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Speaker 1: Broadcasting live to New York, Cloomberg to Washington, d C,

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Speaker 1: Bloomber to Boston, Bloomberg twelve unders to San Francisco, Bloomberg

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Speaker 1: to the Country Series Exam Channel one ninety and around

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

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Speaker 1: is Bloomberg Surveillance. Good morning. Can I say Happy Friday

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Speaker 1: to everybody? It's the end of kind of a volatile

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Speaker 1: week in the markets and the volatility continuous. Stocks higher

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Speaker 1: this morning. Verizon planning to make a first round bid

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Speaker 1: for Yahoo's web businesses next week, also says, according to

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Speaker 1: people familiar with the matter, it's willing to take on

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Speaker 1: Yahoo Japan. Google also considering Disney a bidding. According to

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Speaker 1: another person, the first round bids are coming in. UNI

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Speaker 1: Credits CEO says they are intensively working in Europe on

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Speaker 1: a solution that would see of IT investors participating in

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Speaker 1: a fund aimed at recapitalizing troubled lenders in Europe. That's

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Speaker 1: giving a bid to financials. Did you see Batman versus Superman? Um?

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Speaker 1: I was not dragged to that. You were not dragged

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Speaker 1: to that? No, not a lot of people have been.

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Speaker 1: It's the number one movie for the last couple of weeks,

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Speaker 1: expected to be again this week, but according to uh

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Speaker 1: SNL Kagan analysts, it is not likely to make more

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Speaker 1: money than the Superman uh Man of Steel movie Superman

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Speaker 1: wins um. I don't know, can you give that away? No,

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Speaker 1: but no, no spoiler alert here. We'll We'll turn it

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Speaker 1: over to Michael Barr to get the latest world of

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Speaker 1: national headlines instead of doing movie spoilers, Thank you very much, Mike.

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Speaker 1: Pope Francis says the Church must no longer sit in

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Speaker 1: judgment and throw stones against those who failed to live

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Speaker 1: up to the church's teachings about marriage and family life.

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Speaker 1: Pope Francis has released a document in which he says

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Speaker 1: that individual conscious should be the guiding principle for Catholics.

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Speaker 1: The Pope said, as that even applies when talking about contraception.

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Speaker 1: Secretary of Stage Gun Kerry. He made a surprise visit

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Speaker 1: bag that day. Kerry met with the Racks Prime Minister

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Speaker 1: to talk about stabilizing the region and to fight against

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Speaker 1: the Islamic States. And I've been working on a lot

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Speaker 1: of differditions the last few years, so it's good. Republican

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Speaker 1: National Committee, Chairman of rights previous says he trusts that

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Speaker 1: Donald Trump will not violate a loyalty pledge to support

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Speaker 1: the eventual presidential nominee of the party. Trump indicated recently

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Speaker 1: he may not support the nominee if it's not him.

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

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Speaker 1: twenty four hundred journalists and more than a hundred fifty

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Speaker 1: bureaus from around the world. I'm Michael Barr, Mike. Thank you, Michael.

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Speaker 1: Time now for the Bloomberg NBC Sports Update with John Stashower.

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Speaker 1: All right, Mike. Jordan Smith went to the Master's last

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Speaker 1: year red hot, continue to play that way a wire

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Speaker 1: to wire victory this year. He has struggled a bit,

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Speaker 1: but not yesterday bogey free six under sixties six and

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Speaker 1: he leads by two over Annie Lee and Sean Lowry.

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Speaker 1: Justin Rose, Sergio Garcia three shots behind. Rory McElroy trails

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Speaker 1: by four, Phil Mickelson by five. So does world number

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Speaker 1: one Jason Day, who was five under on the front

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Speaker 1: nine yesterday and then had a triple bogey six on

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Speaker 1: the par three sixteen poll. Round two of the Masters

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Speaker 1: four fifteen today on Bloomberg eleven three oh live from

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Speaker 1: augusta long rivalry between the Rangers and Islanders. Never have

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Speaker 1: the Aisles won every game in a season series they

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Speaker 1: did this year, scoring three times in the last eight

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Speaker 1: minutes of the second period of four one victory at

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Speaker 1: the Garden at the Stadium. Yankee scored half the runs

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Speaker 1: they had the night before, still plenty enough eight five

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Speaker 1: over Euston on Mark the sheriff's tiebreaking three run homer

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Speaker 1: in the seventh named Brian McCann, also homer, sort of

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Speaker 1: the red hot Starling Castle, already his third of the year.

