WEBVTT - Normand: dot plots and forward guidance

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<v Speaker 1>Broadcasting live to New York, Gloomberg eleventh Yo to Washington,

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<v Speaker 1>d C, Bloomberg to Boston, Bloomberg twelve hounds to San Francisco,

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<v Speaker 1>Bloomberg to the country. Sees XM Channel one nine and

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<v Speaker 1>around the globe. The Bloomberg Radio Plus happened Bloomberg dot Com.

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<v Speaker 1>This is Bloomberg Surveillance. The morning eight thirty on Wall Street.

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<v Speaker 1>I Michael McKee along with Tom Keene. Economic Indicators brought

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<v Speaker 1>to you by Commonwealth Financial Network. When it's time to

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<v Speaker 1>change the conversation, talk with a broker dealer r I

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<v Speaker 1>A that's ready to listen call eight six two three

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<v Speaker 1>six three eight or is it Commonwealth dot Com to

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<v Speaker 1>learn more? No major indicators at the eight thirty hour today. However,

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<v Speaker 1>we do have new home sales out at ten am

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<v Speaker 1>and that will get a lot of attention. We saw

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<v Speaker 1>the decline in existing home sales reported earlier this week,

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<v Speaker 1>and of course at nine o'clock coming up at the

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<v Speaker 1>top of the hour, Tom Keene and I will be

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<v Speaker 1>interviewed US St. Louis Federal Reserve President James Bullard, which

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<v Speaker 1>we do not but we are going to try to

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<v Speaker 1>find out interesting Yesterday Patrick Harker, the new president of

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<v Speaker 1>the Philadelphia FED, made specific reference to it and said,

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<v Speaker 1>I am not one of the two dot people. I

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<v Speaker 1>think we should raise rates more than that. So we'll

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<v Speaker 1>see if we can't start placing some of these people.

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<v Speaker 1>This is a good person to talk to as we

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<v Speaker 1>go to James Bullard in the next thirty minutes, even

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<v Speaker 1>less than thirty minutes. John Norman is a student of

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<v Speaker 1>the linkage of economics into foreign exchange. He's out of

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<v Speaker 1>Georgetown Economics with a career path at JP Morgan that

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<v Speaker 1>has led him to ride herd on the dollar. Let

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<v Speaker 1>me quote Norman. Despite the federal reserves, well known serial

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<v Speaker 1>forecast errors, markets nonetheless move every time James Bullard lowers

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<v Speaker 1>the dots. I put in a little phrase there, John Norman,

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<v Speaker 1>to do that for entertainment. But you really don't know

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<v Speaker 1>where the dots are, do you, John Norman? Well, we

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<v Speaker 1>know is the dots and seem to go down every quarter,

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<v Speaker 1>and investors tend to extrapolates from that, and I think

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<v Speaker 1>that's the main worry that investors have every time the

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<v Speaker 1>FED rolls up to one of these quarterly press conferences.

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<v Speaker 1>Even though the FED has its dots way above the market.

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<v Speaker 1>The fact that they've been lowering them for so long

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<v Speaker 1>makes some people think they may never hike again. Bill

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<v Speaker 1>Dudley said in a speech a bit ago, for guidance

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<v Speaker 1>maybe a thing of the past. Will the dots be

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<v Speaker 1>a thing of the past? I don't think the dots

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<v Speaker 1>will be. Uh. They they may lose their their sticker

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<v Speaker 1>shock for for investors that the less accurate these are

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<v Speaker 1>as as a predictor of future rates, the less investors

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<v Speaker 1>will pay attention to them. But I don't think they'll

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<v Speaker 1>disappear as a as a piece of information that the

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<v Speaker 1>FED provides. But I agree with the idea that the

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<v Speaker 1>forward guidance is much less credible when you're at a

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<v Speaker 1>turning point. Uh. With some with respect to some part

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<v Speaker 1>of the business cycling right now where going through a

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<v Speaker 1>rethink around inflation, and in that kind of environment where

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<v Speaker 1>you can't have much certainty around CPI, you can't have

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<v Speaker 1>much certainty around FED policy. Is this a situation where

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<v Speaker 1>investors think the dots are wrong or hope there wrong?

