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Speaker 1: Broadcasting live to New York Bloomberg eleventh Rio to Washington,

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Speaker 1: d C. Bloomberg to Boston, Bloomberg twelve hundreds to San Francisco,

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Speaker 1: Bloomberg to the country Sea Channel one nine and around

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Speaker 1: the globe the Bloomberg Radio plus an Bloomberg dot Com.

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Speaker 1: This is blomberk Surveillance. Good morning, It is eight thirty

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Speaker 1: on Wall Street. I'm Michael McKee along with Tom King.

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Speaker 1: We are not on Wall Street today. We are in

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Speaker 1: London the first of a week long series of shows

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Speaker 1: on the Brexit referendum. We'll have that for you every

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Speaker 1: day on the program here. But we do keep track

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Speaker 1: of what's going on in the United States, and our

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Speaker 1: economic indicators are brought to you by Brooks Brothers Big Event,

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Speaker 1: the semi annual sale is going on now through June.

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Speaker 1: Shop early for the best selection. Visit Brooks Brothers dot

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Speaker 1: com to shop the entire collection or find the location

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Speaker 1: closest to you, which you can do because you're not

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Speaker 1: going to miss anything in the economy. There are no

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Speaker 1: economic indicators today. We do have Neil cash Kari, the

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Speaker 1: Minneapolis Fed President, giving some remarks on the banking system,

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Speaker 1: and then tomorrow a person named Yelling. You may have

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Speaker 1: heard of her. She goes up to Capitol Hill her

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Speaker 1: semi annual testimony on Monetary policy and the Economy, otherwise

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Speaker 1: known as the formerly known as the Humphrey Hawkins Report.

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Speaker 1: It was brought forward by about a month because your

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Speaker 1: representatives in Congress want to leave Congress early this year

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Speaker 1: to get out onto the campaign trail, and if if

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Speaker 1: it were at its normal time in about the third

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Speaker 1: week of July, it would be conflicting with the presidential

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Speaker 1: nominating conventions. So we get Humphrey Hawkins tomorrow risk on

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Speaker 1: very quickly. Before we get to miss Waka Michael, let

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Speaker 1: you bring in Diane to talk about the US economy.

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Speaker 1: Let me frame Sterling. Sterling went in the latest bout

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Speaker 1: of Brexit from a one forty seven seven sixteen all

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Speaker 1: the way down near one. We've made back a good

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Speaker 1: of that in three sessions at one seven, Mike, two

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Speaker 1: standard deviations of remain strength is a stick above here,

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Speaker 1: one forty seven nine six rounded up to We need

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Speaker 1: to get to a one to really show a massive

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Speaker 1: shifting trend. We're not there yet. Yeah, well, I would

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Speaker 1: warn you if we get to a one eight they're

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Speaker 1: coming for your company credit card while we're over here.

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Speaker 1: That's true, that would be true. We we've we we

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Speaker 1: are not helping you. The question is the day the

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Speaker 1: family or today read O Keeper MX. We're in trouble

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Speaker 1: both ways. Diane Swak is in Chicago. She's not over

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Speaker 1: here in London spending money. But hopefully she's stimulating the U.

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Speaker 1: S economy. Of course, she's the founder of DS Economics.

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Speaker 1: She joins us. Now, Uh, Diane, It's an interesting week

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Speaker 1: because we do get an early look at what Janet

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Speaker 1: Yellen thinks. But we get this just a week after

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Speaker 1: she told us what she thought last after the FED vote. Um,

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Speaker 1: is there anything she can say that will satisfy anybody

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Speaker 1: about anything at this point? That's a good question, Mike.

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Speaker 1: I mean, unfortunately, I think Janet Yellen is in a

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Speaker 1: painted herself into a very difficult corner at this moment

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Speaker 1: in time. Clearly, the Brexit vote did weigh heavily on

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Speaker 1: the FED, and uncertainties about what growth abroad meant weighed

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Speaker 1: heavily on the FED. But there's also a real credibility

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Speaker 1: issue going on. She had you know, we had Bullard

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Speaker 1: out last week's saying you know, he sort of put

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Speaker 1: his one one and done for the whole rate forecast

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Speaker 1: because he doesn't think the rate forecasts are very useful.

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Speaker 1: That rebellion um within the set to about the Dots.

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Speaker 1: I'm gonna dump the Dots campaign because I don't think

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Speaker 1: they're very useful anymore. I think they've lost their youth.

