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Speaker 1: This is Bloomberg Surveillance. Overall, what we see is a

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Speaker 1: slow growth world where the fast graith markets of not

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Speaker 1: growing as fast as they used to. I look at

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Speaker 1: the banks and sometimes it's hard to differentiate between a

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Speaker 1: great large gap versus a great small cap bank on

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Speaker 1: the financial side. I don't want to sit here and

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Speaker 1: say we have a crystal ball and we know where

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Speaker 1: the price of oil is going in the future. We

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Speaker 1: just don't know. I mean, it can't fall forever, but

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Speaker 1: we just don't know where it's gonna go. Bloomberg Surveillance

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Speaker 1: your link to the world of economics, finance, and investment

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

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Speaker 1: and Tom Keane. We are thrilled you with us in

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Speaker 1: this hour. Scott Galloway on Yahoo they're out with important announcements.

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Speaker 1: Mr Galloway, Professor Galloway has been way out front and

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Speaker 1: criticism of the Yahoo shop. He will join us. We

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Speaker 1: are honored to bring you and diagnon of JP Morgan.

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Speaker 1: She will join us on the bombshell of John Deere.

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Speaker 1: We saw that earlier. Uh this morning, we'll get much

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Speaker 1: more on that from Mr Wilson. Here in a moment

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Speaker 1: our for X brief for the markets moving our FOREX

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Speaker 1: brief raunch you by Interactive Broker's winner of FX Weeks

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Speaker 1: two thousand and fifteen award for the Best Retail for

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Speaker 1: X training platform. Visit ib at I, b k R

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Speaker 1: dot Com slash four X some back and force of

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Speaker 1: the market. And then cp I moves the market the

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Speaker 1: two year old point seven five and we see oil

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Speaker 1: to sixty six down a stick and eleven a dollar

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Speaker 1: eleven the en one eight eight stronger yen not as

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Speaker 1: ever strong as it was earlier, but nevertheless stronger dollar

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Speaker 1: strength gives way to fractional dollar weakness in the last

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Speaker 1: number of moments. Hyder carbon currencies adapt ruble dollar ruble

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Speaker 1: seventy seven point three eight backs it up. We're watching

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Speaker 1: cable Caroline Hide very strong on cable and Brexit today

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Speaker 1: with surveillance on Bloomberg Television one eight three on cable

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Speaker 1: is Prime Minister Cameron extends his stay in Brussels again

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Speaker 1: and dignon to join us lay her in this half hour.

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Speaker 1: She is definitive, John dear, she needs a briefing right

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Speaker 1: now from David Wilson. I assume you're gonna start with

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Speaker 1: those headlines, David, were stunning, Absolutely, Tom, I mean, and

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Speaker 1: they've certainly had their effect on Deer shares. They're down

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Speaker 1: about three and a half percent in early trading, the

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Speaker 1: world's largest maker of agricultural equipment reduced full year earnings

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Speaker 1: and sales forecasts. The cuts reflect a worsening outlook for

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Speaker 1: farmers who face lower commodity prices and declining income. And

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Speaker 1: you've also got shares of rivals C and H Industrial

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Speaker 1: lower there down about two and a half percent at

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Speaker 1: the moment, v FS down seven and a half percent.

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Speaker 1: This is a company on the north face. Lee and

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Speaker 1: Wrangler clothing brands fourth quarter earnings and revenue failed to

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Speaker 1: meet analysts average estimates in the Blueberg survey. The f

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Speaker 1: sited relatively warm weather and a stronger dollar, along with

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Speaker 1: what they called a softer consumer environment. And you certainly

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Speaker 1: saw that at Nordstrom as well. I mean, the stocks

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Speaker 1: down eight and a half percent, the largest US luxury

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Speaker 1: department store chain, posting fiscal fourth board of profit and

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Speaker 1: revenue trailed estimates. North From's earnings forecast for the current

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Speaker 1: year was also lower than projections. On the other hand,

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Speaker 1: Yahoo the most active stock and early trading up two percent.

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Speaker 1: The Web Portals Board formed a committee of independent directors

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Speaker 1: to review strategic options and hired advisors. Yeah who said

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Speaker 1: separating its fifteen percent stake in China's Ali Baba Group

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Speaker 1: holding is a must to maximize value. That Applied Materials

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Speaker 1: has a gain of eight percent. The largest maker of

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Speaker 1: chip production equipment, gave earnings and sales forecast for this

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Speaker 1: quarter that beat estimates. Alright, how about Amaran It's a

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Speaker 1: utility and it's down three and a half percent in

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Speaker 1: early trading. Uh, they expect this year's profit to be

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Speaker 1: two hours and sixty cents, should share at best and

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Speaker 1: almost looking two sixty nine on average. And there's a

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Speaker 1: commodity tie in here. Amer In citing a projected drop

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Speaker 1: in electricity sales to Randa Alluminum, its largest customers. YEP

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Speaker 1: and Floor are another company affected by what's going on

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Speaker 1: the commanding markets, down six and a half percent in

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Speaker 1: early trading. The construction company spourt quarter orainings and revenue

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Speaker 1: drop more than now was expected, and that reflected lower

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Speaker 1: demand from metals and mining. You are on the dark

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Speaker 1: side today. You've got your pink Floyd tie on today.

