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Speaker 1: This is Bloomberg Surbiban's. I think one of the challenges

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Speaker 1: has been that the FED and other central banks want inflation,

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Speaker 1: but they don't want too much inflation. What's holding us

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Speaker 1: back at home is not what we're spending on national security.

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Speaker 1: It's what we're not doing domestically, the lack of a

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Speaker 1: creative the response two years and on a cup of

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Speaker 1: the low growth is the real story here. Bloomberg sur

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Speaker 1: Bailey's your link to the world of economics, finance, and

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Speaker 1: investment on Bloomberg Radio. Good morning everyone, Michael McKee and

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Speaker 1: Tom King Bloomberg Surveillance, Welcome all of you worldwide. Bloomberg

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Speaker 1: twelve hundred, Boston, Bloomberg eleven three oh New York FM, Washington.

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Speaker 1: In the early morning in San Francisco, Good morning, Bloomberg

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Speaker 1: nine sixty the Bay Area where thrilled you with us

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Speaker 1: in serious Next m Channel one nineteen is kitchus here

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Speaker 1: uh in a moment Bloomberg Surveillance this morning brought you

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Speaker 1: by kon Reznec Accounting Tax Advisory. Is your business ready

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Speaker 1: Cone Resnik dot com. Michael, we're very Yen based. I

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Speaker 1: just made a chart of yen reran Minby and we

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Speaker 1: can put this out on Bloomberg Radio Plus showing the

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Speaker 1: stark ran men By appreciation and how yen has given

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Speaker 1: it back then stronger. Interesting in the last number of

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Speaker 1: months different, the end has been getting stronger overnight. It

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Speaker 1: is now what one stronger one on nine one? The

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Speaker 1: Japanese postponing their sales tax increased to two thousand nineteen

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Speaker 1: and the markets reacting to that. Kachuks is a head

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Speaker 1: of US strategy for ASSOCIATEATIONERAL and he is on the

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Speaker 1: end Watch this morning. What do you make of this, kid?

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Speaker 1: Is is minister are reaping the world wind here or

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Speaker 1: is it just a temporary kind of of reaction in

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Speaker 1: the markets. I think it's well, I think it's the

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Speaker 1: start of June reaction in terms of general wider risk aversion.

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Speaker 1: So I mean, I think that it's been harder and

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Speaker 1: harder for them to push through with this increase in

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Speaker 1: the consumption tax in the face of an economy that's

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Speaker 1: pretty much back in recession. Another awful manufacturing p M.

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Speaker 1: I over there before we get to anybody else's so um,

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Speaker 1: I wasn't that surprised that that happened. The market reaction today,

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Speaker 1: it did smell of a reaction as muster that the

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Speaker 1: soggy numbers in China, that the sense the global manufacturings

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Speaker 1: under the cash and the number one safe saving currency

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Speaker 1: in the world is still bid Um And I don't

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Speaker 1: I don't think we're going to go much further than this,

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Speaker 1: but it tells you that people are a bit nervous

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Speaker 1: this morning. Well, if it's it's sort of like the

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Speaker 1: problem Jennet Yellen has. Coronason and Yelling have the same

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Speaker 1: issue of they don't have complete control over their currency

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Speaker 1: because at this point the rest of the world wants

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Speaker 1: to own it. Yeah, I mean yes, I mean you know,

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Speaker 1: Mr Corona, with Mr Rabbi's help, they managed a week

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Speaker 1: in the end and week in the end and week

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Speaker 1: in the end through and then when it was so

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Speaker 1: cheap it couldn't get any cheaper, when they cut rates

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Speaker 1: into negative territory, it started strengthening. Um. You know, I

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Speaker 1: draw parallels with that in terms of quantitative easing, driving

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Speaker 1: I don't know, driving down bond deals or driving up

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Speaker 1: equity indices, driving p rati ratio is higher and higher.

