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Speaker 1: This is Bloomberg surveilling. So much of what's going on

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Speaker 1: right now is financial engineering. It's issuing really really low

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Speaker 1: cost debt, it's buying back shares. I think Left will

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Speaker 1: continue to be more lower coupon, better quality issues will

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Speaker 1: continue to outperform the big nailers. Now we're getting worried

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Speaker 1: if stock tumble seven or eight percent. Here today we're

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Speaker 1: just more evilly alarmed than we used today for some

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Speaker 1: ravel Bloomberg surveillance your link to the world of economics, finance,

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

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Speaker 1: It is seven am on Wall Street noon in the

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Speaker 1: city where London currency traders are very happy. It is

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Speaker 1: time to get out from under their desks and go

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Speaker 1: out to get something we need. The pound a falling

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Speaker 1: knife this morning on Brexit concerns. Right now the pound

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Speaker 1: down more than two tom After Boris Johnson, the mayor

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Speaker 1: of London, Lord may here I guess they call him,

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Speaker 1: came out and said he would campaign four leaving the

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Speaker 1: European Union. So it's going to be an interesting campaign.

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Speaker 1: He head June. Sir Michael, it's it's here, and shout

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Speaker 1: out to Francis laquix who like what ninety days ago,

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Speaker 1: a hundred days ago was going brexit brexit and I'm like, no,

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Speaker 1: I don't, I don't want that for breakfast, and you

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Speaker 1: know she was dead on. We're gonna have a lot

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Speaker 1: to talk. As if the world needed something else to

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Speaker 1: worry about. Now we've got this for a couple of months.

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Speaker 1: For equity investors, though, here's what you need to know.

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Speaker 1: West Texas one is up four percent, Brent crude thirty

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Speaker 1: thirty two is up four percent. Because the correlation to

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Speaker 1: equity markets is strong. This morning, the stock six hundred

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Speaker 1: up five points one and a half percent, The docks

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Speaker 1: up a hundred and eighty two points two percent today.

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Speaker 1: That is even though Market Economics Composite p m I

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Speaker 1: felt the fifty two point seven lowest in more than

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Speaker 1: a year. European economy is still growing, but slowly. In

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Speaker 1: the US were being pushed higher by oil prices. Smp

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Speaker 1: E Mini features up twenty two points one point one percent,

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Speaker 1: DOWI meaning he's a hundred and eighty six points one

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Speaker 1: point one percent, and nasdaqimnies are up fifty one points

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Speaker 1: that's one point two percent. Bond yields in the US

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Speaker 1: and most of Europe are higher this morning. Your tenure

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Speaker 1: one point seven eight uh five year goes for one

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Speaker 1: point to seven percent, and we're at seventy eight basis

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Speaker 1: points for the two year. The German two year negative

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Speaker 1: fifty three basis points. You're you can probably guess that

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Speaker 1: across the curve they are lower. In the UK, gold

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Speaker 1: getting hammered this morning, down twenty six points two point

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Speaker 1: one percent twenty six dollars. Time Rich corrects me, you

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Speaker 1: are absolutely correct, uh twenty six dollars two point one percent.

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Speaker 1: Speaking of hammered bank stocks, the KBW Bank Index down

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Speaker 1: sixteen point seven percent so far this year. Joining us

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Speaker 1: this morning, Brad hints he was for years, of course,

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Speaker 1: the top bank anam down Wall Street at Sanford Bernstein.

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Speaker 1: Now he has retired. He is teaching at n y U.

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Speaker 1: You are teaching managing financial businesses. I understand the second

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Speaker 1: year NBA students, and I would imagine that the way

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Speaker 1: you manage a financial business now is a whole lot

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Speaker 1: different from when you got into the business. Absolutely, you

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Speaker 1: teach an awful lot more about regulation and UH and

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Speaker 1: and living within regulation, and then the other thing you

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Speaker 1: have to remember, is that even to NBA students, the

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Speaker 1: financial crisis is ancient history. Well, it just shows how

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Speaker 1: old we are. But is it regular? I mean, the

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Speaker 1: returns on banks have been terrible? Is it regulation? Is

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Speaker 1: it they're not making their cost the capital? Is Is

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Speaker 1: it because the government is weighing on them? Well, I

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Speaker 1: mean mathematically you can you can run the numbers and say,

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Speaker 1: you know, look at the change on the capital base

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Speaker 1: and and and leverage to the banks, and that that

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Speaker 1: explains an awful lot of the r o E change,

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Speaker 1: But awful a lot of it is also the the

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Speaker 1: business models are changing. Fixed income. Fixed income remains the

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Speaker 1: problem child, right, and fixed income was a business of

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Speaker 1: taking risk. You know, you're no longer allowed to take

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Speaker 1: risk now, whether that is because for regulatory guidance as

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Speaker 1: of Europe right, or vulcar as in the United States.

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Speaker 1: We that big piece of the business is still generating

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Speaker 1: very very low turns, dragging down the returns. There's still

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Speaker 1: good businesses, right, I mean, you know, if you look

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Speaker 1: at the capital markets businesses M and A and equity underwriting,

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Speaker 1: wonderful businesses, right, you know, those are still very very

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Speaker 1: profitable businesses for the banks. But the mixes are all

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Speaker 1: are all wrong and that's what's pulling there are there

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Speaker 1: are aways down. Well, I know Tom wants to get him,

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Speaker 1: and let me ask one more quick question Tom, and

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Speaker 1: that is, so, are we seeing a reset in what

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Speaker 1: the value of the businesses is and that's why stocks

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Speaker 1: going down? Or is it people don't believe these businesses

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Speaker 1: are good businesses. You're saying they are, well, some of

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Speaker 1: them are. Um and and so what we we have

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Speaker 1: with investors is you remember it's been six years since

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Speaker 1: since they've beaten their cost of capital, right and um

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Speaker 1: and there there was a survey came out in December

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Speaker 1: that of all the major institutional investors around the world,

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Speaker 1: it they what was surprising about this is across the

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Speaker 1: group Europasian, North America, none of the investors believed that

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Speaker 1: the banks were going to be able to beat their

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Speaker 1: cost of capital over the next five years. And that

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Speaker 1: says that regulation hasn't changed, right, I mean regulation changes,

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Speaker 1: capital keeps going up, uh C, car stress become harder,

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Speaker 1: and the banks can't adjust their business models fast enough

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Speaker 1: to the changing regulations. If you think about a two

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Speaker 1: thousand nine, we would expected that new regulations would come out,

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Speaker 1: We'd have a new, new, new level playing field. Hasn't

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Speaker 1: turned out to be that way. Great hints with this

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Speaker 1: with the New York University features features up one seventy

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Speaker 1: nine Bloomberg Surveillance brought to you this Monday by Investo

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Speaker 1: in Vestco believes it's time to bench the benchmarks and

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Speaker 1: consider active management and factor based strategies. Find out more

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Speaker 1: at investco dot com slash high conviction bread I got

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Speaker 1: like eight ways to go here. Let me start with

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Speaker 1: a two charts in the Wall Street Journal I think

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Speaker 1: it was last week, which is basically the bigger too

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Speaker 1: big to failed banks are bigger than they were X

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Speaker 1: number of years ago, and that some of them are

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Speaker 1: actually minting money. There is, however, say, and I don't

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Speaker 1: mean to pick up Mr Corbett, but City Group with

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Speaker 1: a ten for one reverse split is trading before the reverse.

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Speaker 1: But it's three dollars nineties cents per share and basically

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Speaker 1: hasn't been able to get out of its own way

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Speaker 1: for seven years. Is that a going concern? Um? I

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Speaker 1: had an executive at Moodies in my class who said

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Speaker 1: City is the most difficult bank to manage, simply because

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Speaker 1: it's everywhere around the world, and it's in all these businesses.

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Speaker 1: So let's give manage to benefit of the doubt to

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Speaker 1: day that this is a this is a tough machine

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Speaker 1: to run. They're strong and certain parts of the world

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Speaker 1: there they don't have quite the retail business. In the States.

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Speaker 1: We've seen the retail business is not a bad business

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Speaker 1: to be in and banking, right, that's there, you can

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Speaker 1: you can make money. Okay, Then to rip up the

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Speaker 1: script here will they expense away the retail business as well?

