going through without what is 380 00:24:20,960 --> 00:24:23,080 Speaker 1: to us is that the reality is Wall Street really 381 00:24:23,080 --> 00:24:25,360 Speaker 1: afraid of what's going on abroad or are they basically 382 00:24:25,440 --> 00:24:29,520 Speaker 1: saying over the last seven years we overpriced assets because 383 00:24:29,600 --> 00:24:32,600 Speaker 1: the FED stuffed cash into our pockets and now we 384 00:24:32,680 --> 00:24:34,240 Speaker 1: know we have to adjust it. It's going to be 385 00:24:34,280 --> 00:24:36,600 Speaker 1: painful for us, and we don't want to do that. Well, 386 00:24:36,920 --> 00:24:39,200 Speaker 1: some of that too, let's say it relationships to have 387 00:24:39,280 --> 00:24:43,479 Speaker 1: their child is side too. Um. But you know, fairness, Um, 388 00:24:43,800 --> 00:24:45,920 Speaker 1: this is a period that said started raising rates and 389 00:24:46,240 --> 00:24:48,119 Speaker 1: settle banks don't have a good history of its not 390 00:24:48,240 --> 00:24:50,440 Speaker 1: having to go back to euro again, and some of 391 00:24:50,520 --> 00:24:52,560 Speaker 1: the Feds think that's no problem. I think it's a 392 00:24:52,600 --> 00:24:54,760 Speaker 1: credibility issue. Once you go off of zero, you don't 393 00:24:54,760 --> 00:24:56,159 Speaker 1: want to have to turn around and go back to 394 00:24:56,280 --> 00:24:58,600 Speaker 1: zero quickly. I think the FED has lost some of 395 00:24:58,600 --> 00:25:01,800 Speaker 1: their credibility. I official lacking that Janet Allen took. I 396 00:25:01,840 --> 00:25:04,960 Speaker 1: think her speech actually did make a major step in 397 00:25:05,040 --> 00:25:07,800 Speaker 1: trying to acknowledge what's going on in the concerns and 398 00:25:07,920 --> 00:25:10,840 Speaker 1: uncertainty out there that Walsted is facing, the broader use 399 00:25:10,920 --> 00:25:13,239 Speaker 1: economy is facing. But the shell lacking she took by 400 00:25:13,359 --> 00:25:16,120 Speaker 1: senators in the House that was not did not look good. 401 00:25:16,480 --> 00:25:18,639 Speaker 1: We know we're not in a recession. We're that interviewed. 402 00:25:18,640 --> 00:25:21,120 Speaker 1: The interview, and I don't agree with a touchy feel 403 00:25:21,119 --> 00:25:24,479 Speaker 1: the interpretation of what policy is versus markets. I think 404 00:25:24,520 --> 00:25:28,000 Speaker 1: the markets are just pricing and lower nominal GDP. Lacey 405 00:25:28,119 --> 00:25:32,080 Speaker 1: Hunt and Van Hoysington's have a really smart article on 406 00:25:32,240 --> 00:25:36,639 Speaker 1: growth recession, which Jimmy Wales and Wikipedia pick up beautifully. 407 00:25:36,920 --> 00:25:40,439 Speaker 1: Diane Swunk, you're meant at this, what's a growth recession? 408 00:25:41,000 --> 00:25:43,480 Speaker 1: We're not in a recession, we just said Martin Feldstein 409 00:25:43,640 --> 00:25:47,159 Speaker 1: on but what's a growth recession? And is that what 410 00:25:47,320 --> 00:25:51,359 Speaker 1: we're in even as the unemployment rate comes down. Actually, 411 00:25:51,359 --> 00:25:53,359 Speaker 1: I don't think we're in a growth recession because we're 412 00:25:53,400 --> 00:25:55,240 Speaker 1: looking for we're looking for the economy to grow at 413 00:25:55,280 --> 00:25:57,919 Speaker 1: about two percent, which is above the economy's potential this year, 414 00:25:57,960 --> 00:26:00,080 Speaker 1: which will continue to bring down the unemployment rate and 415 00:26:00,200 --> 00:26:02,560 Speaker 1: push wages up. So that's not a growth recession. On 416 00:26:02,640 --> 00:26:04,840 Speaker 1: the flip side of it, are we in a profit recession? Yes? 417 00:26:05,520 --> 00:26:10,080 Speaker 1: And remember not all profit recessiance proceed actual recessions, but 418 00:26:10,200 --> 00:26:12,359 Speaker 1: some of them do. And so that I think is 419 00:26:12,400 --> 00:26:15,240 Speaker 1: a realistic issue of the gap between how Wall Street 420 00:26:15,280 --> 00:26:17,800 Speaker 1: sees things and how the FEDS these things. In and 421 00:26:17,880 --> 00:26:20,080 Speaker 1: all fairness, there are some on the FED that are 422 00:26:20,160 --> 00:26:23,520 Speaker 1: worried that the profit recession is deep enough to scare 423 00:26:23,560 --> 00:26:26,480 Speaker 1: CEOs to cut cut costs. Not the broad where they're 424 00:26:26,480 --> 00:26:28,680 Speaker 1: losing money, but