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Speaker 1: At some point you're pushing on a string and UM

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Speaker 1: and you start losing control of the situation. I think

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Speaker 1: that should worry chant. Are we in a range I

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Speaker 1: mean within all the nuances and the sophistication of your

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Speaker 1: society general report, Are we range bound or is there

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Speaker 1: something we're missing about a direction that we need to know?

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Speaker 1: I think at the moment we're range bound. I mean

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Speaker 1: in terms of you know, the euro dollar, the biggest

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Speaker 1: profile currencies that I watch all day is definitely in arrange,

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Speaker 1: and that the and the FET is trying to keep

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Speaker 1: us in arrange by making sure there are no surprise

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Speaker 1: so you know, whether they raise interest rates or don't

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Speaker 1: interest raise interest rates on on the fifteenth of June. UM,

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Speaker 1: it's not going to be a surprise on the day.

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Speaker 1: They're working super hard to make sure of that, so

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Speaker 1: they're trying to avoid things going wrong. I still have

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Speaker 1: this fear that, you know, we're putting a lot of

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Speaker 1: liquidity into the system. We're working really hard to keep

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Speaker 1: volatility down in markets and to keep us in these

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Speaker 1: ranges UM, and that that just means that when we

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Speaker 1: break out, it's more likely to be more violent. Are

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Speaker 1: we going to break out? I mean historically when the

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Speaker 1: FED starts a tightening cycle and dollar sort of peaks, Yeah,

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Speaker 1: well you could break out, you know, in a bunch

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Speaker 1: of ways. It may be that when the Fed starts

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Speaker 1: moving rates, you know, that we we then extract relate

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Speaker 1: long way as we did in January, and then we

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Speaker 1: get a big risk averse move. It may be that

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Speaker 1: the markets react and the Fed has to deliver a

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Speaker 1: very dubbish ray rise and we get something else. But um,

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Speaker 1: I think we're still walking a very tight line between

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Speaker 1: markets getting frightened about a global economic slowdown and getting

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Speaker 1: frightened at the title would eventually raised most more. Are

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Speaker 1: there a lot of trades placed right now? The other

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Speaker 1: mystery that Mike and asking questions on is just the

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Speaker 1: visibility and exposure of people. Is everybody under the desk

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Speaker 1: selling you know, mayor I guess selling June and go away.

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Speaker 1: That doesn't work like that doesn't rhyme selling June and swoon.

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Speaker 1: I'm not sure. But is there is there a belief

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Speaker 1: in the market right now? No, I think there's a

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Speaker 1: there's a debate in the market. There's there's a lot

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Speaker 1: of uh, you know, I mean, for the leverage community

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Speaker 1: has one community at a very rough ride, so there

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Speaker 1: aren't a lot of speculative bets. Yeah, people are finding

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Speaker 1: it difficult. I still think that a lot of people

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Speaker 1: can't avoid having money put to work on in some

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Speaker 1: kind of yield when the nominal rights are just a

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Speaker 1: love well. But but I see that did they go

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Speaker 1: to a point and just looking at the Bloomberg screen, folks,

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Speaker 1: I mean it's amazing you look away for twenty minutes

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Speaker 1: the German tenure point one to four. The German two

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Speaker 1: year now begins a new grind lower and negative point

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Speaker 1: five two. Are German emils hinged to the Drugg meeting

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Speaker 1: or more importantly, are they hinged to the Yellow Meeting

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Speaker 1: of June fiftuh and then and then and they hinged

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Speaker 1: to boats? But I think, I think at the moment,

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Speaker 1: I mean, you know, what's changed in the last two

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Speaker 1: weeks is that the Yellow Meeting took control the markets,

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Speaker 1: but it only really controlled the short end of yield curves,

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Speaker 1: which the two year piece, not not the ten thirty

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Speaker 1: year piece. As the said repriced us and we we

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Speaker 1: didn't have too much for the the move. But I think

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Speaker 1: that's become the big focus that the ECB at the

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Speaker 1: moment is is doing nothing. Meanwhile, I mean I'll throw

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Speaker 1: it out that you know that an investor, when people

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Speaker 1: turn around and say, what a scary place, what a

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Speaker 1: scary place Brazil is, you know that inevitably you face

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Speaker 1: an investor who turns around and says, well, yeah, you know, Brazil's.