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Speaker 1: In their desperation to cut costs. Well, they're cutting costs

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Speaker 1: in there, and you're seeing them target areas. You know,

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Speaker 1: we're gonna be bigger in Asia, that's gonna be our

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Speaker 1: that's gonna be one of our strengths, right and we're

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Speaker 1: you know, we're we're going to They don't want to

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Speaker 1: back away from capital markets. So part of this is

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Speaker 1: is there's a reluctance to give up on some of

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Speaker 1: these businesses that are pulling down. Like I open a

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Speaker 1: bank account this weekend over by Columbus Circle. I had

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Speaker 1: to give them a toaster. Well as banks trying to

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Speaker 1: figure out what to do. Are we seeing them go

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Speaker 1: into different businesses city. You're saying, focus on Asia, who's

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Speaker 1: in the banking supermarket business for the long haul, that

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Speaker 1: that's a business model that that that probably isn't going

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Speaker 1: to uh it. Well, you can look at JPM and

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Speaker 1: say JPM is is is well positioned in terms of it.

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Speaker 1: But the question about the supermarket is it does it

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Speaker 1: doesn't work? Um for the cross selling, right, because that's

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Speaker 1: the argument, and you know, I can I can put

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Speaker 1: myself in the position of having been a corporate treasurer, right,

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Speaker 1: cross selling simply doesn't work, and it it doesn't work

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Speaker 1: for a very simple reason. You know, the the loans

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Speaker 1: are done by the corporate treasure M and a is

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Speaker 1: done by the CFO and the CEO. So how do

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Speaker 1: you cross sell between when when the decision makers are

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Speaker 1: different players? And so the idea that I can take

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Speaker 1: a retail from checking account and turn that into a

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Speaker 1: wealth management account, that's pretty tough to do. And and

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Speaker 1: yet that's what the banks have tried over the years.

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Speaker 1: You bring up wealth management and I find that interesting because, um,

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Speaker 1: coming out of the financial crisis, UBS when whole hog

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Speaker 1: to that business and it seems like everybody is following

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Speaker 1: that model that Barclays wants to be big in wealth management.

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Speaker 1: Credit Suite says, well, we're getting out of investment banking

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Speaker 1: and we're going to concentrate on wealth management. Are there

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Speaker 1: enough wealth wealthy people to manage their money where all

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Speaker 1: these banks can make money in that business wealth You're

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Speaker 1: you're you, You're absolutely right. There's a there's a limit

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Speaker 1: to all the wealthy people in the world if everybody

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Speaker 1: goes after it. But to me, the the issue is

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Speaker 1: many of these banks are doing me too write, I mean,

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Speaker 1: ubs can become largely an asset management firm. They had

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Speaker 1: a large enough asset management business that if they shrink

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Speaker 1: their their their capital markets business, there are always go

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Speaker 1: up and they and and it's a successful strategy. If

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Speaker 1: you don't have an asset management business, saying that you're

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Speaker 1: going into asset management isn't going to offset that that

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Speaker 1: that that drag of a fixed income business that's pulling

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Speaker 1: down your performance. So a lot of this is, you know,

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Speaker 1: Morgan Stanley was able to pull off what they did

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Speaker 1: because they bought city Smith Barney business. When you put

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Speaker 1: them to oather, you ended up with a wealth management

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Speaker 1: business roughly half the firm. So Morgan Stanley has reduced

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Speaker 1: its reliance on the capital markets business on that DiNovo builds.

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Speaker 1: That's we're talking decades to build something like that, and

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Speaker 1: I'm not certain that the that that the the the

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Speaker 1: investors are willing to to to take that long, long

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Speaker 1: time frame. We've got lots to talk about bread hints

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Speaker 1: with us on the future of your Wall Street will

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Speaker 1: continue this discussion. I also want to talk to about

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Speaker 1: the scope and scale a big banking and scope and

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Speaker 1: scale that I think we lose touch with mostly each

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Speaker 1: and every day. I want to go right to the

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Speaker 1: nuance of the screen this morning, which is curve flattening.

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Speaker 1: Yields are higher, equities up, futures up twenty one, but

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Speaker 1: the two s tent spread is flattened out by a

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Speaker 1: solid seven basis points this morning. This hour of surveillance

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Speaker 1: is brought to you by Mazda White Planes. Visit Mazda

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Speaker 1: white Plains dot com. John Tucker has our news headlines

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Speaker 1: Job Michael and Tom. Apple CEO Tim Cook says the

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Speaker 1: US government should withdraw its demand that Apple healthy FBI

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Speaker 1: hack a locked iPhone used by the shooter in the

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Speaker 1: San Bernardino attack. In an early morning email to employees

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Speaker 1: and an online post. Cook is dismissing the government's claims

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Speaker 1: that company is acting out of business interest. He says

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Speaker 1: that Congress should form a commission to discuss the implications

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Speaker 1: suspect to ian the shooting rampage in Kalamazoo, Michigan that

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Speaker 1: left six people Dad expected to be ranged today on

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Speaker 1: murder charges. Please say Jason Dalton seemed to choose his

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Speaker 1: victims at random. He has no criminal record. With Jeff

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Speaker 1: Bush's departure from the presidential race on Saturday, a mighty

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Speaker 1: fundraising army scattered. The question now facing the troops, pick

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Speaker 1: another side or retreat. Most bushed loyalist contacted Sunday say

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Speaker 1: that we're preparing to support Marco Rubio. Global News twenty

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

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Speaker 1: jouralists more than one hundred fifty news bureaus around the world.

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Speaker 1: I'm John Tucker, Mike and Tom John. Thanks so much.

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Speaker 1: Michael McKee and Tom Keane. You need to stay with

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Speaker 1: us with brad Hints Bloomberg surveillance. Bloomberg Surveillance brought to

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Speaker 1: you by your try State BMW centers. Visit them online

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Speaker 1: at try State BMW dot Com. At BMW, they make

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Speaker 1: only one thing, the ultimate driving machine. Global Business news

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Speaker 1: twenty four hours a day at Bloomberg dot com, the

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Speaker 1: Radio plus Mobile Act and on your radio is a

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Speaker 1: Bloomberg Business Flash and I'm Karen Moscow. This updates brought

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Speaker 1: to you by Brown University, where the new Executive Master

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Speaker 1: and Cyber Security prepares leaders in law, technology and business

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Speaker 1: to face tomorrow's greatest threats. The Brown University Executive Master

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Speaker 1: and Cyber Security strategy is the best security. The pounds

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Speaker 1: sliding is a split in the UK's ruling party over

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Speaker 1: European Union membership increase the potential for an exit from

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Speaker 1: the block. Stalks across the globe are rallying, sending Dubai

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Speaker 1: shares into a bowl market as oil read bounds and

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Speaker 1: medals advanced. We checked the markets every fifteen minutes throughout

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Speaker 1: the trading day on Bloomberg SNP Eveni futures up twenty

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Speaker 1: points and Dow Emuni futures up a hundred seventy seven,

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Speaker 1: NASADAC Eveni futures up forty nine. The Dacks in Germany's

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Speaker 1: up one point eight per cent. Ten Your treasury down

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Speaker 1: seven thirty seconds the yield one point seven six percent,

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Speaker 1: Nimex screwed oil up three point six percent, or a

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Speaker 1: dollar six to thirty seventy of barrel. Comex goal down

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Speaker 1: one point eight percent or twenty two dollars fifty cents

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Speaker 1: to twelve o eight thirty announced and the pound is

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Speaker 1: at a dollar forty one oh five. And that's a

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Speaker 1: Bloomberg business flash. Tom and Mike Karen, thanks so much.

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Speaker 1: Brad hints with us with New York University for years

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Speaker 1: with Sanford seeing bread. One thing that drives me us.

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Speaker 1: I know Mike's got some adult questions for you, but

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Speaker 1: one of things that absolutely drives me to drink is

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Speaker 1: people blathering about banking who have no understanding of the

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Speaker 1: size of these beasts on the balance sheet. At Fortress Diamond,

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Speaker 1: credit card loans are a hundred and thirty one billion.

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Speaker 1: That's that's almost a double from where they were at

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Speaker 1: the bottom of the market, a hundred thirty one billion.