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Speaker 1: But I think that credibility issues one in an election

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Speaker 1: year where people's emotions are already high, it's going to

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Speaker 1: be tough for her on the hill this week. Yeah,

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Speaker 1: remembers of the Congress. I mean that if they want

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Speaker 1: to be rude, they can point out that the FED

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Speaker 1: has had a very hard time coming up with an

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Speaker 1: economic forecast. That's how they get on TV. Remember that

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Speaker 1: I was being polite abused. I know both sides of

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Speaker 1: the islands have been very rude to yelling when when

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Speaker 1: they when they are rude. We can hope the comedy

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Speaker 1: we're seeing, we're seeing a little bit better attitude here

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Speaker 1: in in the UK. Maybe that will transfer across the pond.

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Speaker 1: But when they get up there and ask her questions, uh,

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Speaker 1: and say why can't you ever get your forecast right?

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Speaker 1: What does she say? I think this is the time

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Speaker 1: where she needs to start saying, you know, they decede

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Speaker 1: needs to pivot from data dependence, which includes forecasts, and

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Speaker 1: say we're doing the best weekend. The world's an uncertain

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Speaker 1: place and at the end of the day, decide is

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Speaker 1: reacting the best they tend to incoming information. They're not

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Speaker 1: to be able to manage expectations. It's already been clear

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Speaker 1: they've been an able to manage market expectations because frankly,

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Speaker 1: the market has been better than the Federal Reserve at

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Speaker 1: predicting what the FED would do, and it brings in

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Speaker 1: an issue of credibility. It's not that necessarily the FED

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Speaker 1: is always wrong, although they have been consistently under forecasting

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Speaker 1: their ability to raise rates. And that's critical because when

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Speaker 1: you tell the markets and Congress that you think you're

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Speaker 1: going to raise rates and then you don't, it comes

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Speaker 1: back to haunt you. And I think the FED needs

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Speaker 1: to get away from what they had help would be

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Speaker 1: forward guidance, and I think that's a critical issue of

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Speaker 1: communications are not at their best right now anywhere, and

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Speaker 1: I think we've seen that the political environment around the

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Speaker 1: globe is heated and that's not productive. You need to

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Speaker 1: do is Ranching ranked things down a bit, ratt things

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Speaker 1: down a bit, and that includes what we expect of

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Speaker 1: the FED in terms of you know, they're not some

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Speaker 1: ivory tower and they don't have all the answers Diane. Um,

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Speaker 1: we're totally focused on those international political events here in London.

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Speaker 1: I'm interested in what no one's expecting, which is a breakout.

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Speaker 1: I sound like Jim Morrison of the Doors break out

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Speaker 1: to the other side. The idea of the Atlanta GDP

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Speaker 1: index is something else breaking out of that two point

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Speaker 1: six two point seven percent range. Is that on your

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Speaker 1: radar that things can become simply more optimistic? I wish

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Speaker 1: it was right now, um, And boy would I love

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Speaker 1: to be wrong. And I think we're unfortunately caught in

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Speaker 1: about a two to two and a quarter percent. We're

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Speaker 1: going to snap back in the second quarter, but we've

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Speaker 1: got this really bad seasonal pattern that's gone on for

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Speaker 1: a long time, with the week first quarter then feeding

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Speaker 1: our fears of what the second quarter is gonna look back,

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Speaker 1: and it comes back in the second quarter and then

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Speaker 1: we slow down again. And I think the reality is

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Speaker 1: that we are dealing with an economy. You know, I

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Speaker 1: just wrote a piece saying it was no joy ride.

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Speaker 1: I'm from Detroit, and you know what do I feel

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Speaker 1: about the economy. It's like it's like recovering after a

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Speaker 1: multi car crash. Our choris six are our wounds appealed,

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Speaker 1: but the trauma is still there. And that's global and scope,

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Speaker 1: and that's the part that we can policy. Our doctors

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Speaker 1: in Marhington haven't held much with that. Right. Let's come

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Speaker 1: back with Diane Swunk ds Economics Loss to talk about

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Speaker 1: on the American economy, including her Chicago Cubs features up

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Speaker 1: seven down features up to sixteen. This our surveillance brought

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Speaker 1: you by Volvo Cars, White Planes. Visit Volvo Cars, White

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Speaker 1: Planes dot Com. Here's Michael Barr with news headlines. My Tom,