at home. Might jump in here, But 425 00:26:28,800 --> 00:26:32,720 Speaker 1: this is magnum decized core theory, which is capitalism is 426 00:26:32,960 --> 00:26:38,480 Speaker 1: always in singularly about profits. Yes, yeah, well it's about 427 00:26:39,040 --> 00:26:41,920 Speaker 1: it's about individual it's not always about profit, because if 428 00:26:41,960 --> 00:26:44,480 Speaker 1: it was, we wouldn't have had a crisis, you know, 429 00:26:44,640 --> 00:26:46,920 Speaker 1: at the end of the day. Yes, maybe a pure 430 00:26:47,040 --> 00:26:49,920 Speaker 1: theory of capitalism, but our commun doesn't operate. I'm sure 431 00:26:49,920 --> 00:26:52,720 Speaker 1: theory it could. It could gets sort of mucked up 432 00:26:52,760 --> 00:26:56,160 Speaker 1: by something called human behavior, and greed is certainly part 433 00:26:56,240 --> 00:26:59,080 Speaker 1: of that. But greed can be blinded short term groups, 434 00:26:59,080 --> 00:27:01,600 Speaker 1: you can blind you from long term profit. And I 435 00:27:01,680 --> 00:27:03,879 Speaker 1: think that's really okay, Mike, what are we gonna talk 436 00:27:03,920 --> 00:27:06,480 Speaker 1: to Diane Swank about next? She's going to pick out 437 00:27:06,520 --> 00:27:09,520 Speaker 1: what the maroon carpet for new offices. Get well, we'll 438 00:27:09,560 --> 00:27:12,520 Speaker 1: get a decoration. Well. Even the more shopping she does, 439 00:27:12,600 --> 00:27:14,160 Speaker 1: the better it is for the economy. We are lost 440 00:27:14,200 --> 00:27:17,600 Speaker 1: in translation with Diane Swank of Swank Economics, that we 441 00:27:17,680 --> 00:27:20,440 Speaker 1: will come back whether on the important issues of the 442 00:27:20,520 --> 00:27:25,000 Speaker 1: American economy. Futures negative seventeen down, futures negative one fifty three, 443 00:27:25,760 --> 00:27:29,520 Speaker 1: the tenure yield one point six nine percent, oil down 444 00:27:29,600 --> 00:27:33,720 Speaker 1: a dollar three cents, the barrel thirty eight four barrel. 445 00:27:38,320 --> 00:27:40,760 Speaker 1: This hour surveillancepot you by Westchester subar up is at 446 00:27:40,800 --> 00:27:43,920 Speaker 1: Westchester subaru dot com. Here's John Tucker with the latest 447 00:27:43,960 --> 00:27:46,400 Speaker 1: news headlines, and Michael and Tom had a blog post 448 00:27:46,520 --> 00:27:49,760 Speaker 1: this morning. President Obama writes he will fulfill his Supreme 449 00:27:49,840 --> 00:27:52,760 Speaker 1: Court duty of the weeks they had. Republican members of 450 00:27:52,800 --> 00:27:55,359 Speaker 1: the Senate Judicial Acmmittee say they won't hold hearings on 451 00:27:55,520 --> 00:27:59,359 Speaker 1: any Supreme Court nominee put forth by the Obama White House. 452 00:28:00,000 --> 00:28:01,960 Speaker 1: Of Coast residents will be cleaning up today from a 453 00:28:02,000 --> 00:28:05,640 Speaker 1: system of deadly storms that killed three people in Louisiana, Mississippi. 454 00:28:05,960 --> 00:28:08,480 Speaker 1: At the same time, residents in parts of Georgia, Alabama, 455 00:28:08,520 --> 00:28:11,960 Speaker 1: the Carolina's hunkering down as the store makes its way there. 456 00:28:12,560 --> 00:28:17,119 Speaker 1: Donald Trump telling supporters the Republican presidential nominee could be 457 00:28:17,280 --> 00:28:19,960 Speaker 1: wrapped up in two months, and so the March first 458 00:28:20,040 --> 00:28:23,600 Speaker 1: bevy of Super Tuesday primaries approaches. Senators Ted Cruz and 459 00:28:23,680 --> 00:28:26,720 Speaker 1: Marco Rubio still looking for ways to slow down the 460 00:28:26,880 --> 00:28:31,199 Speaker 1: Trumpet jungernaut, and the number of cats kept as pets 461 00:28:31,960 --> 00:28:34,840 Speaker 1: is on the way to overtaking that of dogs in Japan, 462 00:28:35,160 --> 00:28:38,680 Speaker 1: While the number of children continues to drop steadily in 463 00:28:38,760 --> 00:28:41,800 Speaker 1: the fast aging nation, with people increasingly living alone, cats 464 00:28:41,840 --> 00:28:46,200 Speaker 1: are finding favor because dogs are more demanding. Global news 465 00:28:46,280 --> 00:28:48,320 Speaker 1: twenty four hours a day, powered by our twenty four 466 00:28:48,360 --> 00:28:50,920 Speaker 1: hundred journalists who more than one fifty news videos around 467 00:28:50,960 --> 00:28:55,360 Speaker 1: the world. I'm John Tucker, Michael and Tom. Thank you John. 468 00:28:55,400 --> 00:28:59,000 Speaker 1: Time now for the Rakatino Autogroup Bloomberg NBC Sports update. 