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<v Speaker 1>In the sense that every time the FED discusses the

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<v Speaker 1>idea of raising rates, we seem to have a temper

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<v Speaker 1>tantrum in the markets. People uh just don't want to

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<v Speaker 1>give up getting additional having that buyer of last resort

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<v Speaker 1>out there, right. I would say the realization of the

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<v Speaker 1>dots is certainly a market event, and and it's a

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<v Speaker 1>high ball market event. Even if the FED is only

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<v Speaker 1>projecting a couple of hikes over the next or through

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<v Speaker 1>the balance of the year, that that's still about twice

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<v Speaker 1>as much as what's in the money market curve. So

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<v Speaker 1>you're right that investors do fear that the feed is

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<v Speaker 1>actually going to deliver on its on its on its

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<v Speaker 1>stipple design, and if they do, you're gonna see race

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<v Speaker 1>moving up in the trusury market and the dollar moving

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<v Speaker 1>up as well. You get a taste of that just

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<v Speaker 1>over the past two or three sessions, as a number

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<v Speaker 1>of have said, officials have um reaffirmed their their sort

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<v Speaker 1>of commitment to a couple of eyes this year. What

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<v Speaker 1>would you like to ask Dr Bullard? I mean, just

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<v Speaker 1>very simply, you're off the foreign exchange, as you've written

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<v Speaker 1>brilliantly in the dollar recently. What's your question for Jim Bullard?

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<v Speaker 1>I would probably ask them, um why they've needed to

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<v Speaker 1>move down their rate projections so substantially over the past

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<v Speaker 1>year and a half, What what, why and and why

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<v Speaker 1>if they something is motivating them to do that, they

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<v Speaker 1>haven't marked down their views on on growth that substantially

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<v Speaker 1>there seems to be a bit of inconsistency and in

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<v Speaker 1>sort of expressing this belief in um in in a

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<v Speaker 1>firmer u S economy, yet every quarter moving down their

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<v Speaker 1>expectations from where policy rais need to be. Where is

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<v Speaker 1>the opportunity and for an exchange, right now we see

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<v Speaker 1>a lot of reanalysis of dollar perpetual dollar strength is

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<v Speaker 1>fading into the distance. You've written in that as well.

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<v Speaker 1>Where is the opportunity and for an exchange, let's say

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<v Speaker 1>it's probably two buckets. There's a there's a lot of

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<v Speaker 1>tactical opportunities over the next say nine months, is to

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<v Speaker 1>set hikes a couple of times, and there's probably a

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<v Speaker 1>big strategic opportunity still in UH in the end, so

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<v Speaker 1>that the tactical opportunities are all around being long dollars

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<v Speaker 1>some quarters, short dollars other quarters. Simply because I think

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<v Speaker 1>that the broad index is an arrange, and it's how

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<v Speaker 1>quiet an attorney point, it's it's probably gonna move sideways

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<v Speaker 1>plus or minus five percent from where we are now. UM.

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<v Speaker 1>Some people consider that an opportunity, you know, I certainly

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<v Speaker 1>do UM, but that means that the clients have to

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<v Speaker 1>be quite numble. I'd say the bigger opportunity is more

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<v Speaker 1>around the end. I still feel like if we're looking

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<v Speaker 1>at a fat cycle that's gonna be pretty shallow and

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<v Speaker 1>and a Japanese economy that still has a big current

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<v Speaker 1>accountclor plus, the end could appreciate for a while. And

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<v Speaker 1>if a consequence of of FED tightening over the next

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<v Speaker 1>year could be a us prossession in SEEN, I think

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<v Speaker 1>that is going to add to the upside for the end.

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<v Speaker 1>There's another big strategic opportunity everyone's looking at, and that's UM,

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<v Speaker 1>the move back into emerging market currencies and and commodity

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<v Speaker 1>currencies UM. But I think it's premature for that. It's interesting,

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<v Speaker 1>certainly the case that UH clients should be buying UM

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<v Speaker 1>the they should be bullish on EM currencies and commodity

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<v Speaker 1>currencies if they think the FED is going to be

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<v Speaker 1>on hold. But the FED needs to be on hold

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<v Speaker 1>for the right reasons. It needs to be on hold

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<v Speaker 1>because first, it's never coming back UM. And if you're

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<v Speaker 1>convinced that that's the kind of world we're end and

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<v Speaker 1>fine by that stuff. But if you think, um, we

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<v Speaker 1>could be in a world where information is only temporarily

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<v Speaker 1>at bay, or if you believe that we're in a

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<v Speaker 1>world where the FED pushes us into recession, it's it's

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<v Speaker 1>way premature to be buying those on a strategic basis.

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<v Speaker 1>And John Norman off the desk in London with JP

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<v Speaker 1>Morgan today as we look at foreign exchange. Of course

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<v Speaker 1>it's linkage into economics. We will continue with John Norman

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<v Speaker 1>uh here into our next section. Right after that, Michael

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<v Speaker 1>McKee and I will speak with Jim Bullard of the St.