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Speaker 1: Brazil might be a scary place, but the local yield

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Speaker 1: um is twelve percent, so you have to be. It

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Speaker 1: has to be pretty scary to keep you out of it.

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Speaker 1: Whenever the world's squiet, you get out of those nothing

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Speaker 1: yielding German puns and go off looking for something else.

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Speaker 1: Could just put out the ten year German. This is

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Speaker 1: a positive yield. The lowest April seven daily low point

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Speaker 1: zero eight nine. I guess we're not near there, but

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Speaker 1: it's been the February view than the April low. Another attempt,

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Speaker 1: second week of May, Mike, and all of a sudden

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Speaker 1: we're back there again. Well, a new about of of weakness.

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Speaker 1: We should lower lower yields. Rather, we should point this

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Speaker 1: out as well. If you want to take the risks

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Speaker 1: that kid is talking about in Brazil just out a

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Speaker 1: few moments ago, Brazil reporting its first quarter economy declined

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Speaker 1: three tents from the previous quarter, contracted five point four

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Speaker 1: percent from a year earlier. So one thinks those yields

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Speaker 1: me may even widen. Uh do you? I mean, is

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Speaker 1: it so compelling kit that you need to to get

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Speaker 1: into something like that or is that the kind of

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Speaker 1: trade that you mess around with on the sidelines because

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Speaker 1: it's very risky. I mean, I think Brazil is a

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Speaker 1: dangerous place for investors. You know, you look at their

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Speaker 1: their recession. Um, you know, we're a long way plast

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Speaker 1: the global financial crisis. They went into recession, then they

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Speaker 1: came out, they went back in that they're in. They're

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Speaker 1: in a proper old fashioned depression with huge political problems

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Speaker 1: facing them. I trow the point out that, but it

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Speaker 1: means that you get this kind of ceasaring but by

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Speaker 1: the market that when you know, the world doesn't have

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Speaker 1: to be quiet for very many days in a row

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Speaker 1: before people look at those yields and thinking, you know what,

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Speaker 1: I should have something put in that because I need

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Speaker 1: to learn some money on my portfolio. And then they

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Speaker 1: get scared and they run away and we go yo, well,

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Speaker 1: well we yo yo, Which I guess is range as well.

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Speaker 1: How does this synthesize into a dollar call? If I

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Speaker 1: look at blended d x y three and it's been

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Speaker 1: there for a few days as well. We got a

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Speaker 1: mix of opinions kitchu week dollar, strong dollar, dollars stability,

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Speaker 1: Which is it? I think we're going to get out.

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Speaker 1: When we break out, it will be a strong dollar.

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Speaker 1: I think the dollar goes up if we get really

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Speaker 1: scared of global growth, will redo January. I think the

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Speaker 1: dollar goes up if the fed Rais is right, the

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Speaker 1: world doesn't end and we look from to raise again.

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Speaker 1: So I think we're washing around marking time before the

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Speaker 1: next leg higher in the US dollar. I'm just not

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Speaker 1: completely comfortable with in my mind with whether it's it's

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Speaker 1: led by this this risk aversion or let's come back

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Speaker 1: with kiss society general wants to talk about here and

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Speaker 1: within the range bound. There's just a lot of nuances

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Speaker 1: going on. Mike, the all packet meeting, we talked to

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Speaker 1: a gentleman from Barclays this morning. Really was adamant how

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Speaker 1: different a meeting that we take for granted is, he

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Speaker 1: said Vienna. He says the basic theme was nothing will

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Speaker 1: happen in Vienna, except a lot of listening. People really

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Speaker 1: listened to what the new Saudi Arabia is messaging. They

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Speaker 1: gotta figure out whether OPEC, what can they do and

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Speaker 1: how can they do it in the future. We're distracted.

