1
00:00:03,000 --> 00:00:07,280
Speaker 1: Broadcasting live to New York Cloomberg eleventh, RYO to Washington,

2
00:00:07,400 --> 00:00:12,400
Speaker 1: d C, Bloomberg to Boston, Bloomberg twelve hunders to San Francisco,

3
00:00:12,520 --> 00:00:16,280
Speaker 1: Bloomberg nine sixteen to the country. SEIS Exam Channel one

4
00:00:16,360 --> 00:00:19,880
Speaker 1: nineteen and around the glow the Bloomberg Radio Plus Appen

5
00:00:19,920 --> 00:00:24,120
Speaker 1: Bloomberg dot com. This is Bloomberg Surveillance. Good morning. I'm

6
00:00:24,160 --> 00:00:26,880
Speaker 1: Karen Moscow along with Tom Keene and Michael McKee, and

7
00:00:26,920 --> 00:00:29,560
Speaker 1: the opening bell is brought to you by se I

8
00:00:29,560 --> 00:00:33,000
Speaker 1: Imagine when cognitive computing shapes the experience you create for

9
00:00:33,040 --> 00:00:36,239
Speaker 1: your investors. See how sc has a global operating platform

10
00:00:36,280 --> 00:00:39,280
Speaker 1: can be your catalyst for business intelligence at se i

11
00:00:39,360 --> 00:00:42,880
Speaker 1: C dot com slash imagine Stocks lower at the open.

12
00:00:42,920 --> 00:00:44,880
Speaker 1: The S and P five hundred is down six tenths

13
00:00:44,880 --> 00:00:47,680
Speaker 1: per center twelve points to nineteen o eight, Dow Jones

14
00:00:47,760 --> 00:00:50,640
Speaker 1: Industrial Average down six tenths per center ninety three points

15
00:00:50,640 --> 00:00:53,559
Speaker 1: to sixteen thousand, three hundred thirty nine, and then AZDAC

16
00:00:53,640 --> 00:00:55,720
Speaker 1: down one point one per cent or forty eight points

17
00:00:55,960 --> 00:00:58,800
Speaker 1: to forty four fifty four ten. Your treasury up nine

18
00:00:58,840 --> 00:01:01,600
Speaker 1: thirty seconds. The yield point six eight percent yield done

19
00:01:01,600 --> 00:01:04,480
Speaker 1: the two year point seven one percent. Now I'm ex screwed.

20
00:01:04,520 --> 00:01:07,360
Speaker 1: Oil down three point six percent, down a dollar fourteen

21
00:01:07,360 --> 00:01:10,400
Speaker 1: to thirty dollars seventy three cents of barrel com scold

22
00:01:10,480 --> 00:01:12,680
Speaker 1: up one point eight percent, or twenty two dollars forty

23
00:01:12,720 --> 00:01:15,720
Speaker 1: cents to twelve forty five announced the euro anollar oh

24
00:01:15,800 --> 00:01:18,679
Speaker 1: nine seven six a yen one eleven point seven three.

25
00:01:18,840 --> 00:01:21,200
Speaker 1: Tom and Mike, thank you so much, Karen, Mike. It's

26
00:01:21,280 --> 00:01:27,000
Speaker 1: always interesting when the German Central Bank speaks. It's not

27
00:01:27,040 --> 00:01:28,880
Speaker 1: like when we were kids it was a huge deal,

28
00:01:29,000 --> 00:01:31,440
Speaker 1: but it's still a big deal. It's the backbone of

29
00:01:31,920 --> 00:01:35,720
Speaker 1: the background of the European Central Bank, coming from the

30
00:01:35,760 --> 00:01:39,680
Speaker 1: Buddhist Bank. Throughout the program, we have been tracing UH

31
00:01:40,160 --> 00:01:43,520
Speaker 1: the outlook for the global economy through the eyes of

32
00:01:43,600 --> 00:01:49,000
Speaker 1: policymakers and UH analysts, and we started with Jack Luise

33
00:01:49,080 --> 00:01:52,240
Speaker 1: suggesting that there is no crisis in the world. Marty

34
00:01:52,280 --> 00:01:58,200
Speaker 1: Feldstein agreed, Diana Va agreed, and pushed back strongly against

35
00:01:58,200 --> 00:02:01,880
Speaker 1: central banks over real looking to what we are seeing.