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<v Speaker 1>Louis FED. Mike, just so much to talk about Jim

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<v Speaker 1>this morning. There go talk some more with John about

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<v Speaker 1>that coming up. Yeah, well, Jim Bollard here in minutes

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<v Speaker 1>or so, a churn to the market, futures flat. They

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<v Speaker 1>yield one point nine this hour of surveillance pot by

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<v Speaker 1>Volvo White Cars, White Planes. Visit Volvo Cars, White Planes

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<v Speaker 1>dot com. Here's Michael bar with headlines mind Tom, thank

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<v Speaker 1>you very much. Belgian police continued to hunt for terrorist

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<v Speaker 1>suspects and yesterday's attack in Brussels. Belgian prosecutors's authorities have

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<v Speaker 1>not arrested demand in this suspect in the Belgian bombing,

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<v Speaker 1>year old Jean Leshraui. The Islamic state has claimed responsibility

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<v Speaker 1>for the attack in Brussels that killed thirty four people.

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<v Speaker 1>Donald Trump was asked about national security in the US

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<v Speaker 1>after the Brussels attack. Trump, on Bloomberg's with all due respect,

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<v Speaker 1>took a swipe at Hillary Clinton. If there are crises

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<v Speaker 1>like we saw in Brussels, and this election focused a

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<v Speaker 1>lot on natural security, you think you can beat her

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<v Speaker 1>head to head on national seaci. I think so. I

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<v Speaker 1>think every time we have a problem in this world,

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<v Speaker 1>I think I do better. That's been proven to your pulse.

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<v Speaker 1>I mean, it's not that I want. I'd rather not

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<v Speaker 1>have any problems and do wors okay, if I had

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<v Speaker 1>my choice. The entire interview can be seen at five

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<v Speaker 1>pm All Street time on Bloomberg TV. With all due respect.

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<v Speaker 1>Voters have had their saying. Tuesday's presidential primaries and caucuses.

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<v Speaker 1>Democrat Hillary Clinton and Republican Donald Trump extended their leads

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<v Speaker 1>with victories and the Arizona primaries in Texas, Senator Ted

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<v Speaker 1>Cruz was a big winner in Utah's Republican CAUCUSUS Bernie

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<v Speaker 1>Sanders won the Democratic caucuses in Utah and Idaho. Global

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<v Speaker 1>News twenty four hours a day, powered by our twenty

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<v Speaker 1>four hundred journalists more than a hundred fifty news bureaus

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<v Speaker 1>from around the world. I'm Michael Barr Bank Tom, Thank you, Michael.

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<v Speaker 1>Time now for the Rakatina Auto Group Bloomberg NBC Sports

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<v Speaker 1>Update with John Stashaw. All right, Michael on the local

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<v Speaker 1>NBA and NHL team in action. Last night, the Nets

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<v Speaker 1>lost at home to Red Hot Charlotte, one of five

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<v Speaker 1>one hundred Hornets have taken nineteen the last twenty four games.

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<v Speaker 1>Nix Or in Chicago tonight. Rangers host the Bruins in Tampa.

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<v Speaker 1>Last night, Yankees beat the met six to three. Battle

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<v Speaker 1>of young pitchers who reached the majors last year. Luis

0:09:07.440 --> 0:09:10.959
<v Speaker 1>Severino again pitched well. Stephen Matt's not so much gave

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<v Speaker 1>up five runs in the second any baseball on display

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<v Speaker 1>yesterday in Havada, everyone in agreements one thing the U

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<v Speaker 1>S and Cuba share a love for. So there was

0:09:18.280 --> 0:09:21.680
<v Speaker 1>President Obamas that next to Cuban counterpart, Real Costro watching

0:09:21.760 --> 0:09:24.600
<v Speaker 1>Tampa Bay Rays beat the Cuban national team four to one,

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<v Speaker 1>only once before in a major league team, which is

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<v Speaker 1>a cubas and revolution. For the NFL owners and their

0:09:31.000 --> 0:09:32.839
<v Speaker 1>meetings today in Florida, there may be a decision on

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<v Speaker 1>a rule change that would object from a game of

0:09:35.200 --> 0:09:38.280
<v Speaker 1>player who has had two on sportsmanlike conduct penalties. Also

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<v Speaker 1>no vote yesterday on proposals to expand the use of

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<v Speaker 1>incident replay. The NFL has made permanent the longer point

0:09:44.600 --> 0:09:47.679
<v Speaker 1>after touchdown that began last season and did achieve its

0:09:47.760 --> 0:09:50.880
<v Speaker 1>goal of making the extra point not as automatic. With

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<v Speaker 1>the Bloomberg NBC Sports Update, I'm John stan Shandler. John,

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<v Speaker 1>thank you so much. Mike. Let's twenty minutes away from