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Speaker 1: They have three hundred thirty one billion commercial loans, like

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Speaker 1: a twenty eight billion in cash they don't know what

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Speaker 1: to do with, and on and on and on. Goodwill,

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Speaker 1: bad will, and whatever will summed up is something in

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Speaker 1: the vicinity of fifty billion. These things are huge, aren't

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Speaker 1: they think of how difficult they are to manage well.

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Speaker 1: And Jakie has said that on and off the record

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Speaker 1: any number of times people don't understand the size. And

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Speaker 1: as a as a CEO, what you don't want to

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Speaker 1: do is to go to hell for a sin of

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Speaker 1: oh mission right, something that you didn't know you did

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Speaker 1: write it, just it just happened. Uh. And the so

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Speaker 1: control is an issue, and you see that in terms

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Speaker 1: of compliance, you see that in terms of cultural issues.

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Speaker 1: You know, I want to have trusted lieutenants who working

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Speaker 1: for me. And that's one of the reasons why you

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Speaker 1: see these banks talk about you know, you know I've

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Speaker 1: I've worked with him for a period of time. You

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Speaker 1: see the management teams come as groups because how you know,

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Speaker 1: how do you ensure that you know, you don't get

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Speaker 1: in trouble? You try to make sure that the value

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Speaker 1: systems are similar. The Uh, the banks have been shedding

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Speaker 1: people right and left. But is that what we're going

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Speaker 1: to see or people going to actually shut down business lines?

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Speaker 1: Uh and shrink these banks? As President cash Cary and

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Speaker 1: others would have them do um well, shrinking the banks

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Speaker 1: and you know, there's there's certain it's very difficult to

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Speaker 1: shrink them. And you know you can, you can carver

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Speaker 1: on the edges, but it here's a here's a really

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Speaker 1: good example. Years and years ago, Solomon Brothers at that time,

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Speaker 1: a private public company UM and Independent shut down commercial

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Speaker 1: paper was a terrible business. It wasn't a great return business.

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Speaker 1: And their clients rose up in righteous into nation about this,

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Speaker 1: saying I'm not going to give you any more investment

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Speaker 1: banking business if you don't place my commercial paper for you.

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Speaker 1: So you think of all these businesses that the banks

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Speaker 1: have on the institutional side, they're all tied together by

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Speaker 1: bungee cords, and the client relationships are are mixed across

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Speaker 1: the board. So you can you can shrink and try

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Speaker 1: to resize each of these businesses, but it's very difficult

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Speaker 1: to say I'm just going to get out of a

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Speaker 1: business without having implications to all the others. It's like

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Speaker 1: a domino effect. This is why you're so good. That

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Speaker 1: was absolutely brilliant that bungee cord idea. Are the bungee

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Speaker 1: cords a little brittle right now? Sure? Sure you see

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Speaker 1: the bungee cords with with with mr Fink. From Mr

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Speaker 1: Fink's point of view, he gives a lot of business

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Speaker 1: to Wall Street and he's not getting liquidity in return. Larry,

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Speaker 1: think of black. That's exactly right. So you know, so

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Speaker 1: the the and why this the model has broken. The

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Speaker 1: model of fixed income was a model that said I

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Speaker 1: will provide free liquidity to you as a as a

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Speaker 1: as a fixed income department. You will provide me flow,

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Speaker 1: and I'll be able to take risk against that flow,

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Speaker 1: and therefore i will make money from the risk taking.

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Speaker 1: And I'm gonna provide you easy execution. That's brought that

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Speaker 1: model is broken. Now I can't do that. I'm not

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Speaker 1: allowed to take the level of risk that I used

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Speaker 1: to take. So fixed income has As you take risk

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Speaker 1: out of fixed income, the profitability of fixed income drops.

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Speaker 1: Now I have a large balance sheet generating low returns,

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Speaker 1: I shrink my balance sheet. Suddenly you have no liquidity

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Speaker 1: and there you go. That gets us back to the future,

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Speaker 1: abhorring a vacuum. How does that get fixed repricing in

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Speaker 1: the market place? I mean, you can you know it's

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Speaker 1: easy for us to say, right, you know, Larry, Mr Fink,

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Speaker 1: you know, if you want liquidity, you're gonna have to

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Speaker 1: pay for it. That means wider bid offer spreads. But

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Speaker 1: that has a secondary effect. Wider bid offer spreads in

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Speaker 1: in fixed income lower trading value. So fixed income shifts

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Speaker 1: from being a flow business to smile and dial sales

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Speaker 1: guys execute working trades over long periods of time, which

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Speaker 1: is you know, that's like a throwback to the nineteen eighties. Right.

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Speaker 1: So we're seeing, you know, with baby steps, we're seeing

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Speaker 1: a business model evolved. Well, I gotta ask you, as

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Speaker 1: the business model evolves, and uh, what do you teach

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Speaker 1: your students? Uh? What are you preparing them for? Oh?

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Speaker 1: The uh how do you manage the old answer? You know,

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Speaker 1: this is an opportunity. You remember, there aren't many kids

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Speaker 1: who are going into Wall Street and you're seeing you know,

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Speaker 1: you're seeing the technology. Everybody wants to go into technology.

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Speaker 1: That's probably a wonderful time to go to the banks,

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Speaker 1: right because if anybody needs capable management teams for the future,

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Speaker 1: it's the commercial banks, right. They're the ones who you know,

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Speaker 1: they're not going to go away. The business isn't going

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Speaker 1: to go away. We need we need a generation of

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Speaker 1: people to come and take it over and happily the

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Speaker 1: baby women were saying, kind of getting out of the way,

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Speaker 1: or why is one why is support done so well

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Speaker 1: at Google? What's in the pixie dust of you CFO

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Speaker 1: type of analysts people like you? And Ruth she goes

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Speaker 1: back out to Google and she's you know, basically she

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Speaker 1: can run for governor in California. She's done so well.

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Speaker 1: She knows how to gain confidence with with think of

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Speaker 1: a CFO on Wall Street. In many ways, you're hurting cats, right.

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Speaker 1: I suspect that. I suspect there's many many, uh, comparable

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Speaker 1: challenges that go on when you're when you're dealing with

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Speaker 1: with technology. People to the technology people think they know everything,

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Speaker 1: which and just as the traders thought they knew everything,

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Speaker 1: and Ruth has to gain a consensus. She's been she's

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Speaker 1: very good at that. She's a team she's a team

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Speaker 1: leader and uh and and people learn to trust a

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Speaker 1: very credit. It's never enough time. Thank you so much.

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Speaker 1: Bret is a New York university where I think he

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Speaker 1: forces people to learn how to use a slide rule.

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Speaker 1: We continue stay of the Bloomberg surveillance. Bloomberg surveillance brought

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Speaker 1: to by the New York Community Bank in New York

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Speaker 1: Commercial Bank, the NYCB Family of Banks Bank with confidence.

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Speaker 1: Anywhere you see the NYCB logo throughout the New York Metro,

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Speaker 1: Visit NYCB family dot Com broadcasting live to New York,

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Speaker 1: Bloomberg eleventh to Washington, d C, Bloomberg to Boston, Bloomberg

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Speaker 1: twelve Winners, to San Francisco, Bloomberg nine to the Country

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Speaker 1: six Channel one nine and around the globe. The Bloomberg

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Speaker 1: Radio Plus happened. Bloomberg dot Com. This is Bloomberg Surveillance.

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Speaker 1: Good morning, seven thirty on Wall Street at Michael McKee

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Speaker 1: along with Tom Keene where two hours away from the opening.

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Speaker 1: What looks to be a an up opening this morning

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Speaker 1: on Wall Street with futures all higher. Some of the

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Speaker 1: corporate news that has broken overnight that you may be

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Speaker 1: interested in. Carlisle two years after buying it, shutting down

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Speaker 1: Diversified Global Asset Management, a hedge fund of fund manager

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Speaker 1: that was supposed to be part of its push to

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Speaker 1: expand beyond private equity. Yahoo's going to begin approaching potential

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Speaker 1: corporate and private equity buyers as soon as today, according

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Speaker 1: to people familiar with the process, YAH, who shares up

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Speaker 1: one and a half percent, HSBC posting an unexpected fourth

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Speaker 1: quarter loss income from lending fell, loan impairment charges increased

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Speaker 1: Right now, HSBC shares in Europe trading down by two

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Speaker 1: point nine percent, and the world's twelve biggest banks cutting

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Speaker 1: front office currency staff by five percent in two thousand

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Speaker 1: and fifteen, according to the Financial Industry Analyst Coalition, development

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Speaker 1: that extends a trend that's seen them reduced for and

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Speaker 1: exchange headcount by more than a quarter since two thousand ten.