469 00:28:59,040 --> 00:29:01,920 Speaker 1: Here's John stash Alright, Mike, About six and alth weeks 470 00:29:01,960 --> 00:29:03,920 Speaker 1: left in the NHL regular season. Right now, the Rangers 471 00:29:04,000 --> 00:29:06,320 Speaker 1: Islanders both in position to make the playoffs and the 472 00:29:06,400 --> 00:29:08,840 Speaker 1: Devil's obviously they want to join them. Three game losing 473 00:29:08,920 --> 00:29:11,320 Speaker 1: streak they'll dropped them to ninth in the East. Last 474 00:29:11,360 --> 00:29:14,120 Speaker 1: been in Newark, they fell behind Rangers, scoring goals forty 475 00:29:14,200 --> 00:29:16,920 Speaker 1: five seconds apart in the opening period, but they held 476 00:29:16,960 --> 00:29:19,680 Speaker 1: the Rangers scoreless over the last fifty one minutes. They 477 00:29:19,720 --> 00:29:22,800 Speaker 1: held them only nineteen shots. New Jersey won five to two, 478 00:29:22,840 --> 00:29:25,320 Speaker 1: so then at one point behind eighth place Pittsburgh. The 479 00:29:25,360 --> 00:29:28,680 Speaker 1: Islanders won four to one. In Minnesota. Fronds Nielsen scored twice. 480 00:29:28,760 --> 00:29:31,000 Speaker 1: The Nets won't be back in Brooklyn until mid March. 481 00:29:31,360 --> 00:29:34,280 Speaker 1: A nine game road trip, longest and franchise history, began 482 00:29:34,400 --> 00:29:37,360 Speaker 1: last night, losing in Portland one twelve to one oh 483 00:29:37,480 --> 00:29:41,240 Speaker 1: four is Both Trailblazer guards c J mccolluman Damian Lillard 484 00:29:41,280 --> 00:29:43,960 Speaker 1: scored thirty four points. Brook Lopez tried to keep the 485 00:29:44,000 --> 00:29:46,479 Speaker 1: Nets in it. He had thirty six. Washington beat New 486 00:29:46,600 --> 00:29:49,240 Speaker 1: Orleans by twenty. The Pelicans Anthony Davis, coming off a 487 00:29:49,320 --> 00:29:53,360 Speaker 1: fifty nine point team, scored only nine. College hoops Rutgers, 488 00:29:53,400 --> 00:29:56,000 Speaker 1: still winless in the Big Ten, lost eighty three sixty 489 00:29:56,040 --> 00:29:59,080 Speaker 1: one in Minnesota. St. Peter's Rout in Manhattan, Army one 490 00:29:59,120 --> 00:30:01,800 Speaker 1: at Boston Universe, and the Mares beat writer. First day 491 00:30:01,840 --> 00:30:04,160 Speaker 1: of workouts with the entire Yankee team today in Tampa, 492 00:30:04,200 --> 00:30:07,640 Speaker 1: Alex Rodriguez's arrival much less fanfare than a year ago. 493 00:30:07,680 --> 00:30:10,160 Speaker 1: When he's coming back from that year long suspension. The 494 00:30:10,200 --> 00:30:12,640 Speaker 1: new clothes are all this. Chapman in Tampa yesterday said 495 00:30:12,680 --> 00:30:16,320 Speaker 1: the domestic violence allegations against him with false. Chapman insisted 496 00:30:16,400 --> 00:30:19,880 Speaker 1: he never hurt anybody. With the Bloomberg NBC Sports update, 497 00:30:20,000 --> 00:30:23,320 Speaker 1: I'm John Station, John thinks so much. John Tucker with 498 00:30:23,440 --> 00:30:25,160 Speaker 1: us here in New York for all of you worldwide. 499 00:30:25,160 --> 00:30:29,280 Speaker 1: There's something about the West Side Highway. Phil out on 500 00:30:29,320 --> 00:30:32,440 Speaker 1: the West Side Highway, John Tucker, stuck in traffic. He 501 00:30:32,560 --> 00:30:37,320 Speaker 1: calls it a pleasurable ride listening to Bloomberg surveillance. Tell 502 00:30:37,360 --> 00:30:39,840 Speaker 1: me how the West Side Highway gets flooded when it's 503 00:30:39,840 --> 00:30:42,800 Speaker 1: an elevated roadway. Just a real hole in the thing. 504 00:30:43,040 --> 00:30:46,160 Speaker 1: This is along the Hudson River and parts of elevated 505 00:30:47,200 --> 00:30:51,000 Speaker 1: parts north of seven Streets. A little warming and rising 506 00:30:51,080 --> 00:30:58,360 Speaker 1: water right, the rain can take it easy, Phil, John, Phil, 507 00:30:58,440 --> 00:31:00,920 Speaker 1: thank you for listening. You know well that you're getting 508 00:31:01,040 --> 00:31:04,920 Speaker 1: enough data checks, particularly in your equity market today, future 509 00:31:04,920 --> 00:31:07,640 Speaker 1: as well. Speaking in equity is a deteriorate negative eighteen 510 00:31:08,360 --> 00:31:11,400 Speaker 1: doubt futures negative one sixty coming up on the American 511 00:31:11,480 --> 00:31:21,920 Speaker 1: Economy Diane Swunk. This is Bloomberg Surveillance. The sports report 512 00:31:22,000 --> 00:31:24,200 Speaker 1: was brought to by Rache Katina Auto Group. Everyone deserves 513 00:31:24,240 --> 00:31:26,080 Speaker 1: to drive a Mercedes ben from Raco Tina. Make it 514 00:31:26,120 --> 00:31:28,880 Speaker 1: happen at Katina Motorcar and Edison Katina of Union and 515 00:31:28,960 --> 00:31:33,320 Speaker 1: the new Racotino Freehold or to rack Quina Katina dot com. 516 00:31:37,600 --> 00:31:40,960 Speaker 1: Global Business News twenty four hours a day at Bloomberg 517 00:31:41,040 --> 00:31:44,120 Speaker 1: dot com, the Radio Plus mobile app and on your radio. 518 00:31:44,400 --> 00:31:48,200 Speaker 1: This is a Bloomberg Business Flash and I'm Parent Moscow. 519 00:31:48,320 --> 00:31:51,920 Speaker 1: This updates brought to you by American Arbitration Association, International 520 00:31:52,000 --> 00:31:55,280 Speaker 1: Trade or Business Dispute Resolve Faster with the International Center 521 00:31:55,320 --> 00:31:59,040 Speaker 1: for Dispute Resolution, the leader in alternative dispute resolution around 522 00:31:59,080 --> 00:32:03,080 Speaker 1: the world, c d R dot org. Target posting holiday 523 00:32:03,160 --> 00:32:05,760 Speaker 1: sales growth that top analysts estimates boost to buy a 524 00:32:05,840 --> 00:32:09,800 Speaker 1: Surgeon online order, so the retailer's heavy reliance on discounts 525 00:32:09,840 --> 00:32:12,680 Speaker 1: took a toll on profit during the season. Shares are 526 00:32:12,760 --> 00:32:16,360 Speaker 1: up seven tenths percent in early trading. Treasury Secretary Jack 527 00:32:16,440 --> 00:32:19,240 Speaker 1: lou says the US wants a more serious commitment from 528 00:32:19,240 --> 00:32:23,080 Speaker 1: other G twenty countries to use monetary policy fiscal measures 529 00:32:23,120 --> 00:32:26,680 Speaker 1: and structural reforms to stoke demand. Lou made the comments 530 00:32:26,720 --> 00:32:29,600 Speaker 1: in an interview this morning on Blueberg Radio and Television. 531 00:32:29,880 --> 00:32:32,960 Speaker 1: Countries that are big economies, regions that have big economies, 532 00:32:33,480 --> 00:32:35,840 Speaker 1: they need to use policy tools. So you know, when 533 00:32:35,960 --> 00:32:37,720 Speaker 1: China looks at what can it do, it has to 534 00:32:37,760 --> 00:32:40,920 Speaker 1: look at how does it stimulate consumer demand. When Europe 535 00:32:41,000 --> 00:32:43,600 Speaker 1: looks at its tools, it looks beyond monetary policy, what 536 00:32:43,720 --> 00:32:46,240 Speaker 1: it asks what can it do with fiscal policy as well? 537 00:32:46,720 --> 00:32:48,840 Speaker 1: And Lu said when group of twenty financi chiefs meet 538 00:32:48,920 --> 00:32:51,200 Speaker 1: this weekend, Shina, the US will be pushing for a 539 00:32:51,280 --> 00:32:53,960 Speaker 1: firmer commitment by nations and not to try to boost 540 00:32:54,000 --> 00:32:57,520 Speaker 1: their economies by depreciating their currencies. S and p Even 541 00:32:57,560 --> 00:32:59,960 Speaker 1: The futures are down seventeen points this morning. Dow even 542 00:33:00,120 --> 00:33:02,640 Speaker 1: futures down a hundred fifty three Now is Dactum Many 543 00:33:02,680 --> 00:33:05,240 Speaker 1: futures down fifty The decks in Germany's down two point 544 00:33:05,280 --> 00:33:08,000 Speaker 1: four percent. Can your treasury of ten thirty seconds the 545 00:33:08,080 --> 00:33:11,120 Speaker 1: yield one point six eight percent. NIMEX screwed oil down 546 00:33:11,200 --> 00:33:13,760 Speaker 1: three percent, or ninety seven cents to thirty dollars eighty 547 00:33:13,800 --> 00:33:16,240 Speaker 1: eight cents of barrel. Comex called up one point nine 548 00:33:16,240 --> 00:33:18,840 Speaker 1: percent or twenty two dollars sixty cents at twelve forty 549 00:33:19,160 --> 00:33:22,000 Speaker 1: twenty announced the Euro a dollar oh nine nine five, 550 00:33:22,080 --> 00:33:24,360 Speaker 1: the British pound a dollar thirty nine twenty nine, the 551 00:33:24,560 --> 00:33:27,880 Speaker 1: en one eleven point seven four. That's a Bloomberg Business Flash. 552 00:33:27,960 --> 00:33:30,280 Speaker 1: Tom and Mike Jerre Moscow, thank you so much. It 553 00:33:30,520 --> 00:33:35,000 Speaker 1: is Folks eight forty nine on Wall Street. The following 554 00:33:35,120 --> 00:33:39,080 Speaker 1: is from Bloomberg View. Opinions and commentary from Bloomberg columnists. 