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<v Speaker 1>Jim Bullard. When n sight of people that he's a centrist,

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<v Speaker 1>but with great nuance. This is not a guy who's

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<v Speaker 1>out in the outliers, is he? No? He? Uh. He

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<v Speaker 1>generally follows the latest developments in the macro economy and

0:10:14.559 --> 0:10:17.199
<v Speaker 1>does a lot of research on his own. Uh. Some

0:10:17.320 --> 0:10:21.600
<v Speaker 1>interesting work on what he calls neo Fisherian economics um

0:10:21.880 --> 0:10:24.120
<v Speaker 1>in recent weeks, and we'll ask him about that. Basically,

0:10:24.160 --> 0:10:28.160
<v Speaker 1>the idea that the low interest rates are the reason

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<v Speaker 1>why we are not seeing inflation rise. It's it's not

0:10:32.320 --> 0:10:35.679
<v Speaker 1>that he's embracing it, but he has looked at that possibility. Yeah. Well,

0:10:35.840 --> 0:10:40.400
<v Speaker 1>Irving Fisher from not Stanley Fisher, Neo Fisherian, Irving Fisher

0:10:40.480 --> 0:10:44.120
<v Speaker 1>from I believe a few uh and distant past as

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<v Speaker 1>well on inflation was Yes, Irving Fisher was with us.

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<v Speaker 1>It was the Coolidge convention in Cleveland. I believe it was, Uh,

0:10:53.440 --> 0:11:01.400
<v Speaker 1>James Bullard in twenty minutes Worldwide Bloomberg Surveillance. The Sports

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<v Speaker 1>Panet dot Com. Credit Suites Group chief executive officer t

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<v Speaker 1>jn Tm pledged to accelerate a restructuring through deeper cost

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<v Speaker 1>cuts and by eliminating an additional two thousand jobs as

0:11:48.240 --> 0:11:51.600
<v Speaker 1>he forecast a first quarter loss. TIA made the comments

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<v Speaker 1>in an interview with Francine Laqua on Bloomberg Television. Very

0:11:56.240 --> 0:11:58.760
<v Speaker 1>risk converse, defensive, and I can tell you that the

0:11:58.880 --> 0:12:01.800
<v Speaker 1>risking we've done, it's cost us, but it's protected us

0:12:01.800 --> 0:12:04.120
<v Speaker 1>a lot. If we had not the risked where we've

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<v Speaker 1>done since we found out about this problem in January,

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<v Speaker 1>given the shape of the first quarter, the numbers would

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<v Speaker 1>be much worse. And that's Credit Strees Group chief executive

0:12:11.720 --> 0:12:15.040
<v Speaker 1>t jn TM speaking with Francine Laquix on Bloomberg Television.

0:12:15.120 --> 0:12:18.040
<v Speaker 1>US Dock Index futures little change to lower this morning.

0:12:18.440 --> 0:12:21.880
<v Speaker 1>SNP emity futures down two points, DOWEMNY futures down nineteen,

0:12:22.000 --> 0:12:25.240
<v Speaker 1>NASA documedy futures down to decks. In Germany's up nine

0:12:25.280 --> 0:12:27.959
<v Speaker 1>ten percent, ten year treasury up four thirty seconds, the

0:12:28.040 --> 0:12:31.000
<v Speaker 1>yield one point nine two percent. NIMEX screwed oil down

0:12:31.080 --> 0:12:33.560
<v Speaker 1>one point two percent or fifty cents to forty nineties.

0:12:33.600 --> 0:12:36.280
<v Speaker 1>Six of barrel comes Goal down one point eight percent

0:12:36.400 --> 0:12:38.800
<v Speaker 1>or twenty two dollars eighty cents to twelve twenty five

0:12:38.880 --> 0:12:41.840
<v Speaker 1>seventy and ounce the Euro at dollar eleven seventy eight

0:12:41.960 --> 0:12:45.160
<v Speaker 1>then one twelve point seven seven, and Nike down five

0:12:45.200 --> 0:12:49.160
<v Speaker 1>percent in early trading after its annual forecast missed analysts estimates.