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Speaker 1: I'll check in with John Tucker now and get the

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Speaker 1: latest world and national headlines. John Well Michael after predicting

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Speaker 1: he could pull off a prollectual upset in Nevada and

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Speaker 1: more than a week before potential wins on Super Tuesday,

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Speaker 1: Bernie sand Is asharing supporters he's working to hire to

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Speaker 1: close the gap in Saturday's primary in South Carolina. No

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Speaker 1: poles in South Carolina have shown Sanders closer than eighteen

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Speaker 1: points down from Hillary Clinton. Apple resisting a court order

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Speaker 1: requiring the company to help unlock the I phone of

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Speaker 1: a dead terrorist. The US Congress, they say, should now

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Speaker 1: form a committee to discuss privacy and personal freedoms. Apple

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Speaker 1: would gladly take part in such an effort, the company

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Speaker 1: saying in a statement on its website today, the US

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Speaker 1: Auto Safety Regulators says it's investigating all Toccata airbag inflators

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Speaker 1: that use a chemical propellant ban from future models. You know,

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Speaker 1: compile data to determine whether to expand the industry's broadest

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Speaker 1: recall ever and serious main political opposition is meeting today

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Speaker 1: to discuss a proposed ceasefire whose potential for even limited

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Speaker 1: success has been undercut by a spike in violence. Global

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

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Speaker 1: more than one fifty news viewers around the world. I'm

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Speaker 1: on Tucker, Michael, Thank you very much. John. Time now

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Speaker 1: for the Ray Katina Auto Group Bloomberg. NBC Sports Update

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Speaker 1: with Rob Bush, Rob Morning Mike. The Rangers continue to

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Speaker 1: get just enough timely offense as they took a Detroit

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Speaker 1: stalemate to overtime at Madison Square Garden. It's Keller Hayes

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Speaker 1: fifth goal of the year for Klein. That's NBC Sports

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Speaker 1: Network with the Call Red Wings Netmtor Jimmy Howard. He

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Speaker 1: was good twenty nine Saints, but Hank glue Quiz made

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Speaker 1: all of his twenty two stand up for another shut out.

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Speaker 1: The Rangers have a stronghold. On Thursday, trail Florida by

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Speaker 1: just a point for the two seed. Rangers will skate

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Speaker 1: in New Jersey on Tuesday. Islanders head to Minnesota. Also

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Speaker 1: on Tuesday, the long season continues for the Nets, beat

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Speaker 1: at home by the Hornets one O four nine six.

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Speaker 1: Brook Lopez the long bright spot offensively on what went wrong?

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Speaker 1: We got some good books, they sink down, then we

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Speaker 1: turn the ball over a bit much. You know, I

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Speaker 1: wasn't really good to picking all defense and on our

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Speaker 1: week's side, wasn't there all the time. You know, when

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Speaker 1: we lose games. I think those are definitely have been

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00:24:09,320 --> 00:24:12,840
Speaker 1: two key factory. Lopez finished with a double double sixteen points,

431
00:24:12,880 --> 00:24:15,840
Speaker 1: ten rebounds. Nick's solst the Raptors at seven thirty. Jimmer

432
00:24:15,880 --> 00:24:17,760
Speaker 1: for a debt. He'll join the team on a ten

433
00:24:17,840 --> 00:24:20,919
Speaker 1: day contract. Exciting game at St. John's wasn't meant to be,

434
00:24:20,920 --> 00:24:23,480
Speaker 1: though the Red Storm rallied from a nineteen point deficit,

435
00:24:23,760 --> 00:24:26,800
Speaker 1: still came up short sixty one. And that's your NBC

436
00:24:26,880 --> 00:24:31,320
Speaker 1: Bloomberg Sports update. Mike, thank you Roup. This is Bloomberg Surveillance.

437
00:24:31,359 --> 00:24:39,840
Speaker 1: You are listening to Bloomberg Radio worldwide. Welcome back to

438
00:24:39,880 --> 00:24:43,119
Speaker 1: Bloomberg Surveillance. I might Coael McKey along with Tom Keene.

439
00:24:43,200 --> 00:24:46,280
Speaker 1: It looks like a green day, at least at the

440
00:24:46,320 --> 00:24:49,040
Speaker 1: start this morning. S and P futures up big twenty

441
00:24:49,080 --> 00:24:51,879
Speaker 1: points right now, one percent one point one percent. For

442
00:24:51,960 --> 00:24:54,040
Speaker 1: doubt futures, they're up a hundred and seventy six points.

443
00:24:54,119 --> 00:24:57,320
Speaker 1: NADAK futures up one point two percent. That's forty eight

444
00:24:57,320 --> 00:24:59,879
Speaker 1: points on that index. Why well, here's what you need

445
00:24:59,920 --> 00:25:04,240
Speaker 1: to no. West Texas thirty seventy three point six percent.

446
00:25:04,280 --> 00:25:06,920
Speaker 1: It's a four percent game for Brent crude thirty thirty two.

447
00:25:07,359 --> 00:25:13,639
Speaker 1: The kalish, the correlations seem to be holding the Bloomberg

448
00:25:13,760 --> 00:25:15,600
Speaker 1: n j I T STEM Report is brought to you

449
00:25:15,600 --> 00:25:18,399
Speaker 1: by New Jersey Institute of Technology, partnering with government and

450
00:25:18,520 --> 00:25:21,439
Speaker 1: industry to apply the university's world class research assets to

451
00:25:21,440 --> 00:25:24,280
Speaker 1: innovate and spur economic growth. Learn more at n j

452
00:25:24,480 --> 00:25:27,960
Speaker 1: I T dot e d U. Here's Bob Moon, thank you, Michael,

453
00:25:28,040 --> 00:25:30,480
Speaker 1: And at seven thirty five on Wall Street, here's what's

454
00:25:30,480 --> 00:25:34,320
Speaker 1: making news in science, Technology, engineering, and math. Kind of

455
00:25:34,359 --> 00:25:38,560
Speaker 1: fancy new camera option helps Samsung win back smartphone customers

456
00:25:38,560 --> 00:25:41,440
Speaker 1: from Apple. The company is showing off its new products

457
00:25:41,440 --> 00:25:45,520
Speaker 1: at the World Mobile Congress in Barcelona, including virtual reality

458
00:25:45,520 --> 00:25:48,240
Speaker 1: hardware aimed at breathing new life into its premium line,

459
00:25:48,240 --> 00:25:51,679
Speaker 1: the latest Galaxy S seven smartphones. It took the wraps

460
00:25:51,720 --> 00:25:54,679
Speaker 1: off a three sixty degree camera designed to work with

461
00:25:54,760 --> 00:25:57,480
Speaker 1: the S seven. The gear of three sixty accessory is

462
00:25:57,520 --> 00:26:00,600
Speaker 1: being seen as a halo product by analysts who say

463
00:26:00,680 --> 00:26:02,879
Speaker 1: it could help boost sales of the smartphone in an

464
00:26:02,920 --> 00:26:07,000
Speaker 1: accelerating global market. Samsung is keeping the form and shape

465
00:26:07,000 --> 00:26:10,960
Speaker 1: of last year's models, while fixing some shortcomings including battery power,

466
00:26:11,280 --> 00:26:14,680
Speaker 1: and outing their potential role in the coming virtual reality boom.