36
00:02:02,480 --> 00:02:05,080
Speaker 1: The next central bank that everybody's get their eyes on

37
00:02:05,360 --> 00:02:09,400
Speaker 1: March tenth, the European Central Bank. What happens next with them?

38
00:02:09,880 --> 00:02:12,119
Speaker 1: Our Hans Nickels sat down just a few moments ago

39
00:02:12,160 --> 00:02:15,320
Speaker 1: with the ends vitement. He's the president of the Bundesbank.

40
00:02:16,160 --> 00:02:20,800
Speaker 1: It's clear that the current price developments warrant a Thoro

41
00:02:20,960 --> 00:02:24,720
Speaker 1: monetary policy debate and the sense that other prices have

42
00:02:24,960 --> 00:02:28,840
Speaker 1: a major dampening influence on on on on prices at

43
00:02:28,880 --> 00:02:33,040
Speaker 1: this time. But what we must ask ourselves is to

44
00:02:33,080 --> 00:02:36,359
Speaker 1: what extent this is only a short, short term development

45
00:02:36,720 --> 00:02:39,679
Speaker 1: through which we should look, or to what extent it's

46
00:02:39,680 --> 00:02:44,600
Speaker 1: affecting the medium term inflation outlook through second ground effects

47
00:02:44,720 --> 00:02:47,520
Speaker 1: or its effects on inflation expectations. So let me ask you,

48
00:02:47,600 --> 00:02:50,560
Speaker 1: how would you then guide market expectations. Would you make

49
00:02:50,560 --> 00:02:53,600
Speaker 1: it clear that you're focusing on this medium term. I

50
00:02:53,639 --> 00:02:56,240
Speaker 1: think it's pretty obvious that we are focusing on the

51
00:02:56,240 --> 00:02:59,200
Speaker 1: medium term, and nobody contests that. I think we need

52
00:02:59,200 --> 00:03:02,760
Speaker 1: a Floro debate first on the necessity to act, and

53
00:03:02,800 --> 00:03:06,160
Speaker 1: then we can have a debate on the instruments at

54
00:03:06,160 --> 00:03:09,359
Speaker 1: our disposing. How bad do things need to get before

55
00:03:09,480 --> 00:03:12,880
Speaker 1: Jans Viman, president of Bonus Bank, changes his view on

56
00:03:13,000 --> 00:03:17,160
Speaker 1: negative indust rates? What do you want negative interest rates?

57
00:03:17,280 --> 00:03:19,640
Speaker 1: Do you mean? Well? You seem to be fairly opposed

58
00:03:19,639 --> 00:03:22,280
Speaker 1: to negative interest rates. You seem like that's not necessarily

59
00:03:22,320 --> 00:03:25,080
Speaker 1: the right. It's the riskory word payout isn't is the

60
00:03:25,800 --> 00:03:29,240
Speaker 1: isn't where you'd want to know. I think what I

61
00:03:29,280 --> 00:03:32,880
Speaker 1: meant to say was that there are some instruments in

62
00:03:32,919 --> 00:03:37,680
Speaker 1: our toolbox that I deem much more problematic than others,

63
00:03:38,280 --> 00:03:41,840
Speaker 1: and the purchases of SOUTHERETHERN bonds are certainly among them.

64
00:03:41,880 --> 00:03:43,960
Speaker 1: I mean, I do believe that in the currency union,

65
00:03:44,640 --> 00:03:48,080
Speaker 1: as the one like the one we we we have here,

66
00:03:49,280 --> 00:03:53,080
Speaker 1: this creates a risk of blurring the lines between fiscal

67
00:03:53,120 --> 00:03:57,960
Speaker 1: policy and monetary policy. That is problematic for monetary policy

68
00:03:58,040 --> 00:04:02,920
Speaker 1: for its independence, and in that sense, I consider purchases

69
00:04:02,920 --> 00:04:08,080
Speaker 1: of sovereign debt as a ultima ratio instrument. The other

70
00:04:08,160 --> 00:04:12,040
Speaker 1: tools that you mentioned are much more conventional and in

71
00:04:12,040 --> 00:04:16,960
Speaker 1: a sense from my perspective, UH don't have this same