0:12:49.240 --> 0:12:52.000
<v Speaker 1>That's a Bloomberg business flash, Tom and Mike churn I

0:12:52.160 --> 0:12:56.679
<v Speaker 1>thanks so much. It is Wall Street. The following is

0:12:56.760 --> 0:13:01.000
<v Speaker 1>from Bloomberg View opinions in commentary from Bloomberg columnists. I'm

0:13:01.080 --> 0:13:04.600
<v Speaker 1>Paula Dwire, an editor with Bloomberg View. Just About everything

0:13:04.720 --> 0:13:07.480
<v Speaker 1>Donald Trump says about trade is wrong, but his use

0:13:07.559 --> 0:13:11.160
<v Speaker 1>of trade deficit numbers is especially so. To understand why,

0:13:11.400 --> 0:13:14.800
<v Speaker 1>consider his attacks on Apple, which he accuses of destroying

0:13:14.840 --> 0:13:18.320
<v Speaker 1>American jobs by making iPhones in China. The devices are

0:13:18.360 --> 0:13:21.560
<v Speaker 1>designed and engineering in the US. Their software was developed

0:13:21.559 --> 0:13:24.160
<v Speaker 1>by Apple in the US. Many of the parts come

0:13:24.200 --> 0:13:28.080
<v Speaker 1>from suppliers outside China, including Germany, Japan, and South Korea.

0:13:28.280 --> 0:13:31.920
<v Speaker 1>But because China assembles and ships the phones, adding only

0:13:32.000 --> 0:13:35.280
<v Speaker 1>about six dollars and fifty cents in value. According to

0:13:35.360 --> 0:13:38.760
<v Speaker 1>one study, the devices value is attributed to China as

0:13:38.800 --> 0:13:41.520
<v Speaker 1>an export and to the US as an import. You

0:13:41.600 --> 0:13:44.840
<v Speaker 1>can see how the US trade deficit can quickly become inflated.

0:13:45.000 --> 0:13:49.120
<v Speaker 1>One economist calculated that this inflation adds forty percentage points

0:13:49.160 --> 0:13:51.800
<v Speaker 1>to the US trade deficit with China. This is why

0:13:51.880 --> 0:13:54.319
<v Speaker 1>Apple stamps the back of each of its devices with

0:13:54.600 --> 0:13:58.120
<v Speaker 1>designed by Apple in California, assembled in China. So when

0:13:58.160 --> 0:14:01.280
<v Speaker 1>Trump repeatedly claims that the US try deficit with China

0:14:01.520 --> 0:14:04.199
<v Speaker 1>is five five billion dollars a year, don't believe it.

0:14:04.360 --> 0:14:07.240
<v Speaker 1>I'm Paula Dwyer, an editor with Bloomberg View. For more

0:14:07.320 --> 0:14:10.320
<v Speaker 1>commentary and opinion, please go to Bloomberg View dot com.

0:14:10.720 --> 0:14:14.240
<v Speaker 1>This has been Bloomberg View and Bloomberg Commentary can be

0:14:14.280 --> 0:14:18.520
<v Speaker 1>heard hourly weekdays on Bloomberg Radio. Michael mckeem, Tom keane

0:14:18.840 --> 0:14:21.600
<v Speaker 1>again in ten minutes, James Bullard to the St. Louis

0:14:21.640 --> 0:14:24.640
<v Speaker 1>FED and there's a wonderful precursor to that. John Norman

0:14:25.600 --> 0:14:29.240
<v Speaker 1>of JP Morgan in London. John, when you look at

0:14:29.280 --> 0:14:33.320
<v Speaker 1>FED policy, and we've had also whole breakdown in the

0:14:33.400 --> 0:14:36.280
<v Speaker 1>last couple of years on the cadence and rhetoric of

0:14:36.400 --> 0:14:39.920
<v Speaker 1>discussion of the dollar by US public officials. Is it

0:14:40.000 --> 0:14:45.160
<v Speaker 1>appropriate for FED officials to speak on the dollar? Absolutely,

0:14:45.600 --> 0:14:48.360
<v Speaker 1>it's it's a financial variable that affects the economy. And

0:14:48.440 --> 0:14:51.880
<v Speaker 1>since they're charged with managing the business cycle to some extent,

0:14:52.000 --> 0:14:56.040
<v Speaker 1>to ignore a financial variable, whether it's a dollar, credit spreads,

0:14:56.120 --> 0:14:59.480
<v Speaker 1>equity markets would would be the missile, very important piece

0:14:59.520 --> 0:15:02.080
<v Speaker 1>of information. Can we say the same about those in

0:15:02.120 --> 0:15:04.880
<v Speaker 1>the United Kingdom? What an interesting for eight hours it

0:15:04.960 --> 0:15:08.640
<v Speaker 1>has been with Prime Minister Cameron having to discuss Brexit

0:15:09.080 --> 0:15:12.120
<v Speaker 1>along with the tragedy in Brussels, and then we saw

0:15:12.200 --> 0:15:16.440
<v Speaker 1>the Mayor of London, Boris Johnson today reaffirm uh an exit.