467
00:26:14,960 --> 00:26:17,919
Speaker 1: Also at the Barcelona expo, Ford plans to debut a

468
00:26:17,920 --> 00:26:21,160
Speaker 1: new model for the European market, unveil in car technology,

469
00:26:21,440 --> 00:26:24,200
Speaker 1: and outline its latest plans under the umbrella of Ford

470
00:26:24,280 --> 00:26:28,360
Speaker 1: Smart Mobility, the company's initiative encompassing areas such as connectivity,

471
00:26:28,520 --> 00:26:31,240
Speaker 1: autonomous vehicles, in big data. We got up with Ford

472
00:26:31,280 --> 00:26:34,760
Speaker 1: CEO Mark Fields, where obviously here at the Mobile WAW Congress,

473
00:26:34,760 --> 00:26:37,280
Speaker 1: because we're really emphasizing the point that we are transitioning

474
00:26:37,320 --> 00:26:40,320
Speaker 1: from an auto company to an auto and a mobility company,

475
00:26:40,359 --> 00:26:44,560
Speaker 1: and by million autos worldwide will be connected to the

476
00:26:44,560 --> 00:26:47,439
Speaker 1: Internet nearly four times more than last year, according to

477
00:26:47,720 --> 00:26:51,000
Speaker 1: I H. S Automotive. That's this morning's Bloomberg and j

478
00:26:51,119 --> 00:26:55,000
Speaker 1: I T Stem report. Michael, well, thank you very much. Well,

479
00:26:55,080 --> 00:26:59,399
Speaker 1: if you are holding British pounds this morning, you lose

480
00:27:00,080 --> 00:27:03,399
Speaker 1: found out two the biggest drop one day drop since

481
00:27:03,440 --> 00:27:06,600
Speaker 1: two thousand and ten, and we're getting down to close

482
00:27:06,680 --> 00:27:09,760
Speaker 1: to very close to the lows of the year. Oddly though,

483
00:27:09,800 --> 00:27:12,360
Speaker 1: at the same time, the footstee is up by one

484
00:27:12,400 --> 00:27:16,440
Speaker 1: point three seventy nine points right now. All this after

485
00:27:16,840 --> 00:27:21,440
Speaker 1: David Cameron got concessions from his EU colleagues and set

486
00:27:21,480 --> 00:27:25,160
Speaker 1: a referendum on whether Britain should leave the European Union

487
00:27:25,200 --> 00:27:30,119
Speaker 1: for June. Boris Johnson, the mayor of London, same party

488
00:27:30,280 --> 00:27:33,959
Speaker 1: as David Cameron, says he will campaign to leave. So

489
00:27:34,000 --> 00:27:35,639
Speaker 1: what is going on in Britain and how does it

490
00:27:35,680 --> 00:27:39,680
Speaker 1: affect investors? For that, we turned to Robert Cinch, macro

491
00:27:39,800 --> 00:27:45,360
Speaker 1: strategy consultant at Amherst Pierpont, longtime watcher of foreign exchange markets. UH,

492
00:27:45,400 --> 00:27:48,400
Speaker 1: a man who probably even knows what marmide is. Uh.

493
00:27:48,560 --> 00:27:51,280
Speaker 1: Thank you for joining is this morning, Bob, what are

494
00:27:51,320 --> 00:27:54,240
Speaker 1: we to make of the big sell off in the

495
00:27:54,280 --> 00:28:00,520
Speaker 1: British currency at a time when people pouring into British equities. Well,

496
00:28:00,720 --> 00:28:04,320
Speaker 1: I think uh, I think this may be another situation

497
00:28:04,400 --> 00:28:07,280
Speaker 1: where markets are getting uh, probably a little bit more

498
00:28:07,280 --> 00:28:10,280
Speaker 1: excited about this whole topic than is justified. You know,

499
00:28:10,320 --> 00:28:12,000
Speaker 1: you look at some of the latest polling and it

500
00:28:12,040 --> 00:28:15,239
Speaker 1: actually has Although the polling in the UK hasn't been

501
00:28:15,280 --> 00:28:18,960
Speaker 1: the most reliable, it does show UM about a ten

502
00:28:19,000 --> 00:28:21,320
Speaker 1: to fifteen point lead for those who want to stay

503
00:28:21,320 --> 00:28:24,439
Speaker 1: in the EU UM and if that's the case, then

504
00:28:24,480 --> 00:28:27,800
Speaker 1: all this becomes a moot. I also think it's probably

505
00:28:27,800 --> 00:28:30,600
Speaker 1: worth while waiting until we get the full presentation UH

506
00:28:30,640 --> 00:28:34,320
Speaker 1: and discussion UH in Parliament by by the Prime Minister.

507
00:28:34,480 --> 00:28:38,040
Speaker 1: So so I think that you know, the markets are skittish.

508
00:28:38,040 --> 00:28:40,440
Speaker 1: The dollar in general in general is a bit stronger

509
00:28:40,800 --> 00:28:44,040
Speaker 1: this morning on slightly higher US rates and a little

510
00:28:44,080 --> 00:28:47,520
Speaker 1: bit better risk appetite, and I think that's contributed to it,

511
00:28:47,760 --> 00:28:49,880
Speaker 1: along with some weaker UK datas. I think it's a

512
00:28:49,880 --> 00:28:54,000
Speaker 1: lot of factors working themselves in but certainly right now

513
00:28:54,160 --> 00:28:56,720
Speaker 1: with the Bank of England squarely on the sidelines, there's

514
00:28:56,760 --> 00:28:59,240
Speaker 1: no reason not to be to be selling pounds, and

515
00:28:59,240 --> 00:29:01,520
Speaker 1: I think that's a lot of what the spectative community

516
00:29:01,600 --> 00:29:05,320
Speaker 1: is doing. All right now we're seeing the lowest pound

517
00:29:05,360 --> 00:29:07,280
Speaker 1: rates since March of two thousand nine, acquid of the

518
00:29:07,320 --> 00:29:09,600
Speaker 1: headline that just went by, and I have to wonder

519
00:29:09,640 --> 00:29:11,800
Speaker 1: if in the short run this might be a bye

520
00:29:12,200 --> 00:29:14,440
Speaker 1: given that, as you say, the b o E is

521
00:29:14,480 --> 00:29:16,560
Speaker 1: on the sidelines at the moment, but the economy still

522
00:29:16,600 --> 00:29:19,600
Speaker 1: seems to be strong, and the idea that they are

523
00:29:19,640 --> 00:29:22,560
Speaker 1: going to remain on the sidelines could change as fast

524
00:29:22,600 --> 00:29:24,680
Speaker 1: as sentiment in the US changes every time we have

525
00:29:24,720 --> 00:29:28,680
Speaker 1: a good econ economic data. Point. Yeah, I mean I

526
00:29:28,720 --> 00:29:31,200
Speaker 1: think this is uh, this is a situation where the

527
00:29:31,200 --> 00:29:34,600
Speaker 1: pound is certainly um, as you said, down to very

528
00:29:34,640 --> 00:29:38,640
Speaker 1: low levels on a risk reward basis. I think if

529
00:29:38,680 --> 00:29:42,000
Speaker 1: you had to do something, um, you're probably I would

530
00:29:42,120 --> 00:29:45,600
Speaker 1: think it better off buying here rather than selling. But um,

531
00:29:45,880 --> 00:29:48,200
Speaker 1: I don't think you really need to do anything. UM.

532
00:29:48,240 --> 00:29:51,120
Speaker 1: I think this is a situation that is that's very fluid.

533
00:29:51,560 --> 00:29:53,480
Speaker 1: As I said before, we know that the polling in

534
00:29:53,520 --> 00:29:58,479
Speaker 1: the UK has been particularly unreliable amongst polling around the world,

535
00:29:58,520 --> 00:30:01,360
Speaker 1: So I think that that um, you know, this is

536
00:30:01,520 --> 00:30:03,400
Speaker 1: this is one where it's better not to play than

537
00:30:03,440 --> 00:30:05,080
Speaker 1: to try to take a position on it one way

538
00:30:05,160 --> 00:30:07,640
Speaker 1: or the other. What about in terms of the cross

539
00:30:07,680 --> 00:30:11,200
Speaker 1: with the Euro, Yeah, I mean I think that that

540
00:30:11,280 --> 00:30:14,520
Speaker 1: the Euro has its own problems also, UM, I think

541
00:30:14,720 --> 00:30:17,720
Speaker 1: uh uh, you know, the e c B is is

542
00:30:17,760 --> 00:30:19,960
Speaker 1: looking at data. We just got data out today showing

543
00:30:20,000 --> 00:30:24,040
Speaker 1: the manufacturing sector weakening up a little bit more um,

544
00:30:24,080 --> 00:30:26,920
Speaker 1: and the overall the overall economy looks like it's off