555 00:33:39,280 --> 00:33:42,400 Speaker 1: I'm Megan mccartell, a columnist for Bloomberg View. Brune Sanders 556 00:33:42,480 --> 00:33:45,400 Speaker 1: is something new, a Democratic candidate who's not pretending to 557 00:33:45,480 --> 00:33:49,000 Speaker 1: represent the party of fiscal responsibility and balanced budgets. That's 558 00:33:49,000 --> 00:33:51,920 Speaker 1: always been more hyped than reality. But Paul must consistently 559 00:33:52,000 --> 00:33:55,480 Speaker 1: run bigger deficits than Bush, even after the financial crisis ended. 560 00:33:55,600 --> 00:33:58,600 Speaker 1: But Sanders has dropped even the act. His policy proposals 561 00:33:58,640 --> 00:34:01,040 Speaker 1: are full of the sorts of Frank the unbelievable numbers 562 00:34:01,080 --> 00:34:03,600 Speaker 1: that would make a conman blush, from doubling the growth 563 00:34:03,720 --> 00:34:06,560 Speaker 1: rate to cutting healthcare costs while making coverage more generous. 564 00:34:06,800 --> 00:34:09,719 Speaker 1: Four former members of the Council of economic advisors under 565 00:34:09,760 --> 00:34:13,719 Speaker 1: Democratic administrations recently penned a scathing open letter about the 566 00:34:13,800 --> 00:34:17,160 Speaker 1: Sanders fairytale promises. They lamented that this would undermine their 567 00:34:17,200 --> 00:34:21,400 Speaker 1: efforts to make the Democrats the party of evidence based policy. Unfortunately, 568 00:34:21,520 --> 00:34:23,160 Speaker 1: the only people who seem to have read it are 569 00:34:23,200 --> 00:34:26,560 Speaker 1: other wonks. The idea of Democrats is the party of technocrats. 570 00:34:26,680 --> 00:34:28,600 Speaker 1: Came in with Clinton and it looks likely to go 571 00:34:28,680 --> 00:34:32,240 Speaker 1: out with his wife. Technocratic projection is fine from modest proposals, 572 00:34:32,320 --> 00:34:35,320 Speaker 1: but it fails in the face of revolutionary promises. The 573 00:34:35,360 --> 00:34:38,160 Speaker 1: younger generation of Democrats, the future of the party, isn't 574 00:34:38,200 --> 00:34:40,480 Speaker 1: looking to be told that they can do four point 575 00:34:40,600 --> 00:34:43,319 Speaker 1: to seven six percent better under a Democrat than under 576 00:34:43,320 --> 00:34:46,240 Speaker 1: a Republican. They're looking for the kind of transformational change 577 00:34:46,280 --> 00:34:48,840 Speaker 1: that Sanders promises, and they're bound to be impatient with 578 00:34:48,920 --> 00:34:52,040 Speaker 1: wonks who demanded they provided detailed analysis of the future 579 00:34:52,080 --> 00:34:54,799 Speaker 1: that doesn't yet exist outside of their dreams. I'm Megan 580 00:34:54,880 --> 00:34:57,040 Speaker 1: mccartell from More of You. Please go to Bloomberg View 581 00:34:57,120 --> 00:34:59,480 Speaker 1: dot com or view go on the Bloomberg terminal. This 582 00:35:00,000 --> 00:35:03,000 Speaker 1: has been Bloomberg View and Bloomberg View comment. Jerry's can 583 00:35:03,120 --> 00:35:07,279 Speaker 1: be heard hourly weekdays. I'm Bloomberg Radio. Some stability to 584 00:35:07,360 --> 00:35:10,560 Speaker 1: the market off of rocking is two hours ago futures 585 00:35:10,560 --> 00:35:14,200 Speaker 1: of negative seventeen. Michael Dan's funcas with us. She is 586 00:35:14,320 --> 00:35:21,560 Speaker 1: the founder chief cook at Bottle Washer uh DS Economics Illinois. 587 00:35:22,200 --> 00:35:27,600 Speaker 1: In Chicago, where have you had a winter? Almost not 588 00:35:27,719 --> 00:35:30,279 Speaker 1: as bad as it's toost to snow today, So we'll 589 00:35:30,280 --> 00:35:33,080 Speaker 1: have it be today. If the day it comes back 590 00:35:33,120 --> 00:35:35,600 Speaker 1: and then it leads again. If there's no winter in Chicago, 591 00:35:35,680 --> 00:35:40,960 Speaker 1: then there's no winter anywhere. And that that is had 592 00:35:41,040 --> 00:35:43,600 Speaker 1: Storm Jonah at the East coast. Well, first of all, 593 00:35:43,880 --> 00:35:45,839 Speaker 1: on this program, we do not buy into the Weather 594 00:35:46,280 --> 00:35:48,880 Speaker 1: Channel's self promotion efforts. We just call it the storm. 595 00:35:48,960 --> 00:35:53,280 Speaker 1: We don't give anything. But it lasted twenty four hours 596 00:35:53,520 --> 00:35:57,440 Speaker 1: snow and so, and it's fifty degrees in raining here today. 