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Speaker 1: He's betting five eight three with eight r v I

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Speaker 1: Yanks in Detroit today and the Mets home opener today

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Speaker 1: against the Phillies. With the Bloomberg NBC Sports Update, I'm

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Speaker 1: John stad Shaffer. Thanks John. Did you see the Master Ship?

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Speaker 1: Were you watching the Masters? Bob Moon at all? Did

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Speaker 1: you see Ernie else first toll at ten US six puts?

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Speaker 1: I could do that. I mean, as a matter of fact,

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Speaker 1: I regularly do that. This is Bloomberg Radio Worldwide. I'm

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Speaker 1: Michael McKee with Tom Keene. Welcome back to Bloomberg Surveillance.

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Speaker 1: It is a another volatile day on Wall Street and

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Speaker 1: in the city and trading houses around the world. After

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Speaker 1: a down day yesterday, stocks are higher. The stock six

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Speaker 1: hundred up by three points now eight tenths of a percent,

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Speaker 1: smp E Mini futures up by eleven half a percent,

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Speaker 1: and down futures up seventy eight points right now about

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Speaker 1: four tents time now for the Bloomberg NJ T I

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Speaker 1: T STEM Report, brought to you by New Jersey Institute

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Speaker 1: of Technology, investing more than a hundred and ten million

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Speaker 1: dollars a year and applied research to solve problems and

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Speaker 1: improve life. Learn more at Stories of Innovation dot m

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Speaker 1: j I T dot E DU. Here's problem Michael, Good morning.

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Speaker 1: Here's what's making news in science, technology, engineering and math.

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Speaker 1: You can never have enough space, even in space. An

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Speaker 1: unmanned SpaceX Falcon rocket is set to launch from Cape Canaveral, Florida,

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Speaker 1: late this afternoon, carrying more space for the International Space Station,

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Speaker 1: specifically a soft sided room that astronauts planned to attach

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Speaker 1: to the outside of the space station and inflate to

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Speaker 1: the size of a small office. The blow up cube

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Speaker 1: is supposed to stay there for two years, with astronauts

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Speaker 1: occasionally ducking in. It's a demonstration of technology backed by

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Speaker 1: Bigelow Aerospace, meant for Moon bases and Mars expeditions, as

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Speaker 1: well as orbiting outpost catering to scientists and tourists. FBI

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Speaker 1: Director James Comey revealed in a speech that the bureau

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Speaker 1: paid for the tool it used to break into a

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Speaker 1: dead terrorist iPhone. He also said the FBI is considering

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Speaker 1: whether to tell Apple how it was done. And Facebook

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Speaker 1: is working to combat a decline in people sharing original

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Speaker 1: personal content. According to people familiar with the matter, that

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Speaker 1: of course, is the fuel that helps power the money

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Speaker 1: machine at the heart of its social network. While Facebook

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Speaker 1: says overall sharing remains strong, it seems one point six

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Speaker 1: billion users are posting more news and information from other websites.

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Speaker 1: People have been less willing to post updates about their

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Speaker 1: lives as their lists of friends grow over time, mindful

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Speaker 1: that their offerings may not be relevant to all their connections.

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Speaker 1: That's this morning's Bloomberg and j I t Stem Report

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Speaker 1: and John Tucker. You can still keep posting pictures of

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Speaker 1: your dog, Biscuit. That'll be fine. That's why we all

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Speaker 1: sign up right. Um. Anyway, so we were talking just

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Speaker 1: a few moments ago about Marianna Cult of Dakota the

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Speaker 1: Bloomberg View. Uh, calmness. Now, he used to be the

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Speaker 1: president of the Minneapolis Fed, got a better job working

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Speaker 1: for us, he writes for Bloomberg View. The occasional columnies

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Speaker 1: now professor at the University of Rochester this morning, saying

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Speaker 1: the Federal Reserve should cut cut rates immediately. Uh. He

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Speaker 1: notes that unemployment is not low enough. I mean there

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Speaker 1: are still people, particularly in their prime working ages, who

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Speaker 1: are not getting jobs or getting only part time jobs.