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Speaker 1: We're looking at the jobs. There was our coverage Friday morning,

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Speaker 1: but neath the headline data at eight thirty and ECB tomorrow, right, Mike,

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Speaker 1: and the press conference tomorrow, uh ECB tomorrow and at

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Speaker 1: this point no no actions forecast. I don't know what

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Speaker 1: I wonder where you're very concerned, Yeah, I wonder. I wonder,

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Speaker 1: of course big risk on tonight Penguins Sharks game too.

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Speaker 1: We're watching game two. I mean, it's an exciting time

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Speaker 1: for sports in America, basketball hockey as well. The Penguins

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Speaker 1: game to San Josey woke up, they played better the

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Speaker 1: last half of the the first game. We'll see what they do.

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Speaker 1: Exciting time for folks out listening to us in the

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Speaker 1: San Francisco bat because he got Warriors and the Sharks

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Speaker 1: in the finals of their respective sports and the Giants

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Speaker 1: are playing a really good bass are they playing? Goodbye?

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Speaker 1: Did not know that it's important to me. I'll have

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Speaker 1: to get brushed up on that instantly. Yeah one oh

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Speaker 1: nine stronger again. Time now to check in with Michael R.

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Speaker 1: And get the latest world and national headlines. Tom, thank

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Speaker 1: you very much. Searchers may be closer to finding the

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Speaker 1: black boxes from the Egypt airplane that crashed into the

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Speaker 1: Mediterranean last month, killing all sixty six people on board.

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Speaker 1: Egypt says a French ship has picked up signals from

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Speaker 1: deep underwater. They're presumed to be from the black boxes

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Speaker 1: of the doomed airbus. A three twenty more flooding is

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Speaker 1: forecast along the Brazis River in Texas. At least six

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Speaker 1: people have died from flooding the past few days. A

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Speaker 1: council committee a scheduled to vote today on a bill

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Speaker 1: to raise the minimum wage in Washington, d C. The

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Speaker 1: bill started out as a proposal to raise the minimum

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Speaker 1: hourly rate to fifteen dollars an hour, but instead calls

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Speaker 1: are raising the minimum wage to five dollars fifty five

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Speaker 1: cents an hour four restaurant workers who rely on tips.

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Speaker 1: That's double the current minimum. Global News twenty four hours

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Speaker 1: a day, powered by our twenty four hundred journalists. I'm

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Speaker 1: Michael Bark. Michael Barr, thanks so much futures negative seven,

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Speaker 1: death'tures negative sixty. We are focused this morning on yen

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Speaker 1: one with a bit of a bit stronger in off

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Speaker 1: of the abbe comments Bloomers surveillance. The news update brought

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Speaker 1: Bloomberg dot Com the Radio plus Mobile Act and on

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Speaker 1: your radio, this is a Bloomberg Business Flash and I'm

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Speaker 1: Karin Moscow us at Indix. Future is moving lower this morning,

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Speaker 1: along with the price of Nimex crude oil. Let's go

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Speaker 1: to the First Word Breaking news desk for today's morning call,

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Speaker 1: and here's Bill Maloney. Good morning Bill, Good morning Karen.

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Speaker 1: That's right. Futures remain lower since the last time we

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Speaker 1: spoke with Doubt. Futures currently down sixty point says b

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Speaker 1: S drop six and NAZAC futures declined by ten us

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Speaker 1: ten yeeld drops to one point eight two percent, and

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Speaker 1: your PM markets are also weak. This morning. Spain drops

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Speaker 1: one point two percent on the US economic front at

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Speaker 1: ninety five market US Manufacturing p m I at ten

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Speaker 1: o'clock U s M Manufacturing and Construction spending, and at

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Speaker 1: two pm, FED releases it's beige book. After the Bellas

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Speaker 1: night under Armour cut net revenue outlook and worked a

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Speaker 1: Q two revenue topped estimates. This morning, Michael Cores said

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Speaker 1: a billion dollar buy back your a ps VU topped estimates,

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Speaker 1: shares her up eight percent pre market. Another news Soft

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Speaker 1: Bank will so at least seven point nine percent billion

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Speaker 1: of its steak in Ali Baba, and a deal News

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Speaker 1: salesforces by Demand Wear for seventy five dollars a share

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Speaker 1: in cash. Finally, some of your wallsheet upgrades and downgrades.