597 00:35:57,640 --> 00:35:59,680 Speaker 1: But my point is is the last two years we 598 00:35:59,800 --> 00:36:04,800 Speaker 1: have add to downgrade GDP forecast because the first quarter 599 00:36:04,920 --> 00:36:07,600 Speaker 1: weather was so terrible and now it's not and it 600 00:36:07,800 --> 00:36:12,160 Speaker 1: was actually yeah, and so you know, um, we're looking 601 00:36:12,200 --> 00:36:15,560 Speaker 1: at a first quarter that is going to be not 602 00:36:15,760 --> 00:36:19,480 Speaker 1: just stronger, but it looks like much stronger than people 603 00:36:19,520 --> 00:36:22,279 Speaker 1: had anticipated. Um, we're looking at well, we're looking a 604 00:36:22,320 --> 00:36:24,160 Speaker 1: little north at two percent. Some people are a little 605 00:36:24,160 --> 00:36:26,440 Speaker 1: stronger than that. We think the consumer is certainly out 606 00:36:26,480 --> 00:36:30,480 Speaker 1: there pulling its might even with discounts. They are savvy consumers. 607 00:36:30,560 --> 00:36:31,840 Speaker 1: I think, you know, one thing I want to go 608 00:36:32,000 --> 00:36:34,440 Speaker 1: back to is that the US economy, we have a 609 00:36:34,520 --> 00:36:37,560 Speaker 1: consumer that is in better shape than it was, and 610 00:36:38,080 --> 00:36:41,520 Speaker 1: that's helping the economy's immune system not to be affected 611 00:36:41,600 --> 00:36:44,880 Speaker 1: by the ills that are um infecting Wall Street. So 612 00:36:45,040 --> 00:36:47,280 Speaker 1: Main Street is a little stronger with a better immune 613 00:36:47,280 --> 00:36:49,759 Speaker 1: system now, and I think that's very important. But going 614 00:36:49,880 --> 00:36:52,520 Speaker 1: back to the fetament, it is something that Tom said, 615 00:36:52,560 --> 00:36:53,880 Speaker 1: and that's it. You know, I don't believe in this 616 00:36:54,000 --> 00:36:56,600 Speaker 1: all this soft stuff and all this touchy feely stuff. 617 00:36:56,800 --> 00:36:59,960 Speaker 1: Let's let's face it. Central banks are only as good 618 00:37:00,120 --> 00:37:03,200 Speaker 1: is their perception in the market and their credibility um. 619 00:37:03,280 --> 00:37:05,840 Speaker 1: What they can really do. Most of their impact is 620 00:37:05,920 --> 00:37:09,560 Speaker 1: on the announcement effect UM, not on what they actually 621 00:37:09,800 --> 00:37:11,680 Speaker 1: do in the market all the time. And I think, 622 00:37:11,800 --> 00:37:13,600 Speaker 1: especially when you're so close to zero and you've got 623 00:37:13,680 --> 00:37:16,759 Speaker 1: so little wiggle room, credibility really matters. And I'm really 624 00:37:16,800 --> 00:37:19,960 Speaker 1: concerned that the FEDS Communications need to reset button I 625 00:37:20,080 --> 00:37:22,440 Speaker 1: really think the FED has given up on things like 626 00:37:22,560 --> 00:37:25,279 Speaker 1: forward guidance, which I think are important and you might 627 00:37:25,360 --> 00:37:27,520 Speaker 1: be surprised at this is even though I think the 628 00:37:27,560 --> 00:37:29,520 Speaker 1: FED will only raise rates twice this year in June 629 00:37:29,560 --> 00:37:32,160 Speaker 1: and December, UM and I think that's all that's necessary. 630 00:37:32,280 --> 00:37:34,840 Speaker 1: I think inflation that we saw the recent heating up 631 00:37:34,880 --> 00:37:37,920 Speaker 1: of inflation. I actually think we we have an argument, 632 00:37:37,960 --> 00:37:40,399 Speaker 1: as long as we avoid recession that we will see 633 00:37:40,400 --> 00:37:42,799 Speaker 1: a little hotder than inflation on the core level than 634 00:37:42,840 --> 00:37:45,920 Speaker 1: many people expect, because we've got wages accelerating and no 635 00:37:46,080 --> 00:37:49,560 Speaker 1: productivity growth, and that's tender for a little bit of inflation. 