545
00:30:26,920 --> 00:30:30,200
Speaker 1: to a sluggish start. So the pressure certainly is building,

546
00:30:30,200 --> 00:30:32,960
Speaker 1: I think on the on the ECB to try to

547
00:30:33,000 --> 00:30:36,320
Speaker 1: ease policy UM at its meeting in early March. On

548
00:30:36,360 --> 00:30:40,200
Speaker 1: the other hand, UM, I think there's a growing sentiment

549
00:30:40,280 --> 00:30:43,880
Speaker 1: that maybe negative rates aren't all that that they were

550
00:30:43,880 --> 00:30:46,640
Speaker 1: supposed to be in terms of stimulating growth and inflation,

551
00:30:47,640 --> 00:30:51,400
Speaker 1: and the ECB is notoriously slow in finding alternatives. So

552
00:30:51,440 --> 00:30:53,280
Speaker 1: I think this could be a tough environment for the

553
00:30:53,280 --> 00:30:57,920
Speaker 1: Euro over the next month or so, UM, because because

554
00:30:57,920 --> 00:31:00,880
Speaker 1: it's it's not clear what the ECB adoptions are going

555
00:31:00,920 --> 00:31:03,520
Speaker 1: to be. All Right, we'll continue this conversation with Bob

556
00:31:03,520 --> 00:31:06,680
Speaker 1: Sinch from Amherst Pierpont in just a moment here on

557
00:31:06,960 --> 00:31:13,040
Speaker 1: Bloomberg Surveillance. The europound cross rate is point one eight

558
00:31:13,280 --> 00:31:17,880
Speaker 1: at the moment, the euro going for one against the dollar.

559
00:31:21,520 --> 00:31:23,800
Speaker 1: Bloomberg Surveillance is brought to you by benzel Bush Motorcar

560
00:31:23,840 --> 00:31:26,280
Speaker 1: and Englewood, New Jersey, offering a commit into service, luxury

561
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562
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Speaker 1: To find the way you drive at benzel Bush dot com,

563
00:31:37,560 --> 00:31:41,000
Speaker 1: Global Business News twenty four hours a day at Bloomberg

564
00:31:41,040 --> 00:31:44,080
Speaker 1: dot com, the Radio plus Mobil and on your radio.

565
00:31:44,400 --> 00:31:48,160
Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow.

566
00:31:48,200 --> 00:31:51,560
Speaker 1: This updates brought to you by American Arbitration Association. Business

567
00:31:51,600 --> 00:31:55,840
Speaker 1: disputes are inevitable resolved faster with the American Arbitration Association,

568
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Speaker 1: the global leader in alternative dispeed resolution for over eighty

569
00:31:59,240 --> 00:32:02,480
Speaker 1: five years. Learn more at a dr dot org. The

570
00:32:02,520 --> 00:32:06,600
Speaker 1: European Union is reviving a probe into Google's advertising practices,

571
00:32:06,640 --> 00:32:09,200
Speaker 1: with an inquiry that adds to active EU anti trust

572
00:32:09,240 --> 00:32:14,440
Speaker 1: investigations into the company's mobile operating system and shopping search services.

573
00:32:14,760 --> 00:32:16,959
Speaker 1: The pound is sliding as a split in the UK's

574
00:32:17,000 --> 00:32:20,760
Speaker 1: ruling party over European Union membership increase the potential for

575
00:32:20,840 --> 00:32:23,400
Speaker 1: an exit from the block, and stalks across the globe

576
00:32:23,720 --> 00:32:26,440
Speaker 1: are higher. We check the markets every fifteen minutes throughout

577
00:32:26,480 --> 00:32:30,479
Speaker 1: the trading day. On Bloomberg, SNP Emni futures up nineteen points,

578
00:32:30,560 --> 00:32:33,800
Speaker 1: DOWI Mini futures of a hundred sixty five, naz documni

579
00:32:33,840 --> 00:32:36,480
Speaker 1: futures up forty five that acts in Germany's at one

580
00:32:36,480 --> 00:32:40,080
Speaker 1: point seven percent, Tenure treasury down six thirty seconds, the

581
00:32:40,160 --> 00:32:43,440
Speaker 1: yield one point seven six percent, Nimex screw oil at

582
00:32:43,440 --> 00:32:45,720
Speaker 1: three point six percent or a dollar seven to thirty

583
00:32:45,720 --> 00:32:48,600
Speaker 1: dollars seventy one cents, and Barrel Comax goal down one

584
00:32:48,640 --> 00:32:50,880
Speaker 1: point nine percent or twenty three dollars to twelve oh

585
00:32:50,920 --> 00:32:54,040
Speaker 1: seven eighty announced. The euro a dollar ten thirty, the

586
00:32:54,200 --> 00:32:57,000
Speaker 1: En one thirteen point one seven, the British pound a

587
00:32:57,040 --> 00:33:00,959
Speaker 1: dollar forty seventy seven an Allergan reporting fourth quarter profit

588
00:33:01,040 --> 00:33:04,360
Speaker 1: that beat analyst estimates. That's a Bloomberg business flash. Tom

589
00:33:04,360 --> 00:33:06,760
Speaker 1: and Mike Karen, thank you very much. We're talking with

590
00:33:06,880 --> 00:33:10,720
Speaker 1: Bob since you've Amherst Pierpont. Before the break, Bob, you

591
00:33:10,760 --> 00:33:14,160
Speaker 1: mentioned negative interest rates. We got five countries in Europe

592
00:33:14,240 --> 00:33:16,360
Speaker 1: right now with negative interest rates, and I read this

593
00:33:16,400 --> 00:33:20,280
Speaker 1: morning the checks are thinking of going there next basically

594
00:33:20,320 --> 00:33:24,720
Speaker 1: because they want a weaker karuna. Are we now, after

595
00:33:25,240 --> 00:33:27,640
Speaker 1: after many years of talking about it, are we now

596
00:33:27,720 --> 00:33:32,280
Speaker 1: getting into currency wars in which, like the nineteen thirties,

597
00:33:32,520 --> 00:33:37,000
Speaker 1: there is no possible way to win if everybody's involved. Well,

598
00:33:37,040 --> 00:33:39,600
Speaker 1: I think I don't know if i'd call them wars,

599
00:33:39,680 --> 00:33:42,440
Speaker 1: but certainly some skirmishes going on. And I think that

600
00:33:42,440 --> 00:33:45,400
Speaker 1: that many have have realized, and we've talked about this

601
00:33:45,480 --> 00:33:47,440
Speaker 1: a number of times over the last couple of years,

602
00:33:48,040 --> 00:33:52,400
Speaker 1: that one of the more important transmission mechanisms of monetary

603
00:33:52,440 --> 00:33:55,600
Speaker 1: policy when rates get to very low levels is actually

604
00:33:55,640 --> 00:33:58,560
Speaker 1: through the exchange rate UM. That was certainly the case

605
00:33:58,640 --> 00:34:01,400
Speaker 1: back in two thousand ten, in two thousand eleven when

606
00:34:01,760 --> 00:34:05,440
Speaker 1: when the Fed initiated its third round of quantitative easing.

607
00:34:06,160 --> 00:34:08,600
Speaker 1: I think we've seen that with the weaker euro down

608
00:34:08,920 --> 00:34:12,120
Speaker 1: under one oh five UM at one point last year,

609
00:34:12,120 --> 00:34:14,480
Speaker 1: with the ECB moving in the negative rate. So I

610
00:34:14,480 --> 00:34:19,839
Speaker 1: think that that um, you know, it's it's um. It's

611
00:34:19,840 --> 00:34:23,440
Speaker 1: a situation where monetary policy, really I don't think negative

612
00:34:23,560 --> 00:34:26,880
Speaker 1: rates themselves are doing very much, and so really it's

613
00:34:26,920 --> 00:34:29,839
Speaker 1: it's way of impacting the economy is through the through

614
00:34:29,880 --> 00:34:33,040
Speaker 1: the exchange rates. So I think we are unfortunately inching

615
00:34:33,080 --> 00:34:38,520
Speaker 1: towards a world where competitive devaluations is something that that

616
00:34:38,640 --> 00:34:42,080
Speaker 1: countries you're looking at because monetary policy has become ineffective

617
00:34:42,120 --> 00:34:44,759
Speaker 1: and physical policy is still missing an action about Since

618
00:34:44,840 --> 00:34:47,080
Speaker 1: good morning, tell me about the dollar. I need an

619
00:34:47,120 --> 00:34:52,360
Speaker 1: update during the Monday morning point five d X. Why

620
00:34:52,600 --> 00:34:54,640
Speaker 1: can you go along the dollar here or is it

621
00:34:54,719 --> 00:34:58,280
Speaker 1: just dollar malaise? No? I think we can go along

622
00:34:58,320 --> 00:35:02,600
Speaker 1: the dollar here. There's certainly we've seen some US interest

623
00:35:02,719 --> 00:35:05,480
Speaker 1: right back up here in the last couple of days. Uh.