72
00:04:17,000 --> 00:04:20,200
Speaker 1: threshold in their in their application. But again it's not

73
00:04:21,080 --> 00:04:23,720
Speaker 1: about single instruments. First we have to analyze is there

74
00:04:23,720 --> 00:04:27,839
Speaker 1: a need to act or is monetary policy already expansionary

75
00:04:28,000 --> 00:04:31,760
Speaker 1: enough given the current situation, And then we have to

76
00:04:31,800 --> 00:04:34,280
Speaker 1: decide which instruments to use. So you're open the negative

77
00:04:34,279 --> 00:04:38,839
Speaker 1: interest rates, we already have negative interest rates h And

78
00:04:38,880 --> 00:04:43,200
Speaker 1: again this is I mean, we're moving into uncharted territory.

79
00:04:43,760 --> 00:04:47,080
Speaker 1: The further we move there, the more we have also

80
00:04:47,520 --> 00:04:51,920
Speaker 1: to carefully consider side effects that these measures might create.

81
00:04:52,400 --> 00:04:55,840
Speaker 1: But in principle this is what central banks do. They

82
00:04:55,880 --> 00:05:01,680
Speaker 1: set the interest rates. The invironment President of the Bundesbank

83
00:05:01,720 --> 00:05:05,279
Speaker 1: Sea that was quite frank Frankly, that was that was

84
00:05:05,279 --> 00:05:08,040
Speaker 1: a very direct set of commons. Torsten slack with us

85
00:05:08,040 --> 00:05:12,960
Speaker 1: with Deutsche Bank. Torsten, with your perspective, in your European perspective,

86
00:05:13,320 --> 00:05:17,400
Speaker 1: how has the Bundesbank relationship changed in the last twenty

87
00:05:17,400 --> 00:05:22,520
Speaker 1: four months with Frankfurt and the e c B. Well,

88
00:05:22,680 --> 00:05:26,800
Speaker 1: let's I would say that obviously Germany is a very

89
00:05:26,839 --> 00:05:29,560
Speaker 1: important part of the European Union and very important part

90
00:05:29,560 --> 00:05:32,840
Speaker 1: of the e CB decision making. And of course it's

91
00:05:32,880 --> 00:05:36,920
Speaker 1: a critical at this point that we have a quid

92
00:05:36,960 --> 00:05:42,400
Speaker 1: debate about, as a Witman says, do we need more stimulus?

93
00:05:43,240 --> 00:05:47,279
Speaker 1: What type of stimulus could be needed? And most importantly

94
00:05:47,320 --> 00:05:50,960
Speaker 1: the big experiment of negative interest rates, Um, how much

95
00:05:51,000 --> 00:05:58,120
Speaker 1: further can that go without creating unintended consequences? And what

96
00:05:58,360 --> 00:06:01,240
Speaker 1: is the Deutsche Bank touched and slow few is it

97
00:06:01,960 --> 00:06:05,640
Speaker 1: are negative interest rates, especially in big economies like the

98
00:06:05,720 --> 00:06:10,839
Speaker 1: Eurozone working? Do they need more? I have been surprised

99
00:06:11,000 --> 00:06:14,120
Speaker 1: that they actually has worked so well in Denmark, Sweden

100
00:06:14,160 --> 00:06:16,640
Speaker 1: and Switzerland and also of course to the e GB.

101
00:06:18,200 --> 00:06:20,320
Speaker 1: But up to this point, I think the conclusion is

102
00:06:20,400 --> 00:06:26,080
Speaker 1: that it is working. The big question becomes now a

103
00:06:26,200 --> 00:06:30,120
Speaker 1: negative interest rates are only modestly negative and Minustero point

104
00:06:30,160 --> 00:06:34,480
Speaker 1: seven five? And what if we do push negative interust

105
00:06:34,560 --> 00:06:38,920
Speaker 1: rates much further down? You do start to wonder what

106
00:06:38,960 --> 00:06:42,039
Speaker 1: the pcase could be and if this will be as

107
00:06:42,080 --> 00:06:46,919
Speaker 1: effective as the economics textbook would simply suggest. Because economic

108
00:06:46,920 --> 00:06:49,560
Speaker 1: textbook is very clear it says just lower interest rates,

109
00:06:49,720 --> 00:06:52,040
Speaker 1: and even if you lower them negatively, that should not

110
00:06:52,120 --> 00:06:55,280
Speaker 1: be a big problem. But the problem of course becomes

111
00:06:55,800 --> 00:06:58,679
Speaker 1: in particular and the practical discussion of negative interest rates.