0:15:16.800 --> 0:15:19.840
<v Speaker 1>To tell me how the pound will go back and forth,

0:15:19.920 --> 0:15:23.600
<v Speaker 1>as we staggered in late June, Well, I think the

0:15:23.880 --> 0:15:28.080
<v Speaker 1>consequences of of a Brexit are are can be so

0:15:28.240 --> 0:15:31.760
<v Speaker 1>substantial that unless we see a swing in the polls

0:15:32.000 --> 0:15:34.360
<v Speaker 1>in favor of the UK remaining in the EU and

0:15:34.960 --> 0:15:36.880
<v Speaker 1>by a wide margin before the Apple vote on the

0:15:36.920 --> 0:15:40.240
<v Speaker 1>twenty third of June, I think the pound continues to depreciate.

0:15:40.560 --> 0:15:43.400
<v Speaker 1>I would say if the the UK voted to leave

0:15:43.440 --> 0:15:47.040
<v Speaker 1>the EU, you'd probably see an additional ten to decline,

0:15:47.960 --> 0:15:51.840
<v Speaker 1>so that takes you down to level Yeah, I think that.

0:15:51.920 --> 0:15:54.040
<v Speaker 1>I think it could reach that on on a on

0:15:54.160 --> 0:15:58.440
<v Speaker 1>a vote to exit just as extraordinary. That cuts you back, folks,

0:15:58.520 --> 0:16:02.360
<v Speaker 1>to live and the weakness, Well, I think the way

0:16:02.400 --> 0:16:04.280
<v Speaker 1>to think about it is it's a regime change. So

0:16:04.440 --> 0:16:06.280
<v Speaker 1>whenever you have a regime change, there are many types

0:16:06.320 --> 0:16:09.040
<v Speaker 1>of regime changes for currency markets, and and when those

0:16:09.480 --> 0:16:12.440
<v Speaker 1>tend to occur, the adjustment and the currency can be

0:16:12.480 --> 0:16:16.760
<v Speaker 1>anything from from does that does that regime change? And

0:16:16.800 --> 0:16:19.000
<v Speaker 1>there's a whole philosophy behind this, folks. I think of

0:16:19.080 --> 0:16:21.560
<v Speaker 1>Popper out of ls among others. If you have a

0:16:21.600 --> 0:16:25.320
<v Speaker 1>regime change of that type, what does euro sterling do

0:16:25.760 --> 0:16:28.000
<v Speaker 1>and what does it mean for the export machine that

0:16:28.160 --> 0:16:31.200
<v Speaker 1>is Germany? Well, I think it's for sure it's going

0:16:31.240 --> 0:16:35.240
<v Speaker 1>to push the the euro higher, the euro sterling rate higher,

0:16:35.800 --> 0:16:38.600
<v Speaker 1>and I think, um, depending on the magnitude of that,

0:16:38.760 --> 0:16:40.840
<v Speaker 1>this could be a hit to European growth. But I

0:16:41.320 --> 0:16:44.480
<v Speaker 1>don't think of um euro sterling is something that's going

0:16:44.520 --> 0:16:48.080
<v Speaker 1>to substantially reduce the growth outlook for your area. It's

0:16:48.160 --> 0:16:51.680
<v Speaker 1>it's the trade sort of linkages with the UK are

0:16:51.760 --> 0:16:54.280
<v Speaker 1>less important for Europe and say euros trade linkages to

0:16:54.800 --> 0:16:58.880
<v Speaker 1>the US or the emerging markets. Is there a London

0:16:58.960 --> 0:17:01.800
<v Speaker 1>alternative on the continent of Europe? And I say that's

0:17:01.840 --> 0:17:03.920
<v Speaker 1>not after Brussels. I would have said this to you

0:17:04.520 --> 0:17:07.320
<v Speaker 1>five days ago. Is there a do you see an

0:17:07.320 --> 0:17:12.159
<v Speaker 1>alternative to the city. Well, if you think of UH

0:17:12.560 --> 0:17:16.320
<v Speaker 1>comparable cities being defined by the flexibility of the labor market,

0:17:16.359 --> 0:17:18.760
<v Speaker 1>then no, there's no competitor there. There may be there's

0:17:18.840 --> 0:17:21.720
<v Speaker 1>there would be no comparable financial center in Europe. You

0:17:21.720 --> 0:17:26.040
<v Speaker 1>could have uh several competing ones going after the the

0:17:26.600 --> 0:17:29.680
<v Speaker 1>the the market share at the London currently enjoys, But

0:17:30.080 --> 0:17:34.240
<v Speaker 1>I seriously doubt you see one single city with the

0:17:34.320 --> 0:17:38.320
<v Speaker 1>financial influence of London. Ask you about something David Kotok

0:17:38.400 --> 0:17:40.440
<v Speaker 1>was talking about earlier on the show, and that is