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Speaker 1: Any notes to drop in inflation expectations. He suggests, we're

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Speaker 1: not getting to the inflation that we need. Chris Lowe

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Speaker 1: is the chief economist at FTN Financial and Chris, the

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Speaker 1: question that comes to my mind when I see UH

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Speaker 1: Professor Coach laquotas um piece today is to what end

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Speaker 1: does monetary policy? Does cutting rates anymore? Now if they

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Speaker 1: went back to zero, they did additional kiwi is that

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Speaker 1: going to help on either count? Or have we gotten

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Speaker 1: kind of the limits of what monetary policy can do?

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Speaker 1: You know, funny, you should ask that question. People are

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Speaker 1: certainly starting to think about that. First off, Wow, Uh,

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Speaker 1: you know, here we are a quarter point off the

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Speaker 1: bottom and it's time to to to roll it back. Uh.

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Speaker 1: We still have decent job growth. We have, at least

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Speaker 1: until this quarter, had decent economic growth. Last year was

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Speaker 1: two percent or so this year everybody thinks is too.

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Speaker 1: So you know, for starters, do we do we need

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Speaker 1: monetary stimulus? That's I think the first question to ask.

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Speaker 1: But on the effectiveness of stimulus, certainly we know there's limits, right. Uh.

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Speaker 1: You look at the Japanese economy, which is an absolute mess.

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Speaker 1: Look at what they've done. Uh, you know, negative interest

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Speaker 1: rates QUEI to the point where it's sort of questionable

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Speaker 1: whether there's any Yeah. And and the the economy hasn't

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Speaker 1: responded to the latest round, so uh, yeah, that there

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Speaker 1: is a limit. There clearly is a limit. And you've

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Speaker 1: even got guys like James Bullard suggesting uh and and

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Speaker 1: and this is an idea that of course popped up

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Speaker 1: outside the Fed first. But maybe if we set rates

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Speaker 1: really really low and keep them really really low for

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Speaker 1: a long time, we actually deter credit because you know,

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Speaker 1: at the fact, we always think about credit in terms

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Speaker 1: of demand, but maybe we need to think about supply.

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Speaker 1: You know, who wants to lend for no return? Is

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Speaker 1: that the biggest concern that you would have right now,

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Speaker 1: Are we at a point where we don't have enough

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Speaker 1: willingness to lend? Or is there still a deficiency of supply?

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Speaker 1: I we're not yet at the point where there's no

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Speaker 1: willingness to lend, and we know that because market interest

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Speaker 1: rates are so ridiculously low around the world. But uh,

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Speaker 1: it's very sort of choosy where it's going. And so

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Speaker 1: what you see is that someone who maybe doesn't need alone,

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Speaker 1: has perfect credit, has plenty of cray of cash, they

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Speaker 1: can they can get some thing um, but then those

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Speaker 1: who are a little bit riskier cannot. And and uh,

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Speaker 1: certainly lenders are not taking risks that were absolutely standard

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Speaker 1: in prior cycles. On on top of that too, Uh,

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Speaker 1: people are thinking twice about about borrowing because of course

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Speaker 1: returns aren't very good because interest rates are so low.

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Speaker 1: All right, let's come back with Chris Lowe's chief economists

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Speaker 1: at ft N Financial, and we'll talk to him a

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Speaker 1: little bit more about Coach of Lakota's requests that the

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Speaker 1: FED lower interest rates right now. And last night's meet

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Speaker 1: the fetals, the four FED chairs. Did you see the

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Speaker 1: picture of the poster advertising their appearance looked a lot

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Speaker 1: like the cover of Meet the Beatles. For those of

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Speaker 1: you old enough to have bought that record album when

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Speaker 1: it first came out, I'm talking to you, John Tucker.