112
00:06:59,000 --> 00:07:02,440
Speaker 1: Do you you have negative insists rates both for depositors?

113
00:07:02,520 --> 00:07:05,360
Speaker 1: Do you have for corporate? Should you have a two

114
00:07:05,480 --> 00:07:09,480
Speaker 1: tiers deposit system? Will people start to react from an

115
00:07:09,480 --> 00:07:14,440
Speaker 1: intensive perspective negativest rates? So a lot of unanswered questions

116
00:07:14,480 --> 00:07:18,760
Speaker 1: in this experiment that that's being carried out at the moment. Well,

117
00:07:18,800 --> 00:07:22,560
Speaker 1: let's get back to your research. Negative interest rates certainly

118
00:07:22,560 --> 00:07:24,800
Speaker 1: work if you want to drive people away from your currency,

119
00:07:24,840 --> 00:07:28,640
Speaker 1: as the Danes and the Swiss did, But in terms

120
00:07:28,720 --> 00:07:32,880
Speaker 1: of the theory that it boost lending because banks would

121
00:07:33,000 --> 00:07:36,680
Speaker 1: rather lend at a small positive rate than deposit cash

122
00:07:36,720 --> 00:07:39,440
Speaker 1: at the at the central bank and have to pay

123
00:07:39,520 --> 00:07:43,560
Speaker 1: for it. Is lending rising, is credit more available now

124
00:07:43,920 --> 00:07:47,520
Speaker 1: in the euro Zone. So the issue becomes that once

125
00:07:47,600 --> 00:07:51,600
Speaker 1: you cut through zero in theory, exactly as you say, Mike,

126
00:07:51,920 --> 00:07:56,040
Speaker 1: you should see more lending because if interest rates a

127
00:07:56,080 --> 00:07:59,920
Speaker 1: plus fifty basis points or minus fifty basis points, that's

128
00:08:00,080 --> 00:08:03,120
Speaker 1: shouldn't at least create a non linear effect around zero.

129
00:08:03,240 --> 00:08:06,960
Speaker 1: But what is a very significant nonlinear effect around zero is,

130
00:08:07,000 --> 00:08:11,800
Speaker 1: of course confidence. There's a lot of confidence their confidence

131
00:08:11,880 --> 00:08:16,400
Speaker 1: issues around whether zero is a magic number, and that

132
00:08:16,520 --> 00:08:20,360
Speaker 1: confidence effect on the negative side could mean, in the

133
00:08:20,360 --> 00:08:23,040
Speaker 1: worst case, that consumers and corporates not holding back because

134
00:08:23,040 --> 00:08:25,200
Speaker 1: they're losing confidence in whether this experiment is working on

135
00:08:25,280 --> 00:08:27,880
Speaker 1: not slack, thank you so much. With Deutsche Bank and

136
00:08:29,040 --> 00:08:31,840
Speaker 1: Professor Summers of Harvard Larry Summers has made a huge

137
00:08:31,880 --> 00:08:36,280
Speaker 1: deal about this overlay of confidence upon our monetary and

138
00:08:36,360 --> 00:08:39,960
Speaker 1: indeed our fiscal certitude, as well, what we know is certain.

139
00:08:40,080 --> 00:08:43,840
Speaker 1: Looking at the Bloomberg, the down negative one two, the

140
00:08:43,880 --> 00:08:46,319
Speaker 1: vix up a good stick point four eight one point

141
00:08:46,360 --> 00:08:50,800
Speaker 1: four eight points twenty two point four six sort of

142
00:08:50,920 --> 00:08:53,960
Speaker 1: captures the angst of the morning. I do need to

143
00:08:53,960 --> 00:08:56,880
Speaker 1: convey that it's a lot better than it was two

144
00:08:56,880 --> 00:08:59,880
Speaker 1: and a half hours ago. Looking at Sterling as the

145
00:09:00,080 --> 00:09:04,400
Speaker 1: media proxy one was stunning, We've come back with a

146
00:09:04,440 --> 00:09:10,080
Speaker 1: bit stronger Sterling in the last oh ninety minutes one