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Speaker 1: It's Dark Side of the Moon, the Lunatickets in my Head.

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Speaker 1: David Gilroy April ten, David Gilmore and Pink Floyd at

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Speaker 1: Radio City Music Hall. It's about the toughest ticket in town.

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Speaker 1: It's selling for jillion dollars dollars a gazollion dollars on stub.

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Speaker 1: Of course, I'll tell you what else is a tough ticket.

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Speaker 1: Bruce Springsteen's makeup show March twenty eight, masson Square Garden.

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Speaker 1: His show, which was supposed to be January got snowed out.

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Speaker 1: Very good, David, I will be there. Let me just

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Speaker 1: for the record that um The Dead, the you know,

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Speaker 1: the group that played the Final Dead concerts with a

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Speaker 1: few adjustments, is also coming going on tour this so

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Speaker 1: that means City Field. John Mayor on guitar, uh in

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Speaker 1: place of Jerry Garcia, who's gotten slugged a lot, and

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Speaker 1: Mr Mayor is actually very good going. Is this like

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Speaker 1: a music show? What? Well? I gotta say. We are luck.

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Speaker 1: We shouldn't dissen because we're lucky to get Martin Haggerty.

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Speaker 1: We're lucky to get through to his desk. He is

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Speaker 1: co head of Black Rocks Inflation linked bond portfolio, and Martin,

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Speaker 1: there's inflation all of a sudden. You've been sitting there

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Speaker 1: waiting for years to sell your bonds, and now I'm

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Speaker 1: sure the phone is ringing off the hook. CPI comes

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Speaker 1: in hotter than expected. The doves are in trouble here. Um.

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Speaker 1: I don't think the doves are in trouble by any

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Speaker 1: means as of yet. But this is a number. I

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Speaker 1: would say, this number is actually higher than we were expecting.

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Speaker 1: But it is the trend that that core CPI has

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Speaker 1: been on for for probably the better half of last year. Um.

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Speaker 1: When you would have have told somebody eighteen months ago

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Speaker 1: that oil was going to go down a dollars and

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Speaker 1: the dollar was going to appreciate, there weren't many people

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Speaker 1: around who who were agreeing with our view that core

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Speaker 1: cb I was probably going to breach two percent, and

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Speaker 1: seems to have reached it quite convincingly on the back

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Speaker 1: on this report. What inflation statistics do you use? I

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Speaker 1: mentioned earlier I had dore the Cleveland CPI, which is

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Speaker 1: a unique core calculation. What does a pro like Martine

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Speaker 1: Haggert to use? You know, I think what I've learned

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Speaker 1: is you can't rely on one particular index, you need

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Speaker 1: to look at multiple different industries and break down each

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Speaker 1: index into multiple different formats. One of the great things

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Speaker 1: that we like to do with you know, today's CPI

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Speaker 1: print is basically break it up into the low volatility

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Speaker 1: components and the high volity high valve components. So the

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Speaker 1: low val components are your slower moving things that that

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Speaker 1: seem to get on trends and move in in that

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Speaker 1: fashion for a reasonably prolonged period of time. And our

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Speaker 1: low val component or of course CPI today basically touched

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Speaker 1: two point seven eight um. The highball components was have

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Speaker 1: actually picked up aggressively in the last couple of months,

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Speaker 1: and these tend to be more driven by you know,

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Speaker 1: dollar strength weakness over on a month of a month basis,

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Speaker 1: the spillover from commodity prices definitely the form of volatile components,

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Speaker 1: but the the trajectory of the low vill components, which

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Speaker 1: is you know, the shelter, medical care, et cetera, have

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Speaker 1: been what has has kept us reasonably constructive on you

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Speaker 1: as CPI up until this point. How does rent in

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Speaker 1: housing calculations? I think most of our listeners understand the

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Speaker 1: oddity in the overweight there. How do you filter in

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Speaker 1: real estate dynamics in the United States in the calculation

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Speaker 1: of inflation. Well, that's when it's worthwhile comparing different CPI

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Speaker 1: industries with each other. If you look at the contribution

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Speaker 1: of shelter to CPI, as you said, it is a

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Speaker 1: large contribution, but CPI is what the tips in tips