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Speaker 1: Nike cuts neutral at Bank of America, also cuts equit

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Speaker 1: at Morgan Stanley at Crant, sweets hellwork and Pain cut underperform,

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Speaker 1: Whole Foods raised to outperform, and Costco raised to five

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Speaker 1: versus neutral over at Goldman Sachs. Live from the First

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Speaker 1: Breaking News Desk on'm Bill Maloney. Karen Grey thanks Bill

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Speaker 1: to hear live breaking news over your Bloomberg type school

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Speaker 1: could go on your terminal s A w K go

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Speaker 1: and that's a Bloomberg business flash. Tom and Mike Karen,

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Speaker 1: thanks so much. One onion stability, I'm gonna call that

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Speaker 1: after a rocky strong yen morning Bloomberg Surveillance. Brought you

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Speaker 1: with Society General, a kit on the dollar, and I

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Speaker 1: guess one way to look at this is a dollar

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Speaker 1: in larger developed economy dynamics and the dollar with e M.

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Speaker 1: But what I'm most interested is the dollar versus a

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Speaker 1: combined Asia. The President just visited Asia, all the history

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Speaker 1: of the visit to Vietnam and of course to G

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Speaker 1: seven in Japan. Do you just presume currency is solution

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Speaker 1: for Asia, which is a weaker sing dollar, weaker Taiwan dollar,

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Speaker 1: et cetera. I think it's inevitable, and it starts from

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Speaker 1: the fact that of that the that the Chinese remember

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Speaker 1: the U and is is still expensive it's probably overvalued.

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Speaker 1: It's certainly gone up too much with the strong dollar,

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Speaker 1: but over a number of years, and I don't think

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Speaker 1: that's sustainable. And so as long as the US economy

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Speaker 1: is strong, as long as the global economy is struggling

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Speaker 1: and strong when I say strong, as long as US

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Speaker 1: economy is growing on the global economy slowly, then then

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Speaker 1: I think then I think a stronger currency is inevitable.

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Speaker 1: I mean someone like Singapore, you know, which is probably

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Speaker 1: about weather for global trade. Those pm I numbers this

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Speaker 1: morning around the world really don't help. So how do

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Speaker 1: you express this? I mean, if a lot of our

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Speaker 1: listeners worldwide you listen every day, say okay, I've got

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Speaker 1: a weak Asia angle, and as you say, p m

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Speaker 1: I was weak, how do you figure out which pair

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Speaker 1: or which trade to affect um The most liquid ones

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Speaker 1: are still you know, the Australian dollar is the liquid place.

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Speaker 1: And I think your training dollar will be allowed to fall.

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Speaker 1: The central Bank will will let it reflect terms of trade.

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Speaker 1: So if if if global trade is weak, resource prices

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Speaker 1: a week, commodities are soft, and they'll let it continue

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Speaker 1: to weaken. So I think that that suffers the New

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Speaker 1: Zealand dollar. Similarly, it's not not quite as liquid within

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Speaker 1: the other things. You don't short the yen for ratio.

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Speaker 1: You understand that yen is is a completely special currency,

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Speaker 1: and then may well benefit because people will be short

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Speaker 1: those other currencies against the yen. I think if you're

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Speaker 1: way away from China, you don't short the Chinese currency.

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Speaker 1: It's too difficult to do that. That's not the best

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Speaker 1: place to trade it. I quite like shorting Singapore. I

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Speaker 1: think it's in Singapore's interests to let the currency weaken

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Speaker 1: a bit. But that's the least volatile of them. Speaking

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Speaker 1: of the Chinese currency, the unsure is approaching a five

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Speaker 1: year low. Last year, the yuan sparked major eructions in

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Speaker 1: the financial markets, and a little bit more in January.