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Speaker 1: Is that a group? This is Bluebird Radio. Bloomerk Surveillance

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Speaker 1: is brought to you you by Untucket. Think your shirt is

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Speaker 1: off to improve your wardrobe. Global Business News twenty four

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Speaker 1: hours a day at Bloomberg dot com, the Radio Plus

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Speaker 1: mobile app and on your radio is a Broomberg Business Flash.

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Speaker 1: And I'm Karin Moscow. This update has brought to you

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Speaker 1: by Sector Spider et FS. Why by a single stock

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Speaker 1: when you can invest in the entire sector? Is its

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Speaker 1: sector spd r S dot Com right six six Sector

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Speaker 1: et F Farmer International Monetary Fund Chief economist Olivier Blanchard

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Speaker 1: said Central Bank should focus on quantitative easing rather than

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Speaker 1: rake cuts. If more stimulus is needed to boost their economies,

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Speaker 1: they probably work likes a bit early to say, thinking

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Speaker 1: basically in fees with the business mall, Thanks and Ways,

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Speaker 1: which are they complex, so even if they do something

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Speaker 1: on the Maco side, a much the fekind of flow.

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Speaker 1: But I know, we knoww call regular Que Blanchard spoke

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Speaker 1: to Bloomberg's Tom Keene and Francis Laqua on Bloomberg Television

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Speaker 1: this morning, describing the economic outlook is not exciting. He

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Speaker 1: said that global demand is weak and growth is sluggish,

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Speaker 1: and this may be the case for some time. Futures

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Speaker 1: are higher this morning. Snp E many futures up twelve points,

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Speaker 1: DOWE many futures up ninety one, NASA DOCU many futures

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Speaker 1: up twenty eight. The decks in Germany's up one point

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Speaker 1: two percent. Can your treasury down eight thirty seconds, the

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Speaker 1: yield one point seven one percent, non ex screwede oil

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Speaker 1: of four percent or a dollar forty eight to thirty

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Speaker 1: eight seventy four A barrel co mix gold is down

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Speaker 1: a tenth of a percent or a dollar seventy to

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Speaker 1: twelve thirty five eight announced and the euro a dollar

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Speaker 1: thirteen sixty four the end one oh eight point six eight.

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Speaker 1: That's a Bloomberg Business flash. Tom and Mike Karl Moscow,

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Speaker 1: thank you very much. We're talking with Chris Lowe. He's

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Speaker 1: the chief economist at f t N Financial. Did you

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Speaker 1: watch the Beatles last night to Meet the Beatles Reunion

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Speaker 1: of the Four Fed Chiefs. I did not watch it.

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Speaker 1: I did read about it this morning, saw the quotes,

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Speaker 1: read the transcript, Listen to the replay on the little

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Speaker 1: Am radio exactly exactly radio. They were all asked starting

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Speaker 1: a fraid. Zakaria just jumped right in, uh, starting with

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Speaker 1: Jenny yell and are we on the verge of recession?

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Speaker 1: The politicians all say that things are really terrible here. Um,

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Speaker 1: so I'll put the question to somebody who does this

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Speaker 1: for a living. Are we on the verge of recession?

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Speaker 1: Things are really terrible here? Mike? Just to depart it

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Speaker 1: back to you, I put it this way, this year

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Speaker 1: probably not odds of procession in the next two years,

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Speaker 1: odds of recession in the next three years, probably getting

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Speaker 1: up towards Uh. You know. The biggest flag not mentioned yesterday.

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Speaker 1: I mean, I love this for sessions. Don't die of

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Speaker 1: old age stuff. Ben Vernink said that, but corporate profit

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Speaker 1: expansions apparently do. And corporate profits in the US stopped

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Speaker 1: growing a year and a half ago. Um. The reason

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Speaker 1: that matters is that you know, when when profits start

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Speaker 1: to drop, and this quarter is, as you know, is

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Speaker 1: gonna be pretty ugly too. When profits start to drop,

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Speaker 1: margins are squeezed, companies start looking for ways to save um.

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Speaker 1: You know, you've got to give something back to shareholders.

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Speaker 1: And the first thing that goes is investment. Business. Investment

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Speaker 1: fell last quarter. Uh. The next thing that goes is employment.