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Speaker 1: security is actually priced off, so we have to pay

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Speaker 1: past attention to that. But then comparing it to the

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Speaker 1: PCE calculation which has basically half of the contribution of housing,

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Speaker 1: which is the Fed's preferred measure, helps put it all

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Speaker 1: into context. And um, you know, just just maintaining looking

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Speaker 1: at you mentioned that the Cleveland FED, there are other

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Speaker 1: FAED median indicries that that give you a pretty good

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Speaker 1: indication as to the CPI basket as a whole, and

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Speaker 1: just stripping out shelter. You know, there has been a

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Speaker 1: lot of talk about how shelter has been such a

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Speaker 1: substantial driver of CPI. What's interesting with this report, um,

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Speaker 1: is that when looking at this CPI print on an

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Speaker 1: x shelter basis, the upturn appears to be fairly widespread,

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Speaker 1: which I think will give some members of the FOMC

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Speaker 1: who have been concerned about inflation, and many have talked

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Speaker 1: about inflation f shelter. It will give them a little

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Speaker 1: bit more comfort in their decision to to lift off

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Speaker 1: in December. Well, you've got a number of people in

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Speaker 1: the markets, I mean, certainly not the majority, but you

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Speaker 1: do have a number of people who have been saying

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Speaker 1: recently that markets may be way underestimating the potential for

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Speaker 1: inflation to accelerate and therefore the Fed to react this year.

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Speaker 1: I think you're right, And the inflation market itself is

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Speaker 1: pricing in a very very benign trajectory. And you know,

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Speaker 1: we talked about this a little bit last time when

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Speaker 1: when I spoke to you guys. But you know, what

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Speaker 1: we like to do is to split up the inflation

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Speaker 1: curve into various one year components or increments, and look

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Speaker 1: what inflation run rates pricing for these different periods. And

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Speaker 1: looking at the inflation run rate that the market is

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Speaker 1: pricing in between two thousand and seventeen and two thousand

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Speaker 1: and eighteen UM, it's basically pricing in an ex energy

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Speaker 1: CPI rate of about sixty basis points. So how we

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Speaker 1: do that is we take the slope of the gasoline

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Speaker 1: curve and x DIS tracked it from the inflation run

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Speaker 1: rate price by the market to get an ex energy rate.

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Speaker 1: So with that being at sixty basis points relative to

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Speaker 1: today's core print of two point two, is ready ready

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Speaker 1: quite quite a widespread and something that we have not

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Speaker 1: seen in a very very long time. And to me,

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Speaker 1: we're gonna say, Martin, we're gonna have to leave up

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Speaker 1: there because it's fine. But that last insight was very

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Speaker 1: valuable in taking the gasoline segment out of inflation to

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Speaker 1: get a core dynamic of sixty basis point six tenths

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Speaker 1: of a percentage point. And we've got a loaded schedule, folks.

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Speaker 1: With there's Martin Haggerty, thank you so much, so much,

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Speaker 1: with black right, there's so much going to three hours

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Speaker 1: with we could do it. We could do an hour

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Speaker 1: with Martin and move right on to Scott Galloway on

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Speaker 1: Yahoo and critically coming up and diagnon of JP Morgan

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Speaker 1: under let's bring him Michael bar now with the latest

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Speaker 1: world in national headlines, Mike Tom thank you very much.

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Speaker 1: A private service as schedule to begin in a about

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Speaker 1: a half an hour for Supreme Court Justice Antonin Scalia.

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Speaker 1: A casket carrying Scalia's bonny will lie in repose in

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Speaker 1: the courts Grade Hall. After the private service, the casket

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Speaker 1: will be on display to the public starting at ten

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Speaker 1: thirty a m. Eastern time. Among the thousands of mourners

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Speaker 1: who will pay their respects today are President Barack Obama

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Speaker 1: and First Lady Michelle Obama. A funeral mass will be

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Speaker 1: held tomorrow. US warplanes have struck multiple targets in Libya overnight,

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Speaker 1: hitting at Islamic state training camp and a senior extremist leader.

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Speaker 1: According to a US defense official, the air strikes at

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Speaker 1: the training camp were close to the Tunesian border. French

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Speaker 1: President France while oland Is, drafted a bill that would

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Speaker 1: allow businesses to increase workers hours above the thirty five

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Speaker 1: hour cap, and he's firing rules. Global News twenty four

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Speaker 1: hours a day, powered by our dred journalists more than

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Speaker 1: a hundred fifty news bureaus from around the world. Now

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Speaker 1: Michael bar Mike Tom Back, Obar Worth, watching Oil under Barrel,

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Speaker 1: Scott Galloway and diagnon in this hour. Next Market Drivers,

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Speaker 1: brought to you by your Mercedes Benz Tri State Dealer.

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