147
00:09:09,480 --> 00:09:18,120
Speaker 1: nine fifteen on cable this morning. This hour of surveillance

148
00:09:18,240 --> 00:09:20,680
Speaker 1: is brought to you by Volvo Cars, White Planes. Visit

149
00:09:20,720 --> 00:09:23,800
Speaker 1: Volvo Cars, White Planes dot Com. Here's John t. But

150
00:09:23,960 --> 00:09:27,720
Speaker 1: Donald Trump's dominating victory of the Nevada Concusses pushes him

151
00:09:27,840 --> 00:09:30,600
Speaker 1: further out ahead of his nearest competitors for the Republican

152
00:09:30,640 --> 00:09:35,079
Speaker 1: presidential nomination, giving his unorthodox canthidacy a major boost heading

153
00:09:35,080 --> 00:09:38,599
Speaker 1: into Super Tuesday contest next week. Hillary Clinton doesn't just

154
00:09:38,640 --> 00:09:40,880
Speaker 1: want to beat Bernie Sanders in South Carolina. She wants

155
00:09:40,880 --> 00:09:43,959
Speaker 1: to beat expectations. She is running more than twenty points

156
00:09:43,960 --> 00:09:47,280
Speaker 1: ahead of Sanders in those poles heading into Saturday's Democratic

157
00:09:47,280 --> 00:09:51,640
Speaker 1: presidential primary, voyed by overwhelming support from the state's lack

158
00:09:51,679 --> 00:09:54,960
Speaker 1: of voters, and members of Congress will hear more about

159
00:09:54,960 --> 00:09:58,920
Speaker 1: the Zega virus today has the CDC investigates fourteen new

160
00:09:58,960 --> 00:10:03,480
Speaker 1: cases of possible sexual transmission. The House Oversight Committee will

161
00:10:03,480 --> 00:10:06,280
Speaker 1: be getting updates from the CDC and the National Institutes

162
00:10:06,440 --> 00:10:09,880
Speaker 1: of Health and Uber Technology is starting its very first

163
00:10:10,120 --> 00:10:14,360
Speaker 1: motorcycle taxi service in Bangkok, where a congestion leads to Russia.

164
00:10:14,360 --> 00:10:16,959
Speaker 1: Our traffic speeds in the Thailand capital of just about

165
00:10:17,080 --> 00:10:20,800
Speaker 1: seven miles per hour. My town of New Jersey so small,

166
00:10:21,000 --> 00:10:23,440
Speaker 1: we don't have Uber. I have a guy who drives

167
00:10:23,440 --> 00:10:25,240
Speaker 1: around at a pickup. You just jump with them back

168
00:10:25,559 --> 00:10:29,480
Speaker 1: up the back. His name is Gouber. Gouber. I know

169
00:10:29,640 --> 00:10:31,520
Speaker 1: it will be interesting to see how over expands up

170
00:10:31,679 --> 00:10:37,840
Speaker 1: motorcycle into this. Yeah, not there either. Oil West Texas

171
00:10:37,880 --> 00:10:40,240
Speaker 1: down a dollar twenty two. That's a deterioration through the

172
00:10:40,280 --> 00:10:44,680
Speaker 1: morning thirty dollars sixty cents. Decidedly not through any level

173
00:10:44,720 --> 00:10:47,320
Speaker 1: of support that we've seen over the last couple of days.

174
00:10:47,440 --> 00:10:51,880
Speaker 1: Brent thirty two fifty two down a lesser amount point

175
00:10:52,240 --> 00:10:56,679
Speaker 1: seven five. This is the greater part of Bloomberg surveillance.

176
00:10:56,960 --> 00:11:03,320
Speaker 1: Thank you for listening, stay with us. Bloomberg Surveillance is

177
00:11:03,520 --> 00:11:05,720
Speaker 1: brought to you by Flushing Bank. Open a complete business

178
00:11:05,760 --> 00:11:07,880
Speaker 1: checking account with fifteen thousand dollars or more and get

179
00:11:07,920 --> 00:11:10,679
Speaker 1: a free sixteen gig WiFi tablet. Visit Flushing bank dot

180
00:11:10,720 --> 00:11:13,760
Speaker 1: com for details. Member fdi C Equal Housing Blender