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Speaker 1: thank you very much. The Senate willhold procedural votes today

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Speaker 1: on four gun control provisions. It comes more than a

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Speaker 1: week after a massacre at a gay nightclub in Orlando, Florida. Meanwhile,

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Speaker 1: the first inside look at the shooting will come today

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Speaker 1: when the FBI releases a partial transcript of the conversations

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Speaker 1: between the gunmen within the Pulse gay nightclub and Orlando

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Speaker 1: police negotiators. Federal investigators have been promising more inside into

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Speaker 1: the tragedy that killed forty nine people and wounded fifty

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Speaker 1: three others. The Southwest is under us stifling heat wave.

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Speaker 1: Dr Eric Nastro at California's North Hospital says people have

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Speaker 1: to stay safe in the dangerous triple digit temperatures. You

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Speaker 1: want to do your best to basically avoid stay in

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Speaker 1: the sun if possible. You want to hydrate, and if

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Speaker 1: you anticipate doing any physical exertion outside or being outside

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Speaker 1: in the hot sun, you want to hydrate early and often.

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Speaker 1: In Phoenix even a hundred eighteen degrees yesterday, The Solar

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Speaker 1: plane is another step close to the reaching its historic

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Speaker 1: goal of circling the globe. The Solar Impulse to aircraft

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Speaker 1: took off early this morning from New York's Kennedy Airport

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Speaker 1: to begin a four day trip across the Atlantic Ocean.

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Speaker 1: The plane is scheduled to land in Seville, Spain. Global

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Speaker 1: News twenty four hours a day, powered by our twenty

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Speaker 1: four hundred journalists more than a hundred fifty news bureaus

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Speaker 1: around the world. I am Michael bar Mike Tom, Thank you, Michael.

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Speaker 1: Time now for the land Rover Parsippany Bloomberg NBC Sports

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Speaker 1: Update with John Stesha, thanks by Calves and Warriors went

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Speaker 1: to last night's Game seven having scored the exact same

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Speaker 1: number of points over the first six games, but none

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Speaker 1: of those six were won by single there just Game

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Speaker 1: seven finally a close game tied in the final minute,

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Speaker 1: Kyrie Irving hit the big shot and the Calvs won

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Speaker 1: ninety three to eighty nine, led by Lebron James twenty

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Speaker 1: seven points a triple double big block late in the

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Speaker 1: game with the score tied. Draymond Green led the Warriors

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Speaker 1: with thirty two, but Steph Curry and Clay Thompson together

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Speaker 1: made only a third of their shots. Golden State, after

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Speaker 1: coming back from three one down in the West Finals,

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Speaker 1: the first to ever blow a three one lead in

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Speaker 1: the NBA Finals, lost two straight and homely. They lost

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Speaker 1: two home games all regular season Cavaliers first to win

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Speaker 1: a Finals Game seven on the road since nineteen seventy eight.

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Speaker 1: The championship the first for Cleveland in any sport since

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Speaker 1: nineteen sixty four. The parade is Wednesday. Dustin Johnson took

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Speaker 1: off controversial one shot penalty ruling won the US Open

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Speaker 1: at Oakmont by three shots. Johnson gets his first major

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Speaker 1: after having finished in the top ten eleven times, including

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Speaker 1: being one er up at last year's Open. Yankees unable

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Speaker 1: to complete the four game sweep in Minnesota, beaten by

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Speaker 1: the Twins seven to four to again dropped back under five.

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Speaker 1: Nathan of all that he couldn't hold the lead. Brian

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Speaker 1: McCann omer twice in the Law Matt's never had it,

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Speaker 1: lost six nothing to Atlanta, had just one head off

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Speaker 1: Julio Tehran and embarrassing home sweep for the lowly Braid

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Speaker 1: The Bloomberg NBC Sports Update. I'm John Stashway so much,

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Speaker 1: Michael McKee. Have we yet to speak about the powerhouse

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Speaker 1: of the West, the San Francisco Giants. Uh, they in

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Speaker 1: a row. They are playing very well, and it it

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Speaker 1: just raises the question. Obviously it's a long way to go,

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Speaker 1: but they have won every other World Series for the

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Speaker 1: last six years and this would be their year again.