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Speaker 1: Companies start to look for ways to save there too.

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Speaker 1: And look, I think when you look at retail employment,

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Speaker 1: particularly in the first quarter, there are already signs of strain. Okay.

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Speaker 1: Elbert Edwards yesterday in suction, who's always gloomy, he has

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Speaker 1: he was optimistic eighteen years ago. He puts out a

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Speaker 1: thing on you know, the slowdown of the American economy

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Speaker 1: to a person. We have people assuming that the first

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Speaker 1: quarter lethargy is a one off and that somehow we

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Speaker 1: improved through the year. As John Bullard said, the first quarters.

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Speaker 1: I don't have an opinion here, but state the optimism

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Speaker 1: that we get back to two point x percent g

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Speaker 1: d P. Well, okay, start with the fact that there

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Speaker 1: is this crazy mystery. You know, it's not just that

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Speaker 1: the last three years first quarter was weak, but going

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Speaker 1: back for decades, it's week more often than not. And

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Speaker 1: the b e A they don't know why, So there

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Speaker 1: may be a seasonal adjustment problem. But I've look I

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Speaker 1: think this this one sort of smells a little different.

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Speaker 1: And and that's because we we don't have the profits

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Speaker 1: growth that gave us optimism last time. We don't have,

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Speaker 1: in fact, accelerating consumption. Consumption has been slowing down Tom

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Speaker 1: for six months. Car sales peaked six months ago, they're down. Uh.

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Speaker 1: You know, I I think there are ample reasons to

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Speaker 1: be at least a little nervous about what's going on.

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Speaker 1: And I would even add to that that the the

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Speaker 1: the Great American bull market. You know, we just celebrated

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Speaker 1: the seventh anniversary, but in fact the peak in the

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Speaker 1: cycle so far was also last summer. Uh. Stocks have

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Speaker 1: yet to regain that that high. What do you do then?

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Speaker 1: What would the FED do? Uh? We we talked before

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Speaker 1: the breaking point, Basis cut his coach of Dakota's callee

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Speaker 1: for in gonna turn around any corporate investment. No, I

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Speaker 1: think the FED is doing exactly what they should do.

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Speaker 1: Uh we We we know credit is growing in the US,

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Speaker 1: It's not growing very fast, but it's growing, which, by

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Speaker 1: the way, sets us apart from Europe and Japan, where

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Speaker 1: credit is contracting at a double digit rate. Uh it.

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Speaker 1: In addition, we know credit is actually accelerating, which sets

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Speaker 1: us apart from China, where it's stronger but coming down.

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Speaker 1: Uh So, you don't necessarily have to ease. What you

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Speaker 1: do is you slow the pace of tightening. And that

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Speaker 1: is exactly what Yellen and the Fed have done. They've

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Speaker 1: signaled a more gradual gradual Uh. You know, they're getting

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Speaker 1: a lot of heat for for this sort of international

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Speaker 1: focus they've taken. But if you step back and think

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Speaker 1: about it rationally, I think they've done exactly the right thing.

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Speaker 1: Just slow it down. Yeah, but what do they do

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Speaker 1: if we get to the to you know, an imminent

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Speaker 1: recession or get into a contraction. Lowering the dots on

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Speaker 1: the dot plot isn't going to change it. Well, then

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Speaker 1: then you have to look at the fiscal side and

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Speaker 1: uh it. Look, it's it's not just necessarily spending or

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Speaker 1: tax cuts, which I would say politically or impossible on

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Speaker 1: both ends, right because Congress isn't going to allow uh

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Speaker 1: spending stimulus and the White House isn't certainly going to

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Speaker 1: sign off on tax cuts. Um, but there's always regulation. Uh.

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Speaker 1: You know that The one thing no one in Washington

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Speaker 1: is willing to say is that regulation costs in terms

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Speaker 1: of economic growth. Uh. The President has a pretty aggressive

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Speaker 1: agenda of regulation, need like to get in place before

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Speaker 1: this summer. They could slow that down. You're one of

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Speaker 1: the great straight talkers that come in this room. Are

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Speaker 1: you telling me that if we got rid of eight

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Speaker 1: of the regulation we get back to a Jeffrey Mell

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Speaker 1: friendly three point No, No No, Tom, I'm not even suggesting

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Speaker 1: you need to get rid of regulation, just slow the

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Speaker 1: pace of putting it on. And the reason is that

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Speaker 1: while some of these regulatory changes probably are neutral in

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Speaker 1: terms of economic effect, it slows down business decision making.