624
00:35:05,520 --> 00:35:07,360
Speaker 1: Some of the things we look at would suggest that

625
00:35:07,400 --> 00:35:10,680
Speaker 1: the dollar has some upside from here. Um. I think

626
00:35:10,680 --> 00:35:13,160
Speaker 1: if we're going to take long dollar positions, I think

627
00:35:13,160 --> 00:35:15,080
Speaker 1: the euro is the way to go right now. Short

628
00:35:15,120 --> 00:35:18,480
Speaker 1: the Euro along the dollar because the ECB is facing

629
00:35:18,480 --> 00:35:22,160
Speaker 1: a meeting. Uh. I think coming up March tense and

630
00:35:22,400 --> 00:35:27,960
Speaker 1: give data message after the beat. There's some technical difficulties.

631
00:35:28,120 --> 00:35:31,520
Speaker 1: Charlie Pellett joining us down, Michael McKee, if you always

632
00:35:31,520 --> 00:35:35,839
Speaker 1: go yeah, there's Charlie, let's continue on buff since she's

633
00:35:35,880 --> 00:35:40,239
Speaker 1: still there. I'm still here. Okay, they're putting some data

634
00:35:40,280 --> 00:35:42,880
Speaker 1: that we get out of the the the you're the

635
00:35:42,920 --> 00:35:46,680
Speaker 1: EU h this morning, your zone this morning, which suggested

636
00:35:46,760 --> 00:35:49,319
Speaker 1: both the manufacturing and service sectors were getting up a

637
00:35:49,320 --> 00:35:52,120
Speaker 1: little bit. So the pressure is certainly on the ECB

638
00:35:52,239 --> 00:35:55,480
Speaker 1: to do something in March. UM. It's not clear what

639
00:35:55,560 --> 00:35:57,560
Speaker 1: they're going to do, but I think a weaker euro

640
00:35:57,719 --> 00:35:59,360
Speaker 1: is part of the mix. I usually don't like to

641
00:35:59,360 --> 00:36:01,000
Speaker 1: look back, but going to break a rule and do

642
00:36:01,080 --> 00:36:03,360
Speaker 1: that here. Bob sinch to me last week and the

643
00:36:03,400 --> 00:36:06,359
Speaker 1: word I use mathematically was indeterminate. We were just sort

644
00:36:06,360 --> 00:36:09,400
Speaker 1: of all over the place last week. What did you

645
00:36:09,440 --> 00:36:14,960
Speaker 1: glean from last week? It frames strategy or more importantly,

646
00:36:15,200 --> 00:36:20,239
Speaker 1: trade placement in the March, you know, I think some

647
00:36:20,400 --> 00:36:22,520
Speaker 1: of them. So much of it still revolves around the

648
00:36:22,520 --> 00:36:27,120
Speaker 1: oil market. And what we've seen is is oil UM

649
00:36:27,120 --> 00:36:30,279
Speaker 1: holding the lows around twenty six, but not really being

650
00:36:30,360 --> 00:36:33,520
Speaker 1: able to break to the top side. So we've had

651
00:36:33,920 --> 00:36:37,800
Speaker 1: UM a lot of volatility in a very narrow range

652
00:36:37,800 --> 00:36:40,920
Speaker 1: in the markets. I think are overreacting to that UM.

653
00:36:40,960 --> 00:36:44,200
Speaker 1: But I do think we're getting this sense that that

654
00:36:44,360 --> 00:36:48,000
Speaker 1: the global economy is slowing further. UM. The risk is

655
00:36:48,040 --> 00:36:50,239
Speaker 1: that oil prices are going to break to the downside.

656
00:36:50,239 --> 00:36:52,600
Speaker 1: I think a lot of that has been discounted, and

657
00:36:52,680 --> 00:36:54,560
Speaker 1: so when you don't get a break to the downside,

658
00:36:54,600 --> 00:36:57,320
Speaker 1: you get these relief rallies. But I think the early

659
00:36:57,400 --> 00:36:59,759
Speaker 1: data we're getting out for the month of February from

660
00:36:59,760 --> 00:37:02,520
Speaker 1: some of these p m I industries around the world

661
00:37:02,960 --> 00:37:05,319
Speaker 1: suggests that there is no bounce going on in the

662
00:37:05,320 --> 00:37:09,120
Speaker 1: first quarter after some relatively weak fourth quarter growth numbers

663
00:37:09,160 --> 00:37:11,320
Speaker 1: around the world, and I think the growth environment is

664
00:37:11,320 --> 00:37:14,080
Speaker 1: going to continue to be a heavy weight of uncertainty

665
00:37:14,080 --> 00:37:16,799
Speaker 1: on markets as we go forward. It does seem though

666
00:37:16,880 --> 00:37:19,960
Speaker 1: that the numbers are telling us things aren't getting significantly worse,

667
00:37:20,480 --> 00:37:22,720
Speaker 1: that we're just sort of muddling along. And I'm wondering,

668
00:37:23,680 --> 00:37:28,440
Speaker 1: given the money that has poured into negative yielding bonds,

669
00:37:29,080 --> 00:37:32,360
Speaker 1: even into the United States, if we do see a

670
00:37:32,480 --> 00:37:37,480
Speaker 1: floor put in under oil prices that people believe in,

671
00:37:38,840 --> 00:37:40,279
Speaker 1: there are a lot of people who, I mean, we

672
00:37:40,360 --> 00:37:43,640
Speaker 1: at risk of a huge blood bath from people who

673
00:37:43,680 --> 00:37:47,239
Speaker 1: have gone the wrong way. Yeah, I think we've seen

674
00:37:47,280 --> 00:37:48,719
Speaker 1: a little bit of that in the last couple of

675
00:37:48,760 --> 00:37:52,399
Speaker 1: weeks with this enormous volatility in the oil markets and uh,

676
00:37:52,520 --> 00:37:54,560
Speaker 1: and so I think we are shaking out some of

677
00:37:54,600 --> 00:37:59,040
Speaker 1: the some of the spectative positions. Um. But but the

678
00:37:59,080 --> 00:38:01,960
Speaker 1: concern has to be inventories. I mean, we canta indicate

679
00:38:02,239 --> 00:38:06,000
Speaker 1: large inventories. Um. The agreement last week was the cap

680
00:38:06,000 --> 00:38:08,400
Speaker 1: production at already high levels. That's not going to do

681
00:38:08,480 --> 00:38:11,600
Speaker 1: much to bring inventories down. So I think I think

682
00:38:11,719 --> 00:38:14,319
Speaker 1: the markets continue to struggle with you know, have we

683
00:38:14,360 --> 00:38:16,920
Speaker 1: found a durable bottom and oil prices, because if it

684
00:38:17,000 --> 00:38:20,440
Speaker 1: goes down and breaks through that level, I think we

685
00:38:20,520 --> 00:38:22,640
Speaker 1: set off all sorts of concerns in the high yield

686
00:38:22,680 --> 00:38:26,239
Speaker 1: bond markets, in the bank lending markets, et cetera. Let's

687
00:38:26,320 --> 00:38:28,239
Speaker 1: rip up the script on a Monday morning. Mike, you

688
00:38:28,280 --> 00:38:31,719
Speaker 1: bring up an incredibly important point, and Bob said, she

689
00:38:31,760 --> 00:38:35,760
Speaker 1: answered it by going to oil. Bob your magic, because

690
00:38:35,760 --> 00:38:39,320
Speaker 1: even though you do foreign exchange, you wonderfully go cross asset.