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Speaker 1: If that was the retro, I may have to break

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Speaker 1: out the new Giants baseball cap, I mean the retro

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Speaker 1: Jersey's Jake Peevee among others dinning them. They're gorgeous. I

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Speaker 1: mean we have a plethora the Cubs, the Nationals, the Giants.

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Speaker 1: Baseball is upon us from London on Baseball, Bloomberg Surveillance,

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Speaker 1: t F Exchange sixteen b n Y Melon's Annual et

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Speaker 1: Largest shareholder, activist investor Carli Com raising his offer to

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Speaker 1: buy the remaining eighteen percent of the auto parts maker

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Speaker 1: mike On Enterprisers, raising its bid to eight dollars a

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Speaker 1: share from the seven dollars a share offered in February.

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Speaker 1: Global equities are rallying, the pound strengthening the most since

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Speaker 1: two thousand eight on signs of campaign for the UK

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Speaker 1: to stay in the EU is gaining momentum. Who checked

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Speaker 1: the markets every fifteen minutes throughout the trading day on

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Speaker 1: Bloomberg SNP eveny futures up twenty six points now, Emnity

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Speaker 1: futures of two hundred seventeen, naz documny futures of fifty six.

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Speaker 1: The docks in Germany's up three point seven percent ten

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Speaker 1: Your Treasury down fourteen thirty seconds. The yeld one point

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Speaker 1: six five percent yield on the two year point seven

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Speaker 1: one percent, nim X scrude oil of one point eight

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Speaker 1: percent or eighty eight cents to forty eight eighties six

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Speaker 1: of barrel Comex gold is down seven tenths per cent

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Speaker 1: or nine dollars thirty cents at twelve eighty five fifty announced.

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Speaker 1: The euro a dollar thirteen forty eight, the British pound

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Speaker 1: of dollar forty six forty two and the yen one

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Speaker 1: oh four point five zero. That's a Bloomberg Business flash.

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Speaker 1: Tom and Mike Current, thanks so much from London. It

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Speaker 1: is on Wall Street. The following is from Bloomberg View.

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Speaker 1: Opinions and commentary from Bloomberg columnists. I'm Paula Dwire, an

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Speaker 1: editor with Bloomberg View. Donald Trump says Muslim immigrants and

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Speaker 1: even their second and third generations, are unwilling or unable

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Speaker 1: to integrate into American society. The evidence for such a

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Speaker 1: sweeping statement is hard to come by. The US Census

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Speaker 1: Bureau is barred from asking about religious affiliation. Other surveys, however,

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Speaker 1: such as those done by the Pew Research Center, fill

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Speaker 1: in some of the blanks, and they tell us that

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Speaker 1: Trump is just playing wrong. Muslims arrive in the US

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Speaker 1: with higher education and income levels than other immigrant groups,

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Speaker 1: and are assimilating at about the same pace. Their integration

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Speaker 1: also happens faster in the US than in Europe. Those

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Speaker 1: surveys show in one important area, Muslim assimilation is exemplary,

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Speaker 1: a higher percentage become American citizens than other immigrant types

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Speaker 1: sev versus fifty. Not only is Trump wrong, his words

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Speaker 1: are dangerous if they encourage violence or discrimination, if employers

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Speaker 1: refused to hire Muslims, or if neighbors shunned them, he

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Speaker 1: may be slowing down the integration he so desires. Donald

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Speaker 1: Trump needn't worry that Muslims will be any more dangerous

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Speaker 1: to the US than his German born grandparents were more

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Speaker 1: than a century ago. I'm Paula Dwyer and editor with

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Speaker 1: Bloomberg View. For more Bloomberg commentary, please go to Bloomberg

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Speaker 1: View dot com or view go on the Bloomberg terminal.

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Speaker 1: This has been Bloomberg View and Bloomberg View commentaries can

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Speaker 1: be heard hourly weekdays. I'm Bloomberg Radio, Michael McKee and

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Speaker 1: Tom keenan London in Chicago, Diane Swunk DS Economics Diane.