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Speaker 1: But now we get to this five year low and

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Speaker 1: nobody's paying any attention. What gives well, Um, it's being

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Speaker 1: managed in a really close way. So if anybody thought

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Speaker 1: that what was going to happen last year was going

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Speaker 1: to lead to a more free floating currency, that's not

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Speaker 1: what's happening. So the onshore is being allowed to weaken.

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Speaker 1: So dollar un is rising steadily, steadily, steadily, And as

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Speaker 1: you say, it's it's reaching a low point for the

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Speaker 1: un at the same time as the wider dollar index

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Speaker 1: isn't anywhere near its hide here at the moment um,

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Speaker 1: I think that they're doing this by stealth. We're beginning

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Speaker 1: to pay attention to it. I think it tells us

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Speaker 1: that they will they have you know, control freaks. Not

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Speaker 1: a fat term, but you know, there's a that they

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Speaker 1: definitely are utterly committed to staying in control of the situation,

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Speaker 1: but it's inevitable that they will need to let the

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Speaker 1: currency weaken further. It also reflects the softness of the economy,

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Speaker 1: and I'm not sure how long you can keep financial

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Speaker 1: markets all bottled up. At some point we'll start seeing

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Speaker 1: capital outflows come again, and that will that will start

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Speaker 1: the concern us, Well, do we need to pay attention

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Speaker 1: to the c n y and the unsure you on?

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Speaker 1: Or is it the basket of currencies that the Chinese

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Speaker 1: want us to watch? Yes, so there's various measures on

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Speaker 1: on on on your Bloomberg you can find, thank you,

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Speaker 1: we'd likely to say that it's not it's not weakening,

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Speaker 1: it's not weakening as fast against those it's pretty much

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Speaker 1: on its basket of currencies. It's pretty much flat. This

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Speaker 1: is roughly what it's doing, um and and that's sort

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Speaker 1: during the course of at least of the last month

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Speaker 1: or so. And that's significant. But I do think it

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Speaker 1: tells us that it reflects the fact that once the

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Speaker 1: dollar is on a rising trend more than a weakening trend,

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Speaker 1: and the pressure is likely to return for the policy.

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Speaker 1: Make so like seeing just quickly here kids, you Singapore

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Speaker 1: dollar goes through the new weakness versus US dollar. Yes,

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Speaker 1: I expect so over the course of I think I

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Speaker 1: can't see how that every time I see a pm

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Speaker 1: I number, I think that's going to happen. I'm gonna

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Speaker 1: put that shout out, folks on Bloomberg Radio. Plus I'll

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Speaker 1: probably do that in television. I haven't looked at Singapore

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Speaker 1: dollar in a while. It is extraordinary point seven US

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Speaker 1: dollar appreciation. All that since the summer of two thousand fourteen,

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Speaker 1: always beneficial. Kitchukes, thank you so much. Is a sharp

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Speaker 1: notes from society general as well. Mike, what did you

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Speaker 1: learn this morning? I learned that once again yen moves markets,

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Speaker 1: our markets move. Yeah, that seems to be uh, you know,

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Speaker 1: the the way to put it, because it can't have

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Speaker 1: been that um Prime Minister Abby wanted a stronger yen

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Speaker 1: from his remarks, well, no, but the yields come in.

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Speaker 1: I mean, it's just it's unambiguous. I mean the two

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Speaker 1: year yield I believe was a point nine to three

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Speaker 1: cups of coffee. Ago, well, I thinks five big figures.

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Speaker 1: Kitchus may have put his finger on it, saying there

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Speaker 1: this is a risk a risky month, and the risk

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Speaker 1: off trade has begun. Everybody's getting out of the way

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Speaker 1: of the tsunami ahead. We hope to give you the

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Speaker 1: nuance the conversation of our Steam guests Michael McKee and

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Speaker 1: Tom Keane Bloomberg's surveillance. It's coming up though with all

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