0:17:40.520 --> 0:17:42.960
<v Speaker 1>the impact of negative rates from around the world. Their

0:17:42.960 --> 0:17:48.320
<v Speaker 1>work Cumberland Advisors suggest for seeing um US rates depressed

0:17:48.320 --> 0:17:50.920
<v Speaker 1>by thirty to forty basis points. Would you say that's

0:17:50.960 --> 0:17:54.439
<v Speaker 1>a fair assessment? And if that's the case, how does

0:17:54.480 --> 0:17:56.439
<v Speaker 1>the Fed know what to do? And how do how

0:17:56.480 --> 0:17:59.720
<v Speaker 1>do the markets know what to do? I think that's fair.

0:18:00.000 --> 0:18:04.720
<v Speaker 1>In this UH broader dynamic of bigger central bank balance

0:18:04.760 --> 0:18:07.919
<v Speaker 1>sheets as it purchases negative interest rates. It's it's kind

0:18:07.960 --> 0:18:11.320
<v Speaker 1>of the new conundrum um for bond markets in the

0:18:11.359 --> 0:18:13.920
<v Speaker 1>sense that it's it's something that depresses rates in the

0:18:14.000 --> 0:18:17.160
<v Speaker 1>States even as the set is tightening. Question calls conundrum

0:18:17.200 --> 0:18:19.120
<v Speaker 1>if you know what it is already, but any event,

0:18:19.280 --> 0:18:20.960
<v Speaker 1>it's a it's a depressed on the long end, and

0:18:21.240 --> 0:18:24.600
<v Speaker 1>normally we think, you know, the lesson from the greenspan

0:18:24.960 --> 0:18:27.960
<v Speaker 1>um tightening was that if a conundrum is weighing on

0:18:28.040 --> 0:18:29.879
<v Speaker 1>the on on long end yields, they have to move

0:18:29.920 --> 0:18:33.320
<v Speaker 1>short in rates more. But I think, um, the Fed

0:18:33.359 --> 0:18:35.840
<v Speaker 1>won't necessarily have to raise rates more because the treasury

0:18:35.880 --> 0:18:38.760
<v Speaker 1>market fails to sell off what what they're getting in

0:18:38.880 --> 0:18:42.560
<v Speaker 1>exchange instead of higher treasure yields, as they're getting wider

0:18:42.600 --> 0:18:45.080
<v Speaker 1>credit spreads, weaker equity prices, and a stronger dollar. So

0:18:45.600 --> 0:18:47.800
<v Speaker 1>you know, the whole kind of range of financial conditions

0:18:48.240 --> 0:18:52.840
<v Speaker 1>can still tighten in the US even exactly never cracks

0:18:52.920 --> 0:18:55.800
<v Speaker 1>two percent. This is a really important idea that the

0:18:55.960 --> 0:18:59.680
<v Speaker 1>markets do for the FED what the Fed can't do publicly.

0:18:59.760 --> 0:19:03.600
<v Speaker 1>Do I have that right? Yes, that's fair. Absolutely. How

0:19:03.640 --> 0:19:07.840
<v Speaker 1>many rate increases is the market assisted? Jerry Yelling with

0:19:09.200 --> 0:19:14.240
<v Speaker 1>two already. It's hard to say. I agree, it's esoteric

0:19:14.400 --> 0:19:16.840
<v Speaker 1>to say the least. I guess, I guess. All we

0:19:16.960 --> 0:19:20.480
<v Speaker 1>know is that um despite cash rates having gone up

0:19:20.600 --> 0:19:24.320
<v Speaker 1>only basis points. Uh, the US is still kind of

0:19:24.359 --> 0:19:29.919
<v Speaker 1>struggling to consistently print growth and corporate profits are are contracting.

0:19:30.040 --> 0:19:33.000
<v Speaker 1>So the economy is sort of behaving as if it's

0:19:33.000 --> 0:19:35.840
<v Speaker 1>at a slump, even with loose monetary conditions that are

0:19:35.880 --> 0:19:38.520
<v Speaker 1>defined by the cash rates. That's sort of suggumptive of

0:19:39.160 --> 0:19:41.640
<v Speaker 1>all other financial conditions that are weighing on the US economy,

0:19:41.640 --> 0:19:45.480
<v Speaker 1>particularly the level of the dollar. John Norman, thank you

0:19:45.600 --> 0:19:48.960
<v Speaker 1>for a perfect briefing before James Browner. Mr Norman is

0:19:49.040 --> 0:19:51.600
<v Speaker 1>with JP Morgan in London. Loved to speak to him

0:19:51.600 --> 0:19:55.520
<v Speaker 1>when we're over visiting London as well, and certainly he's

0:19:55.520 --> 0:20:00.160
<v Speaker 1>adjusting dollar strength views to more dollars stability to any

0:20:00.320 --> 0:20:04.200
<v Speaker 1>which pair you're speaking with, also timely there as well. Uh.