691
00:38:40,160 --> 00:38:44,040
Speaker 1: I would suggest we have rationalized commodities using Brent as

692
00:38:44,040 --> 00:38:48,640
Speaker 1: a proxy from a hundred, actually one, but from a

693
00:38:48,719 --> 00:38:54,440
Speaker 1: hundred we rationalized at eight, we rationalized at sixty. My memory,

694
00:38:54,480 --> 00:38:57,800
Speaker 1: as we moved quickly from there, we rationalized at forty,

695
00:38:58,120 --> 00:39:00,959
Speaker 1: and now we're doing the same thing at thirty. Why

696
00:39:01,080 --> 00:39:05,160
Speaker 1: isn't this just one grand rationalization like the previous I

697
00:39:05,239 --> 00:39:11,560
Speaker 1: see no indication of any catharsis in oil, I would agree,

698
00:39:11,560 --> 00:39:14,279
Speaker 1: And I think that that the oil market is one

699
00:39:14,400 --> 00:39:17,480
Speaker 1: that we have to be concerned about because so many

700
00:39:17,480 --> 00:39:20,360
Speaker 1: of the players are not just motivated by the profit

701
00:39:20,920 --> 00:39:23,320
Speaker 1: by profit margins. You know, you have a number of

702
00:39:23,600 --> 00:39:26,719
Speaker 1: governments who are heavily involved in the market who just

703
00:39:26,840 --> 00:39:30,719
Speaker 1: need revenue, and they'll they'll continue to pump oil just

704
00:39:30,800 --> 00:39:33,279
Speaker 1: to generate revenue, whether it's at a profit or at

705
00:39:33,280 --> 00:39:35,960
Speaker 1: a loss. And I think that makes for a market

706
00:39:36,000 --> 00:39:39,320
Speaker 1: that doesn't really clear. You don't you don't find equilibrium

707
00:39:39,320 --> 00:39:42,279
Speaker 1: as quickly as we should. And I think that's what

708
00:39:42,320 --> 00:39:44,239
Speaker 1: we're seeing in the oil markets. And I think some

709
00:39:44,320 --> 00:39:47,360
Speaker 1: of the uncertainty in the other asset markets is have

710
00:39:47,560 --> 00:39:50,280
Speaker 1: we cleared this market, Are we going to clear this market?

711
00:39:50,400 --> 00:39:53,279
Speaker 1: Or is this uncertainty going to stay with us. At

712
00:39:53,320 --> 00:39:57,480
Speaker 1: the same time, that certainly industrial production around the world,

713
00:39:57,520 --> 00:40:01,080
Speaker 1: maybe the services sector is doing okay, but industrial production

714
00:40:01,160 --> 00:40:06,480
Speaker 1: continues to weekend. That certainly puts downward pressure on oil demand. Uh.

715
00:40:06,520 --> 00:40:08,880
Speaker 1: And you put those two together and you keep grappling

716
00:40:08,880 --> 00:40:11,200
Speaker 1: for this equilibrium price, and I just don't think we

717
00:40:11,320 --> 00:40:13,319
Speaker 1: found it yet it may take a while to find it.

718
00:40:14,440 --> 00:40:18,319
Speaker 1: A while is how long in your view for Bob?

719
00:40:18,440 --> 00:40:22,680
Speaker 1: Since end of the month. Yeah, I think you know,

720
00:40:22,800 --> 00:40:25,319
Speaker 1: you would normally expect these markets to adjust in a

721
00:40:25,360 --> 00:40:27,960
Speaker 1: matter of months. We haven't done that. It could take

722
00:40:28,000 --> 00:40:30,440
Speaker 1: another three to six months before we really sort of

723
00:40:30,480 --> 00:40:34,560
Speaker 1: sort out, um, you know what rational levels are for

724
00:40:34,600 --> 00:40:37,680
Speaker 1: oil prices going forward on a Monday morning, Bob, since

725
00:40:37,920 --> 00:40:41,879
Speaker 1: filter in the good work of one S. Stanley, he's

726
00:40:41,920 --> 00:40:45,759
Speaker 1: been better than good, not about gloom, but about malaise

727
00:40:46,400 --> 00:40:49,400
Speaker 1: where it's not morning in America. What does Steven Stanley

728
00:40:49,520 --> 00:40:53,480
Speaker 1: say that you fold into your strategy. Well, I think

729
00:40:53,480 --> 00:40:55,319
Speaker 1: there's a couple of things. One, I think Steve has

730
00:40:55,320 --> 00:40:59,720
Speaker 1: been very early on the on the concerns about growth

731
00:40:59,800 --> 00:41:04,680
Speaker 1: in estment, and he's been particularly pessimistic about a rebound

732
00:41:04,719 --> 00:41:07,719
Speaker 1: and investment activity. UM. Part of that in the US

733
00:41:07,800 --> 00:41:11,480
Speaker 1: related to policy issues, but I think, you know, investment

734
00:41:11,560 --> 00:41:14,200
Speaker 1: really is the global issue that we're we're facing a

735
00:41:14,640 --> 00:41:17,799
Speaker 1: shortage of right now, and and that's really holding back

736
00:41:17,880 --> 00:41:21,120
Speaker 1: the global economies. Number one. Number two, Uh, Steve is

737
00:41:21,160 --> 00:41:24,320
Speaker 1: also getting a bit more concerned about about the inflation

738
00:41:24,320 --> 00:41:27,040
Speaker 1: outlook and the fact that the Fed may have to

739
00:41:27,080 --> 00:41:30,759
Speaker 1: continue to normalize rates. Certainly, the core CPI numbers we

740
00:41:30,800 --> 00:41:34,000
Speaker 1: saw last week or are a concern in that regard,

741
00:41:34,400 --> 00:41:37,320
Speaker 1: And I think if the Fed does continue to normalize rates,

742
00:41:37,320 --> 00:41:39,440
Speaker 1: then then we think we have another leg up in

743
00:41:39,480 --> 00:41:41,880
Speaker 1: the dollar, um as we go through the year, and

744
00:41:41,920 --> 00:41:45,279
Speaker 1: we've talked about your dollar getting back toward parity by

745
00:41:45,320 --> 00:41:47,160
Speaker 1: the end of this year, and I think that's still

746
00:41:47,200 --> 00:41:52,400
Speaker 1: in play. Really that had seemed to go away as

747
00:41:52,440 --> 00:41:54,520
Speaker 1: an issue for a while. I gotta put that on

748
00:41:54,640 --> 00:41:57,319
Speaker 1: on Twitter. That's did you just say, Bob Sins that

749
00:41:57,400 --> 00:42:00,520
Speaker 1: the euro takes another dash to parody. I think we

750
00:42:00,560 --> 00:42:02,759
Speaker 1: will test parody by the latter part of this year

751
00:42:02,800 --> 00:42:05,960
Speaker 1: because I think things are not moving along very well

752
00:42:06,000 --> 00:42:08,319
Speaker 1: in Europe, and um, you know, if we do get

753
00:42:08,320 --> 00:42:10,880
Speaker 1: the Fed needing to normalize rates, I think I do

754
00:42:11,000 --> 00:42:14,080
Speaker 1: think parody comes back into view. UM. We were a

755
00:42:14,080 --> 00:42:16,719
Speaker 1: little reluctant to go for the parody call a few

756
00:42:16,719 --> 00:42:19,040
Speaker 1: months ago because it looked like US rates were coming

757
00:42:19,080 --> 00:42:22,160
Speaker 1: off and there were too many people in that direction. UM,

758
00:42:22,200 --> 00:42:24,960
Speaker 1: I think it's no longer the big consensus out there,

759
00:42:24,960 --> 00:42:26,879
Speaker 1: and I do think there's downside in the euro from

760
00:42:26,880 --> 00:42:32,839
Speaker 1: current levels. That's an important quote here as we can

761
00:42:32,920 --> 00:42:37,120
Speaker 1: features up nineteen down features up one yields higher, but

762
00:42:37,239 --> 00:42:40,919
Speaker 1: the curve flatter. That's an oddity of the morning. Here's

763
00:42:40,920 --> 00:42:46,719
Speaker 1: another oddity. Bonus Round Bonus Monday, another hour of Bloomberg surveillance.

764
00:42:46,960 --> 00:42:47,560
Speaker 1: Stay with us,