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Speaker 1: In one or two or three conversations in these interviews

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Speaker 1: that we do you could hear little nuances the difference

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Speaker 1: between Europe and America. The Laureate Christopher Pisser Reades was

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Speaker 1: on today with huge value. He is asking his United

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Speaker 1: Kingdom to not leave the EU out with a letter

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Speaker 1: from ten economists today and support Prime Minister Cameron. But

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Speaker 1: in the discussion, Professor Proseridis made real clear that Eastern

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Speaker 1: Europeans do the help. In the United Kingdom, we don't

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Speaker 1: say that. In America. We have a different language, a

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Speaker 1: different discussion of our death stiles of income. How are

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Speaker 1: lower death stiles of income can do doing the bottom

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Speaker 1: descile a minimum wage and the group above them, well,

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Speaker 1: certainly they've not been doing well. And we have income

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Speaker 1: inequalities and lack of education in some areas within both

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Speaker 1: the US and Europe. That is part of where this

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Speaker 1: debate is coming from, and the frustration we're seeing sort

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Speaker 1: of correlation does not apply causality, but people want state scapegoats,

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Speaker 1: and they looked to their immigrant populations as a scapegoat

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Speaker 1: because they tend to be self chosen and more educated

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Speaker 1: income in and there is that tension there on the

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Speaker 1: lower end of the wage spectrum. What we are seeing

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Speaker 1: is there has been a movement up at the state

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Speaker 1: and local level. Minimum wages have finally hit a tipping

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Speaker 1: point in very large population areas, in very large population states,

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Speaker 1: and we've seen an acceleration in those wages UM at

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Speaker 1: the very lowest wrongs. That doesn't mean they're going moving

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Speaker 1: up rapidly enough to say pay for themselves. UM in

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Speaker 1: the ways that they'd like to live in a middle

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Speaker 1: class income style. That's not where they're going, but they

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Speaker 1: are moving up. What I worry about is the next wave,

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Speaker 1: which is structural in nature, and that will be um

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Speaker 1: what I'm likening to the restructuring and manufacturing, the restructuring

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Speaker 1: in retail, the move to the hybrid of bricks and clicks,

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Speaker 1: and to move away from bricks in general of the

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Speaker 1: real estate. In the retail sector, you're going to see

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Speaker 1: a lot of people currently employed in retail lose their jobs. Now,

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Speaker 1: many people may correlate that with the higher minimum wage,

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Speaker 1: that is not really what's going on. We have a

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Speaker 1: secular change in retail that I think is very important

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Speaker 1: to watch going forward as well well what happens to

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Speaker 1: the economy. I mean, we've seen this globalization angst develop

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Speaker 1: in the United States, UH in a great measure on

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Speaker 1: the back of the manufacturing job losses we've seen. Now

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Speaker 1: you start to add retail into that, then the American

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Speaker 1: people get where do they go from there? Well, it

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Speaker 1: is something that it really highlights the one issue that

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Speaker 1: economists keep getting back to, and that was the need

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Speaker 1: to invest in human capital. We did not educate people

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Speaker 1: in this country to take the jobs that they needed

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Speaker 1: to take. There's a huge mismatch on jobs out there.

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Speaker 1: We do not educate people to be employed in a

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Speaker 1: globalized economy, and we neglected our investment in human capital

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Speaker 1: and it shows, and I think that's where the issue lies.

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Speaker 1: What we often forget, though, is when the economy, when

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Speaker 1: we had labor markets that were so tight to unemployment,

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Speaker 1: fell so low our ability to innovate around skill shortages.

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Speaker 1: In the late when things like the fast food restaurants,

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Speaker 1: instead of just printing the name of what you had

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Speaker 1: to you were ordering, the people behind the counter could

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Speaker 1: push an icon, the ability to innovate around the skills levels.

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Speaker 1: They didn't even have to know English to take an order.

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Speaker 1: All they have to do is punch a picture of

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Speaker 1: something to take an order. That is what we've not

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Speaker 1: seen of late, and I think that's the next step

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Speaker 1: is not only do we need to invest in human

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Speaker 1: capital for the long term, in the short term or

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Speaker 1: one of the few countries in the world that has

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Speaker 1: shown a capability to actually innovate around people's own skill

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Speaker 1: shortages and keep them employed. And I think the ability

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Speaker 1: we all know how to use a smartphone now and

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Speaker 1: that doesn't matter what income strategy or what educational level

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Speaker 1: you're in. And that gives us an opportunity to move

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Speaker 1: the next level without destroying all the jobs out there,

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Speaker 1: just creating new jobs in different areas with an ability

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Speaker 1: to innovate around the fact that they don't have maybe

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Speaker 1: all the skills that they once needed for those jobs.