0:20:04.440 --> 0:20:07.639
<v Speaker 1>The discussion on pounds sterling weird. Steve Gallo over at

0:20:08.119 --> 0:20:11.920
<v Speaker 1>Demo Capital Markets suggests the same vector on Brexit, and

0:20:12.119 --> 0:20:15.120
<v Speaker 1>only on Brexit you need that vote to get there,

0:20:15.640 --> 0:20:18.399
<v Speaker 1>but of attend to fifteen percent adjustment, which is in

0:20:18.440 --> 0:20:23.320
<v Speaker 1>the vicinity with a broad statement of sterling, which um,

0:20:23.760 --> 0:20:25.600
<v Speaker 1>I'm just in the camp folks that I think it

0:20:25.640 --> 0:20:29.800
<v Speaker 1>would be a profound change on tourism and the dynamics

0:20:29.840 --> 0:20:33.400
<v Speaker 1>of consumption within and without the United Kingdom. We'll see

0:20:33.400 --> 0:20:38.080
<v Speaker 1>what we do if we go from to one. This

0:20:38.160 --> 0:20:41.360
<v Speaker 1>is the most interesting if you're just joining us worldwide.

0:20:41.359 --> 0:20:49.399
<v Speaker 1>Bloomberg twelve, Boston, FM, Washington and Baltimore six, the Bay Area,

0:20:49.720 --> 0:20:53.439
<v Speaker 1>in San Francisco, and of course in New York eleven three. Oh,

0:20:53.600 --> 0:20:56.720
<v Speaker 1>we say good morning, particularly to all of you on

0:20:56.840 --> 0:21:00.679
<v Speaker 1>serious and next time Channel one in the Federal Reserve

0:21:00.760 --> 0:21:03.840
<v Speaker 1>Bank of St. Louis District, James Bullard. I just saw

0:21:03.920 --> 0:21:06.200
<v Speaker 1>him walk by. Michael McKee has wandered out to greet

0:21:06.720 --> 0:21:10.480
<v Speaker 1>President Bullard, and we will have an important and lengthy

0:21:10.560 --> 0:21:15.480
<v Speaker 1>conversation with Mr Bullard. One of the things that's fun is,

0:21:15.880 --> 0:21:18.359
<v Speaker 1>as a rule, which we've always done on surveillance and

0:21:18.400 --> 0:21:22.320
<v Speaker 1>Bloomberg Anty economy, we never get together and go over

0:21:22.480 --> 0:21:26.120
<v Speaker 1>our questions. I have no idea where Michael McKee's going.

0:21:26.520 --> 0:21:30.040
<v Speaker 1>He has no idea where I'm going, and that makes

0:21:30.080 --> 0:21:33.840
<v Speaker 1>it interesting. We're gonna talk about policy. Maybe we'll both

0:21:35.119 --> 0:21:36.959
<v Speaker 1>maybe we'll talk about the Red Sox beat the Cardinals

0:21:37.080 --> 0:21:40.359
<v Speaker 1>yesterday and spring training as a game that didn't count

0:21:40.960 --> 0:21:45.400
<v Speaker 1>unlike in October. But anyways, UM, it's as much fun

0:21:45.560 --> 0:21:47.960
<v Speaker 1>for me and Mike because we really don't know where

0:21:47.960 --> 0:21:51.720
<v Speaker 1>we're going with anyone, and particularly with as someone as

0:21:51.800 --> 0:21:55.600
<v Speaker 1>smart as a PhD from Indiana University James Bullard. So

0:21:55.640 --> 0:21:58.080
<v Speaker 1>this will be important for those young global Wall Street

0:21:58.400 --> 0:22:01.959
<v Speaker 1>always Jim Bullard can move the markets to yield one

0:22:03.600 --> 0:22:06.040
<v Speaker 1>the thirty year bond, haven't quoted an ages two point

0:22:06.119 --> 0:22:10.520
<v Speaker 1>seven one percent. Oil churns forty one barrel. The yen

0:22:10.600 --> 0:22:14.640
<v Speaker 1>one twelve eighty. That's a weaker yen, weaker euro one

0:22:14.720 --> 0:22:21.320
<v Speaker 1>eleven seventy four in sterling. Next, a conversation with Jim

0:22:21.440 --> 0:22:23.960
<v Speaker 1>Bullard Worldwide Bloomberg Surveillance