636 00:37:49,600 --> 00:37:51,919 Speaker 1: We could use it. It's okay, But I think those 637 00:37:51,960 --> 00:37:54,040 Speaker 1: things are all important to keep in context. But the 638 00:37:54,160 --> 00:37:57,800 Speaker 1: FEDS communications really do matter, and they're not getting it. 639 00:37:58,320 --> 00:38:01,920 Speaker 1: I'm sorry they as they say, how do they change it? 640 00:38:02,040 --> 00:38:05,080 Speaker 1: They keep changing it. Yeah, that's the problem. They keep 641 00:38:05,120 --> 00:38:08,279 Speaker 1: testing the waters and you know, um, you know forward. Okay, 642 00:38:08,520 --> 00:38:11,480 Speaker 1: it's an experimental process. But what in theory to that 643 00:38:11,640 --> 00:38:13,040 Speaker 1: is trying to do? Now? As they want to say, 644 00:38:13,160 --> 00:38:16,879 Speaker 1: in theory, nothing's predetermined. We want to reinsert uncertainty into 645 00:38:16,880 --> 00:38:18,440 Speaker 1: the market. We want to say that we don't know 646 00:38:18,560 --> 00:38:20,640 Speaker 1: our predetermined path. At the same time they're saying that 647 00:38:21,000 --> 00:38:22,560 Speaker 1: at the beginning of the year, they saying that, we're 648 00:38:22,560 --> 00:38:24,840 Speaker 1: also saying it looks like every other meeting. How is 649 00:38:24,920 --> 00:38:26,520 Speaker 1: that not that we're going to raise rates? How is 650 00:38:26,560 --> 00:38:29,120 Speaker 1: that not poward guidance? It is, so they need to 651 00:38:29,280 --> 00:38:31,239 Speaker 1: come to terms with what are they going to say now? 652 00:38:31,440 --> 00:38:33,839 Speaker 1: In their minutes it looks like they're starting to talk 653 00:38:33,840 --> 00:38:35,520 Speaker 1: about And I'm not sure this helps because I think 654 00:38:35,640 --> 00:38:38,520 Speaker 1: more information is actually t M I UM and we're 655 00:38:38,560 --> 00:38:41,200 Speaker 1: sort of we've seen too much as the kitchen the 656 00:38:41,280 --> 00:38:43,360 Speaker 1: back of up before the food comes out all pretty 657 00:38:43,360 --> 00:38:47,400 Speaker 1: and now, but they're talking about talking about ranges of um, 658 00:38:47,560 --> 00:38:49,160 Speaker 1: how they're going to think about the best guns rate 659 00:38:49,160 --> 00:38:51,480 Speaker 1: so may go negative. I don't think that's going to help. 660 00:38:52,040 --> 00:38:54,600 Speaker 1: I think they need to simplify. And Diane Swart stands 661 00:38:54,640 --> 00:38:56,640 Speaker 1: a smart guide derivatives. He likes us to keep his 662 00:38:56,760 --> 00:39:00,799 Speaker 1: name private, but he writes sharp notes. He links fed 663 00:39:00,960 --> 00:39:05,640 Speaker 1: action the Diane Swunk World simply to where oil is going? 664 00:39:06,440 --> 00:39:12,400 Speaker 1: Is there any framework of adjustment or expectations If oil 665 00:39:12,560 --> 00:39:16,520 Speaker 1: finds a new level modestly below where it's been on 666 00:39:16,680 --> 00:39:20,719 Speaker 1: West Texas three dollars eighty seven cents if oil gets 667 00:39:20,800 --> 00:39:25,080 Speaker 1: to a twenty nine fifties stasis. Have we adjusted for that? 668 00:39:26,000 --> 00:39:28,359 Speaker 1: You know? It's well, I think we've over adjusted that. UM, 669 00:39:28,600 --> 00:39:31,719 Speaker 1: that's an issue. It's interesting oil prices falling in a 670 00:39:31,760 --> 00:39:34,200 Speaker 1: global economy that is a net consumer of oil used 671 00:39:34,200 --> 00:39:36,120 Speaker 1: to be a positive thing. Thunder Nacchi actually had a 672 00:39:36,200 --> 00:39:39,080 Speaker 1: very good blog on UM looking at oil prices in 673 00:39:39,160 --> 00:39:41,640 Speaker 1: this weird correlation we have that falling oil prices are 674 00:39:41,719 --> 00:39:44,520 Speaker 1: now bad and why is that? Because people are using 675 00:39:44,600 --> 00:39:48,640 Speaker 1: oil prices as a proxy for global economic growth and 676 00:39:48,760 --> 00:39:50,440 Speaker 1: we know this is at the same time that we 677 00:39:50,520 --> 00:39:52,440 Speaker 1: know some of the reason oil prices are so lowest 678 00:39:52,480 --> 00:39:54,680 Speaker 1: because we have a lot, a lot of production in 679 00:39:54,719 --> 00:39:57,560 Speaker 1: the world, more production than we ever had, including in 680 00:39:57,560 --> 00:39:59,799 Speaker 1: the United States. In fact, even though we've cut him 681 00:40:00,000 --> 00:40:03,680 Speaker 1: spent dramatically, shale production has actually fallen very little. So 682 00:40:03,800 --> 00:40:06,080 Speaker 1: we're still producing a lot of oil. So there's a 683 00:40:06,239 --> 00:40:10,000 Speaker 1: supply glut that's exacerbating these perception issues. And I think 684 00:40:10,040 --> 00:40:12,560 Speaker 1: it's the wrong way. I think people are not are 685 00:40:13,480 --> 00:40:15,640 Speaker 1: entangling too many things. I think there's a lot going 686 00:40:15,680 --> 00:40:17,560 Speaker 1: on with oil. I think one of the reasons you've 687 00:40:17,600 --> 00:40:20,920 Speaker 1: not seen more consumer spending from the falling oil prices. 