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Speaker 1: On January January one, President Clinton or President Trump calls

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Speaker 1: you up and says, Diane, I need a chief Economic advisor,

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Speaker 1: somebody to run my Council of Economic Advisors, and I

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Speaker 1: want from you one thing we can do, one thing

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Speaker 1: we must do to break out of this uh new normal,

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Speaker 1: low growth path. What would you recommend? Well, there's no

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Speaker 1: one silver bullet, or we would have already shot at

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Speaker 1: the Fiscal policy has been neglected. Corporate tax reform low

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Speaker 1: hanging fruit, bipartisan support. Income tax reform also low hanging fruit,

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Speaker 1: needs to be done. We need to get through this,

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Speaker 1: but more importantly, we need to invest in infrastructure, and

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Speaker 1: to do it when interest rates are still low in

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Speaker 1: the United States. To come up with the fiscal plan,

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Speaker 1: We've already had them out there. They did hit bipartisan

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Speaker 1: plans to reduce the deficit over the long term. But

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Speaker 1: invest today, even infrastructure is simple as our roads and

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Speaker 1: our bridges, which let me tell you, even though the

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Speaker 1: cups are doing great in Chicago, the bridges are still

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Speaker 1: crumbling in Chicago, and the road still have a lot

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Speaker 1: of potholes in it. That undermines our productivity in this country.

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Speaker 1: So I think the first thing out is to think

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Speaker 1: about infrastructure investment and those reforms, and some of those reforms,

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Speaker 1: believe it or not, even in this stalemated Congress, can

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Speaker 1: be done. Where are we on credits for investment? I

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Speaker 1: guess it's an early sixties idea, Mike and made me

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Speaker 1: wrong on that, But doctors trunk, where are we on

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Speaker 1: stipulating or incentivizing investment beyond infrastructure? You know, that's where

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Speaker 1: the text code had gone. And it's one of the

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Speaker 1: reasons why we're uncompetitive now is because of all the

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Speaker 1: deductions we put in to stimulate investment. We had to

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Speaker 1: raise tax rates so that they're no longer competitive with

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Speaker 1: the global economy. And so I think one of the

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Speaker 1: things we do need to do, and we've seen businesses

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Speaker 1: sign on on this as well. The Business Roundtable in Washington,

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Speaker 1: John Angler who's head of that who I know they

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Speaker 1: are now behind this as well. Is eliminating and decomplicated,

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Speaker 1: taking the complications out of the text code and all

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Speaker 1: those specific incentives and making it cleaner so we make

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Speaker 1: economic decisions going forward without all the sort of special

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Speaker 1: Once you start putting those incentives in, Unfortunately, too many

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Speaker 1: special interest groups get involved and they become distorted incentives.

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Speaker 1: I think the other side of the game is what

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Speaker 1: we've seen in the individual tax structure. We do know

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Speaker 1: it's not bad to have lower capital gains tax rates.

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Speaker 1: It's not bad to have lower dividends tax rates. We

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Speaker 1: want that an investment. However, it is bad when people

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Speaker 1: aren't engaging in investment, or when returns are so low

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Speaker 1: that companies are buying back stock and issuing dividends to

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Speaker 1: satisfy people in their search and their reach for yield,

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Speaker 1: rather than investing in their own company. And I think

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Speaker 1: that's where we're at. Dance Mark, thank you so much,

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Speaker 1: greatly appreciate it. This morning from Chicago, will look at

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Speaker 1: the amair. It's nice, Mike to get away from brexit

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Speaker 1: remain for a bit. We should we shouldn't point out

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Speaker 1: that the Ricketts family did take advantage of low interest

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Speaker 1: rates to rebuild infrastructure. They rebuilt Wrigley Fielding in the

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Speaker 1: process of bringing it up to twenty century standards and

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Speaker 1: then they can work on in the shout out to

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Speaker 1: any of you worldwide that want to see a rebuild,

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Speaker 1: I would wander down Yawkey Way. Well they have done

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Speaker 1: what they have done to rebuild Fenway Parks got to

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Speaker 1: be the example for any sports stadium in the world

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Speaker 1: you like, you love to see. You know, the Red

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Speaker 1: Sox and the Cubs are the oldest stadiums in Major

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Speaker 1: League Baseball, and instead of replacing them, they have the

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Speaker 1: courage courage to do it. We are in London waxing

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Speaker 1: nostalgic on Major League Baseball, Michael McKee and I all week.

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Speaker 1: I hope you enjoy it. Bloomberg's