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Speaker 1: If you know some looming changes looming, Uh, that the

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Speaker 1: boards freeze up, investment stops. And I saw him on

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Speaker 1: the street the other day. I tried to cross the

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Speaker 1: street to avoid him, like, but I couldn't. There was

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Speaker 1: Dan Elpert of his wonderful book The Age of Oversupply. Okay,

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Speaker 1: is that all this is about is there's just too

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Speaker 1: much after the crisis, and we're unwinding our oversupply. Maybe

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Speaker 1: we're unwinding our over investment and we're certainly underwinding our

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Speaker 1: over debt. I mean, is that really what we're talking

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Speaker 1: about on a Friday. It's a very big part of

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Speaker 1: what we're talking about, as I would suggest, more than regulation.

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Speaker 1: But maybe I'm wrong. No, no, well except that, Look,

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Speaker 1: it's outside our reach because the big slowdown is in China,

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Speaker 1: and and we are not going to save the Chinese economy.

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Speaker 1: We're not going to turn it around from from here

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Speaker 1: in the US. Uh so. And by the way, we're

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Speaker 1: not going to soak up the the enormous supply of

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Speaker 1: commodities that was going into China. We we just don't

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Speaker 1: need that kind of the rest of the world doesn't

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Speaker 1: need that kind of investment. And I'll give you just

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Speaker 1: one example, tom uh a friend who is in the

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Speaker 1: shipping business, leases these enormous freighters. The Panamax traders was

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Speaker 1: getting two d fifty thousand dollars a day on those ships.

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Speaker 1: It's now three thousand. UM. There's just way too many

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Speaker 1: of them. And of course they were all built to

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Speaker 1: carry stuff into China that that isn't isn't going. So

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Speaker 1: let me if I can squeeze this in, Mike, I mean, Chris,

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Speaker 1: You've got to come back like every other day. The

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Speaker 1: bottom line is, can we do an analysis of the

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Speaker 1: American economy and take out net exports? Because there's a

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Speaker 1: whole rationalization that things are pretty good? But can you

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Speaker 1: take out the butt witness, your ocean liner or whatever

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Speaker 1: it is quote you just gave us. Yeah, look, take

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Speaker 1: out net exports, and what you're left with is looking

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Speaker 1: backward two percent growth. The question is is it two

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Speaker 1: percent growth going forward? And what what I'm particularly concerned

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Speaker 1: about is is uh. First off, business fixed investment, which

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Speaker 1: was negative last quarter. Right now Wall Street is predicting

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Speaker 1: that's going to rebound in no time. And and actually

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Speaker 1: we're going to have stronger business fixed investment this year

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Speaker 1: than last. I'm skeptical because we don't have earnings growth.

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Speaker 1: The second piece is consumption UH, and that one, I'll

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Speaker 1: admit is an absolute mystery. You've got stronger UH employment, right,

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Speaker 1: we had really good employment growth last year. You have

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Speaker 1: strong income growth, but you've got this rising savings rate,

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Speaker 1: which is the kind of behavior you normally see when

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Speaker 1: people are scared. And I think, frankly that would go

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Speaker 1: Mike mute with oliviable and charge set today about negative

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Speaker 1: rates and that you do all these great distortions and

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Speaker 1: this great economics and this new stuff we're doing, and

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Speaker 1: we really don't know the real economic effects, one of

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Speaker 1: which is people go, I think I'll save more. Look,

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Speaker 1: I tell you what, I think. We should have won

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Speaker 1: the cosmic lottery on that one. Thank goodness, negative rates

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Speaker 1: were experimented with somewhere else before we decided to try

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Speaker 1: them here. I think they're an absolute disaster. Chris, Oh,

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Speaker 1: thank you so much. Never enough time. Let's go out

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Speaker 1: with Meet the Bankers.