688 00:40:21,080 --> 00:40:23,960 Speaker 1: We have actually seen some food services and accommodation, the 689 00:40:24,040 --> 00:40:27,440 Speaker 1: most discretionary thing you can spend out there. The strongest 690 00:40:27,560 --> 00:40:30,640 Speaker 1: year since two thousand. You can't tell me that wasn't 691 00:40:30,640 --> 00:40:33,359 Speaker 1: oil related. On the flip side of it, we don't 692 00:40:33,400 --> 00:40:36,360 Speaker 1: have the accelerant we once did for good reason. Credit 693 00:40:36,560 --> 00:40:39,000 Speaker 1: is not the accelerant to falling oil prices nor the 694 00:40:39,040 --> 00:40:42,160 Speaker 1: mitigator to rising oil prices that it once did. Access 695 00:40:42,239 --> 00:40:45,040 Speaker 1: to consumer credit is much lower than it was in 696 00:40:45,080 --> 00:40:47,719 Speaker 1: the past for good reason. Credit card usage in this 697 00:40:47,800 --> 00:40:52,200 Speaker 1: country is down as a share of GDP levels. That 698 00:40:52,640 --> 00:40:55,640 Speaker 1: is unwinding all of the expansion and credit card of 699 00:40:55,719 --> 00:40:59,319 Speaker 1: the nineties. So we don't have some of the relationships 700 00:40:59,400 --> 00:41:01,320 Speaker 1: with oil that we once did. And I think people 701 00:41:01,440 --> 00:41:05,000 Speaker 1: simplify the oil story far too much, but of course 702 00:41:05,280 --> 00:41:07,439 Speaker 1: that's how markets think. They're thinking in black and white, 703 00:41:07,719 --> 00:41:12,160 Speaker 1: and here we're trying to paint a color story. So 704 00:41:13,160 --> 00:41:16,600 Speaker 1: bottom line, and we've been asking this question, Jack Luis says, 705 00:41:16,640 --> 00:41:20,239 Speaker 1: there's no crisis. Is there is there a crisis? There's 706 00:41:20,280 --> 00:41:23,120 Speaker 1: no crisis yet, and we don't want it to become 707 00:41:23,160 --> 00:41:26,480 Speaker 1: a self fulfilling prophecy. In part of doing that is 708 00:41:27,000 --> 00:41:31,000 Speaker 1: the said communicating better and also looking to main Street, 709 00:41:31,160 --> 00:41:34,440 Speaker 1: because we're now shifting a baton. Wall Street has carried 710 00:41:34,480 --> 00:41:36,880 Speaker 1: this economy for some time. It's time to broaden it 711 00:41:36,960 --> 00:41:39,360 Speaker 1: out and shift a baton and hand it to main Street. 712 00:41:39,640 --> 00:41:42,160 Speaker 1: And I think they can carry it now. They're um 713 00:41:42,320 --> 00:41:45,239 Speaker 1: not super fast runners on main Street yet and we're 714 00:41:45,239 --> 00:41:47,520 Speaker 1: still recovering. Bet our immune system is better and we're 715 00:41:47,560 --> 00:41:49,640 Speaker 1: up there and we're moving again. And I think that's 716 00:41:49,719 --> 00:41:55,080 Speaker 1: critically important understanding the economy in dance ds economics. Thank 717 00:41:55,120 --> 00:41:58,000 Speaker 1: you for trying. Hopefully, I hope they don't get too 718 00:41:58,080 --> 00:42:01,120 Speaker 1: much snow there. You know, it's a little reassuring if 719 00:42:01,160 --> 00:42:03,359 Speaker 1: they are actually gonna have a little. I think it's 720 00:42:03,400 --> 00:42:06,200 Speaker 1: her whole Michigan background, or maybe it's a white Sox 721 00:42:06,280 --> 00:42:09,840 Speaker 1: Cubs whackiness out of Chicago. But she has a beautiful 722 00:42:09,880 --> 00:42:15,080 Speaker 1: way of finding the middle ground between the polarities of conversation, 723 00:42:15,960 --> 00:42:19,799 Speaker 1: which I greatly respect. I think it's harder. It's easy 724 00:42:19,880 --> 00:42:22,960 Speaker 1: to take an angle or a belief one way, it's 725 00:42:23,000 --> 00:42:26,520 Speaker 1: harder to find the nuances in between. She does that 726 00:42:26,920 --> 00:42:31,080 Speaker 1: very very well. Sterling does it well off of a 727 00:42:31,280 --> 00:42:35,960 Speaker 1: horrific European and London morning on eighty I believe is 728 00:42:35,960 --> 00:42:38,960 Speaker 1: where we got to stronger Sterling in the last hour 729 00:42:39,040 --> 00:42:44,239 Speaker 1: one ninety eight US future stasis here negative sixteen down 730 00:42:44,320 --> 00:42:47,840 Speaker 1: futures negative one forty four. No stasis here, We're dynamic. 731 00:42:48,200 --> 00:42:50,040 Speaker 1: Another hour of Bloomberg surveillance.